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Negotiating a Pipeline Contract?Here Are Some Tips

By Clif Little | OSU Extension, Guernsey County Published: December 1, 2016 1:00 AM

As the development of shale energy continues, pipelines and related infrastructure are spreading across farmland. New gathering lines now extend out to wells that have come on-line in recent years.

In addition, intrastate and interstate transmission pipelines are being built so that more natural gas can move from settings where it is extracted to distribution networks serving homes, businesses and other end-users.

Though much of this infrastructure is constructed to the satisfaction of rural landowners, complete with restoration of pastures and crop fields, complaints are registered from time to time. In some cases, dissatisfaction can be traced to landowners’ attempts to negotiate with pipeline companies on their own, without legal counsel. Based on observations in Guernsey County and the surrounding region, there are steps one can take to avoid needless conflict.

It is important that the landowner understand the total number of pipelines, depth of pipeline burial, appurtenances, future uses which the pipeline company desires for the right-of-way area and what uses the company may want to grant to other utilities. Before signing any sort of agreement with a pipeline company, a landowner should insist on pinpointing the pipeline and temporary work area. A good option is to ask the company for a plat showing the area’s location and dimensions. Beginning and ending dates for construction and installation can and should be negotiated and written into the agreement. Also to be spelled out are entry and exit points for the landowner’s fields, types of gates to be utilized, as well as who is responsible for maintaining gates and fences.

Unless agricultural operations are suspended entirely during pipeline installation, a specific place for farm equipment to cross through the construction area needs to be identified. It is also possible that springs, ponds and streams might be affected, in which case an appropriate remedy must be identified. As with other points of agreement with the pipeline company, anything not put in writing will be difficult to enforce.

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The company’s activities might have an impact on farming operations and therefore can be described and limited in the right-of-way grant. For example, if hunting, fishing, loitering, lodging, camping or similar activities by the company or its contractors or guests ought to be prohibited, the landowner’s attorney should make this restriction clear. Parking of vehicles, trucks or other equipment necessary for construction may also be limited to the period of construction, if likewise described in the agreement.

For some farms, preserving esthetics is important. If a landowner does not want the easement area to be used as a storage area or staging area, for example, this should be agreed to in writing. In addition, permanent fencing around pipeline structures may be needed. Identify all fencing issues in the contract, what type, if it is permanent or temporary and who will maintain it. Some farmers will lose forage production and need additional forage for livestock. Do not forget to include these damages in the contract and be aware that damages might extend beyond one year.

Agreements with a pipeline company need to clearly define the company’s responsibilities for land restoration. A landowner might want to describe what locations are to be replanted, seeding method to be used, as well as what forage cultivars, seeding rates and even what mulch type is to be used. It can be helpful to provide a description of what water diversion practices should be employed. Practices such as silt fences and water bars can be an obstacle when a field needs to be mowed or clipped, so the contract must identify when obstacles should be removed and when and whom is to restore the land.

The Soil and Water Conservation at the Ohio Department of Agriculture has published a document titled “Pipeline Standard and Construction Specification” that addresses restoration issues in detail. In the process of pipeline installation, large rocks will be unearthed. Some landowners have elected to have boulders placed in a location for their use or sale.

When pipelines go through timber, a landowner will need compensation for damages. There are several successful means to handle these losses. Probably the simplest is to agree upon a price per foot of pipeline through the woodlot. Landowners should be paid for the damaged marketable timber and any hardwood of pole size which would have been marketable within the next twenty years. It might also be possible for the landowner to retain possession of this timber and have it placed at a specific location on the farm which should be accessible even after pipeline installation. It can be helpful for landowners to hire a consulting forester when negotiating timber issues. A list of consulting foresters can be provided by the local OSU Extension office or the ODNR Service Forester.

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It is prudent to soil test the pipeline area after installation, as lime and fertilizer needs will change significantly after soil disturbance. Landowner attorneys will need statements written into the contract which require pipeline installers to follow the fertilizer and seeding recommendations of the landowner.

The landowner may want to stipulate in writing that he or she, not the firm building the pipeline, has the final say about the completeness of restoration. The landowner will probably have need for a company contact and telephone number utilized for the sake of regular consultation as reseeding and other kinds of reclamation are happening. Landowners should discuss consequences for non-compliance of the right-of-way contract with their attorney.

It is possible for a right-of-way to become infested with weeds or to experience soil erosion. If this occurs, what procedure is to be followed and for how many years after construction do the company’s responsibilities for remediation last? If the landowner negotiates for additional items to be placed on the farm such as drips, valves, and metering equipment, how will these be maintained? All of these measures may require fencing, some kind of reseeding, and long-term plans for weed control.

Another issue landowners should seriously consider is contract-described limitations on their use of the right-of-way. For example, it may be important to reserve the right to install drainage ditches, tiles or to construct a road across the easement. In addition, PVC pipe conduit may be needed for water and electric either in support of current farm operations or in anticipation of expanded operations.

If the property has been enrolled in a United States Department of Agriculture government program it is important to have protection in the agreement for the possibility of recoupment of program payments.

Finally, nothing lasts forever. Some landowners may want to describe what triggers the end of an agreement, and what procedures must be followed to clear the farm title of encumbrances. Any language that appears to give rights to the company, “exclusively” needs to be considered carefully by the landowner and their attorney.

More information about pipelines can be found online at www.serc.osu.edu. Property owners need to keep in mind that the items in an offer for a right-of-way are negotiable, and it is advisable to never attempt to negotiate without the assistance of an attorney.


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