If you live in West Texas or southeastern New Mexico, you may have been contacted by an oil and gas company that wants to build new facilities or extend existing facilities here in the Permian Basin. In both states, power companies often have the power of eminent domain when they are building a public project.
If they do, they can force you to sell all or part of your land to further their development project. They sometimes want only an easement, or a limited right to use cross or use part of your land. In other cases, they may want to purchase the entire parcel.
Is there anything I can do?
Depending on the situation, you may be able to challenge the company’s right to use eminent domain authority. This is possible, for example, when the company’s project isn’t meant to benefit the public.
If challenging the company’s eminent domain authority will not work, you could be forced to sell your land. This is sometimes referred to as “condemnation.” However, the U.S. Constitution and both state constitutions require fair and just compensation when land is taken in this way.
How do I ensure I’m getting just compensation?
First of all, don’t just accept what the company offers you. Chances are, the agreement they prepared is written to benefit their interests, not yours. Moreover, they may be presenting a lowball offer at first.
Sometimes, energy companies try to get all the major landowners in a particular area to sign on to the project all at once. They may throw a get-together, such as a barbecue, where landowners can enjoy each other’s company as they contemplate the proposed lease or purchase offer.
This is not a good way for landowners to ensure their rights are protected and that they’re getting a fair deal. There is time pressure, and you probably won’t have an attorney with you at the event.
Don’t sign anything until you’ve had it reviewed – and perhaps renegotiated – by an energy law attorney with significant experience. Experience is necessary because it means the lawyer has seen a few of these offers and knows what to expect.
Just compensation is defined by law as the fair market value. The fair market value is the price a willing buyer would pay on the open market for the land’s highest and best use.
Your attorney will research how much land is going for in your area and take into account all the traditional valuation factors, including trends related to oil and gas activity. This may produce a valuation that is significantly higher than what the oil and gas company initially offered. The company can then accept your valuation, negotiate for a different amount or face you in court for a final decision.
What if the company just wants an easement or right of way?
Sometimes, oil and gas companies only need access to your land during the project or for maintenance. Assuming they have eminent domain authority, they can force you to grant this access, but you are still owed just compensation for the property interest they are taking.
Your attorney should negotiate with the company to ensure your property rights are fully protected. You deserve to grant an easement or right of way that is as narrow as possible and which protects your rights, now and in the future.