March 24, 2017


Pipeline easement agreements stir questions, strong feelings 

Mountain Valley Pipeline’s controversial quest to bury a 42-inch diameter natural gas pipeline through the region requires the company to acquire easements across private property — a process that itself rouses strong reactions.

Mountain Valley reported last week that as of Jan. 27 it had negotiated about 1,250 easement agreements with landowners along the 303-mile pipeline’s proposed route through six counties in Virginia and 11 in West Virginia.

Court records show numerous deed easements purchased in Giles, Montgomery and Franklin counties. Only a few have been filed in Craig County, which would host a comparatively short stretch of the pipeline. And, as of late January, only one easement had been acquired in Roanoke County — where opposition has been fierce to surveying by crews seeking to define the pipeline route.

 Natalie Cox, a spokeswoman for Mountain Valley, said the acquisitions represent more than 70 percent of the total acreage needed to build the pipeline, including rights-of-way and access roads. The company hopes to begin construction this year, but the project must first be approved by the Federal Energy Regulatory Commission.

Deed easement payments recently reviewed in the region for pipeline rights-of-way ranged from an apparent high of $356,880 for an easement affecting a large parcel along Reese Mountain Road in the Fort Lewis Mountain area of Montgomery County to an apparent low of less than $1,000 in Giles County.

Easements for access roads paid less.

Cox said compensation varies based on the amount of acreage needed to build or access the pipeline.

Many of the perpetual easements acquired for the pipeline include language that lawyers with at least two Virginia-based firms experienced in such negotiations have described as “company friendly.”

For example, many agreements would allow Mountain Valley to install a second pipeline within the easement at a later date. Many include wording that could allow the pipeline to transport products other than natural gas, including oil or “other liquids or gases.”

If FERC approves the project, Mountain Valley will have access to federal eminent domain to acquire easements if negotiations with landowners fail to yield a price acceptable to all.

Chuck Lollar, a Norfolk-based lawyer who specializes in representing clients who are facing eminent domain cases, quotes the Latin phrase “caveat venditor” — “seller beware” — when discussing easement negotiations.

Lollar has represented property owners fighting pipeline surveying by both Mountain Valley and the separate but similar Atlantic Coast Pipeline project, which would route through central Virginia.

He said landowners should hire lawyers experienced in easement negotiations “because the easement language MVP, ACP and other gas companies is using is broad, complicated and somewhat unlimited, and owners generally cannot understand the impact of these permanent easements on their property.”

Generally, lawyers who represent property owners in easement negotiations take as their fee either a percentage of the additional amount paid for the easement through settlement or an award in an eminent domain trial, over the initial appraisal and offer, or an hourly rate, flat fee or combination.

Among other potential consequences of negotiating without experienced representation is the risk, Lollar said, of “being grossly under-compensated.”

He and other lawyers familiar with eminent domain cases have said easement payments should compensate property owners for anticipated loss of value of the larger property. Study results, anecdotes and opinions offer varying conclusions about whether a perpetual easement for a large-diameter pipeline transporting natural gas at high pressure causes a decline in property value. There have been cases reported regionally suggesting that simply the prospect of such an easement has negatively affected property values.

A few of the agreements included a provision for Mountain Valley to prepay the property owner “for surface damages associated with the construction and laying of the pipeline.” It also provides for the potential payment for damages to “crops, trees and fences” that might occur during reclamation of the right-of-way after construction.

A separate agreement negotiated in Montgomery County included a section requiring Mountain Valley to maintain liability insurance coverage during pipeline operations, with one provision requiring coverage “with limits of $2 million in any one occurrence for property damage and bodily injury.”

Other deed easements reviewed in the region did not include similar liability insurance provisions. The landowner involved in that transaction declined to be interviewed but acknowledged he was represented by a lawyer.

Source of resentment

The $356,880 easement payment in Montgomery County went to HS Tejas, a Florida-based company involved in developing the Fort Lewis Mountain Estates subdivision along Reese Mountain Road.

Neither HS Tejas nor Continental Pacific LLC, an apparent partner in the development, replied to inquiries about deed easement negotiations with Mountain Valley or its agents and the potential effect of the easement on marketing the 20-acre wooded tracts.

Meanwhile, Serina Garst, a co-owner with family members of property in Franklin County, has alleged in a filing with FERC that employees of Coates Field Service, an Oklahoma-based company handling easement acquisitions for Mountain Valley, have engaged in “unfair and deceptive negotiation tactics.”

Garst alleged that a Coates employee “portrayed herself as working for landowners rather than MVP” and claimed that FERC was encouraging property owners to sign easements in advance of the commission’s decision about whether the pipeline project would proceed. Tamara Young-Allen, a spokeswoman for FERC, noted that the Natural Gas Act prohibits FERC involvement in landowner easement negotiations.

Cox responded in an email Wednesday. “The Mountain Valley Pipeline project team takes these issues, concerns, and allegations very seriously and it is troubling to us that there is even potential for this type of allegation to occur,” she said.

“We expect our land agents to be transparent, upfront and honest in their discussions and negotiations with landowners,” Cox added, noting that “Coates Field Service land agents are MVP representatives and they are instructed to inform landowners of that fact.”

A resident of Franklin County who sold an easement without a lawyer, negotiating with Coates Field Service, said he felt he was treated fairly. He said that although he is opposed to the pipeline and believes the easement likely will affect his property’s value, he felt as though the project was just about inevitable and could provide some benefit for the county, which has not had access to natural gas.

He also said the pipeline’s current route through his property is tolerable, being about 400 yards to 500 yards from his house, and he fears the route could be worse.

“I don’t want it near me,” he said.

He asked that his name not be disclosed. Both he and the Montgomery County landowner said they are aware that neighbors who continue to fight the pipeline might resent that they have negotiated easements.

Tailored vs. uniform

All of the easement agreements reviewed include language barring property owners from obstructing the permanent right-of-way with buildings and trees.

Another common provision grants Mountain Valley the right to come on and off the property on the right-of-way “and across adjoining lands” during construction, operation and maintenance of the pipeline.

Lollar said that this “secondary easement” essentially allows Mountain Valley to travel from a public road across any part of the landowner’s property and that landowners should limit access to the easement acquired “or some other specified path or road.”

If not, he said, “Arguably, their entire parcel is encumbered with an ‘access’ easement.”

Lollar said easement agreements can also specify the terms by which a company like Mountain Valley can transfer the easement to another company. Cox acknowledged that a company can sell an easement but noted that the buyer must abide by the terms of the original easement.

Lollar said deed easement negotiations can be uniquely tailored for individual landowners, guided by dozens of specific concerns he said he often raises for clients. But pipeline companies prefer much more uniform agreements, he said, and sometimes offer less money for deed easements that are more restrictive.

Meanwhile, Cox said Mountain Valley is not concerned about the dearth of easement agreements negotiated to date in Roanoke County.

“We do not anticipate this will hinder the steps we are taking in the regulatory approval process and we remain confident that the Mountain Valley Pipeline project can bring economic benefits to the region in the form of increased business development, job growth and tax revenue generation,” Cox said in an email.

She said Mountain Valley respects the opinions of pipeline opponents and will continue to try to alleviate their concerns.

News researcher Belinda Harris contributed to this report.

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