Landowners Connect To Negotiate With Pipeline Companies

Aug 22, 2014

Credit Hiland Crude, LLC.

There’s a huge, mostly invisible web of pipelines crisscrossing the country that make it possible for our stoves to light and our cars to turn on. Those pipelines run from oil and gas producing regions to refineries and processing plants, crossing miles of private property along the way. The people whose land they cross don’t often benefit, but a new strategy may help.

Driving across parts of Rocky’s Foy property is like being on a roller coaster. There are twelve pipelines that cross his cattle ranch outside of Glendo. The gravel road rises over each one of them, and then drops back down. As we bumped along on a recent morning in his pickup truck, Foy joked: “The only lottery I ever won in my life is all the pipelines."

It’s a lottery he wishes he hadn’t won -- and one he didn’t choose to enter. In Wyoming, as in most states, pipelines have the power of eminent domain, which means they can cross private property, with or without the owner’s permission, so long as the companies offer reasonable compensation.The first pipeline was installed on Foy's property in 1927, or thereabouts.

“Grandpa let them come across for basically nothing. He sold them beef, a beef, every day because they had to stay on the line,” Foy said.

While he no longer accepts beef purchases as payment, he says it can be hard to negotiate good deals as a single landowner up against a billion dollar company. “They come and pick you off, one by one,” he said, referring to pipeline companies sending landmen to negotiate one-on-one with landowners. But that could be changing. The latest pipeline that's being laid on his property -- number twelve -- is a crude pipeline that will run from North Dakota to Guernsey. In Foy's telling, Hiland Partners initially refused to negotiate with him, saying they’d take him to court if he didn’t sign the agreement for the 'Double H' pipeline. Then, Foy joined a group of landowners to negotiate.

“And then it give us so much more clout because we had one voice instead of 200 small voices," Foy said.

As simple as it sounds, collective bargaining was a novel approach. Attorney Frank Falen, who represented the group, says banding together wasn’t easy.

“[Hiland] deliberately made it very difficult, as difficult as possible, for the landowners who were trying to figure out who else was going to be impacted.”

The company didn’t respond to interview requests, but Falen says Hiland was obviously nervous that the landowners were banding together to oppose the pipeline. But he says that was never the goal. The goal was to get better terms.

“The landowner does not get to share in the profits of this, but they absolutely get to share in the problems," Falen said. "And in the risk.”

Risks that range from the obvious, like fires and spills, to the less expected. Foy tells the story of shooting at a coyote once, and accidentally hitting a natural gas pipeline on his property. “It sounded like you were standing behind a jet taking off," he said. "It was just roaring.” But Foy was lucky. “It scared the coyote, and it scared me, but it didn’t blow up.”

That pipeline has been on Foy’s property for 30 or 40 years. The contract for it is maybe a couple pages long, and doesn’t address what happens if he pipeline gets shot, or if the company decides to abandon it. That’s in stark contrast with the latest agreement, for the Double H pipeline. By banding together, the landowners group was able to get Hiland’s attention.

“It got to the point where CEO of Hiland was getting some of his guys, and their corporate lawyer, and getting on their jet and flying up and talking,” Foy said.

The final contract, including appendices, is over 70 pages long, according to Foy. It touches on everything from reclamation of the land to gates that need to be shut.

“There's no grey area, everything has been discussed, spelled out on paper,” Foy said.

Not only that, the payment was six times the original offer. To say Foy is happy about the contract would be too strong. He’d prefer not dealing with pipelines at all. But he knows that’s wishful thinking.

“Once you get a pipeline corridor started on you, I mean, I just can't foresee it ever stopping, until we find a different source of energy," Foy said.

By one estimate, half a million miles of pipeline will be build in the U-S over the next two decades. The Double H isn’t even in the ground and another company has already contacted Foy, to let him know they’re thinking about running a pipeline across his property. But this time, if they do, he won’t be negotiating alone.