As Arthur Dent surveys his Kidder Township property with the meticulously landscaped garden surrounding the in-ground swimming pool, he has a hard time picturing 250 feet of natural gas pipeline cutting through his backyard oasis.
PennEast Pipeline wants to run the piping between Dent’s fiberglass pool and septic mound, and offered Dent and his wife, Leonie, $11,890 plus an additional $3,000 for damages that could occur during construction.
It’s not just the money that concerns Dent, but also the fine print in his offer.
“It looks like they can come in whenever they want and add additional structures,” Dent said.
Dent is so frustrated, he said he wishes PennEast would just buy his entire property so he can move.
“You see what they are going to do, and that’s not where we want to live,” he said.
Dent is among more than 500 property owners who have begun receiving offers from PennEast to purchase permanent easements for its planned pipeline that would carry natural gas from Wilkes-Barre to Mercer County, N.J.
Easements are legal documents that grant access to property to a nonowner for a specific purpose. In this case, PennEast is making offers for access to the properties, with the right to replace or alter the size of the pipeline and install additional utility lines, including fiber-optic cables, data acquisition, telecommunication lines in the same easements, according to offers shared with The Morning Call.
Using that easement, PennEast could then sell off the rights for thousands of dollars, legal experts said.
“What’s equally, or possibly more important, than the compensation for property in these cases is negotiating a robust easement agreement that provides protection going forward,” said Carolyn Elefant, a former attorney for the Federal Energy Regulatory Commission, which is in charge of approving interstate utility projects such as PennEast’s.
Requests to install additional utility lines in the right of way are standard in most pipeline easement agreements.
But these agreements would give PennEast more rights than it would lawfully acquire if it were forced to use eminent domain, said Elefant, now an attorney in Washington, D.C., who represents landowners potentially affected by the pipeline.
Besides provisions about future lines, legal experts said property owners also should pay close attention to property appraisals and damage compensation.
When easement negotiations break down, the law gives utilities the right to use eminent domain to take properties for projects that benefit the public good.
In the case of utilities, eminent domain would limit the easement to the project under FERC consideration. In the case of PennEast, that would be a single pipeline.
Still, having easements for future lines has its advantages for utilities.
“If a landowner does not retain those rights,” Elefant said, “the pipeline can sell them off, potentially for tens of thousands of dollars.”
She noted that fiber-optic cable companies “will pay a considerable amount of money to be able to lay cable in an easement.”
Further, Elefant said, it’s easier to install additional pipelines in an existing right of way than to find another route and start from scratch.
The MB Line, a 17-mile extension built in Maryland by Columbia Gas Transmission, was installed in or adjacent to existing right of ways, she said.
Another Columbia expansion, The East Side Project, used existing right of ways to install 9.5 miles of pipeline in Chester County and 9.5 miles in Gloucester County, N.J.
In such cases, she said, the compensation for a second line is minimal — “largely for damages and remediation rather than for the property value.”
Standard contract language
PennEast’s application is pending FERC approval. The company hopes to receive approval this year so it can begin construction and be operational by 2017.
The company is not planning to construct another pipeline, but includes language on additional lines in initial contract offers as standard practice, said Patricia Kornick, a spokeswoman for PennEast.
“If a landowner is not comfortable with certain provisions in the initial easement agreement — or wants to add provisions — PennEast encourages landowners to discuss their preferences with the PennEast land agent,” she said.
More than 50 landowners have signed offers since October, when PennEast began sending them to the about 565 landowners along the pipeline’s 118-mile route, said Simon Bowman, head of land acquisition at PennEast.
Monetary amounts in offers shared with The Morning Call vary and include payment for damages such as the removal of trees, for temporary right of way and for the permanent easement where the 36-inch-round pipeline will be buried.
PennEast is working with Western Land Services, a Tunkhannock, Wyoming County, land management company, which is making offers to landowners and negotiating on PennEast’s behalf.
The company looked at the value of neighboring and similar properties to make offers to landowners, Bowman said.
“What is best for both the landowner and us is to have a bilateral negotiation where we can talk with the landowner and offer them a premium value,” Bowman said. “If it goes [to eminent domain], it involves a lot of cost and additional time.”
Property owners interviewed by The Morning Call said the provision allowing easements for multiple lines was among the items that immediately drew attention when they received offers in the mail.
They said monetary offers don’t seem to begin to cover the value of their land or the damage it would incur, let alone any issues caused by future lines.
Guy Wagner, who owns Wagner Farm in Lower Nazareth Township, said he was offered $72,000 for a permanent easement and $29,000 for damages across 10 acres of his 100-acre property.
“The land won’t be able to be farmed efficiently anymore. The pipeline will cut right through the center of it on a diagonal. They don’t care how much damage they do to it,” Wagner said.
Jeff Porter, an owner of Porters’ Pub in Easton, hired an attorney to review his contract.
PennEast is offering Porter $6,660 to install 31 feet of pipeline on a sliver of the three-quarter acre property Porter purchased in Durham Township, Bucks County, where he hopes to open a cafe. Of the $6,660 PennEast is offering, $3,000 is specified to cover damages.
Porter’s property, which borders the Delaware River, is on Route 611, about 9 miles south of Easton. Porter said it is the last property PennEast has to cross before the pipeline passes under the river.
“I know for a fact my property would be worth less if I have this pipeline running through it. It’s going to depress the value a lot more than $6,660.”
His attorney, David Juall of Durham, is a member of the Concerned Citizens Against the Pipeline group.
Juall said property owners like Porter should question appraisal values. Juall has seen several contracts and is concerned none of them includes a formal appraisal of the landowner’s property, or lists the criteria for how the company determined the value.
A typical appraisal includes how much the land is worth in its current state, and how much it would be worth once it has an easement running through it.
PennEast’s offers only provide a monetary figure and do not outline how the company came up with the valuation.
Carl Engleman, a Reading attorney representing nine landowners, said property owners should seek the advice of an attorney.
“I am advising [my clients] not to sign without negotiating an addendum to the contract first,” he said. “With the deals I negotiate with my clients, I make sure the easements are exclusive easements, meaning the only thing that can go in the ground is an underground pipeline, nothing else, unless it is necessary for safe operation of the pipeline.”
Engleman believes the amount of money PennEast is offering is a decent starting point, but the offers do not adequately compensate landowners for the harm they are going to suffer.
For example, those with agricultural property could stand to lose multiple years of crops when their land is disrupted, Engleman said.
Dave Messersmith, an educator and pipeline expert for the Penn State Cooperative Extension in Wayne County, said the viability of farmland after the pipeline installation depends how the company handles the soil during installation.
It takes about three years before soil can start generating crops again because it is compacted during construction, Messersmith said.
Messersmith said it’s common for a pipeline operator to pay full crop damage during the year of construction and then some percentage over the next couple years after the site is restored.
Eminent domain
Utilities usually will send a final offer to property owners still without signed contracts. If the property owner declines the offer, the company will file suit against the hold-out landowners, Elefant said.
The lawsuit will ask the court for the right to take property so the company can begin construction of the pipeline. It will also ask the court to settle damages.
Whether landowners wind up better off going to trial, Elefant said, “that depends.”
A Philadelphia County judge recently ruled that a lawsuit trying to stop Sunoco Pipeline from using eminent domain on its Mariner 2 project in southern Pennsylvania can proceed, according to The Philadelphia Inquirer.
The Clean Air Council, one of the plaintiffs, argued that since the natural gas the pipeline would carry would end up overseas, it would not benefit the public good. Thus, the company would not be a utility, rendering it unable to use eminent domain.
But Elefant cautions that negotiating an easement might yield the landowner more in the long run. There is no guarantee how much money the court might award if it goes to eminent domain.
“Although I can pretty much guarantee that the pipeline’s offers up front will be far too low, in some instances they can be negotiated up to a point that they might be worthwhile when weighing the costs and benefits of trial,” she said.
PENNEAST EASEMENT OFFERS
What: PennEast Pipeline has filed an application with the Federal Regulatory Commission to build a 118-mile natural gas pipeline from Wilkes-Barre to Mercer County, N. J.
Easements: It has begun making initial offers to acquire permanent easements from the approximately 565 landowners along the path. Easements are legal documents that grant access to property to a non-owner for a specific purpose.
Initial offers: Besides money for the easement and to cover damages from construction, the company wants easement rights for future utility lines, including fiber-optic cables, data acquisition and telecommunication lines in the same easements.
What’s next: Landowners can negotiate, accept or reject offers. With rejected offers, PennEast could acquire easements in court through eminent domain.