In our third installment on oil & gas law, here are five things to consider in negotiating pipeline easements…
- What surface facilities will be brought in with the pipeline? Many pipelines require other facilities on the surface in conjunction with the pipeline. Surface facilities are particularly noteworthy for surface owners that have ranching or farming operations as the facilities can take up needed space or interfere with things like hay, grazing, or crops. The agreement should restrict the company to a set number of surface facilities that are limited in size and location or specify that the facilities need to be built further down the pipeline on a different location. If surface facilities are absolutely necessary on your property then the landowner might negotiate approval of the location for those facilities.
- Can the company transfer their rights under the agreement? The landowner will want to require consent to assignment of rights under the agreement. One of the biggest concerns for a landowner is that the company operating on their land has a good reputation for integrity and stewardship towards the properties they operate on. It’s important to understand that without a consent to assignment provision in the agreement the company that signed the agreement with the landowner may be able to transfer or assign the rights to the operation of the pipeline to a company that may or may not have a good reputation for looking after the land. Further, in the event of an assignment, it’s imperative to make sure that any new operator is bound by all the terms of the agreement when it comes to things such as liability insurance, repairs, and restoration of the land.
- Is your liability limited under the agreement? In addition to being named as an insured on the liability and property policies of the company for the proposed pipeline, the landowner will also want to make sure that the agreement stipulates they are not liable for any acts, damages, or environmental violations caused by the company. Additionally, the agreement should include that the landowner will be held harmless and indemnified for any acts, damages, or environmental claims arising out of pipeline operation or accompanying surface facilities.
- How are cleanup and removal handled after operations have ceased? The agreement should set out that upon termination the company will be required to remove all of their surface facilities, pipeline, and equipment within a set number of days. The surface should be completely restored. Any damage to the surface during this removal process should be the responsibility of the company. If there are things like fences or vegetation that need to be replaced then the agreement should set out the specifications for the fence or the grass or vegetation that needs to be planted. Finally, all cleanup should be conducted in accordance with all applicable federal and state regulations.
- What depth should the pipeline use? The standard used in the industry is generally at least 36 inches below the ground. Other form agreements use the language “plow depth”. Each landowner’s situation is unique and therefore they may want to evaluate whether 36 inches below the ground is sufficient after accounting for settling and erosion over time.
Associate Attorney, Eagle Ford Office
This post is the third 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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