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August 3, 2013

Pipeline firm is offering landowners a raw deal

By Christopher Hammond Guest Commentary
The Daily Star

---- — I met with Bob Lidsky the other day, a Davenport landowner whose property sits in the path of the proposed “Constitution Pipeline.” Bob told me about his interactions with the pipeline company’s “Right of Way Agent,” and showed me the documents he had received.

The agent’s introductory letter starts with a conflict of interest: “My responsibility is to be the ‘voice’ of the Constitution [sic] directly with you, (landowner) as well as to represent ‘your voice’ and best interest to communicate and work in ‘good faith’ negotiations.”

The agent is working for the interests of the pipeline company; it is unethical to claim to also represent the landowner’s best interests.

Although the Right of Way agreement gives the company access to the entire property, landowners are only offered three times the value of the 50-foot strip of “impacted acreage” where the pipeline will lie.

This one-time monetary offer is the only payment for any damages the company might cause during installation of the pipeline. No compensation whatever is offered for loss of property value.

Signing within three months gets the landowner three times the value of the impacted acreage. Signing during the next three months brings only twice the value, and waiting beyond that results in a payment of only 1½ times the value.

This puts a lot of pressure on the landowner to make a quick decision and sign the agreement without taking time to do the necessary research in order to make an informed decision.

There are many potential consequences of signing the pipeline company’s Right of Way agreement. Mortgages generally prohibit hazardous activity and hazardous substances from being on the mortgaged property. Will the landowner be able to get a mortgage to build a home if there’s an easement for a gas pipeline on the land? Will the landowner be able to sell the land later with this limitation on the property?

Signing makes the landowner potentially liable for any damage that results from the industrial activity they have voluntarily allowed on their land. Bob’s insurance agent told him he wouldn’t be covered for any damages resulting from pipeline activity, since his coverage does not extend to business activity, which he would be entering into by accepting compensation from the pipeline company for an easement to use his land for industrial operations. These and other issues should be explored by every landowner before signing a Right of Way agreement.

A follow-up letter from the pipeline company threatens the landowner with the forcible seizure of land through eminent domain if they do not sign. This letter states that eminent domain is the “last option considered.” It doesn’t state why.

The reason, kept well-hidden by the pipeline company, is that the landowner might get a lot more money through eminent domain proceedings. The pipeline company does not want to resort to the courts because it will raise their costs considerably, and limit their rights regarding use of the easement (the terms of the agreement permit the pipeline company to build any kind of “appurtenant” facilities they deem necessary, including compressor stations, to expand the size of the pipeline, and to run anything they want through the pipeline, including tar sands).

Landowners should consult an eminent domain attorney, many of whom will work on a contingency-fee basis.

Bob told me the pipeline agent misrepresented the terms of the Right of Way agreement to him more than once in order to convince him to sign. Landowners should be very wary of this. The terms of the Right of Way contract specifically exclude any verbal or written agreements or promises made by the agent to the landowner from being enforceable in court.

When Bob told the agent that the pipeline would destroy the only site on his property where a home could be built, the agent replied that the route is not negotiable. Bob was not happy that his property would be destroyed for the purpose he intended, and that he would only receive a pittance in compensation, based on the value of the small strip of land where the pipeline would be constructed.

When confronted with this fact, the agent did not argue the point that the amount offered was only a small fraction of the amount the property would depreciate in value, stating only that the price was firm and the pipeline company would not negotiate.

Well, there is a real Constitution out there, and it states that the government will not seize land without just compensation to the landowner. In a court of law, the land subject to taking must be valued at its “highest and best use.” A court will also take into consideration any decline in the value of the remaining parcel. The court may also award the landowner compensation for appraisal costs and legal fees.

It is not just the pipeline company’s terms that are non-negotiable, the U.S. Constitution and its command of just compensation when land is seized is also non-negotiable. And if a judge orders the pipeline company to pay the landowner six or seven times their “non-negotiable” offer, there will be no negotiating that, either.

CHRISTOPHER HAMMOND is a Cooperstown resident.