Court Upholds Validity of Decades-Old Pipeline Easements

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Federal Court Upholds Validity of Decades-Old Pipeline Easements

The United States Court of Appeals for the Seventh Circuit, Chicago, recently upheld the validity of several decades-old pipeline easements affecting 120 miles on a pipeline construction route. Enbridge Pipelines (Illinois) L.L.C., v. Michael S. Moore, et al., Nos. 10-2268, 10-2305, 10-2313, 10-2850 (7th Circuit Jan. 24, 2011). The decision is important because it interprets ?maintenance? of pipelines, a provision found in many such easements and often controlling on whether the easement remains in force and effect, in a manner favorable to pipeline companies.

The appeal was a consolidation of several lower court judgments rendered in favor of Enbridge. The easements had been obtained by Enbridge?s predecessor for the purpose of constructing a 10 inch pipeline in 1939. Enbridge had plans to construct a 170 mile, 36 inch pipeline in Illinois as part of a larger project to transport oil. This would involve replacing the 10 inch pipeline along this route. Litigation ensued in 2010 because the landowners refused to honor the easements, claiming that Enbridge?s predecessors (and hence, Enbridge) had ?forfeited the easements by failing to maintain the pipeline in good working condition.?

Acknowledging that the word ?maintain? was ambiguous, the Court concluded that in the context of the easements, the most reasonable interpretation was pipeline maintenance akin to maintaining an office in a particular location, as opposed to maintaining a car in mint condition. Factually, it was established to the Court?s satisfaction that the 10 inch pipeline had been maintained at a minimal level ? ?preserving the option of a future use not just of the easements but of the existing physical pipeline[.]? This minimal maintenance, in the Court?s view, established that the easement had not been forfeited or abandoned and therefore remained in force and effect.

Should you have questions about this decision or pipeline easements in general, please contact us in the Energy Litigation Group of Steptoe & Johnson.

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