Law review article: Wind as a severable property interest

Interesting article on wind as a property interest in Texas:

The Texas Wind Estate: Wind as a Natural Resource and a Severable Property Interest (University of Michigan Journal of Law Reform, Vol. 44, No. 2, p. 429, 2011 ), by: Alan J. Alexander, University of Michigan Law School

The article states:

[T]o fully utilize [Texas] energy resources, the State needs authority to regulate wind to mitigate wasteful practices, and landowners need a legal property interest in wind that they can market or develop and that courts will recognize and protect.Yet under current law it is unclear whether the State has full regulatory power over wind as a property interest severable from land, and whether wind ownership is incident to land ownership.

Addressing these issues requires resolving at least three legal questions

… whether wind is considered a “natural resource” like oil or groundwater,24 such that the Texas Legislature can pass laws to regulate it under the Texas Constitution.

… whether wind is subject to ownership in Texas.

… whether a landowner’s interest in the wind that flows over his land is severable from the surface estate.

Mr. Alexander argues “that the Texas Legislature should pass laws clarifying that wind is a natural resource under the Texas Constitution, and that to promote ‘[t]he conservation and development’ of wind as a natural resource, the Legislature should statutorily recognize wind rights as an interest severable from land ownership.

From: SSRN-The Texas Wind Estate: Wind as a Natural Resource and a Severable Property Interest by Alan Alexander.

Washington Post review of “Windfall” documentary

Washington Post’s Ann Hornaday reviews “‘Windfall” documentary about the local conflicts engendered by a wind project in Meredith, N.Y.

Faucets don’t spit fire in “Windfall,” making its local premiere Saturday at the Environmental Film Festival. But incendiary water may be the only side effect not associated with wind power in Laura Israel’s absorbing, sobering documentary about the lures and perils of green technology…

via Ann Hornaday reviews ‘Windfall’ – The Washington Post.

Law professor proposes Cathedral Model Rule Four to allocate wind rights

Wind resources are generally thought to be “free”. What right, for instance, do you have to prevent a cool breeze from refreshing me in the summer? The breeze belongs to everyone and no one, right? Well, when it comes to the installation of revenue-generating turbines upwind from someone else’s property, the rights of the downwind neighbor may also be implicated. One law professor examines how to hash out the relationship between these two parties.

A Downwind View of the Cathedral: Using Rule Four to Allocate Wind Rights
by Troy A. Rule, University of Missouri School of Law
In San Diego Law Review, Vol. 46, p. 207, 2009
University of Missouri School of Law Legal Studies Research Paper No. 2009-23

Abstract: The rapid pace of U.S. wind energy development is generating a growing number of conflicts over competing wind rights. The “wake” of a commercial wind turbine creates turbulence and unsteady wind flow that can reduce the productivity of other wind turbines situated downwind. Existing law is unclear as to whether a landowner who installs a wind turbine on its property is liable for the lost productivity of a downwind neighbor’s turbine resulting from such wake effects. Legal uncertainty as to how competing wind rights are shared among neighbors can induce wind energy developers to abandon otherwise lucrative turbine sites situated near property lines, thus forfeiting valuable wind resources. This paper applies Calabresi and Melamed’s familiar “Cathedral” model to determine which rule regime would best promote the efficient allocation of competing wind rights while maintaining consistency with existing law. Surprisingly, the Cathedral model’s infamous and rarely-applied “Rule Four” seems best-suited for addressing these conflicts.

via SSRN-A Downwind View of the Cathedral: Using Rule Four to Allocate Wind Rights by Troy Rule.

New study examines rural landowner concerns regarding wind energy production

While abundant, wind resource locales on land in the United States are finite. The location of these resources is relatively easy to determine. With the push to develop green energy alternatives such as wind, it is perhaps not a surprise that a rush by developers over recent years has attempted to shore up these resources. If anything it seems there will be even more pressure to develop as the Obama administration comes into office with its green agenda.

The “rush” undeniably has produced some controversial if not questionable practices. Where the line is between unscrupulous development activity and unreasonable landowner expectations will need to be drawn by someone else. What developers and landowners alike can do, however, is get educated about the other side’s position.

In this context, a new academic study coming out of Iowa cites concerns that landowners may have regarding the leases and agreements necessary to develop a large scale wind project on rural landholdings.

The study concludes that:

From a landowner’s perspective, many wind energy leases and/or easements are inadequate, unfair and offer limited economic benefits when compared to the revenues generated (and tax subsidies received) by large-scale wind energy developers. The most common shortcomings of such agreements include: (1) contractual terms extending too long into the future; (2) contractual language that binds landowners to unilateral amendments; (3) inadequate compensation clauses (and compensation clauses that are difficult to understand); (4) provisions that are the result of unequal bargaining power. While some landowners are reporting better experiences in recent months – better contract terms and compensation levels – that may be the result of greater competition among wind energy developers, greater education on the part of landowners and lawyers, and increased oversight by state regulators (the vast majority of wind energy developers are not subject to the regulatory rules that most utilities are subject to).

Clearly, wind farming has the potential to provide significant economic benefits for rural landowners. However, substantial peril exists that landowners who don’t carefully evaluate proposed agreements with developers can be taken advantage of significantly. Landowners should have any proposed agreement evaluated by legal counsel and attempt to negotiate any unfavorable terms. Failure to do so could result in many years of dissatisfaction for landowners.

The study also discusses various state and federal wind siting court cases. “Wind Energy Production: Legal Issues and Related Liability Concerns for Landowners in Iowa and Across the Nation“, by Roger McEowen, was released by the Iowa State University Center for Agricultural Law and Taxation in October 2008.

As an addendum, it is worth noting that the New York Times reported last week that some rural landowners in Wyoming are forming groups to increase bargaining power while negotiating agreements with wind developers.  It will be interesting to see the extent to which such a model may replicate elsewhere, including New York state.

More information on the landowner – wind developer relationship and leasing may be found here.