Know Your Rights

 

Signing your rights away

In December 2015, PennEast started sending “easement acquisition offer letters” to impacted landowners along their proposed route. Given the seriousness of the endeavor, and tremendous burden it’s going to place on property owners, you might think that they’d send out a detailed, complex proposal. I got a chance to look at a few of them for properties here in NJ, and I can tell you this is not the case.

Instead, the document is surprisingly short and relatively easy to read. The message is clear: for a very small one time payment, PennEast is asking you to more or less sign your rights away to them and give them carte blanche to do whatever the heck they want on your land.

Some of the details are probably what you’ve heard or suspected. Others might shock even the most jaded among you.

Here’s some notable features of these letters.  Please note that I am not a lawyer and this does not constitute legal advice. This is simply my opinion of what the PennEast materials are offering, and the issues I see with the wording.  If you’ve been offered a contract by PennEast I urge you in the strongest possible terms to contact a lawyer immediately, and if you cannot contact one of the citizens groups (or me) and we’ll get you in touch with someone who can help you.

  1. PennEast reserves the right to enter any part of your property at any time for “survey” purposes.  Not just the ROW – any part at all.  They have to give reasonable notice – but you can’t refuse, or even offer a time more acceptable for you. They simply tell you they’ll be showing up on date X and there’s nothing you can do about it. And I repeat – this is anywhere on your land.  If you’ve got a 200 acre farm, PennEast is reserving the right to survey the whole thing for future projects any time the whim strikes them.
  2. No mention of consulting a lawyer.  They include an offer letter that summarizes what PennEast wants and is offering, a contract, and a memorandum. They urge you to read it, call them if you have any questions, and then sign and notarize it and send it back, and PennEast will cut you a check. No where in the letter do they indicate what you’re truly giving away, and no where do they suggest you should consult a lawyer. Just give it a read and then sign away your rights!
  3. The letter is contradicted by the contract.  They are offering a purchase price for the easement, and a “damage” price for damage they’re going to cause to your property. In the non-binding, not-a-contract offer letter, they indicate that their offer is a premium based on your land value. In the actual contract they state bluntly that the offer is based on what they think they can get away with, and specifically is not a statement about the value of the land they want to take.  So people who can’t read legal documents and just go by the letter may think they’re getting a deal – when they are not.
  4. The values are far below market value for the size of the easement.  Prepare to be massively underwhelmed by the offer.
  5. The contract is irrevocable and perpetual e.g. it’s forever.  You’ll pay taxes on the land as long as you own it, but the easement is owned by PennEast for ever (unless they sell it to someone else).
  6. They reserve the right to add more pipelines into the easement. Or dig up the PennEast pipeline and make it bigger or smaller. And add or remove any kind of equipment or machinery  they feel is “necessary or convenient”.  There is also mention of other types of pipeline, opening the possibility of more than just natural gas running through your land.
  7. Use the ROW anyway they feel like it, whenever they want, without notice.  So long as PennEast says it’s “reasonable” for their business, they can do construction, repairs, inspections, use vehicles, etc etc in the ROW.  Any time they want.  Without notice.  Nothing you can do about it.  So you are more or less losing your total right to the easement ROW.
  8. Unlimited land/road/driveway access.  Go across your land, including all roads on your land, when ever they feel they need to if they feel the use of the pipeline is (in PennEast’s sole opinion) interfered with or endangered.
  9. Do whatever they want in the ROW.  More than just do all of the pipeline things mentioned in other sections, one section notes that PennEast expressly has the right to do whatever is necessary or convenient to them within the ROW.  Yes, that’s right – if PennEast thinks it’s “convenient” for their purposes, they can do it.  If they want to put a pressure relief valve next to your house?  They an do it. How about a monitoring shack with a 24 hour guard?  Yes they could do that too.
  10. There is no guaranteed route on your land.  The contract only stipulates the dimensions of the ROW.  It includes a diagram of the potential route across your land – but that route is only an example and is not binding.  PennEast explicitly says they can change the route on your land for whatever is necessary for “efficient” construction of the pipeline.  If you sign this contract as is, you’re allowing PennEast to put the pipeline anywhere on your land they’d like, and you can’t say boo about it if they put it somewhere you don’t like.
  11. You can’t make any changes along the ROW without PennEast’s approval.  Pretty much anything more ambitious than mowing the grass will require PennEast’s approval.  And they can say no, and you are probably stuck if they do.
  12. You have to give PennEast additional temporary work space if they want it during construction.  If PennEast thinks they need more space for construction beyond what’s in the contract, you have to give it to them.
  13. Yes, there’s a save harmless clause.
  14. They can sell the easement to another company or individual.  You have no say in this at all.
  15. They don’t have to build the pipeline.  If the pipeline is  defeated – PennEast still owns the ROW and can do what they like with it.
  16. Confidentiality clause.  If you sign the contract, you can’t tell anybody any of the terms of the contract.

What you need to know when an interstate gas pipeline comes to your community.

From Pipeline attorney Caroline Elefant:Knowing and Protecting Your Rights When an Interstate Gas Pipeline Comes to Your Community

Landowner’s Rights

Negotiating Pipeline Right-of-Way Agreements

Signing a ROW should be reviewed by a professional as if you were buying or selling your property on the open market.  ROW agreements become amendments to your property deed.  Typically, funds received by a landowner in a ROW agreement are subject to income taxes and often are required to be surrendered to your mortgage company to satisfy their lien as the first deed holder. *WE RECOMMEND ALWAYS CONSULTING AN ATTORNEY BEFORE SIGNING ANYTHING.

Considerations in Signing an Easement Agreement:

(with adaptations from and thanks to Kentucky Resources Council)

* Do not rush into a decision to grant an easement.

An agreement becomes part of your deed, in perpetuity.

* Interstate gas pipelines (gas but not hazardous liquids pipelines that cross state or country boundaries) must be approved by the FERC (Federal Energy Regulation Commission) through a defined process.

Before signing an easement, you have the right to:
1) wait until the FERC issues an EA (Environmental Assessment) or EIS (Environmental Impact Statement)

2) review and comment on the EA or EIS

3) review the FERC Conditional Approval for conditions that may alter the pipeline operator’s preferred/applied for route and therefore may alter terms of your proposed easement.

* Do not allow yourself to be pressured into signing an easement contract before you are ready and before all your questions have been answered in writing. Once an easement is granted, it is highly unlikely that you will be able to change or add terms or conditions.

* Considerations you will want to address through the negotiation process:

1) Consult an attorney and other advisers before signing anything; particularly if a company states that the alternative to signing an easement is that eminent domain will be used.

2) Do not to sign an easement based on a fear that your property will be taken by condemnation if you do not.  Eminent domain does NOT allow the pipeline company to take ownership of your home or land away from you.

3) Eminent domain allows the pipeline operator to purchase the use of the land inside the Right of Way in perpetuity unless you are able to specify a set period of time or can write into the agreement termination upon the time at which the pipeline ceases to be used.

4) The landowner retains ownership of the land inside the Right of Way and therefore continues to pay all taxes and insurance on the Right of Way (ROW).

5) Easements you will be asked to sign are written for the benefit of the company seeking the right to access and use your property.  Consult an attorney and/or other advisers to help negotiate easement terms that protect your interests.

6) Once an easement is established on your land, it is easy for the pipeline company to expand the ROW to expand the size of existing pipelines and/or add new pipelines.

7) Payments made to landowners for an easement are considered taxable income by the IRA.  You should seek advice from your accountant or tax professional.

8) Granting an easement may affect your insurance policy availability and rates, for which you should consult your homeowner insurance agent.

9) Granting an easement may affect your existing mortgage or the ability to refinance your mortgage, so the bank or other institution holding your mortgage should be consulted.

10) If you do not own your property outright, your mortgage company has the right to require some or all of the easement payment made to landowners be paid toward outstanding balances.

11) Granting an easement may affect your property value, the ability to develop your property, and the marketability of your property. Check with your realtor about the impact that granting an easement for a hazardous material pipeline or natural gas liquids pipeline may have on the value or use of your property.

Compensation:

1) Payment details may be specified, for example, for the easement, damages to crops, timber or other products located within or outside of the easement, impact to land value, division between the landowners and the surface tenant, duration, survey fees, legal review fees, recording fees, and taxes on payment.

2) Payment amounts are negotiable.

Questions to ask before you consider signing an easement: Always obtain written answers.

1) What is the minimum depth of cover for the proposed pipeline. Minimum federal standards require 3-feet to top of pipe, 2-feet if in bedrock, but a greater depth can be negotiated. The agreement can specify that the depth of cover shall be maintained at all times, to address possible settlement or subsidence.

2) How many and what size of pipelines will be allowed, what can be transported in the pipeline, the maximum size and maximum pressure of pipelines can all be specified and limited in your agreement. If you do not limit the number and size of pipelines, new pipelines could be added without your permission within the ROW.

3) What above-ground facilities, such as test leads, markers, rectifiers, casing vents, valves and valve actuators, meter stations and pig launcher/receivers, compressor stations, will be allowed.

4) What rights of access across the property to the easement will be allowed, if any. The right of access to the easement can be limited, so that the company will not be able to cross your property to gain access to the easement but will be limited to using the easement itself for any monitoring, maintenance, testing and repair.

5) The location and dimensions of the temporary and permanent easement.

6) Is consent of the landowner needed before the easement can be transferred, sold, or assigned to another pipeline company by the easement holder.

7) What are the limitations on the use that can be made of the easement by the landowner.

8) Will the company participate in alternative dispute resolution for resolving disputes between the landowner and pipeline company.

9) Will the pipeline company incorporate all landowner requirements into the easement document.

Construction-related provisions:

1) Who is the point of contact during construction, who can be called day or night of there is a problem.  Phone and email contact information.

2) What days and hours will construction activity be allowed and do those activity hours comply with local ordinances.  If they do not, why and how might the construction activity be altered to comply.

3) Ask for copies of construction plans, including location of temporary roads, if any, disposition of brush or trees removed from right of way; the segregation, stockpiling, and restoration of topsoil and subsoil, re-vegetation and other, restoration requirements, the timetable for construction, location of temporary crossings across open trenches or ditches, back filling and compaction of trenches, and stone removal and disposition, etc.  Some of these details should be included in the FERC approval but ask the operator for their copy.

4) Ask for a blasting plan if blasting will occur, including a blasting schedule and a pre-blast survey of all buildings, wells, springs, and other structures be done to document pre-blasting conditions, followed by a post-blasting survey and an agreement to compensate for any changes occurring between those periods.

5) A construction bond to cover all construction-related responsibilities under the agreement, including payment for damages to crops, structures, buildings, and water supplies (including water quality testing and well yield).

6) A water supply replacement obligation in the event that the excavation, construction, blasting, or operation (leakage, etc.) causes loss, diminution, or contamination of water supply.

7) The surveying and staking of the easement prior to construction.

8) Compensation for any damage to trees, crops, plants, fences, etc. during construction.  You may negotiate restoration above and beyond the Restoration Plan, including timeframe for restoration, types of grasses and other vegetation to be planted and numbers of trees removed (ie two for one for 6” diameter and up trees)

9) Pre-construction survey of easement provided in hard copy.

10) Evidence of maintenance of casualty and liability insurance and worker’s compensation insurance for personal or property damage during construction.

Operation, Maintenance, Abandonment

1) Access to the easement by the easement holder (i.e. if fenced, who can gain access, and does access require prior notification to the landowner). Where fencing or gates exist, what locks will be used and who will have access to the locks.

2) The name and information on the landowner’s contact with the easement holder, including emergency contact information.

3) Frequency and manner of inspection and maintenance schedule.

4) Who bears responsibility for maintenance of right-of-way, and how it will be maintained (i.e. mowing, use of herbicides or not, etc.)  ROW’s do NOT have to be mowed or cleared of areas such as farm fields or natural wildlife habitats.

5) When the pipeline and related structures are deemed “abandoned,” will the pipeline and other related structures be removed, and will the easement be revegetated and then revert to the landowner?

6) Mandatory termination of the easement for non-use over a defined period of time, and for failure of the company to comply with the terms of the easement.

7) Liability for property damage and personal injuries during operation, and abandonment.

8) An indemnity agreement providing that the easement holder will save and hold harmless the other party against any legal causes of action, including environmental, levied as a result of activities both on and off the land by the easement holder or agents. The indemnity could also include an obligation to pay legal fees incurred in defense of a suit, and an obligation to defend the landowner from any third-party claims associated with the operation of the pipeline or any leaks, releases, or other accidents.

9) Responsibility for costs of remedying any contamination from leaks or releases from the pipeline.

10) Repair and compensation for any damage to property or use of property from operation of pipeline, including leaks, releases or accidents.

11) Maintenance of non-cancellable insurance policy to insure against all risks, including property damage, personal injury, and from leaks and spills.

12) The obligation to repair and compensate for damages incurred during maintenance or repair of pipeline.

13) Stipulated penalties for any breach of easement terms and conditions by the company.

(The above is courtesy of Pipeline Safety Coalition and is intended purely for backround information and not intended or recommended as legal advice.)

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