If you’re a landowner who has a pipeline easement, or you’re currently considering a pipeline easement on your property, here are essential questions every landowner should ask, or at least be aware of…

1.Are you insured?

The first inquiry to the company should be what kind of insurance they carry as it relates to your property and their operations. Is the company willing to name you as an additional insured with regard to that pipeline easement? Many landowners have surface operations on their property that involve physical structures, equipment, and guests or business invitees. Being named as an additional insured may (depending on the scope of coverage) provide the landowner some insurance recourse if there should be an issue related to the pipeline easement such as property damage or injury.

2. Is your neighbor getting a better deal?

Chances are you are not the only landowner in the neighborhood being affected by a proposed pipeline easement. The company has more than likely already approached your adjacent neighbors along their proposed route. Many companies require confidentiality as to the terms of compensation paid for a pipeline easement. So, It may be difficult to find if or how much your neighbor was paid.

One thing you can consider is requesting a most favored nations clause. This clause would attempt to make sure that landowner A is, in fact, getting the best deal in town by requiring the company to match the difference in compensation if they make a better deal with another landowner B within a given period of time after signing with landowner A.

3. Does the pipeline easement contain a choice of law provision?

Do not assume the law in the state where you are located or signing automatically applies. It is important to be aware that the company can stipulate in the easement which state’s law will apply if a dispute arises over the easement agreement.

4. Does the easement contain a forum clause?

Many landowners assume that the most logical place for a lawsuit or dispute is where they are located. This may be true but it is very important to be aware of what the easement agreement states as to the forum or location of litigating a dispute under the agreement. Insist on forum in your home state and county.

5. Should I warrant title?

In short, no. By warranting title you are representing to the company that there are no other unknown owners or encumbrances on the property. This poses a certain degree of risk to the landowner in that there could be something in the chain of title that they were unaware of. A standard form easement will probably include a provision where the landowner’s location warrants title to the property. The company has the ability to conduct a title research to determine ownership and encumbrances on the property. The best practice is to decline to warrant title.

Carlos Estrada

Associate Attorney

Bethune | Enright, PLLC – Eagle Ford Office

This post is the second installation in our series on oil & gas law. The next installment in the series will feature further considerations for dealing with pipeline easements.

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