Legal questions to ask about pipeline easements

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Guest column by Terry Geoghegan and Tom FitzGerald

By Terry Geoghegan and Tom FitzGerald
Guest Columnists
Landowners contacted by Bluegrass Pipeline Partners LLC, the Williams Co. or one of their representatives about selling an easement for construction of a 24-inch pressurized natural gas liquids pipeline across their property rightfully have questions about whether granting such an easement is in their interest.
The products that will be transported are natural gas liquids, and are not to be confused with natural gas that may be used to heat our homes. Natural gas liquids are a mixture of various hydrocarbons, including ethane, pentane, propane and butane, that are flammable and combustible, and which can contaminate land and groundwater and pose an asphyxiation risk if the pipeline leaks.
Landowners thinking of granting an easement are wise to consult an attorney, insurance agent, mortgage holder and tax preparer because granting an easement could affect the value and insurability of your property, your tax liability for payments received and your mortgage holder’s interests.
The easement language that you may be asked to sign was written to benefit the pipeline company and likely will not contain conditions that strictly limit the rights granted. When negotiating the easement, a number of conditions that may be included in the easement agreement, such as provisions:

  • Limiting the number, size and pressure of pipelines that can be constructed on the easement, and the product that the easement may transport
  • Limiting other uses of the easement
  • Requiring landowner approval of any assignment of the easement
  • Limiting the duration of the easement and defining clearly when the easement will be deemed “abandoned” and whether the pipeline will be removed and the easement reclaimed
  • Defining how the company will access the easement and whether notification to the landowner is required before the company comes on the property for maintenance and repair
  • Limiting above-ground facilities, such as valves and pump stations, that will be allowed
  • Setting the frequency and manner of inspections to detect leaks
  • Maintaining a sufficient amount of insurance against personal or property damage and injury to third-parties from installation, operation and removal of the pipeline, including damages from leakage or catastrophic incidents
  • Setting the depth of cover over the pipeline and requiring that the depth be maintained
  • Requiring independent testing of the quality and quantity of all streams and groundwater resources, and pre-blast surveys of all structures prior to the start of construction
  • Establishing the precise location and dimensions of the temporary and permanent easements
  • Requiring the easement agreement be co-signed by the parent companies of the Bluegrass Pipeline Partners LLC (Williams Co. and Boardwalk Pipeline Partners), because it is a limited liability company, and the parent companies should stand behind any agreement reached in order to assure that if there is a problem, sufficient assets are available to address and resolve the problem
  • Requiring that the landowner be indemnified and that the company provide representation if there is a third-party claim made relating to the pipeline, including any accidents or leakage.

We believe no landowner should sign an easement because of a direct or implied threat of eminent domain, which involved court-ordered condemnation). The Kentucky Attorney General, Energy and Environment Cabinet Secretary and others who have researched the question do not believe eminent domain powers exist for this pipeline project. 
We encourage you not to rush into a decision to grant an easement, and to consult an attorney to help negotiate an easement that protects your interests. Once the easement is granted, it is unlikely that you will be able to change or add terms or conditions.
We have developed an information sheet that has additional considerations landowners may want to discuss with an attorney in negotiating an easement agreement. It can be found at www.kyrc.org.
Terry Geoghegan is an attorney in Bardstown and is Commonwealth’s Attorney for Nelson, Hart and LaRue counties. Tom FitzGerald is director of the Kentucky Resources Council.