Pipeline Easements and Projects

Growth and urbanization throughout the country create unprecedented demand for all types of energy and infrastructure projects. Utility companies typically have the power of eminent domain to acquire property for their infrastructure projects (pipeline projects, transmission lines) if negotiations with landowners cannot be reached.

Few issues evoke such strong opposition as the taking of private land through eminent domain for a public use.  The eminent domain conflict deepens when the condemning authority is a private company acquiring land for a utility project.

Can I stop a pipeline project?

If the proposed pipeline is transporting materials for interstate or intrastate commerce and is defined as a common carrier, then the pipeline operator will usually obtain the right to use eminent domain to acquire property. Generally, once the project is approved by the local state utility commission or the Federal Energy Regulatory Commission (FERC), the utility company can proceed with eminent domain to acquire property and construct the project. Without special circumstances, you won’t be able to stop the project during the eminent domain process.

For some projects, property owner coalition groups are formed at the onset of the project. These groups work with environmental groups and focus their efforts on stopping the project through the regulatory process, before the process gets to eminent domain.

Can I prevent them from acquiring my land?

Although there are some situations where a company may not have eminent domain authority, generally, private utility companies have the authority to condemn property for projects such as pipelines, high transmission power lines, natural gas storage facilities, etc. Without special circumstances, you will generally be unsuccessful at preventing them from acquiring your land. However, you are entitled to just compensation under eminent domain law.

Can I force the company to change the route so that it doesn’t cross my land?

Utility companies are required to study various alignments and select a preferred alternative based upon environmental impacts and feasibility. Property owners can propose alternate routes, but without special circumstances, you can’t force the utility company to change their preferred alternative.

The easement terms are ambiguous, can I negotiate better terms?

If the pipeline is a common carrier, property owners have no legal recourse to compel the utility company to change the easement terms. Where utility companies have eminent domain authority, they have very little incentive to negotiate a change in terms.

During eminent domain, the focus is not on changing the easement but instead making sure the property owner is fully compensated for the easement language contained in the eminent domain filing papers. The more ambiguous the easement, the more compensation a property owner should obtain.

I have been offered very little for my easement; am I entitled to more money?

Generally, utility companies determine the value of easements by analyzing the impact to the surface of land with the easement in place. Unless surface use is dramatically impacted by the easement, this analysis invariably leads to low levels of compensation. Utilities usually fail to compensate property owners for the value of the easement itself. When determining just compensation for utility and pipeline easements, the largest value probably will not come from the impact to the surface of the property; it will come from the value of the easement.

Where the easement is negatively impacting the surface of my land and devaluing my property, am I entitled to additional compensation?

Yes, you are entitled to compensation for the easement itself and compensation for damages to your remainder parcel (severance damages). In some cases, severance damages are greater than the value of the easement itself.

Will the easement impact your ability to develop your property? Will it restrict the current use of your land or any future use of your land? If so, then you are entitled to severance damages under eminent domain law.

Pipeline Damages to my land in Eminent Domain

The damages basically fall into three categories:

1.  The cost of the land that is being acquired by way of easement to hold the channel that the pipeline will be buried in. This value should be determined based upon the property’s highest and best use.
2. The loss of potential development
3. The stigma with regards to the potential for explosion particularly with regards to high pressure gas pipelines.

I’d like to focus my comments on the latter two as I feel these are the most important and complicated issues.  With regards to development potential, when a pipeline goes through a parcel, particularly a vacant parcel of land, and is installed in such a way as to carve up the property so that it makes it difficult to develop, the property owner will be entitled to receive compensation for several damages.  First, the property owner is entitled to the highest and best use value for the easement over the land where the pipeline is located; and second, they are entitled to receive compensation for the loss of development potential, if the placement of the pipeline will hinder development or significantly affect where improvement for future development can be placed.  This can create inefficiencies and other problems that drive the value of the remainder parcel lower than it was before the pipeline was installed.

The second aspect of the damages relate to the potential for explosions.  This is an emerging area with regards to pipeline easement eminent domain damages and up until a few years ago, had not been considered by courts anywhere. Recently, several courts have been willing to entertain the threat of explosion and the stigma resulting from that as an element of damages for consideration by a jury.  I think as more of these explosions occur and receive media attention, the public awareness to this problem will heighten and the detriment upon the impact of value to property is going to become greater and greater.

This will be particularly true with regards to development land where a high pressure gas pipeline is installed and the highest and best use for that property before the pipeline was installed was residential development.  The pipeline in place could make it very difficult for future development because the stigma surrounding gas explosions.  A developer might have to sell the residential lots for a steep discount if they can even be sold at all.

Typically, the condemning authority in pipeline easement cases will only offer compensation for the easement taking and not compensation for additional eminent domain damages.  Therefore, if you’re a property owner with vacant or development land that is affected by a pipeline project, I highly recommend you consult with an eminent domain attorney prior to signing off on an offer from the condemning authority.

Summary of Pipeline Easements and Projects

Like we discussed above, stopping a pipeline project through legal means is almost impossible because pipeline companies typically have the power of eminent domain.  Depending upon the state you’re in, this power is either granted to them generally, or it’s spelled out through special provisions within their statutes.  A property owner would need to challenge the public use in order to stop the project through legal means, and this endeavor is very difficult and costly and is one that we don’t recommend.

Even if the project can not be stopped, you still have the right to pursue an eminent domain claim for just compensation.  However, there are serious issues that need to be considered before moving forward with this type of claim.  For example, if you are an individual residential property owner, the costs that you will incur to hire experts will be very expensive in comparison to the potential recovery that may be obtained by successfully pursuing this claim.  If you’re located in a state where attorney’s fees and costs can be recovered with regards to utility claims, then this will certainly be a factor weighing in favor of the property owner when considering whether to pursue a claim.  However, in states where costs and fees are not recoverable, the costs associated with hiring appraisers or other experts to establish damages may simply be too prohibitive to allow a single individual residential property owner to fully pursue a claim against a pipeline company for the damages they might be entitled to receive.

When deciding whether it is worthwhile to pursue a claim for just compensation in pipeline cases, you must consider the level of damages that you are entitled to receive.  Consult an eminent domain attorney to for a free consultation.