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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Mike MurphyPermalink Reply by Mike Murphy on February 14, 2016 at 8:19am

Permalink Reply by Finnbear on February 16, 2016 at 2:55am

This will not go how you think it will go. If you demand any of those things from the pipeline company they will look elsewhere for a place to lay their pipe. That may be a good thing, especially if you want to retain use of your land.

Permalink Reply by Finnbear on February 16, 2016 at 3:08am

We were approached about a temporary easement for a water line across our property. We were also approached about a pipeline ROW. When we looked at their vague contracts and started asking questions the landman wasn't prepared to answer, they looked elsewhere. In our case, this was a good thing because the money offered wasn't worth the inconvenience and loss of use and income from the land.

Permalink Reply by Kyle Nuttall on February 18, 2016 at 3:06pm

Typical damages in a contract case will be money.  The court will determine just how much money it will take to "make you whole" and award that.  Of course, that costs lawyer's fees and takes a lot of time, so you're better off getting the right language in the agreement ahead of time.

You've got the right attitude about this.  Get it in writing.  Like Dave Lemley said, the landman will be reassigned or move to another job, and nobody will remember what you guys talked about.  All that's left is the paper.  Being the nice, understanding landowner won't help you long-term.  

I'm not licensed in PA, so I can't help you with the legalese up there, but if you want to get in touch I can try to find another lawyer for you up there.  I highly recommend getting experienced counsel.  

Permalink Reply by Billy Bob Meeker on February 22, 2016 at 6:09am

Simple answer ... tell then you don't want a pipeline on your property.

To date, I've been approached by over a dozen "pipeline" companies about placing pipelines on my farms.  In each case, I have refused to even consider a line across tillable acreage for many of the same concerns you have expressed.  The landmen have griped and complained and threatened, but I've stood firm and they all ended up putting the lines on someone else.  Fine with me as I don't want the hassle.  I'm totally tired of their crap.

The last two landmen I've told outright that I'm not interested in any pipelines anywhere on my property.  So far, none of the pipelines have been eligible for eminent domain so I haven't had any problems telling them to get lost!  The landmen say I'm unreasonable but then I point to their standard two-page ROW agreement that is all one-sided in their favor and ask who is unreasonable??

The pipeline companies make their own lives difficult by treating landowners unfairly, not keeping their obligations, making threats, and wasting dozens of hours of my time.  Sorry for the rant, but I've had it with these people!

Permalink Reply by Michael Allen on February 22, 2016 at 12:28pm

When you are negotiating your right of way easement for pipelines, if you do not have a specific default clause that the company signed, then you are likely to get screwed on any damage issues. The initial default amount needs to wake them up; something like $10,000 initial payment and then $500/day until the issue is fixed to your satisfaction.

This includes off-right of way trespass, ditch subsidence, non-revegetation, access road maintenance issues, and rock removal. Rocks over 3-4" are the usual size for picking, less than that is rather difficult unless the dirt is really dry and if it is that dry, seeding becomes a problem.

The depth of the pipe is of major concern and 5' isn't an unusual stipulation with drain tile and deep furrows and can be a problem with only 3' of cover. For the individual above where there was a 5' stipulation and the pipe has only 3', then you need to hire a lawyer and sue for breach of contract and either make them dig and rebury the pipe (plus a substantial additional damage claim for surface damages) or, present them with a huge damage settlement (like $100/foot) plus a waiver for you if you hit and damage the pipe. Also a new indemnification for any damages that you may cause that will result in a spill or hazmat situation. All days in default after the agreed upon "end of construction" should again be at a premium. The real problem is determining when the "end" really is. Is that after the ditch is covered? After the rocks are picked? After the seeding? Or after the successful re-vegetation? IMHO it is after successful re-vegetation and that date should be 6 months after final grading, rock picking and seeding. That gives the land time to recover and show areas that are not vegetated.

Regarding the question as to whom decides which is as good or better, that means you, the landowner makes that decision and no one else. If the company has a problem with you making that decision, then you should hire an expert on the situation. In all cases, if you hire an attorney, make sure that the company pays all of your attorney fees. That should also be a clause in you original easement "contract".

Hope this helps-

Michael Allen

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