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ecognize that having this type of stuff on
a person’s property has risk and potential
consequences for the landowner,” explains
Falen. “You have a very high dollar industrial
use going on your property, and there
is the possibility that it could harm you,
and there is a possibility that you could
harm it. Typically, you are simply paid
based on the ag value of the property interest
that you’re giving up. But you get nothing
for the fact that you have got to deal
with this, go around it, be careful around
it—that kind of thing.”
Unfortunately, because of the way the
laws are written regarding the authority
to condemn, property owners don’t have
any room to demand more for their risk.
And Falen says that there are any number
of potential problems that can arise in that
situation.
“There are different levels of danger.
To the extent that we are talking pipelines,
pipelines are definitely the cheapest
and safest way to transport certain materials,”
says Falen. “So, while danger is a
relative term, the risk or the extent to the
landowner can be anything from a spill—
which can be major—down to just people
with the right to come onto the property,
maybe spread noxious weeds, maybe start a
fire. Those types of things. Basically, if you
are where they need to put it, as a practical
matter, you don’t have a lot of choice.”
Neighbor to an
industrial use
Falen explains that the Constitution allows
the government to take over parts of
a property and pay to make the landowner
whole, something that was established
when the country was formed. Often
times, he says, the landowner would then
vacate the land.
“If they are just paying you the value of
what it is worth and you are leaving and
never coming back, that is one thing,” he
says. “But more so, now, it is not the government
condemning you; it is the government
giving its police power to a private
company, and they have the authority to
condemn an easement across your property,
and then you are going to be neighbors.
Then, what the law doesn’t recognize,
is that you are going to be neighbors to
an industrial use, you are going to have
a lot of issues that you should to want to
address, like what could happen, how we
can prevent it from happening, how I can
make sure that I am not going to lose my
farm or ranch over this.”
Falen continues, “And the law mistakenly
assumes that you are already
“So, the surface use issues that involve
pipeline, roads, drilling, you know,
seismic research, all of those can create
a lot of impact for a land owner—
impact that takes time and expense for
a landowner to deal with.
up-to-speed on that and that you don’t
need to hire a lawyer, or go through quite
a bit of expense to try and have those issues
covered. It comes with risk and expense,
but under the condemnation law, they just
get paid for the value of the property interest
that they are giving up.”
Dealing with surface
use agreements
If that isn’t enough, there are also surface
use agreements for landowners to contend
with. A surface use agreement come
into play in an area where a landowner—
often a farmer or rancher—owns the surface
land but not the minerals below. So,
the mineral owner leases the minerals out
through a development company, which
can come in to do the necessary work to
access those minerals. That, says Falen,
produces another set of issues.
“It can be hard for a landowner because
they don’t have a lot of say in what goes
on, or certainly they don’t have any say in
whether or not it is going to go on. So,
the surface use issues that involve pipeline,
roads, drilling, you know, seismic research,
all of those can create a lot of impact for
a land owner—impact that takes time and
expense for a landowner to deal with.”
Falen says one solution to these issues
would be legislative changes, but those can
take years to come into play. In the meantime,
though, he says that one of the ways he
has been most successful is to gather as many
landowners as possible with the same issue in
a group, to spread the costs as they fight to
create change.
“And not only can they spread their
costs,” says Falen, “but if there is a whole
group of them, then they can begin to have
a little more clout, or even a lot more clout.
With one of these pipelines, we have had
landowner groups representing 300 miles
of the pipeline, which is approximately half.
So, if we get that many of them together, not
only can they spread costs, but that is a big
enough portion of a company’s pipeline that
they concede; they have to come deal with
the concerns,” he continues.
“We have found that we have been
able—when we approach it that way—to
talk to somebody from the company that has
the power to put some things in their easements
that are otherwise pretty hard to get.”
Limiting risk
One example of that, he says, would
be things that limit a landowner’s risk. For
example, having a provision in there that
says if an employee of the company harms
the landowner’s property, the landowner
is not going to be liable for it. With the
way the law currently works, typically, the
landowner would be responsible for any
damages done by employees, licensees,
even contractors.
“Our concern with that is that we are
looking at a pipeline company and say,
‘Look, you guys create a limited liability
company that houses this asset.’ And you
normally have to invest in that LLC, whenever
you choose to risk. So, your whole
operation is not at risk, just that LLC. But
the property where the project goes is essentially
in that box; the landowner can create
an LLC, and they have to put their property
in it. And for many of them, their property
is the majority of what they own, so they
can’t manage their risk in the same way, because
everybody’s else’s risk—if a company
is to be involved, they say, ‘I’m willing to
risk X amount of dollars,’ and that risk is
justified by whatever profit we expect to receive,
whereas, the landowner doesn’t have
a choice. He doesn’t get to participate in
BASIN BITS | Spring 2014 89