On April 10, 2024, Louisiana’s Second Circuit Court of Appeals released an important decision regarding pipeline servitudes. In ETC Tiger Pipeline, LLC v. DT Midstream, Inc. and DTM Louisiana Gathering LLC, No. 55,534-CA, the Court of Appeals reversed the trial court’s decision to grant ETC a temporary restraining order (TRO) and preliminary injunction to prevent the appellants (collectively DTM) from constructing a perpendicular pipeline under a pipeline owned and operated by ETC. Prior to that decision, in 2010, ETC obtained a Servitude of Use for Pipeline, which allowed the company to operate a 42-inch, high-pressure, high-volume natural gas pipeline from Panola County, Texas, through the pipeline servitude in DeSoto Parish, to Richland Parish.
The Dispute: Pipeline Crossings
According to the Second Circuit’s opinion, in 2022, DTM informed ETC that it intended to cross ETC’s pipeline servitude in DeSoto Parish with a 24-inch, 4-mile-long natural gas pipeline. Despite the parties meeting to discuss DTM’s pipeline project, ETC repeatedly objected to DTM’s pipeline route. But after DTM initiated a Louisiana One Call for information to cross ETC’s pipeline servitude and an ETC employee observed staged pipe, ETC filed a petition and sought a TRO, preliminary injunction and permanent injunction against DTM. ETC argued that it had an “exclusive servitude” that prevented all other pipelines from crossing. The servitude granted to ETC, among other things, “an exclusive servitude of use” and provided for the maintenance of “one (1) pipeline for the transmission of natural gas. . . .” ETC also alleged that the DTM pipeline presented a safety and operation risk to ETC’s high-pressure pipeline and would cause immediate and irreparable injury, among other things.
DTM’s opposition explained that it made a good-faith effort to discuss its safety code compliance, construction standards, and industry customs and practices with ETC. DTM also disputed ETC’s supposed “exclusive servitude” and explained that, at the location in question, its pipeline would cross several other adjacent and parallel pipelines. This included not only ETC’s high-pressure pipeline, but also two 12-inch diameter pipelines owned by third parties. DTM’s pipeline would also run approximately 19 feet below the largest pipeline and 25 feet below ETC’s high-pressure pipeline.
After a hearing, the trial court granted ETC’s preliminary injunction and denied DTM’s preliminary injunction. According to the trial court, ETC’s “exclusive servitude” gave ETC the right to block construction of a crossing pipeline. DTM appealed and argued that ETC’s pipeline servitude did not allow ETC to use an unlimited depth or prevent another pipeline from crossing under ETC’s high-pressure pipeline.
Louisiana Court of Appeals Decision
Louisiana’s Second Circuit Court of Appeals reversed the preliminary injunction against DTM. In reaching that decision, the court concluded that ETC’s pipeline servitude was a “personal servitude of right” — allowing a specified use of an estate less than full enjoyment — rather than a “predial servitude” — a charge on a servient estate for the benefit of a dominant estate. Compare La. C.C. art. 639, with La. C.C. art. 646.; see also id. art. 720, art. 730. It did so because, in Louisiana, a predial servitude necessarily involves two estates: a servient estate and a dominant estate. But rather than involve a servient and dominant estate, ETC’s pipeline servitude simply represented a right of use.
The Second Circuit next addressed ETC’s claim — and the trial court’s decision — that ETC’s pipeline servitude was “exclusive.” The Second Circuit disagreed, concluding that the servitude’s single use of the word “exclusive” did not convey to ETC the sole right to construct a pipeline at any depth underground — particularly when the servitude is silent regarding depth. The Second Circuit also explained that under the one-pipeline provision of ETC’s pipeline servitude, ETC could not lay a second pipeline below its existing high-pressure pipeline. Finally, the Second Circuit concluded that ETC’s pipeline servitude did not authorize ETC to prohibit underground crossings at safe depths.
Takeaways for All Jurisdictions
The Second Circuit’s decision stands for the proposition that the holder of a pipeline personal servitude of right — at least in Louisiana — may not act as a bouncer to some exclusive property club. From a Louisiana policy perspective, the concurring opinion rejected the notion that, “through silence and/or ambiguity in an agreement, a landowner should be deprived of the rights of ownership and that the oil and gas industry should effectively be disrupted regarding the ability to construct and maintain necessary pipelines in Louisiana for transmission of oil and natural gas.”
But pipeline operators in all jurisdictions should be mindful of several issues following the Second Circuit’s decision. First, pipeline operators must ensure that pipeline crossings take place at safe distances. Second, pipeline operators should be mindful that crossing agreements can better provide boundaries to protect both companies should an issue arise. Finally, new or renegotiated easement and right-of-way agreements should consider clearance depth and the potential benefits of depth separation limits.