What landowners should know before signing a pipeline deal
About three years from now, landowners along the proposed NEXUS pipeline could have 2 billion cubic feet of natural gas flowing across their properties every day.
For them, and for the companies that want to build the pipeline, the questions are: What path will it take, and at what cost?
Even though interstate pipeline builders can use eminent domain to obtain rights-of-way, landowners can influence how a pipeline affects their property and their community.
“A lot of things are very negotiable,” said Dale Arnold, the Ohio Farm Bureau’s director for energy, utility and local government issues.
IN THE WORKS
NEXUS Gas Transmission wants to build a pipeline — 36 inches to 42 inches in diameter — through Washington, Nimishillen, Marlboro and Lake townships and the city of Green.
Spectra Energy, of Houston, Texas, and Detroit-based DTE Energy, are the lead companies behind the project.
Pipeline representatives have been contacting landowners along a 250-mile-long study corridor, asking permission to survey their land, and holding open-house meetings.
At this point, NEXUS is studying where to put the pipeline. Construction isn’t expected until 2017, provided the Federal Energy Regulatory Commission approves the project, which would allow NEXUS to use eminent domain to cross the land of uncooperative landowners.
NEXUS isn’t the only interstate pipeline planned for Stark County. The 42-inch ET Rover Pipeline would carry more than 3 billion cubic feet of natural gas a day across the county’s southwestern townships. Energy Transfer of Dallas, Texas, plans to start construction in January 2016, pending FERC approval.
ON THE TABLE
Before invoking eminent domain, companies make an offer, and a lot of landowners take it, not always to their benefit.
“Typically, people who sign up first get the least amount of money,” said William G. Williams, an attorney with Krugliak, Wilkins, Griffiths & Dougherty who specializes in oil and gas issues. “The longer you hold out, the more likely they will pay you more money.”
NEXUS is one of several pipeline projects in planning or under construction in Ohio, spurred by Utica and Marcellus shale drilling.
One company initially offers landowners $15 for every foot of pipeline on their property and tops out at $25 a foot, Williams said. Another company’s offers range from $35 to $60 a foot.
“It’s kind of all over the place depending how fast they want to sign these people up,” he said.
When negotiating an easement, landowners need to consider the value of the property being taken for the right-of-way and the damage the pipeline will cause to the value of the remaining land and any future development opportunities, said Michael Braunstein, a Columbus-based eminent-domain attorney who has clients along the proposed NEXUS route.
An easement also should include insurance and indemnification language that protects property owners in the event an accident damages their property or a neighbor’s, Braunstein said.
Neither Williams nor Braunstein said they had heard of NEXUS making any offers to landowners.
Other issues on the table can include the pipeline’s depth; its distance from homes, farms or businesses; the location of access roads; and protections for existing fencing, drainage systems, soil and water.
That can add up to a complex easement, requiring careful thought and the help of an attorney, Arnold said.
“Where’s the worst place in the world to sign a pipeline easement agreement?” he asked. “It’s on the hood of your pickup truck.”
EMINENT DOMAIN
Having a pipeline on their property isn’t necessarily a loss for landowners, Braunstein said.
But some landowners dig in and refuse to grant an easement. In that case, pipeline builders can use eminent domain.
A judge or jury in a county probate court determines how much the landowner will be compensated in those cases.
Generally, if the verdict awards compensation in an amount 25 percent greater than the company’s final offer, state law requires the company to pay the property owner’s attorney fees, Williams said.
Going to court also could delay the project for at least a year, “and of course (pipeline companies) don’t want any delay,” he said.
ROADBLOCKS
But stalling a project, whether in probate court or in FERC — where landowners can intervene in the permitting process — can have advantages for pipeline opponents.
In the late 1990s, three companies proposed building the Independence Pipeline across northern Stark County.
FERC approved the project over opposition from landowners and politicians, such as U.S. Rep. Ralph Regula and U.S. Sen. George Voinovich.
Williams represented about four dozen businesses and landowners who were against the project.
“We held that up for three years,” he said.
The builders never started construction and ultimately shelved the project in 2002 after failing to get enough long-term commitments from pipeline customers.
Reach Shane at 330-580-8338 or shane.hoover@cantonrep.com.
On Twitter: @shooverREP
WHAT TO ASK
The Ohio Farm Bureau’s Dale Arnold meets with landowners across the state several times a week to talk about pipelines.
There are four questions he said every person should ask before signing an easement:
- What kind of material will the pipeline carry?
- What will be the length?
- What will be the diameter?
- What will be the pressure of the contents?
The Stark County Farm Bureau will host a public meeting with Arnold next month. The doors open at 6 p.m. Nov. 10 at Marlington High School, 10450 Moulin Ave. NE in Lexington Township.