Lawyers to landowners: Carefully consider pipeline easement agreements
By Nick Longworth
By Nick Longworth
If someone offered you 30, 40 or even $50,000 to sign a piece of paper, the decision would likely seem to be an easy one.
But what if your signature on said paper allowed a corporation – one whose net earnings surpassed $600 million in 2012 – to then use your land for as long as, and however, they saw fit?
Your decision might warrant more consideration.
Many Hubbard County residents will be faced with this very decision due to North Dakota Pipeline (Enbridge) Company’s plans to build a pipeline across much of Minnesota, including land in Hubbard County.
Enbridge’s proposal is for a $2.6 billion pipeline to run across 299 miles of Minnesotan soil. The pipeline would transport crude petroleum from Enbridge’s Beaver Lodge Station just south of Tioga, N.D. to its terminal in Superior, Wis.
According to Enbridge, once in Superior the oil will then be transported by Enbridge and other inter-connected pipelines to refinery hubs across the United States and into eastern Canada.
The Minnesota portion of the project will cost about $1.2 billion and along with it would create 1,500 temporary pipeline jobs, with about 50 percent being locally hired.
The proposed timeline for the project includes planning, design, outreach and permitting to be done through late 2014, with construction beginning in late 2014 through 2016. Accordingly, the pipeline itself would then be operational by 2016.
But before Hubbard County soil begins to be dug up, Enbridge will need to secure “easement agreements” from the landowners that will be directly affected by the pipeline’s route and placement.
An easement agreement is a real estate contract that gives someone the right to use property for a specific purpose, without officially transferring ownership of said property.
Typically referring to the use of land itself, an easement agreement can either be for private or public benefit.
When involving public benefit, as Enbridge’s pipeline does, a legal precedent known as “eminent domain” can be instituted in order for Enbridge to procure the land successfully, and in a timely manner.
In cases involving eminent domain for public benefit, the government can require a private individual to forfeit his or her land through an easement agreement contract as long as it produces a specific public benefit, a process known as “condemnation.”
Essentially, in the wake of Enbridge’s pipeline, Hubbard County residents will be forced to accept a settlement - one deemed "fair" by Enbridge's lawyers - for the extended use and subsequent maintenance of their privately owned land.
Realizing this, lawyers around the Park Rapids area are encouraging landowners to know exactly what they are signing, before they sign anything.
“We have been contacted by a number of people already (about easement agreements). It seems to me that there is a person going around the area and offering easement agreements to landowners for this pipeline already. But it’s a complicated transaction and there have been a lot of similar questions,” said Roger Zahn, a local attorney for the law office of Thomas, Swanson & Zahn in Park Rapids.
“The simplest way to explain eminent domain is that the government can take your land for a public purpose. If they do that, they have to offer fair compensation; but what is fair compensation? If you can’t reach an agreement on what ‘fair compensation’ is then you have the chance to appeal it in court, but it’s a lengthy process. The pipeline company has the power of precedent, and they have the lengthy process all working for them,” Zahn said.
Zahn sees these easement agreements as multi-faceted. The issues regarding the Enbridge-offered easement agreements, Zahn says, go well beyond the upfront monetary settlement offered to landowners for the use of their land.
“The offer that (landowners are receiving), in my mind, has two parts to it: money and the contract terms. How wide is the easement and how deep is it? Who is liable for repair? Who is liable for environmental problems? That side of the contract, I think, is probably more important than the money given upfront. I wonder if people who are being approached by these Enbridge lawyers fully understand how complicated the deal they are signing really is,” Zahn said.
“Right away I am concerned about liability. If the pipeline breaks on your property, it’s a catastrophe. Enbridge will have to maintain and inspect the pipeline, but how often are they going to do that? The extent to which the landowner or pipeline company will maintain the pipeline needs to be clearly defined. All of this should be defined within the final agreement, but a lot of these issues aren’t dealt with at all in the initial proposal they will give you.”
“What if Enbridge’s proposal says that they’re responsible for damages except for negligence or intentional acts? Hypothetically, you own a farm and are farming while you drive over the pipeline many times throughout the year. Then the pipeline breaks; were you ‘negligent’ under your agreement? Could you imagine 350,000 gallons of oil a day spilling onto your property? How would you like to be held partly responsible for the cleanup now too? The money side of the deal is important, but the liability side is even more so. We want to spell out the liability in a way that is more favorable to the landowner than what is being proposed out there,” Zahn said, “what do you think the cost will be if the pipe bursts on your property? That $30,000 you were given upfront is nothing."
Another Park Rapids attorney, Steve Bolton, agreed with Zahn’s sentiment, while also raising other concerns that landowners need to consider.
“These agreements have been a sore spot for a lot of people. Companies like Enbridge do so many easement agreements that they will go out and tell people that they have a right to do this, so sign here. People give away valuable property without fair or adequate compensation,” said Steve Bolton, attorney for the law offices of Steve Bolton.
“If I had a pipeline going through my property, I really would not like it. There is the potential of spills, leakage and you really can’t use that land for much of anything anymore. If the pipeline has a leak and it goes on your land, how will you be compensated for that? You’re now going to have a lawsuit against some huge corporation that has a lot more money than you. The initial easement agreements offered are way too vague; I think it’s problematic for a landowner,” Bolton said.
Attorneys interviewed around Park Rapids unanimously agreed on the benefit of only signing a clearly defined easement agreement in order to protect a landowner’s rights.
“I have seen a lot of people sign away their rights for practically nothing. They’re giving something of value away, and often times they will do it for very little money. I would say most of the time the pipeline company has a full land-acquisition department working for them. After so many properties they become callous and are trying to get the land for as cheap and as quickly as they can,” Bolton said.
“I think that most people don’t understand how valuable of a right they are giving up. They have to give it up anyway, but don’t give it away for free. You wouldn’t give your car away for free. If the pipeline is going to be there anyways, the better the easement agreement, the more protected the landowner will be,” Bolton said.
Easements agreements come with a timeframe for response that a landowner is required to adhere to. When considering whether or not to pursue professional legal advice, it is advised to act sooner than later.
“I want to give people a better understanding as to what agreement they are about ready to sign. I would hope the pipeline would agree, and then the landowner would have better controls, restrictions and limitations as to how the pipeline operates on their property,” Zahn said.
According to Enbridge community relations consultant Christine Davis, Enbridge is currently offering "financial incentives" for those who sign easement agreements within 30-days of receiving their initial offer package.
“The pipeline wants you to sign it the way it was proposed to you. Your land, once there is a pipeline on it, is not the same anymore. If you go and try to sell it later on, the buyer will know it has a pipeline on it. How is that going to affect you? The better your contract, the less it is going to reduce the value of your land,” Zahn said.
“It’s an individual decision whether or not you want to talk with a lawyer, but I think it’s important for people to really understand what rights they have and what rights they are giving away as a part of their easement agreement,” said James Perkett, attorney for the law offices of James Perkett.
“You can pretty much guarantee that the (pipeline company) has a lawyer, or a team of lawyers who have drafted the easement agreement. Their lawyers are looking out for their company’s best interest. My opinion is initially I would go to lawyer that I trust and allow them to review whatever proposal documents you have received, and then decide if it is something that they can take on or not,” Perkett said.
“What is the value of your property before the pipeline and what is the value after? That should be where fair compensation lies. The pipeline has the right to do this under the law because it is a public service corporation, but that doesn’t mean they’re going to give you what they’re taking is worth. I would get whatever documentation they give you and take it to a good, competent attorney,” Bolton said.
“Everybody’s property is different, but how does their agreement fit in with your long-term plans for your property? The pipeline is going to get the easement agreement either way, but the question is: what will the terms be? You can take the document as-is, or you can try to improve upon it for yourself,” Zahn said.
For more information about the project, call 855-788-7805 or go to www.enbridge.com/SandpiperProject.
Written comments can be emailed to email@example.com or Enbridge Pipelines (North Dakota) LLC, Sandpiper Pipeline Project, 1409 Hammond Ave., Superior, WI 54880.
Comments can also be submitted to the PUC at puc.state.mn.us.