Welcome to our 11th and final issue of The Site Report for the year.

Tomorrow, Julian Neiser and Sophia Hines will be presenting "How Technology is Changing Construction Projects and the Practice of Law" at the Allegheny County Bar Association and Engineers' Society of Western Pennsylvania's CLE event. The three-credit CLE will cover rapidly evolving technology - including AI - and its impact on construction law. You can learn more here.

On January 11, 2024 at 2pm EST, Steven Hemric will be giving a presentation on “Subcontracting 101” at a joint meeting between the North Carolina Bar Association Construction Law Section and the United Minority Contractors of North Carolina. The format will be hybrid in-person/remote. More information will be provided at a later date.

We want to take a moment and sincerely thank you for reading The Site Report throughout the year. We hope it has provided information and insight regarding a multitude of construction issues. If you have any suggestions for 2024, please let us know. Your input is invaluable to the production of this publication.

We wish each of you a wonderful holiday season and a prosperous 2024!

Stephanie U. Eaton - Co-Chair, Construction Group; Vice Chair of Southern Offices, Litigation Department; Editor, The Site Report

and

Julian E. Neiser - Co-Chair, Construction Group; Vice Chair of Northern Offices, Litigation Department

“The bill known as the ‘Planned Offshore Wind Transmission Act’ has been working its way through the state legislature since April 2023.”

Why this is important: The northeastern United States has been the first area of the country with offshore wind development - with projects in Rhode Island, Connecticut, and Massachusetts - and New York is targeted for development of a wind farm about 20 miles off the coast of the City of Long Beach, on Long Island, New York. The project known as Empire Wind is being developed through a partnership between Equinor and BP. The partnership plans to construct the project consisting of up to 147 turbines providing up to 2.1 GW of wind energy in two phases. The Bureau of Ocean Energy Management (BOEM), which approved the project on November 21, 2023, estimated that Empire Wind 1 and 2 could power more than 700,000 homes each year. However, the transmission lines were to land on a public beach and a park in the city, which is where the project hit a state-level snag. 

Residents and local officials opposed the plan, which would have authorized the City of Long Beach to discontinue use of and alienate certain lands for the construction of an underground conduit and electrical distribution cable system to service the offshore wind facility. Thus, the Planned Offshore Wind Transmission Act (Act) was vetoed by Governor Kathy Hochul on October 20, 2023, who explained that “It is incumbent on renewable energy developers to cultivate and maintain strong ties to their host communities.” Had it passed, the Act would have required the state’s Energy and Research Development Authority (NYSERDA) to undertake a cost-benefit analysis, conduct a ratepayer impact study, and establish a plan to coordinate systems and transmission planning for an offshore grid. The veto came on the heels of the New York State Public Service Commission’s decision rejecting price adjustments for the Sunrise Wind, Beacon Wind, and Empire Wind 1 and 2 offshore projects.

New York has targeted 2030 as the year in which the state will have 70 percent clean energy. Offshore wind development would be a critical resource for New York to meet this stated goal. The situation in New York is another important example of how consideration of reasonable options for siting and transmission development at the state and at the local, community level will be crucial for states seeking to meet net zero carbon emission goals. While “NIMBY” challenges are not uncommon for projects such as Empire Wind, the more state governments are able to address local-level concerns on the front end, before legislation is passed to push forward projects that will certainly have local impacts, the less chance the legislation will have of derailing plans to meet clean energy goals intended to address national, and global, climate change concerns. --- Stephanie U. Eaton

“The Pennsylvania Superior Court recently reaffirmed the longstanding requirement that ‘materials’ subject to a mechanic’s lien claim be ‘incorporated’ into construction.”

Why this is important: On March 9, 2022, Appellant, R.A. Greig Equip. Co., filed a mechanics’ lien claim against Appellee, Mark Erie Hospitality, LLC, to secure a lien against two adjacent properties of Appellee’s located in the City of Erie, Pennsylvania. The adjacent properties are referenced in one or more subsequent filings as the “hotel” parcel and the “vacant” parcel. The claim is for the alleged window sticker replacement costs of $135,311.00 for a piece of construction equipment, a “Telehandler-2019 Haulotte LT 9055 SN#2065360” (Telehandler) leased by Appellant to Appellee. The claim is also for certain unpaid rental charges of $56,392.00 for the Telehandler. On November 15, 2022, Appellee filed a preliminary objection to Appellant’s mechanics’ lien claim. On December 15, 2022, Appellant filed a release of mechanics’ lien claim as to the vacant parcel. Hence, the scope of Appellant’s preliminary objection was limited to the lien against the hotel parcel.

On January 25, 2023, the trial court sustained Appellee’s preliminary objection to the mechanics’ lien and struck the lien because it concluded that the Telehandler and rental payments were not “materials” within the definition of the Mechanics’ Lien Law. 49 P.S. §§ 1101-1902. On appeal, the Court reiterated the prevailing Pennsylvania case law and statutory text which recite that, to constitute “materials” within the meaning of the statute, the “fixtures, machinery and equipment” must not only be “reasonably necessary,” they must also be “incorporated into the improvement,” i.e., actually used in the building structure.

The Court further explained that it is undisputed that the subjects of the lien, i.e., the Telehandler and rental payments, were not “incorporated into the improvement". Thus, as a matter of law, the Telehandler and rental payments do not constitute “materials” which are subject to a lien under the Act at 49 P.S. Section 1201(7) and the trial court correctly sustained Appellee’s preliminary objection on this basis. --- Julian E. Neiser and Sophia L. Hines

“An Act to reorganize the Building Code Council and create the Residential Code Council, the amend various provisions of the North Carolina State Building Code and Land Development Regulations, and to increase the project cost minimum for applicability of general contractor licensing requirements.”

Why this is important: While the primary purpose of this broad update was to reorganize the North Carolina Building Code Council, create a new Residential Code Council, and delay planned changes to the Residential Code - hot-button issues that will have long-term impacts on residential construction in the state - it also made a plethora of practical updates to the licensing and permitting statutes. Even though these changes did not get the same attention delaying the Residential Code changes received, they have a more immediate impact on the day-to-day of residential construction work. Two of these changes getting more recent attention are the statute’s increases to the project value thresholds for contractor licensing and permitting. Under the new statute, projects valued under $40,000 do not require contractors to hold a general contractor’s license. The statute also increased the “minor activities” permit threshold - an exception for some lower-value projects from permitting requirements - from $20,000 to $40,000. These changes relax the oversight on smaller projects and could help reduce costs on those projects. However, homeowners should be wary of contractors that deliberately try to skirt licensing or permitting requirements. Similarly, contractors should review their internal processes to ensure they are complying with the new changes and taking advantage of new efficiencies when possible --- Steven C. Hemric

“The proposed ‘categorical exclusions’ would speed project reviews, the Department of Energy said.”

Why this is important: On November 16, 2023, the U.S. Department of Energy (DOE) proposed new and revised “categorical exclusions” for environmental reviews of projects located on federal land. Projects that fall within the new categorical exclusion will not require Environmental Assessments (EAs) or Environmental Impact Statements (EISs). Certain solar, energy storage, and rebuilt or upgraded transmission line projects would fall within the new and revised categorical exclusions. Battery and flywheel energy storage systems would be eligible for the simplified review process if built on or next to already disturbed land. Moreover, the DOE proposed allowing developers to relocate power lines located on land already developed or allocated to their power line, requiring upgrades or rebuilds to incorporate best practices to protect local environments, and removing a 20-mile limit on the length of existing power lines eligible for simpler environmental reviews. Finally, the 10-acre limit for solar projects on already-developed land would be removed. These proposals are important to the United States’ target of reaching net zero emissions by 2050 at the latest, and are expected to reduce time and cost for the environmental review process, improve resiliency and reliability of electric grids, and increase generation by renewable resources on federal lands. --- Stephanie U. Eaton

By Lisa M. Hawrot

Schools across the county use a myriad of different surveillance technologies, including school communications monitoring, online monitoring, web filtering, weapon detection systems, and remote video monitoring. According to a survey by the American Civil Liberties Union (ACLU) highlighted in a K-12 Dive article, 87 percent of 14 to 18-year-olds are aware of technologies used by their schools. The question is whether or not these technologies actually improve school safety or undermine a parent’s trust in the school and its teachers.

Click here to read the entire article.

“With 50,000 solar panels that will produce 18.9 megawatts, it is the largest of five planned facilities by the utility.”

Why this is important: The article notes that First Energy intends to go live with an 18.9 MW solar farm located in Monongalia County, West Virginia, by the end of 2023. This is the first such solar energy project in First Energy’s West Virginia service territory, and the company plans to move forward with construction at two additional sites in the near future. The article also notes there are two further sites that may be constructed if sufficient support is gained for the project, which was a condition the West Virginia Public Service Commission imposed on First Energy as a pre-condition to starting construction. Because many companies have expressed a desire for some of their energy mix to come from renewable resources, First Energy’s decision to construct this (and other) solar farms could help attract new business to West Virginia, which continues to be dominated by coal as its primary energy source. Customers take service from these projects by purchasing the solar renewable energy credits (SRECs) generated by the solar farm. Ensuring these resources are not only available but priced competitively are the keys to relying upon them for economic development; that could be further enhanced by allowing end users to acquire these resources not just from FirstEnergy but also from the competitive market or third-party producers of renewable power. --- Carrie H. Grundmann

“NRDC has teamed up with the International Brotherhood of Electrical Workers Local 32 in a joint legal filing that asks the Ohio Supreme Court to reverse a decision of the Ohio Power Siting Board, which found that a proposed solar project was not in the ‘public interest’ and thereby was denied certification.”

Why this is important: A major case on the approval of large-scale solar farms is now before the Ohio Supreme Court and has found unions, environmental groups and businesses all supporting the 300 MW farm. The Ohio Power Siting Board (OPSB) found the new solar farm was not in the public interest. Now, a broad array groups want the decision overturned. Unions want the farm approved for jobs, environmental groups support CO2 free power generation, and local governments want $80 million in tax revenue the farm will bring over its life. The case should be watched closely. Many solar farms across the country have faced difficulty in getting permits due to local land owners opposing the solar farms. This case will determine whether other benefits such as jobs, environmental benefits and tax revenue are in the greater public interest to mandate approval of solar farms. --- Mark E. Heath

In every issue of The Site Report, we highlight one of our Construction Practice Group attorneys. As we wrap up 2023, we want to take a moment and feature the group as a whole.

At Spilman, we take our commitment to client service very seriously. We hire the best and brightest to help our clients through every business scenario. Our Construction Practice Group is comprised of seasoned attorneys who focus on all aspects of construction law – from contracts, site selection, permitting and zoning to project management to claims resolution. Our Construction Practice Group partners with other Spilman practitioners when needed to provide our construction clients solutions to financial, cybersecurity, environmental, tax, corporate, labor and employment and safety issues, to name a few.

Our core group of construction attorneys collectively has decades of experience with a wide variety of construction matters. Moreover, this core group of attorneys has obtained professional recognitions that symbolize the group’s commitment to the law. 

As a whole, Spilman was named to the 2024 "Best Law Firms" list for Construction Law by Best Lawyers - in addition to 57 areas of law throughout the firm’s footprint. Several of the Construction Practice Group’s attorneys were selected by their peers for inclusion in the 2024 Best Lawyers list, including: Julian E. Neiser, Stephanie U. Eaton, Carl H. Cather III, F. B. Webster Day, Lee D. Denton, Travis H. Eckley, Matthew P. Heiskell, Steven C. Hemric, James E. Simon, John R. Teare, Jr., and Gerald M. Titus III. Clifford F. Kinney, Jr. was selected as 2024 Best Lawyer of the Year in Litigation – Construction for Charleston, West Virginia. Recognition by Best Lawyers is based entirely on peer review.

Spilman also had attorneys named to the 2023 Pennsylvania (Julian Neiser), North Carolina (Lee Denton and Steven Hemric), and Virginia (Robert Ziogas) Super Lawyers lists. The objective of the Super Lawyers selection process is to create a credible, comprehensive, and diverse listing of outstanding attorneys from more than 70 practice areas.

In addition to accolades received from nominating agencies, our attorneys are very involved with professional organizations and we are members of those organizations’ construction-focused committees when possible. Some of these include:

• Allegheny County Bar Association, Construction Section
• American Arbitration Association’s Roster of Arbitrators & Mediators
• American Bar Association, Construction Forum
• Construction Law Society of America
• Defense Research Institute, Construction Law Committee
• Defense Trial Counsel of West Virginia
• Diversity Law Institute
• Energy and Mineral Law Foundation
• Federal Bar Association
• Federation of Defense and Corporate Counsel, Construction, Energy Utilities Law, and Products Liability Committees
• Forsyth County Bar Association
• Greater Winston-Salem, Inc.
• International Association of Defense Counsel
• Kanawha County Bar Association
• Litigation Counsel of America
• Monongalia County Bar Association
• North Carolina Bar Association, Construction Law Section Council
• Ohio Valley Construction Employers Council
• Roanoke Bar Association
• South Carolina Bar, Construction Section
• Trial Law Institute
• Virginia Bar Association
• West Virginia Bar Foundation
• West Virginia Housing Institute
• West Virginia Real Estate Lawyers Association

We encourage you to learn more about our Construction practice and our members. At Spilman, understanding that our value is in the experience our clients receive, we believe in a client-first philosophy—selfless, hands-on, relentless and collaborative—and we have codified that philosophy as promise to our clients. From Spilman, you can expect a higher return on the relationship. You can expect different.