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Many Ohio landowners have been, or soon will be, approached by a pipeline company representative trying to obtain a pipeline easement. This memo provides an overview of the steps that a landowner will want to consider in preparation for being approached by a pipeline company representative. This is important because a pipeline easement is likely a forever encumbrance on the property!
Step 1 "The Title Research": Determine whether there are any existing easements or right of way agreements affecting your property's title. Pipeline rights granted in the past can have a significant impact on your ability to sign a new pipeline easement. A prior easement may allow a pipeline company to install new pipelines on your land. It's important to know that, unlike oil and gas leases which are for a limited duration, most easements last forever.
Step 2 "The Decision About Granting": The landowner's first decision is whether he is willing to agree to a pipeline easement. If the landowner absolutely does not want a pipeline on his property - no matter the terms or compensation - then the landowner should tell that to the pipeline company AS SOON AS POSSIBLE, so the pipeline can be re-routed around your property. If a re-route isn't possible the landowner will want to immediately hire an attorney (knowledgeable about pipelines) to discuss options.
Step 3 "The Knock on the Door": When the pipeline company representative first approaches you to sign an easement he will likely want to obtain your signature on the spot. You will be told there is a certain timetable within which you need to sign, and if you don't sign, the company will take your land through eminent domain. You will also be told that your neighbors signed the easement and the neighbors will be angry with you if you do not sign. You will feel pressure to sign quickly. But, there is no rush for you to sign! You will want to be fully informed about your rights and understand every word in the document before you decide to sign.
Step 4 "The Negotiation of Terms": You want to make sure that the easement terms adequately protect you and your land forever - and that will take negotiations. Some of the terms you will want to include: (1) Description of the specific purpose of the pipeline; (2) the specific location; (3) the type of pipeline to be installed; (4) Specific requirements regarding construction, maintenance, and remediation; and (5) terms to adequately protect you and your property and sufficiently compensate you for the easement and for any damages.
Step 5 "Show Me the Money": After negotiating terms, focus on the question that has been on your mind since you started thinking about pipeline easements--what am I getting paid for this? While the easement will likely last forever, typically the only compensation you will be paid for on the easement, is a one-time payment agreed to at the time of signing. Think about how the easement will affect the property, property uses, and property value at the present time and also what future uses or value the easements may inhibit.
Step 6 "The Threat of Eminent Domain": A pipeline company may have the right to acquire a portion of your land through eminent domain if you do not agree to grant an easement. However, do not let the threat of eminent domain cause you to accept the easement and compensation that a pipeline company representative first offers you. Even if a part of your land is taken by eminent domain a landowner has the right to "just compensation" for that land, and your land values will be at its "highest and best use" which is usually well in excess of the amount initially offered to a landowner.
NOTE: This article has been prepared for informational purposes only and is not legal advice. This general discussion of the law should not be used to solve individual problems and no person should act upon any information contained in this article with regard to their own unique factual situation without first seeking their his/her own attorney knowledgeable about easements and rights of way.
Mr. Emens is a partner in the Emens & Wolper Law Firm, LPA, whose major areas of practice are Corporate Law, Oil and Gas Law, and Family Owned Businesses. For more than forty years, he has counseled numerous clients on business and oil and gas issues including oil and gas leases, acquisitions and sales, and represented many clients before state and federal regulatory agencies. Throughout 2011, Mr. Emens spoke to more than 3,500 Ohio landowners about oil and gas leasing.
The well known reference book, "Best Lawyers in America," lists Mr. Emens in Corporate Law, Oil and Gas Law and Natural Resources Law
Sean Jacobs is an associate with Emens & Wolper Law Firm, LPA. His primary areas of practice include Oil and Gas Law, Estate Planning, and Corporate Law. Mr. Jacobs regularly speaks to groups of landowners around the state of Ohio about various topics related to oil and gas.
Mr. Jacobs is a member of the American Bar Association, the Ohio State Bar Association, the Columbus Bar Association, the Ohio Oil and Gas Association, and the Energy and Mineral Law Foundation.