chapter 8 gas pipeline relocation issues - emlf 8 gas pipeline relocation issues nicolle renee...

Chapter 8

Gas Pipeline Relocation Issues

Nicolle Renee Snyder Bagnell1 Reed Smith LLP

Pittsburgh, Pennsylvania

Synopsis

§ 8.01. Introduction ........................................................................................ 281§ 8.02. Factors Regarding Pipeline Relocation ........................................... 282

[1] – When May a Pipeline Owner Decide to Relocate? ................... 282[a] – For Its Own Purposes ....................................................... 282[b] – For Safety Reasons ........................................................... 282[c] – At the Request of Others ................................................... 283

[2] – What Must Be Done in Order to Relocate? ............................... 283§ 8.03. Reasons for Relocation and Determining Which Party Pays ............................................................................... 283 [1] – The Pipeline Is Located in a Public Right-of-Way .................... 284

[2] – The Conveyance Requires Relocation ....................................... 293[3] – The Conveyance Does Not Require Relocation ........................ 298

[a] – The Property Owner Requires the Relocation ................................................................... 298[b] – Another Right-of-Way or Holder of an Estate in Land Requires the Relocation ................................................................... 301

[4] – The Government Seeks to Condemn ......................................... 306[5] – The Government Acquires Private Rights ................................. 310

§ 8.04. Conclusion ............................................................................................311

§ 8.01. Introduction.At the time when the majority of the United State’s pipeline infrastructure

was constructed, pipelines – and in particular larger interstate transportation lines – were located in remote areas consisting mostly of farmland. As development increases and cities expand, pipelines and construction come more frequently into conflict. As a result, the need for pipelines to be relocated has increased in recent years.

1 The author gratefully acknowledges the assistance of Kevin C. Abbott in preparing and editing this chapter.

CITE AS26 Energy & Min. L. Inst. ch. 8 (2005)&

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A number of issues arise when a request is made to relocate a pipeline including determining when and if the pipeline must be relocated, the mechanics of relocation, the need to acquire new rights, and the determination of who will pay for the relocation. This chapter will explore instances when an owner must relocate its pipeline, what must be done in order to relocate the pipeline, including acquiring new right-of-way and abandoning the old right-of-way if necessary, and what factors are applied by the courts to determine who is responsible for the costs of relocation under different circumstances including road construction, mining, and development projects near natural gas pipelines.

§ 8.02. Factors Regarding Pipeline Relocation.[1] — When May a Pipeline Owner Decide to Relocate?

[a] — For Its Own Purposes.A pipeline company may choose to relocate its line for a number of

reasons. Common examples include instances when a company wants to link two pipelines together or where they wish to expand a line, and relocation of a pipeline is required to accomplish that goal. Also, as environmental and historic preservation requirements become stricter, pipeline companies are often required to relocate their lines around areas found to be of environmental or historical significance, such as wetlands or burial grounds, when upsizing or replacing currently existing lines.

[b] — For Safety Reasons.In addition to federal environmental and historical preservation requirements

becoming stricter in recent years, federal and state regulations regarding the safety of natural gas pipelines have also become more stringent.

The Pipeline Safety Act authorizes the Secretary of Transportation to prescribe minimum safety standards for the design, construction, operation and maintenance of pipeline facilities.2 These standards or similar state requirements may require pipeline companies to relocate their pipelines in areas where erosion from water or landslides occurs, where construction has taken place too close to a pipeline, or where other dangerous conditions may exist.

2 49 U.S.C. § 60102(a) (2000).

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GAS PIPELINE RELOCATION ISSUES

[c] — At the Request of Others.As will be discussed in detail below, pipeline relocations may also be

required in instances where other entities request the relocation. This may occur where a public entity requires relocation of a pipeline in order to do a public works project. It may also occur where a property owner requests a relocation to develop his property, grade the land, or change the use of the property. Finally, other easement owners or holders of estates in the same land may seek relocation. This oftentimes occurs when the holder of a mineral estate seeks to fully extract the mineral and the pipeline must be relocated in order for that to be accomplished.

[2] — What Must Be Done in Order to Relocate?In order for a pipeline to be relocated a number of preliminary steps must

be accomplished. In many cases a new right-of-way must be acquired. In addition, the previously used right-of-way may need to be abandoned after the relocation is accomplished.

For interstate pipelines, a new or amended Certificate of Public Convenience and Necessity may be required. For all pipelines, state and local permits, including road or stream crossing permits, may also be obtained.

Finally, construction plans and related work will need to be completed prior to the relocation.

§ 8.03. Reasons for Relocation and Determining Which Party Pays.

The determination of who pays for the relocation of a pipeline generally must be made on a case-by-case basis based on the pipeline owner’s rights, the conveyance documents, applicable statutes, and the facts surrounding the relocation. In four common pipeline relocation situations, however, there seems to be a trend among the courts as to who should pay for relocation. These situations include instances where 1) the pipeline is located in a public right-of-way; 2) the conveyance under which the pipeline owner acquired the right to lay the pipeline requires relocation and describes which party will pay; 3) the conveyance document is silent as to relocation; and 4) the government condemns the land in which the pipelines are located. In the first situation, the determination of which party bears the cost of the relocation of a pipeline in a public right-of-way will depend on the language of the permits or license by which the pipeline owner laid the line and whether the legislature, be it state or

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federal, has abrogated the common law rule, which traditionally put the burden of relocating the pipeline on the pipeline owner. In the second situation, where the conveyance under which the pipeline owner acquired its rights explicitly addresses the issue of pipeline relocation, courts will look to the plain language of the agreement and will normally strictly construe it in order to determine who pays. On the other hand, in the third situation where the conveyance document does not instruct who should pay for relocation of the pipeline, courts will generally put the burden on the party that benefits from the relocation or the party which disrupts the status quo. Finally, in the condemnation context, whether the pipeline owner will be reimbursed for relocation costs where the private land in which the pipeline is located is condemned will depend on whether the pipeline owner has a vested right in the land.

[1] — The Pipeline Is Located in a Public Right-of-Way.Pipelines located in a public right-of-way are often required to be relocated

in order to accommodate a change in the use or form of the public land. One common example is the situation where the government requires the relocation of a pipeline located near a highway or under a bridge as part of an infrastructure-improvement project. In these situations it is often difficult to decide which party should equitably be required to pay for the relocation because both parties have compelling arguments that the other should pay: the government entity can argue that the pipeline owner has previously enjoyed free use of the public land and does not have vested rights in the property, while the pipeline owner argues that it is not the party interrupting the status quo and, but for the government’s actions, it would not incur any costs. This conflict, which is rooted in the nature of a public right-of-way, not only makes such a determination difficult, it makes the determination distinct from situations involving private lands and private parties.

Under the common law of many states, the general rule dictated that public utilities were responsible for any expenses incurred in relocating its facilities.3 The rationale behind this rule was partly based upon the fact that, traditionally, public utilities have been permitted to occupy a right-of-way

3 Bell Atl. – Pa., Inc. v. Pa. Turnpike Comm’n, 703 A.2d 589, 591 (Pa. Commw. Ct. 1997). See also, Hampton Roads Sanitation Dist. Comm’n v. City of Chesapeake, 240 S.E.2d 819, 822 (Va. 1978)(“In the absence of a statute or an agreement to the contrary, Virginia, like most jurisdictions, adheres to the common-law rule that a public utility is required to relocate

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free of cost and are usually subordinate to the government’s police power.4 Moreover, public utilities obtain no rights in the public land but instead own a privilege to occupy the land, which by definition is revocable by the government.5 Therefore, because public utilities occupy public lands free of cost and have only a privilege to occupy the land, courts generally have held that owners of pipelines in a public right-of-way should not be compensated if they are forced to relocate their facilities.6

This common law rule, however, can be abrogated by a statutory mandate.7 Where the legislature has altered the common law rule, it is necessary to review not only the statute but also the duties and decisions of the agencies empowered to enforce the statutes in order to determine who must pay for the relocation. Moreover, when both a state government and the federal government enact laws which modify the common law, the issue of which law applies can be difficult to discern. This is especially true where both state and federal government agencies take part in the project, which was the case in Air Liquide Am. Corp. v. U.S. Army Corps of Eng’rs.8

In Air Liquide, the plaintiff pipeline owners were granted permits by the U.S. Army Corps of Engineers (the Corps) pursuant to the Rivers and Harbors Act of 1899,9 which prohibits construction in navigable waters of the United States unless the work has been approved by the Secretary of the Army.10 These permits provided that pipelines and other underwater structures were to be relocated at no expense to the United States.11 In addition to the permits, the pipeline owners were granted licenses by the Port of Houston Authority of Harris County, Texas (the Port), which also required the pipeline

and/or adjustment is necessary to facilitate street and highway improvements.”); Appalachian Power Co. v. Gainer, 143 S.E.2d 351, 361 (W. Va. 1965)(under common law, public utilities could be required to move their facilities at their own expense).4 Bell Atl., 703 A.2d at 590-91.5 Id. at 591.6 Id.7 Id.8 Air Liquide Am. Corp. v. U.S. Army Corps of Eng’rs, 359 F.3d 358 (5th Cir. 2004).9 33 U.S.C. § 401 et seq. (2000).10 Air Liquide, 359 F.3d at 360.11 Id.

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owners to relocate the pipelines at their own expense.12 In addition to the conveyances, both the federal legislature and the state legislature enacted statutes that allocate the burden of relocation costs.13 Specifically, the federal Water Resources Development Act of 1986 required the state to pay for any harbor navigation project in harbors less than 45 feet deep; however, facility owners were required to pay for relocations for harbors with a depth greater than 45 feet,14 while the Texas statute15 required relocation costs to be borne by the state if it required the relocation.16

When the Port and the Corps, who jointly worked on the project, attempted to require the pipeline owners to relocate the lines at their own expense, the owners brought suit in both federal and state court claiming that they should not have to pay the costs of the relocations.17 They argued in the alternative that the Port’s required relocation constituted an unconstitutional taking without compensation and that the Port was required to share the costs of the relocation under the Water Resources Development Act of 1986.18 The state court action was subsequently removed and consolidated with the original federal action.19 At the trial court level, the district court granted partial summary judgment for the owners, holding that Texas law had preempted the licenses granted by the Port and thus the Port was required to bear the cost of the relocations.20

On appeal, the Fifth Circuit faced the question of whether state or federal law applied. Specifically, the court had to determine whether Tex. Water Code Section 60.102 applied because the Port “required” relocation and, therefore, triggered the Port’s responsibility to bear the cost of relocation, or whether federal law applied because of the Corps’ involvement.21 The circuit court

12 Id. at 360-61.13 Id.14 Id. (citing Pub. L. No. 99-662, 100 Stat. 4082 (1986); 33 U.S.C. § 2201 et seq.).15 Tex. Water Code §60.10.2.16 Air Liquide Am., 359 F.3d at 360.17 Id.18 Id. at 360-62.19 Id. at 362.20 Id.21 Id. at 362.

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rejected the district court’s conclusion that the Port shunned its obligation by using the Corps as its agent and found that it was not the Port that “required” the relocation, but the Corps, and as such, federal not Texas law should apply.22

Once the court held that federal law applied, the court then looked to whether the Corps was properly enforcing federal law. The court held that “the federal navigational servitude (applied through the Section 10 permits) cannot be ‘trumped’ in the absence of a clear Congressional waiver.”23 Specifically, Congress’ power to control navigation, which is derived from its power to regulate commerce, has been recognized to impose a “navigational servitude,” which operates as an exclusion of any competing or conflicting right.24 As such, the Corps properly exercised its rights and powers and the owners must bear the cost of relocating the pipelines under the Section 10 permits regardless of possible preemption of the licenses.25 In the end, the court held that the pipeline owners were responsible for the relocation cost under either federal law or state law.

Air Liquide Am. highlights the difficulty that courts face in determining which statute applies once both the state and federal legislatures have abrogated the common law rule that the pipeline owner must pay for relocation of pipelines in public rights-of-way. From the Fifth Circuit’s analysis of the issue, it is apparent that consideration must be given to a) the applicable statutory language; b) which entity is undertaking the public project requiring relocation of the pipeline; c) the terms of the agreements or conveyances pursuant to which the pipeline was constructed; d) what entity owns the public property being improved; and e) whether one law might preempt another law or agreement. In addition, courts must also consider the validity and ramifications of the conveyance agreements themselves.

Generally, in the context of pipelines located in public rights-of-way, the language of a conveyance, whether a license or a permit, issued pursuant to statutory mandate will usually determine which party pays for relocation of a pipeline within the public right-of-way.26 Such conveyances must still

22 Id. at 363.23 Id.24 Id. at 364.25 Id. at 365.26 See, e.g., id. at 362.

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conform to constitutional requirements, however, and are only as valid as the statute on which they were based. The question of the constitutionality of certain provisions in a government-issued permit was the issue faced by the Louisiana Court of Appeals in Tenneco Oil Co. v. Bd. of Comm’rs for the Lake Borgne Basin Levee Dist.27

In Tenneco Oil, the land in dispute included a refinery adjoining the Mississippi River in Chalmette, Louisiana owned by Mobil Oil Company (Mobil).28 In addition to the refinery, there was situated on the land a river levee, which was three to four hundred feet from the river’s edge.29 Numerous pipelines, constructed pursuant to permits obtained from the Levee Board and the U.S. Army Corps of Engineers, ran across the land, over the levee, and to the wharves and other facilities along the river.30 The permits on which the pipelines were based contained the clause:

That should changes in the location of the existing levee and/or river, or in the generally prevailing conditions in the vicinity, be required in the future in the public interest, the applicant shall make changes in the project concerned, or in the arrangement thereof, as may be necessary to satisfactorily meet the situation, and shall bear the cost thereof.31

Pursuant to its plan to widen and extend the levee, the Corps requested the Levee Board provide it with the necessary additional rights-of-way.32 As a result, the Levee Board “appropriated” the required additional servitudes from Mobil.33 In addition, the Corps’ plans also required relocation of Mobil’s existing pipelines.34 Both the Corps and the Levee Board advised Mobil that the latter would have to bear the cost of relocating the pipelines.35 As a result

27 Tenneco Oil Co. v. Bd. of Comm’rs for the Lake Borgne Basin Levee Dist., 567 So. 2d 113 (La. Ct. App. 1990).28 Id. at 114.29 Id.30 Id.31 Id.32 Id.33 Id.34 Id.35 Id.

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of numerous discussions, negotiations, studies and plan revisions, the Corp, the Levee Board and Mobil agreed to a plan which attempted to minimize the burden and costs of relocating the pipelines.36 Specifically, the plan allowed Mobil to move the pipelines at their convenience, e.g., during normal maintenance or shutdown within the specified time span.37

After Mobil had relocated many, but not all, of its pipelines, it brought suit to recover the costs it incurred.38 After the trial court held that no compensation was due, Mobil appealed, arguing that the trial court erred because it ignored Mobil’s constitutional and statutory rights to just compensation when it held that Mobil was bound by the agreement that it pay for relocating its pipelines.39

The issue on appeal was simply whether the Levee Board was required to reimburse Mobil for the cost of relocating the pipelines.40 In answering this question, the Louisiana Court of Appeals first noted that under Louisiana law, “[a] riparian property owner owes a legal servitude to the public for levee purposes.”41 Moreover, under the Louisiana constitution, compensation for the taking of property pursuant to Article 665 was limited to the value assessed during the preceding year.42

The court further held that Article 665 applied to the case before it and that Mobil was entitled to compensation.43 In doing so, the court rejected the Levee Board’s argument that Mobil’s original permits controlled in this instance where the pipelines to be relocated were outside of the permit area.44 Specifically, the court held that the clause in the permit, as it applied to existing servitudes, simply reiterated what the law already required, i.e., that a servient landowner had the duty not to diminish or make more inconvenient the use of a servitude.45 The court further found that, as the clause in the permit applied

36 Id.37 Id. at 115.38 Id.39 Id.40 Id.41 Id. (citing La. Civ. Code Ann. art. 665).42 Id.43 Id. at 116.44 Id.45 Id. (citing La. Civ. Code Ann. art. 748).

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to the acquisition of new servitudes, it was not enforceable as a violation of both constitutional and statutory requirements that all takings of property be fairly compensated.46 In other words, the court held that “[a] permit cannot be conditioned upon the permitee giving up his basic right to fair compensation for property or improvement that may be taken for some future work and which are located outside the permitted area.”47

When relocation of a pipeline located in a public right-of-way is required, the language in the permit or license granted to the pipeline owner determines who must pay for the relocation. However, as Tenneco Oil makes clear, such conveyances must pass constitutional muster. Where a permit requires a pipeline owner to bear the costs of relocation for improvement projects to existing servitudes, such a requirement will likely be valid. However, as to additional servitudes not within the scope of the permit, the government must provide compensation.48

Under the Texas and Louisiana statutes at issue in Air Liquide Am. and Tenneco Oil, the state legislatures attempted to enunciate a bright-line rule as to who should pay for the relocation of pipelines located in public rights-of-way. Some state legislatures have taken a different approach by delegating the decision to a state agency.49 The purpose of such statutes is to afford notice and an opportunity for a hearing to all involved parties, and to allow the costs of relocation to be fairly apportioned between the parties as determined by an administrative body. Some cases do arise, however, where the permit pursuant to which the pipeline was constructed and an administrative body both apportion the costs of relocation and in those cases the court must determine which allocation will govern. The Pennsylvania Supreme Court in City of Philadelphia v. Philadelphia Elec. Co.50 addressed this issue in the context of multiple utilities which were located in a public right-of-way.51

46 Id.47 Id. at 118.48 See id.49 See, e.g., 66 Pa. Cons. Stat. § 2704(a).50 City of Phila. v. Phila. Elec. Co., 473 A.2d 997 (Pa. 1984).51 Although the actual appellants in Philadelphia Elec. Co. were telephone and power companies, Philadelphia Gas Works was also required to relocate its pipelines as a result of the reconstruction of a railroad bridge and had it been a party, would have similarly been affected by the administrative law judge and the Pennsylvania Supreme Court’s decisions.

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In Philadelphia Elec. Co., the City of Philadelphia (City) filed an application with the Pennsylvania Public Utilities Commission (PUC) for approval to reconstruct a railroad bridge.52 In the application, the City listed a train company, telephone company, electric company, subway authority and a gas company as the utilities that would be affected by the reconstruction.53 Although all of the utility companies occupied a public right-of-way, at least some did so pursuant to permits which contained the following condition:

If, in the construction of water or gas mains, sewers, or any other municipal work, it shall become necessary to change the location of any existing privately owned structures occupying highways, their location shall be changed, at the sole expense of the owners, to such new locations as shall be directed by the Board [of Highway Supervisors].54

After a hearing, an administrative law judge approved the City’s applications and ordered the utilities to do all work necessary to relocate their facilities in order to accommodate the reconstruction.55 In addition, although the judge required the utilities to do so initially at their own expense, the judge also required the City to fully reimburse the utilities.56 The City appealed and received a favorable ruling from the Pennsylvania Commonwealth Court, which held that utilities were responsible for their own costs.57 The telephone and electric company subsequently filed an additional appeal.58

On appeal the court began its analysis by reviewing the common law rule requiring utility companies to pay for relocation costs where their facilities were located in a public right-of-way.59 The court noted, however, that this common law rule had been statutorily abrogated in some instances by the Public Utility Law of 1937 and later 66 Pa. Cons. Stat. Section 2704(a)(Compensation for

52 Id. at 998.53 Id.54 Id. at 998-99. 55 Id.56 Id.57 Id. at 999.58 Id.59 Id. at 1000.

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Damages occasioned by Construction, Relocation or Abolition of Railroad Crossings).60 Specifically, the court found that the legislature expressly delegated to the PUC the power to allocate the costs of relocation after proper notice and hearing, unless the proportions were mutually agreed upon and paid by the interested parties.61

The issue in this case arose from the fact that, although the PUC was delegated authority to apportion the costs, the permits explicitly indicated that the utilities should be responsible for the costs. In order to reconcile the two, the court looked to the plain language of the statute which required that the allocation of costs be agreed upon and paid by the parties.62 Although the permits required the utility companies to pay for relocation, no payment had been made.63 The court also noted that it did not therefore have to address whether there was a mutual agreement.64 As such, the PUC was not divested of its jurisdiction and it was appropriate to apportion the relocation costs.65

Philadelphia Elec. Co. reinforces the need to closely review statutes that attempt to abrogate the common law rule that utility companies must pay the costs of relocating facilities located in public rights-of-way. For example, when faced with a statute similar to Pennsylvania’s, something as technical as whether or not costs have been paid before an administrative law judge makes his or her decision can be dispositive as to who must bear the burden of relocation. Moreover, a close review of the statute is especially essential where there is a permit or license that conflicts with the statutory mandate.

In many states, the common law rule is that a pipeline company must pay for the cost of relocation of its pipelines located in public right-of-ways. However, in certain cases, statutes have since abrogated that rule. Because the statutes do not always conclusively determine who must pay for the relocation, in making that determination, a court must consider the common law, statutes, and any applicable licenses, permits, or right-of-way agreements in determining which party will bear the costs of relocation.

60 Id. at 1000, 1002.61 Id. at 1002.62 Id. at 1003.63 Id.64 Id.65 Id.

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[2] — The Conveyance Requires Relocation.Where the terms of a conveyance of rights to lay pipelines in private land

require relocation of those pipelines, the courts have strictly construed the language of the conveyance in order to determine who must pay for the costs associated with relocation. The courts look to the plain meaning of the language in the agreement to determine the rights and duties of the parties under the conveyance.66 Courts will utilize this approach even where the circumstances that existed at the time the agreement was signed have since changed.67

In Laughlin Real Estate, Mobil Pipe Line Company’s predecessor in interest had purchased a right-of-way across a 90-acre farm in order to build an oil pipeline.68 The right-of-way agreement included the following language:

Should the land over which said line is constructed be required by the Grantors herein, their successors and assigns, for future use in the development of, or in connection with, the operations of their business, [purchaser of the right of way], its successors or assigns, the owner or its lessees of said pipe line, shall relocate at its or their own cost and expense the said pipe line and the appurtenances to a another location on said or other property to be furnished by the said grantors, their successors and assigns, in such manner as to properly connect with the said pipe line on adjoining lands at the points where the said pipe line has been originally located.69 Subsequently, Laughlin Real Estate, Inc. (Laughlin) entered into an

agreement to purchase the farm and acquired title three years later.70 Laughlin requested that Mobil relocate its pipeline prior to its actual purchase of the property.71 When Mobil refused to relocate the pipeline, Laughlin filed suit

66 See, e.g., Laughlin Real Estate, Inc. v. Mobil Pipe Line Co., No. Civ. A. 98-4295, 2000 WL 230360 (E.D. Pa. Feb. 22, 2000)(where conveyance requires relocation by pipeline owner, relocation must be done when requested by landowner).67 See, e.g., Cabot Oil & Gas Corp. of W. Va. v. Pocahontas Land Corp., 376 S.E.2d 94 (W. Va. 1988)(lease required lessee’s successor to relocate gas line).68 Laughlin Real Estate, Inc., 2000 WL 230360 at *1.69 Id.70 Id.71 Id.

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to determine whether Mobil had to relocate its pipeline at its own expense.72 At trial, Mobil argued that under the agreement signed by the parties, it was not required to relocate the pipeline unless it interfered with farming of the property and, because Laughlin intended to develop the farm into residential housing, the terms of the agreement did not require relocation.73

The district court rejected Mobil’s argument and found that the plain meaning of the language of the agreement, which explicitly included the phrase “in connection with, the operations of their business,” applied not only to the business of the original grantors, but also to the business of the original grantor’s heirs and assigns.74 Thus, the district court interpreted the agreement to allow the property owners to require relocation of the pipeline for any type of development.75 As such, the district court granted Laughlin’s motion for partial summary judgment as to the issue of Mobil’s breach of its contractual obligations.76 Significantly, the district court awarded the plaintiff “any damages it can establish as having been caused by defendant’s breach of the relocation agreement.”77

This holding is important because it finds that in refusing to relocate a pipeline at its own cost pursuant to the agreement between the parties, pipeline owners expose themselves not only to potential liability for relocating the line, but also liability for any damages that its refusal to relocate caused.78

That a court will apply the plain meaning of the language contained in a conveyance that requires a pipeline owner to relocate its pipeline at its own expense is true even where circumstances not explicitly contemplated at the time the conveyance agreement was entered into have changed. In Laughlin, the use of the land changed from farming to residential housing; however, because the right-of-way agreement used the phrase “of their business,” the court required the pipeline owner to relocate at its own expense.79 An earlier

72 Id.73 Id.74 Id.75 Id.76 Id.77 Id.78 See, e.g., id.79 Id. at *1-2.

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West Virginia Supreme Court case took a similar approach and required the pipeline owner to relocate its pipeline at its own expense where the landowner’s lessee sought to mine land using a method that was not used at the time the pipeline owner’s lease was signed.80

In Cabot Oil, Pocahontas Land Corporation’s predecessor in interest and Cabot Oil and Gas’ predecessor in interest entered into a lease that gave the latter the sole and exclusive right to drill and operate wells for oil and gas.81 The lease specifically recognized that the landowner held the property principally for coal-mining purposes and that the landowner would be the dominant estate.82 In addition, the lease required that the oil and gas company not interfere with the coal mining, including that the oil and gas company had to relocate its pipelines at its own expense if necessary for the landowner’s use.83

Subsequently, Pocahontas Land Corporation (Pocahontas) leased the coal under parts of the land to Robinson-Phillips Coal Company (Robinson-Phillips).84 That lease, and a supplement to it, authorized Robinson-Phillips to engage in deep mining and surface mining.85 Subsequently, Robinson-Phillips proposed to mine coal near Cranberry Pipeline Corporation’s (Cabot Oil & Gas’ successor in interest) pipeline and requested that Pocahontas Land require Cranberry Pipeline Corporation (Cranberry) to relocate the pipeline at the latter’s expense.86 Cranberry refused and claimed that it was not required to relocate the pipeline because Robinson-Phillips utilized the mountaintop removal method of coal mining which was not covered by the lease agreement between the parties.87 The parties entered into an agreement under which Pocahontas would pay for the relocation but institute a lawsuit to determine who should ultimately pay.88

80 Cabot Oil & Gas Corp. of W. Va. v. Pocahontas Land Corp., 376 S.E.2d 94 (W. Va. 1988).81 Id. at 95.82 Id.83 Id.84 Id.85 Id.86 Id.87 Id.88 Id.

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Looking to the language of the agreement, the trial court held that the lease was clear and unambiguous and was therefore not subject to judicial interpretation or construction.89 The trial court further held that under the lease language, Cranberry was obligated to relocate the pipeline at its sole expense.90 Cranberry subsequently appealed the determination.91

On appeal, the West Virginia Supreme Court supported the lower court opinion, finding that “plain and unambiguous language in an oil and gas lease should be applied and enforced according to its plain intent and should not be construed.”92 The supreme court rejected Cranberry’s argument that because the mountaintop removal method of mining was not contemplated at the time the lease was entered into, the lease should be construed in accordance with the intent of the parties at that time and not require relocation.93 The court found that when the parties entered into the lease, they clearly contemplated that there would be some form of mining that would require relocation of the pipeline at the expense of the oil and gas company.94

Both Laughlin and Cabot Oil make it clear that where a conveyance is unambiguous as to whether relocation is required and who should pay, a court will apply the terms of the agreement between the parties. The plain meaning of the language in the conveyance documents will be applied even where the activities contemplated by the landowners were not in existence at the time the rights were conveyed.

In some cases, however, the conveyance document requires relocation of a pipeline but fails to allocate responsibility for paying the costs of the relocation. The West Virginia Supreme Court faced this situation in Quintain Dev., L.L.C. v. Columbia Natural Res., Inc.95

In Quintain, the West Virginia Supreme Court faced a situation almost exactly the same as it did thirteen years prior in the Cabot Oil case.96 In

89 Id. at 96.90 Id.91 Id.92 Id.93 Id.94 Id. at 97.95 Quintain Dev., L.L.C. v. Columbia Natural Res., Inc., 556 S.E.2d 95 (W. Va. 2001).96 Id.

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Quintain, the pipeline owners acquired easements to lay a pipeline on three separate tracks of land.97 The easements contained a provision which read, “[i]t is expressly understood and agreed that the rights and privileges hereby granted shall not interfere with the proper and reasonable use of said premises for the mining and removal of coal and other minerals therefrom or the cutting and removing of timber from said premises.”98 Further, the deed provided that the easement holder was to “pay any damages which may arise in the future from maintaining, operating and removing of said pipe line.”99 When the landowner advised the pipeline owner that certain pipelines had to be relocated in order to accommodate its mining plans, the pipeline owner refused to do so unless the landowner agreed to pay for the relocation costs.100 The landowner filed suit.101 The trial court held that the pipeline owner was required to relocate its pipeline at its own expense because the easements clearly and unambiguously provided that the coal estate was dominant.102

On appeal, the court rejected the pipeline owner’s argument that the reservation in the deed did not apply to mining operations utilizing the surface or mountaintop removal method.103 The court further found that although the deed required the pipeline owner to pay any damages incurred from operating, maintaining, or removing the pipeline, it was silent as to who bears the financial burden for relocating the pipeline.104 The court held that in light of this silence, the party who will benefit from relocating the pipeline and disrupts the status quo – in this case the landowner – is the party who must pay for the relocation of the pipeline.105

It is clear from the caselaw that the court will look to the language of the conveyance document to determine who will pay for the relocation of a pipeline and will strictly construe the clear terms of that agreement. Further, in the

97 Id. at 98.98 Id. at 99.99 Id.100 Id.101 Id.102 Id.103 Id.104 Id. at 101.105 Id.

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case where the conveyance requires relocation but is silent as to who should pay, the court will put the burden on the party who benefits from relocation or who disrupts the status quo. As discussed in the next section, this is also the approach courts have taken in cases where the conveyance document is silent as to relocation.

[3] — The Conveyance Does Not Require Relocation.Where the conveyance does not explicitly require relocation of the

pipeline, but an interested party seeks to have a pipeline relocated, courts seem to uniformly hold that the party who benefits or disrupts the status quo should bear the cost of relocation.106 This is true regardless of whether the land owner,107 another estate holder,108 or the pipeline company wants the pipeline to be relocated. As long as the conveyance does not expressly require the relocation of an existing pipeline, in a conflict between private parties, courts are reluctant to burden the party who did nothing to disrupt the status quo.

[a] — The Property Owner Requires the Relocation.

Generally, a property owner will request that a pipeline owner relocate its pipeline in order to improve the property owner’s land or to accommodate a change in the property owner’s use of the land. In the situation where the conveyance document does not require relocation or is silent as to who bears the cost of relocation, courts have generally allowed property owners to use their land as they see fit, but require that the party seeking the relocation or making changes in the land that require the relocation pay the relocation costs.109 However, one court has refused to allow a property owner to force the relocation of a pipeline where the conveyance is silent as to relocation and

106 See, e.g., Amerikohl Mining Co. v. Peoples Natural Gas Co., 860 A.2d 547 (Pa. Super. Ct. 2004); Hazard Coal Corp. v. Ky. W. Va. Gas Co., 311 F.3d 733 (6th Cir. 2002); Columbia Gas Transmission Corp. v. Taylor, 64 F. Supp. 2d 651 (E.D. Ky. 1999); Columbia Gas Transmission Corp. v. Ltd. Corp., 951 F.2d 110 (6th Cir. 1991); Lukens, Jr. v. U.G.I. Corp., 336 A.2d 880 (Pa. 1975); Minard Run Oil Co. v. Pennzoil Co., 214 A.2d 234 (Pa. 1965).107 See, e.g., Minard Run, 214 A.2d at 234.108 See, e.g., Amerikohl, 860 A.2d at 547.109 See, e.g., Minard Run, 214 A.2d at 234; Taylor, 64 F. Supp. 2d at 651; Lukens, 336 A.2d at 880.

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where the property owner’s desire is solely to increase the value of her land, not to accomplish some activity, like development, on her property.110

Although the facts of Minard Run, Taylor and Lukens are slightly different, the result in all three cases is the same. In Minard Run, the landowner wanted to build onto a road in order to increase his timber business.111 The road work required that the landowner cross an existing pipeline.112 The extension of the road required that the pipeline be lowered so that it would not be damaged by the increased traffic.113 When the pipeline owner refused to relocate its pipeline, the landowner brought suit seeking an order compelling the pipeline owner to lower the pipeline.114 The pipeline owner counterclaimed seeking an order enjoining the landowner from extending the road and from moving heavy equipment over the pipeline.115

In Taylor, the pipeline owner had acquired easements that granted it “the right to lay, maintain, operate, and remove a pipeline for the transportation of natural gas.”116 When the landowner wanted to mine the coal located in a reserve in the immediate vicinity of the pipeline, it asked the easement holder to relocate its pipeline in order for the landowner to satisfy certain mining regulations.117 The pipeline owner refused and brought suit to determine the parties’ rights under the easement.118

In Lukens, the Pennsylvania Department of Public Highways condemned a portion of land in order to widen a public road on July 10, 1963.119 Subsequently, the Department granted U.G.I. a permit to install a gas pipeline.120 In 1967, the landowner conveyed the property to the plaintiffs, who sold the property

110 Hale v. Columbia Natural Res., Inc., Nos. 2002-CA-000168-MR, 2002-CA-000274-MR, 2003 WL 1240600 (Ky. Ct. App. Feb. 7, 2003).111 Minard Run, 214 A.2d at 235.112 Id.113 Id.114 Id.115 Id.116 Taylor, 64 F. Supp. 2d at 651.117 Id.118 Id. at 652.119 Lukens, 336 A.2d at 880.120 Id.

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four years later to Mobil Oil Corporation (Mobil).121 Pursuant to its sales agreement, Mobil began grading operations, which exposed U.G.I.’s pipeline and caused the pipeline to violate the depth regulations of the Public Utilities Commission.122 As a result of a settlement with Mobil, the former landowners relocated the pipe at their own expense and subsequently brought suit against U.G.I. seeking reimbursement.123

In all three cases, the courts held that the landowners were entitled to have the pipelines on their property relocated, but must bear the financial burden of doing so. The courts reasoned that when a landowner conveys a pipeline easement, it does not surrender its rights to the enjoyment of the rest of its property.124 Moreover, “[t]o the extent a land-owner does not interfere with what he has sold he cannot be prevented from working his land so as to derive the greatest profit therefrom.”125 As such, although the conveyance is silent as to relocation, landowners are entitled to relocate a pipeline on their property in order to use their property to its greatest benefit. Although landowners can require relocation, all three courts also held that the landowners must pay for expenses related to such. In placing the financial burden on the landowners, all three courts found that it was the landowner who wanted to change the status quo and who benefited from relocation. As the court in Minard put it, the landowners’ requests would be like “asking the miller to pay the farmer for flour he has produced from the farmer’s wheat.”126 Based on these cases, where the original conveyance document is silent as to whether the pipeline owner must relocate its pipeline at the request of the landowner, the general rule seems to be that a landowner may require the relocation of a pipeline on its property, however, the landowner must pay the costs of the relocation because he is the party who benefits from the relocation and who disrupted the status quo. As discussed below, this also seems to be the general rule where another right-of-way or holder of another estate in land requires the pipeline relocation.

121 Id. at 881.122 Id.123 Id.124 Minard Run, 214 A.2d at 235.125 Id.; see also Lukens, 336 A.2d at 881.126 Minard Run, 214 A.2d at 235.

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[b] — Another Right-of-Way or Holder of an Estate in Land Requires the Relocation.

Other owners of a right-of-way or other holders of an estate in land often request that a pipeline on the same land be relocated in order to accommodate its use of its easement or estate. This request is usually made where a holder of the mineral rights in land requires that a holder of a pipeline easement relocate its pipeline in order to accommodate the efforts of the mineral holder to fully extract the minerals from the land. In situations such as these where the conveyance document is silent as to rights and duties regarding relocation, some courts have allowed the holder of the mineral rights to require relocation. However, like the situation where the landowner seeks the relocation, the courts have also held that the party requiring the relocation must pay.127,128 Thus, where a court will require that a pipeline be relocated, it will place the burden of paying for the relocation on the party who disrupts the status quo and benefits from the relocation.129

In Hazard, the Hazard Coal Corporation owned mineral rights in the land and leased some of its interests to Perry County Coal, who in turn hired Locust Grove, Inc. to mine the land (collectively the “coal companies”).130 Kentucky West owned and operated gas pipelines which were located over the coal companies’ mineral interests.131 Kentucky West’s sister corporation owned the gas running through the pipelines.132 When the coal companies decided to mine the area where Kentucky West’s pipelines were located, they requested that Kentucky West remove or relocate its pipelines.133 Kentucky West refused to do so unless the coal companies would bear the cost of relocation and the

127 See, e.g., Hazard Coal Corp. v. Ky. W. Va. Gas Co., 311 F.3d 733 (6th Cir. 2002); Columbia Gas Transmission Corp. v. Limited Corp., 951 F.2d 110 (6th Cir. 1991).128 In at least one case, however, the court held that the owner of the mineral rights in the land where the pipeline was situated could not require that the pipeline be relocated where the parties did not intend a reservation of mining rights in the pipeline right-of-way. See Amerikohl Mining Co. v. Peoples Natural Gas Co., 860 A.2d 547 (Pa. Super. Ct. 2004).129 See, e.g., Limited, 951 F. 2d at 110.130 Hazard, 311 F.3d at 733.131 Id.132 Id.133 Id. at 737.

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coal companies filed suit to require Kentucky West to relocate the lines at its own cost.134

At trial, the coal companies argued that Kentucky West never had the right to transport gas from other companies in its lines because the deeds and lease under which Kentucky West acquired its rights granted permission to build and operate pipelines to transport only its gas.135 Further, the coal companies contended that because Kentucky West exceeded its rights, they should not be responsible for relocation of unauthorized pipelines.136

The court first looked to the express terms of the conveyances in order to determine whether they were dispositive of the issue.137 The court found that the instruments neither permitted nor prohibited Kentucky West from transporting gas that it did not own.138 Because the language of the instrument did not decide the issue, the court turned to Kentucky law;139 however, the court’s review of the case law did not answer the question either.140 Therefore, the court turned to the parties’ intent and subsequent course of dealings.141 A review of the parties’ course of dealing revealed that the coal companies had known about Kentucky West’s transportation of another corporation’s gas.142 Indeed, some of the coal companies had previously agreed to pay Kentucky West to relocate its pipelines and knew that Kentucky West was transporting gas of another.143 Based on this course of dealing, the court held that the parties’ intention was to allow Kentucky West to transport its sister corporation’s gas.144

Moreover, the court held that the coal companies’ actions constituted a waiver by acquiescence.145 Specifically, because the coal companies knew

134 Id.135 Id. at 737-38.136 Id.137 Id. at 738138 Id.139 Id.140 Id. at 739.141 Id.142 Id.143 Id.144 Id. at 740.145 Id.

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about and allowed Kentucky West’s transport of other’s gas for so long, under the law they could not subsequently complain about it.146 Therefore, to the extent that the mineral-rights owners wanted the pipeline to be relocated, they had to pay.147

What is interesting about Hazard are the steps that the court took to reach its conclusion. Specifically, Hazard seems to stand for the proposition that a court should first look to the express terms of the conveyance in order to determine which party should pay for relocation of a pipeline. If the conveyance does not decide the issue, a court will then look to the law. If neither case law nor statutory law is dispositive, a court will determine the intent of the parties by considering the circumstances surrounding the conveyance and any course of dealing since the conveyance was entered into. A similar approach was utilized in Limited, 951 F. 2d at 110; however, the court in that case did not have to determine the parties’ intent as Kentucky law decided the issue.

In Limited, Columbia Gas Transmission Corporation’s (Columbia) and Limited Corporation’s (Limited) predecessors in interest entered into a lease for oil and gas rights.148 The lease expressly provided that the oil and gas estate was servient to the lessor’s coal estate.149 In 1988, Limited asked Columbia to temporarily move its pipelines to accommodate Limited’s surface mining.150 When Columbia refused to do so unless Limited paid for relocation, Limited went forward with its mining plans.151 As a result, two of Columbia’s pipelines were damaged. In addition, Columbia’s access to the pipelines was obstructed by a coal haul road and retaining bench built by Limited.152 Columbia filed suit and sought compensation for the damage to its pipelines.153 The trial court held that Limited’s activities constituted a trespass on Columbia’s estate and therefore Limited was liable for damages to and relocation of the pipelines.154

146 Id.147 Id.148 Columbia Gas Transmission Corp. v. Limited Corp., 951 F.2d 110 (6th Cir. 1991).149 Id.150 Id. at 112.151 Id.152 Id.153 Id.154 Id.

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On appeal, Limited argued that Columbia’s refusal to relocate its pipelines upon Limited’s request constituted a trespass.155 In support of this argument, Limited relied on the provision in the lease that expressly provided that the oil and gas estate was servient to the coal estate.156 The court rejected this argument and found that although the lease did name the coal estate as the dominant estate, it also granted the lessee certain surface rights.157 Because the lease itself did not decide the issue, the court turned to case law.158

The court held that under Kentucky law, the “dominant estate holder enjoys rights correlative to the servient holder.”159 However, “each estate owes a duty to exercise that degree of care and use which a just consideration for the rights of the other demands.”160 The court concluded that because Limited breached this duty when it went forward with its mining plans with the knowledge that it would damage Columbia’s pipeline, it “is liable for the repairs to the pipelines and the costs of action necessary to protect the pipelines and the costs of moving them to accommodate Limited’s coal mining activities.”161 The court further held that because Limited was the party who would benefit from relocation and disrupted the status quo, it should bear the burden of relocation costs to prevent damage.162

Recently, the Pennsylvania Superior Court considered a situation where mining came in conflict with a pipeline and held that the holder of the estate in land could not require that the pipeline be relocated.163 In that case the Court found that the parties’ intent controls and must be determined from the outset.164 In Amerikohl, Peoples Natural Gas Company (Peoples) obtained a general right-of-way for its pipelines that contained a condition

155 Id.156 Id.157 Id. at 113.158 Id.159 Id.160 Id.161 Id.162 Id.163 Amerikohl Mining Co. v. Peoples Natural Gas Co., 860 A.2d 547 (Pa. Super. Ct. 2004).164 Id.

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that the landowner “shall have the free and uninterrupted right to mine and remove the coal underlying [its] land.”165 In order to accommodate its own mining operation, Amerikohl Mining Company (Amerikohl) relocated some of Peoples’ pipelines at its own expense and mined around the remaining pipelines.166 Subsequently, Amerikohl filed suit seeking damages and a declaration that it is entitled to surface mine all of the coal under the land at issue and that Peoples must relocate its pipelines at its own expense.167 The trial court held that under the terms of the agreement, Amerikohl did not have the right to mine coal located in the right-of-way.168

On appeal, the court held that whether Amerikohl had the right to mine coal located in areas covered by the right-of-way agreement depended upon the intention of the parties at the time the agreement was executed.169 Further, in order to determine the intention of the parties to an easement, the court looked to the words of the conveyance construed with reference to the attending circumstances known to the parties at the time the grant was made.170 The court found that “[a]mbiguous words will be construed in favor of the grantee” and the agreement will be construed so as to create a fair and reasonable result.171 Working with these standards, the court held that the language of the right-of-way only applied to deep mining and not surface mining and that the circumstances surrounding the execution of the agreement also indicated that the parties only intended that the right-of-way apply to deep mining.172 As such, because surface mining within the areas of the right-of-way was not envisioned by the parties, Peoples was not required to move its pipelines at its own expense.

The Sixth Circuit’s view that where the conveyance is silent as to relocation, it will allow another holder of a right-of-way or an estate in land to require relocation at its own expense is consistent with the cases where the

165 Id. at 548.166 Id. at 549.167 Id.168 Id.169 Id. at 550.170 Id.171 Id.172 Id. at 552-53.

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landowner requires relocation. This consistency is particularly appropriate based on the fact that a holder of a right-of-way or an estate in land stands in the shoes of the owner and should have similar rights. The Amerikohl case, which did not allow the estate holder to require relocation, is limited to the situation where the parties agreed or intended that no mining could take place in the pipeline right-of-way. Indeed, the court in Amerikohl based its decision on the fact the parties did not intend to reserve mining rights where the pipeline was located.173 Therefore, it seems that generally, courts will allow both the landowner and another holder of a right-of-way or an estate in land to require relocation of a pipeline unless the parties have agreed that the pipeline owner would use the right-of-way exclusive to others.

[4] — The Government Seeks to Condemn.The government’s exercise of eminent domain over land in which a

pipeline owner has laid a pipeline raises unique issues as to who should bear the costs of relocation. In particular, in order to determine whether the pipeline owner or the government should bear the cost of relocation, a court must first look to the statute under which the government exercises its powers of eminent domain.174 If the statute does not explicitly specify whether reimbursement is required, a court must then determine what interest the pipeline company has in the land and whether such an interest requires compensation under the law.175 Usually, the determination as to whether the pipeline company qualifies for compensation for relocation expenses depends upon the nature of the rights acquired by the pipeline company.

For example, in Weir v. Consolidation Rail Corp.,176 the Department of Transportation for the State of Ohio initiated eminent domain proceedings for several thousand feet of property from the defendant, Consolidated Rail Corporation (“Conrail”) in order to construct a highway.177 The construction

173 Id. at 553.174 See Columbia Gas Transmission Corp. v. Ohio Dep’t of Transp., 660 N.E.2d 1225 (Ohio Ct. App. 1995).175 See Weir v. Consol. Rail Corp., 465 N.E.2d 1341 (Ohio Ct. App. 1983).176 Id.177 Id. at 1343.

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plans also required Buckeye Pipeline Company (Buckeye) to relocate its pipeline under Conrail’s seized land which was laid pursuant to private agreements with Conrail.178 In order to carry out its plans, the Department of Transportation initiated suit against Conrail, Buckeye, and others.179 In response, Buckeye filed a counterclaim seeking reimbursement for the costs of relocating its pipeline.180

The Ohio statutes under which the Department of Transportation exercised its right to appropriate land required “[a] ‘state agency’ to pay relocation expense to any ‘displaced person,’ whenever the agency acquires real property for a program or project.”181 The primary issue in the case concerned the definition of a “displaced person” as used in the statute.182

In order to determine whether Buckeye was entitled to compensation, the court first noted that no common law rule existed that deprived utilities of compensation in appropriation cases.183 Under the Ohio common law, when the government seizes real property from a utility company who has a vested interest in the property, it is required to pay compensation to the utility owner.184

Based on this common law, the court analyzed whether Buckeye’s agreement with Conrail was more analogous to a license or an easement and whether Buckeye had a vested right in the land.185 In answering this question, the court recognized that “it is settled that an easement is an interest in real property, whereas a license is not.”186 This is because a license, unlike an easement, is terminable at will, precluded from assignment, terminated upon conveyance of land, and binding only to the parties to the license agreement.187 Based on this distinction, the court held that Buckeye’s original

178 Id.179 Id.180 Id.181 Id. (citing Ohio Rev. Code § 163.53).182 Id.183 Id. at 1344.184 Id.185 Id. at 1345.186 Id.187 Id.

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agreement was a license and therefore Buckeye would not have been entitled to compensation under such a lease.188 However, the court further held that Buckeye’s subsequent agreement was an easement and was therefore entitled to compensation.189 Specifically, the court found that although the agreement was not assignable, the rights under the agreement “run with the land”; the agreement was in the form of a grant in exchange for a lump-sum payment; and the agreement was not terminable at the will of the railroad.190 The court held that under both statutory and common law, Buckeye, as an owner of an easement, was the holder of an interest in land, and therefore, was entitled to compensation.191

A few years later, the Ohio Court of Appeals faced a similar situation in Columbia Gas Transmission Corp. v. Ohio Dep’t of Transp.192 This time, however, the language of the statute under which the Department of Transportation derived its power of eminent domain was controlling. In that case, the Ohio Department of Transportation notified Columbia Gas that its pipelines and a pumping station would have to be relocated in order to accommodate a highway construction project.193 The pipelines were located on land owned by Consolidated Rail Corporation pursuant to a license agreement and the pumping station was located on public land pursuant to an easement.194 The highway construction project began in 1984 and Columbia Gas began the planning of its relocation work in 1985.195 In 1989 the Ohio legislature amended Ohio Rev. Code Sections 163.53 and 5501.51 to require a utility company to show it had a vested right in the nature of a fee interest, easement interest, or lesser estate in private property in order to recover relocation expenses required by a state project.196 The actual relocation occurred after

188 Id.189 Id.190 Id.191 Id.192 Columbia Gas Transmission Corp. v. Ohio Dep’t of Transp., 660 N.E.2d 1225 (Ohio Ct. App. 1995).193 Id. at 1226.194 Id.195 Id. at 1226, 1228.196 Id. at 1228.

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the amendment to the law. A hearing officer appointed by the Ohio Department of Transportation determined that since the relocation was subsequent to the change in the law and Columbia did not have a vested interest in Conrail’s land, it was not entitled to reimbursement.197 Columbia appealed to the Court of Common Pleas which held that Columbia’s claim for reimbursement arose prior to the amendment of Ohio Rev. Code Sections 163.53 and 5501.51 and so the previous law applied.198

The court first noted that prior to the 1989 amendments to Ohio Rev. Code Sections 163.53 and 5501.51, Columbia Gas would not have had to demonstrate any vested rights in order to be reimbursed for relocation costs.199 Further, a public utility’s claim for reimbursement arises when engineering plans for the move begin.200 Because Columbia Gas’ plans began in 1985, its claim for reimbursement was not subject to the statutes as amended and it therefore did not have to show that it had a vested interest. As such, Columbia Gas was entitled to reimbursement.

The Ohio Dept. of Transp. case highlights the importance of reviewing the statute under which a state agency derives its power of eminent domain. Moreover, the case is significant for its holding that claims for reimbursement arise when the plans for relocation begin, not the construction, and so the applicable statutes are those that exist when plans for relocation begin.201

When the government condemns land in which a pipeline is located on the land pursuant to a private agreement between the pipeline owner and the landowner, the courts look to the applicable statutes to determine whether the pipeline owner is entitled to compensation for the relocation. In doing so, the courts must also analyze the nature of the conveyance to the pipeline owner in order to determine whether the pipeline owner’s interest in the land warrants compensation.

197 Id. at 1226.198 Id.199 Id. at 1228.200 Id.201 Id.

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[5] — The Government Acquires Private Rights.In the case of St. Albans Township Bd. of Tr. v. Columbia Gas Transmission

Corp.,202 the court considered which party should pay for the costs of a pipeline relocation where the government acquires private rights. In that case, Columbia Gas Transmission Corporation (“Columbia”) obtained an easement from two adjoining landowners in order to lay a gas pipeline.203 The easements permitted Columbia to lay the pipeline under Hardscrabble Road, which was a public road in existence since 1832 pursuant to a roadway easement.204 St. Albans Township wanted to lower the grade of the road, but in order to do so, required the relocation of Columbia’s pipeline.205 When Columbia refused to relocate the pipeline, the Township filed suit arguing that Columbia was required to obtain permission from the Township and County before laying its pipeline and therefore the pipeline was unauthorized.206 Columbia argued that by changing the grade of the road, the Township was interfering with its valid easement.207 The trial court agreed with Columbia and granted it summary judgment.208

On appeal, the issue before the court was whether Columbia had a valid easement under the road.209 The court held that “although the county had a valid and existing easement for roadway purposes over the two lands owned by the two landowners, [Columbia] had a valid and existing easement under the two lands owned by the two landowners.”210 As such, the pipeline was not located within the county’s easement.211 The court, which adopted and incorporated the lower court opinion, reasoned that no subsurface rights attach

202 St. Albans Township Bd. of Tr. v. Columbia Gas Transmission Corp., 688 N.E.2d 48 (Ohio Ct. App. 1997).203 Id. at 49.204 Id.205 Id.206 Id.207 Id.208 Id. 209 Id. at 50.210 Id. at 50-51.211 Id. at 51.

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where an easement for the operation of a roadway is granted.212 Thus, the landowner can use the land under the road in any manner not inconsistent with the public easement for the roadway.213 Therefore, the court held that the Township and County had to compensate Columbia for the costs of relocating the pipeline.214

Where the government acquires private rights and requires the forced relocation of a pipeline in the same land, a court must look to the nature of the rights acquired by the government. If those rights do not entitle the government to force relocation, any attempts of the government to do so can be considered a taking for which compensation is required.

§ 8.04. Conclusion.As the need for pipeline relocations increase, the issues surrounding

those relocations become more relevant. In particular, the considerations of what must be done in order to relocate a pipeline, including acquiring and abandoning right-of-way, obtaining the proper certifications and permits, and planning for the relocation must be considered.

The issue of who pays for the relocation is undoubtedly one of concern for the owner of the pipeline. Where the pipeline to be relocated is in a public right-of-way, the language of the agreement pursuant to which the pipeline was constructed and the common law rule or statutory requirements determine who pays for relocation. Where the conveyance explicitly provides for whether a party can require the pipeline owner to relocate places the liability for the relocation on a specific party, courts will look to the plain language of the agreement and will strictly construe it. On the other hand, where the conveyance is silent as to relocation, the party that benefits from the relocation or the party to disrupt the status quo will be required to pay for the relocation. Finally, in situations where the government requires the pipeline owner to relocate, whether the government must pay will usually depend on whether the pipeline owner is deemed to have a vested right in the land. If a vested interest is found, then the government will be required to pay the relocation costs.

212 Id. at 52.213 Id.214 Id.

§ 8.04

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