October 31, 2025

The Site Report - Construction Industry Insights, Issue 10, 2025

Jonathan Deasy, Stephanie Eaton, Steven Hemric, Jamie Martines, Julian Neiser, Suzanne Pierce, Shane Riley, Jason Wandling

Spilman Thomas & Battle, PLLC

+ Follow Contact

Facebook

Send

Embed

Issue 10, 2025

Welcome to our tenth issue of The Site Report for 2025! In this edition, we address an interesting case voiding a design-build contract for failure to comply with architect’s licensure law, a look at particularities regarding data center contracts, the latest regarding a Michigan case involving a ‘defective’ pumped hydro upgrade, an update on the Department of Transportation's DBE Program, how outdated tech is impacting AI infrastructure, how data center construction and infrastructure are helping alleviate backlogs, the impacts of the AI boom in Pennsylvania, and the tariff effect on the industry.

West Virginia Environmental Hot Topics

Join Trinity Consultants and our own Jason Wandling and David Yaussy on November 18 in Charleston, West Virginia, for this complimentary training designed to help facilities and environmental professionals stay ahead of evolving requirements in West Virginia. Click here to learn more.

Thank you for reading.

Sinclair v. Marco Polo Real Estate - Voiding Design-Build Contract for Failure to Strictly Comply with Architect’s Licensure Law

By Jamie L. Martines

A Pennsylvania trial court has found in favor of the owners of a residential construction project who sued their builder for failing to comply with the Architects Licensure Law, rendering the project’s contract void and signaling that failure to expressly name the licensed architect overseeing the project in the contract will violate the statute.

Click here to read the entire article.

For Data Center Contracts, It’s All About the Fine Print

“Construction attorneys share how contractors can protect themselves in the high-demand, fast-track environment.”

Why this is important: Construction in the data center sector is booming in the U.S., with large investments (for example, Apple’s $20 billion commitment in Pennsylvania) and major players getting involved. On the surface, a data center structure may resemble a warehouse, but the contract risk is significant. These projects demand sophisticated power, utility, and technology systems; many are delivered under EPC (engineering, procurement, construction) or turnkey models; and they are typically on fast-track schedules that put a heavy burden on contractors.

Construction lawyers engaged in a data center project, therefore, need to focus on contract language in this niche area to protect contractors. Because delivery schedules are compressed and the technical/regulatory demands are elevated, clauses addressing scope changes, supply chain disruption, material cost escalation (e.g., tariff exposure), specialized labor/immigration compliance, and safety/OSHA risk in high voltage, fast build environments are critical. As such, failure to ensure proper risk-allocation and protections in these areas could lead to disputes or cost overruns in this rapidly expanding segment of construction. --- Jonathan A. Deasy

Michigan Utilities’ US$800 Million Case Over ‘Defective’ Pumped Hydro Upgrade Goes to Trial

“Consumers Energy and Detroit Edison (now known as DTE Energy) appointed TAES to overhaul the 1,875MW Ludington Pumped Storage Plant 15 years ago.”

Why this is important: This breach of contract action arises from repairs made to the Ludington Pumped Storage Plant, which is a Michigan hydroelectric plant that opened in 1973 and features six 312 MW pump turbines. The plant is owned by DTE Electric Company. They contracted with Toshiba Energy Systems in 2010 to overhaul the plant. Toshiba’s provided a guaranty with respect to the contract, in which Toshiba agreed to “return the Plant to as nearly an as new condition as possible” and allow the plant to operate with a “minimum thirty (30)-year service life” with “only minimal routine maintenance.”

Plaintiffs allege that TAES’s work is defective in multiple respects. The work, which began in 2015, resulted in operational issues that left several units inoperable for 90 percent of the year.

Construction has started on many new energy production projects since the injection of federal money in the first half of this decade. As some of these projects gain steam or even near completion, more and more of these kinds of claims with enormous damages claims will crop up. This suit alleges more than $800,000,000 in damages.

On September 26, the district judge ruled on several outstanding discovery motions to exclude expert witness testimony on both sides. On October 21, the court entered an order limiting each side to 77 hours of witness testimony at the trial. Both parties appear ready to try the case for at least a month. --- Jason E. Wandling

Changes to the DBE Program Via This Interim Final Rule (IFR)

Why this is important: Since the new federal administration took over and the U.S. Supreme Court ruling against affirmative action programs in higher education, many in the industry have anticipated significant changes to the DBE program and certification process. Some expected the changes to come via litigation, and The Site Report has reported multiple times on updates from the Mid-America Milling Company case in the Eastern District of Kentucky that looked to be the avenue through which the changes would come. In fact, earlier this year, DOT proposed a settlement in the Mid-America case that would have forced implementation of wide-sweeping changes to the program via an agreed injunction. Following that proposal, however, the Supreme Court ruled that Federal District Courts do not have the authority to enter nationwide injunctions. Now, the administration has also moved to implement its proposed changes to the DBE program via this Interim Final Rule (IFR), which will have immediate, far-reaching impacts. The entire DBE certification process is being revamped to omit the prior race- and sex-based presumptions of “disadvantaged” status, and all currently certified DBEs are required to undergo a re-evaluation process. This process could result in businesses being de-certified as DBEs, as well as new applicant businesses that would have been certified facing denials of certification. In the interim, DBE goalsetting and compliance have been suspended, and a lot of uncertainty remains on exactly how existing contracts/projects will be impacted as the re-/de-certification process moves forward. As the IFR’s impacts become clearer, Spilman’s Construction Practice Group will be tracking the situation closely and will be ready to assist businesses throughout the contracting chain in navigating the changing landscape. --- Steven C. Hemric

Race to Build Out AI Infrastructure may be Hampered by Outdated Construction Tech

“More than a quarter of construction teams still rely on tools like Excel and PDFs.”

Why this is important: AI data centers are in high demand. In turn, that means architecture, engineering, construction, and operations industry professionals are in high demand to get these projects off the ground. But here’s the catch: The professionals tasked with building the AI infrastructure to power the future are stuck in the past, according to this article and the underlying white paper describing survey results that show that about 27 percent of architecture, engineering, construction, and operations industry professionals “still rely on email, spreadsheets and PDFs as their primary digital tools.”

According to the article, digital tools like email, Excel spreadsheets, and PDFs are not robust enough to support the successful completion of large-scale, complex projects like AI data centers. That puts those projects at risk of falling behind schedule and increases the likelihood that mistakes will be made. Both scenarios put architecture, engineering, construction, and operations industry professionals in danger of costly litigation if they fail to deliver on these projects for their clients. That’s why it is important for industry professionals to consider how they can safely and securely update their internal technology to meet the intense demands of the AI data center construction boom. --- Jamie L. Martines

Data Centers, Infrastructure Prop Up Construction Backlog

“Public works and digital infrastructure sustained pipelines as private projects lost momentum over the past year, according to ABC’s backlog report.”

Why this is important: The Associated Builders and Contractors reported that the U.S. construction backlog held steady at 8.5 months in September, driven largely by growth in data center and infrastructure projects despite slowing activity in other private sectors. Roughly one in five contractors is now engaged in data center work, which averages about 12 months of backlog—notably higher than the industry average. While this digital and public-sector demand is stabilizing construction pipelines, the Associated Builders and Contractors warned that federal funding risks, such as potential government shutdowns, could disrupt infrastructure projects reliant on federal dollars.

For construction lawyers, these trends signal both opportunity and heightened risk. Longer project durations increase exposure to regulatory shifts, cost escalation, and scope changes, emphasizing the need for carefully drafted construction agreements. The surge in data center projects also introduces new legal challenges related to technology integration, power reliability, and environmental compliance, while infrastructure work requires attention to funding contingencies and suspension provisions. Ultimately, as data and infrastructure construction drive industry growth, lawyers must anticipate disputes and manage evolving contractual risks inherent in every data center project. --- Jonathan A. Deasy

The AI Boom is Coming for Pennsylvania. How will Lawmakers Respond?

“Pa. trails only Texas and Virginia in announced AI buildout.”

Why this is important: Pennsylvania is rapidly becoming a leading destination for artificial intelligence and data center development, ranking just behind Texas and Virginia in announced projects. Major companies such as Microsoft and Amazon are investing heavily in the state, bringing promises of jobs and infrastructure improvements. At the same time, the expansion is creating significant challenges, particularly for the power grid and electricity consumers.

Data centers consume large amounts of electricity, and their growth has already contributed to higher costs in regional power markets. PJM, the state’s grid operator, reported a record $16 billion in a recent capacity auction, partly due to the added demand from new facilities. Consumers are feeling the impact, with utility rates rising 5 to 12 percent across much of Pennsylvania and as much as 40 percent in some areas.

Lawmakers are beginning to explore policy responses. Senator Katie Muth has introduced legislation that would require high-load users to pay for transmission upgrades instead of shifting costs to ratepayers. Other proposals focus on streamlining permits, updating zoning, and offering tax incentives. Governor Josh Shapiro’s “Lightning Plan,” which emphasizes faster permitting and clean energy investment, could also indirectly support the sector.

Progress is complicated by political gridlock. Republicans control the state Senate, while Democrats hold the House and the Governor’s office, making consensus on energy policy difficult. Environmental advocates warn that Pennsylvania has a history of prioritizing industry growth without fully considering impacts such as water use, emissions, or local siting.

In the meantime, regulatory bodies may play a larger role. The Public Utility Commission is reviewing a tariff that would require data centers to cover their own transmission costs, while PJM is considering rules that would push large users to bring additional power resources online.

The state faces both opportunity and risk: AI-related investment could drive economic growth, but without clear policies, it may also increase costs for consumers and lock in fossil fuel dependence. --- Shane P. Riley

New Tariffs on Lumber, Wood Product Imports Add Headwinds to Housing Market

"The U.S. imports roughly one-third of the lumber it consumes because America does not produce enough softwood lumber to meet domestic demand."

Why this is important: On September 30, 2025, the United States Commerce Department imposed a 10 percent tariff on all timber and lumber imports and a 25 percent tariff on kitchen cabinets and furniture, with the tariffs rising to 30 percent and 50 percent, respectively, on January 1, 2026. The agency made a finding that imports of lumber and furniture constitute a national security risk.

The United States imports roughly one-third of the lumber it consumes because America does not produce enough softwood lumber to meet domestic demand. This National Association of Home Builders editorial piece argues that the new tariffs will dampen housing construction activity and increase construction costs for those who still build. The NAHB also noted that, though the tariff is designed to protect American lumber firms, recent data show that U.S. sawmills are only operating at 64 percent of capacity and will require years to ramp up production. --- Jason E. Wandling

Featured Attorney Question and Answer

Suzanne Y. Pierce

Member

Roanoke, VA

office 540.512.1801

spierce@spilmanlaw.com

Q: As we all know, the construction industry can be a fertile area for groundbreaking products and processes. As someone extremely well-versed in intellectual property law, what are your best practice suggestions for those embarking into the IP realm?

A: This is a great question, as the construction industry is indeed increasingly ripe for innovation, from sustainable materials to automation and digital design. Innovation is also vital to this industry as it enables workers to collaborate more effectively, minimizes labor costs and maximizes people resources, while delivering projects on time and within budget. If you have developed your very own groundbreaking idea and are wondering how best to protect it, I have the following recommendations for you:

1. Begin with a strategy.

All too often, clients rush to register a patent or trademark. However, there is great value in taking the time to develop a strategy to protect your idea. First, identify what makes your innovation unique, how it supports your business goals, and how it fits into the competitive landscape. IP protection should first and foremost serve your commercial objectives. Once you have identified these key aspects, this is a great time to start a conversation with an IP attorney and get assistance with the next steps.

2. Document thoroughly.

Keep records of development, prototypes, and contributors. It is key to use and obtain invention assignment agreements from collaborators and employees to secure your ownership of the idea, and record invention dates to prove priority and avoid disputes.

3. Maintain confidentiality.

Always enter into a Non-Disclosure Agreement before disclosing information to collaborators or contractors, share only what’s necessary, and clearly mark and store confidential documents.

4. Use layered protection.

Your idea will likely include a blend of IP types:

Patents for technical inventions (materials, systems, machinery).
Design rights for visual or structural features.
Trademarks for brand identity.
Copyright for plans, software, and BIM models.
Trade secrets for confidential processes or formulations.

Combining these creates broader protection.

5. File patents strategically.

It is key that you time your patent filings carefully – make sure to avoid early public disclosure through project tenders, presentations or marking before filing; use provisional or priority filings to secure an early date while you refine your invention; and wisely balance speed vs. secrecy. Early filings can help secure your rights; however, rushing without a solid idea in place can weaken the protection you end up obtaining.

6. Monitor and enforce.

Watch services are available through third-party providers to track competitor filings and market activity. It is vitally important that you address potential infringements early through cease and desist letters.

7. Collaborate wisely.

Ensure joint development agreements clearly define background IP ownership and who will own the rights to the improvements. Use licensing or partnerships to expand into new markets while maintaining control of your IP.

8. Build an IP culture.

Educate your teams about confidentiality and invention disclosure, reward employee innovation, and promote IP awareness across departments.

9. Review regularly.

Review your IP portfolio regularly to ensure you are meeting all deadlines for registered trademarks, patents and copyrights. Identify underused IP, potential licensing opportunities, and outdated protections. A disciplined, strategic approach to IP will ensure that you can effectively safeguard your ideas, strengthen your market position, and maximize the commercial value of your innovations.

Send Print Report

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.