Issue 3, 2026
Welcome
Welcome to our third issue of 2026 of The Site Report – our construction law insights e-newsletter.
West Virginia State Bar Annual Meeting – Constitutional Conversations, Charleston, WV, April 19-20
As a sponsor, we invite you to join us for this top-tier event exploring the evolving landscape of constitutional law in a thoughtful and engaging way. Through practical presentations and meaningful discussion, speakers will share insights on core constitutional principles and how they intersect with today’s legal challenges. Click here to learn more.
DRI 2026 Employment and Labor Law Seminar, Boston, MA, May 20-22
This comprehensive seminar provides practitioners and HR professionals with a sharp, practical update on the legal and compliance issues shaping today’s workplace. Our own Eric Kinder is the Committee Vice Chair and will be speaking. Click here to learn more.
Spilman SuperVision Labor & Employment Symposium, Charleston, WV, June 18
2026 Workplace Masterclass: L&E Compliance, AI, & the Brave New Employment Landscape: A fast-moving, high-impact seminar for employers navigating the modern workplace. Join Spilman attorneys for our full-day SuperVision Symposium, designed to inspire your confidence in navigating complex employment decisions! This complimentary symposium is tailored for business owners, C-suite executives, HR professionals, and anyone who manages employees. Dive into a day of valuable insights on employment topics such as AI, investigations, litigation, immigration, labor law, accommodations, and much more. Spend the day with us and leave armed with strategies and solutions to tackle the ever-changing world of labor and employment law! Click here to learn more and register.
Stephanie U. Eaton - Co-Chair, Construction Group and Editor, The Site Report
Julian E. Neiser - Co-Chair, Construction Group and Chair, Litigation Department
Jonathan A. Deasy - Assistant Editor, The Site Report
No license or incorrect license limitation when you sign a contract, and that contract is unenforceable in North Carolina.
Why this is important: This decision from the North Carolina Court of Appeals makes it imperative that contractors know the licensing requirements and the limits on their license(s) before signing contracts, because many contracts that contractors and attorneys alike considered at least arguably enforceable under the prior precedent of Dellinger v. Michal, 92 N.C. App. 744 (1989) are not unambiguously not enforceable. The Court of Appeals distinguished and narrowed the prior ruling in Dellinger and ruled that if a contractor does not have an appropriate license at the time a contract is formed (including appropriate license limitations), the contract is unenforceable regardless of whether the contractor obtains or upgrades its license during performance of the contract.
Even though this case only dealt with the issue of general contractor license limitations (limited v. intermediate v. unlimited), it is important for every business and individual engaged in the North Carolina construction industry. The logic the Court used could be extended to general contractor classifications/specialties and to licenses issued by boards other than the North Carolina Licensing Board for General Contractors (e.g. NC State Board of Examiners of Plumbing, Heating, & Fire Sprinkler Contractors, NC Board of Examines of Electrical Contractors, NC Board of Architecture, NC Board of Examiners for Engineers and Surveyors, etc.). Therefore, everyone in the industry needs to be aware and revisit contracting practices to ensure compliance with this new guidance from the Court of Appeals. Spilman’s Construction Practice Group is ready to assist businesses and individuals across the industry in navigating the implications of this new decision. --- Steven C. Hemric
Labor Issues May Drive Construction Disputes in 2026
“Fundamental shifts in the U.S. construction labor market are expected to significantly impact project delivery in 2026, with industry experts warning of a rise in disputes and litigation despite only modest growth.”
Why this is important: Workforce shortages, rising wages, declining apprenticeship pipelines, and an aging labor force are expected to significantly increase project risk and drive a higher volume of disputes and litigation. Owners, contractors, and subcontractors facing these labor constraints are more likely to experience delays, cost overruns, and performance deficiencies, all of which create fertile ground for claims between project stakeholders. This trend ultimately highlights the need for proactive risk allocation in contract formation. Specifically, stakeholders should consider labor escalation clauses, schedule contingencies, and clearly defined performance standards. Dispute avoidance strategies and ADR provisions to manage a potential increase in labor-driven conflicts also must be given appropriate consideration and review. --- Jonathan A. Deasy
Data Center Moratorium Gains Traction Among Hill Progressives
“A handful of lawmakers is joining Vermont independent Bernie Sanders in wanting to pause new projects.”
Why this is important: Data centers continue to be a highly contentious issue in Washington, D.C., and across the United States. Last year, advocacy groups petitioned lawmakers to enact a national data center moratorium, citing concerns about energy, water, and other environmental issues. Led in part by Bernie Sanders, the idea of halting construction on data centers has begun to gain traction from both sides of the political aisle. Those in favor of the moratorium stress that it would allow regulators to catch up with the fast pace of development and provide time for studies to assess the effects of these centers on surrounding communities. Some members of Congress, like Senator John Fetterman, think that a pause in construction would mean the United States is surrendering in the AI race to China.
The White House supports the continued light-speed construction of data centers and is trying to get out in front of public concerns by pushing centers to source their own energy, thereby reducing the negative impact on communities, but communities continue to push back. Republican gubernatorial candidate for Florida, James Fishbank, has criticized his own party for putting major tech companies ahead of communities.
A moratorium on AI data center construction is one of the few issues that has supporters across the political spectrum, with federal and state implications. At the state level, support for business growth must be balanced against the counterintuitive notion that such growth could cause citizens to bear significant increases in utility bills. For the continued construction of data centers, all stakeholders will have to strike a balance that promotes innovation while also protecting communities and their resources. --- Nicholas A. Muto
Penzance to Invest $4B for West Virginia Data Center Build
“Once complete, the Berkeley County campus, about an hour northwest of Virginia’s Data Center Alley, will total about 1.9 million square feet and deliver 600 megawatts of power output.”
Why this is important: Penzance Management plans a $4 billion privately funded data center campus in West Virginia’s Eastern Panhandle, totaling roughly 1.9 million square feet and 600 megawatts of capacity. The project, which is expected to generate about 1,000 construction jobs, was driven largely by West Virginia’s business-friendly regulatory framework. Notably, the state is not contributing direct funding and is instead relying on private capital attracted by expedited approvals and energy policy advantages. This development underscores the increasing importance of regulatory arbitrage in site selection. For such projects, stakeholders must carefully evaluate permitting timelines, resource availability, and legislative incentives as material project risks and opportunities. It also highlights the need for sophisticated contract structuring around evolving infrastructure demands, as well as heightened due diligence and coordination with both public and private entities. --- Jonathan A. Deasy
Pa. Lawmakers Advance Bill to Help Towns Set Guidelines on Data Center Construction
“Rep. Mike Armanini (R-Elk/Clearfield) said data centers could be the next ‘industrial revolution.’”
Why this is important: Pennsylvania continues to be a state to watch in terms of stricter data center regulation as state lawmakers advance bills through committee to require data centers to report annual water and energy uses, as well as to create a model law that municipalities could use as a template to set local guidelines. These developments come as polls from earlier this year showed that residents and lawmakers are split on the issue: On one hand, many Pennsylvanians are concerned about the negative effects of data centers—like pollution or a strain on energy prices—and want to make sure that reporting is transparent so that the impact can be monitored. Others worry that the state will miss an opportunity for economic investment and growth if data centers are strictly regulated. While new regulations are not going to be put in place overnight, these developments could be an important consideration for companies planning to site projects in Pennsylvania in the future. --- Jamie L. Martines
Why the US is Now Constructing More Data Center Space Than Offices
“According to the U.S. Census Bureau, data center construction spending hit $3.6 billion at the end of 2025, compared with office construction spending, which dropped to $3.5 billion.”
Why this is important: U.S. construction spending has shifted decisively toward data centers, surpassing office development for the first time in 2025. The inflection reflects a structural reallocation of capital. American demand for new digital infrastructure is being driven by the exponential growth of consumer use of AI, while office construction continues to contract amid persistent post-pandemic changes in office and work culture.
Importantly, declining office vacancy rates are partly artificial, as firms decommission or repurpose excess space rather than expand footprints. In contrast, data centers represent long-duration, capital-intensive assets with sustained demand trajectories and multi-phase buildouts, all of which are currently underway at relative light speed. Put simply, there is a lot more capital available for data centers than office space.
The result is a reorientation of commercial real estate toward computing infrastructure, with data centers emerging as a core asset class underpinning the digital economy rather than a niche subsector. --- Jason Wandling
When AI Chatbots Hallucinate, Infrastructure Pays
“Chatbots can create authoritative-sounding reports based on flawed inferences, which can lead to liabilities that outlive a project, writes a senior lecturer at Georgia Tech.”
Why this is important: The adage “cut once, measure twice” applies to more than just the physical construction on a job site. It is also essential for anyone using artificial intelligence tools to generate daily reports, summarize project documents, or complete administrative tasks like compiling schedules or responding to emails, one expert in machine learning writes. While generative AI output often sounds good, critical errors could be lurking under the authoritative tone of a site report if the software misunderstands the data it was fed. This could lead to harmful and costly mistakes if humans do not check AI’s work or take care to train teams using AI software to understand how to use it responsibly. --- Jamie L. Martines
Drone Construction Inspections Powered by IoT & AI: Safer, Smarter Projects
“By combining drones with IoT sensors, cloud connectivity, and AI analytics, project managers can gain a comprehensive, real-time view of their sites, improving decision-making, safety, and overall efficiency.”
Why this is important: Drone-based construction inspections, enabled by AI, are transforming project oversight by replacing manual, error-prone processes with real-time, data-driven intelligence. Connected drones equipped with advanced sensors capture high-resolution imagery, thermal data, and 3D models, which are transmitted to cloud platforms for AI-driven analysis.
This integration enhances safety by reducing human exposure to hazardous environments and enabling automated detection of risks and compliance gaps. It also improves efficiency through rapid data collection, predictive maintenance insights, and tighter alignment between project progress and planning.
As adoption in industry continues, emerging capabilities (and concepts that are likely new to many people, especially lawyers and regulatory compliance officers) like digital twin integration, edge computing, and autonomous inspections position drone-based systems as increasingly important tools for a more predictive, cost-efficient, and data-centric construction industry. For the regulated community like manufacturing, with large facilities and thousands of implements that must be inspected frequently, drone inspections will likely be a godsend. --- Jason Wandling
Jonathan A. Deasy
Senior Attorney
Office 412.325.3306
jdeasy@spilmanlaw.com
Q. What are some of the differences between private and public construction projects?
The key difference is that public projects – funded by federal, state, or municipal entities – are heavily regulated under federal or state procurement laws and processes. These laws typically require competitive bidding, strict compliance with statutes (such as prevailing wage laws and minority participation requirements), and the use of specified project delivery systems that limit negotiation flexibility. They also often substitute mechanic’s lien rights with statutory payment bond remedies under frameworks like the Miller Act or analogous state laws. Conversely, private projects afford significantly greater contractual freedom. Private parties freely negotiate risk allocation, pricing structures, indemnity provisions, and dispute resolution mechanisms, with lien rights serving as a primary security tool for payment. Private owners and contractors are also subject to payment obligations under applicable prompt payment acts that differ significantly when compared to their publicly situated counterparts. These distinctions materially impact everything from project delivery and documentation to claims strategy, making it critical for contractors, subcontractors, and owners to understand the legal environment governing each type of project at the outset.
Q. How do these rules and regulations apply if work performed on public property – say, The White House – is financed through private donations?
Whether a federal or state procurement law applies to a particular project depends less on the project’s visibility and more on how it is funded and procured. Construction, repairs, and alterations to The White House and other federal buildings, albeit subject to important practical nuances, are no different since those projects are typically funded by Congress through various statutes. Because they’re federally funded and procured through a federal agency, the Federal Acquisition Regulation (FAR) applies to govern the solicitation, award, and administration of the construction contract. The FAR and other similar state procurement regulations, however, may not strictly apply when a project is funded through private donations and delivered outside the standard procurement process. Such is the case with respect to the East Wing Ballroom Project, which is emblematic of how the lines between a public and private construction project are easily blurred. Still, that does not mean such projects are immune from environmental, labor, and historical preservation laws – only that the regulatory steps designed to ensure compliance with those laws have not been undertaken. In short, the trigger of procurement regulations is not the construction project itself, but whether it is being procured as a federal or state contract.
Q. As someone well-versed in complex construction litigation, could you share your best practice suggestions for contractors, subcontractors, and investors facing potential issues, depending on the type of project investment?
The recent order halting construction of the East Wing Ballroom underscores a familiar but often underappreciated reality in complex construction projects: the source and structure of project financing can materially alter the regulatory landscape, the applicable procurement framework, and ultimately, the risk profile for all stakeholders. From a best-practices standpoint, contractors and subcontractors must engage in rigorous contract drafting and preconstruction due diligence. They should clearly allocate responsibility for permitting delays, regulatory compliance, and scope changes arising from governmental action. Clearly defined change order mechanisms, force majeure provisions tailored to regulatory shutdowns, and indemnity clauses in anticipation of future disputes. For investors and developers, early engagement with regulatory counsel and consultants is essential to map approval pathways and identify potential litigation risks, especially on high-profile or politically sensitive projects. Contingency planning with respect to project finances and scheduling can also provide a buffer against the kind of abrupt judicial intervention seen with respect to the East Wing Ballroom Project. Ultimately, projects that straddle the line between public and private involvement demand a heightened level of legal coordination and strategic foresight. Stakeholders should treat regulatory risk as a core project variable rather than a peripheral concern.
