Lawmakers seek to harness the wind—legally speaking—and tie it to the land

/ Colorado News Agency commentary
Feb 2nd, 2012

pete mug“Who owns the wind?”

If that isn’t the title of a country song about a drifter who loves ‘em and leaves ‘em, it ought to be.

But in Colorado and elsewhere, who owns the wind is no longer a whimsical question. It’s becoming important politically because of the increasing number of turbines and wind farms producing electricity.

Under common law, the answer to the question is: I do.  At least when it’s rolling across property I own.  But it’s all yours when it crosses onto your land, clearing me of liability should it blow down your house.

If I own a ranch on which Xcel Energy wants to erect wind turbines, can I sell the land and move to Arizona, but keep the wind rights since I need the income?

That’s the current assumption, and some deals have been made that sever wind rights from surface rights.

But House Bill 1105, which cleared the House Agriculture Committee this week, would establish “a nonseverable wind energy right in real property.”

It’s probably a good idea.  Too bad it’s far too late to pass another bill creating “nonseverable mineral rights in real property.” It’s the unending problem of severed mineral rights—which are practically universal in Colorado—that the wind bill backers are trying to avoid.

Creating nonseverable rights wouldn’t stop wind development any more than it would stop mining or drilling.  You’d just have to draft separate “wind energy agreements,” which under the bill would have to be recorded with the county clerk.  (The bill does specify that pre-existing severed wind rights would be grandfathered in, so long as they are registered.)

There are several problems with severable wind rights.  First, they might be taxed even if not developed, just as unexploited minerals can be.  No one, not even state property tax administrator JoAnn Groff, spoke in favor of taxing the wind during the House hearing. “Whatever wind is, it’s inherent in the value of the land,” she said.

“We want to make sure there’s no tax until the right is developed,” said Troy Bredenkamp of the Colorado Farm Bureau.

Second, severed wind rights might take priority over surface rights.  That’s certainly the case with minerals.  If an oil company with the right to minerals beneath your land wants to come onto your property and drill, it can. It may make a satisfactory agreement that provides you with a few pennies and leaves your land relatively unscathed, but the conflicts between owners of surface rights and mineral rights are bitter and unending.  The same could be expected with severed wind rights—especially after the land has changed hands.

Third, when wind rights are severed, they eventually have to be split up among the heirs, and then the heirs’ heirs, making them increasingly difficult to track.

Other hazards that no one suggested have occurred to me.  If wind rights were severed, would commodity brokers start making a market in wind energy futures?  Would investment banks chop up and bundle bad “underwater” wind rights and sell them as separate securities, like so many “collateralized debt obligations”?

A professor at the University of Denver law school, liltingly named K.K. DuVivier, showed up to testify in favor of the bill although she hadn’t been asked by sponsoring Rep. Jon Becker, R-Fort Morgan.  DuVivier, a specialist in energy and environmental law, said only six states have passed laws that prohibit the splitting of wind and surface rights.  One that hasn’t is Texas, which produces far more wind energy than any other state.  The severed rights have caused many problems for those owning the land, she said.

She urged lawmakers to keep the wind rights in the surface estate.  “Without legislative guidance, courts logically turn to precedents defining the status of other resources, such as oil or water,” she wrote in an article for the Washburn Law Journal.  “Yet, defaulting to traditional models is unlikely to encourage the best development of our country’s wind resources.”

Wind farms, she noted, require long-term and extensive use not only of the surface land, but of the area immediately above and below it, for transmission, distribution and collection lines.

It makes sense to cut off legal problems before they occur—although DuVivier seems to be violating the oath lawyers apparently take when they’re admitted to practice: Create as many legal thickets as possible, in order to build business.

Maybe she’s doing it to honor her father.  DuVivier started her career as a geologist, and when she switched to law, her father asked her, “Why are you leaving an honest profession like geology to become a lawyer?”

If she can simplify the law, her father should be proud.

Longtime Rocky Mountain News political columnist Peter Blake now writes Thursdays for the Colorado News Agency. Contact him at pblake0705@comcast.net You may re-publish his work at no charge and without further permission; please give full credit to Peter Blake and www.ColoradoNewsAgency.com

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