The Site Report - Construction Industry Insights, Issue 9, September 2024

Stephanie Eaton, Matthew Georgitis, Steven Hemric, Julian Neiser
Spilman Thomas & Battle, PLLC
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Issue 9, 2024

Welcome to our ninth issue of 2024 for our construction industry insights e-newsletter - The Site Report.

Thank you for reading!

 

Building Code Legislation Becomes Law

“The new law reorganizes the Building Code Council and appointment authority for North Carolina.”

Why this is important: Senate Bill 166, 2024 Building Code Regulatory Reform, was recently passed by North Carolina’s Congress over Governor Cooper’s veto. The new law is important because it contains numerous and unrelated amendments to Chapter 130A of the N.C. General Statutes, changing regulations applicable to contractors and design professionals, various environmental and environmental health and various N.C. State Building Code provisions. S.B. 166, Ratified Bill, can be accessed here: https://www.ncleg.gov/Sessions/2023/Bills/Senate/PDF/S166v5.pdf

Examples of these various new changes are as follows:

  • Sec. 130A-330 through 331 address new provisions related to backflow preventers and testing, shut-off valves;
  • Sec. 160D-402, Sections 1.3, 1.4, address how fees collected by building inspection departments will be used and local government review of residential building plans, 1.5 clarifies public safety issues for withholding building permits or certificates of occupancy, 1.6 prohibits unrestricted rights of entry as a condition to development approvals, 1.7 prohibits technical code compliance affidavits, 1.8 clarifies local government curb and gutter design standards, 1.9 adds municipal pedestrian facility requirements within extraterritorial jurisdiction for subdivision streets designated as public;
  • Sec.160D-1501 clarifies and adds requirements for model homes;
  • Sec. 160D-804.1 revises performance guarantees for subdivisions;
  • N.C. Gen. Stat. 143-138(e) was revised to prohibit local fire prevention codes for residential dwellings that are not prescriptively required by the N.C. Residential Code;
  • S.L. 2023-108 Section 6 is amended to implement code changes for use of certain insulation in unvented attic and enclosed rafter assemblies, and Section 9 is amending the Residential Code for 3- and 4-family dwellings.

Part V. of the new law also significantly reorganizes the Building Code Council, which will now be comprised of 13, not 17, members – only seven (not all) of whom are to be appointed by the Governor, three to be appointed by the House of Representatives, and three to be appointed by the Senate President Pro Tempore. This change will likely result in a different mix of Councilors, especially if the Governor and either or both the North Carolina Senate and House of Representatives are controlled by different political parties. Code changes supported by the Governor could now have additional scrutiny by council appointed by the legislative branch. Further, Councilors will be required to have various professional or licensing qualifications, which should provide the Council with informed and experienced construction professionals to carry out their responsibilities.

Notably, Governor Cooper had previously vetoed the legislation in part because, according to the article, he believed that it limits “options for energy efficiency and electric vehicles.” This is a reference to the Electric Vehicle Supply Rule, S.L. 2023-108, Section 2.9, which states that electric vehicle supply equipment (EVSE) loads “must not be required for the purpose of calculating loads for the electrical feeder or service to dwellings subject to the North Carolina Residential Code...” --- Stephanie U. Eaton

OSHA Proposes Nationwide Workplace Heat Safety Standard

“The rule borrows from standards set by state occupational safety and health agencies, such as Cal/OSHA, which already impose heat safety measures on employers in their states.”

Why this is important: OSHA has been long considering a rule regarding heat safety, and it finally was released in July 2024. All employers need to be aware of these requirements, which impose a number of protocols and record-keeping requirements. As with any good safety program, employers are required to create a policy for employees to follow, which OSHA specifically identifies as a Heat Injury and Illness Prevention Plan. As part of the plan, employers are obligated to monitor heat conditions inside and out when the temperature reaches 80 degrees Fahrenheit, track weather conditions, seek the input of non-managerial staff, and deploy a number of heat mitigation measures. --- Julian E. Neiser

The Need for Speed Can Lead to Problems on Projects, Engineers Say

“The push to accelerate construction and a lack of maintenance on existing infrastructure and buildings are top concerns for structural engineers, a new survey found.”

Why this is important: This article discusses a common danger in construction projects and those specific to infrastructure projects--speed. We all know the term “speed kills,” and when that is brought to bear on a construction project, increasing the speed on the job can lead to errors that can result in poor workmanship. When that project is infrastructure, increased speed on the job can cause bridges, tunnels, etc. to fail causing injuries and even death. This is a common problem on construction projects, particularly given the pressure placed upon infrastructure projects in our country’s aging system. So what is the solution? Obviously, that is very project-specific, but a good rule of thumb is to move with deliberate speed and not be rushed into completion. --- Matthew W. Georgitis

Judge Partially Blocks DOT’s DBE Program

“The federal preliminary injunction could have widespread implications for workforce participation goals in federal contracts.”

Why this is important: Since the Supreme Court’s ruling on affirmative action programs in college admissions, several challenges to the federal DBE and state-level M/WBE programs have ensued. These challenges have largely used similar arguments to those used by the opponents of affirmative action in college admissions, and the results have been mixed. While this latest ruling from the Eastern District of Kentucky technically only impacts the specific project at issue in that case, it also signals that M/WBE programs may need to undergo significant changes to survive future challenges. Earlier this year, the Department of Transportation (DOT) issued a final rule making exactly those types of changes to the DBE program, but we have yet to see how the altered framework will fare when put to the test. As these types of challenges continue, it is almost certain that the DBE program, Section 8(a) program, and state- and local-level M/WBE programs will undergo additional changes as proponents of the programs look for methods and opportunities to preserve the economic benefits M/WBE programs provide and opponents attempt to limit or eliminate the programs. When navigating these programs and their recent changes, an experienced construction lawyer who has dealt with the relevant agencies and has guided businesses through both the certification and compliance/good faith effort process can be an invaluable resource to help contractors take full advantage of the programs and avoid missteps. --- Steven C. Hemric

Low-Carbon Materials a ‘Huge Opportunity’ to Green the Transportation Sector

“The DOT is releasing $800 million to reimburse builders for using cleaner construction products.”

Why this is important: Purchasers identify these “green products” for use in federal projects, which labeling is expected to be available for the first round of products by September 2026. Further, the Federal Highway Administration plans to host webinars this fall to assist contractors using the green products. This will be an important educational opportunity for any contractor or supplier working on a DOT project, especially as the federal government expects state and local governments to follow suit by requiring the use of lower carbon materials in their RFPs, as well. See the FHWA’s site for more information. --- Stephanie U. Eaton

Ask the Attorney

We sat down with Julian Neiser, Member; Vice Chair of Northern Offices, Litigation Department; Co-Chair, Construction Group; and Chair, Alternative Dispute Resolution Practice Group, to inquire about what he is seeing in the construction industry - specifically regarding litigation.

Q: Are you seeing any litigation trends or other issues that contractors should be aware of?

A. Indemnity clauses have always been an issue, but I’m seeing larger companies and owners being more forceful than usual during contract negotiations. Indemnity is something they will not compromise on, which causes subs to reach a decision point of whether to accept potentially fatal liability or pass on the work.

Q. What are the options if one side won’t budge on an indemnity clause?

A. There usually is room for negotiation, but other than declining the work, the company giving the indemnification can request a liability limit, create exceptions if the other side is negligent, or pass through the exposure to another contractor. And always ensure the party you are indemnifying is listed as an additional insured on your insurance policy. Also, be aware that in some states, indemnification clauses may be unenforceable, so it may be a question of assessing state law and accepting terms that you are fairly certain will not be enforceable.

Q. Does insurance cover these clauses?

A. Not always. Indemnity clauses create an “insured contract,” but there may be limits and exclusions. This is why adding the other side as an additional insured or additional named is so critical.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

© Spilman Thomas & Battle, PLLC

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