What is an Access Agreement?
Access agreements are an important contractual arrangement that allows one party (the licensee) access to property controlled by another party (the licensor), so the licensee can carry out a specific purpose, such as to explore for minerals or install utilities. An access agreement is commonly used to connect utilities to a facility, allowing utility companies to run power lines to individual units within apartment buildings, for example, or to bury fiber optic cable across private land. A typical access agreement provides the licensee with the right to enter , explore, and if the licensee chooses, install equipment on another’s land. Access agreements measure a how much access is actually given, such as where the licensee can go, for what purpose, and under what conditions. Access agreements can also be limited to a particular period of time, such as temporary licenses to conduct surveys, borings, and data collection on land to determine whether lease of the land for exploration would be economically and practically viable.
Legal Requirements of an Access Agreement
Access agreements, when properly drafted, typically include the following legal elements:
Parties: The parties to an access agreement are usually the property owner and the party seeking access. Under New Jersey law, a person may be regarded as the owner or the attorney-in-fact for the owner of the property. In this context, an attorney-in-fact is one who is authorized to secure access on behalf of the property owner.
Duration: The duration of an access agreement should be reasonably calculated so that the activity being conducted pursuant to the access agreement can be completed within that time frame. Courts have held that a specified duration of an access agreement will be enforced, even if the parties do not complete the work within that timeframe. The duration of a typical access agreement is two years, with additional extension periods of up to one year provided to allow the performing party to complete the work if it cannot be completed within the agreed upon period due to external factors beyond its control such as the discovery of additional contamination during the performance of the work.
Rights Granted: The right of access granted in an access agreement is a right of entry. Such a right must be restricted to the specific purposes for which the access is granted. A broad grant of access can be held invalid by the courts. Similarly, an access agreement must be restricted to the specific areas of property where access is needed to perform the agreed upon work.
Obligations: The obligations to perform the work, and to restore the property to its prior condition at the end of the work, is very important. An access agreement that fails to require restoration or fails to require restoration to a condition of equal or better than prior to the work being performed on the property, has been held as being void and unenforceable. Accord: Peddler’s Village, Inc. v. C&M Realty, Inc., 263 N.J. Super. 553, 621 A.2d 85 (N.J. App. Div. 1993) (provision for restoration of property to a better condition than that which existed prior to work obligated but not done); Int’l Union United Auto., Aerospace & Agric. Implement Workers of Am. V. Specialty Chemicals (In re Speciality Chemicals), 138 N.J. 411, 650 A.2d 368 (1994) (Restoration obligations for property of an environmental trustee violated)
Forms of Access Agreements
There are a number of different types of purpose-built access agreements. These include data access agreements, site access agreements and temporary access agreements.
A data access agreement provides the basis upon which information will be made available or shared. For example, in the resource sector data access agreements are often used in the context of projects where large amounts of data relating to resource exploration or mining have been obtained. Depending on the nature of the information this type of agreement may relate to confidentiality requirements, liability restraints and intellectual property rights in the data.
An agreement between an owner or occupier and a land surveyor regarding the use of land for carrying out a survey is commonly known as a site access agreement.
A temporary access permit may be required if you need access permission to undertake surveying activities, such as drilling holes, running cable or installing pipes. To formalise this, a temporary access agreement will contain conditions for use of the land, as well as indemnity clauses specifying that the person gaining access will be responsible for damage they cause.
Creating Clear Access Agreements
While some access agreements are entered into without a great deal of thought or negotiation up front, it’s best to assume that the terms will be agreed by the time the equipment contract is completed or at least before the equipment is delivered or installed.
The first step in drafting an access agreement is to identify the purpose of the access rights being granted. Some examples of access rights that may be granted include the following: It’s helpful to understand the overall goal of a program before deciding the scope of the access rights. In most cases, the holder of the access rights should be prepared to enter into a written access agreement with the provider that clearly describes the rights and responsibilities of both parties. The resulting document sets out the provider’s obligations to the company holding the rights, as well as the obligations of the holder of the access rights, but it may also address additional aspects of the company’s rights under the applicable contract with the provider, such as whether the access rights apply to "ancillary technology," such as upgraded or replacement technology, and whether the access rights are applied on an exclusive or non-exclusive basis.
Access agreements often contain several important features, which are set out below. Scope. An express grant of access will most often appear in the equipment contract. More complicated grants of access will appear in a separate provision, common in MSA and medical device supply contracts, referring back to the contract and imposing additional requirements or limiting the grant of access to specific purposes. For example, the contract may grant access "for internal business activities related to use of [equipment] in [X Industry; clinical research; APQP audit]." Sometimes the terms of the grant are implied, which requires careful examination of the applicable contracts and any competing provisions. Depending on the circumstances, and if the grant can’t be determined from the contract language, it’s best to assume that a separate agreement will need to be brought to the table. Term and termination. The access agreement should expressly state the length of the term and whether it is renewable. It may also provide for automatic renewal unless one party gives advance notice to the other. Like most contracts, an access agreement may also contain a provision permitting termination if one party violates the material terms and conditions of the contract, or the specific terms of access. Pricing. The pricing structure for the access rights should be stated in the agreement. Considerations here will include whether the pricing is fixed, subject to increases, the availability of discounts, and how pricing will be determined when equipment is replaced or upgraded. Transferability. To the extent the access rights are not restricted to a particular entity, the agreement should expressly provide that the access rights can be assigned or transferred to another entity (assuming that’s the intention). The language in the agreement should also specify that access rights cannot be assigned or transferred to a competitor. In general, access agreements should not be assignable without the express written consent of the provider of the software, equipment or service. Confidentiality and Ownership of Work Product. Like other agreements, the access agreement should set out defined limitations on the disclosure of confidential information and guidance on how and who has the ability to amend, destroy or transfer the material. These practical considerations should also address what happens when the work is completed.
Typical Issues in Access Agreements
The negotiation and drafting of access agreements are easy traps for the unwary, and omissions in an access agreement can lead to frustration or worse. Often, the same concerns will apply regardless of which party is requesting access, and the solution can simply be a reflection of who has more bargaining power. Where the parties have unequal bargaining power, however, the terms usually reflect that imbalance; a requirement that the accessing party indemnify the other party (even from the accessing party’s own negligence) is a particularly onerous term that may not be reasonable in the circumstances. When the parties have equal bargaining power, the allocation of risk is more likely to be fair. However, two parties with equal bargaining power may also simply rest on their laurels, thinking that they do not need to provide a complicated list of precisely what the accessing party is permitted to do and exactly under what conditions they may do it.
Setting out precise specifications of the vehicle size and weight may make sense simply because the accessing party may be using multiple vehicles for different operations. However, early planning can help reduce complexity in this respect, as access agreements relating to oil and gas activities often refer to a set of approved vehicles, rather than offering general vehicle specifications.
A common pitfall in access agreements is to use the phrases "best efforts" and "reasonable and timely" without setting out clear definitions for what these concepts mean. These phrases are often used to describe the standard of care that is required to be met by an accessing party when obtaining access. The reasons for the wording can be admirable – if the accessing party is required to meet certain conditions in order to gain or maintain access, then that accessing party is best suited to determine how and when these conditions can be satisfied.
On the other hand, these phrases allow an accessing party a lot of wiggle room. For example, if an accessing party encounters unexpected geological features in the course of drilling, it may take a best-efforts approach to drill through them, or to try another approach. If the accessing party decides to take a different approach but damages the land as a result , it could be argued that the accessing party met the standard of care described above.
One of the key steps in avoiding mistakes in this respect is to clarify whether a duty of care is being imposed on an accessing party, and if so in what respect. The duty can then be defined to be specific to the likely conditions in relation to the lands at issue.
Parties are also sometimes unaware that requests for access are not always granted. An operator may have valid reasons to deny access to a landowner’s land. The particulars will vary depending on the industry; for example, access to an oil and gas lease will be more difficult to deny than access to a coal mine. In Alberta, the Mines and Minerals Act and the Coal Conservation Act require conformance with applicable ministerial regulations, but the duty to accommodate with other surface rights holders can be imposed on a discretionary basis.
Operators should be vigilant to ensure that the access that they agree to in one agreement does not prejudice their ability to obtain access in another agreement, particularly in the context of a pooling agreement. Operators should consider adding a clause to the access agreement specifying that any access obtained is subject to the requirements of any pooling agreement.
Where an operator has signed access agreements and is refusing access on the basis that there are no economic resources present on the lands, the landowner may claim compensation under the Environmental Protection and Enhancement Act. In Alberta, this issue is likely to be mitigated by the enactment of the Responsible Energy Development Act and the replacement of the Energy Resources Conservation Board with the Alberta Energy Regulator, but there are still circumstances where an operator will be able to refuse access.
If an operator is aware in advance that a landowner will be denied access due to economic considerations (for example, where an operator has not made a discovery and is aware that production will not be economic), the operator will be able to anticipate the situation. However, if an operator knows nothing about the economic viability of the land, it may be caught by surprise when access is requested.
Legal Disputes Over Access Agreements
In terms of legal disputes arising from access agreements, there are a few broad categories: (a) Access disputes. Access disputes can be broken into three subcategories: a lack of access to a resource, an improper restriction of access to a resource or an improper denial of access to a resource. Access disputes make up a large amount of the legal disputes created through the access regime because they are the most easily identifiable. For instance, a clear case of a restriction to access and/or a lack of access is refusal by an access seeker to provide information. The access regime is designed to compel the provision of this information as a precursor to negotiation and therefore withholding that information constitutes a breach of the access regime. (b) Price disputes. Price disputes are generally examples where the various pricing frameworks do not fit the instance in question. As discussed above, the cost of access to a monopoly infrastructure provider can lead to price disagreements because certain models (most commonly the building block model) do not function as intended in some circumstances. For instance, it is much harder to fit a punted access price using the building block model for a service fringed by a range of technologies than more commonly recognised monopoly industries such as telecommunications. Access disputes are fairly common, particularly regarding LOGIS and the economic consequences involved in the misallocation of the costs of infrastructure. (c) A general disagreement. Disagreements that do not fit any of the categories can be harder to resolve, but where these disputes arise, the regulatory bodies will be called upon to decide. Where these disputes arise, regulatory bodies will look for factors such as the previous conduct of the parties with respect to one another, informal practices in the industry and previous decisions regarding the type of dispute in question as guidance. In general, regulatory bodies will be more concerned with creating certainty within the regulatory regime rather than deciding each case on its own merits.
The Future of Access Agreements
As access agreements continue to feature prominently across many sectors, the demand for consistent and reliable access processes is likely to increase. For example, regulators may now have to deal with different access arrangements between the same parties for different regulated services. In the future, one might expect to see further attempts by regulators and other stakeholders to facilitate consistency and uniformity in the use of access agreements.
Separately , technology improvements could drive the future of access agreements. Some regulators are already looking at how they can make the operation of an access agreement more transparent. Indeed, Ofcom recently published proposals about making some aspects of Ofcom-mandated access agreements public. However, the extent to which access agreements should be made public is a subject of debate. New technologies could also bring about improved ways for contracts to operate. Automated contract management systems, for instance, could increase efficiency, improve compliance monitoring for both parties and make access agreements easier to enforce.