Pipeline infrastructure provides a crucial link between natural gas wells in the Marcellus Shale and the processors and consumers who use that gas. Landowners across Pennsylvania are increasingly being asked to lease land for pipeline right-of-ways.

This article provides information about pipeline construction and maintenance requirements, the leasing process, and issues landowners might consider when negotiating their right-of-way agreements.

What is a pipeline right-of-way?

A pipeline right-of-way is a strip of land over and around natural gas pipelines where some of the property owner's legal rights have been granted to a pipeline operator. A right-of-way agreement between the pipeline company and the property owner is also called an easement and is usually filed in the county Register & Recorders office with property deeds.

Rights-of-ways and easements provide a permanent, limited interest in the land that enables the pipeline company to install, operate, test, inspect, repair, maintain, replace, and protect one or more pipelines within the designated easement. The agreement may vary the rights and widths of the right-of-way, but generally, the pipeline company's rights-of-way extend 25 feet from each side of a pipeline unless special conditions exist.

Property Use Restrictions

If you are negotiating a right-of-way easement on your property, you should be aware of the pipeline operator's guidelines for property use and construction near natural gas pipelines and equipment.

Generally, property owners are prohibited from installing any structures, storing anything that could be an obstruction, or planting trees or shrubs along the right-of-way. Unauthorized building or planting in the pipeline right-of-way is known as right-of-way encroachment.

Pipeline operators will regularly conduct aerial and ground inspections to check right-of-way conditions, test for leaks, install and maintain pipeline markers and to clear brush that restricts access to the right-of-way or visibility during inspections. Rights-of-way are kept clear of trees, brush and other obstructions so the pipeline operator can safely operate, inspect, maintain and repair its pipelines.

Normal gardening and agricultural activities are generally acceptable. However you should never dig or construct anything within the easement without first having a pipeline representative mark the pipeline, stake the right-of-way and explain the company's construction guidelines.

Although pipeline markers are located along the path of a gas pipeline, they only identify the general location of the pipeline.

Negotiating a Right-of-Way Agreement

Easement agreements are formal legal agreements granting the operator long-term use of the right-of-way. A change in ownership of the property does not alter the easement agreement.

Because easement agreements are legally binding contracts, landowners are encouraged to have the contract reviewed by an attorney who is knowledgeable in Pennsylvania oil and gas law and experienced in reviewing right-of-way agreements before entering into any contract.

Many aspects of a pipeline easement are negotiable. Typically a pipeline representative will present the landowner with a pre-printed agreement. This document can serve as a starting point for a two-way negotiation, or it can be fully accepted or rejected by the landowner. You can make changes to the easement by creating an addendum that is approved by both parties.

Value of Rights of Way

Payments to landowners for granting right of way easements can be quite variable between pipeline operators and from location to location. Most payments involve a set dollar amount per linear foot (or per "rod," which is 16.5 feet). In Pennsylvania, easement agreements have ranged from less than $5 per linear foot to more than $25 per linear foot.

Some pipeline operators will also offer a "signing bonus" (a fixed dollar amount for signing an easement agreement) in addition to the payment per linear foot. Be sure to get the amount and terms of payments in writing before signing an easement agreement.

Right of Condemnation or Eminent Domain

In Pennsylvania, eminent domain or right of condemnation generally only applies to interstate transmission lines, or lines moving gas longer distances between two or more states. In other states the power of eminent domain is given to all intrastate gathering and distribution pipeline companies.

Individual gathering lines (pipelines running between well sites, compressor units and metering stations) are not subject to eminent domain in Pennsylvania, and the pipeline operator must negotiate easements with each individual landowner along the pipeline route.

There is a provision in Pennsylvania law that allows operators of a "public utility" to use eminent domain to secure pipeline easements. In the event of an eminent domain proceeding, the landowner will be compensated by the court or regulatory authority at a fair market value for the easement.

According to US Title 15, Chapter 2, Section 15.0201, a public utility is defined as a public corporation, company, person, association, authority, or enterprise fund that owns, operates, or controls a plant or equipment within the territory for the production or delivery of power in any form, water, or telegraph or telephone services, to another person, corporation, company, or association.

Extension's Role

Penn State Cooperative Extension is currently developing a publication for landowners on negotiating pipeline rights-of-way and is planning a series of educational workshops on pipelines throughout the Marcellus fairway. Please visit http://extension.psu.edu/naturalgas for a list of available publications and workshops.

Cooperative Extension provides educational resources for landowners about Marcellus shale and the natural gas leasing and exploration process. County Extension offices may host an educational workshop, discuss leasing and right-of-way arrangements, or refer you to regulatory or legal specialists.

Although extension educators cannot provide legal advice, they can provide additional insights about leasing and right-of-way considerations.

If you have questions, contact your county's Penn State Extension office.

This press release was submitted by the Penn State Cooperative Extension.