Law Office of Stephen Boyd Moon, PLLC Blog

October 5, 2009

Pipeline Rights of Way – Voluntary and Involuntary

Filed under: Uncategorized — admin @ 8:18 PM

Let’s face it, natural gas and oil are crucial commodities – we use natural gas in our homes, recreational vehicles and our grills, refined oil powers our vehicles and is used in creating many of the products we use everyday.  The oil and gas  we use on a daily basis is regularly transported through pipelines.  Moving oil and gas through pipelines is both efficient and relatively inexpensive thus cutting down on costs at the pump.  However, the one drawback is that these pipelines have to be laid on private property.  If you own property in Texas, the chances are high that you either already have at least one pipeline running under your land – or will in the future.  Not much can be done to stop pipelines from being run across your property (this is not always true – attorneys are developing interesting ways), but you can know the rules and things to ask for before you are contacted by a pipeline company.

Negotiating the Easement (Voluntary)

Many times a pipeline company will send a landman to discuss obtaining a pipeline easement (right-of-way) across your property.  For the most part, landmen act in a respectful and courteous manner, but regardless of their demeanor, you need to remember that the landman works for the pipeline company and has only his company’s interest at heart.  More often than not your attorney and the landman will be able to work out a mutually agreeable solution covering a variety of issues important to you and the company.  Matters typically addressed are: compensation, amount of acreage taken (width of easement), location of the easement, duration and surface issues.  While the foregoing issues are crucial to any easement agreement, there are a vast amount of other issues to be addressed and should be discussed with your attorney.

Compensation

When negotiating compensation, one must look at the value of the land being taken and what impact it will have on your present or future use of the property.  If you are only using the property for cattle grazing, you may not be able to justify a high price; however, there is always the possibility that you may someday use it for some other purpose – make sure to consider this.  Landmen like to price the easements in terms of “rods”.  A rod is roughly sixteen and a half feet.  I think Landmen like to talk in terms of “rods”rather than “feet” because $125 per rod sounds a lot better than $7.50 per foot.

Surface Issues

Surface issues are extremely important.  Make sure to address surface issues that are important to you such as double ditching, erosion prevention, environmental concerns and access issues.  You may also want to reserve use of the easement area as long as it doesn’t interfere with the company’s intended use of the easement.

When negotiating you must remember that the pipeline company will not just be acquiring a certain amount of linear rods (or feet), but will be acquiring an area.  Therefore, it is crucial that you negotiate the width of the easement.  For most easements, you should stick to your guns and allow no more than thirty feet in width.  Easement widths can range from twenty feet wide to seventy-five feet wide depending on a variety of factors.  It is always good to calculate the square footage (or acreage) acquired, not just the distance, so that you can get a fair value for the land taken.

If at all possible, in order to minimize damage, you should try your best to locate the easement along (or as close to) the border of your property.  You should also focus on having the pipeline situated in a vertical or horizontal fashion, as opposed to running diagonally across your property.

Termination

Without clear language to the contrary, an easement can last in perpetuity.  Make sure to include language in the agreement that requires a termination and release of the easement after a set time.  You may also wish to include language that provides for an abandonment of the pipeline itself after a certain number of months after termination.  Steel pipe is extremely valuable and can be sold either in the ground or dug up to third parties.

Condemnation (Involuntary)

The foregoing issues covered matters you may be able negotiate; however sometimes, you and the landman will not be able to reach an agreement.  At this time, the company will likely make a final offer.  If you reject the final offer (or do not respond), the company will institute proceedings to condemn your property.  As a “public carrier” a pipeline company can have virtually the same rights as the government to condemn you property.  These rights are termed “eminent domain”.  The Texas Constitution and the United States Constitution require that a party exercising eminent must proceed under due process of law.  This means that you must be paid adequate compensation for the property taken (and possibly damage to the remaining land) and that certain mandated procedures must be followed.  The process involved is lengthy and a full examination thereof cannot be covered in this article, but includes a hearing before specially appointed commissioners.  Depending on the response from this article I may consider devoting an entire article to the condemnation process.

Pipeline easement negotiation is a complex process and can have a lasting impact on your lands.  If you are approached by a company wanting an easement, you are advised to contact an attorney experienced in this area.  None of the foregoing is intended as legal advice or to replace representation by a competent attorney.  Certain things that may be desired in one situation may not be desired in another; each situation is different.  Do not rely on the foregoing and consult an experienced attorney.

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