News 2018

The Keystone Pipeline, Rights-Of-Way, and You

As the Keystone Pipeline continues to expand and evolve, know where you and your property stand

Completed in 2010, the first implantation of the Keystone Pipeline carried oil from Alberta, Canada, over 2,147 miles to Nebraska and Illinois. By 2016, the pipeline had expanded into Houston, Texas, and looks to expand even further today. But the construction and expansion does not come without strife. Building and operating a pipeline is a complex undertaking that requires years of preparations, planning, and communication.

In fact, the pipeline, which would carry 830,000 oil barrels each day between Canadian and the U.S. refineries, has been delayed for nearly a decade by regulatory hurdles.

In developing any type of pipeline route, it’s essential to understand the various environment, culture, and proprietor resources along the proposed right-of-way. That way, builders and invested parties can anticipate, and ideally avoid impacts on these important features.

As a real estate owner or investor whose property may cross paths with the Keystone Pipeline, you’re probably wondering what to expect as this massive project expands its roots, and what those evolutions will mean for you and your property.

The pipeline, condemner and landowners

It’s no surprise that pipeline projects require countless permits. In examining the rights-of-way pertaining to Keystone, it’s important to first look at existing research (e.g. maps; geographic information systems; data and census by federal, state, and local agencies; previous studies in the area; and relevant, historical data).  Environmental resource documents are also involved, weaving landowner and the public in the mix. This allows all parties involved to better assess the situation and all aspects involved for the safety and surety of the entire Keystone XL project.

These stepping stones, in relation to the Keystone project, are critical to gaining approval for safe building – it’s the right way for business. For example, if commercial property that you currently own is within a proposed Keystone route, it is time to find a professional valuation expert to discuss the proposed pipeline and subsequent easement and how it may affect your property.

The easement is the legal vehicle that details the construction company rights of access to your land to construct, operate, and maintain the pipeline across a portion of your property. The condemning authority will ask for your approval of their offer of just compensation for the easement and, of course, and that’s (again) where a professional valuation expert comes into play! You’ll be able to rest assured knowing you’re making informed, educated, and fair decisions.

The Easement will outline all the necessities, including but not limited to:

  • Liability provisions
    • Must be consistent with existing property rights and law
  • Rights to protect personal property
  • Details of landowner operations and usage into the future development

Despite expansion of the Keystone pipeline, there are entitlements that are rightfully and exclusively in the hands of the landowner. Prior to any construction or manipulation of land, a professional valuation expert will work closely with landowners to consider the potential adverse impacts construction may have, and the aspects it should include, such as:

  • Disruption of land processes (farming, cultivating, irrigation, etc.)
  • Livestock displacement
  • Crop losses (in accordance with land disruptions)

Land in areas affected by pipeline development easements should be returned to its complete level of productivity prior to the project by the developers – even if that includes debris removal, leveling of grounds areas, etc. – so that the landowner can resume business as usual.

When it comes to right of way appraisals such as that of the Keystone pipeline project, there are two sides to every story, and the landowner isn’t the only party involved! Property valuation experts not only work with affected landowners, but also the condemning authority – the common carrier or government entity that will exercise eminent domain rights to acquire a piece of land.

At the onset of many projects, market studies are provided that develop value ranges for property types along a proposed route. This serves as a beneficial tool for the carrier to determine cost, feasibility, and routing. It also can expedite the appraisal process when complete appraisals are required.

The condemner for a pipeline project must follow specific laws related to the acquisition process. This varies by state, but generally a good faith offer must be made based on an independent appraised value. In some instances, easements are acquired through private negotiations, often at prices higher than market.

When an appraiser is engaged by the pipeline company, one of the first considerations is the methodology to be developed.

The two primary valuation scenarios are:

  • Valuation of the proposed easement area as part of the whole property, typically valued as raw land.
  • Valuation of the easement corridor, often on a per rod basis. This method is often not appropriate when there is not an existing corridor in which the new easement will be constructed.

Pipeline and utility companies have many factors when acquiring a right-of-way. One of the primary factors is timing. The cost of delays due to property owner hearings can quickly offset the cost of litigating value.

This is dependent on the project and sometimes the strategy of the carrier.

Though eminent domain statutes vary from state to state, seasoned professional valuation experts like the team at Valbridge are ready to ensure ease of the project.

The Valbridge experience

If your property is impacted by the continued development if the Keystone Pipeline, or if you’re an entity considering acquiring right of way for the Keystone expansion or other corridors, you’ll want to ensure that a highly trained professional valuation expert is by your side every step of the way. At Valbridge Property Advisors, we specialize in helping our clients through eminent domain processes.

From pipelines and telecommunications valuation throughout Texas, to California’s high-speed railway system, Valbridge Property Advisor's high-level experience comes second to none in the real estate valuation industry. With locations across the country, a highly-trained Valbridge expert is always there to lend you a hand.