Landowners receiving the letter should first obtain a copy of their easement and work with legal counsel to determine if Texas Gas has the right to convert to liquid components. Does the lease limit the company to natural gas? If not, consider your present and future needs if you chose to renegotiate a right-of-way.
Three key areas to consider are the pipeline impacts on your property from maintenance and long term presence, income from the easement and for damages that may occur, does the company have the potential for eminent domain and is it willing to pursue eminent domain? (Utility companies have the ability to condemn land for right-of-ways. Based on Kentucky law the legal opinion is that with this liquid fraction the companies will not have condemnation rights, however, Texas Gas believes it does have the right.)
A lease the company brings to you is a starting point for discussion. You have the right to negotiate when signing a new lease. It is very important to read a lease closely as there are many possible clauses that can be added to your benefit and to protect your rights.
Leases for pipelines in Pennsylvania have run from $5 to $25 per linear foot. On a tour I attended recently in West Virginia, Extension agents there indicated that most pipeline contracts in that area were in the $5 range. Keep in mind the exceptional nature of this phenomenal natural gas development. Land leases for natural gas development (not pipelines) in the region started out, as has been common here, with farmers receiving less than $10 per acre. Leases now are common in the thousands of dollars. Personal friends of mine have leased land for $1,500 per acre in the last year.
Aspects of a pipeline easement that are negotiable include:
n Pipeline location can be specified for new pipelines taking into consideration areas a landowner doesn’t want disturbed and future building considerations.
n Pipeline depth can be negotiated deeper than state law. For farmland this is recommended to be 48 inches below the land surface.
n Specify the maximum pressure allowed with a higher payment for higher pressure lines due to the associated risks.
n Construction of associated structures or “appurtenances” can be prohibited, location can be limited and extra compensation can be required. These include compressor stations, pump and meter stations and meter pits.
n Pipeline width should be in specific terms and may include additional temporary width for construction in a construction easement.
n Negotiate using the right-of-way as a recreational trail.
n Soil amendments will be added based on soil tests and seed, seed type. It can be specified that topsoil will replaced on top and not inverted to the bottom for new construction or repairs.
n Specify the easement width and timeline/time of year for completion. Standards can be included to reduce soil compaction, erosion and drainage.
Companies can be required to identify sub-contractors and be responsible and liable for all acts on your property by independent and sub-contractors. In addition, the agreement can require the pipeline company to not hold legally liable the landowner from the acts and omission of the independent and sub-contractors.
Specify payments for trees, crops and other damage occurring from pipeline work, reseeding requirements, stream crossing methods and required restoration.
Defining and limiting access to easements including replacement or installation of fences and gates stating which gates will have locks and the nature of the locks, limit the keys and lock access.
Identify a company contact for the landowner and require 30 days prior notice to landowner of any change in contact person or contact information, define access post-construction to the easement including method and roads, prohibit or limit surface accessories to the pipeline, lease termination.
Define “abandonment” of the pipeline and require removal of a pipeline if abandoned.
Require prior landowner consent for any assignment of the easement to another party.
Limit the size and the right to install additional pipelines.
Specify requirements for surface repairs and damages, and the right to seek surface damages for repairs.
Choose an alternative dispute resolution method that makes it the cheapest, quickest and least burdensome way to resolve conflicts between the landowner and the pipeline company.
Require that easements should be by metes and bounds descriptions and with the official surveys – pre-construction and post-construction (as-built survey).
Landowners should never agree to warrant a clear title or to compensate a company if a title issue arises.
Payments for 30-year easements are considered capital gains. Income for a temporary easement, lasting less than thirty years, is considered ordinary income. Landowners should receive a statement from the company that itemizes and explains payments made to the landowner. This information should not be used to replace the services of an attorney or other professional.
References for this article are publications by Penn State University: Natural Gas Pipeline Right of Ways: Understanding Landowner Rights and Options, and Ohio State University: Negotiating Pipeline Easements.
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