C&I Solar Rooftop Installations are now Exempted from Building Modification Permit (Aor.1)
As Thailand seeks to streamline its processes related to the installation and adoption of renewable energy, the Thai government has announced Interior Ministerial Regulation No. 72, B.E. 2568 (2025), issued under the Building Control Act B.E. 2522 (1979). This regulation exempts the installation of solar rooftop panels weighing less than 20 kilograms per square meter from being classified as a “building modification”, thereby exempting the need to apply for a building modification permit for such installation.
What is the new regulation exactly?
Before this new regulation, a building modification permit was exempted for the installation of solar rooftops only on residential buildings and under certain conditions, as further detailed below.
The new regulation significantly broadens the scope of exemption for solar rooftop installations as follows:
Building Type: The exemption now applies to any type of building, whereas previously it was limited to just residential buildings and not commercial and industrial buildings.
Conditions: All previous conditions, such as area limit, structural safety certification, and prior notification, have been removed. The only remaining requirement is that the installation must not exceed 20 kilograms per square meter in weight.
Criteria
Old Exemption(Before November 19, 2025)
New Exemption(Effective November 19, 2025)
Building Type
Only residential buildings
Any type of building
Area Limit
Installation area not exceeding 160 sq.m.
No area limit specified
Weight Limit
Total weight not exceeding 20 kg per sq.m.
Total weight not exceeding 20 kg per sq.m. (unchanged)
Structural Safety Check
Must have structural stability inspection and certification by a licensed civil engineer
No requirement for structural safety certification mentioned
Notification to Local Officer
Must notify local authority before installation
No notification requirement mentioned
The exemption does not apply to ground-mounted or floating solar projects.
What effect will this have on solar C&I development in Thailand?
Based on (i) similar regulatory relaxations, such as the recent easing of factory licensing for solar rooftops and (ii) our discussion with officers from relevant governmental agencies, if the proposed solar rooftop projects meet the weight requirement, we anticipate the following:
Projects without submitted applications: Developers may proceed with installation and will not be required to submit a modification permit application.
Projects with pending applications: Applications that have already been submitted but not yet approved may be discontinued, with no further action required. The installation can commence regardless of the application status.
Area Coverage: This relaxation applies to projects both inside and outside industrial estate areas without further implementing regulations to be issued by the Industrial Estate Authority of Thailand.
It is essential to ensure that all projects remain fully compliant with all applicable energy-related laws, regulations, and standards throughout the development process. In addition, where required by law, developers must secure the appropriate licenses and permits from the Energy Regulatory Commission prior to commencing any construction activities. Failure to obtain these approvals may result in legal penalties, project delays, or suspension of operations.
Are there potential challenges for this regulation?
While the regulation has only been recently introduced, we have identified two practical concerns with the new regulation as follows:
Self-Assessment and Structural Assurance: The exemption removes permit and certification requirements entirely, introducing a self-assessment model similar to tax compliance. No authority or independent engineer is required to verify compliance with the 20 kg/sq.m. threshold. This raises a critical question for building owners: How can they ensure contractors have calculated weight correctly? Without oversight, errors or poor workmanship could lead to structural issues and legal liability.
To reduce risk, parties should consider:
Engaging reputable contractors or power producers with a track record of compliance and technical competence.
Addressing compliance obligations in contracts, including warranties and indemnities related to structural safety and weight limits.
Opting for a high-level technical review by an independent engineer, even though not legally required, to confirm that the installation meets the 20 kg/sq.m. threshold.
Aor. 5 Complications: Projects that previously required a building modification certificate (Aor. 5) because an Aor. 1 was issued under the old regulation may now face uncertainty. For example, if a solar rooftop project is installed on a mall or a large factory and the local authority required Aor. 5 under the old regime, the exemption of Aor. 1 under the new regulation logically suggests that Aor. 5 should also be exempted. However, local authorities may hesitate to forego Aor. 5 requirements for such projects, given their linkage to permits issued under the old regulation.
Until any further clarification/guideline from a governmental authority is issued, developers of existing projects should consult with the responsible local authority to confirm whether Aor. 5 is still required or can be exempted under the new regulation.
Texas’ CCS Landscape Shifts with Class VI Primacy and Clearer Pore-Space Ownership Rules
On November 12, 2025, the U.S. Environmental Protection Agency (EPA) granted the Texas Railroad Commission (RRC) primacy over the Class VI Underground Injection Control (UIC) program, authorizing Texas to assume primary permitting and enforcement authority for carbon capture and storage (CCS) projects. With this decision, Texas joins Louisiana, North Dakota, and Wyoming as one of the few states administering its own UIC Class VI permitting program.
Understanding Class VI WellsClass VI wells, which are used for long-term geological sequestration of CO2, are among the most highly regulated injection well categories. Federal UIC regulations require detailed geologic characterization, plume-migration modeling, rigorous construction and monitoring standards, and long-term post-injection site management. Until now, EPA has served as the exclusive permitting authority for CCS projects in Texas, a process often criticized for lengthy review times and administrative uncertainty.
With primacy, day-to-day permitting authority shifts to the RRC, while EPA maintains supervisory authority over the state’s implementation of the program. For CCS developers, the transition is expected to provide greater predictability and regulatory efficiency, particularly given the RRC’s longstanding experience regulating Class I and Class II injection wells and its familiarity with Texas’ geologic conditions. Combined with the state’s abundant saline formations and proximity to major CO2 sources, RRC primacy further positions Texas as a leading jurisdiction for CCS development and investment.
Clarifying Pore Space OwnershipPermitting, however, is only one component of the legal framework surrounding CCS projects. Recent judicial decisions and legislative developments have helped clarify that subsurface “pore space”—the voids within underground formations used for CO2 storage—is generally owned by the surface estate unless expressly conveyed. Mineral ownership alone does not include the right to store CO₂ or other injected substances, and pore-space rights may be leased or conveyed separately from mineral interests.
While this clarity provides a more predictable foundation for project development, it also underscores the need for careful title review. Developers must determine whether pore-space rights have been severed from the surface estate, whether earlier conveyances restrict the use of formations for storage, and whether existing mineral leases contain provisions that may conflict with sequestration activities. For surface owners, clarified pore-space ownership may create opportunities to participate in CCS projects through easements or leases, though such agreements involve long-term operational considerations, potential interactions with mineral development, and careful allocation of post-closure responsibilities.
ConclusionTexas’ assumption of Class VI primacy offers increased regulatory certainty and alignment with an agency already deeply experienced in injection-well oversight, while legal clarity around pore-space ownership provides a more stable foundation for negotiating and securing storage rights. Together, these developments create a clearer pathway for CCS project development, but they also highlight the importance of a disciplined permitting strategy, robust title analysis, and carefully structured agreements. As Texas begins implementing its Class VI program—and as early RRC guidance and permitting decisions appear—both developers and landowners will benefit from proactive legal planning and attention to developing regulatory requirements.
California Court of Appeal Affirms Strict Prevailing Wage Standards
On November 18, 2025, the California Court of Appeal, Fourth Appellate District, issued a published decision in Anton’s Services Inc. v. Hagen, affirming administrative findings and penalties against a contractor for misclassifying workers, failing to pay prevailing wages, and violating apprenticeship requirements on public works projects. The decision does not make any new law, but it provides an important reminder on the strict enforcement of California’s Prevailing Wage Law and apprenticeship statutes, particularly concerning the importance of using the correct worker classification for the type of work performed. The decision also clarifies the standards for judicial review of administrative determinations.
Quick Hits
On November 18, 2025, the California Court of Appeal affirmed penalties against Anton’s Services for misclassifying workers and failing to comply with prevailing wage and apprenticeship requirements on public works projects.
The court’s decision highlights the strict enforcement of California’s Prevailing Wage Law, emphasizing the necessity of correct worker classification and adherence to apprenticeship statutes.
The ruling clarifies that judicial review of administrative wage and penalty assessments is limited to the administrative record and governed by the substantial evidence standard.
Background
The case arose from two public works projects in San Diego County for road improvement and slope restoration. Anton’s Services was retained as a subcontractor on the slope restoration project, and its scope of work included “clearing and grubbing” the slope. The contractor was cited by the Division of Labor Standards Enforcement (DLSE) for misclassifying workers under the “Tree Maintenance” classification rather than the higher-paid “Laborer (Engineering Construction)” classification, failing to pay prevailing wages, and not complying with statutory apprenticeship requirements. The DLSE issued civil wage and penalty assessments for both projects, which the contractor challenged through administrative and judicial proceedings.
Key Holdings
Worker Misclassification and Prevailing Wage Obligations. The court upheld the administrative finding that the contractor misclassified workers on both projects. The work performed—primarily clearing and grubbing as preparatory construction activity—was found to be incidental to construction and thus subject to the “Laborer” classification, not “Tree Maintenance.” The court rejected arguments that certain tree-related work was outside the scope of construction or that a change order altered the classification analysis. The decision emphasizes that work incidental to a public works construction project must be classified and compensated in accordance with the applicable prevailing wage determination, regardless of the contractor’s licensing or invoicing practices.
Penalties and Liquidated Damages. The court affirmed the imposition of penalties under Labor Code section 1775 for failure to pay prevailing wages, finding no evidence of a good-faith mistake or prompt correction by the contractor. The court also upheld the assessment of liquidated damages under section 1742.1, clarifying that wages remain “unpaid” for purposes of liquidated damages until actually paid to workers or deposited with the Department of Industrial Relations, even if funds are withheld by the prime contractor and transmitted to the awarding body. The court declined to create an exception to the statutory scheme based on the withholding of funds under section 1727, emphasizing the Legislature’s clear intent and the plain language of the statutes.
Apprenticeship Requirements. The decision affirms findings that the contractor failed to (a) submit contract award information to an applicable apprenticeship program before commencing work, (b) employ the required ratio of apprentices to journeypersons, and (c) request dispatch of apprentices from appropriate committees. The court rejected arguments that self-training or prior approval excused compliance, and noted the existence of an irrebuttable presumption of knowledge of apprenticeship requirements where the contractor had prior violations or was notified by contract documents. Penalties for “knowing” violations were upheld under Labor Code section 1777.7.
Scope and Standard of Judicial Review. The court reiterated that judicial review of administrative wage and penalty assessments is limited to the administrative record and governed by the substantial evidence standard. Arguments relying on extra-record evidence or unsupported by the record were deemed forfeited.
Key Takeaways
Contractors on California public works projects must ensure proper worker classification and payment of prevailing wages for all work incidental to construction, regardless of how work is described or invoiced.
Strict compliance with apprenticeship requirements—including notice, employment ratios, and dispatch requests—is mandatory, and prior violations or contractual notice may establish knowledge for penalty purposes.
Liquidated damages for unpaid wages will be imposed unless the contractor pays workers or deposits the full assessment with the Department of Industrial Relations within sixty days, regardless of any withholding by the prime contractor.
Judicial review of administrative wage and penalty assessments is highly deferential, limited to the administrative record, and will not consider new evidence or arguments not raised below.
The Anton’s Services decision underscores the importance of diligent compliance with prevailing wage and apprenticeship laws on public works projects and the significant consequences for misclassification and related violations.
FERC Requests Information on Streamlining Post-Licensing Hydropower Approvals and Issuance of a Blanket Rule for Post-Licensing Amendments
On November 20, 2025, the Federal Energy Regulatory Commission (FERC) issued a Notice of Inquiry (NOI) seeking stakeholder input on how it could streamline approval for post-licensing activities at hydropower projects, including whether it should establish blanket authorizations for post-licensing activities that currently require a license amendment. Comments are due January 26, 2026.
Background
FERC issues licenses for the construction, operation, and maintenance of non-Federal hydroelectric projects pursuant to section 4(e) of the Federal Power Act. FERC hydroelectric licenses are typically issued for a duration of 30 to 50 years in order to provide a certain level of regulatory certainty to operators of these projects, which require significant capital investments to construct and maintain. Given the long duration of a license term, hydroelectric operators often need to modify portions of the project works or operational requirements prior to relicensing. However, the Federal Power Act requires that any project modifications that are “substantial” or “significant” first receive authorization from FERC.
FERC’s existing regulations require hydropower operators to apply for a license amendment to make certain changes to the physical features of the project or to make a change to the plans for the project under the license. These license amendments may either be a “capacity” or “non-capacity” amendment, depending on whether the power generating potential of the project is affected. Additional minor changes to the project may be authorized under the terms of the individual hydropower license without requiring a license amendment, but often still require review and approval by FERC staff before implementation.
FERC and stakeholders have identified that the process for authorizing post-licensing activities for the maintenance, repair, and improvement of hydropower projects is often time consuming and unclear. FERC explained that it is processing a significant number of non-capacity amendments from hydropower operators who are seeking to modify or improve their operations, but who cannot accomplish these changes without first receiving Commission approval.
Summary of the NOI
The NOI seeks input from stakeholders on how the approval process for minor post-licensing activities at hydropower projects could be streamlined and improved, including whether certain activities can be implemented without case-specific authorization, i.e., through blanket authorizations.
The NOI requests input on the following broad categories of activities:
Minor Post-Licensing Activities. FERC requests information on how it could streamline approval for minor post-licensing activities that do not require a license amendment, including feedback on the scope of activities addressed, the process that should be used, and documentation that should be required.
Post-Licensing Activities Requiring Amendments. FERC requests information on whether it should implement a blanket authorization for post-licensing activities at hydropower projects that currently require a license amendment. FERC further requests input on how such a blanket authorization should be structured and implemented and what specific post-licensing activities would fit within the blanket authorization.
Implications
A blanket approval process for post-licensing activities at hydropower projects would significantly enhance the ability of hydropower operators to maintain and improve infrastructure projects in a timely and responsive manner. Streamlining the post-licensing approval process could lead to significant cost savings for hydropower operators, as the effort involved in preparing and submitting post-licensing applications for minor modifications is significant. The Commission has identified the increasing number of non-capacity amendment applications for minor modifications as an obstacle to the goal of maintaining and enhancing the Nation’s hydropower infrastructure. The NOI demonstrates that FERC is willing to find solutions to this roadblock by investigating more efficient approval processes. Hydropower operators would benefit from providing detailed feedback to FERC on the challenges posed by the current process and tailored advice on how it may be improved within the framework proposed by the Commission.
NYISO Reliability Plan: New York May Require Thousands of Megawatts of Dispatchable Generation by 2034
On Nov. 18, 2025, the Board of Directors of the New York Independent System Operator, Inc. (NYISO), as anticipated, approved the 2025-2034 Comprehensive Reliability Plan (CRP). This blog post highlights two aspects of the CRP that may have significant repercussions related to future electric generation and transmission planning and development. The first relates to the NYISO’s proposal to refine its reliability planning process from one that identifies needs based on a single probabilistic base case to one based on several plausible scenarios to more adequately capture numerous risk factors that may directly impact the state energy system both in the short term and over the long run. The second is the NYISO’s potential future finding – if its proposed or a similar enhanced framework were to be adopted – that the state’s electric system may need several thousand megawatts (MW) of new dispatchable generation by 2034. Based on the current state of technology innovation and options, gas-fired power plant technology may be required to meet some significant portion of this need under that timeframe.
New Planning Approach Based on a Range of Plausible Futures
The NYISO utilizes a two-step biennial Reliability Planning Process. Under the first step, the NYISO performs a Reliability Needs Assessment (RNA) on even years that studies the system over the next 10 years and identifies any Reliability Needs over a 10-year horizon on the State’s bulk power transmission system starting in year four. Under the second step of the process, the NYISO prepares a CRP on odd years to identify the plan for the planning horizon, including, as necessary, solutions to Reliability Needs found in the RNA and remain subject to resolution.
In the recently released CRP, the NYISO found that its current Reliability Planning Process structure is no longer sufficient to adequately identify reliability needs in future iterations; in particular, it found that relying on a single baseline set of assumptions under the pre-existing RNA process to determine whether a Reliability Need exists “does not reflect the growing range of combinations of demand, resource availability, and system conditions.” The NYISO found that it “must evolve its methodology so that Reliability Needs are identified under a broader range of credible combinations of system conditions, not just a single deterministic [base] case.” Underlying this proposed change in approach are several risk factors the NYISO identified that might adversely affect system reliability over the planning horizon.
Perhaps the biggest risk factor relates to the enormous potential increase in large electric loads associated with semiconductor manufacturing plants, data center projects, and hydrogen production facilities. The NYISO points out that, at the end of 2024, the interconnection queue included roughly 4,000 MW of large load projects; however, by September 2025, that figure has more than doubled to over 10,000 MW of load seeking to be in service prior to 2031. Rather than considering a single large load input into a base case, the CRP illustratively examines the effects that would arise under different scenarios that address the variability of projected large load growth, considering further potential growth and the possibility that some projects may not timely move forward.
Another important risk factor the NYISO identified relates to the supply side of the equation, particularly with respect to the state’s existing generation facilities. Twenty-five percent of the state’s total generating capacity is thermal generation that has been in operation for more than 50 years, with an average age of 65 years for thermal generators located in New York City. The NYISO notes that, based on national data, fossil-fuel thermal generators tend to experience more frequent and longer outages as they age, and difficulties in maintaining such generators may drive them to deactivate or be more susceptible to catastrophic failure. The NYISO offered a statistical retirement risk mode to illustratively account for the risks that may arise due to the state’s reliance on aging generation as information to potentially guide its future reliability planning studies. The model predicts that as much as 3,000 MW of capacity is at risk of retirement by the end of the planning horizon. This is in addition to 517 MW associated with New York Power Authority’s seven simple-cycle combustion turbines, located in New York City and Long Island, which are currently under state law to be removed from service by 2031 if reliability can be maintained, despite having a relatively young age of 27 years.
As for potential new generation over the planning horizon, the CRP accounts for the fact that “[r]ecent actions taken by the federal government have drastically impacted the prospects for the development and construction of offshore wind and other renewable resources.” These recent actions call into question whether anything beyond the two offshore wind projects currently under construction (Empire Wind 1 and Sunrise Wind) will be in service over the next 10 years. The NYISO also builds into its analysis framework the reality that supply chain issues have led to long lead times for the delivery of equipment needed to construct energy infrastructure and persistent delays in acquiring the permits that are required as a prerequisite to developing generation and bulk transmission projects.
Application of Plausibility Scenarios
The CRP assesses the uncertainty around each individual key system factor and offers illustrative information bounding; e.g., combinations of these uncertainties to understand and highlight how different plausible configurations may benefit or harm system reliability margins during summer and winter peak conditions. At a high level, the NYISO found that most of the combinations of scenarios show decreasing reliability margins through 2034 with the range of future margins narrowing over time. The most optimistic scenario combinations show positive margins by 2034 in the 2,000 MW range, while the most conservative scenario combinations show deficiencies of up to 10,000 MW by 2034. Similarly, using a Loss of Load Expectation (LOLE), the NYISO is forecasting reliability violations as soon as 2030 presuming a high demand forecast and a substantial risk of thermal generator deactivations.
Why it Matters?
The NYISO reliability planning process is not an academic exercise; it provides the NYISO with critical information to seek reliability-based solutions in the name of keeping the lights on and air conditioning working during the hottest days of the year. The CRP – a core part of that process – projects increasingly narrow reliability margins through 2034 using various illustrative scenarios for the purpose of shedding light on the fact that reliability needs may well be becoming more pressing. The NYISO uses this information to support its recommendation in the CRP to strengthen its reliability planning across a broad spectrum of plausible outcomes.
In light of the various, significant factors that have thwarted development in the electric industry post-COVID, exacerbated by the significant change in federal policy beginning in 2025, and matched against expected large load growth due to the State’s extensive economic development efforts and its public policy initiatives, gas infrastructure may remain one of the core supply components for the foreseeable future, a fact that the draft State Energy Plan also echoed. Under the new plausibility framework recommended under the CRP – if ultimately adopted and approved by the Federal Energy Regulatory Commission, over the next 10 years –gas-fired power plants may need to be built and existing gas-fired facilities repowered to address the growing risks to reliability.
Streamlining Middle Housing: The Latest in Small-Site Development Reforms
California continues its legislative push to address the state’s housing crisis, particularly focusing on “middle-housing” projects that bridge the gap between single-family homes and large apartment buildings (e.g., duplexes, triplexes, townhomes, cottage clusters, etc.).
Recent legislation broadens the small lot subdivision framework under SB 684 and SB 1123 (previously analyzed here), strengthens SB 9 duplex and lot-split rights, accelerates ministerial permitting timelines, and further liberalizes ADU development. As we previously reported, SB 79 (signed October 10, 2025) also increases density around transit, including on small parcels in single-family zones.
This alert summarizes the most significant newly enacted state laws affecting small-site residential development.
Expanded Opportunities for Small Lot Subdivisions With Remainder Parcels
The Starter Home Revitalization Act — amended and expanded by SB 684 (multi-family zoned sites) and SB 1123 (single-family zoned sites) — continues to evolve through legislative clean-up efforts. This Act provides ministerial approval of projects consisting of no more than 10 units on up to 10 parcels (essentially, smaller, more affordable “starter” homes).
AB 130 expands this framework in two key ways:
Remainder Parcels that Do Not Count Toward the 10-Lot Cap
AB 130 authorizes creation of a “remainder parcel” that is excluded from the Act’s 10-lot limit, provided that the remainder parcel:
contains no new residential units, and
is not exclusively dedicated to serving the new housing development (consistent with Gov. Code § 66499.41(a)(1)(B)).
This change expands site eligibility by allowing an additional parcel for existing uses, utilities, or other non-exclusive functions.
Restrictions on Sale, Lease, or Financing of Newly Created Parcels
Except for the remainder parcel, newly created lots may not be sold, leased, or financed unless the parcel:
includes a Building Standards Code-compliant residential structure with at least one dwelling unit;
contains an existing legally permitted residential structure;
is reserved for circulation, open space, or common area; or
is the final undeveloped parcel within the subdivision that has yet to be improved with a code-compliant residential structure.
While the remainder parcel option increases flexibility, these new post-subdivision restrictions may complicate financing and phasing for some projects.
Bolstering SB 9 Duplexes and Lot Splits (With Notable Exception)
SB 9 (2021) legalized ministerial duplexes and urban lot splits statewide. New legislation clarifies and strengthens its application:
SB 450 (Effective Jan. 1, 2025)
Applies SB 9 to charter cities, closing the loophole created by a Los Angeles Superior Court ruling (City of Redondo Beach, et al., v. Rob Bonta, in his capacity as California Attorney General, Case No. 22STCP1143 (2024), pending appeal)
Limits additional local standards, preventing jurisdictions from imposing requirements beyond base zoning and SB 9’s statutory criteria.
Creates a firm 60‑day approval deadline, after which SB 9 applications are deemed approved.
Raises the bar for denials, requiring specific findings of an adverse impact to public health and safety, not generalized environmental concerns.
Expands HCD enforcement authority over local SB 9 compliance.
AB 1061 (Effective Jan. 1, 2026)
AB 1061 extends SB 9 to historic districts, provided the resulting duplexes and lot‑splits do not alter or demolish any historic structure.
Governor’s Executive Order Carve-OutA July 2025 Executive Order (N-32-25) authorizes local agencies in Los Angeles County to restrict or suspend SB 9 projects in high fire‑hazard areas undergoing post‑fire rebuilding (including Pacific Palisades, Malibu, and Altadena), citing evacuation and wildfire safety concerns.
Doubling Down on Accessory Dwelling Units (ADUs)
California’s ADU laws have evolved to produce tens of thousands of small but flexible housing units in the last decade. Recent legislative changes further reduce barriers, making ADU construction an increasingly viable option for homeowners, developers, and investors. Key updates include:
Elimination of Owner-Occupancy Requirements:
AB 976 permanently eliminates owner-occupancy requirements for ADUs.
AB 1154 eliminates owner-occupancy requirement for Junior ADUs (JADU) (defined as a dwelling unit up to 500 square feet contained within the existing space of a single-family home) that do not share a bathroom with the primary unit.
Separate Sale of ADUs as Condominiums:
AB 1033 authorizes local agencies to permit the separate sale of ADUs from the primary residence as individual condominium units. Major jurisdictions such as San Jose, Los Angeles, San Diego, San Francisco, Berkeley, and Sacramento have opted in.
More ADUs for Multifamily Buildings:
SB 1211 allows up to eight detached ADUs on multifamily properties, or as many ADUs as there are existing primary dwelling units — whichever is fewer.
Relaxed Parking Requirements:
SB 1211 also prohibits local agencies from requiring replacement parking where uncovered spaces are removed to construct an ADU.
Pre-Approved Plans:
AB 1332 requires every city to establish a pre-approved ADU plan program by January 1, 2025, streamlining design and permitting.
Legalization of Unpermitted ADUs:
AB 2533 extends the amnesty date for legalization of unpermitted ADUs from January 1, 2018, to January 1, 2020, allowing more homeowners to legalize units with reduced penalties.
ADU/JADU Consistency and Clarification:
SB 543 aligns JADU rules with ADU rules and clarifies square‑footage standards and permitting timelines.
Automatic Statewide ADU Rules (Noncompliant Cities):
Under the newly enacted SB 9 (distinct from the 2021 SB 9), state‑level ADU standards automatically apply when local jurisdictions fail to timely update their ADU ordinances.
ADUs in the Coastal Zone:
SB 1077 (effective July 1, 2026) directs the Coastal Commission and HCD to prepare new streamline ADU guidance for the Coastal Zone. However, Coastal Zone ADUs will continue to face heightened restrictions and longer review timelines as compared to those in inland areas.
New “Shot Clocks” Tighten Approval Deadlines
Recent laws impose strict deadlines (shot clocks) on local agencies reviewing middle‑housing projects.
Permit Streamlining Act (PSA) Now Applies to Ministerial Projects:
For the first time, AB 130 applies the Permit Streamlining Act (PSA) to ministerial projects — including ADUs, SB 9, SB 684, and SB 1123 projects. Local agencies must:
act within 30 days of deeming the application complete (unless a shorter timeline applies by statute), and
issue a decision within 60‑days, except for projects under AB 2011/2243.
Some conflict may arise with other ministerial streamlining statutes (e.g., SB 35/423 or SB 6), which impose their own timelines.
Third‑Party Review of Delayed “Post‑Entitlement” Permits:
AB 253 allows applicants for residential projects with 10 or fewer units and four or fewer stories to hire licensed third‑party plan-check reviewers when local agencies exceed the 30‑day review deadline.
Mandatory Final Inspections Within 10 Days:
AB 1308 requires local agencies to complete final inspections within 10 business days of receiving notice of completion for applicable residential projects of 10 units or fewer.
Local Initiatives
Not to be outdone, several jurisdictions have adopted their own small-to-middle housing development incentives:
Berkeley Middle Housing Ordinance (effective Nov. 1, 2025):
Eliminates most single‑family zoning and allows small multifamily projects up to 70 units/acre, 35‑foot height and 60% lot‑coverage.
Santa Monica Emergency Ordinance (adopted in Aug. 2025):
Allows up to 20 units on vacant residential lots and permits three‑story structures in areas previously zoned exclusively for single‑family homes. The ordinance complements SB 1123’s ministerial small‑lot framework.
Conclusion
Together, new state legislation and proactive local initiatives are significantly expanding opportunities for small‑site housing development across California. Projects historically subject to lengthy, costly, and uncertain discretionary review may now qualify for streamlined, ministerial approvals under multiple overlapping statutes.
North Carolina Licensing Board for General Contractors’ Recent Enforcement Priorities: Unlicensed Contracting
2025 is the 100th anniversary of the General Assembly’s establishment of the North Carolina Licensing Board for General Contractors (“NCLBGC”).
Due to the shortcomings of unscrupulous or underqualified contractors, the legislature sought to prescribe minimum standards for those performing construction work. The rules and regulations have changed over the years, with some changes coming as recently as 2023.
This article will explore some of the NCLBGC’s recent enforcement priorities relating to unlicensed practice of general contracting. It will specifically focus on the minimum threshold and certain licensing exceptions. The goal of this article is to help those performing construction work to stay in compliance with the licensing statutes and avoid running afoul of the NCLBGC’s recent enforcement priorities.
The Minimum Threshold and the Owner Exception
One of the NCLBGC’s most important enforcement priorities is against those engaged in the unlicensed practice of general contracting. North Carolina General Statute § 87-1 provides in relevant part that anyone who “undertakes to bid upon or to construct or who undertakes to superintend or manage … the construction of any building, highway, public utilities, grading or any improvement or structure where the cost of the undertaking is forty thousand dollars ($40,000) or more” is required to be a licensed general contractor. Performing in excess of $40,000 worth of work without a license is known as the unlicensed practice of general contracting.
There are some exceptions to the licensing requirements, one of which involves a property owner serving as his own general contractor for work he is performing on his own property. An individual who constructs or alters a building on land that is owned by that individual is not required to have a general contractor’s license, even if the work will cost over $40,000, if
the building is intended solely for occupancy by that person and his family, firm, or corporation after completion; and
the individual complies with the permitting requirements found in N.C. General Statute § 87-14.
Notably, if the building is not occupied solely by the person and his family, firm, or corporation for at least 12 months following completion, it shall be presumed that the person did not intend the building solely for occupancy by that person and his family, firm, or corporation in violation of the licensing statute.
The Owner Exception in Practice—Signing the Owner Affidavit
Many property owners who do not work in the construction industry but are preparing to undertake work on their property do not even know there is a minimum licensing threshold, much less an owner exception, until they are attempting to get their first permit. Before a building department will issue a permit for work costing $40,000 or more, the building department will require the permit seeker to furnish satisfactory proof that the permit seeker either (1) has hired or is a licensed general contractor or (2) falls under one of the licensing exceptions, like the owner exception.
If an owner intends to act as his own general contractor under the owner exception, the local permitting department will present him with an affidavit, often called an “Owner Exemption Affidavit.” Different counties and municipalities have their own owner affidavit forms, but they tend to follow a similar format. At minimum, they will commonly require the owner to certify that he will:
Personally superintend and manage all aspects of construction;
Be personally present for all inspections; and
Not sell or lease the property for 12 months following completion of the project.
By way of example, you can find the Owner’s Exemption Affidavits for some of North Carolina’s most populous counties here:
Wake County;
Mecklenburg County;
Guilford County;
Forsyth County;
Cumberland County;
New Hanover.
An owner who is not familiar with the licensing statute or does not read the owner affidavit closely may not realize that, by signing the owner affidavit and acting as his own general contractor, he is not permitted to sell or rent his property for 12 months following completion of the project.
The Board’s Crackdown on Owners who Sell or Rent Within 12 Months
We have seen an uptick in the Board enforcing the licensing statute against owners who utilize the owner exception but list their property for sale or rent within 12 months of obtaining a certificate of occupancy. This specifically includes short-term rentals such as those listed on Airbnb and VRBO. You may be thinking, “As long as I otherwise do what I’m supposed to, pass my inspections, sell or rent my property to a happy buyer/renter, and keep happy neighbors, nobody will even notice if I sell or rent this property before the 12-month period has run.” Wrong. The NCLBGC can, and often will, find out this licensing exception has been violated even if nobody turns the owner into the NCLBGC.
Many counties and municipalities transmit all executed owner affidavits to the NCLBGC as a standard practice. The NCLBGC’s investigators, in turn, may periodically check in on projects for which they have received owner affidavits. For example, they may monitor sites like Realtor.com, Zillow, Airbnb, and VRBO to see if the property is listed for sale or rent while the permit is still open or in the 12 months immediately following the issuance of a certificate of occupancy. Inspectors may even drive by construction sites looking for “For Sale” or “For Rent” signs, which may trigger the NCLBGC to investigate whether the owner is acting as his own general contractor under the owner exception.
The bottom line is that the NCLBGC can, and often will, find out an owner has breached his owner affidavit and violated the licensing statute even if he passed all of his inspections, has happy neighbors, has happy buyers/tenants, and otherwise generally flew under the radar during construction.
Consequences of Engaging in the Unlicensed Practice of General Contracting
An owner who violates the licensing statute or breaches the certifications he made in the owner affidavit may face various consequences. First and foremost, someone who signs an owner affidavit knowing that he does not intend to uphold its requirements may be guilty of perjury, which is a Class F felony.
Second, the NCLBGC may open an investigation to determine if the licensing statute has been violated. If the NCLBGC determines that it has, the NCLBGC is permitted to seek an injunction or restraining order, which it will do by initiating a lawsuit against the violator. N.C. Gen. Stat. § 87-13.1. The NCLBGC is also permitted to recover from the contractor its attorneys’ fees up to $5,000 plus costs associated with bringing the complaint against the contractor. Perhaps more severe than the financial punishment, the law also provides that one who has engaged in the unlicensed practice of general contracting shall be deemed guilty of a Class 2 misdemeanor.
Conclusion
For many owners utilizing the exception, the moment they realize they have violated the licensing statute is when they receive a complaint from the NCLBGC in the mail. The complaint will typically require a response within a certain number of days. The NCLBGC investigators may also contact the owner directly to obtain a statement, which the NCLBGC can then use against the owner in its future enforcement action.
Owners who have found themselves in this situation are encouraged to reach out to legal counsel as soon as possible, but certainly before responding to an NCLBGC complaint or giving any statement to the NCLBGC. Failing to do so could lead to the financial and criminal consequences outlined above.
Oregon Prevailing Wage Law Amendments Target “Bespoke” Construction Projects
Introduction
On July 31, 2025, Governor Tina Kotek signed House Bill (“H.B.”) 2688 into law amending Oregon’s prevailing wage rate (“PWR”) law. These changes, which take effect July 1, 2026, expand the scope of the PWR law to require contractors to pay prevailing wages on certain off-site bespoke work fabricated for public works projects that previously fell outside the law’s requirements.
Overview of Oregon’s Prevailing Wage Law
Oregon’s longstanding PWR law requires contractors and subcontractors on public works projects valued over $50,000[1] to pay workers a prevailing wage rate — that is, the wages and benefits comparable to those earned by workers in the same geographic area for similar work. The law, which applies to construction projects funded by public agencies, aims to protect local wage standards, prevent undercutting by low bids, and guarantee that public investments support fair labor practices. The law is administered by Oregon’s Bureau of Labor and Industries (BOLI), which sets prevailing wage rates and imposes penalties, including fines or loss of eligibility for future contracts, on contractors who violate the PWR’s requirements.
H.B. 2688 Expands Oregon’s Prevailing Wage Law to Cover Off-Site Bespoke Work
Previously, Oregon’s prevailing wage requirements only applied to work performed on the site of work of the public works project. The amendments introduced by H.B. 2688 broaden the definition of “public works” to include certain off‑site bespoke work that is fabricated, preconstructed, or assembled specifically for use in public projects. Manufacturers and suppliers who provide specialized materials — such as prefabricated steel or other custom assemblies — are required to compensate workers engaged in this production at prevailing wage rates.
For contractors on public works projects, these amendments significantly expand the scope of covered work by requiring prevailing wage rates on custom work performed off-site that was previously exempt from prevailing wage requirements. Simply put, H.B. 2688 represents a major shift in Oregon’s prevailing wage framework, extending wage protections beyond traditional construction sites and into the broader network of off-site suppliers and fabricators that support public projects.
This shift thus presents uncertainty as to what off-site fabrication is now covered by the PWR law. Governor Kotek’s Signing Letter to Oregon’s secretary of state published in connection with H.B. 2688 expressed the governor’s opinion that modular housing or mass timber products should not be classified as “bespoke,” and thus exempt from prevailing wage requirements. However, since BOLI has not yet adopted regulations interpreting the amendments in H.B. 2688, it remains to be seen whether contractors will receive clarification as to what “bespoke” fabrication is covered by these amendments. BOLI is actively soliciting feedback on enforcement of H.B. 2688 in advance of the July 1, 2026, effective date and is expected to promulgate rules in the coming months.
Conclusion
With these expanded requirements on the horizon, Oregon contractors on public works projects should be sure to review their contracts to ensure that prevailing wage provisions are properly included as necessary to comply with these new requirements. Over the coming months, covered employers should plan for the financial impact of these changes, and budget for the additional expense of paying prevailing wages for off-site bespoke fabrication work. When in doubt, contractors should always consult legal counsel to ensure compliance.
California Battery Energy Storage Systems Legislation Update: Safety Requirements and AB 205 “Opt-In” Procedures Amended
In the wake of a catastrophic battery storage facility fire in Moss Landing in January that burned over half the batteries in a 300-megawatt (MW) installation in Monterey County, 2025 has been a rollercoaster year for Battery Energy Storage System (BESS) regulations.
Introduced within days of the Moss Landing fire, Assembly Bill (AB) 303 (Addis) would have immediately banned utility-scale BESS within 3,200 feet of sensitive receptors and removed BESS from eligibility for the California Energy Commission’s (CEC) “Opt-In” permitting procedure under AB 205 (2022) (and required the CEC to deny pending applications).
As the (literal) dust settled, Governor Newsom called for the California Public Utilities Commission (CPUC) to investigate the incident. The CPUC’s investigation, conducted by the Safety and Enforcement Division (SED), as well as several other agencies that investigated water and soil contamination relating to the fire, found no significant impacts. Meanwhile, the CPUC adopted modifications to its General Order (GO) 167 on March 13, 2025, adding new safety standards for BESS.
Later in March, Governor Newsom and Senator John Laird, who represents Monterey County, both issued public statements in support of Battery Energy Storage. (See California Leaders Move to Support Energy Storage | Energy Law Blog.) Shortly after, the Governor’s Office of Business and Economic Development (GO-Biz) held the first of a series of webinars focusing on “assessing challenges and barriers faced by local jurisdictions” in permitting BESS facilities, culminating in its draft “Clean Energy Permitting Playbook” and Toolkit.[1]
On November 13, 2025, Governor Newsom announced that the State has now built one-third of the energy storage capacity estimated to be needed by 2045 to meet California’s clean energy goals, and it is now the first subnational to join the Global Energy Storage and Grids Pledge, which sets global targets to deploy 1,500 gigawatts of energy storage.[2]
Meanwhile, Monterey County has continued investigating[3] and the EPA is proceeding with cleanup of the Moss Landing site.[4] Looking forward, updates to NFPA 855 (the Stationary Energy Storage Systems standard[5]) and the California Fire Code go into effect in 2026.[6]
For its part, the Legislature has proceeded with other efforts to ensure safe deployment of battery energy storage following the death of AB 303 in committee in April 2025.
SB 283 (Signed October 6, 2025; effective January 1, 2026)
Sen. Laird’s bill, the “Clean Energy Safety Act of 2025,” supports fire safety and regulatory oversight for stationary energy storage systems by:
Requiring applicants for large energy storage projects (≥10 MWh for local, ≥200 MWh for state) to meet with local fire authorities to discuss safety, emergency plans and mitigation at least 30 days before submitting applications.
Mandating that installations may not begin operation until inspected by fire authorities after construction, at the applicant’s expense.
Directing the State Fire Marshal to propose amendments to the next building code considered after July 1, 2026, potentially restricting the location of energy storage systems to dedicated-use noncombustible buildings or outdoor installations.
Requiring applicants to document and summarize the fire authority consultations, and making local approvals contingent on completed inspection.
SB 283 is effective January 1, 2026, and applies Statewide, including to charter cities.
SB 254 (Signed September 19, 2025; Urgency Bill, effective upon Governor’s signature)
Effective immediately as an urgency bill, SB 254 includes a number of measures to expedite clean energy projects. With respect to BESS development, this bill:
Establishes a process for the CEC to adopt a Program Environmental Impact Report (PEIR) for a class or classes of projects and for a public agency considering approval of a facility within the class to tier from the PEIR. Once complete, this process may help streamline applications under the CEC’s Opt-In certification process or applications for BESS approvals to local agencies.
Amends the CEC’s “Opt-In” Certification Procedure (AB 205, 2022) to:
Allow the CEC to certify a Mitigated Negative Declaration or Negative Declaration in lieu of an EIR for an eligible facility.
Remove the requirement that the CEC make specific findings of public convenience and necessity to certify a facility that does not conform with applicable state, local or regional standards, ordinances or laws (including zoning).
Add a “rebuttable presumption” that the facility will have an overall net positive economic benefit to the local government.
Requires the CEC to establish clear permit application requirements and adds specific time targets for the CEC to process applications to meet the existing target to complete environmental review within 270 days, in an apparent effort to resolve delays in the CEC finding applications to be “complete” for processing.
AB-1285 (Signed October 11, 2025; Effective January 1, 2026)
Finally, AB 1285 mandates that the State Fire Marshal, in collaboration with the Office of Emergency Services, formulate best practices for fire prevention and response specific to utility-scale lithium-ion battery storage facilities, focusing on emergency services personnel’s health and safety.
In addition, AB 1285 mandates that facility owners/operators establish systems for timely and accurate sharing of information regarding incidents with local emergency managers and public safety agencies, in order to improve coordination and recovery from fire-related events at battery storage facilities.
FOOTNOTES
[1] https://business.ca.gov/industries/climate-and-clean-energy/go-biz-renewable-energy-permitting-initiative/
[2] Governor Newsom announces California’s record growth in battery storage and clean energy leadership at COP30 | Governor of California
[3] 2025 Moss Landing Vistra Power Plant Fire | County of Monterey, CA
[4] Moss Landing Vistra Battery Fire Response | US EPA
[5] See https://cleanpower.org/wp-content/uploads/gateway/2024/01/NFPA855_Safety_240111.pdf
[6] https://www.dgs.ca.gov/bsc/codes
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No Bailout for Bureaucratic Inertia- NYDEC Ordered to Implement Albany’s Climate Commitments
In a ruling with sweeping implications for New York’s climate policy, an Albany trial court ordered the New York Department of Environmental Conservation (NYDEC or Department) to issue long-overdue regulations under the Climate Leadership and Community Protection Act, known as the Climate Act.[1] Enacted in 2019 and effective January 1, 2020, the statute requires a 40 percent reduction in statewide greenhouse gas emissions from 1990 levels by 2030, and an 85 percent reduction from 1990 levels by 2050.[2]
To meet those targets, the Legislature created the Climate Action Council—a body composed of the heads of major state agencies and appointees of the Governor and Legislature—and charged it with developing a “Scoping Plan” by January 1, 2023. The plan was to serve as a road map recommending the steps necessary to achieve the Climate Act’s goals. The Scoping Plan is not self-effectuating and does not impose binding requirements on any public or private entity. Rather, the statute directs the Department to adopt regulations establishing enforceable emissions limits, performance standards, and other controls on greenhouse gases across all sectors of the state’s economy by January 1, 2024.[3]
The Council completed the Scoping Plan in December 2022. The Department, however, missed the statutory deadline. It held public workshops in 2023 and 2024, and proposed a greenhouse gas reporting rule, but ultimately failed to issue the more comprehensive climate regulations the law contemplates. In March 2025, three environmental groups filed suit in the Supreme Court, Albany County, alleging that the Department’s delay was unconstitutional.[4] They sought an injunction compelling agency rulemaking and a declaration that the delay was unconstitutional.
The Court’s Decision
The court sided with the petitioners. It held that the Climate Act’s command that the Department “shall promulgate” regulations left no room for discretion.[5] The agency’s argument—that compliance would impose “extraordinary and damaging costs upon New Yorkers”—found no traction.[6] Questions of cost and feasibility, the court observed, belong to the Legislature, not the executive branch, and if the statutory targets prove unworkable, the remedy lies in Albany, not in an agency “unilaterally determining the course of New York’s climate policy by refraining from issuing legally-mandated regulations.”[7]
The court set a firm deadline of February 6, 2026, for the Department to issue the required regulations. Because that date falls during the legislative session beginning in January 2026, it effectively gives that Department a window to raise its feasibility concerns—including its view that “the 2030 goal itself is not practically feasible due to costs consumers simply cannot bear”—to law makers, who could consider amendments to the Climate Act that address those concerns, or simply leave the statute as-is and let the chips fall where they may.
Though the court declined to reach the petitioners’ constitutional claim, its ruling signifies that courts are willing to enforce legislative climate mandates according to their terms, even when doing so threatens serious economic consequences. The ruling is expected to be appealed, and Governor Kathy Hochul has indicated she intends to meet with lawmakers to consider potential adjustments to the Climate Act in light of the decision.
Implications for Real Estate and Building Operations
The court’s decision to enforce the Climate Act has immediate practical consequences on sectors responsible for substantial emissions, particularly building operations. According to the Scoping Plan, buildings account for 32 percent of New York’s total greenhouse gas emissions.[8] Most arise from fossil fuel combustion in homes and businesses, imported fuels, and hydrofluorocarbons released from building equipment and insulation.
The Scoping Plan establishes the blueprint for “decarbonizing” building operations. Its principal strategies include:
Reducing energy demand in residential buildings through efficiency improvements, targeting one to two million homes reliant on electric systems by 2030, and deploying heat pumps for space heating and cooling in 10 to 20 percent of commercial space statewide.
Replacing gas-fired appliances (boilers, furnaces, and stoves) with electric alternatives such as induction stoves and electric heat pumps.[9]
Retrofitting or constructing more than 250,000 homes annually to achieve high efficiency standards and ensure “heat pump ready” systems for heating, cooling, and hot water.
Powering 85 percent of residential and commercial buildings by electricity rather than fossil fuels by 2050.
The Climate Act directs the Department to adopt regulations that “reflect, in substantial part,” the Scoping Plan developed by the Climate Action Council. The statute does not prescribe specific measures, leaving the Department broad discretion over the design and stringency of its rules.
That discretion carries significant implications. Aggressive standards could require building owners and developers to retrofit existing structures, phase out fossil-fuel equipment, and report emissions. A more incremental approach might initially target new construction, major renovations, or state-funded projects before expanding to the broader building stock. Either path will reshape the regulatory landscape.
Commercial property owners, developers, and asset managers would be wise to begin preparing now. Participation in public workshops, submission of written comments, and early review of building portfolios for exposure to forthcoming standards will be critical. Under the State Administrative Procedure Act, all proposed regulations must undergo a minimum 60-day comment period, and the Department must review and respond to potentially thousands of public comments before issuing final rules.
________________
[1] Climate Leadership and Community Protection Act, § 1(1), 2019 N.Y. Sess. Laws Ch. 106 (S. 6599).
[2] ECL § 75-0107(1)(a)-(b), 75-0109(4)(a)-(b), (f).
[3] The Climate Act directs the Department to promulgate regulations that “shall … [r]eflect, in substantial part,” the Scoping Plan developed by the Climate Action Council. ECL § 75-0109(1), (2)(c). The regulations must also “[i]nclude legally enforceable emissions limits, performance standards, or measures or other requirements to control emissions from greenhouse gas emission sources” across all sectors of the economy except emissions from livestock. Id. § 75-0109(2)(b). Additionally, the regulations must “[i]nclude measures to reduce emissions from greenhouse gas emission sources that have a cumulatively significant impact on statewide greenhouse gas emissions, such as internal combustion vehicles that burn gasoline or diesel fuel and boilers or furnaces that burn oil or natural gas.” Id. § 75-0109(2)(d).
[4] Article I, Section 19 of the New York Constitution includes a provision guaranteeing that “[e]ach person shall have a right to clean air and water, and a healthful environment.”
[5] Order at 5-6: newyorksupremecourt_clcpa_nyci__decision___order_oct2025.pdf
[6] Id. at 7.
[7] Id. at 7-8.
[8] New York State Climate Action Council Scoping Plan, New York State Climate Action Council, *175 (Dec. 2022), available at https://climate.ny.gov/-/media/Project/Climate/Files/NYS-Climate-Action-Council-Final-Scoping-Plan-2022.pdf . (“The buildings sector was the largest source of emissions in 2019, responsible for 32% of emissions statewide, which includes the combustion of fossil fuels in residential (34%) and commercial buildings (19%), emissions from imported fuels (33%), and hydrofluorocarbons released from building equipment and foam insulation (14%). The fuels used in buildings today include fossil natural gas, distillate fuel (e.g., heating fuel oil #2), wood, propane, kerosene, and residual fuel.”)
[9] Scoping Plan at 176-180
Fixed Price, Fluid Quantities – The Hidden Risks in Lump Sum Agreements with Variable Units
Lump sum construction agreements are the most basic of the different design-bid-build options: the contractor agrees to complete the entire scope of work for a fixed price, and assumes most of the quantity and cost risks. If the contractor’s actual costs exceed its estimates, the contractor absorbs the loss. Adding a clause into the construction agreement that allows unit quantities to increase or decrease based on actual job quantities creates a mechanism that can reduce the risk of estimating, but it is a clause that should be carefully drafted and closely guarded.
There are times when it makes sense for parties to deviate from their lump sum agreement and allow for greater flexibility: when there are uncertainties in site conditions or scope, and/or to reduce disputes over changed conditions. The parties can introduce elements of unit-price contracts into the lump sum framework, either choosing to shift the risk entirely to one party or the other, or sharing the risk, e.g., by including an equitable adjustment clause that allows for a price adjustment if the variation exceeds a certain threshold. Even with that balance, incorporating opportunities for adjustments can favor more than just the contractor: it creates a disincentive for the contractor to inflate unit prices to hedge against quantity risks.
Like with any other construction contract, though, if certain items are not thoroughly addressed, it can raise doubts about the resultant risk allocation, breeding an environment ripe for dispute – especially when the quantity differential adds up. This was the case in the conflict giving rise to the action, Providence Construction Corp. v. Silverite Construction Company Inc. et al, 239 A.D.3d 551 (1st Dep’t June 24, 2025).
Plaintiff Providence Construction Corp. subcontracted with defendant Silverite, a general contractor, to perform masonry work on the construction of the Mother Clara Hale Bus Depot, a public infrastructure project for The Metropolitan Transit Authority, acting by The New York City Transit Authority. Providence’s subcontract specified a lump sum payment for furnishing and installing concrete blocks, i.e., concrete masonry units a/k/a “CMU”s, subject to adjustments based on actual job quantities.
During the project’s progression, the parties entered into a change order increasing the quantity of blocks and adjusting the lump sum price to $7,108,873.80. Silverite later noticed, however, discrepancies in its records of the CMUs installed versus those records of Providence. Silverlite paid $5,968,592.01 towards the lump sum price, and withheld payment of $1,140,281.79 on the final three applications.
Providence sued for the difference, and Silverite counterclaimed for $500,000 in damages, alleging overbilling, defective work, delays, and failure to pay vendors. Silverite also filed a third-party complaint against the surety from which Providence procured payment and performance bonds.
Providence moved for summary judgment on liability on its breach of contract claim, to dismiss Silverlite’s counterclaim and to dismiss Silverlite’s third-party complaint. The Supreme Court denied summary judgment in its entirety, and Providence appealed.
The Appellate Division affirmed those portions of the Supreme Court’s decision that denied Providence summary judgment on liability and to dismiss Silverlite’s counterclaim. The Court appreciated that “a fair reading of the subcontract terms as a whole provide for a lump sum payment based upon an estimate of the total number of concrete blocks ‘to be installed’ by plaintiff, and to the extent the actual number installed by plaintiff varied from the ‘estimates,’ the lump sum payment would be adjusted accordingly.” The Court identified issues of fact regarding the actual number of blocks installed and the value of the lump sum price, finding that although Providence had satisfied its burden as a movant by submitting documentary proof in the form of the subcontract and its riders, written correspondences, deposition testimony, and daily business records, Silverite produced credible controverting evidence with its own affidavits and documentary evidence. Most notably, Silverite submitted its expert’s opinion accompanied by architectural drawings, photographs, records kept as to the progress of installation, and the expert’s proprietary 3–D imaging technology showing a different quantity of CMUs that Providence installed. Responding to Providence’s protestations, the Appellate Division stated: “Plaintiff’s arguments that the expert’s methods of computing the number of CMUs laid differed from its own and failed to adequately take into account openings in the building’s interior walls go to the weight and not the admissibility of the expert’s opinion.”
The Court reversed, however, that part of the Supreme Court’s decision that declined to dismiss Silverite’s third-party complaint against Providence’s surety. The Court found that Silverite did not have an interest as a claimant or obligee under the payment and performance bonds because Silverite could not show that it had satisfied the bonds’ default and notice conditions so as to trigger an expectation of coverage.
The Providence decision is an unusual and remarkable public source of constructive takeaways from a construction contract dispute. Putting aside the separate lesson about whether and when a general contractor has a viable claim against a subcontractor’s bond and how to make a proper claim, the decision reflects not only the role of modern technology in fact-dispute resolution, but also how the parties’ subcontract could have been drafted better to avoid their conflict.
From the beginning, the parties agreed that it was uncertain how many concrete blocks would be needed to construct the bus depot. Rather than unfairly place the entire risk on the subcontractor, the parties allowed for a deviation from the then-estimate (of 191,477 total square feet of glazed and regular CMUs combined) and to compensate the subcontractor accordingly. It seems, however, that the subcontract may have lacked a clear mechanism for verifying the final quantities needed from which the subcontractor’s payments would be adjusted. That these parties appeared to use entirely separate verification methods is unfortunate: their agreement could have required the subcontractor to maintain and submit detailed daily logs, installation records, and supporting documentation with each payment application. Their agreement also could have specified acceptable methods of verification, whether the advanced 3D imaging used by the general contractor, or basic field measurements and sampling. Further, their agreement could have included a clause requiring joint measurement or third-party verification of installed quantities at the time of different sections’ completion and prior to finalizing progress payment applications, as well as a clear process for resolving disagreements over quantities or payment, including timelines and escalation procedures.
In sum, on any subject important to a construction contract and particularly one necessary to trigger payment, it is better to include as much specificity as possible and offer parties a path forward in the event of uncertainty – rather than a fertile battlefield that ultimately is favorable to neither.
Contract Formation 101- General Contractor Prevails in Dispute with Framing Subcontractor
A contract is an exchange of promises that a court will enforce. In the fast-paced world of construction, disputes often arise over whether the parties actually formed a legally enforceable contract. The general rule is that to form a contract the parties must reach a meeting of the minds on the contract’s essential terms. Whether there is a meeting of the minds is determined not by the parties’ internal or “subjective” belief, but rather by their outward or “objective” words or conduct indicating an intent to enter a contract. Where one party secretly believes it has entered a contract without manifesting that belief, or where the parties do not reach agreement on materials terms like price or quantity, courts may conclude that no contract exists.
Such was the case in a decision released last week by the District of Connecticut in International Building Supply et al v. Hudson Meridian Construction Group, LLC., No. 3:22-cv-01167, 2025 WL 3096605 (D. Conn. Nov. 6, 2025). In that case, the parties negotiated for over two years regarding a contract to supply and install lumber for a 400-unit apartment complex in New Haven. The general contractor had twice issued letters of intent to the subcontractor, however no formal contract was ever executed as contemplated by the LOI. Despite their efforts, the parties disagreed over whether the $6.9 million price tag did or did not include a $150,000 allowance for hardware. The subcontractor eventually brought suit for breach of contract after the general contractor rescinded the LOI and hired another firm to do the work. The 44-page opinion, authored by former Marine and current Federal Judge Thomas O. Farish, focuses largely on the issue of contract formation.
Interestingly, the court’s analysis includes both the UCC and common law of contracts. That’s because the parties were actually negotiating two separate subcontracts: one for supply of lumber/hardware (i.e., goods) and one for the labor to install them. The court recognized that for the sale of goods, contract formation is a more flexible concept as the UCC will supply default terms to fill gaps in the parties’ agreement. Such default terms may come from trade custom, standard usage, and past dealings. They may even include, in the right circumstances, a default price term. The court in International Building Supply nonetheless refused to impose a default price term because the LOI expressly contemplated an additional written agreement, which was never executed. The LOI also did not address several other material terms, including prequalification, insurance, retainage, responsibility for defective materials, the discharge of mechanics’ liens, and indemnification in the event of third-party claims. All of those material terms were left for future negotiations, which never culminated in a meeting of the minds on all essential terms. The court therefore held there was no legally enforceable contract and entered judgment for the general contractor.
A copy of the court’s decision is located here.
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