The vast reserves of oil and gas located in West Texas’ Permian Basin have helped the U.S. become the leading energy producing country in the world. However, the record-breaking production levels find companies facing a new challenge: not enough pipelines to get their product to market. Right now, setting up drilling operations in the Permian Basin only takes about a month; getting a pipeline to the new site can take over a year. Some analysts fear the lack of pipeline infrastructure could begin to affect supply and drive up energy prices.
There are currently plans to construct thousands of miles of pipelines throughout Texas. Since many of these pipelines must cross private lands, the oil companies must first get permission — in the form of a pipeline easement in Texas — from the individual property owners whose land lies within the pipeline’s path before construction can begin.
If your property lies within the path of a proposed pipeline, you’ll want to strike a deal that adequately compensates you for the use of your land and fully protects your rights as a property owner. There are many factors to take into account; the details you include in your pipeline easement agreement could have a great impact on the value of your land and your access and control over it.
Compensation for a Pipeline Easement in Texas
At Dawson & Sodd, our Texas eminent domain attorneys have seen an increasing number of landowners being contacted by oil and gas companies seeking an easement — the right to use a portion of their land — to install pipelines across their property.
In a pipeline easement in Texas — as well as most other utility easement acquisitions — the landowner is entitled to compensation in the amount of the fair market value of the land taken, plus damages to the remainder caused by the acquisition. Payments can be made as an upfront lump sum, or you can try to negotiate for annual installments.
Don’t rely on what the oil company says the land is worth or the amount of compensation they say you are entitled to, as these amounts often do not fully compensate you for the easement taken. There are several experts whose input can help you come to a fair amount of compensation. Our eminent domain attorneys work with these types of professionals often when negotiating easement agreements for Texas landowners.
A qualified land appraiser can determine the actual value of your land. Engineers and land planners can assist in determining the impact the pipeline may have on your remaining property. An accountant can help determine how the payment will be described and structured so as to avoid paying any extra taxes due to the easement. The attorneys at Dawson & Sodd work with all of these experts to ensure the laws applicable to eminent domain procedures are followed and that the landowner is fully compensated for a pipeline easement in Texas.
You should take the following things into account when determining the amount of compensation you are going to ask for granting an easement:
Does the pipeline company have the power of eminent domain?
Does the company that wants to build the pipeline have the power of eminent domain? A company with the power of eminent domain has the authority to use your land even if you aren’t able to reach an agreement. However, they still have to offer you a fair price for using your property. If they don’t have the power of eminent domain, this puts you in a much stronger bargaining position.
What will be the impact to your property?
While negotiating an easement agreement, you’ll want to take steps to limit the impact the pipeline will have on your property. This can include:
- Establishing the width of the easement
- Indemnifying yourself from liability from any incidents that occur during construction or operation of the pipeline
- Granting a nonexclusive easement
- Limiting the easement to only one pipeline
- Ensuring you have access to and across the easement
- Controlling the company’s access to the easement (when, where and how they can enter and exit your property)
- Solutions for resolving any violations in the easement agreement
- Determining what surface facilities are permitted and specifying fencing requirements
- Limiting what type of products can flow through the line
- Determining maintenance responsibilities
What about the future?
In addition to the immediate impact, you also need to be concerned with the effects the easement will have on the long term use and value of your land. A few of the details you’ll want to be sure and address are:
- Your rights to surface use of the property (planting crops, erecting structures, building roadways or sidewalks, creating water features such as ponds, etc.)
- The termination date of the easement agreement
- Terms of transferability of the easement
- The right to payment for damages resulting from construction, maintenance, repair, replacement, and removal
- The specific details for restoration of your land (soil, waterways, timber, vegetation, etc.), including removing any fencing or other structures
Frequently Asked Questions about Eminent Domain
Generally yes, eminent domain laws grant the government the ability to condemn property for legitimate public uses. However, the Fifth Amendment to the U.S. Constitution protects property owners by forcing the federal government to pay “just compensation” for the property taken and by permitting the federal government to condemn private property only when it does so for a “public use.” Likewise, Article I, Section 17 of the Texas Constitution guarantees property owners “adequate compensation” when their property is “taken, damaged, or destroyed” for public use. Article I, Section 19 also provides that no Texan can be deprived of property except by the due course of the law.
Read more about the legality of eminent domain.
Generally, the federal, state, county and municipal governments, as well as water districts and school districts, can exercise the right of eminent domain. Public utilities may also be able to use private property for power lines, pipelines and other alleged ‘public uses.’
Read more about who can take private property through Eminent Domain in Texas.
Sometimes the government takes and uses or damages property for public use without following the traditional condemnation process. In such cases, the law allows a property owner to file an inverse condemnation lawsuit seeking compensation for the value of the property that was taken, damaged, or destroyed.
Read more about inverse condemnation claims.
Appellate Court Win for Pipeline Easement in Texas
At Dawson & Sodd, we’ve helped many landowners negotiate favorable easement settlements. In one notable case, our clients were Denton County landowners involved in a long-running battle with Crosstex Energy over the company’s natural gas pipeline easement across the landowners’ undeveloped property.
Crosstex originally offered $44,955. The Fort Worth Court of Appeals upheld a 2011 jury verdict that required the company to pay significant damages for the reduced market value of the land caused by the pipeline. The result was a total of $873,824 in compensation for the pipeline easement, with a net recovery to the landowner after fees and litigation expenses of $609,193.36 (inclusive of the Special Commissioners’ Award).
Get the help of an experienced Texas easement attorney
Making the contract as detailed as possible avoids the risk of a “blanket” easement that allows the oil company to act in ways that might be detrimental to the value of your property. Remember to get everything in writing before you sign an agreement.
We recommend you hire the services of an experienced Texas property rights lawyer with an extensive background in negotiating easement agreements to protect your interests and maximize compensation.
If a pipeline company wants to secure an easement on your property, contact the law firm of Dawson & Sodd to schedule a free consultation. We’ve been protecting the rights of Texas landowners in a wide range of property disputes for over a century. Our team of experienced Texas property right lawyers is dedicated to defending your rights and getting you the best deal for your land possible.