Landowner Compensation Negotiations for Pipeline Easement and Right-of-Way Agreements
Compensation negotiations for Pipeline Easement and Right-of-Way Agreements are property-specific. The "going rate" may not adequately compensate a landowner for the damage to their specific property. Here are some of the factors landowners should consider during these compensation negotiations
Compensation to the LandownerPipeline Companies usually offer to compensate the Landowner for the Pipeline Easement and Right-of-Way Agreement by a payment per linear foot (or rod) the easement covers. But what does that include? And is the Landowner entitled to additional compensation? As for the first question, the per linear foot (or rod) price usually just includes the value of the land covered by the easement. Often the Right-of-Way Agent will refer to this as the "going rate" in the area. But is that all of the damage the Landowner incurs or all the compensation the Landowner should receive for the Easement Agreement and the pipeline's permanent presence on its land? Usually not. Depending on the situation, the Landowner may be entitled to additional consideration - if the Landowner is savvy enough to negotiate for it. Some factors that sometimes merit additional consideration to the Landowner above and beyond the per acre value of the land covered by the easement, include, but are not limited to (a) the width of the easement; (b) the route of the pipeline across the land (along the edge or bisecting the land); (c) whether there are other pipelines already on the property; (d) whether the easement and pipeline's presence will impact the land's development potential; (e) whether construction operations will negatively impact agricultural or hunting activity; (f) whether valuable timber will be lost during initial construction; (g) whether timber will never again be allowed to be planted on the easement; (h) whether there will be (or can be) any above-ground appurtenances on the land (like valve sites, compressors, etc.); (i) whether there can be more than one pipeline installed in the easement; and (j) whether the Pipeline Company will agree to many of the significant changes to the Easement Agreement listed in this article. Often in rural areas the price offered is per linear rod, not linear foot. When calculating, note that one (1) linear rod equals sixteen and a half feet (16.5'). An appraiser is often necessary to determine the land's value prior to and after the easement.
Dealing with the Right-of-Way AgentThe Right-of-Way Agent is hired by the Pipeline Company to get the Landowner to sign the Pipeline Easement and Right-of-Way Agreement as quickly and for as little money as possible. Depending on the jurisdiction and type of pipeline, the Pipeline Company may or may not have the power of eminent domain to take the Easement if Pipeline Company doesn't reach an agreement with the Landowner. The Landowner, or the Landowner's attorney, should determine whether the Pipeline Company has the power of eminent domain with respect to the particular pipeline. Even in the Pipeline Company has eminent domain authority and condemns the easement, the Pipeline Company still has to pay the Landowner for the fair market value of the taking. In dealing with Right-of-Way Agents, it is best to be as polite and professional as possible during these negotiations. The Landowner that refuses to communicate with the Right-of-Way Agent usually gets a significantly worse result than those that negotiate respectfully and professionally.
Paying for an Attorney to Represent the LandownerMany Landowners do not hire attorneys to represent them in Pipeline Easement and Right-of-Way Agreement negotiations with Pipeline Companies because the Landowner thinks they can't afford an attorney. The reality is that Pipeline Easement and Right-of-Way Agreements are a big deal and will burden the land for decades - so Landowners should at least talk to an attorney to figure out if they can afford representation. Many attorneys offer free consultations. And for Pipeline Easement and Right-of-Way Agreements, many attorneys are willing to take these cases on contingency fee arrangements - such as 1/3 of any improvement over the initial offer. Under such a contingency fee arrangement, the Landowner would not have to spend any money, would get at least all of the initial offer, and would get a lawyer to edit the Pipeline Easement and Right-of-Way Agreement and negotiate compensation for the Landowner - all for a percentage of any improvement in compensation the lawyer may or may not be able to negotiate. Bottom line, cost should never prevent a landowner from getting legal representation in Pipeline Easement and Right-of-Way Agreement negotiations.