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Construction Law Issues Impact the Expansion of Natural Gas Pipelines in the Region

As the natural gas industry expands in the region, energy and midstream companies and their contractors need to be aware of the unique Pennsylvania construction law issues that may impact development.

Although Pennsylvania courts have not yet addressed whether natural gas construction activities constitute an “improvement” under the Pennsylvania Mechanics’ Lien law, contractors and subcontractors may have mechanics’ lien rights for services rendered. Thus, it is undecided whether the lien would attach to the fee simple interest of the owner of the real property at issue, or whether a lien claimant is limited to attaching its lien to the leasehold interest of either the lessee or easement holder.

Although also not yet addressed by a Pennsylvania appellate court, it seems clear that the Pennsylvania Contractor and Subcontractor Payment Act (CASPA) applies to contracts entered into for natural gas development. Under CASPA, owners of construction projects must pay contractors according to the terms of their contracts. If owners fail to do so, courts may award the contractor interest along with penalty fees and attorneys’ fees. Furthermore, under CASPA a venue and/or choice of law provision selecting a venue outside of Pennsylvania or seeking to apply non-Pennsylvania law is unenforceable.