Negotiating Rights-of-Way & Easements on Your Property

Written by Angela & Wil Stanton
August 21, 2015

easementAn article in the August 21st edition of The Roanoke Times by Duncan Adams (http://www.roanoke.com/news/mvp-begins-buying-easements-for-proposed-pipeline-in-w-va/article_7738a513-ca37-523e-9139-c643da1f4077.html) provided information that Mountain Valley Pipeline, LLC has begun to purchase easements for the proposed pipeline.  Based on the information provided in the story, these agreements sound like a BAD deal for landowners.  According to the article: “Among other provisions, the perpetual right-of-way contracts in Summers County give Mountain Valley Pipeline LLC, or successor, the right to install and operate one additional pipeline and related equipment within the easement area for a separate but equal payment.”  This means that people who have agreed to these terms have (1) granted an easement forever, (2) given MVP the right to sell the easement to another company at any time it wishes in the future, (3) given permission for another pipeline (and related equipment) to be installed on the property at any date it wishes in the future, and (4) agreed that what MVP paid for an easement today will be the same amount paid if the clause for a second pipeline is executed at any point in the future.  Think about it, what will $5000 be worth in 2025? 2030? 2050?  What are the future implications on your children and grandchildren?

It is not an unusual practice for companies to purchase easements before a project is certificated by the Federal Energy Regulatory Commission (FERC).  Companies do this because (1) they believe the project will be certificated and (2) purchasing easements early facilitates the construction process if the project is approved by the FERC.  Additionally, companies can use landowners’ willingness to negotiate a deal early on to show to the FERC that the project has public acceptance.  Our view is that it is far too early for any landowner to consider negotiating and signing an agreement granting an easement.  The route is still in flux and the Environmental Impact Study has not been completed.  Signing away your rights is not in a landowner’s best interest when there are still so many unknowns.  We strongly encourage any landowner who is contacted by a right-of-way agent for MVP to not sign an agreement at this point in time.  While the right-of-way agent will simultaneously try to cajole you and intimidate you into signing an agreement now, it is not in your best interest.  According to the Pipeline Safety Coalition[1], “you have the right to: (1) wait until the FERC issues an Environmental Impact Statement, (2) review and comment on the EIS, and (3) review the FERC Conditional Approval for conditions that may alter the pipeline operator’s preferred/applied for route and therefore may alter the terms of your proposed easement” before signing an easement agreement.

If a landowner signs an easement agreement, such as those apparently being signed by some landowners in the proposed path of the MVP, before the FERC certificates the project, the easement (1) can be sold to a third party or used for gathering or distribution lines, (2) becomes part of the title to your property, and (3) may be very difficult to remove.[2]

An easement is a right granted by the property owner to a third party to use a defined part of a property for specific purposes (which are outlined in the agreement).  Keep in mind, however, that while an easement grants a right to use a defined area of your property, it may also have effects outside of the easement boundaries – and these should be considered before you sign any easement agreement.  When the company sends a landman or right-of-way agent to your home to negotiate the terms of an easement agreement, remember that they are working for the company, in this case MVP, LLC.  That means they are trying to get the best deal for the company and they are not looking at what is best for you.  They will also try to get you to sign for the fewest restrictions for the least amount of money you are willing to accept.  We recommend that you do not rush into a decision to grant an easement and you should not allow yourself to be pressured into signing any contract granting an easement on your property before (1) you are ready to do so, (2) all of your questions have been answered, and (3) an attorney has reviewed the agreement.  Let’s face it, unless you are an attorney, the agreement will be written in legalese – you do not want to miss something important or sign something you do not agree with because of the wording used.  We cannot stress strongly enough that if you are considering an agreement, you should consider consulting an attorney to help negotiate easement terms that protect your interests.  Two companies that have been involved in protecting the interests of landowners in the path of the MVP and can help you with this are Waldo and Lyle (contact Joe Sherman at jvs@waldoandlyle.com or 757-622-5812) and Appalachian Mountain Advocates (contact Isak Howell at isak@howell-lawoffice.com or 540.998.7744).

Some things to keep in mind during the negotiation process and before signing an easement agreement (adapted from the Kentucky Resources Council[3]):

  • Granting an easement may result in income tax consequences; it is a good idea to seek advice from an accountant or tax professional to determine your tax liability.
  • An easement on your property may impact your ability to obtain or maintain insurance on your home or property. It may also impact the rates charged.  Only your insurance agent can tell you the impact an easement may have on your property and we recommend they be contacted.
  • If you hold a mortgage on your home or property, granting an easement may violate the terms of your mortgage. It may also harm your ability to refinance your mortgage in the future.  We recommend you contact your bank/mortgage company.
  • Granting an easement may hurt the value of your property, impair your ability to develop your property, and make marketing your property difficult if you wish to sell it in the future. Seeking advice from a qualified real estate professional about the impact hosting a natural gas pipeline may have on the value and use of your property is warranted.
  • The companies will likely want to give you a one-time payment based on the length of the easement but you do not have to accept this. Remember, MVP claims they want to partner with us.  Landowners could consider asking for an annual payment based on some percentage of the throughput of gas on the line, for example.
  • Consider specifying payment details for such things, in addition to the easement, as damage to crops, timber or other products located within or outside the easement, impact to land value, duration, survey fees, legal review fees, recording fees, and taxes on any payments from the company.
  • MVP is asking landowners to sign “perpetual” easements. This means easements that continue forever.  You do not have to accept this because that is what is being offered.  An easement can be limited to a set period of time or written to terminate when the pipeline ceases to be used.
  • MVP is including the ability for the company to sell its stake in the easement to another company. Again, you do not have to agree to this and can, instead, specify that your consent as the landowner would be needed before an easement can be transferred, sold or assigned to another entity by MVP.
  • The landowner is typically responsible for the taxes on the land covered by the easement. However, you can negotiate that the company pay these taxes although you would need legal assurances to insure that taxes are paid in a timely manner.
  • Just because MVP wants landowners to agree to a possible second pipeline, you do not have to do so. It is critical that you not only specify the number of pipelines but also the size of pipelines allowed, what can be transported in the pipeline, and the maximum size and pressure; all of these can be specified and limited.
  • Currently MVP is negotiating easements not only for pipelines but “related equipment”. You should ensure that any equipment or above ground facilities be delineated.
  • It is critical that an easement agreement clearly specify the rights of access across the property to the easement. The right of access can be limited so that the company will not be able to cross your property to gain access to the easement.
  • Water supplies may be endangered during the construction or operation of the pipeline. It is imperative that you include a water supply replacement obligation if your water supply is lost, diminished or contaminated.  This applies to septic systems as well.
  • You can ensure that the company be held liable and have a non-cancellable insurance policy in place to insure against all risks including property damage, harm to livestock and crops, and personal injury from the construction and operation of the pipeline.

This is not an exclusive list of considerations if you are considering negotiating an easement agreement.  We have provided additional resources that address more specifics on this process as well as sample agreements at: http://preservethenrv.com/negotiating/.  We hope you will share this information with anyone along one of the proposed routes if and when they need it.  Once again, we cannot emphasize enough that anyone considering an easement agreement should seek legal counsel for their protection.  MVP will certainly have a lawyer draw up the agreement and it will be in their favor; legal advice on your part simply puts both sides on equal footing.

Finally, we ask that you consider simply saying no to negotiating with MVP.  We understand this may be a scary proposition as you will be threatened by the company that will use eminent domain to take your property.  However, eminent domain is not an option unless the pipeline is certificated by the FERC.  At this point, the MVP has not been approved by the FERC.  If the FERC knows that the majority of landowners will not negotiate with MVP, LLC, it can have a direct impact on their review process and their decision-making as FERC does not like for eminent domain to be overly used for land acquisition (see http://www.lancasterpipeline.org/eminent-domain for more information).

[1] http://www.pscoalition.org/pages/landowners-rights

[2] http://www.stopthepipeline.org/why-do-we-care-if-the-constitution-pipeline-is-built-wee28099ll-be-next-in-line-to-be-fracked/how-much-might-you-actually-get-for-your-seized-property1/

[3] http://www.kyrc.org/webnewspro/138142064642871.shtml

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