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Have a Texas Oil and Gas Attorney Review Your Pipeline Easement!

As a Texas oil and gas attorney, I have occasion to review and negotiate many oil and gas leases in Texas for clients all over the United States (hopefully before the lease has been signed). However, having an attorney review a pipeline easement is every bit as important. Here are just a few of the critical questions that a pipeline easement should address:1. Is the easement limited to a specific area, or is it a blanket easement over your entire property?
2. Is the pipeline going to be buried to an appropriate depth, in light of your future use of that property, what the pipeline will carry and the anticipated size of the pipeline?
3. Does the easement obligate the pipeline company to refill to the original contour of the land and maintain that contour as the fill packs down?
4. Is the pipeline company obligated to remove and save the top soil from the easement area separately, to replace the topsoil and reseed with whatever grass was there originally and in general to restore the easement area to its original condition?
5. Will you have rights to use the surface in any manner that does not interfere with the pipeline?
6. Will the pipeline company agree to avoid important trees and not to remove or trim trees without your consent?
7. Will the pipeline company agree to mark the pipeline route with durable and permanent markers?
8. Will the pipeline company agree to be responsible for any damages that are caused directly or indirectly by the installation, operation, maintenance or removal of the pipeline?
9. Does the easement terminate if it is unused for a certain length of time?
10. Will there be above-ground equipment along the pipeline route? If there is going to be above-ground equipment, are you going to be separately and appropriately compensated for it?
11. Will you get a separate payment for the easement and for damages?

These can be major issues if not properly addressed in the easement. For example, if there is no right on your part to declare an unused easement to be abandoned, that easement will show up on your title forever, even if it has not been used for many years. This can create a major impediment to future uses of your property. You can try to get a release of the easement, but the pipeline company may not exist any longer, and there may be no one to sign a release. You may even need to file a suit and obtain a court order to declare the easement terminated.

In connection with above-ground equipment, this can include valves, gas compressors (that can be very loud and messy) loops or pig entry sites or measurement equipment (that may interfere with irrigation equipment).

Regarding payments, currently easement payments are taxed as capital gains but damages payments are not taxable. If you get one check and the payment for the easement is combined with the payment for damages, the IRS may well assume that the entire payment is taxable.

If you are the kind of person who takes out their own appendix, then by all means, negotiated your own pipeline easement. However, the small amount you pay an attorney to review and negotiate that easement now is very likely going to save you a lot of expense and distress in the future!

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