Rob Schwartz comment on ASRG FB Page:
This is American information but similar situations can and do happen in Canada. ie; Around 10 years ago Alberta surface landowners started receiving demand letters from electricity suppliers to suspended oil well lease sites located on their surface land that demanded payment for unpaid oil company electrical use. The Alberta govt. cajoled these electrical suppliers to temporarily quit sending these demand notices to the surface landowners BUT did not change the laws that allowed the electrical supplier to demand payment from those who agreed in good faith to a lease on their surface land.
Erie County landowners gave access for pipeline. Now they’re getting hit with liens by Ed Palattella and Jim Martin, Jan 22, 2021, Erie Times-News
ALBION — A segment of a multimillion-dollar energy project runs under the far end of Richard and Barbara English’s farm on Old Albion Road in Springfield Township.
Nearly four years ago, in April 2017, the Englishes received a payment in exchange for a right-of-way that allowed a section of the 28.3-mile Risberg natural gas pipeline to be installed on a swath of their property.
The 2,300 feet of pipe went in below the soil near where the Englishes grow corn and soybeans. Court records show the couple got $10 per foot.
Scores of the English’s neighbors also granted rights-of-way for the pipeline. So did property owners in Ashtabula County, Ohio. More than 100 landowners in all agreed to provide access.
The Risberg Pipeline’s owner, the Erie-based RH Energytrans, needed the rights-of-way to run mile after mile of 12-inch steel pipe from Elk Creek Township, in western Erie County, to North Kingsville, Ohio, just west of the Pennsylvania line. The total planned cost of the project: $86 million.
RH Energytrans developed the Risberg Pipeline as an extension of an existing pipeline that draws gas from national transmission lines. The natural gas started flowing through the new section in December 2019, providing Dominion Energy Ohio with up to 40 million cubic feet of natural gas a day — enough to meet the daily needs of about 150,000 households.
The pipeline is also expected to provide the natural gas needs of a $474 million pig iron plant that has been proposed for Ashtabula.
The Englishes and the other property owners believed their connection to the pipeline was over after the pipe had been buried on their property.
Then the legal papers arrived.
‘We don’t understand’
On Dec. 17, a deputy with the Erie County Sheriff’s Office showed up at the Englishes’ house. The deputy served them with a document known as a mechanic’s lien, a legal instrument that contractors attach to a property to secure payment of a debt from a residence or business.
The amount of the debt in the English’s mechanic’s lien was staggering: $18,946,185.
The name of the contractor who filed the lien was the Wood Group USA Inc., of Houston Texas. It is the company that built the Risberg Pipeline for RH Energytrans.
At first glance, the mechanic’s lien appeared to state that the Englishes owed the Wood Group USA nearly $19 million and that the lien would be forever attached to the couple’s property until they satisfied the debt.
A closer reading shows that the liens are attached only to the improvements related to the pipeline work, and that “no lien is being claimed against any improvements, dwellings, structures, facilities or fixtures that are not related or connected” to the pipeline. That means the Englishes’ house and their farm are not at risk.
Even so, the lien raises the possibility that a small part of the Englishes’ property could be encumbered with a debt.
“We are going to send it to an attorney,” Richard English said during a recent interview. “We don’t understand what it means.”
The Wood Group in December filed similar mechanic’s liens against hundreds of other property owners in Erie County and Ashtabula County, with all the liens containing eye-popping amounts.
Through no fault of their own, the Englishes and the others have become caught up in a legal battle over the Risberg Pipeline.
The two parties in the case are the Wood Group and RH Energytrans.
They are fighting in U.S. District Court in Erie over the construction of the Risberg Pipeline. The Wood Group sued RH Energtrans in August, claiming that RH Energytrans owes it more than $35 million, with $18,946,185 of that due on the work the Wood Group said it completed in Erie County.
Along with the federal lawsuit, the Wood Group filed the liens in an attempt to recoup the money that it claims RH Energytrans owes it. As the federal suit proceeds, the mechanic’s liens, filed at the Erie County Courthouse, linger in the background.
If the Wood Group were able to execute on the liens, according to the court records, it would be able to take over whatever leases or other interests RH Energytrans has in the pipeline.
By placing a mechanic’s lien on each right-of-way that RH Energytrans secured for the Risberg Pipeline, the Wood Group has created a legal mechanism that, if necessary, it could use to try to recover the entire $18,946,185. The Wood Group would be expected to remove the liens if it loses in federal court or ends the case by reaching a settlement with RH Energytrans.
Though the mechanic’s liens are not attached to a landowner’s house or other real estate, they have created confusion and alarm.
Christy Shatto, another Old Albion Road resident who was served with a mechanic’s lean, initially read the document as an effort by the Wood Group to collect millions of dollars from the individual property owners, including her.
She said she is still concerned about how the mechanic’s lien could affect her house and land, which she bought in June 2018. That was more than a year after an affiliate of RH Energytrans paid the previous owner $8,000 for a right-of-way to install 650 feet of pipe on the side yard of the house, according to court records.
“I am not happy,” Shatto said. “I can’t afford a lawyer. I live paycheck to paycheck.”
The Risberg Pipeline’s total of $86 million included expenses related to construction as well as land acquisition. RH Energytrans, an affiliate of EmKey Energy LLC — its owner is Oivind Risberg, a native of Norway — had to spend millions of dollars to get rights-of-way from the Englishes, Shatto and other landowners in Erie County and Ashtabula County.
The challenges inherent in getting so much land for such a large project are reflected in how the Risberg Pipeline spans its 28.3 miles — about 15 miles in Erie County and about 13 miles in Ashtabula County.
The pipeline does not travel in a straight line. It follows a winding path based on the rights-of-way.
Not all the property owners along the ideal route agreed to rights-of-way, which prohibit the property owners from building atop the pipelines.
As a result, the pipeline zigs and zags in many places.
RH Energytrans said it got all its rights-of-way voluntarily, without having to resort to eminent domain and what could have been messy court fights over the value of the desired property.
The one big messy court fight is focused instead on the construction of the pipeline.
The quality of the Wood Group’s work is not an issue. A spokesman for the RH Energytrans, Dennis Holbrook, told the Erie Times-News that the work on the pipeline was done properly and safely, passing all inspections.
Richard English said he was also satisfied with how the Wood Group handled the work on his property.
“I have no complaints,” English said.
The Wood Group and RH Energytrans are fighting over money.
The Wood Group is claiming that RH Energytrans has not paid it enough. RH Energytrans is claiming it has paid the Wood Group everything due under the terms of the contract.
Challenge over change orders
The Wood Group signed its contract with RH Energytrans in 2018. The contract totaled $34,692,028, the Wood Group said in court records.
The Wood Group is claiming that the total cost of the work it performed turned out to be about $58 million. It is claiming the additional cost is due to $22 million in change orders, typically used to compensate a contractor for unforeseen circumstances.
The Wood Group submitted the change orders to get compensated for performing “additional, out-of-scope or supplemental work” on the Risberg Pipeline, according to the Wood Group’s lawsuit.
The Wood Group is suing RH Energytrans for breach of contract and other claims. It is contending that RH Energytrans has paid it only $22,900,691.03 out of the total project cost of $58 million.
The total amount due, the Wood Group is claiming, is $35,473,659.
The majority of that amount represents work the Wood Group said it performed in Erie County — $18,946,185, the same sum on the mechanic’s liens filed against the Englishes, Shatto and other landowners in the county, according to court records.
The balance of the $35,473,659 is $16,527,474. It represents the amount of work the Wood Group said it performed in Ashtabula County. That figure is on the mechanic’s liens filed against landowners in that county. The Wood Group submitted 210 change orders, each asking for compensation above the contracted amount.
Among the reasons for the additional costs, the Wood Group claims in its lawsuit, were “extremely wet ground conditions present in the wetland and upland areas” of the project, in addition to “unfavorable stream crossing conditions.”
RH Energytrans responded in court papers that it had compensated the Wood Group for 95 of the 210 change orders, and that the remaining requests are unjustified.
RH Energytrans blamed the large number of change orders on the Wood Group’s “incompetence on the Project — both in failing to conduct adequate due diligence prior to executing the Contract and during pipeline construction,” RH Energytrans said in court records.
Many of the change orders request additional compensation for issues that RH Energytrans claims the Wood Group should have anticipated. In one instance, the Wood Group sought a change in the contract to reflect the challenges of working in snowy, cold weather, Holbrook, the RH Energytrans spokesman, told the Erie Times-News.
“Did they not expect snowy, cold weather in the Northeast?” Holbrook said. “They were given very detailed specifications and information up front” to review. “The expectation is that the type of things they are describing are not worthy of a change order.”
In a comment to the Erie Times-News, a lawyer for the Wood Group said, “the liens have been filed in connection with Wood’s litigation against RH and Wood’s policy is not to comment on ongoing litigation.”
Caught in the middle
Holbrook said he hopes RH Energytrans and the Wood Group can resolve the dispute amicably, possibly through a mediation process that could begin in late March.
Holbrook described as unfortunate the situation in which liens have been placed in a way that might upset property owners along the path of the pipeline.
“We very much appreciate the support from the property owners, over 100 of them who agreed to provide access to our project,” Holbrook said. “We take very seriously anything that impacts them.” Bullshit, you cruel piece of frac. If you actually cared, these liens would not be terrorizing the families that supported your project.
He continued: “We tried to do what we can to encourage the Wood people not to take this particular approach. I don’t think they really needed it, but that is their business call. I would prefer to keep this dispute between ourselves and Wood and not involve anybody else.”
On Old Albion Road, Christy Shatto will wait, as well, though her anger over the lien has not cooled. She also said she is not pleased with how the pipeline was installed on her property as part of the right-of-way that the previous owner granted.
“They are calling it an ‘improvement,'” she said, referring to how the mechanic’s lien describes the pipeline. “All I have back there is standing water.”
“Now it’s just an eyesore,” she said.
Down Old Albion Road, Richard English said he hopes to get a fuller understanding of the mechanic’s lien after he and his wife talk to a lawyer. Then they will wait and see what happens, English said.
“Who knows what is going to come of it,” he said.