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Gas Pipeline Easement Negotiations Giving You a Headache?

Texas Business reports: COLLEGE STATION— Natural gas drilling in Texas’ shale regions may be lucrative for mineral rights owners, but it can be a headache for landowners with surface rights who are unprepared to negotiate with pipeline companies.

 “Most landowners are unfamiliar with how to deal with companies that are acquiring pipeline easements to move gas,” said Judon Fambrough, an attorney with the Real Estate Center at Texas A&M University. “If the landowner and the company can’t reach a deal, the easement will be condemned.”

The condemnation process can be complex, but Fambrough walks landowners through all three stages in Understanding the Condemnation Process in Texas.

 The publication has been revised to include changes implemented Sept. 1, 2011, by SB 18. It covers a wide range of facts surface owners need to know.

 For example, the condemnor has the right to enter a property to conduct preliminary surveys even before any documents are signed.

 “The landowner cannot stop them legally, but the condemnor will be liable for any damages to the land incurred during the survey,” Fambrough said.

 Also, the proposed Pipeline Easement Agreement that the condemnor offers to landowners is negotiable. This is important since the condemnor can legally attempt to purchase (acquire) in that document property and property rights not needed for the project.

 

“For example, the company needs a 30-foot easement for one 20-inch pipeline to transport natural gas,” Fambrough said. “However, according to the high court, they can attempt to purchase in the proposal — without telling the landowners — a 50-foot easement for multiple lines to carry multiple products. It’s up to the landowners to limit them to what is reasonably needed during negotiations.”

Fambrough said the pipeline company does not have to offer the landowner fair market value for the easement, but they must make a bona fide attempt to purchase it as outlined in SB 18.

Finally, landowners should be compensated for two items: the fair market value of the easement and the resulting damages to the remaining uncondemned property caused by the presence of the pipeline.

“Generally, condemnors recognize the need to pay the landowner for the easement, but they take the position that there is no resulting damage to the remaining property,” Fambrough said. “This is where the battles generally lie.”