Thursday, June 13, 2013

Before signing a pipeline contract

Farm owners must carefully consider the specifics of their land, but there are also a number of considerations with regard to the contract itself when making a decision about a pipeline easement on the property.

“There is no such thing as a group contract. Each one of these agreements is with an individual landowner and an energy service company,” said said Dale Arnold, director of Energy Services for the Ohio Farm Bureau Federation. “You can group negotiate, but there is no group easement. You still have the opportunity to negotiate the contracts based on the individual needs of the farm. The ability to negotiate separate agreements is much greater than it was just a couple of years ago. You can tweak the agreements to fill your unique needs. I would not sign anything until I see an exact map of where this right of way is going to go, including GPS coordinates.”

An easement contract involves the right to use property of another without possessing it. The contract could be temporary, perpetual or both and ownership of land (as well as tax obligations) remains with the landowner. Arnold also suggests that landowners consider the following with regard to a pipeline contract:

• Does a new easement conflict with an existing easement on the property?

• Are there USDA, CRP, CREP or other farm program obligations on the property?

• Identifying clearly the farm property in question and avoid “blanket” language.

• Specifying access, road width and size of construction site.

• Limiting the placement of additional infrastructure on the property.

• The landowner has the right/option to require burying lines at a desired depth due to specifics of tile lines and other underground infrastructure, though general guidelines are typically acceptable.

• The width of both the temporary construction project and the final easement.

• Clarifying/restricting if and where compressor station, metering equipment and/or other pipeline support infrastructure is placed on right of way and property.

• Limiting right of way to a single pipeline — no additional infrastructure.

• Limiting pipeline to a single substance.

• Addressing how company will access the property for inspection and routine maintenance and identifying times when company should not enter area.

• Addressing the handling of landowner damages and disruptions including wording that makes the company liable for damage to growing crops, trees, fences, buildings, tile lines and drainage ditches, springs, water wells for homestead and livestock, and all surface property.

• And clarifying pipeline markers and signage.

Arnold strongly recommends getting an attorney that specializes in this area for the process. Call the local Farm Bureau for a list of good attorneys in Ohio.  Guernsey FB phone number is  740-425-3681

“The easement is one a landowner will live with for the rest of his life, as well as several generations,” Arnold said. “These agreements will go on for several generations and you want to work with good legal council and good accountants who are looking at this for you.”

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