Oil and Gas Lawyer Blog
This month the Texas Supreme Court refused to hear the case of Lindemann Properties, Ltd. v. Campbell, 524 S.W.3d 873 (Tex.App.-Ft. Worth 2017). Although the case involves an easement for a radio transmission tower, it provides some lessons for negotiating easements for pipelines.
In 1977 Smith granted to Campbell an easement to install a radio transmission tower on his land. The easement provided that it would be located on a tract 500 feet by 500 feet, the actual center of which would be determined by its location when installed. The easement did not specify the size or height of the tower. Campbell constructed the tower, 400 feet tall.
In 2012 Campbell decided to replace the tower, which had deteriorated in condition, with a new tower 420 feet tall. The original tower remained in place while the new tower was being constructed. The new tower was some 18 feet from the original tower. The old tower was later removed.
Lindemann, the new landowner of the property, sued Campbell in 2013, arguing that the easement did not authorize construction of a new tower and that the easement had terminated when the old tower was dismantled. The trial court sided with Campbell. The Court of Appeals agreed, but with a dissenting opinion. The Court held that the easement language granting the right to “maintain” a tower included the right to remove and replace the tower, and that Campbell did not exceed the scope of the easement by building a tower 420 feet higher or 18 feet from the original tower. The dissenting judge would have held that the easement did not grant the right to replace the tower, but only to build “a radio transmission tower.”
Both opinions discuss a 1964 Texas Supreme Court case, Houston Pipe Line Company v. Dwyer, 374 S.W.2d 662, in support of their arguments. In that case, a landowner granted a pipeline easement to Houston Pipeline in 1926 “to lay, maintain, operate [and] repair” a pipeline for the transportation of gas across his property. The easement did not specify where the pipeline would go or how large it could be. HPL installed an 18-inch gas line across the property and continued to operate the line until 1959, when it removed the old line and replaced it with a new 30-inch high-pressure pipeline along the same course. The landowner sued, arguing that the easement did not grant the right to replace the old line with a larger new line.
The Supreme Court held that (1) “the terms ‘operate’ and ‘maintain’ in the granting clause are at least broad enough to include the right to remove and replace the original pipe with pipe of the same size when necessary”; and (2) once the 18-inch line was laid, “the extent of defendant’s easement rights under the 1926 agreement became fixed and certain” and HPL “was not authorized to remove this 18-inch line initially constructed and replace it with a line of substantially greater size.”
In the past it was common practice for landowners to grant pipeline easements without specifying where the line would be located – a “blanket” easement. Courts construed such easements to limit their scope to the location of the line once laid. The easement then became “fixed and certain.” Today almost all pipeline easements provide a surveyed description of the scope of the easement, both its course and its width. The course of the line is often heavily negotiated to limit the adverse impact on the landowner’s property.
Negotiated easements also often limit the size of the pipeline and what can be transported through the line. The grantee is given the right to repair and replace the line, but only with line of a size no greater than the original line. If the line is later replaced, the easement may require payment of additional damages to the landowner. Other specifics addressed in easements include whether any surface facilities such as valves and compressors can be laid within the easement, how long the pipeline can sit idle before the easement terminates, whether the line must be removed when the easement terminates, how deeply the line must be buried, remedies for pipeline leaks and spills, limitations on the right to assign the easement, obligations for maintenance and repair of the line, rights of access to the easement, and, of course, the consideration to be paid for the easement. Such provisions will not be in the form of easement offered by the pipeline company, but companies generally agree to such provisions in the course of negotiations.