In the United States, a pipeline network is used to transport goods and materials between jurisdictions. Energy products are the most commonly transferred materials especially natural gas and petroleum. Pipelines transport water and sewage.
To balance the rights of cross-border parties, pipeline agreements must be drafted before work takes place. Below, you will find a pipeline contract form agreement you can use to draft your pipeline contract. We also explain the importance of this legal document and how to write one effectively.
A pipeline agreement is a legal contract between members of the Pipe Line Contractors Association. Another type of pipeline contract is entered into between pipeline contractors and industry labor unions. We are focusing on the former, those agreements between contractors. These include leases, subleases, permits, franchises, rights of way, and other terms necessary for the functional management and operation of the pipeline. These documents clearly outline all the rights and responsibilities of both parties to ensure smooth and reliable pipeline operations across the state and international borders to transport products in and out of the US.
A national pipeline agreement is extremely important for the effective functioning of the pipeline. It details when ownership of the transported material changes hands, who is in control of handling transported material, provisions, and equipment, and all other rights of both parties. Without these agreements in place, serious issues can arise in the pipeline’s operation. This can result in states experiencing water shortages or energy disruptions from restricted gas transfers.
A pipeline agreement must contain the details of the respective rights of both parties. It can be broken down into the following basic sections. This is a non-exhaustive list of a few main components this agreement should have*:
Detailed identification of both parties and all other employees and agents engaged in the agreement, plus the definition of any terms and expressions used in the contract.
A sentence stating that the named parent entity agrees to serve the operator of the contract for the term of the agreement.
A list of all the duties of the operator, including terms outlining material purchases, liabilities, environmental matters, permits and bonding, pipeline facility maintenance, and gathering agreements with third parties.
Details of the operating budget and capital budget, including payment terms and required reports. This section also includes emergency expenditures and limitations of capital expenditures notwithstanding the budget outlined previously.
A statement saying who is responsible for the costs and expenses along the pipeline, any taxes incurred, and any reimbursable charges.
The scope of any applicable insurance policies, certificates of insurance, and the related indemnities of both parties.
Details of how the operator can access the systems of the gatherer and what notice is required. This section also explains what reports are required and the parties’ rights and responsibilities relating to audits.
A statement regarding force majeure, which is where unforeseeable circumstances prevent either party from fulfilling their contractual obligations.
A statement identifying which jurisdiction’s law shall govern the pipeline agreement. This issue is determined by state law and will differ depending on which state pipeline is being used.
Detail the process of negotiating disputes, and identify the circumstances and manner in which an arbitrator will be selected if required. This section also specifies the process used in arbitration, especially relating to hearing requirements and timelines for decision-making.
Details on how the pipeline agreement contract can be terminated, and what happens in the case of early termination.
A sentence that describes what constitutes the agreement and how this legal document supersedes any prior conversations or written proposals regarding the rights of both parties operating in the pipeline.
A statement explaining that third-party beneficiaries have no obligation or liability under the terms of the pipeline agreement.
Details on how either party can provide notice of termination for the contract agreement and contact details of both the operator and the gatherer and other relevant third parties involved in the transaction.
Other sections regarding the rights and regulations of the agreements. This includes amendments to the contracts, further assurances, no=waiver statements, bankruptcy waivers, construction, damages, public announcement disclosures, and confidentiality agreements.
Signature pager of the pipeline operating agreement, which contains signatures of both the representatives of the operator and the gatherer involved in the pipeline agreement. This also requires witness signatures that confirm the agreement is executed as of the effective date.
You can find a sample of our pipeline agreement template on this page. This is downloadable in both PDF and Word format; simply choose which file format you would rather work in. You should easily be able to identify the sections of the contract form agreement with the sections above. Read through the form and then complete the blanks using our writing process outlined below.
Writing pipeline agreements is a challenging task. These operating agreements are lengthy legal documents and have to be written correctly so that both parties know their rights and respect their obligations. We walk you through a step-by-step process to make the task as easy as possible in the sections below.
Your first step is always to speak with your counterpart to discuss the type of agreement you want to pursue. This will let you know whether it is worthwhile to engage in an agreement or not.
Next comes the negotiation stage. It is best to have a verbal discussion about the terms of the contract before getting the agreement down on paper. This is your time to try to ensure the pipeline agreement has favorable terms and is a profitable enterprise. You might want to appoint a lawyer to help with the negotiation stage.
Once the negotiations are over, you can download the contract template. It is a good idea to read this ahead of time so you know what details it needs to contain. Keep this webpage handy, as you will find it useful when writing your pipeline agreement.
Writing your pipeline agreement is simple when using our pipeline agreement form. Just fill in the blanks on the document with the correct terms for your contract. Once both parties have signed, the contract is legally binding and the work can begin.
When you use this pipeline agreement pdf, you assume all responsibility and liability. Lawrina retains no legal responsibility for the legal document’s accuracy, reliability, or functionality.
The unprofessional use of this legal form or other templates on this website could result in direct or indirect losses or damages. By downloading, printing, or using this agreement, you accept all liability for any loss or damage you may suffer.
Frequently Asked Questions
