December 18, 2013

Natural gas pipeline installer sues Summit

Schmid Pipeline Construction, Inc. is seeking more than $72 million in damages from Summit Natural Gas.

By Betty Adams badams@centralmaine.com
Staff Writer

A dispute between a pipeline construction company and the natural gas company that hired it has risen to the level of federal court.

Schmid Pipeline Construction, Inc., based in Mayville, Wis., is suing Summit Natural Gas of Maine Inc., based in Littleton, Colo., seeking more than $72 million in damages.

The lawsuit was filed electronically Wednesday in U.S. District Court in Maine, and there was no indication that Summit had been notified.

Summit did not respond to a request for comment Wednesday.

The two firms have been at odds publicly, and resulting delays in the pipeline installation have a number of customers in central Maine waiting for natural gas to arrive.

Schmid and two other construction firms, CCB Inc., of Westbrook, and Tetra Tech, of Pasadena, Calif., were hired last spring to begin the pipeline installation for Summit.

At that time, Mike Minkos, president of Summit Natural Gas of Maine, sent a news release.

“We’re pleased to announce the signing of our three contractors as they commence construction on this year’s $110 million portion of our Kennebec Valley natural gas transmission and distribution system. This represents the installation of 68 miles of steel pipe and 66 miles of plastic distribution pipe in various communities throughout the region, which creates an estimated 435 jobs during this construction season.”

Summit faced competition for customers from Maine Natural Gas, which had a head start in installing its lines in the Kennebec Valley.

Summit’s website said it “has made a commitment to invest $350 million dollars and create more than 400 jobs by building a natural gas pipeline to serve 15,000 homes and businesses in the Kennebec Valley within five years.”

The federal lawsuit, filed by attorney John A. Hobson, of the Portland law firm of Perkins Thompson, says Schmid was hired by Summit “to construct and install approximately 68 miles of 10-inch, 8-inch and 6-inch steel pipe in Somerset and Kennebec counties. Schmid was to provide a capital outlay of no more than $10 million at any point.”

Schmid was to provide all labor, materials, and services. Summit, in turn, was to make weekly payments to Schmid. The original completion date for the work was Nov. 1, with Summit to forward its final payment by Dec. 1.

The lawsuit says Schmid “quickly determined that the scope of the work ... was significantly greater than originally estimated and budgeted for.” That included numerous additional line crossings where the pipeline needed to be installed deeper than originally contemplated.

The lawsuit says Schmid was forced to increase workers, working hours, materials and equipment, but that Summit “failed to increase payments” to Schmid in response.

A later amendment to the contract increased Schmid’s contract from $62 million to $76 million, and again limited Schmid’s outlay to $10 million, but put in a completion date of Dec. 6.

So far, the complaint says, Schmid’s capital outlay amounts to $72 million.

Schmid was working on the pipeline project in Norridgewock and Randolph, but was gone by late November. At that time, Summit officials declined to say why. The lawsuit says Schmid told Summit on Nov. 20 it was terminating the contract and “demobilizing from the jobsite.”

The lawsuit charges breach of contract, violation of Maine’s Prompt Payment Act, unjust enrichment and damages of more than $72 million.

Betty Adams — 621-5631badams@centralmaine.com Twitter: @betadams
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