November 22, 2011

Oil and Gas Pipeline Easements and Texas’ New Eminent Domain Law

There is a new arrow in the quiver of Texas oil and gas attorneys who represent land and mineral owners! Specifically, there are significant changes to the Texas eminent domain statutes, which went into effect on September 1, 2011. Oil and gas companies can still acquire easements across private property to build pipelines. If the pipeline is a private pipeline, the pipeline company must obtain the voluntary agreement of the property owner. If the pipeline is going to be a common carrier, and the pipeline company and property owner cannot agree on easement terms, the company can commence condemnation, or "eminent domain" proceedings, in which panels of commissioners appointed by a court decide the easement terms.

Another portion of the statute allows landowners to construct roads over the pipeline, although the pipeline company may still impose restrictions on things like the size and road material.

The new law applies to condemnation lawsuits initiated on or after September 1, 2011. These changes strengthen a landowner’s right to defend against eminent domain from both the government and private companies. One of the landmark changes to the eminent domain law is a new “bona fide offer” requirement, which means the purchasing entity must give a written offer for the property 30 days before the final offer is made. Additionally, a certified appraisal of the property in question must accompany the final offer, and that final offer must be of equal or greater value than the appraisal figure. The landowner now has 14 days to respond to the final purchase offer. The new law also allows landowners to obtain relevant information concerning the proposed easements from the potential purchasers.

Prior to the effective date of these new legal requirements, the number of condemnation proceedings surged in those areas of Texas that are experiencing increased oil and gas production. This has especially been the case in South Texas because of the Eagle Ford shale, where natural gas production nearly quadrupled and oil production increased tenfold between 2009 and 2010. According to an article in the Wall Street Journal, at least 184 lawsuits against landowners had been filed already between January and August 2011 in just four South Texas counties, compared to only 24 lawsuits in all of 2010. A district court judge in Lavaca County indicated that the number of lawsuits filed this year is “highly extraordinary.” That county alone registered 62 such lawsuits by August, 2011, compared with only 18 in all of 2010.

These pipeline cases are important to everyone involved, so there is incentive to make the process equitable and fair for all parties. Texas oil and gas companies employ thousands of workers and contribute to a healthy and growing economy. The boom in oil and gas production has also brought prosperity to many areas of Texas. However, it is equally important to consider the rights of private landowners whose property is affected by the pipelines.

It may take time to determine the total impact of revisions to Texas eminent domain law. Hopefully, the original purpose of the law will be fulfilled: giving landowners more knowledge and influence in negotiations with pipeline companies. These companies are going to face more significant hurdles in exercising their eminent domain rights than in the past, especially when this new eminent domain law is combined with the recent Texas Supreme Court decision in Denbury (read our recent blog entry on this case here). The Denbury decision essentially affirmed that there must be a reasonable probability that the pipeline will serve the public before a pipeline company can use eminent domain.

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August 23, 2009

Consult a Texas Attorney Before You Sign that Electrical Utility or Transmission Line Easement

As lawyers in Texas are well aware, there is a lot of construction of high voltage transmission lines ("HVTLs") going on in Texas as well as in other parts of the United States. Research by electricity providers shows that they may lack capacity for the future demand, and so the race is on. Most landowners, when approached by the transmission line company, really wish they would just go away. They don't want one of those lines across their property. However, they won't go away. In addition, if you cannot come to an agreement with the company, they have the right of eminent domain, which is the right to condemn the portion of your property that they need for the easement or right of way. It is truly in the land owner's best interest to negotiate the best agreement possible under the circumstances. Here are some of the questions that should be addressed in the agreement:
Electric_transmission_lines.jpg 1. Is the easement limited to a specific area, or is it a blanket easement over your entire property?
2. Is the company obligated to reseed with whatever grass was there originally and in general to restore the easement area to its original condition?
3. If your land is used for agricultural purposes, can construction, installation and maintenance be performed when the ground is cold or frozen to reduce soil compaction?
4. Is there a "temporary work area" in addition to the easement itself? Are you receiving an additional payment for use of this area?
5. HVTL installation can involve a lot of very heavy equipment which will compact the soil. Is any temporary work area situated so that the soil compaction is kept to a minimum? Are you being paid damages if the compaction that does occur prevents future crops in this area?
6. Will you be compensated for crop loss or crop damage caused by the installation and construction phase as well as by the permanent easement?
7. Is the company required to notify you prior to use of herbicides for brush or weed control?
8. If fences will be effected, is the company obligated to use temporary fencing and to restore the original fence to same or better than the original?
9. If gates must be installed, will a gate be installed that is of a design and quality suitable for the use of that gate?
10. What route will the construction and maintenance contractors use? Is the route situated so as to minimize damage to the service and inconvenience to you?
11. Will you have rights to use the surface in any manner that does not interfere with the transmission line?
12. Will the company agree to avoid important trees and not to remove or trim trees without your consent?
13. Will the company agree to be responsible for and indemnify you against any damages that are caused directly or indirectly by the installation, operation, maintenance or removal of the transmission line?
14. Does the easement terminate if it is unused for a certain length of time?
15. Will you get a separate payment for the easement and for damages?
16. Will you get paid for the actual easement or right of way area, as well as for the possible decrease in value to the rest of your property because of the presence of the line?

These are just a sample of the kinds of serious issues involved in negotiating an HVTL easement or right of way agreement. Each of these can be major issues if not properly addressed in the easement. For all these reasons, many landowners consider it simply good insurance to consult an attorney before they sign an HVTL or electrical line easement. The cost of an attorney is a small fraction of the amount of potential damages caused by the line. In many cases, an attorney will pay for themselves because they are able to negotiate more complete damage payments from the company.

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