Pennsylvania’s tremendous production of shale gas has resulted in an overabundant supply with the pressing need to move the natural gas to other regions of the country. Pennsylvania’s natural gas market is saturated and gas companies are pressing hard to transport gas to distant markets at higher prices. As a result of the pressing need to move gas great distances, many major pipeline companies are undertaking substantial interstate pipeline projects to move gas across state lines to distant markets.
The Federal Energy Regulatory Commission (“FERC”) regulates interstate pipelines . Pipeline companies apply to FERC for approval of proposed interstate pipeline projects with the ultimate goal of approval and the issuance of a Certificate of Public Convenience and Necessity. Once FERC issues a Certificate of Public Convenience and Necessity the pipeline company obtains eminent domain authority and the power of condemnation.
Learn Your Rights, Become Educated, and Understand Your Options
For most landowners, it is a bad day when they are first notified that their property is in the proposed easement path of an interstate pipeline project. It is a very helpless feeling when landowners are told that if you do not reach an agreement with the pipeline company the company will simply “take” your property by way of eminent domain and condemnation. Rarely are landowners enthused when told that a major interstate pipeline will be installed on their property and they cannot simply decline the offer and avoid the pipeline. However, just because your land is in the path of the FERC pipeline project, does not mean that you do not have options. In fact you do have options and you must understand your options and make the best of this usually unwanted circumstance.
In my opinion and from my experience, every landowner notified that they are in the path of an interstate pipeline should immediately contact an attorney experienced in representing landowners in FERC pipeline projects. I believe that it is critical to have an initial consultation with a knowledgeable attorney to review your specific situation and to understand your rights and options moving forward. Landowners must know what to expect as the FERC application process and pipeline project moves forward. Landowners must eliminate fear, confusion and uncertainty when faced with the overwhelming proposition that an unwanted major pipeline will most likely be installed on their property.
Do Not Rely on the Pipeline Company’s Landman
Landowners cannot rely on the pipeline company Landman to inform them of their rights and options during this important time. Remember, the Landman works for the pipeline company and is paid by the company to get you to sign a Pipeline Agreement. The Landman is not paid to educate you on your options or teach you negotiation strategies. The landman is not working to get you the highest compensation and best property protections. Again, the landman works for the pipeline company – not you.
Substantial Value of an Initial Consultation in FERC Pipeline Projects
I have represented many Pennsylvania Landowners presented with FERC pipeline projects and the threat of eminent domain and condemnation. Through my experiences I have found that my landowner clients have benefitted greatly from a telephone or in-office conference shortly after they are notified or become aware that their property is within the path of the pipeline project. However, it is never too late for an initial conference to review your situation and learn your rights and options moving forward. An initial conference is an excellent opportunity for the lawyer to educate the Landowner on the FERC application process and to address the questions and uncertainty facing the landowner. This initial conference also serves as the first step in forming a comprehensive strategy for future discussions and negotiations with the pipeline company.
Never Just Give Up! Do Not Fall Into the Company Trap. Formulate a Negotiation Strategy
Properly evaluating your situation and formulating an early plan and strategy is critical when facing a FERC pipeline project. Landowners must never simply take the position that:
“The pipeline company is going to take the easement anyway through eminent domain, so I might as well sign the Pipeline Agreement they are offering me and get what I can.”
“There is no need to contact a lawyer because a lawyer cannot do anything for me since the pipeline company will ultimately obtain eminent domain and condemnation authority through FERC.”
“My neighbors have signed so I might as well sign because I cannot get more money or better terms than my neighbors.”
“I do not want to get into a fight with the large pipeline company or go to court to challenge condemnation, so I might as well sign and get it over with.”
“The pipeline company will have eminent domain through FERC so a lawyer cannot help me and will only cost me money and eat into the compensation offered by the company.”
Pipeline Companies are Smart, Landowners Must be Smarter
I certainly understand these thoughts, but so does the pipeline company and their Landmen. Pipeline companies did not form yesterday and they understand and study landowner psychology. Pipeline companies use their vast experience in these FERC projects to design their calculated plan as to how best to approach and communicate with landowners to acquire the cheapest possible pipeline easements. Pipeline companies know that many landowners will feel helpless when told that they are within the path of a FERC pipeline project and that this group of landowners will sign whatever Pipeline Agreement the Landman puts in front of them. It is for this reason that pipeline companies rarely, if ever, present their best offer as a first offer to a landowner on a FERC project.
A Comprehensive Strategy is Key to Make the Best out of this Unwanted Situation
I want to stress that this Blog, or any Blog, is not intended to provide specific legal advice to any landowner. However, this Blog is intended to stress the value of information and the need to formulate a comprehensive strategy when facing a FERC pipeline project. I have seen and represented many landowners who significantly increased compensation and added important addendum terms through effective negotiation of interstate pipeline project agreements. Remember, you have options when presented with a FERC pipeline project and you must make the most of this unwanted situation. Many landowners leave tens upon tens of thousands of dollars on the table and miss out on important pipeline addendum terms by not learning their rights and not approaching these negotiations with a sound plan.
If you are presented with a Pipeline Agreement for a FERC pipeline project, do not simply give up. Contact a knowledgeable attorney who can educate you on your rights and options and assist you in formulating and implementing a plan to make the most of this unwanted situation.
Douglas A. Clark, Esq. – Protecting Pennsylvania Landowners