July 28, 2014
As noted by a growing number of sources, natural gas, specifically shale gas, is booming in the United States like few other industries have in some time. But as people count on future money and positive trends, seemingly all growth areas have their bumps in the road, at best, and, at worst, watch bubbles burst spectacularly. There is little historic evidence to say there won’t be problems on some projects related to gas, specifically construction-related improvements that could affect service providers and materialmen. It begs the question: will mechanic's liens play a role in future line and well improvements?
"I certainly would not tell a client that it is not an option. I think there is an argument that you can, in fact, file a mechanic’s lien on such a project," said Kit Pettit, a senior associate with the Pennsylvania firm Bernstein-Burkley PC. "Yes, there is a certainly a lot of money in the industry right now and typically there is plenty of cash flow to pay vendors and contractors performing well. At the same time, there are a number of new entities or startups looking to get work. You may very well have companies that fail to perform properly. You may have companies that don’t know what they’re doing or perhaps expanded too quickly or don’t have employees with enough skill or training."
Mechanic's liens vary greatly from state to state, even among high-production states, according to Chris Ring, of NACM’s Secured Transaction Services. For example, the lien laws of Pennsylvania seem significantly more vague than those of Texas or Oklahoma (all three are among the top five in US states producing natural gas). As noted by Pettit, there still exists sparse case law available on the topic that is applicable to the current situation, in part because the boom conditions mean there have been few problems to date.