Fallout from the bankruptcy of Welded Construction, the main contractor in two local gas pipeline projects, has ensnared landowners in Berks and Lebanon counties with the threat of liens on their properties.

Lancaster County residents are wondering if they could be next.

Three homeowner couples and the Twin Valley School District near Morgantown, Berks County, were astounded to find legal letters in their mailboxes recently.

The letters were from United Piping Inc., a Minnesota-based subcontractor that says it has not been paid by Welded for work on the controversial Sunoco Mariner East natural gas liquids pipeline that runs through their properties.

United Piping was giving the property owners formal notice of the company’s intent to go to Berks County court within 30 days to file “mechanics liens” on their land.

“When I saw I was on the hook for a half-million dollars, my stomach was on the floor,” recalls David W. Anspach III, a Caernarvon Township, Berks County, resident who grudgingly granted a right of way for the pipeline near his home.

In Lebanon County, meanwhile, Dykon Blasting Corp. — an Oklahoma subcontractor that worked on the Atlantic Sunrise gas pipeline and says it has not been paid by Welded — has mailed similar legal letters to landowners.

Sent by McNees Wallace & Nurick, the Lancaster law firm representing Dykon, the letters note that every property owner along the pipeline’s path in Lebanon County is facing liens.

So far, no lien notices appear to have been sent to the nearly 300 landowners in Lancaster County whose properties are crossed by the Atlantic Sunrise and Mariner East pipelines.

Contractor sued

The legal action to pursue liens against property owners has its roots in the October decisions by the two pipelines’ builders to sue their main contractor, Ohio-based Welded Construction.

Atlantic Sunrise builder Williams Partners of Oklahoma withheld $23 million in payments to Welded, alleging overcharges, accounting failures and contract breaches.

Sunoco, owner of the Mariner East pipeline, also terminated its contract with Welded, alleging the company failed to comply with environmental regulations.

Weeks later, Welded declared bankruptcy. That left some of its own suppliers and subcontractors — including United Piping and Dykon Blasting — unpaid.

Lien law originated in 1901

But how can landowners whose property was used — in some cases through eminent domain takings — for a pipeline project be held liable for utility work they had nothing to do with?

The answer is a 117-year-old state law called the "mechanics lien law" (see related story). It gives unpaid contractors, subcontractors and suppliers the right to pursue liens against properties where companies have performed work that resulted in “improvements.”

Sign up for our newsletter Success! An email has been sent with a link to confirm list signup. Error! There was an error processing your request.

The law has rarely been applied to pipelines.

A Lancaster attorney who didn’t want his name used because his firm has been approached to defend area landowners affected by the lien action said he believes the liens would not stand up if challenged in court.

“Asserting mechanics liens happens every day in Pennsylvania, but in connection with a pipeline operation which is an operation that the property owner didn’t want to begin with — that’s a somewhat unusual use of that law. Hey, those contractors didn’t do anything to improve the property.”

Still, the threat of a lien against the landowners is very real and would create legal headaches, he said, and a lien placed on a property would prevent it from being sold until the lien is removed.

At the very least, if liens are filed, the landowners will likely have to go to the expense of consulting a lawyer, the attorney said.

‘Unfair’ to homeowners

State Sen. Judith Schwank, who represents part of Berks County, finds the lien threat outrageous.

“Homeowners don’t deserve this. It’s unfair,” she said Wednesday. “I don’t think they should be subjected to this and I’m going to look at possible legislative remedies.”

She said she already has started conversations with the Pennsylvania Public Utility Commission over changes in the law that would protect landowners from liens where pipelines have been placed through their properties .

A PUC spokesman, Nils Hagen-Frederiksen, told LNP/LancasterOnline that the commission's technical and legal staffs were reviewing Schwank’s concerns.

Christopher Stockton, a spokesman for Atlantic Sunrise owner Williams Partners, said “landowners should know that Williams is aware of the issues and is diligently working toward resolution and will continue to do so until all such issues are resolved.”

He said that when Williams hired Welded Construction, Welded procured a payment bond “to ensure payment for labor and services for the issues.”

He said Williams is working to educate unpaid subcontractors of Welded about the availability of the bond and to make claims.

“We see no value in anyone threatening property owners,” Stockton said.

He said affected landowners can contact Williams for additional information by e-mail at AtlanticSunrise@Williams.com.

Dykon Blasting on Wednesday referred questions for comment to its attorney, who did not return a phone message.

A law firm for United Piping also did not return a call for comment Wednesday.

The east-west Sunoco Mariner East pipeline, which cuts through 6.5 miles of northeastern Lancaster County in Clay and West Cocalico townships, has faced delays and has not yet gone into service.

The north-south Atlantic Sunrise pipeline cuts through 37 miles of western and southern Lancaster County. It went into service in October.