Task force considers eminent domain
Casper – On Sept. 30 the Legislative Task Force on Wind Energy met in Casper to hear a report on the eminent domain/compensation research and to give an overview of the Draft Final Report outline.
Crystal McDonough of the UW Law School presented the legislators with her research and information regarding the use of eminent domain for wind energy collector systems.
“It was difficult to decide whether fair market value could be adjusted, or if we could provide any kind of alternative fair market value, without first deciding if eminent domain can be used for collector systems. I first began looking closely at that,” she explained.
She said the crux of her report focuses on different options surrounding collector systems.
“You can leave eminent domain alone and let the courts decide on a case-by-case basis whether collector systems meet all the requirements for eminent domain. The second option is the committee could look at amending the broad act at the end of the eminent domain statute, which is a big laundry list of all the different things it can be used for – railroad lines, oil and gas pipelines, etc.,” said McDonough. “The third possibility is to create a special provision for wind energy collector systems, taking into account some special needs and specific things that go along with collector systems. That would include some things that might narrow or define its use more clearly.”
“Currently the Wyoming constitution authorizes the use of eminent domain for a few things, including mining, and oil and gas is, in effect, along the same line as mining,” said McDonough. “A case out of California specifically looks at wind energy and eminent domain. In that case, they used an analogy of liking wind to minerals, in that the estates could be severed. The important thing from that case is they compare wind to mineral estates and oil and gas. If we’re looking at eminent domain, and whether or not collector systems can condemn, we can use some of these comparisons as arguments for condemning a collector system. That might be a thin argument, but it’s an argument.”
However, she said another case in New Mexico likened wind to water, and there could be some comparisons with that as well.
“One of the things I looked at is public interest,” continued McDonough. “In one court case, the court determined public interest is met for transmission lines when the power is feeding Wyoming consumers. If we’re going to make a comparison with collector systems, we’ll look at energy collected from wind towers, going to hub station and then most likely being sold downwind to California, Oregon and Nevada. Most of that energy will not feed Wyoming consumers. There’s an argument that that may not meet public interest and assessment requirements.
“On the other hand, it could meet the requirement, because wind energy will bring jobs, tax revenues and industry to Wyoming, supporting Wyoming as an energy producing state. We also should look at a case by U.S. Supreme Court that determined economic reasons were sufficient for public use. There are some very strong arguments for meeting the public interest.”
“Another option is the task force could recommend a special provision for eminent domain and wind energy collector systems. I really started looking at some of the oil and gas provisions, such as the Split Estate Act and what federal and state lands are doing,” said McDonough. “State lands authorize two types of permits, a temporary use permit for met towers and a special use lease for data collection, construction and operation.”
McDonough said state lands use a formula to calculate the valuation of payments based on fair market value. In the first phase it’s based on annual rents per acre, the second phase looks at the installation fee and the third rent is based on generating capacity, or rent per acre, whichever is higher.”
She said the Forest Service currently uses BLM policy for wind energy. “They’re developing their own to mirror the BLM, but it’s still in process, and the BLM’s policy expires today, Sept. 30,” she said, explaining, “The BLM is going to, in effect, issue a moratorium, but they’re not calling it that, and not authorizing any more wind energy projects for the next three years, during which they’ll study wind energy corridors in Wyoming and determine the best locations on federal land. At the end of three years they’ll have completed Environmental Impact Statements and will open up leasing for competitive bidding for a lease, not a right of way. That’s what’s coming up in the next three years.”
“That may have some effect on wind energy development in Wyoming,” she said. “Energy could be pushed onto private and state lands. There’s an argument that the BLM is trying to push wind energy off federal land, and another argument that says they’re for wind energy, but only want to streamline their process first.”
“An option the committee has is to leave it alone and let the courts decide,” said McDonough of the eminent domain decision. “There are a lot of things to define. If the task force will define the collector systems, there will be litigation, especially when wind companies start using eminent domain for these collector systems. There will be folks who hold out, and you can let the courts find out, and most likely the court systems will come to great conclusions, but it will take years and a lot of money. If the task force is looking at issues to circumvent litigation, these are some of the things they should look at. “
“It comes down to one of two ways you get there,” said Wyoming Stock Growers Executive Vice President Jim Magagna in public comment. “If you remove the cloud of eminent domain, I believe private sector negotiators will get there, in most cases.”
“The other option, if you leave the cloud of eminent domain, and I would emphasize it hangs over every negotiation, as a task force you need to look at mandating many of those things through statute,” continued Magagna. “Our strong preference is the former, allowing private sector to address all the issues such as surface use and length of payments.”