Pipeline easement: negotiating penalties

Landman is supposed to show up this week to begin the negotiation process. I know what I want in the easement. The problem I always encounter is how to enforce the agreement. 

For example: You want the pipeline buried with 5' of cover on top of it. The company agrees to include this provision in the easement. Then the construction crew shows up and only buries it with 3' of cover. How can you force them to comply on something like this? I know I could take them to court, but what would the judge order in this example? Would he tell them to dig it up and bury it deeper, or bring in 2' of topsoil to put on top of it, or ????? I would like the resolution/penalty to be included in the easement so that I don't have to rely on the "common sense" of a judge at some later date. 

Another example: "construction/remediation to be completed by Dec 31, 2016". I know I want the penalty to be included in the easement and this one has a simple solution: "For every day past completion date, company to pay grantor $XXXX." Very simple and enforceable by a judge if without any interpretation needed. 

But here is another example where the outcome is subject to interpretation: "Grantee shall remove rocks from re-deposited topsoil, to the extent the rocks would be an impediment to normal tilling methods." This is way too vague. I would change the provision to read: "Grantee shall remove all rocks larger than 2" from the re-deposited topsoil to 12 inches of depth". Sounds better right? But what happens when they don't do it? What type of penalty should I impose OR how do I get them to come back and fix it? 

Same deal with tile: "Upon completion of construction, any fences and drains will be reinstalled in a manner and condition equal to or better than that existing prior to construction." The problem with this provision is determining what "equal to or better" is, who determines it and when it is to be done. My revision is to include specific instructions for the tile installation. Example: "Within 6 months of pipeline completion, a 8" perforated tile line is to be installed on each side of the pipeline and shall run perpendicular to the pipeline at a distance of 25' from the pipeline with minimum depth of 3' and a minimum slope of .32%. Installation shall be performed by a installer chosen by the Grantor and all costs of said installation to be paid for by the Grantee. Payment not received within 90 days of installation shall be charged 1% penalty for every 30 days late.(12% apr) " Again, this is a case where I can assign a time frame, a cost and a penalty right in the easement. 

Sorry for the long post, but I just want to see if anyone else has had success negotiating "penalty" clauses into their pipeline agreements. Thanks in advance!

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1xc6tw2xj1fwlPermalink Reply by 1xc6tw2xj1fwl on February 3, 2016 at 4:59am

I'm not sure why any pipeline company would even want to do business with someone like you.  It would be easier just to deal with your level-headed neighbors.  Why on earth would you need 5 feet of soil from the top of the pipeline?  

Permalink Reply by Indiana Smith on February 3, 2016 at 6:39am

Here is a situation that would explain why 5 feet of cover is needed:  I have a pipeline going through my farm that has been there for 50 years.  I needed to harvest some trees from the back of the farm and drag them to the front of the farm using a dozer.  I had to cross the pipeline easement to do this.  The pipeline company would not allow me to drive the dozer across the easement because their pipe is not deep enough.  So, I cannot harvest the trees until I put 3' of additional dirt on top of their pipeline AND get their approval.  

I also cannot  install a drainage tile over their line because it is not deep enough.

I cannot even plow over their easement because there is a danger of hitting their pipe.

So, I have lost the use of this land because they did not install at a depth that would allow me to do normal farming operations.

This easement was signed by the previous owner of the farm.  That owner did not plan for the future.  I am trying to plan for the future and keep this ground farmable to preserve its value.  

Permalink Reply by Dave Lemley on February 10, 2016 at 5:45am

Here is another reason that you need to get as much in writing as possible, including penalties against the pipeline company. You will get screwed over ! I have been in the gas industry for over thirty years and when I negotiated with the pipeline company I was a level-headed person and do you know where that got me? Its been over a year and a half since Rice Energy installed a pipeline on my property and they still have not completed their reclamation!  I have contacted them numerous times and all they offer is false promises! The original contact that was overseeing the project moved on to another company and the land person that they are using now is worthless!   There is brush, stumps, and wood chips that have never been removed as promised from the temporary work space that they needed, the ditch line is settling, they tore out my waterline 2 times  and where it was repaired in my driveway has a big dip in it from settlement,  I have been  been picking up pieces of wood and large rocks out of my hay field ever since this pipeline project as completed. I have tried to be patient and understanding with them but nothing ever gets done! They promise to come out and fix these issues but then you never hear from them until you call back weeks later! So I say good for you Indiana Smith ! Get as much in writing as you can. And yes you are absolutely correct about the restrictions on crossing over the pipeline. Most people are good, honest, and level-headed but are forced to be difficult to deal with only because they are smart enough not to get screwed over!

Permalink Reply by Indiana Smith on February 10, 2016 at 7:57am

Thanks Dave!  The guy that posted above is obviously a landman (you can look at his previous posts on this forum and tell which side of the fence he is on).

I rent two farms that had pipelines go through in the last 3 years.  All 3 pipeline right of ways are a mess with rocks and trash left from the construction.  Topsoil was mixed with subsoil.  Erosion is a problem due to poor grading.  These areas will never produce crops very well again.  And the companies that installed these lines are gone from the area.  

The landmen or right of way agents tell you that you will never know the pipeline is there. However, I can show any person a yield map from the field and they can easily see where the pipeline is because the corn and soybeans yield less in the right of way.  I know one farmer who sued the pipeline company for crop losses.  The judge dismissed the case due to the poor wording in the easement agreement.

So, again, thank you for your support.  Landowners need to be aware of potential damages and need to be compensated when the damages occur.

Permalink Reply by Dave Lemley on February 10, 2016 at 8:42am

You are welcome! I have been involved in oil and gas operations many years and I have worked with many good land agents. But there are some land agents who say what needs to be said in order to get the ROW then you never hear from them again. Its requires the cooperation of the operations dept. and the  land department to make sure the promises are kept. I have learned that a pissed off landowner can make your job very difficult and I always tried to treat them with respect and as though that was my property. Unfortunately that is not always how it goes in todays environment. Its frustrating watching these inexperienced people out there trying to negotiate agreements with landowners. The more restrictive your agreement is the better off you will be! Its sad to be hearing that from an oil and gas guy, but I have found that the nice neighborly guys are the ones who usually get shafted the worst by the gas companies!

1xc6tw2xj1fwlPermalink Reply by 1xc6tw2xj1fwl on February 14, 2016 at 4:55am

Rice Energy is a joke.  No surprise there.

Permalink Reply by william Allen. Ladd on February 16, 2016 at 4:17am

Cardinal seems to be pretty lax when it comes to returning paperwork

Permalink Reply by william Allen. Ladd on February 17, 2016 at 2:16am

I have been waiting since before Thanksgiving day 2015. Emails have been sent requesting this paper work.  Return Emails from their representative and others such as land men give promises but as yet no paperwork!

1xc6tw2xj1fwlPermalink Reply by 1xc6tw2xj1fwl on February 14, 2016 at 4:53am

They should be able to give you a "heavy crossing" clause.  Burying the line an extra 2 feet costs an incredible amount of money.

Permalink Reply by Dutch Buckeye on February 3, 2016 at 5:35am

What pipeline is this?

Permalink Reply by Dave Lemley on February 10, 2016 at 5:47am

Was originally the Momentum M3 30" pipeline. Greene County, PA

Permalink Reply by Tim on February 11, 2016 at 11:50am

still no direct pipeline from NE PA to the New England market.

It is still so far behind production.

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