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Easements -- Energy: $8K Award Premature: It Was Based On Ambiguous Pipeline Easement

Friday, March 03, 2017

A North Dakota trial court improperly held that a pipeline easement allowed only one pipeline, with no continuations, even though the easement referred both to a singular ''pipeline'' and plural ''pipelines.'' The easement's ambiguity meant that the granting of summary judgment on the issue was inappropriate.

Facts: Darwin and Jean Krenz own the surface estate for land in North Dakota. XTO Energy, Inc. (XTO) owns the mineral rights to three portions of the Krenzes' property: A, B, and C. In 2007, the Krenzes had granted an easement to XTO's predecessor in interest. That easement authorized its owner to build a gas pipeline in section A, and, under that easement, XTO's predecessor built a pipeline to collect gas from other pipelines in the area. Later the same year, the Krenzes executed another easement to XTO's predecessor, authorizing the construction and operation of ''pipelines'' across sections A and B but limiting the easement to ''one pipeline within the surveyed right of way.'' In 2008, XTO drilled in a nearby area owned by the state, and it built a pipeline across section A connecting those wells to existing pipelines.

In 2010, XTO started a well on section C. XTO wanted to connect that well to its other pipelines, and so it began negotiating with the Krenzes to acquire a pipeline easement, a road use agreement, and a surface damage agreement so that it could operate the well in section C. The Krenzes signed an agreement, but XTO did not. Apparently during the negotiating process, XTO discovered the April 2007 easement authorizing its owner to build ''pipelines'' across sections A and B. XTO interpreted that easement as authorizing it to build a pipeline from section B to section C. The Krenzes disagreed because a pipeline had already been built across section A.

The Krenzes sought a declaration in state court that the April 2007 easement was void and unenforceable or, in the alternative, that the easement limited XTO to one pipeline, which had already be[...]

Next: Nuisance: Wild Animals' Stench May Be Unpleasant, But It's Not A Public Nuisance
 
Prev: Takings: No Taking When Govt. Dumps Debris Into Easement Sinkhole
 
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