Who Owns the Wind and Other Strange Questions

Transcription

1 Who Owns the Wind and Other Strange Questions January 18, Four States Irrigation Council

2 2 Wind Growth 2002 total wind power capacity operating in the U.S. < 5,000 megawatts Now tops 35,000 megawatts For the first time in history, the right to capture wind in some areas of the country has become marketable and highly lucrative. Troy A. Rule, Assoc. Professor, Univ. of Missouri School of Law Confidential Attorney/Client Work Document

3 3 Severing Wind Rights what does that mean? Allowing wind rights to be owned separately from the real property Similar to the ownership of mineral rights versus ownership of the surface estate Is this wise public policy?

4 4 Severing Ownership Interests - Implications Wind ownership may become taxable as an asset, even if not developed (similar to unexploited minerals) Whose property right is superior wind or surface estate? Can a wind developer construct turbines on your property without your permission? Keeping track of ownership of wind as it is sold, inherited, etc. Subdividing of ownership interest (divided for sale; transferred to multiple heirs)

5 Competing Wind Development a man-made tornado of problems Wake effect Wind turbines create a wake of turbulent air (similar to the wake behind a boat) If another turbine is close enough in proximity, the wake effect could reduce the wind available to the second turbine, making it unprofitable to operate Who is entitled to operate? Who must compensate the other? Do we need a first in time/first in right law? 5

6 6 Colorado Law on Wind HB : Wind energy is a property right that belongs to the surface estate Cannot be severed from that estate; irrevocably attached to the surface ownership Cannot be separately conveyed Defines the wind energy right as a property interest in the development of windpowered energy generation; Not so much ownership of the wind itself

7 7 Colorado Law (cont.) Wind energy rights may be developed only pursuant to a wind energy agreement with a wind energy developer Forms Lease License Easement Other

8 8 Colorado law (cont.) The wind energy agreement is an interest in real property Wind energy developer may be the owner of the real property or the other party to the agreement The new law provides a framework for contracting, recording, terminating, reversion, etc.

9 9 Colorado Law (cont.) Any pre-july 1, 2012 wind agreements are not automatically invalidated A copy of any such conveyance agreements, or a notice thereof, must be recorded in the local real property records If such agreements are not recorded they may be subject to being invalidated or becoming unenforceable

10 10 Colorado Law (cont.) Unanswered questions (a few of many): Whether a landowner may assert a claim against a neighbor whose turbines interfere with the use and enjoyment of his wind energy rights Construction of improvements on neighboring property that create a wind shadow or something similar that diminishes or alters the wind Should nuisance law apply? That s what lawyers are for, isn t it?

11 11 Wyoming Law on Wind Primary issue right now: the use of eminent domain to acquire rights Task Force created a few years ago Purpose to obtain input from the various different interest groups on the issues surrounding wind energy development Wind energy development industry Landowners Counties

12 12 Task Force Recommendations To implement a complete and permanent ban on the use of eminent domain by private developers of wind energy collector systems Legislature seemed to disagree Status as of 2011: Industry informed some legislators that there are currently no plans to build collector lines to wind farms (at least for a year or two)

13 13 Eminent Domain Law Continuing Controversy The power of private companies to condemn private land has been contentious for years Landowner concerns Eminent domain destroys private property rights Strips landowners of bargaining power Just compensation isn t just Wind developer concerns Power of eminent domain keeps energy costs low Prevents a few people from stopping a project

14 14 Task Force: Alternative to Eminent Domain Wind developers must negotiate with landowners affected by the project without the threat of condemnation Provides greater protections to landowners Will likely result in more on-the-ground protections for landowners, and higher monetary compensation, than if condemnation allowed

15 15 Alternatives (cont.) Landowners who hold out would ultimately receive the average compensation and protections afforded to the landowners who freely negotiated This still provides more benefits than when wind companies have power of eminent domain This alternative avoids wind developers concern re: one landowner having the ability to stop the entire wind project

16 16 Current Eminent Domain Authority in Wyoming Private wind energy developers currently do not have the authority to condemn private property for wind turbines, wind farms, or wind energy collector systems Private wind energy developers do have the authority to condemn private property for interstate transmission lines and energy distribution systems

17 17 Wyoming Wind Permitting Requirements Wind facilities > 0.5 MW that begin construction after 07/01/10 must obtain a permit from the County in which located Must obtain permits for any enlargements The permit application requirements and process are statutory Wyo.Stat et seq. Defines notice requirements, construction requirements, etc.

18 18 Montana Law on Wind 4 th largest State; #1 in the nation for wind speed available on federal, state and private lands Montana citizens and counties seem to be supportive of wind development Cascade County, for example, offers developers GIS based maps Wind resource classifications Roads Transmission lines Property ownership Topography Officials also introduce potential developers to landowners

19 19 Montana Wind Development Renewable Portfolio Standard currently requires regulated utilities to purchase 10% of their annual electricity supply from renewable sources; increases to 15% in 2015 Montana provides substantial tax credits and financial incentives for renewable energy Four major industrial scale wind projects have gone on-line since 2005 Montana went from # 50 in Country to # 15

20 20 Montana Wind Development (cont.) 10/2011, NaturEner USA began construction on a 189 MW wind farm near Shelby Once in operation, NaturEner will own 70% of the wind generation in the State investing approx. $ 800 million On build-out, this project will supply enough electricity for approx. 60,000 U.S. households

21 21 Nebraska Wind Development Nebraska has not moved forward with wind development in the same manner as its neighbors Currently places 25 th in actual wind energy production (compared to other States) Nebraska offers fewer incentives (tax credits, etc.) for wind energy There is also limited infrastructure

22 22 Wind Development Challenges in Nebraska Wind sources are in least populated areas Transmission costs are thus more expensive The current transmission system was built with the concept that most of the energy would be generated near towns Works well for energy produced at plants (coal and nuclear) Does not work as well for wind

23 23 Future Wind Development in Nebraska Neb Public Power District (serves 91 of the 93 counties) and Omaha Public Power District Have committed to using 10% renewable energy by 2020 NPPD used 1.5% in 2009 Equates to about 800 MW of power Anywhere from 260 to 500 new wind turbines (depending on production capacity)

24 24 Future of Wind Development in Nebraska(cont.) Discussions re: imposing a carbon tax Will force consideration of alternative energy such as wind Adding wind energy takes time, planning and money

25 25 Conclusion All of the States have approached wind permitting, development, use, incentives, etc., a little differently. Developing wind energy is complicated, costly, and potentially problematic for landowners, etc. This is an issue that will most likely see increased interest if and when carbon taxes go into effect