The Site Report - Construction Industry Insights, Issue 8, 2025

Issue 8, 2025

Welcome to our eighth issue of The Site Report for 2025! In this edition, we address tariff volatility, the effect of AI on the construction industry, solar projects in Ohio and Texas, higher education and modular construction, how states rank with construction red tape, and the sticky process of communities accepting data centers.

Thank you for reading.


Managing Tariff Volatility in Construction Contracts

“To mitigate the risks that unpredictable tariffs cause, construction contracts need to be updated with specific clauses—such as price escalation and force majeure—that account for the financial impact of changing trade policies.”

Why this is important: It has always been important for all parties to a construction contract to actually read and understand the relevant contracts for a project BEFORE signing them. However, the very real potential for tariffs to impact parties’ expectations regarding the pricing, timing and availability of construction materials--including lumber, steel, copper, aluminum, finished electronic goods, and renewable energy products--is evident. Moreover, the impacts of tariffs can be delayed for long periods of time, and rapidly changing tariffs on a single construction material can result in price swings that are atypical during the course of a project.

As contracting parties enter into negotiations over contract terms and conditions, or are handed a form contract to sign, there are many parts of the contract to consider, ask about in pre-construction meetings, and resolve to the extent possible before construction activities begin:

  1. Does the contract consider the imposition of tariffs during a project to be a “force majeure” event? If not, it may be important for the parties to add that to the list of force majeure events, especially since contracting parties may argue that tariffs are “foreseeable” now (and therefore, would fall outside of force majeure clause protections). If a “change in law” is part of the “force majeure events,” it will be important to specify that a “change in law” includes the imposition of tariffs.
  2. What construction materials are being specified, and what is the source country for those materials? If there are tariffs related to a particular material, that can impact the availability of the material for use on a given project. Even if there is a force majeure clause, the parties should analyze and plan for potential use of alternative materials, and include provisions in the contract that would allow the parties to mutually select appropriate alternate materials.
  3. Are there tariffs currently being imposed on the construction materials specified in the contract documents? If so, expect higher prices to purchase and incorporate those materials, and reflect those expectations in bidding. If not, or not yet, if there is a chance for a tariff imposition given the type of material it is (and the existence of tariffs on like materials or news related to potential tariffs for that material), then be sure the contract has a price escalation clause to address pricing impacts.
  4. What is the construction sequencing? Depending on the construction sequencing, a delay in one subcontractor’s materials can have a substantial impact on the other subcontractors’ ability to begin work. Communication and collaboration among the contractor and subcontractors will be important for potentially adjusting sequencing.
  5. Does the contract have clauses addressing damages for delay? If so, and there is no corresponding force majeure clause, then any delay in securing specified materials as a result of tariffs could result in the affected subcontractor/supplier facing damages claims even if the situation was out of their control.
  6. Does the contract address requests for price adjustments during the project, and if so, who bears the risk of increased prices? Often, guaranteed maximum price (GMP) or fixed-price contracts do not allow for pricing changes, which puts the risk of price escalations on the parties supplying those products. Therefore, if the contract is a GMP or fixed-price contract, the bidding is even more important.
  7. Is there a provision in the contract that addresses cost-tracking? If not, then this type of provision can help the parties share information and identify pricing impacts early on, as opposed to later in the project, where mitigation of tariff-related price impacts forces the parties to resort to claim resolution.
  8. What dispute resolution provision does the contract outline? Adding informal meetings among relevant parties and/or mediation as prerequisites to filing a legal action is advised, since those options provide opportunities to mitigate unforeseen impacts that tariff impositions can have on a project.

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


An Ohio Solar Project Overcomes Local Opposition and Misinformation

“A contested solar agrivoltaics project avoided having its permit denied by Ohio regulators, likely thanks to the neutral stances of a county board and one of its townships.”

Why this is important: The 120 MW Frasier Solar project in Ohio has received final local government approval. The 840-acre project faced strong initial local opposition and opposition by fossil fuel groups tied to natural gas. A change in opposition by one county led to the project’s approval. Between 2023 and 2024, opposition to solar farms has increased by 32 percent by one survey, and remains a strong impediment nationally. --- Mark E. Heath


This $900 Million Solar Farm in Texas is Going 100% to Data Centers

“Once it’s up and running, every bit of Clear Fork’s electricity will go to Meta Platforms under a long-term contract.”

Why this is important: A 600 megawatt solar farm is under construction near San Antonio, Texas. Once it comes online in 2027, all of the energy it generates will go to Meta to help run its data centers. The article reports on how this contract for the purchase of the entirety of the energy reflects the “growing demand for renewable power across North America from blue-chip companies involved in technology and data center operations.” Technology companies like Meta, Amazon, and Google have been racing to obtain renewable energy contracts to power their fleets of data centers, which use vast amounts of energy. Last year, the U.S. had over 5,000 data centers, and that number is continuing to rise. The increase in the number of data centers will bring an increased amount of legal issues, including site selection, permitting, and data security. If your company has questions about any of the legal issues surrounding data centers, to contact our Construction Practice Group, who would collaborate with the firm’s Technology Group, to offer creative and thoughtful analysis for the project. --- Nicholas P. Mooney II


Higher Ed Ramps Up Modular Construction

“Standardization and a factory-like quality control process could lead to fewer problems once buildings are put into service, a Suffolk executive says.”

Why this is important: Modular construction is not new. However, it is becoming more mainstream--accounting for over 5 percent of total construction activity in the U.S.--and for good reason. Without the need to coordinate and stage all building materials and equipment on site, without the impact of varying weather conditions, and the problem of coordination of tradespeople who do not normally work together on similar jobs each day, modular construction can certainly save facility owners time and money over traditional stick-built construction. Moreover, in the more controlled environment of modular construction, plumbing, electrical, and mechanical connections throughout the building can be planned and even tested before the “modules” are transported to a site. The more frequently certain module models are built, the more efficient the modular construction company can become.

Often, schools and colleges have time constraints in construction to avoid significant disruptions in the classrooms, laboratories, dorms and campus facilities. In addition, once the facilities are in use, school leaders can find it difficult to schedule building inspections and repairs that allow learning to continue. One way educational facility construction can minimize construction-related challenges--both from initial construction and from an operational and maintenance perspective--is to incorporate modular construction on campuses.

There are approximately more than 250 modular manufacturing companies in North America, one of which is Suffolk Construction. James Stanley, Executive Vice President and Los Angeles Division Manager for Suffolk Construction, was interviewed for the referenced article. Mr. Stanley observed that California Polytechnic State University plans to address expanding student housing needs with modular housing to bring 3,000 additional beds to the university over 10 years. Given the evolution of modular construction that can incorporate more sophisticated designs for good value to the owner, Mr. Stanley points out that modular construction can incorporate standardized base components that may be enhanced or “stacked” on site. According to Mr. Stanley, “Cal Poly could expect to get the main structure for a 100-unit building completed in seven days – 30% quicker than if stick-built – using the modular method, with roughly corresponding savings in cost.

Having worked for a modular home contractor and watched entire homes being constructed in assembly line fashion inside controlled warehouses near Martinsville, VA, I can personally attest to the time and cost savings of this construction process. If you have questions regarding the potential use of modular construction on your next project, give our construction team a call. --- Stephanie U. Eaton


Best, Worst States for Construction Permit Red Tape

“Several states in the South rank as the most efficient, according to a new report that aggregates data from building departments, zoning boards and state environmental agencies.”

Why this is important: Navigating local construction permitting procedures can be a significant hurdle to moving forward with a project, so it is important to be prepared and anticipate when and where extra time might need to be built into project timelines. This knowledge is especially critical against the backdrop of the Trump administration’s efforts to accelerate permitting for projects valued at $500 million or more, according to the article, because those efforts could change permit review periods to the tune of months or years. Avoiding permitting hang-ups will help construction project managers keep projects on track and avoid disputes and expensive litigation later in the process. Three states in the Spilman footprint – Florida, North Carolina, and Virginia – all rank in the top 10 states for “permitting efficiency,” according to the Red Tape Index, a report that measured “how quickly and effectively states process building permits and zoning changes.” Ohio and South Carolina trailed the top ten at 11th and 12th, respectively, while Pennsylvania and West Virginia hovered near the bottom of the list at 29th and 31st, indicating that project timelines in those states might require some extra planning and attention when it comes to managing local permitting processes. --- Jamie L. Martines


This Rural Community Fought the Country’s Second-Biggest Gas-Powered Data Center, and Won

“Inside the grassroots opposition that fended off a 2,200-acre data center campus in southern Virginia, and why their struggle isn’t over yet.”

Why this is important: Artificial intelligence is increasing the power demand for data centers, which are used to power the large language models on which AI operates. According to the U.S. Department of Energy, the power demand for data centers is expected to double or triple by 2028 compared to 2023 levels. The creation of data centers has recently been the focus of several states and commonwealths, including West Virginia, Virginia, Alabama, and Kentucky. In fact, Virginia has been called the “Data Center Capital of the World,” with 507 data centers located north of Richmond, which is a higher concentration than in any other state or country. The article discusses a proposal to build 84 warehouse-sized data center buildings and a 3,500-megawatt power plant fueled by natural gas on 750 acres of land. The proposal also sought to rezone 14 parcels of land, previously zoned for agricultural and rural residential use. The article tells the story of how many neighboring landowners sought to stop this proposal from being approved. They teamed with air pollution researchers at Harvard University to successfully defeat the proposal. Issues like this are almost certain to arise more frequently in the future. There will be a push to create more data centers, and that push will continue to lead to friction and disputes with local residents. --- Nicholas P. Mooney II


Featured Attorney Question and Answer

Matthew P. Heiskell

Q: One matter that many of our clients, including our commercial real estate and construction industry clients, should know is the Uniform Commercial Real Estate Receivership Act (UCRERA). Many states, such as West Virginia, have adopted these uniform laws that empower a receiver to take possession and control of real property and related personal property. As someone who is well-versed in this area, what are your suggested best practices when it comes to UCRERA?

A: Whether you are an owner, lender, general contractor, or supplier, it is essential to understand how a receiver appointed under UCRERA can affect real property control, contracts, payments, liens, and ongoing work.

UCRERA provides a court with the power to appoint a receiver to control and manage real property, collect debts related to the property, adopt or reject contracts related to the property, and dispose of the property. A receivership usually is sought in connection with a foreclosure or lawsuit, but those are not required – a court may invoke its equitable powers (based on ideas of fairness) to appoint a receiver in the absence of a lawsuit or foreclosure. Under UCRERA, the primary duty of the receiver is to preserve property and prevent waste, and the receiver has near-complete power to handle property as he or she sees appropriate to meet the mandate.

Once a receiver is appointed, activity is usually undertaken quickly, and it is imperative to have a firm grasp of the status of your project. Is your work in full contractual compliance? Notices and approvals timely provided and obligations timely satisfied? Payments made or received and documented? Liens recorded? A receiver has the power to reject an executory contract, effectively terminating it, and UCRERA provides for the mechanics and resulting consequences.

UCRERA can also be used offensively. If an owner fails to manage or operate real property in an appropriate manner given the circumstances, a creditor could use UCRERA to appoint a receiver to run the real property.

No project runs perfectly, but when it seems commercial real property is wasting or not being preserved, it is time to expect (or consider) a receiver appointment. Once a receiver is appointed, it is imperative to communicate with him or her as soon as possible. A receiver has immense power over a project, but a receiver also has significant corresponding obligations. Working “with” a receiver to meet your goals is ideal and ultimately the most efficient way to operate.

Having counsel that understands UCRERA and has dealt with a variety of issues under the Act is going to be critical. Your attorney should act as an extension of your staff. Having someone who understands your business and how a potential receivership can affect you will be pivotal.

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.

© Spilman Thomas & Battle, PLLC

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