April 2, 2011
Property and Renewable Energy
This semester, I have taught a Wind Energy course in the form of a writing seminar. I should call this more of an experiment than a course, really--there's no textbook, of course, and in place of regular law review style papers, I have assigned my students to write pieces of a model wind energy code. My surprise in teaching the course has been the content that I have found to be most important. I expected the course to be mostly about permitting, ratemaking, and other classic electricity-based issues, but each day, as I introduce my students to a new phase of the wind energy development process, I find myself teaching a Land Use and Property class.
First, there is the challenge of finding a suitable site for a large wind development. (I have focused on utility-scale developments in the course, although in the future I am determined to fit in distributed renewable issues, too.) The location challenge is a big one: for renewables, a developer needs two parallel estates. First, she needs a strong wind resource, which I call a "fugitive estate" (or a "renewable estate" if one wants to more clearly differentiate wind from water, minerals, and wildlife). Second, she needs a static land resource that's sufficiently free of competing uses to ensure that she can site large towers and turbines on the property. Combining these estates into one neat package or "renewable parcel" is no easy task because strong winds do not cooperatively follow jurisdictional lines. A developer of one wind project often has to build a farm that straddles county or town lines and of course mutiple private property lines; she may even have to cross state lines, as the "Stateline" wind farm on the Washington-Oregon border has done. Even where her development does not cross county lines, she also often must deal with several school districts, which impose different taxes.
In oil and gas development, law addresses the challenge of the combined fugitive-land estate through a combination of common law and state legislation. Typically, an oil or gas developer leases just the mineral estate. The developer then uses the surface to the extent necessary to economically produce the mineral estate; she does not have an express lease or even easement on the surface, but state legislation and the common law provide that she has the right to reasonable use of the surface. Wind could potentially be moving in this direction--where a developer would acquire the rights to the wind flowing over properties and then use the surface as necessary to develop the resource. But in many states, it does not appear to be, which may make sense. Wind technology, after all, is more permanent and land intensive than an oil or gas well, and perhaps it makes sense that some states require the wind developer to lease the surface. But what happens when a wind developer with surface rights and/or wind rights wants to place a tower on the very spot planned for an oil or gas well? Whose rights are superior? Ernest Smith and Becky Diffen have a rich article that addresses these issues, suggesting that wind and oil and gas developers are typically contracting around this problem (at least in Texas) and that wind developers are indeed obtaining wind rights in hopes that courts will recognize these new rights if they are challenged in court--which they likely will be when a disgruntled surface owner buys a property only to discover that the wind rights have been sold away and towers will begin to be installed next month. In addition to Smith and Diffen's article, Lincoln Davies on the Environmental Law Prof Blog has recently alerted us to some new articles exploring the common law of renewables.
Once the developer finds a suitable site, she must of course obtain permission to build not just from the private property owners but also from the relevant land use authorities. This process varies substantially by state, with states like Minnesota fully centralizing the process for wind developments of a certain size and states like Washington and Oregon allowing municipalities to regulate but collecting these municipal regulations within a centralized process (for projects beyond a certain size threshold) and ensuring compliance through this process, and states like Kansas leaving almost all siting authority to municipalities.
Finally, beyond the renewable parcel itself, there is the challenge of transmission, which merits a post of its own. For now, I hope that I have persuaded you that Land Use and Property issues are central in the renewable realm and present interesting case studies in siting challenges.
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