Oil and Gas Pipeline Easements and Right-of-Way Agreements

December 29, 2016

In the past several years landowners in Pennsylvania have been challenged by the drilling of natural gas primarily from the Marcellus Shale and Utica Shale strati.  As a natural progression of the oil and gas industry, the energy companies must now confront the task of moving the natural gas products from producing wells to areas of processing and consumption.  As a result, pipeline companies are challenged to acquire easements and right-of-ways from landowners to establish a system for gathering and transporting natural gas products through pipelines to market.  Many of the pipelines flow to major Interstate Transmission Pipelines which are regulated by the Federal Energy Regulatory Commission (FERC).  FERC has exclusive authority for siting, permitting, construction, operation, and expansion of these pipelines under the Natural Gas Act.

Landowners, as a result, are being confronted by pipeline companies with Pipeline Easements or Right-of-Way Agreements in an effort to secure the pipeline pathway.  The pipeline landsmen are trained and often experienced in negotiations when approaching landowners in efforts to acquire the proper agreements from landowners.  Many landowners lack the knowledge to adequately protect their rights in negotiations of the Pipeline Agreements which are skillfully drafted in favor of the pipeline companies to the detriment of the landowner.  The unskilled landowner as a result may face unforeseen consequences under the terms of the agreement, potential liability and inadequate financial compensation for the use of their property.  Therefore, landowners should protect their interests by seeking the advice and counsel of an experienced lawyer in the area.  The goal for each landowner in negotiating an agreement should be to maximize the financial benefits under the most favorable terms thereby restricting the pipeline companies’ use of the property and limiting the landowner’s liability.

The landowner has a better opportunity to negotiate a more favorable Pipeline Agreement if the pipeline does not fall under the purview of FERC.  This is true due to the ability under FERC to acquire property for interstate commerce through Eminent Domain and the condemnation process.  Due to the ability to acquire property under Eminent Domain, pipeline companies have little incentive to fairly negotiate with the landowner.  Nevertheless, landowners need to be well informed so that they do not miss the opportunity to participate and potentially influence the pipeline placement as the FERC process is complex.  Should the landowner face the placement of a FERC pipeline they should seek the advice of an attorney to decide if they should intervene in the procedure.  In addition, a skilled attorney can provide advice on easement acquisition, drafting of easement terms including provisions for damages and restoration of the property and whether to litigate Eminent Domain disputes to achieve the highest compensation for the taking of the property.

If you have concerns or questions about a pipeline company seeking a Pipeline Easement or Right-of-Way or are having problems as a result of a pipeline companies’ noncompliance with the terms and conditions of an existing Pipeline Easement or Right-of-Way Agreement, please contact Diane Zack Buchanan of Strassburger, McKenna, Gutnick & Gefsky at dbuchanan@smgglaw.com or (412) 281-5423 to assist you.