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Acquiring Surface Use Rights For Pipelines: The Easement Way Or The Hard Way

Isaac N. Sutphin, Oil & Gas Agreements: Surface Use in the 21st Century (May 2017)

With the constant change in the world of surface use for the extractive industries, the possibilities for acquiring surface use rights are varied and, at times, complicated. This paper will examine some of the unique issues facing surface uses for pipelines and related facilities, including negotiated agreements and rights acquired through eminent domain. In light of the authors' licensure and experience, most of the citations and supporting case law referenced in this paper is from Wyoming. However, given the nearly universal reorganization of easements and eminent domain, most of the principles addressed herein have an analog in every jurisdiction in the United States. 1. Easements - Fundamental Pipeline Rights Although there are various options available to acquire surface rights for a pipeline, including simple permission, licenses, and leases, the preferred device is an easement. An easement is an interest in land that grants to the holder a defined right to use or enjoyment of another person's property.1 As a real property right, easements are usually created through a written agreement, which is recorded in the land records for the appropriate county.2 Indeed, to comply with the Statute of Frauds, easements should be in writing and include words of conveyance such as "grant" or "convey." Easements also typically include the formalities accompanying a transfer of property in the jurisdiction, including acknowledgements and legal descriptions of the property. One hallmark of an easement is that the fee owner retains all rights and incidents of ownership in the land that is compatible with and does not impede the purposes of the easement. Nevertheless, the rights of the easement holder to use the land are dominant to the extent they are defined in the easement agreement. Thus, the surface estate is servient to the easement, but the servient owner may use the easement property in any manner that does not interfere with the dominant use as provided for in the easement.3 This joint use is particularly appropriate in the context of a pipeline easement where the pipeline is typically buried and operated in a manner to limit the impact on surface operations. Whether obtained by mutual agreement or through condemnation, pipeline easements generally include terms and conditions regarding depth of cover and other limitations on surface use necessary to protect the integrity of the pipeline. In the absence of specific provisions, industry standards regarding pipeline safety would typically apply. For these reasons, pipeline easements are not generally considered to grant an exclusive right to the holder. This is appropriate where the property owner is able to continue certain uses of the surface on and around the pipeline. Unlike easements for railroads of highways, which may require the exclusive use of the surface, pipeline easements can typically be shared with other uses. Thus, while the language of the easement grant is important when determining