Wednesday, April 6, 2011

Competing Mineral and Wind Rights

In my previous post, I mentioned that renewable energy law often raises property and land use issues.  For a recent example of legislative action in this area, see Oklahoma H.B. 1821, which, if enacted, would provide: "Any rights derived from a wind or solar energy agreement shall be subordinate in all respects to [oil and gas] exploration rights except to the extent consent is otherwise given . . . ."  The bill also would require a wind or solar developer to obtain prior written consent from "the owner of [oil and gas] exploration rights" in order for the developer to "diminish[], abrogate[], or interfere[] with" exploration rights, and the owners of oil and gas exploration rights would be allowed to grant or withhold consent "for any reason or no reason." Jeff Wilson, the Oklahoma Independent Petroleum Association (OIPA) Vice President of Governmental Affairs, notes that "the wind turbines and transmission lines popping up across western Oklahoma can make it tough to bring in oil and gas rigs," and he supports the bill.  A separate pending bill, S.B. 124, would also block wind developers from using eminent domain authority to acquire land.   The wind industry is understandably concerned about these developments, arguing that H.B. 1821 would halt most wind development in the state.

Professor Ernest Smith and Becky Diffen have a useful discussion of broader legal principles likely to emerge in mineral-wind surface disputes in their "Winds of Change" article in the Texas Journal of Oil, Gas, and Energy Law.  As Smith and Diffen point out, developers can avoid many of the conflicts anticipated by Oklahoma's bill through private contracting.  Oil or gas and wind developers can enter into an accommodation agreement, for example, wherein they agree to share roads for rigs and construction equipment and select specific locations for well and tower placement.  Regardless of the remedy chosen, mineral-wind disputes will likely expand in importance as renewables continue to grow, and these raise interesting questions for the classroom.  Will first-in-time principles continue to govern?  Who must "accommodate" whom under traditional common law doctrines? If a wind and mineral lease are acquired simultaneously, should one right have priority over another, or should the parties be required to negotiate from equal positions?  Many of the answers to these questions will likely depend on states' energy priorities.  In states with strong natural gas economies, like Oklahoma, gas development may maintain the upper hand despite the abundant winds that blow through the western portion of the state.   As the OIPA President has argued, "In Oklahoma law, the mineral estate is the dominant estate." If supporters of H.B. 1821 succeed, the law likely will reflect this position. 

Hannah Wiseman

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