Falen: Multistate Landowner Group Forms
FALEN LAW OFFICES, LLC
Phillips 66 and Bridger have recently announced they will be constructing new interstate pipelines to transport oil from the Bakken in North Dakota to Cushing, Oklahoma; passing through Montana, Wyoming, Colorado, Kansas, and Oklahoma. Recent multistate landowner groups have been successful in negotiating unprecedented terms in limiting a landowner’s liability with regards to a pipeline, better compensation, protecting landowner rights, and requiring certain reclamation standards throughout the life of the pipeline project. Now, landowners in Montana, Wyoming, Colorado, Kansas, and Oklahoma are seeking to build on the success of recent multistate landowner groups in negotiating better easements, and have so far organized a group of landowners from the states of Wyoming, Colorado and Montana. This group encourages any landowner that may be impacted by the proposed Phillips 66 and Bridger pipelines to join.
Due to condemnation laws, landowners often cannot prevent a pipeline from being constructed on their property. While payment terms are certainly important in these circumstances, it is especially important to address issues such as a landowner’s liability to a pipeline company. This is particularly true considering that landowners are forced to accept an industrial sized risk on an agricultural operation. Many landowners are not aware that accidentally damaging a pipeline can result in a person being held liable for millions of dollars and losing their property.
Pipelines are generally owned and operated by limited liability companies. This allows the pipeline company to limit their own liability to the extent they are invested in the project, while allowing those associated with the company to share in the profits generated by the pipeline. On the other hand, a landowner facing condemnation for a pipeline cannot limit their liability the same way a pipeline company does, and cannot share in the profits generated by the pipeline. A landowner’s LLC would have to place the land being burdened by a pipeline into the LLC, which in many cases includes the landowner’s home. Often, the landowner’s land and home is all they own, in which case the LLC offers no protection to the landowner against liability. Even with insurance, the landowner could still end up losing their land and home. The policy amounts of a landowner’s agricultural insurance will not be sufficient to cover an industrial-sized risk such as a pipeline. Therefore, if the landowner’s liability is unlimited they could potentially lose everything if something goes wrong.
Through collective bargaining, landowner owned and operated groups have successfully negotiated unprecedented terms in limiting a landowner’s liability with regards to a pipeline, better compensation, protecting landowner rights, and requiring certain reclamation standards throughout the life of the pipeline project. By acting in concert, landowner groups enjoy greater bargaining leverage against companies that have the authority to condemn than individual landowners otherwise would.
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Recently in early December 2017, Oneok Partners announced preparations to build an approximate 900-mile natural gas liquids underground pipeline known as the Elk Creek Pipeline. The Elk Creek Pipeline is a 20 inch natural gas liquid pipeline being developed to transport product from the Bakken Field in North Dakota and Montana to its facilities near Bushton, Kansas.
Following this announcement, landowner meetings were immediately organized throughout eastern Montana, Wyoming, and Colorado. Similar to previous landowner groups, these landowners were primarily concerned with liability, construction and reclamation, abandonment, and compensation. Buoyed by the success of past landowner groups, such as those associated with the Oneok Bakken Pipeline, landowners from Montana, Wyoming and Colorado organized for the purposes of collective bargaining with Oneok Partners. These groups eventually merged into what is now the MT-KS group to increase bargaining leverage and due to shared values and goals. Overall membership constitutes approximately 500 miles of the pipeline; well over half of the entire easement. The MT-KS group successfully negotiated an improved survey access agreement with greater compensation, something Oneok had never done in Colorado and had only previously done in Wyoming. These negotiations allowed the MT-KS group to establish its presence with Oneok and to continue to build its membership.
The MT-KS group successfully negotiated unprecedented terms addressing landowner liability. The agreed-upon terms limit the amount for which a landowner can be held responsible and protect landowners against vicarious liability; meaning a landowner cannot be held responsible for actions of employees, guests, contractors, etc. Oneok Partners also agreed to indemnity protection covering any losses that a landowner may incur due to the pipeline being on their property, including limiting a landowner’s legal expenses if they are forced into legal action.
Construction and reclamation terms were particular concerns and it was vital that Oneok agree to construct the pipeline and reclaim landowners’ land in a way that minimized scarring and returned the land to its original productivity. Accordingly, Oneok agreed to reseed the ground with the same plant species found adjacent to the pipeline. Negotiations also sought to minimize impacts caused by construction crossing streams. Local conservation and Weed and Pest districts were very helpful in developing construction and mitigation standards addressing resource concerns. This has paved the way for local districts to influence reclamation plans, benefitting group members and non-members alike. With this help, MT-KS was able to negotiate the ability to have input in the development of the Elk Creek Pipeline Construction, Mitigation and Reclamation Plans, and requiring Oneok to perform reclamation standards throughout the life of the pipeline project. In addition, the MT-KS group was able to successfully negotiate criteria for abandonment of the pipeline so that the land would not be encumbered by an easement that is not being used.
Further, the MT-KS group successfully negotiated limitations on the rights granted to Oneok through the pipeline easement. It was the MT-KS group’s philosophy that the future risk and uncertainty associated with pipelines be mitigated to the greatest extent possible by the pipeline company rather than the landowner. Property law usually grants an easement holder widespread and growing rights; without specific language limiting their rights, a landowner is always at the mercy of the easement holder. It was agreed that only one pipeline could be built within the easement and could not be relocated anywhere in Oneok’s sole discretion. The limitations also limit access to the pipeline within the right-of-way or specific access areas. Additional uses, such as pump stations, valve sites, access to the easement, and additional pipelines require separate agreements. These limitations are especially important because several old and vaguely-written pipeline easements allow an easement holder to install additional pipelines, install additional surface facilities, and make additional uses of the easement years or decades later.
Moreover, the MT-KS group successfully reserved the right of landowners to continue using their land as they have in the past. Property law usually prohibits a landowner with an easement on their property from doing anything that could harm the easement. Everyday use of the land, like farming and tilling, or driving over the easement could be prohibited because the easement holder claims that it harms their rights. The MT-KS group ensured that farming and ranching activities were specifically allowed to remain even if the easement holder later argues that those uses interfere with the pipeline easement.
Finally, the MT-KS group successfully negotiated for better compensation after reaching agreement on the other easement terms. Through those extensive negotiations, the MT-KS group gained a measure of respect from the Oneok representatives. Moreover, due to the extensive number of miles of pipeline right-of-way represented by the group, the MT-KS group was able to meet and negotiate with policy-level decision makers from Oneok. This allowed the MT-KS group to negotiate an excellent compensation package considerably better than what had been offered from previous interstate pipelines in the area.
The combined MT-KS group is very proud of the new precedent set by their agreement in terms of liability and indemnity protection, protecting landowners’ rights, construction and reclamation, and compensation. The agreement is something that landowners over a large area will be able to draw on in the future, such as the currently organized landowners from Wyoming, Colorado and Montana in negotiations for the proposed Phillips 66 and Bridger pipelines. It is my hope that others will find the agreement helpful in future negotiations. If you discover that a pipeline may be crossing your property and forming or joining a landowner group interests you, please feel free to contact:
Jason Adamson, of the Colorado Negotiating Committee, at (970) 580-4970 or firstname.lastname@example.org;
Monte Willeke, of the Colorado Negotiating Committee, at (970) 554-0366 or email@example.com;
Donley Darnell, of the Wyoming Negotiating Committee, at (307) 746-4044 or firstname.lastname@example.org;
Clark House, of the Wyoming Negotiating Committee, at (307) 532-0941 or email@example.com;
Pat Wade, of the Wyoming Negotiating Committee, at (307) 334-2425 or firstname.lastname@example.org;
Kevin Braun, of the Montana Negotiating Committee, at (406) 978-2704 or email@example.com; or
Frank Falen, Legal Counsel for the landowner groups mentioned herein, at (307) 631-6331 or firstname.lastname@example.org.
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