Pipeline talks are business, Arnold says
Negotiating a pipeline easement through a farm is similar to negotiating a contract with a potential business partner, Dale Arnold told local landowners Thursday evening.
Arnold, Ohio Farm Bureau Federation’s director of energy, utility and local government policy, met with about 45 local people at the youth center on the Seneca County Fairgrounds to give them an overview of what landowners should know about easements. The meeting was hosted by Seneca County Farm Bureau.
“Don’t sign anything unless everything is detailed to your requirements and satisfaction,” he said. “You’re going to be working with a number of energy service providers from this point forward. What we learn from one will help with others in the future.”
The meeting was in regard to a pipeline planned by Sunoco Logistics which covers 22 miles through Seneca County from the east side of Tiffin through the Bloomville area in a southeasterly direction.
Part of the line would follow an existing easement where a pipeline from the 1940s lies but is no longer used. Another part of it would bypass the existing easement and be rerouted through new area.
In the area where landowners are organizing, there are 160 miles affected through Huron, Richland, Ashland and Wayne counties.
Arnold said he has met twice with Sunoco representatives and he believes them to be genuinely interested in learning about farming practices.
“Sunoco is one of the few companies I have seen that is doing the education and outreach to find out how to do it right,” he said.
Arnold said Sunoco is the pipeline under consideration now, but there will be others.
“In Seneca County, there will be six or seven other pipelines in the next 10 years,” he said. “Things are happening so quickly. We’re seeing all sort of projects.”
Arnold said new laws took effect last fall that impact pipeline projects.
“We used to have a longer process,” he said. “We’re going from centralized to decentralized rules and regulations. Now it’s expedited. It’s going to go fast. It’s going to go quick.”
He encouraged landowners to get involved with the decision-making process at the county level, and he gave an overview of pipeline types and uses.
He said eminent domain, which gives the government or utility right of access across a property, does not apply to all pipelines.
If it does, it only gives the right, he said.
“Everything else is negotiable,” he said. “You still have a lot of options, needs, opportunities and responsibilities.”
Regarding negotiations, Arnold gave suggestions on the types of questions landowners might want to ask their potential business partner when negotiating an easement.
Arnold said easements and leases negotiated decades ago still might be in effect.
“If you want to be free and clear, work with legal counsel to have old ones lifted from the property,” he said.
Although landowners can negotiate as a group, he said there are no group agreements.
“They are all individual easements,” he said.
While state law takes care of 80 percent of landowner needs for an easement, he said it’s the other 20 percent that make each easement unique to the individual land.
“State law sets very good minimum standards,” he said. “Anything over and above the minimum standards are individually negotiated.”
Another consideration is change in tax status, he said. For example, if the law changes in the future and allows land with pipelines to be taxed differently than other farm ground, the landowner is responsible for paying the increased tax.
“Always have written into the easement how those additional taxes are to be addressed,” he said.
Also, Arnold said there is a potential for pipeline easements to become easements for other forms of infrastructure to follow such as more pipelines, fiber optic lines or other similar long-distance lines.
He suggested making sure the easement is for “one right-of-way, one ditch, one piece of infrastructure. Period.”
If more lines are requested in the future, the landowner then has a right to negotiate a new easement.
Also, he said if the contents of the pipeline change, a new easement may be negotiated if language allows.
“If the mission of that line changes, you possibly have the ability to negotiate an additional settlement,” he said.
He said language also should say the easement reverts back to the owner if the line is abandoned.
Farm programs through the U.S. Department of Agriculture also might make a difference in negotiations, he said, and also farmland preservation contracts.
“Many of those agreements are actually easements themselves,” he said. “Will that easement conflict or interfere with another easement across the property?”
In addition, Arnold said landowners might be working with more than one company at the same time.
“You want to make sure all energy service providers are communicating to make sure they all know what’s happening,” he said.
The pipeline is likely to cause loss of farm production for a certain amount of time, he said, whether the loss is in crop production, timber production or pasture land for animals.
“Your ability to use that piece of ground has changed forever,” he said. “You must negotiate a settlement that reflects that.”
He said the landowner also should make sure he or she retains the use of the land for normal agricultural production, and even consider future land uses.
“If you’re two or three miles from a county seat or a village, could it go from agricultural to commercial or industrial?”
Arnold said not only landowners, but long-term leaseholders have a stake in the negotiations. Landowners should take their renters into consideration on topics such as compensation for land improvement and loss of farm income.
Arnold said company representatives must be educated about local farming practices such as the importance and purpose of field tile and the volatility of highly erodible land.
“It’s an educational opportunity,” he said.
Arnold recommended logging every meeting with a company representative into a notebook that include the name, address, phone number and name of supervisor.
And landowners should point out with great detail such points on their property of historical or environmental significance.
“You don’t have to take the first offer,” he said. “Make a counter-offer.”
When making a counter-offer, he said landowners should document the costs involved in hiring an attorney, consultants, surveyor and other professionals, along with making an allowance for his or her individual time and effort involved.
“Consider the value of the ground in question,” he said. He suggested talking to the county auditor and a couple real estate agents who can estimate what the land would be worth if it was sold.
Arnold suggested landowners start with local attorneys and let them contact the experts on energy issues and deal with the complexity.
He offered a list of OFBF-approved attorneys who deal with energy topics.
“For every dollar you spend now in negotiation, you’ll save $15 later in litigation,” he said.