Does Your Utility Need a Risk-Based Approach to Easements and Rights-of-Way?

May 28, 2015 by Philip B. McKiernan, Partner
Does Your Utility Need a Risk-Based Approach to Easements and Rights-of-Way?

The following is an excerpt from Ice Miller's Pathways to Success for Utilities Guide which provides insights on a variety of topics potentially impacting utility service providers. 

Underlying any utility system, whether it be an electric, gas, water or wastewater system, are the land rights on which it is built. A utility’s rights in land include the outright or “fee” ownership of land on which it may site significant assets, e.g. a power plant. Land rights also include the more economically acquired rights-of-way on which a utility locates distribution or collection facilities.
 
Understanding Easements in Relation to Risk Assessment

A right-of-way allows a utility to cross land owned by another with its facilities. Typically, a right-of-way is secured with an easement agreement, which gives the utility a permanent, legal right to use the right-of-way to construct and operate the facilities. In addition to describing the utility’s scope of permitted activities, an easement agreement usually describes the land subject to the right-of-way, the utility’s rights to access the right-of-way from adjoining land, the number and size of facilities, rights for expansion, and term and procedures for abandonment.
 
While a common and cost-effective way to extend distribution and collection infrastructure, an easement agreement rarely extends an exclusive right to use the land subject to the right-of-way. The utility receives a right to use the specified right-of-way for a particular purpose and the landowner retains the right to use the right-of-way in any way that does not conflict with that purpose, including the right to grant another the ability to pursue activities consistent with those of the utility. Most easement agreements also are geographically-limited and do not give the utility any rights on land outside of the right-of-way area.

To learn more, download the Pathways to Success for Utilities Guide or contact any member of Ice Miller's Energy and Utilities Law practice group.


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