UNDERGROUND TELECOMMUNICATIONS CABLES ACROSS PRIVATE LAND

FACT SHEET TELEPHONE 0800 327 646 I WEBSITE WWW.FEDFARM.ORG.NZ UNDERGROUND TELECOMMUNICATIONS CABLES ACROSS PRIVATE LAND BACKGROUND The Rural Broadband Initiative envisages substantially improved broadband access for people in rural locations. This enhanced telecommunications fibre network will require the acquisition of rights from private landowners to lay fibre cabling underground, across their land, and protect it. The gaining of those rights, and associated compensation, will generally be achieved by way of an easement agreement between the landowner and the broadband provider / telecommunications company. If you have been approached by a broadband provider/telecommunications company seeking to lay a fibre optic cable across your land, this fact sheet can be of assistance to you. FEDERATED FARMERS OF NEW ZEALAND S POSITION ON RURAL BROADBAND Federated Farmers of New Zealand is a supporter of the Rural Broadband Initiative, and is working hard to get the best deal for rural areas. The Federation has developed sound knowledge of easement provisions and how they affect landowners, principally through advising landowners that are negotiating easements for public infrastructure such as electricity lines and gas pipelines. WHAT IS AN EASEMENT? An easement is a property right the broadband provider / telecommunications company will need to purchase from landowners along the fibre network route. Rights and obligations of the parties over the easement land will be set out in the agreement. For the landowner, it will set out the easement area and what they can or cannot do within it. It will also set out the broadband provider / telecommunications company rights of access to the land, and payment of compensation for temporary disturbances during the laying of the fibre. Easement terms related to underground fibre optic cables are not thought to be onerous on the landowner. Once laid, an underground fibre network rarely requires maintenance, and the fact of it being hardened and underground substantially reduces the impact on the landowner. The rights acquired from the landowner, and the obligations placed on them by the easement, are much less, for example, than those associated with an electricity line. Nevertheless it is important that landowners ensure that their interests, short and long term, are protected, and they come to an arrangement with the broadband provider / telecommunications company that is optimal for them. CONSTRUCTION It is important that the landowner find out from the company just how the company intends to construct the cable across their land. This could have quite significant effects that need to be considered as part of the easement negotiations. 2012_4 Page 1

Construction will in most cases involve the laying of ducting for fibre-optic cable by way of moleplough. This means that the cable will be laid with very little disruption to the land over a very brief period. Given the undergrounding of the cable avoids the engineering concerns of overhead lines (line tension, spacing between poles, etc.), the route the cable takes can more easily take account of routes the landowner would prefer taken through their land. There is however situations where the undergrounding of the fibre cable by mole-plough will not be possible, whether for reasons of topography (steep slopes) or soil structure (stony or hard ground). In these situations, the line will likely be directional drilled, trenched or strung up above ground along poles. This means that parts of the line could be more intrusive and potentially have a larger on-going impact on the landowner s use of their land. This impact must be discussed with the company so the company can either alter the route to minimise the impact, take other steps to minimise the impact or compensate for the impact. COMPENSATION Compensation is paid for the rights acquired by the easement and any associated impact on the surrounding property and the landowner s use of it. Where fibre optic cabling is laid underground, there is no visual impact on the property and limitations on the use of the easement area are less than is the case for infrastructure that is above ground. As such, compensation can be insubstantial. The preference of companies for property rights under an easement is that compensation be paid as a once-off lump sum. There are reasons for this, such as the principle of equivalence under the Public Works Act. A major perceived shortcoming of once-off lump sum payments, however, is that they cannot accommodate the on-going impact on the landowner s future economic potential use of the Land. It may be that, for example, the landowner in the future wishes to take advantage of conversion of the land to production forestry but is limited by the presence of the easement and the cable s location. As such, Federated Farmers considers compensation paid as an annual rental may better reflect this changing situation and may be worth the landowner pursuing in their negotiations with the company. Alternatively, it is worth understanding that there exists a certain amount of pragmatism and flexibility in the laying of fibre networks where the company is reluctant to pay compensation as an annual rental. Federated Farmers would encourage landowners to seek compensation additional to the once-off lump sum, perhaps, in the form of an additional goodwill payment or some other form of additional assistance. EASEMENT VS LEASE The land rights allowing the laying of fibre across private land are usually secured by way of easement agreement. This is in recognition of the permanent tenure of the cable across that land. This is a situation also common to gas pipelines, electricity lines and other long-term infrastructure. This situation is however different with the construction and siting of cellphone / wireless towers on private land. As these towers can service a large area wirelessly, the siting of the tower is a lot more flexible. Standard practice for cellphone / wireless towers is for the property rights to be secured through a combination of lease and easement agreements. This usually happens where the tower and an area at the base of the tower are secured by lease, while the fibre cable and electricity line that connect the tower to both the telecommunications and electricity networks are secured by easement agreement. 2012_4 Page 2

A separate fact sheet has been developed to assist landowners in their lease negotiations with telecommunications companies. Members can obtain a copy of this fact sheet by calling 0800 327 646. EASEMENT GUIDANCE Below are a range of suggestions as to provisions that Federated Farmers considers necessary in an easement agreement that balances the rights and obligations of the landowner and the company. The easement negotiation and associated compensation are a business matter between the landowner and the broadband provider / telecommunications company. The easement agreement provisions below are suggested as guidance and a starting point for landowners in their negotiations, and are not intended as a comprehensive legal agreement. 1) Purposes of the easement The purpose of this section is to set out the intent of the agreement, as well as define basic terms like: Accessway: the agreed access route across the land to the Easement Area. Company: the telecommunications company seeking to purchase rights to use private land to host Telecommunications Infrastructure on the Easement Area. Easement Area: the area of land the company requires to site the Telecommunications Infrastructure Land: the area around the Easement Area that comprises the rest of the property. Landowner: the owner of the land selling land use rights to the Company under the easement. Telecommunications Infrastructure: the fibre cable and any other additional equipment or structures to be constructed on the Easement Area under the easement agreement. An agreement will set out its purposes, for example that it is to allow the company to construct and use Telecommunications Infrastructure on the Easement Area. It may perhaps go further to make it clear that the agreement describes the rights the Company is acquiring from the Landowner, the obligations on the Landowner that arise from the Company s occupation and use of the Easement Area, and the obligations the Company has to the Landowner as occupant of the Easement Area. One aspect the Landowner would do well to assert in their negotiations is the inclusion of a statement that makes it clear what the easement does not seek to do, namely: This easement does not prevent the Landowner from continuing to use the Land outside of the Easement Area for normal farming practice except where it would interfere with the Telecommunications Infrastructure. 2) Company s rights The purpose of this section is to clearly describe the rights that the Landowner is allowing the Company to purchase under the agreement. In general terms, the rights cover everything from the right to enter the Land, to construct and do work on the Easement Area, and to have their cable sited on the Easement Area. This section is important because it outlines what the Company is allowed to do. While it should be focussed on the positive aspects, one should also bear in mind those activities the landowner would rather the company did not do while on their land. An example is the securing of an agreed Accessway between the Landowner and the Company, in such a way that the Landowner has control over the entry point and route the Company uses to access the Easement Area. 2012_4 Page 3

It is important of course not to grant the Company excessive rights. We suggest that the provisions below are adequate for the purposes of describing the basic rights an easement for underground fibre optic cabling: This easement gives the Company the following rights: To construct, install, inspect, operate, repair, maintain, renew, replace, add to, modify and remove the Telecommunications Infrastructure on the Easement Area; to transmit, convey, send, distribute, convert and receive telecommunications signals by means of the Telecommunications Infrastructure; to undertake any tests, investigations and surveys to exercise the Company s rights and obligations under this easement; to enter and remain on the Easement Area and the Accessway with or without vehicles and equipment to exercise the Company s rights and obligations under this easement; to enter and remain on parts of the Land outside the Easement Area and the Accessway with or without vehicles and equipment to exercise its rights and obligations under this easement, but only if: o the Accessway is not available for any reason; or o o access to and from the Easement Area is by air; or we need to have access outside the easement area and the Accessway to exercise our rights under this easement; but only with the prior agreement of the Landowner. And then the Company may use any access route to exercise its rights and obligations. The Company will make best attempts to run the fibre cable along existing fence lines or otherwise avoid the need to cross through fences, as it eases problems for both parties. It may however be necessary in some situations for the Company to interfere with fences or gates within fences to complete the laying of the fibre cable along the Easement Area. In these instances, the Landowner would do well to argue that while the Company can have the right to install gates within fences, this should only happen when essential to achieve the purposes of the easement. The Company will likely seek the right to construct, use and modify access tracks on the Land. This is necessary to ensure the Company can use access tracks that are fit for their purposes under this easement. The important consideration for the Landowner is to argue that the easement should ensure the Company must first obtain the Landower s consent. The Company may want to have the right to keep the Easement Area clear of obstacles like trees, soil, and structures. This is reasonable as such things would impede their access to the cable. The Landowner would do well to argue in their negotiations that the Company should cover the costs of keeping the Easement Area clear. Additional rights the Company may reasonably seek in the easement could include: to excavate the Easement Area and remove vegetation (including trees), soil, earth, gravel and stone from the Easement Area; to temporarily exclusively occupy any part of the Easement Area to undertake work safely including temporarily fencing off the occupied area and temporarily preventing or restricting the Landowner s access to the occupied area. 2012_4 Page 4

3) Limitation on the Company s rights The purpose of this section is to clearly constrain what the Company can build on the Easement Area under this agreement to what is agreed. It is important to ensure that it is clear in the easement agreement that the Company does not have the right to redevelop and extend the Telecommunications Infrastructure beyond that for which the Easement was negotiated with the Landowner. This is a safety mechanism and might be worded as follows: The Company does not have the right to: install Telecommunications Infrastructure to a specification beyond or in addition to that which is negotiated with the Landowner for the purposes of this easement; use the Easement Area for purposes other than those negotiated for the purposes of this easement. The constantly evolving technology related to Telecommunications Infrastructure is such that capacity and performance can be enhanced without the need for additional infrastructure to that negotiated with the Landowner. This can be achieved with replacement infrastructure that performs to a higher specification. It is not our intention within this easement guidance to limit the replacement of Telecommunications Infrastructure that is the same or similar to the agreed with the Landowner but can perform to a higher specification. 4) Company s obligations The purpose of this section is to describe the obligations the Company will have towards the Landowner and the Landowner s use of the Land. These generally focus on the things the Company needs to have regard for when they enter the Land, while they are on the Land, and when the Company will compensate the Landowner for losses arising from their entry to the Land. Although these obligations are likely to be fairly standard, it would help to discuss with the Company just exactly what they intend to do while on the Land. There may be aspects to your farming operation that you d rather the Company stayed far away from, or that they took specific actions while entering your Land. The key here is to be clear what the Company needs to do to avoid a situation where you need to be compensated for damage. We suggest the following as a helpful guide for your discussions with the Company: When the Company enters the Land, they must; only enter the Land at access points and via Accessways and / or access tracks agreed to with the Landowner and specified on the maps accompanying this easement; have regard to the Landowner s use of the Land; minimise disruption to the Landowner s use of the Land; restore any part of the surface of the Land that is damaged by the Company as close to its prior condition as reasonable practicable and repair any other direct physical damage caused; the Company shall use its best endeavours to prevent the outbreak and spread of noxious weeds and fire; and remove any debris the Company creates in undertaking any works and otherwise leave any work sites in tidy condition. 2012_4 Page 5

Upon completing the installation of the Telecommunications Infrastructure, and in the course of exercising its rights under this easement, the Company must: restore the soil surface to its original contour and condition; restore any crops or pasture disturbed by the Company; complete all site restoration requirements of any resource consents or any Authority; and restore any fences, including boundary fences, modified by the exercise of their rights under this easement. The company will compensate any loss to the Landowner resulting from: any damage caused to the surface of the Land to the extent that the Company cannot restore it; and any trees that the Company removes outside of the Easement Area. 5) Accessway and access tracks The purpose of this section is to clearly describe what the Company can and cannot do as regards Accessways or access tracks across your Land. This means considering what rights you will allow the Company to purchase to construct new access tracks or modify existing ones. There is limited likelihood that the Company will require permanent access tracks for underground fibre optic cables, however it is still important to set out conditions. The following are suggested provisions: If the company constructs, modifies or upgrades any access track (including culverts, bridges and other supports) on the Easement Area or the Accessway, it will at their cost: Take steps prior to entry to ensure the access track is of the standard they require. Repair any damage they cause to the access track. If the Landowner damages any access track that the Company has constructed, modified or upgraded on the Easement Area or the Accessway, the Company may recover the cost of repairing that damage from the Landowner. All access tracks that the Company constructs, modifies or upgrades on the Easement Area or the Accessway will form part of the Land and will be the property of the landowner (unless agreed otherwise in writing with the Landowner). 6) Notices The purpose of this section is to clearly describe the obligations on the Company to provide notice in advance of their intention to enter the Land, as well as the rights of the Landowner to manage that access. This section of the agreement is important because notice provisions ensure that potential interruptions to the Landowner s use of the Land are managed in the best interests of the Landowner. It may seem unreasonable to require the Company to give 10 working days notice, but the Company must be required to give notice far enough in advance that the Landowner has a chance to advise of any conditions or delays they may need for farm management purposes. We suggest the following as a helpful guide for your discussions with the Company: The Company will give the Landowner at least 10 working days notice of their intention to enter the Land for any purpose allowed by this easement. 2012_4 Page 6

The Landowner may set reasonable conditions on Company entry onto the Land, but the Landowner must inform the Company at least 2 working days before their proposed date of entry. Reasonable conditions could include matters of animal welfare, stock and crop disturbance, high fire risk, and biosecurity risk. In an Emergency, the Company may enter the Land without giving prior notice to the Landowner, but must give notice as soon as possible and no later than 5 working days after the event, and must comply with all other provisions of this easement relating to their entry. The Landowner must advise any tenant of the Land of the Company s proposed entry onto the Land if the Landowner is given notice of proposed entry. If the Landowner has notified the Company of any tenant, the company may send a notice directly to that tenant. 7) Landowner s obligations The purpose of this section is to describe the actions and activities that the Company requires the Landowner to perform. These typically fall under a general obligation on the Landowner not to interfere with the Company s use of the Easement Area. In the case of Telecommunications Infrastructure, these obligations should not be excessive and might reasonably be encompassed by agreeing not to excavate, erect structures, plant trees, impede access, or flood the Easement Area or Accessway. Many of these will be reasonable expectations on the part of the Company so they can exercise the rights they are purchasing under the easement. It is important however to keep in mind the restrictions the Company is looking to impose on the Landowner s use of the Land and Easement Area. It is further important that the Landowner argue that the easement include an additional provision that allows for exceptions to be negotiated as required. We suggest the following as a helpful guide for your discussions with the Company: Exceptions to these obligations must be obtained by the Company s prior written consent. 8) Breach of respective obligations The purpose of this section is to describe the process the Company and the Landowner must pursue where they believe the other party has breached a condition contained within the easement. This should include a dispute resolution process, suggested as follows: If either the Company or the Landowner breaches any of their obligations in this easement, the other party may: if reasonable in the circumstances, give notice of the breach and give a reasonable period to remedy the breach; and take all reasonable steps to remedy the breach; or refer the matter for mediation. Mediation will be undertaken by a registered mediator with at least 10 years experience in disputes resolution. 9) Health and safety The purpose of this section is to describe who is responsible for the health and safety of people the Company send on to the property, and is essential from a liability perspective. Although, there are general obligations under the Health and Safety in Employment Act on the Landowner, this section does provide the opportunity for the Landowner to require the Company to take additional measures. 2012_4 Page 7

We suggest the following as a helpful guide for your discussions with the Company: The Company will be responsible for the health and safety of any persons who enter the Land at the Company s request to the maximum extent allowed by law. The Landowner will be responsible for complying with their obligations under the Health and Safety in Employment Act. The Landowner must notify the Company of any rules or procedures regarding the health and safety of persons on the Land and the identification and mitigation of hazards. The Company will comply with all reasonable rules and procedures that the Landowner provides. 10) Indemnity and liability The purpose of this section is to clarify how liability will be dealt with between the Landowner and the Company where there is damage to the Land, the fibre cable or the interests of third parties. It is essential to emphasise indemnification of the Landowner against damage to the Land in an easement agreement for any infrastructure on private land. The Company will also seek indemnification from the Landowner in circumstances where the agreement has been breached, or there has been wilful damage. There are no cases of which Federated Farmers is aware, where the Landowner has been liable for the knock-on costs to the consumers of services delivered through infrastructure (for example electricity users and in this case businesses and residences using the fibre network), in the event of an outage arising from a Landowner s breach of the agreement or wilful damage. Such liability does however still potentially exist and there should be a limitation placed upon it. We suggest the following as a helpful guide for your discussions with the Company: The Company indemnifies the Landowner against: any physical damage to the Land or anything located on the Land; and any damage to a third party for which a claim is successfully brought against the Landowner; where that damage is caused by the Company s act or omission in breach of this easement or is caused by the Company s negligence. The Landowner indemnifies the Company against: any physical damage to the Telecommunications Infrastructure, equipment and the Company s other property; and any damage to a third party for which a claim is successfully brought against the Company; where that damage is caused by the Landowner s act or omission in breach of this easement or is caused by the Landowner s negligence. It would be worth the Landowner arguing for the inclusion of a cap on the liability they bear under this easement. This is something Federated Farmers has secured from its negotiations with Transpower over the siting of transmission lines across private land. The Company should be asked to tie the cap to breaches of easement provisions, any damage to a third party, or otherwise required by law. The cap should be set at a level agreed by both parties, and the premiums for public liability insurance to that level should be paid by the Company additional to any compensation to the Landowner under the easement. 11) Compensation The purpose of this section is to describe those aspects of the construction of Telecommunications Infrastructure and the Company s on-going use of the Easement Area that are to be compensated to the Landowner under the easement. 2012_4 Page 8

When considering allowing a cable across the property it is important that negotiations with the Company have regard to the fact that the land title will be permanently encumbered by an easement agreement. Even though the fibre will not be visible, the easement may impact on the market value of the property and therefore should be compensated. Of significant importance is the extent of the rights the Company is taking over the Easement Area. These rights are valuable and should be appropriately compensated. The Landowner will have obligations under the easement and these should also be appropriately compensated. The Landowner should also be compensated for the inconvenience caused during the days the cable is being installed on the Easement Area. 12) General provisions The purpose of this section is to cover off the lesser aspects of the easement that do not easily fall under separate sections of their own. Although they may appear minor, many of the aspects covered off in this section could have significance to the Landowner s on-going use of the Land. The easement should state that the Telecommunications Infrastructure and associated equipment and vehicles will not, for any reason, become the property of the Landowner. This is a good thing as it avoids the Landowner assuming responsibility for such things. The easement may state that if any provision of the easement requires one party to obtain the other party s consent, then consent must not be unreasonably withheld or delayed; may be given subject to reasonable conditions; and that the party giving consent must not require a payment as a condition of giving consent. This is reasonable given the relationship the Landowner and the Company will have under the easement. The Landowner would do well to understand that it is standard for easements to continue forever unless surrendered by the company. The easement will likely further state the landowner has no power to terminate the easement. The perpetual nature of the rights obtained by the Company under the easement agreement should form part of the case for appropriate compensation. The easement may state that where there is an outage for reasons of an emergency or under storm conditions, that both the Landowner and the Company will work responsibly to ensure that telecommunications are restored to those benefit of those affected. This is not intended to see the Landowner having to actively work on the infrastructure, but to instead enable the Company to access the fault and otherwise assist where reasonable and necessary. This obligation would only apply where there was a risk to human health or property, or as the result of an adverse event like a storm, so the circumstances would be severe as would the need for telecommunications to be reinstated. It would be reasonable for the Landowner to argue that this provision does not imply any liability on the Landowner for costs arising from the outage. There will also be general obligations on the Landowner and the Company to comply with all of their legal requirements. This is reasonable as there are many requirements under law that neither party can contract out. An example is the duty of care the Landowner has towards visitors under the Health and Safety in Employment Act. CONTACT Federated Farmers of New Zealand fact sheets are produced for our members by the Federation as a quick and easy reference guide to general information on topics of interest. If you wish to reproduce the information please ensure that you provide appropriate acknowledgement of the Federation as the source. To either seek further advise on information on the material contained in this fact sheet or to order a contract or agreement ring 0800 327 646. The information contained within these fact sheets should not be relied upon in lieu of legal advice. If you require specialised legal advice, please contact Federated Farmers team of employment lawyers and OSH specialists. 2012_4 Page 9