Parr Richey’s Advice to Wind Energy Landowners –- Beware, The Written Documents Are Crucial!

Have you been approached by a wind energy company soliciting your land for inclusion in a new wind farm proposed for the area. If you have, the promised compensation may look good for the fairly small acreage committed for the structures and related equipment. You may have been given a draft agreement for review and execution. It will likely be long and complicated, but the company representative may describe it as “standard” or in line with what other companies are offering. Don’t accept that at face value; these leases often vary widely from company to company and from project to project. You may be intrigued, and even interested, but what should you do next?

The attorneys at PARR RICHEY have represented landowners in several Indiana counties in lease negotiations with several wind energy companies. In so doing we have learned much about these companies, how these projects work, and what they are typically willing to agree to in assembling the land needed for a viable project. We do not represent any wind energy companies, so our interests are aligned with those of landowners.

There is strength in numbers, and normally better terms can be leveraged through coordination with other landowners in your area. Your group should check with your neighbors, the local Extension Agent, or your County’s planning director to learn as much as you can about the proposal and its status. Perhaps more importantly, check on the company’s experience and track record in bring projects on line. Much information is available on the Internet about these companies and wind farms in general. Does your county have an ordinance permitting or regulating these projects? How likely is this company to move forward with a project if enough land is obtained? Or is it merely attempting to assemble lease rights for parcels that it can later sell to another wind company?

At some point, preferably early on, your group should consult with an attorney experienced in these negotiations. That attorney can guide you through the process and attempt to obtain the most favorable terms possible. You need independent counsel to look out for your interests, and some companies are even willing to reimburse you for some or all of those fees.

We recommend you not sign any agreement until these efforts have been taken. Once you sign, you likely are committed. You may not be able to get the terms changed, even if the company would later offer more favorable terms to your neighbors in seeking their agreement. And don’t rely on oral statements or promises made by a wind energy company representative. If they are not in the written lease or easement agreement, they likely won’t be binding or enforceable on the company.

Landowner objectives in reaching agreement as to suitable terms should include:

• making sure the compensation is fair and competitive with what other wind developers might pay; are other companies willing to offer a better deal?

• if the compensation is to be tied to actual energy production (rather than a fixed annual payment), establishing a fair audit process to review and verify the company’s figures;

• protecting future lease payments from the effects of inflation;

• requiring the landowner to be notified before work is conducted on his land;

• prohibiting the developer from exercising more control over the land than is reasonably needed to conduct wind operations;

• minimizing as much as possible any restrictions the wind company will wish to impose on the future use of your land;

• allowing landowner input as to the actual location of turbines, roads, and utility lines;

• requiring identification and repair by competent contractors of damaged underground tiles and drainage systems;

• compensating for future crop losses from soil compaction caused by heavy equipment;

• insuring that damage to public and private roads will be timely and adequately repaired;

• protecting the landowner from mechanic’s liens of unpaid workers or suppliers;

• preventing topsoil, ground water, mineral, or timber rights from being taken without permission and compensation;

• arranging adequate financial security to remove the structures, concrete, and roads should the company cease operations;

• establishing reasonable choice of law, forum, venue, and indemnity provisions; and
• seeking a provision that if other landowners in the project are able to obtain more favorable terms, those same terms will be incorporated into your lease.

Because of the substantial investment needed to make a wind farm profitable, these agreements can last between thirty and fifty years. That is a very long time! These decisions can be of utmost importance. Protect your land and the interests of your family by being informed and prepared as much as possible.

The statements contained herein are for informational purposes only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.

© 2009
PARR RICHEY OBREMSKEY FRANDSEN & PATTERSON
225 West Main St., P.O. Box 668 Lebanon, Indiana 465052 Tele. (765) 482-0110 Fax (765) 483-3444 www.parrlaw.com