Landowners unite for collective bargaining with pipeline easements

A few months ago, in late 2010, individual landowners in eastern Wyoming received requests from the company Oneok Partners LP for permission to survey for a 12-inch natural gas pipeline that is planned to move natural gas from Sidney, Mont. to Buxton, Kan.
After learning of the planned pipeline, and in response to the requests for permission to survey and the impending use of eminent domain for a pipeline right-of-way, landowners along the proposed route have formed a landowner group that encompasses the length of the pipeline in Wyoming, and also partners with a similar group in Montana.
“Our goal is not to stop the pipeline – we just want to be treated fairly,” says eastern Wyoming landowner Steve Hays, who’s involved with the group, known as Progressive Pathways, LLC. “Our four points of concern are liability, reclamation, abandonment and compensation for what they do to our land.”
Currently the group is still in the signup stage and is recruiting more landowners to join in the effort.
Progressive Pathways is divided into three 100-mile increments, which run from the Colorado line to the Platte River, from the Platte River to the northern Niobrara County line, and from there north to the Montana state line. Each of the three sections has its own board of directors, composed of four landowners, giving a total governing body of 12. The boards of directors were voted into service at each of the areas’ landowner meetings.
“My big concerns are liability, reclamation, abandonment or change of use, and one thing we’re really adamant about is that the easement is written as a one-time, one-pipeline use only, so there can’t be other pipelines or other things added to the easement later on,” says Lusk area landowner Pat Wade, who is a member of his region’s board of directors and who was in on the initial planning stages of Progressive Pathways.
“With our landowner group we’ll be able to collectively bargain,” says Hays of the reasoning behind forming the group, which has hired Cheyenne attorney Frank Falen of Budd-Falen Law Offices to advise them. Hays says that, while the 12 representative landowners will conduct negotiations on behalf of the rest of the landowners, Falen will help educate and guide them.
“If we were to walk in alone to negotiate, we’d be one leaf in the forest, but if we walk in together we represent 300 miles with a unified voice, and hopefully they’ll pay attention to us,” says Hays.
Falen says he’s in the final stages of working with a similar landowner group in Montana, South Dakota and Nebraska.
“That has worked really well – we put together one big group, elected a negotiating team and they worked with the pipeline company to reach a template agreement that was then distributed to the members, and almost everyone has adopted that easement agreement,” notes Falen. “We’re hoping to repeat the same thing, because it was a successful and is a useful template.”
In a mere two-and-a-half months the eastern Wyoming landowners have succeeded in organizing the group and recruiting 70 landowners that control approximately 50 percent of the proposed pipeline route, and Hays says they hope to get that number to 80 percent.
Hays says signup to join the group will be open as long as possible, and that it’s quite involved to figure out where the pipeline is going and which landowners are involved, because Oneok is not sharing any information on their route plans.
“Once a neighbor tells us they’ve received a letter, we’ll have them talk to their neighbors to the north and south to see if they’ve also received one. It’s really tough, and we have some out-of-state landowners and some people who don’t believe in what we’re doing and want to negotiate their own treatment,” explains Hays.
Although the board of directors of Progressive Pathways will represent everyone as a group in negotiations, individual landowners have the option, after the best deal possible is struck with the company, to either take it or leave it. Also, if they feel they need to do more negotiation particular to their property, they can.
“Everyone has the right to say it’s not working for them, and they have the right to drop out,” says Hays.
Progressive Pathways is collecting membership fees on a per-mile basis to pay the bills and the cost of operating.
Falen says a unique and unexpected twist in the Oneok negotiations is the company’s claim that their line will not be subject to Federal Energy Regulatory Commission (FERC) requirements.
“It’s Oneok’s position that, because the product is called natural gas liquids, as opposed to liquid natural gas, they’re not required to get a certificate before they can begin construction of the pipeline,” says Falen. “That’s interesting, because it leads to the question of who, if anybody, regulates it.”
In a traditional FERC process, Falen says there’s much opportunity for landowner involvement, and he had planned on being involved.
“You’d think with a $500 million project there’d be some regulation and permit requirement somewhere,” he continues, adding that not even Montana’s Major Facility Siting Act applies because the pipeline isn’t big enough in circumference, even though it will move a lot of material.
“It doesn’t come under the Montana act, and there is no regulation in Wyoming, if this is treated like a crude oil line, which doesn’t need any permits in Wyoming,” says Falen. “The concern for us is that the condemnation allows them to take property, and most landowners would like to say that, if they’re going to put this industrial use on their property, they have a lot of concerns, and if they were a true ‘willing seller’ those would be addressed before permission is granted.”
“Condemnation is more political than it is legal,” notes Falen. “There are many politics wrapped up in it, and if you feel like you’re being steamrolled what you have to do is look at the places that are capable of regulating it. A group of this size has the ability to pull some of those levers, whereas it’s difficult for an individual landowner to do that.”
Falen says it’s also been his experience that, if a group of landowners is large enough, they can speak higher up the ladder to those in the company who are the policy makers and who have more authority to actually address concerns rather than, for example, one landowner talking to a field agent.
“The goal of a group like this is to be a large enough size that it’s worth the company’s while to have the folks at the policy-making level sit down in the same room and work on their issues. That’s one of the first big advantages,” he adds.
“We just want to represent the landowners as a whole so they’re not taken advantage of in a forced transaction,” says Hays. “Oneok would have a carte blanche right to take advantage of each of us individually, and there are many, many horror stories of pipelines crossing people and then being abandoned, or reclamation not conducted up to specs. If something happens, we don’t want to be held liable for injuries, and if the pipeline is abandoned, the cost to excavate a natural gas or crude line would break most landowners. Those are some of our negotiating points, and our goal is to keep them chained to the negotiation table so that both parties are happy in the end.”
“So far Oneok seems open to talking with us and working with us on our issues, but our concern is what to do if they don’t address them to the extent we think they should,” says Falen. “We have some options, and a lot of ideas, but it seems that if state law takes away a landowner’s ability to truly protect himself, there ought to be some help somewhere.”
Hays says Oneok would like to start surveying immediately and begin construction in Spring 2012. The first meeting between landowner representatives and Oneok was held March 23 in Cheyenne, and Falen expected five representatives to attend.
“I helped organize the vehicle, and I work with them, but it’s their decisions,” says Falen of the meetings. “They’re free to listen or not listen to my advice – I’m not the one doing the negotiating.”
For more information on Progressive Pathways, contact Steve Hays at 307-834-2184 or Pat or Joann Wade at 307-334-2425. Christy Martinez is managing editor of the Wyoming Livestock Roundup and can be reached at christy@wylr.net.