Gas Pipeline Companies are Offering Landowners Money in Exchange for Easements
A group of landowners in West Virginia and Virginia are about to be put through an ordeal that will have long-lasting consequences for them. As proposals for three major natural gas pipelines solidify and work through the regulatory process, pipeline companies have already begun working to assemble and purchase easements along the pipeline routes. To secure the privilege of running their pipelines across private lands, the pipeline companies are offering landowners money in exchange for easements.
What is an easement? Essentially, it is a contract that limits the use of your land and gives rights to that land to the pipeline company for life. The pipeline company becomes a partner in your land; it ties you to them forever. Suddenly, many of the things you want to do with your land — develop your land, sell lots, drill a well, put in roads crossing the easement, put up a fence, — requires a negotiation and approval of your new partner.
Contrary to what some people believe, the pipeline company’s offer is not a windfall, and without a full understanding of what the easement is worth and how it will affect their rights to use their own land into the future, landowners will almost certainly give up more than they receive.
Landowners do not have to accept the company’s initial offer, even if company representatives start talking about eminent domain. But none of the pipeline companies have been granted the right to use eminent domain — and it’s possible they never will. But even if they are, landowners don’t give up their right to negotiate.
Landowners shouldn’t be afraid to hold out. In fact, it limits the use of your land, and in my experience the initial offers are almost never the best offer you can get.
Every landowner’s situation is going to be different going into these negotiations. Every landowner’s goal will be different. But the pipeline companies’ goals are clear: They want to assemble the necessary rights-of-way at the least expense with the most flexibility. The pipeline companies will employ knowledgeable and experienced attorneys and other negotiators to get what they want. Landowners need to ensure they negotiate as broad of a scope of use for their own property as possible.
There are a multitude of issues landowners need to consider when negotiating an easement with a pipeline company. The language of the easement document is critical. How the document is drafted can determine whether it protects a landowner’s rights or erodes them.
For instance, a well-drafted “hold-harmless” provision will protect a landowner from liability in the case of an accident or damage caused by the pipeline construction or operation, but a poorly worded release could prevent the landowner from receiving compensation from the pipeline company for an accident that damages the property.
The pipeline company doesn’t want the landowner, for instance, to sue for damage to trees after the easement has been granted — but if a release is vaguely worded it could indemnify the company for damage beyond the easement. Say a careless surveyor tosses a cigarette and starts a brush fire (which has happened).
A poorly written easement could make it difficult to get the pipeline company to pay for that damage — or even the much worse potential damage from a pipeline rupture or explosion.
The easement will also determine whether a pipeline company has a right to place above-ground fixtures. Some of these fixtures could be unobtrusive, such as warning signs. Others could be large fixtures surrounded by huge fences. What’s allowed is determined by the language of the easement.
Other considerations include what rights of access the pipeline company has, both during the construction and after. Can the pipeline company use a driveway or other roads on the property? Will the company restore any damage to the roads after construction?
The company may also often want a temporary construction easement — which could be double the width of the permanent easement. This will be a muddy, industrial construction zone, with heavy machinery, trucks and pipes stored on it for the duration of the build. After construction, it will be returned to the landowner’s full use, but the easement determines what shape the company must leave it in.
This all just brushes the surface of the complexity and consequences of these negotiations. No landowner should enter into them lightly, or without a lawyer to help them.
John Barrett is a partner at Bailey & Glasser, a Charleston-founded firm with offices in nine states and the District of Columbia.
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