Pipeline Easement and Right-of-Way Agreements 4-16-2015 Mark Landefeld OSU Extension Monroe County landefeld.6@osu.edu 740-472-0810 Clif Little OSU Extension Guernsey County little.16@osu.edu 740-489-5300
In this presentation we will look at items related to oil and gas pipeline type developments in eastern Ohio.
Disclaimer: Don t sign anything without seeking the advice of an attorney. The information provided is intended for educational purposes only!
Pipeline Construction Standards ODNR-DSWC has developed a model pipeline standard and construction specification to provide guidelines for controlling and minimizing the adverse impacts of pipeline construction on Ohio s soil and water resources. Web Site: http://soilandwater.ohiodnr.gov/portals/soilwat er/pdf/swcd/pipelinestandard_12-3-13.pdf
Project Type: Production lines & Wellheads Siting Jurisdiction: Ohio Department of Natural Resources (ODNR) Safety Jurisdiction: ODNR http://www.opsb.ohio.gov/opsb/index.cfm/information/natural-gas-pipeline-faq/ http://oilandgas.ohiodnr.gov/laws-regulations/senate-bill-315
Project Type: Gathering lines Siting Jurisdiction: Local zoning authorities Safety Jurisdiction: Public Utilities Commission of Ohio (PUCO)
Project Type: Natural gas distribution/transmission (intrastate)* within Ohio Siting Jurisdiction: Ohio Power Siting Board (OPSB) Safety Jurisdiction: PUCO *OPSB jurisdiction is limited to intrastate lines greater than 500 feet in length and 9 inches in diameter with a Maximum Allowable Operating Pressure of greater than 125 psi.
Project Type: Natural gas transmission (interstate) across state lines Siting Jurisdiction: Federal Energy Regulatory Commission (FERC) Safety Jurisdiction: Pipeline and Hazardous Materials Safety Administration (PHMSA)
Project Type: Liquids lines (individual finished product such as ethane, propane, butanes etc.) Siting Jurisdiction: Local zoning authorities Safety Jurisdiction: PHMSA
Pipeline Right-of-Way through a forested area
Easements Generally An easement is a legal right to use the real property of another. Arises by agreement between property owner (grantor) and easement holder (grantee), and should be documented in a written legal instrument. Easement instrument should be filed with county recorder where property exists. Also referred to as a right-of-way.
Easements Generally Ownership of land remains with landowner. As does obligation of property taxes. Landowner s rights on the easement property can be entirely restricted. May be temporary or perpetual. Easement payment and income tax: Temporary: ordinary income Perpetual: capital gains
Easements and Oil and Gas Leases Have I already granted any pipeline easements in my oil and gas lease? Check language of the lease to clarify extent of rights granted. In future leasing, remove grants of easement rights and negotiate those by separate agreement.
Pipeline Easements and Eminent Domain Ohio law grants pipeline companies the power of eminent domain to obtain property for some pipeline projects. And also the power to enter onto and survey private property for pipeline projects. Ohio Revised Code 1723.01. But company must follow eminent domain process and procedures. Chapter 163, Ohio Revised Code.
Pipeline Easements: Initial Questions Are there potential conflicts with other agreements, contracts or programs? Does pipeline conflict with an existing easement on the land? Does pipeline violate an existing agreement for a government program--crp, EQIP, etc.? Fully consider landowner s individual situation and what s happening on the property.
Pipeline Easements: Initial Questions Should I involve an attorney? Highly recommended One with experience in oil and gas, property law Different roles for an attorney Review the easement agreement Actively negotiate the easement Represent in eminent domain proceeding Do a cost/benefit analysis
Pipeline Easements: Initial Questions Should I negotiate easement together with other landowners? Landowner group negotiation approach? Challenge Differences in properties, land uses. Benefit Compensation?
Two Easements in One Pipeline easement Perpetual Continues indefinitely unless there is an ending agreement. Temporary construction easement Exists during pipeline construction process and possibly also for maintenance, repairs, replacement of pipeline. Important to establish clear boundaries and scope for each easement.
Payment for the Easements Payment is based on length of pipeline run across the property. Price typically paid per linear foot How does width or total acreage factor into the payment? Doesn t, unless landowner raises it. Increase payment for higher width of easement?
Payment Considerations What is the amount for the easement, and what is the amount for damages to the property? What about other costs such as: Survey work Attorney fees Filing fees Other
Easement Location Minimize impacts on property, farm, sensitive areas, etc. May need to specifically exclude areas. Can it parallel property boundaries or other easements?
Easement Location Determine the location clearly. Avoid a blanket easement. Use legal descriptions and illustrations. Request a pre & post-construction survey for exact location.
Easement Width Typical width: 100 to150 feet- often includes construction area May shrink down to about 50-75 feet after construction?
Pipeline(s): Number & Size(s) Limit the easement to a single pipeline? How to address the possibility of additional line(s) in the future: Additional easement or approval. Additional payment. Clarify size of the pipeline(s), or establish maximum size(s). Another factor to consider for payment.
Pipeline Depth Clarify the required depth of the pipeline when laid beneath the land surface. Minimum: 36 inches For agriculture, consider 48-60 inches to avoid conflicts with surface use.
Other Structures or Facilities Restrict surface facilities or structures on the easement. Compressor/pump stations? Pig launchers, drips, valves, metering equipment Alternatively, could limit surface facilities to certain locations. Consider this in payment determination.
Substances in the Pipeline Limit to natural gas and constituents. Generally prohibit other substances. List specifically excluded substances like sewage, wastewater, etc.
Pressure in the Pipeline Establish maximum pressure for the line. Consider higher payment for higher pressure line. Due to higher risks.
Limitations on Easement Use Prohibit company s right to grant permission: To other companies. For other types of easement uses. Determine ingress or egress points onto the easement
Construction Timetable Establish a specific time period for the construction and installation of the pipeline. Include timetable for temporary construction easement. Include remedies for failing to meet timeline. Include restrictions on workers during construction period.
Crossings at Ditches, Waterways Will pipeline cross a ditch or waterway,? Consider impacts. Require company to construct temporary crossings.
Restoration of Land Incorporate ODNR standards. And/or establish how company will restore easement area. After construction and after any future surface disturbance. Specify top soil removal and replacement methods (double ditching; original topsoil). Require soil enrichment manure, compost. Require reseeding may need future years, until established.
What if forage seeding did not take and the area is too rough for farm equipment? What if boulders are encountered?
What if the pipeline area becomes weed infested? How, Who and when will it be fixed? Who removes sedimentation devices?
Weeds can be a problem.
Water diversion bars prevented erosion but you can t run hay harvesting equipment over these.
Could there be some yield loss and if so how long?
Other Restoration or Repair Will there be impacts or repairs needed for: Field tile? Fences, gates (types and who maintains)? Livestock watering - Springs? Roads or driveways and how are these used? Timber, Tree tops ground, piled, burned? Other uses, structures, etc. on your property?
There are also temporary easements and water lines.
There can be damage even with temporary structures and lines.
Landowner s Rights of Use Retain broad rights to use the easement area. May farm in, on and around the easement. May graze animals. Permit temporary structures or accessories. What about driveways, landscaping, parking? Consider all potential future uses and needs Crossing the pipeline for timber harvest, etc.
Signage and Markers You may require that landowner agree to locations for required signage that the company must post. Will company mark the easement boundaries?
Easement Inspection and Maintenance Address how company will access the easement in the future, inspection schedule? Establish a routine maintenance, Identify times when company can t access, i.e., harvest, planting & provide notice of spraying, etc..
Disputes or Problems Address procedure for notifying company of a problem or for handling disputes. Where to direct problems. Time period for addressing or remedying the problem. Dispute resolution? Have it in your local area, and Options. Legal remedies if fail to address problem.
Indemnification Require company to indemnify landowner and hold harmless against any future lawsuits that may arise. Of or arising from the easement. Due to the pipeline, equipment or any facilities, etc. As a landowner you may want the right to hire legal representation.
Assignment Rights Address procedures for assignment of rights to other companies. Notice to landowner required. Compliance with easement terms required. As a landowner, be careful of granting Exclusive rights.
Amendments to Easement No verbal amendments. Establish that a written agreement is required to amend the easement terms.
Apportionment of Payment Require company to itemize payments for easement and damages. Income tax reporting advantages.
Warranting Title Do not agree to warrant or promise clear title to the property. Or to compensate company if a title issue arises.
Abandonment of Easement Define what constitutes an abandonment of the easement by the company. No construction occurs within X years of entering into easement agreement. No actual use of pipeline after X years. How long will this agreement last and how is my title cleared of this encumbrance?
Termination of Easement Define what constitutes termination of the easement. Require notice of termination to landowner. Determine company s obligations upon termination. Clarify landowner s rights upon termination. Address company s obligations: Remediation after removal & timeframe.
Final Thoughts If asked to grant an easement make certain you understand everything it includes While not mandatory, we recommend you consult with an attorney Review the agreement, Keep a log of conversations Actively negotiate the easement Get contact information Name(s) Address Phone Number(s)
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