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Welcome
Welcome to our sixth issue of 2026 of The Site Report – our construction law insights e-newsletter.
Again, we welcome several of our Summer Associates who have contributed to this issue.
We are pleased to announce that several of the firm’s practice groups and attorneys, including many in our Construction practice, were recognized in the 2026 edition of Chambers USA, a directory of leading law firms and attorneys. Chambers and Partners annually researches the strength and reputation of law firms and individual lawyers across the globe. The evaluation process includes interviewing lawyers and their clients, including influential general counsel at Fortune 100 companies, high-profile entrepreneurs, and significant purchasers of legal services. Considerable credence is given to the opinions of clients. Click here to learn more.
Thanks for reading.
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
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“Homeowners allege faulty construction, developers blame aggressive lawyers.”
Why this is important: A recent report highlights a growing wave of construction-defect claims against several of the nation’s largest homebuilders, including D.R. Horton, Lennar, and PulteGroup. Litigation appears tied, at least in part, to homes built during the pandemic-era housing boom, when builders faced labor shortages, material-cost pressures, and heavy reliance on subcontractors. Homeowners notably have alleged defects related to cracked foundations, mold, roof issues, and ventilation failures, among others. The reported financial exposure is significant: Lennar’s self-insurance reserve reportedly rose to about $337 million, while D.R. Horton’s legal-claim reserves increased to approximately $1.1 billion. This trend is important to keep an eye on because it underscores the litigation risk associated with compressed schedules, subcontractor oversight, quality-control documentation, and warranty-response practices. Industry representatives should view the surge in claims as a reminder to revisit contract language, arbitration provisions, insurance coverage, and defect-prevention protocols before isolated warranty issues result in systemic litigation. --- Jonathan A. Deasy
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“A greater range of industrial and agricultural equipment made with the metals will temporarily face a reduced 15% levy.”
Why this is important: Since the beginning of the Trump administration, tariffs and their impacts on construction costs have been a hot topic in the construction industry, and this article highlights and discusses some of the latest changes to the tariff framework. As the tariff environment continues to change, every company involved in construction, from project owners to general contractors to subcontractors and suppliers, needs to continually be aware of how tariffs are impacting/could impact their projects and needs to implement strategies to mitigate those impacts when possible. --- Steven C. Hemric
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“The report noted that climate action in the housing sector must go hand-in-hand with tackling the growing global housing affordability crisis.”
Why this is important: A new report from the United Nations Environment Programme and the Global Alliance for Buildings and Construction concludes that progress toward decarbonizing the global building sector has slowed despite gains in energy efficiency and renewable energy use. Building energy intensity declined 8.5 percent over the past decade, while investment in building efficiency reached $275 billion in 2024.
Nevertheless, operational emissions from buildings increased to 9.9 gigatons of CO₂, leaving the sector well off the trajectory needed to meet the Paris Agreement's climate targets. The report calls for governments to accelerate building retrofits, strengthen energy codes, phase out fossil fuel heating and cooking, and expand renewable energy deployment. With buildings and construction responsible for 37 percent of global carbon emissions and nearly half of all material extraction, the report underscores the growing importance of regulatory and policy measures affecting the built environment. --- Jason Wandling
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“According to the Environmental Protection Agency, energy service companies, or ESCOs, like Ameresco typically work on ESPC projects with 10- to 20-year contracts worth at least $1 million.”
Why this is important: Cities and counties across America are increasingly turning to energy savings performance contracts (ESPCs) for affordable, environmentally friendly building upgrades. Since ESPCs first came on the market decades ago, local governments have begun to trust ESPCs to assist in refurbishing old buildings, rather than the costlier option of demolition.
In ESPC arrangements, the contract stipulates that the government owns the equipment the energy service company installs, while the company maintains the equipment. Once an agreement is made, significant savings can be made. For example, the City of Orem, Utah saved $11.5 million on one project in 15 years. The savings are used to repay gaps in funding. With savings as big as these, the word is bound to spread further across the country. --- Charlie C. Long, Summer Associate
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“Solar and storage provided 90% of all new power added in the U.S.”
Why this is important: Solar has come a long way and is a fixture in integrated resource plans (IRPs) of many utility planners. In fact, the amount of power in the U.S. generated by solar (12.8 percent) has now surpassed power generated by coal (12.2 percent). As of May 2026, 45.5 terawatt hours of solar were generated, which is enough to power about 50 million households. This growth in solar energy has occurred despite administrative challenges and is expected to double in capacity by 2034.
Per the article, the growth of solar is important because it solidifies continued business opportunities for suppliers and contractors in the renewable energy space. It presents opportunities to evaluate the addition of battery storage to solar facilities to better meet peak demands utilities face. It requires careful planning and development of new solar sites, including consultation with real estate and environmental professionals to address site-specific properties and impacts. Our Construction Practice Group is here to collaborate with our partners in our real estate, environmental, energy, and other groups to assist with the planning for your existing or future solar projects. --- Stephanie U. Eaton
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“Much of the material price jumps stem from metals and lumber, though rising fuel and transportation costs are starting to push other input prices higher, added Raimond.”
Why this is important: As data center development surges across the country, construction and operational issues continue to persist. Labor, materials, and even infrastructure concerns have led to cost increases for these projects. For example, material costs have risen 4-7 percent just since the beginning of the year. Further, relative to the operative issues for data center expansion projects, community opposition continues as local resources continue to be exhausted during the construction and operation of these facilities. Despite rising costs and persisting issues, demand for data centers remains strong. As evidenced by the construction industry reaching a 10-month high in April for a backlog on these projects. These trends are expected to continue as data center development carries on with its momentum in the construction industry. --- Nathan T. Ellis, Summer Associate
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“As neighbors of the data center construction site in Mason County say they face issues with a lack of communication, disruptions and damage from the construction, and a lack of input, the state’s data center liaison said he is working to address those concerns.”
Why this is important: Mason County, West Virginia residents and other advocates have not only raised concerns about the noise of construction and the future noise or other environmental concerns that an operational data center could create, but they have also raised concerns about the efficacy of the data center certification process. Many of their concerns center around open communication and informing communities about what new data center projects have found their way into their backyards.
Issues with construction, like noise, traffic, road damage, and other concerns, are not isolated to data centers. Any construction project taking up hundreds of acres, like a data center, is likely to cause some interruptions to the day-to-day feel of a community. Beyond construction-related concerns, the pushback most communities have with incoming data centers is regarding the transparency of their planning and operation. Data centers are still largely an unknown for many, particularly with technology rapidly evolving. Further, there are no or minimal alerts to the general public that developers of data centers must make regarding data center certifications (the high-impact data center program provides for confidentiality of applications). Especially for areas outside of city zoning, developers could get away with no notices to the general public about what is being constructed. While there may not be legal requirements for notice to neighboring communities, the idea of being a good corporate citizen stands as a concern for future data centers. Providing advance notice to neighboring communities could be the difference for a data center that gains community approval as compared to widespread pushback. --- Andrew B. Komorowski, Summer Associate
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“As legislators in both parties — but especially in blue states — pitch everything from cost restrictions to water standards to outright bans on new data centers, unions are pushing back to protect what they see as the best opportunity for work they’ve had for years.”
Why this is important: Artificial intelligence (AI) has become one of the defining drivers of economic growth in the twenty-first century, fueling unprecedented investment in digital infrastructure across the United States. As demand for AI continues to accelerate, so too does the need for data centers. At the same time, these data centers have become topics of increasingly contentious debates over energy consumption, water usage, environmental impacts, and tax incentives. Recognizing the enormous economic potential of this emerging industry, organized labor has emerged as one of the strongest advocates for expanding data center construction. As Caleb Max, CEO of the National Artificial Intelligence Association, observed, “American AI leadership depends on data centers, and data center construction depends on skilled trades.” Rather than viewing AI infrastructure solely as a technology issue, labor organizations increasingly see it as a once-in-a-generation opportunity to create thousands of high-paying construction jobs, strengthen apprenticeship programs, and ensure that the benefits of the AI economy are shared by American workers.
Between March 2025 and March 2026, data center construction increased by more than 34 percent, accounting for nearly 30 percent of the total value of all construction projects nationwide. This rapid expansion has prompted states to reconsider how they regulate and incentivize these developments. California, for example, has advanced legislation designed to streamline permitting for data centers that satisfy specified environmental and labor standards without shifting additional costs onto consumers. Meanwhile, private industry is investing heavily in the future workforce, with companies such as Microsoft partnering with North America's Building Trades Unions (NABTU) to expand AI education and workforce training initiatives. Although fewer than 11 percent of construction workers belong to unions, the growing demand for skilled labor places increasing pressure on state lawmakers to strike a careful balance between environmental stewardship and the need to deliver the infrastructure necessary to sustain America's leadership in artificial intelligence. --- Carter P. Capehart, Summer Associate
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“The proposal would add conditions for the projects to receive a major state tax exemption and participate in preferential tax zone programs.”
Why this is important: As data centers are becoming increasingly more popular, governors are continually balancing the need to attract these centers for economic gain while managing concerns of potential environmental impacts on air and water quality, water supply, and energy prices. Governor Josh Shapiro is no different.
In Pennsylvania, Governor Shapiro has published a full version of proposed incentives to draw in data center developers. This includes major state tax exemptions on the 6 percent sales tax on purchases related to building and maintaining their campuses, participation in preferential tax zone programs and potential faster permitting for developers. To receive these GRID (Governor's Responsible Infrastructure Development) benefits, centers will need to meet certain GRID standards in their applications. This, while still in a preliminary stage, includes escalating requirements for the amount of clean energy data centers must build or buy to power their operations, creating a minimum of 200 construction jobs that involve hiring and training workers, submitting environmental sustainability plans, and paying $1.5 million annually in total wages following four years of operation. Data centers will have to submit their applications to the state Department of Revenue and the Office of Transformation and Opportunity for assessment.
Some call this proposal “strictly performative” because of evidence that large companies, such as Amazon, were told these GRID standards would be voluntary and were not intended to discourage data centers that would not comply with or implement these stipulations. However, individuals within the Shapiro administration stated that these communications were necessary to receive feedback as guidance on how to move forward with the policy development process.
While some remain unsure about the plan’s legislative prospects in making it through Pennsylvania’s Senate, they believe that this proposal is important for maintaining environmental, labor, and economic development. Conversely, others believe that this will introduce complexities that would ultimately make Pennsylvania less appealing for potential data centers. Others have also expressed concerns about the impact on communities, utility bills, and the environment.
These potential incentives were created ahead of Pennsylvania’s June 30, 2026 budget deadline. Their significance cannot be overstated for Pennsylvania’s economic development and environmental stability. Shapiro said in a statement earlier this summer that “this is about setting a higher bar for projects and ensuring development happens responsibly and in a way that benefits Pennsylvanians.” --- Stefany A. Kaminski, Summer Associate
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“This comes as the North Carolina General Assembly moves forward with discussing statewide data center regulations and restrictions that cap energy and water use.”
Why this is important: As universities and businesses invest more in artificial intelligence, decisions about building data centers have become increasingly significant. Community involvement and public policy play an important role in major development projects. According to surveys conducted by CBS News, many Americans oppose building new data centers because of concerns about their impact on natural resources, utility costs, and the environment. In the first quarter of 2026, U.S. businesses invested $44.7 billion in data centers, a 28 percent increase compared with the same period in 2025. This rapid growth demonstrates how quickly AI infrastructure is expanding. The growth of AI is not only driving technological innovation but also raising important environmental, social, and political questions. --- Jessica Blevins, Summer Associate
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