Elements of a Typical Easement – Specific Terms & Concerns
Generally, the opening paragraph of an easement contract includes very broad language and may raise red flags on a number of issues:
♦ The ability to use pipelines for “any other products” raises concerns about what those products might be. A statement that includes, for example the language, “any hydrocarbon product” should raise a red flag to the landowner. A single pipeline, within a single easement, should be restricted to transport a single, specific product for its lifetime. For example, a pipeline should be intended to carry compressed natural gas only, for the duration of the easement.
♦ “This lease gives the company the right to install additional lines at any time.” This language is a huge red flag. Easements should be negotiated for a single pipeline, and any additional lines should be in separate easement negotiations and agreements, separately, and addressed one at a time. Each installation activity causes damages to a landowners property, and each pipeline that crosses a landowners property should provide both recovery of damages, and payment for the easement.
♦ Language that allows the grantee to change the size (increase the diameter) , type of material, alter the Maximum Allowable Operating Pressure (MAOP), either with, or without notice is problematic, and should raise a red flag. The grantor (property owner) has the right to negotiate these terms. For example, allowing the grantee to change the size of the pipeline involves excavation of the easement, removal of the existing pipeline, and installation of the new, increased diameter pipeline. This has associated damages, requires access for construction equipment, and poses risk of rupture, explosion, and fire.
♦ What size is the line? As pipe size increases the payments per foot should also increase. Depending on the market, the type of land, region, and many other factors, as well as the location on the pipeline route, the easement price should vary. Common rules of thumb range from $1.00 per inch of pipeline diameter, per linear foot, to more than $2.00 per inch of pipeline diameter, per linear foot. For example, a 24” pipeline easement, crossing 1000 feet of a landowner’s property, at the lower rule of thumb value would produce an offer of $24 per linear foot (24” x $1.00 = $24.00), with a total value of $24,000.
♦ Statements regarding “perpetual” use or easement duration. An easement should have a defined beginning date, duration, and ending date, and should be renewed through an independent, new negotiation at the end of the easement’s current term. The “lifetime” of a pipeline varies, ranging from 25 to 50 years, sometimes longer. Most experienced Grantors limit an easement’s duration to 10 years, and renew, through negotiations, an easement on a periodic basis.
♦ The opening paragraph, and other elements of the lease agreement should specify units of measure in a consistent manner. Surveyor’s terminology is sometimes used, which may not be part of common language, for example the term “rod”, a unit of linear measure equivalent to 16.5 linear feet – in this case, the unit of measure is linear only, and does not specify the area affected. Easement agreements are often deliberately written to be misleading to laypersons, so an agreement that mixes “rods”, linear feet of easement, acres, square feet, etc. should raise a red flag to the landowner.
Details of the Easement Agreement
Description of Right-of-Way, including permanent easement, temporary, or construction easement:
♦ The full, and complete legal description of the landowner’s property should be clearly stated, by block, section, survey, tract, and other identification – it should match any legal description on file with the County Assessor/Collector, courts, and appraisal district. If the pipeline easement is crossing multiple sections of property, each crossed section should be correctly, and specifically identified.
♦ The landowner has the right to negotiate the route of the pipeline across the property. Common tactics used to counter the landowner’s right include claims that adjacent landowners have already signed an easement agreement, that fix the route, based on entry to, and exit from a property, and that the route across your property is thus fixed, and defined because of these agreements. You as the property owner have the right to negotiate the least impactful path, and easement, on your property.
♦ The easement agreement should include both a narrative description of the portions of the property to be crossed, and a survey diagram, or drawing, from a surveyor certified to practice in the county. The narrative, and survey diagram should completely, and specifically specify the boundaries of any temporary construction, and permanent easements, as well as any temporary, or permanent access roads, any surface facilities associated with the pipeline, and it should state, and show the locations of any existing features, including fences, roads, structures, improvements, or other aspects of the property that will be impacted by the easement.
♦ Is the 50-foot permanent right-of-way area a total of 50 feet, along the centerline of the pipeline, or 50 feet on each side of the centerline? The terms “overlay” and “overlap” may be of concern.
♦ The term “overlay” generally refers to a pipeline on the same property, while “overlap” refers to pipelines laying over part of another property.
♦ The agreement should specify the width of the temporary construction easement. All pipelines have an associated temporary construction easement, and a permanent easement. For a 42” diameter pipeline, the temporary construction easement has an average width of 125-feet. The most common construction method is known as “double-ditching” – in this construction method, the land surface is cleared of vegetation to a width of 125-feet along the route of the pipeline. The topsoil is normally stockpiled into a windrow along one edge of the construction easement. Subsurface soil is then stockpiled into a windrow along the other edge of the construction easement. The trench used to contain the pipeline is cut into the construction easement, offset toward one edge. The pipeline, once welds are completed, and hydrostatic tests of that segment are complete, is lowered into the trench, backfill is placed to bury the pipeline, and the easement is restored to a finished grade. Topsoil is replaced, and the area is re-seeded for vegetative cover.
♦ Temporary roads are items of concern. Of what material will these be constructed? What happens to these temporary roads upon completion of the project? Would you prefer these temporary roads become permanent roads? How will the temporary roads be used? Are speed limits necessary on the temporary roads, for example to protect livestock? Are cattle guards, gates, or other barriers required on the temporary roads, to restrict livestock, game, or traffic?
♦ “Other temporary work space” is referenced. What is the purpose, and how will the temporary work space be used? What does it include?
Timber and brush:
♦ It’s reasonable to expect that there will be areas where removal of timber and brush will be necessary during construction. However, as the landowner you should specify what you want done with the timber and brush. Where do you want it to be placed?
♦ If timber and brush are taken off-site who pays for disposal? Is on-site burning allowed for disposal?
♦ Is there marketable timber on the property? Who is responsible for, and how will valuation of that asset be determined? Will you be compensated? If so, how? Of specific concern in arid, or desert regions should be potential harvesting, or resale of cactus or similar succulents. The landowner should be compensated if any succulents may be harvested for resale. In some cases, protected and endangered species regulations prevent harvesting, and sale of certain succulents and cacti.
Access to surface water, groundwater, stored water, and disposal of water:
♦ If the easement agreement requires access to, or use of water, is that use compensated as part of the offer? If the landowner wishes to restrict access to, or use of any water on the property, the easement agreement should explicitly state this.
♦ If the easement agreement allows for disposal of water on the property, will that disposal be permitted by State or Federal agencies? If so, under what permits? How much water will be disposed of on the property, what will the water contain (i.e. hazardous chemicals, other contaminants)? Where, and how will the water be disposed of, at what rate? If the Grantor does not wish to allow disposal of water on the property, the easement should state this explicitly.
Disposal of waste, debris, sanitary sewage:
♦ The Grantor should determine what, if any waste disposal is allowed, and specify it by type, amount, and location, and if the waste is to be disposed of, and transported off the property, the Grantor should specify that the Grantee is responsible for all costs, including necessary permits, transport fees, temporary storage, any necessary clean-up, or decontamination in the event of spills, leaks, or other escape of waste materials onto the property.
Right of Ingress/Egress:
♦ Language of the form, “This agreement allows the company to enter and exit the property at any location.” is problematic. It should be clearly specified where access is, and is not allowed in the easement agreement.
♦ It should be clearly understood that the ingress and egress are for the purposes of installing and maintaining this pipeline only. Do you want to allow access by any roads? Specify which can or can’t be used. It is recommended that the company stay on the easement, if at all possible, rather than allowing the use of roads on the property.
♦ Who has keys to any locks on any gates? Is notification required before entering the property to access the easement? If so, what advance notice must be provided (hours, days), and to whom?
Freedom from Obstructions:
♦ An agreement that fails to specify a minimum burial depth should raise a red flag – A minimum of 36 inches is a must. For larger diameter systems, 30” or more, the minimum burial depth should be 48”, measured from the top, outer surface of the pipeline, to the soil surface.
♦ The easement, unless it specifically allows for surface facilities, should leave the property free of obstructions; the surface should be returned to a finished grade specified by the property owner, it should be free of depressions, hills or hummocks, rock outcrops, or other exposed surface features that impair or obstruct the property.
Use of Premises/Duty to Repair:
♦ The agreement mentions the Grantee will repair gates and fences they damage. All fence and gates replaced must be of equal or greater quality.
♦ Specify what you do or don’t want seeded upon completion of the installation. The landowner has the right to specify how the easement will be restored, including the specific type, or blend of seed used to regenerate vegetative cover.
Right to Install Additional Pipelines:
♦ We strongly encourage landowners to negotiate for one pipeline at a time.
♦ Do you want above ground pipes and other items on your property? For safety reasons, it’s best that there be no above-ground facilities – these include metering stations, valve boxes, pig launchers or traps, and many other surface facilities associated with a pipeline.
♦ “Temporary periods.” How long are these temporary periods? Does this mean there could be future “temporary periods?”
♦ All topsoil should be removed, and separately stockpiled from subsurface soil. Topsoil should be removed first, segregated, and be the last to be returned to produce finished surface grade.
♦ Does this agreement allow the Grantee to sub-lease? If so, you should request requirement to notify in the easement agreement.
♦ The easement agreement should specify a defined starting date, and a defined ending date. It is recommended that a reasonable time be assigned for the project to begin and end. A ten-year period is considered reasonable, and fifteen to twenty-five year agreements are not uncommon. After the expiry of the agreement, there should be a new, separate negotiation for renewal of the easement.
♦ The easement agreement should stipulate a specific means, and possibly set of conditions that may be used by both parties to terminate the agreement. A clause should be included that the agreement terminates if construction is not completed in a specified time period. If the installation is not completed on time a penalty should be assessed for each day the project is not complete. Consideration should also be given to a means to terminate the agreement if the pipeline is not in use for a specified time.
♦ If the affected land loses its status in relative to wildlife, agricultural, or any other exemptions, or causes the county appraisal district to increase valuation and assessment as a consequence of the easement, the grantee should be responsible for any assessments.
♦ A hold harmless agreement should be included. It should be understood that as the property owner you accept no responsibility for any injury to the Grantee, its employees, sub-contractors, etc.
♦ The easement agreement should specify that the Grantee is responsible for identifying, and mitigating erosion, gullying, subsidence, or any soil, or soil structure problems, including problems as a result of storm water run-off post-installation of the pipeline, including damage to the easement itself, and any damage that occurs to adjacent property as a result of problems on the easement itself. The Grantee should be financially responsible for all aspects related to erosion and related problems.
♦ The easement agreement should specify allowable herbicides, and other maintenance to the permanent vegetative cover on the easement, how frequently this maintenance may occur, and what, if any advance notification is required, for example to remove grazing livestock from the area.
♦ Any specialized concerns related to livestock, game animals, whether domestic or exotic, hunting lease issues, seasonal concerns, etc., and associated restrictions, for example prohibiting access for maintenance during hunting season, should be explicitly stated in the easement agreement.
♦ If the easement agreement contains provisions for surface features and facilities, including, but not limited to:
- block or mainline valves
- line blow-down stations and equipment
- liquid separators, condensate drums
- pig launchers and/or pig traps
- metering stations
- above-ground telemetry equipment
- fiber-optic system man-ways
The easement agreement should specify any ingress/egress limitations, advance notification for access, emergency notification procedures, etc. associated with these facilities. Of specific concern would be the use of block or mainline valves, and line blow-down stations for periodic, scheduled maintenance. Use of the facilities can cause venting of natural gas, at high-pressure, and volume to the atmosphere, result in high-decibel, damaging noise, odor, and create the risk of explosion and fire. Ask specifically for advance notice of any scheduled, or planned line blow-down or venting activity.