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Landowners: Be aware of legal issues surrounding wind farms By Jeff Caldwell While wind farms can have many positive influences upon a community and its residents' economic viability, it is crucial landowners wishing to become part of a wind farm must understand the legal implications of dealing with utility companies and wind power developers. Despite its importance, the arena of wind energy law is relatively new to Kansas, and therefore lacks past legal precedent or case law, according to Charles Benjamin, Lawrence attorney who specializes in this area of the law. As a result, he says landowners must "be sure [they] know what [they're] doing," in striking accords with wind power developers and utility companies for leasing and co-ownership agreements for the establishment of new wind farms. "There are very serious issues to landowners," Benjamin says. "The landowner is putting himself at risk. Landowners should ask a lot of questions."
When starting a working relationship with a wind developer or utility company, a landowner should exercise diligence in obtaining information about the intent of wind farm development by the companies seeking development on his or her land, Benjamin says. This information gathering should not end with the company itself. Instead, a landowner should ask the developer for contact information for other landowners whose land the developer has used in previous wind farms. "Ask if the developer has developed wind farms elsewhere. Ask for the names of landowners on other farms, and call them and ask how it's been working with the company," Benjamin said. "Ask to see documents that reveal the developer's intent, what kind of development will happen, and if there is financing already in place." The latter query regarding financing should be the most indicative in revealing the developer's intentions and seriousness in establishing a new wind farm. "If they don't have millions of dollars available to them, they're not serious about it," Benjamin says. "The typical investment is around $100 million."
After initial validation of a wind farm developer's legitimate intentions, Benjamin says the structure of financing of land use is also paramount to a landowner. This is part of the process that, with no case law on which to base legal precedent, is subjective, therefore up to the landowner to ensure there are no surprises in establishing a leasing or land-use agreement with the developer. "Consider clauses in a lease agreement that require the developer to consent with uses before they engage in a particular use," Benjamin says. "Landowners should note and carefully consider provisions in the lease that afford the developer rights not related to wind energy development."
A leasing or land use purchase agreement should be explicit in detailing how the landowner will be financially compensated for use of his or her land. This includes payment timing, frequency and basis. Some options include payment to a landowner in one lump sum, annually or any other frequency negotiated between the two parties involved. In addition, compensation can be based on a number of purposes, including effects upon cultivated land by construction. This, like any other payment elements of a lease agreement, is subjective in its schedule of financial compensation, in both time and amount. "There are payments made for loss of crop cultivation. It may be paid as a flat fee per acre, on which crop cultivation ability is lost due to tower installation and maintenance," Benjamin says.
After a wind farm has been constructed, and a leasing agreement has been established between landowner and developer, Benjamin says the landowner should stay informed and educated about liability. This extends into property taxes, possible lawsuits from conceivable risks and continued payments. "You want to make sure who's liable for costs associated with the project," Benjamin says. "And, you want protection from suits and claims related to the developer's actions and the project."
For more information on the legal issues surrounding the development of wind farms, contact Charles M. Benjamin, Ph.D., J.D., Attorney at Law, by phone at 785-841-5902 or e-mail at cmbenjamin@msn.com.
Jeff Caldwell can be reached by phone at 620-227-1805 or e-mail at jcaldwell@hpj.com. Date: 10/9/03
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