Battle begins: Landowners vs. Rover

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SALEM, Ohio — Listen up, landowners. If you are being approached by a Rover landman, there are some things you may want to know before you start negotiating.

The Rover Pipeline LLC is an interstate natural gas project designed to carry 3.25 billion cubic feet per day of natural gas across 830 miles. It will reach across Ohio, West Virginia, Michigan and into the Dawn Hub in Ontario, Canada. In parts of the project, there will be two 42-inch lines, and in other parts of the project, there will be one line.

Rover pipeline

In Ohio, the counties with land impacted include Belmont, Harrison, Carroll, Tuscarawas, Stark, Wayne, Ashland, Richland, Crawford, Seneca, Wood, Hancock, Henry, Fulton and Defiance.

The pipeline is expected to be in service in late 2016 or the first half of 2017.

FERC regulated

The Rover pipeline is an interstate pipeline, and is governed by the Federal Energy Regulatory Commission, which must issue a permit before the pipeline construction can begin.

According to FERC spokeswoman Tamara Young-Allen, the permit application process is about midway completed.

A draft environmental impact statement was issued in February, and the follow-up comment period ended April 11.

FERC staff is now going through the comments, and they are expected to issue a final rule and final environmental impact statement this summer.

Landowners in Ohio

There are more than 1,200 landowners in Ohio impacted by the pipeline’s construction, and not all of them are happy about it. At least 750 have hired attorneys to represent them in negotiations, according to filings made with FERC.

The filings have more than one thing in common — most state it’s not just about the money being offered for the easements, it’s also about the terms of the easement agreements.

Lawyer involvement

Some law firms have filed briefs with FERC asking the commission to force Rover Pipelines to negotiate fairly with landowners.

Columbus-based Emens and Wolper Law Firm is working with the firm of White Law Office, Millersburg, Ohio, and the law firm of Goldman and Braunstein LLP, Columbus. The attorneys claim the landowners feel the deals offered are one-sided and benefit only the pipelines.

“It’s a stacked deck against the landowner,” said Dick Emens, of Emens and Wolper.

Liability, damage issues

The attorneys say landowners need stronger protection from liability and property damage resulting from construction or operation of the pipeline.

Landowners need language in the easements to protect them in the event something happens with the pipeline, such as explosion. They want to know that someone is going to pay for the injuries or property damage.

Other information in the filings show landowners are concerned about compaction, since the pipeline is passing through a large portion of farmland.

The filings show that the pipeline company could be using equipment that weighs three times the weight of a combine loaded with grain, which they are concerned will lead to compaction and lower yields.

Drainage tile

Other concerns have been with drain tile in farm fields.

The hope is that Rover will include a plan about replacing drain tile before construction begins.

“Farmers are losing very real production value,” said Attorney Tom White, of the White Law Office, talking about the impacts of the drainage tile being disassembled and reassembled, as well as the compaction issues.

He added if a landowner discusses using a local land improvement contractor for field drainage/tiling, then that should be specified in the agreement.

Contractors

Dale Arnold, Ohio Farm Bureau Federation energy director, agreed, and said landowners need to know what they can do in their easements when it comes to drainage tile and compaction.

He said if a landowner has used a local land improvement contractor in the past to install drainage lines or clay tiles, the landowner’s attorney who writes or reviews the easement can write that into the easement so that the landowner can use that contractor again to ensure their property is put back the way he wants it.

Moving the pipeline

The comments reflect other landowner concerns, such as the lack of willingness by the pipeline company to relocate the proposed pipeline route on the property to accommodate for projects the landowner has planned or because of other existing pipelines or railways on properties.

Emens said the landowners he is representing say they have been told that unless landowners take the offers given, there will be no choice in the matter — and the pipeline will force eminent domain.

Money

And one of the biggest hurdles is the negotiation of payment for the permanent pipeline easements. The pipeline easement agreement includes only one payment, and the easement is permanent, unlike an gas and oil lease where the landowner could be paid royalties or another leasing bonus in the future.

According to Emens and White, the going offer for landowners is $42.73 a linear foot for the construction of a single line on the property and just over $60 per linear foot for the construction of a double line on the property.

However, in negotiating for landowners on the Nexus pipeline, which has a smaller pipeline diameter and is shorter in length, Emens and Wolper found that Nexus was offering landowners between $140-$160 per square foot.

Rover response

For its part, Rover Pipelines said it is negotiating fairly with landowners.

According to an email statement to Farm and Dairy from Rover Pipelines’ spokeswoman Vicki Granado, Rover has allocated $124 million for direct payments to landowners along the route.

“It is Rover’s first choice to negotiate voluntary easement agreements with landowners. If an impasse occurs between the company and the landowner, then and only then, do we use legal options available to us,” the email statement read.

“We are very proud of the success rate we have had in negotiating voluntary easement agreements overall. We are able to reach agreements with more than 90 percent of the landowners we have worked with across all the projects associated with Energy Transfer Partners, the parent company of Rover,” said Granado.

Property values are assessed by local real estate appraisers. Rover bases its offers of compensation upon these professional appraisals.

Easement payments are typically based upon two categories: A permanent easement (which includes like land use) or a temporary easement for construction, and crop loss if appropriate (nontaxable).

Crop loss funding

Granado stated farmers would be paid 100 percent of the crop loss in the first and second years, 60 percent in the third year, 30 percent in year four and 10 percent in year five.

Eminent domain

OFBF’s Arnold said the eminent domain process is not available to Rover Pipeline until is granted the permit from FERC, which will be Oct. 27 at the earliest, according to FERC.

In the meantime, Arnold said, every landowner approached by a Rover Pipelines landman can stave off eminent domain by negotiating with the company.

“There is still time to work out an easement,” he said.

He added that odds are with the landowner that an agreement can be decided, and said a national average for pipelines to use the eminent domain proceedings is between 1 and 1 1/2 percent.

“Many landowners come to an agreement before they get to that point,” said Arnold.

Negotiate, negotiate

 Arnold said that as landowners negotiate with any pipeline company, they need to keep good notes. Document every name, date and was discussed at every meeting.

“I encourage all farmers and landowners to negotiate in good faith and these notes will be very valuable in showing that,” said Arnold. “It’s a matter of negotiation. Continue to communicate, keep good notes.”

And last, but not least, if a landowner feels pressured by a pipeline company in any way, there is something he can do.

“If you feel pressured, call the Ohio Attorney General and file a complaint,” said Arnold.

If a landowner is looking for an attorney to represent them in a pipeline easement, Arnold encouraged the landowners to contact the Ohio Farm Bureau Federation, which maintains a list of 18 law firms in Ohio that are known for their work in the field.

Tips for pipeline negotiation

Take notes.

The No. 1 thing to do when negotiating with a landman regarding a pipeline easement is to take notes of each session.

Get a notebook and designate it the pipeline easement notebook.

Record the date of the meeting, who you are meeting with and what is discussed. If you look at the property with the Rover representative, jot it down.

Keep a running tab of the meetings.

The notebook will become valuable if forced to hire an attorney or if you are forced into eminent domain proceedings. The notebook can serve as proof that you have been negotiating faithfully.

 

Also know this:

Rover case:

Rover is an interstate pipeline, which means it is a pipeline governed by the Federal Energy Regulatory Commission. Any court proceedings will be in a federal court, not a county court. In Ohio, this will mean that court hearings could be held in Youngstown, Akron, Cleveland or Toledo depending on the land location.

Quick Take means that a federally licensed pipeline can ask for a preliminary injunction in the negotiation proceedings, and means the pipeline can build the pipeline now and pay later. The landowner will be forced to accept the construction on the property while waiting for the court system to determine the land easement value. It is important to note that Rover has not yet asked for the “quick take.”

All court proceedings in the Rover pipeline will be in federal court, and there are no juries in the federal court. The land value will be determined by a team of three commissioners from the Federal Energy Regulatory Commission.

Story update

* Since the original publication of this story, Rover responded with comments.*

“Our (Rover)  easement payments are calculated in linear feet. Those are very different things.  Again, we do not discuss details of our easement payments as we consider those private contracts with the individual landowners,” said Rover Pipelines’ spokeswoman Vicki Granado.

 

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