The Site Report - Construction Industry Insights, Issue 12, December 2024

Kevin Carr, Jonathan Deasy, Stephanie Eaton, Matthew Georgitis, Anthony Hassey, Mark Heath, Steven Hemric, Bryan Neft, Julian Neiser, Mitchell Rhein, James Simon
Spilman Thomas & Battle, PLLC
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Issue 12, 2024

Welcome to our year-end issue of The Site Report! As always, the construction industry is ever-changing and is impacted by extreme weather, new technology, labor issues, material and supply chain restraints, and code changes. This year was no different. As we wind up 2024, we wanted to look back at the top issues that affected our clients, colleagues, and the industry. This edition features a top trending topic from each of the past 11 issues of The Site Report. And, as a holiday bonus, we also have included insights on a new topic. We note that each of our featured articles published from January through November 2024 were current as of the time of the articles’ publishing. Look for updates to these and other 2024 articles from our authors in 2025.

As we look forward to 2025, we are planning our eighth year of this publication. It’s hard to believe we have been publishing for that long, and we appreciate every single one of you who read our materials.

Thank you again for reading! From our construction team to yours, we wish you the most joyous of holidays and a prosperous new year!

January -- Biden Mandates PLAs on Large Federal Contracts

By Kevin L. Carr

“The White House announced the implementation of an executive order to require project labor agreements on federal construction jobs above $35 million.”

Why this is important: President Biden recently announced the implementation of an executive order mandating project labor agreements (PLAs) on federal construction jobs exceeding $35 million. The decision marks a significant shift in the administration's approach to large-scale infrastructure projects, with the articulated goal of promoting fair labor practices, ensuring worker rights, and fostering collaboration between contractors and labor unions.

Project Labor Agreements are pre-hire collective bargaining agreements between project owners and labor organizations that set terms and conditions of employment for all workers involved in a specific construction project. These agreements aim to establish a framework for labor relations, ensuring projects are completed efficiently, on time, and within budget. PLAs typically cover issues such as wages, working hours, and dispute resolution mechanisms.

The White House's executive order mandates the use of PLAs on federal construction projects with a total value exceeding $35 million. This move aligns with President Biden's broader agenda to revitalize the nation's infrastructure and create jobs while prioritizing fair and equitable treatment for workers. The executive order emphasizes the administration's commitment to fostering collaboration between contractors, subcontractors, and labor unions to create a more harmonious and efficient construction process.

According to the White House, the key objectives of the Executive Order include:

  • Ensuring fair wages and working conditions
  • Promoting collaboration and efficiency
  • Job creation and economic growth
  • Prioritizing diversity and inclusion

While the executive order has received support from labor unions and those advocating for workers' rights, it has also sparked debates within the construction industry. Some critics argue mandating PLAs may increase project costs and limit competition, potentially disadvantaging smaller contractors. The administration, however, contends the long-term benefits of improved efficiency, worker satisfaction, and project success outweigh any short-term challenges.

February -- A Look at the Pennsylvania Statute of Repose

By Bryan S. Neft

The Pennsylvania Statute of Repose for Improvements to Real Property, 42 Pa. C.S. § 5536 (PA Statute of Repose) is a powerful tool that provides protections to persons lawfully performing or furnishing the design, planning, supervision, or observation of construction, or construction of any improvement to real property. The PA Statue of Repose bars any claims for personal injury or injury to property based on defects in those improvements, or for the defects themselves, that are brought after 12 years since the completion of the improvement. The law requires (1) the defense be asserted by a member of the protected classes (i.e., those performing lawfully the design, planning, supervision, construction, or observation of construction) (2) concerning an improvement to real property that (3) was completed over 12 years prior to the claim being made.

There are a great number of cases that discuss what constitutes an improvement to real property.

Click here to read the entire article.

March -- Clarifying Mechanics’ Lien Law

By Anthony J.G. Hassey

A mechanics’ lien is a powerful remedy that provides a contractor with a priority lien on a property and a fast means of being made whole if payment is not rendered at the completion of a job. In order to successfully obtain a mechanics’ lien, a filing party must “Perfect the Lien,” meaning that it must be filed appropriately and contain the necessary information. Belfor Property Restoration v. Ravenwood Mannor, LLC, 305 A.3d 1085 (Pa.Super. 2023), and R.A. Greig Equipment Company v. Mark Erie Hospitality, LLC, 305 A.3d 56 (Pa.Super. 2023), demonstrate the importance of strict adherence to the rules and meaning of the language in the mechanics’ lien statute to ensure a cost-effective and successful outcome when filing a lien on behalf of a client. In Belfor and R.A. Greig, the Superior Court of Pennsylvania was asked to review two separate but related trial court rulings dismissing mechanics’ liens.

Click here to read the entire article.

April -- How Baltimore Bridge Collapse Impacts Supply Chain

By Stephanie U. Eaton

“While the full extent of the impact is yet to be determined, the collision is likely to have far-reaching consequences for the Port of Baltimore and its role in the regional and national economy.”

Why this is important: Sometimes a tragic event in a single location can magnify issues facing the construction industry more than even the accumulation of issues across the country. Unfortunately, the March 26, 2024, collapse of the Francis Scott Key Bridge in the Port of Baltimore did that in more ways than one. In addition to raising issues related to bridge construction and design to prevent future loss of life caused by a barge striking a bridge, such as adding larger or more “dolphins” (i.e., circular concrete constructions that are located near the central supports of a bridge), the Francis Scott Key Bridge collapse also pinpoints supply chain vulnerabilities, especially for cargo located at or destined for the Port of Baltimore. This article reports that between 30-40 container vessels unloaded approximately 21,000 containers each week. In relation to the construction industry, the Port of Baltimore is a key hub for steel and aluminum imports/exports. As a result of the March 26 tragedy, these vessels and containers will have to be diverted to other ports, which in turn disrupts schedules and increases the labor burden at other ports where the diverted cargo must be unloaded and processed. It is expected that it could take months to absorb and process the diverted materials in other ports, such as those in Norfolk and Philadelphia. As noted by Christian Roeloffs, co-founder and CEO of Container xChange, the Frances Scott Key Bridge collapse “highlights the importance of contingency planning, diversified routing options, and the integration of real-time tracking and analytics to mitigate the impacts of unforeseen events . . , [and] serves as a reminder that infrastructure vulnerabilities can lead to disruptions, and being prepared with flexible, adaptive strategies is essential for maintaining continuity in the face of challenges.” If you suspect or are aware of supply chain disruptions on your projects caused by the Baltimore bridge collapse, and want to understand your contractual options and/or remedies, contact the Spilman Construction Practice Group to analyze your contract documents and provide counsel on how best to mitigate the impacts.

May -- OSHA Goes Forward with Walk-around Rule for Inspections

By Mark E. Heath

On March 29, 2024, the Department of Labor (DOL) published its final rule allowing employees to authorize a representative to accompany an OSHA compliance officer during inspections of their workplace. The rule will be effective May 31, 2024, and is published in the CFR.

The Occupational Safety and Health Act (OSH Act) has language that gives both the employer and employees the right to authorize a representative to accompany OSHA officials during workplace inspections. In order to comply with the OSH Act, the new rule is intended to clarify when and how workers may authorize another employee or select a non-employee to serve as their representative.

Click here to read the entire article.

June -- CASPA Clash: Major Victory for Contractor in Pipeline Project Dispute as Third Circuit upholds CASPA Penalties and Fees

By Sanya Memon, Summer Associate

In a significant decision on April 17, 2024, the U.S. Court of Appeals for the Third Circuit upheld significant penalties and attorney fees awarded to C.J. Hughes Construction Company, Inc. under the Pennsylvania Contractor and Subcontractor Payment Act (CASPA). This ruling, emerging from a contractual dispute with EQM Gathering OPCO, LLC over the MAKO pipeline project, provides critical insights into the court’s interpretation and enforcement of CASPA provisions. We have provided a brief analysis of this important court decision.

Click here to read the entire article.

July -- After Landmark Chevron Ruling, could Workplace Safety Agency OSHA be the Next Supreme Court Target?

By Jonathan A. Deasy

“But this case could find a receptive audience in the court’s conservative supermajority.”

Why this is important: The Supreme Court has declared open season on federal agencies' rulemaking authority in striking down the 40-year-old precedent that gave rise to the Chevron doctrine. Under this doctrine, a court was required to defer to a federal agency’s reasonable interpretation of ambiguities in its own statutes if Congress had not addressed the particular question clearly. The Supreme Court however now says this doctrine was “fundamentally misguided” because it is the court's responsibility to decide whether the law means what the agency says. As a result, even when an ambiguity exists involving technical or scientific questions that fall within an agency’s area of expertise, courts now have the final say on how a federal agency should best implement its regulatory authority.

Those looking to take advantage of the Supreme Court’s decision and curb regulatory burdens have already placed OSHA in their crosshairs. Allstates Refractory Contractors, LLC recently filed a petition for writ of certiorari with the Supreme Court presenting the question of whether Congress’s delegation of authority to write “reasonably necessary or appropriate” workplace safety standards to OSHA was constitutional. Given the broad scope of this question, finding Congress’s delegation of authority to be improper would have monumental impact of invalidating the lion's share of OSHA’s workplace safety standards. Likely for this reason, the Supreme Court denied certiorari and will not take up the question at this time. However, it’s worth noting that both Justice Gorsuch and Justice Thomas would have granted the petition. Justice Thomas however went even further and dissented stating this case “exemplifies the problem” with Congress’s delegation of authority. Make no mistake, the question surrounding OSHA’s authority is far from over.

August -- Atlantech Decision Enforces Important Lessons About Avoiding Double-Payment Jeopardy in North Carolina Construction Contracts

By James E. Simon

A recent decision from the North Carolina Court of Appeals has highlighted the necessity for general contractors to ensure that they fully comply with notice and lien waiver requirements in order to avoid “double payment jeopardy” in North Carolina.

Under North Carolina law, a second-tier contractor may enforce a subrogation lien against real property if the first-tier contractor fails to pay it for work performed or materials supplied. This applies even if the general contractor had already paid the first-tier contractor for the same work or materials. In that situation, the general contractor can be exposed to “double payment jeopardy”; i.e., paying the first-tier contractor and the second-tier contractor for the same work/materials because the first-tier contractor failed to pass the payments down to the second-tier contractor.

To remedy this potential liability, the North Carolina Legislature established two methods by which general contractors can avoid this situation. Under N.C. Gen. Stat. § 44A-23(b)(1)(a), the general contractor can post a Notice of Contract at the job site within a certain time period after the building permit is issued or the contract is awarded, which forestalls enforcement of these types of subcontractor liens. Alternatively, under N.C. Gen. Stat. § 44A-23(c), the general contractor can issue lien waivers to the subcontractor, which would likewise eliminate the subcontractor’s subrogation lien rights.

In Atlantech Distribution Inc. v. Land Coast Insulation, Inc., the general contractor failed to follow these provisions and subsequently was found liable to pay the second-tier contractor even though it had already paid the first-tier contractor for the second-tier subcontractor’s materials. As the North Carolina Court of Appeals found, the general contractor made two significant errors that subjected it to this “double jeopardy.” First, while the general contractor had appropriately filed a Notice of Contract with the local county clerk, it did not post that Notice of Contract at the jobsite, which meant that it could not take advantage of the protections of N.C. Gen. Stat. § 44A-23(b)(1)(a). Second, while the general contractor had issued partial lien waivers to the subcontractor, it had not issued a final lien waiver. While partial lien waivers can limit the amount of the subcontractor lien to the extent of the lien rights that the general contractor possesses on the property, a partial lien waiver cannot eliminate the subcontractor’s subrogation rights (contrary to a final lien waiver, which does eliminate those rights). Although the general contractor argued that the cumulative total of the partial lien waivers should make them operate in the same manner as a final lien waiver, the Court of Appeals found that argument unpersuasive.

Atlantech should serve as an important reminder to general contractors that (1) double payment jeopardy is an important issue to be aware of in North Carolina, and (2) in order to avoid the situation that arose in Atlantech, general contractors should conscientiously ensure that they are satisfying every element necessary to establish their protections under N.C. Gen. Stat. § 44-23.

September -- Judge Partially Blocks DOT’s DBE Program

By Steven C. Hemric

“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, and the Court’s subsequent clarification in October of this year, technically only impacts projects on which the plaintiffs bid, 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.

October -- The FTC’s Rule Banning Noncompete Agreements is Dead. Long Live Noncompete Agreements?

By Mitchell J. Rhein

Earlier this year, the Federal Trade Commission (FTC) announced a Final Rule outlawing nearly all noncompete agreements between employers and employees. That Final Rule, however, was overturned at the end of August 2024. After granting a limited injunction in July 2024, a Texas court invalidated the FTC’s Final Rule days before it was set to take effect on September 4, 2024.

The court ruled that the FTC has no authority to issue broad rules like the Final Rule banning noncompete agreements or invalidating millions of contracts retroactively. Instead, the court said the FTC could only deem noncompete agreements unfair methods of competition through case-by-case adjudication. The court also concluded the Final Rule was unenforceable because the FTC lacked sufficient evidence to support a categorical ban on non-compete agreements and failed to consider less restrictive alternatives.

So, what’s next?

Click here to read the entire article.

November -- Federally Funded Projects and Minority/Women-Owned Businesses – A Legal Lesson

By Matthew W. Georgitis

It may seem obvious that construction companies and federal agencies, such as the Department of Transportation, are to adhere to the federal regulatory statutes for federally funded construction projects, but you would be wrong in assuming that the rules are followed, particularly when it involves a minority or women-owned business. Let’s be upfront and honest. The construction industry is still predominantly male and non-minority dominated, with growing, but still smaller in terms of number, involvement from minority/women-owned companies. In an effort to increase the participation of minority/women-owned companies, the federal government enacted several statutes that require a certain percentage of subcontractors on federally funded projects to be minority/women-owned companies. Without the participation of those companies, a general contractor’s bid should not be accepted by the DOT…unless all bids fall below the threshold or the GC can demonstrate they made a good faith effort to find a minority/women-owned subcontractor but there were none to be found. This statutory backdrop sets the stage for the following matter that was successfully prosecuted by the team at Spilman after a long, hard-fought battle lasting eight years.

Click here to read the entire article.

December – Executive Roundtable: Data Center Site Selection Implications

By Stephanie U. Eaton

With the enormous volume of electronic transactions, backup data storage, and use of Artificial Intelligence, the ever-growing number of data center construction projects presents significant issues for both the construction and energy industries headed into 2025. The energy load and reliability requirements for data centers have become central issues in various regulatory litigation matters involving electric utilities over the course of 2024, such as Integrated Resource Plan (IRP) matters in Georgia (see Docket 55378 before the Georgia Public Service Commission involving an IRP Update for Georgia Power Co.) and South Carolina (see Dockets 2023-8-E and 2023-10-E before the South Carolina Public Service Commission involving IRPs for Duke Energy Progress, LLP and Duke Energy Carolinas, LLP). Given the particular infrastructure needs for data centers, siting these centers can be of paramount importance, especially if proposed sites are not located near existing electric generation and/or transmission lines, and have insufficient land or other geographic barriers.

This article discusses the issue of site selection from the perspective of five data center industry leaders. These leaders unanimously opined that site selection is critical – and possibly the most critical – part of data center construction, as these highlights reflect:

  • Founder and CEO of Seattle metro data center specialist metrobloks, Ernest Popescu, explained, "If site selection is done poorly, it makes every downstream process more difficult, from constructability and salability to energization and renewable resources."
  • Danielle Rossi, Global Director – Mission Critical Cooling, Trane, expressed that “Site selection has changed greatly in the last few years. Limited power in primary markets has required new selections be based on available power and fiber causing site selections to be opportunistic.”
  • Phillip Marangella, Chief Marketing and Product Officer, EdgeConneX, opined that “Real estate is taking a back seat to power. Power availability and scalability are the primary considerations regarding site selection.”
  • Pat McGinn, Chief Operating Officer, CoolIT Systems, provided input on site selection evaluation, noting that “Increasingly, the industry is prioritizing sites in regions with favorable climates for natural cooling or abundant renewable energy sources, as these choices align with both operational efficiency and sustainability goals. However, emerging technologies such as liquid cooling and heat reuse are enabling greater flexibility, allowing operators to consider locations that may not have been viable under traditional cooling models.”
  • Steve Zielke, Discovery Energy/Rehlko, explained that while a “data center’s geographic location is increasingly becoming the most important aspect of a facility’s power and cooling solution, [] for backup power the opposite is the case . . . While utility grid supply is becoming less available and less stable, backup power supply is only getting stronger in terms of performance, support, and sustainability.”
  • Steven Carlini, Vice President of Innovation and Data Center, Schneider Electric, reported that “Before data center developers can receive a permit in most areas, they must show they have secured utility sources for power and water. In many cases they will be required to provide an environmental impact assessment that meets certain sustainability criteria, for example committing to a certain percentage of carbon free power or running their operations in a very efficient manner for electricity and water use.”

In light of these valuable insights, in the coming new year, Spilman’s Construction and Energy teams look forward to collaborating with clients involved in any aspect of data center construction to provide counsel regarding the myriad of construction, geographical, energy, permitting, environmental, and sustainability issues you are facing.

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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.

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