This is a second post in a series describing common promises or other statements land agents make to entice landowners to signing leases, easements, or other agreements relating to oil and gas or pipeline transactions.
Click here to view part one.
“The crops will grow right over it, you won’t even know it’s there!” While the first part of this statement may be true, the second part is a loaded gun. True, most pipeline contracts allow farmers to plant crops on top of the easement. But trust me, the farmers will know that it’s there. Under the best case scenario circumstances a farmer will suffer yield loses in the first four years. Year one is construction. Year two is reclamation (for farm ground this should include fertilization and disc’ing, aeration, etc. to prevent compaction). Even if these methods are implemented correctly, I still usually see up to two years significant yield loss. With the worst case scenario you could see issues with compaction, erosion, snow melt, poor fertilization, and any other number of problems for years to come. Most of these issues can be addressed in your contract. Any pipeline contract worth its salt deals with specific methods for reclamation and particular fertilization methods [by the way, the same is true for non-crop lands!]. An exceptional pipeline contract will also deal with what happens when the pipeline company doesn’t follow the contract, or a perfect storm of weather circumstances causes severe compaction or erosion. Trust me, you’ll know it’s there. Please speak with an experienced pipeline attorney to plan for the worst-case scenario.
“Pipelines are safe.” Pipelines are widely considered to be the safest method of transporting petroleum, natural gas and their constituents. But this is largely because a pipeline’s only competition is rail, truck and barge, which also come with fairly severe safety considerations of their own. The debate rages on inside and outside of the industry as to what ‘safe’ really means. As a landowner, what you care about is the two measures of distance: how far away from your home/business/buildings the pipeline will be, and how deep in the ground it will be. The larger these distances, the more you have set yourself up for success in the event that a catastrophe happens. Sometimes you can control (or at least have input in) where the pipeline goes across your property—sometimes you can’t. This depends on what type of pipeline is being installed. Typically, a landowner can have input into how deep the line is buried, although most pipeline companies act like you can’t. Getting good legal representation is key to understanding both these issues on your specific property.
“We can’t do that because of our regulations.” This phrase is most often used when you’ve asked a pipeline company to do something that they don’t want to do because it will be expensive for them. I hear it a lot when a landowner asks for extra depth of cover. On a FERC (federally regulated) pipeline, it’s true that the company will have to follow regulations, what they don’t tell you is that often they are allowed to raise the bar above FERC regulations. For example, FERC may require three feet of cover on top of the pipeline, but there is nothing stopping the pipeline company from agreeing to five feet of cover over the line. There are innumerable examples here. Also note that non-FERC pipelines have very few regulations at all.
An experienced pipeline attorney can help you translate the above statements to fit your needs.