Wyoming ponders wind ownershipWritten by Christy Hemken
Depending on who you talk to, some say severance would add value and another income opportunity for landowners. Others say there are already too many layers restricting private property rights and that wind “ownership” should stay with the surface landowner no matter what.
However, wind continues to prove itself the wild card. “Wind is different than anything else. It’s not like a mineral, which is something that sits there in the ground until you go after it,” says Bob Whitton, chairman of the Renewable Energy Association of Landowners (REAL). “It’s not like water that can be put in a lake or pond. The wind blows in and blows out and you can’t put it in a pond, pipeline, truck or train and send it somewhere.”
“The question is if wind rights should be severable from surface ownership,” says UW Law Professor Dennis Stickley, who has worked on the issue along with a group of graduate students that gave their findings at the recent Wind Energy Task Force meeting in Casper.
“As a general principle, all rights in property are assignable and transferrable and alienable, and you can transfer title,” says Stickley. “Moreover, anecdotally there are situations already where landowners have severed wind rights.”
Stickley says as Wyoming moves forward on the issue the state needs to decide if it’s necessary for the Legislature to recognize a wind energy property right, and if so, how that should be dealt with. North Dakota and South Dakota have already ruled that wind rights are not severable from surface ownership.
“I’ve reached the conclusion that the wind is owned – to the extent that you can own wind – by the owner of the surface estate across which it traverses,” says Rawlins attorney John MacPherson of the firm MacPherson, Kelly & Thompson. “I reached that based on a Wyoming statute that says the ownership of the space above the lands is declared to be vested with the owners of the surface beneath it.”
Wyoming has also adopted the common law that recognizes anything above the surface to the heavens or below the surface to the depths belongs to the owner of the surface.
Stickley says the closest legal example to compare to wind rights are mineral rights, with which Wyoming has 150 years of legal experience with severance and transfer. “These issues about mineral rights are still coming before courts for resolution as to the extent of the right and how to interpret mineral leases. My concern is that we seem to be starting down that same path with wind energy.”
“If you can transfer those interests around with wind rights, what kinds of complications are you creating for the other estates – the surface owner or the mineral owner?” asks Stickley.
MacPherson refers to the common analogy of property ownership as a bundle of sticks. “You can characterize wind rights as being one in a bundle of sticks that represent ownership of property,” he explains. “Some of the others are mineral rights, hunting rights and water rights. If you view it in that context, all those rights are severable and it would be in a landowner’s best interest if wind rights were also severable in one fashion or another.”
A stick recently added to the bundle, and that many refer to when discussing wind rights, is the recent decision by the Wyoming Legislature that underground pore space may by sold as a separate right.
However, Glendo Wind Energy Association Chairman and REAL member Larry Cundall is one who says he couldn’t even believe the issue of severing wind rights ever arose. “I was against it then, and I’m still against it, but quite a few smart people have said, wait, we need to think about this, so now I’m thinking about it and I’m confused,” he says.
Whitton says REAL is opposed to severance. “Our opinion was it should not be severed or reserved from the land. It would just be another layer on top of the ranchers themselves,” he says. “Keeping wind rights with the land would make it far less complicated.”
Cundall notes that some ranch people have expressed interest in developing wind farms on their land and retaining the royalties throughout retirement. Stickley says that is possible, in a way, because nothing limits the assignment of payments for wind rights.
“In that case, the wind right would stay with the property, but if you’ve entered into a lease and you’re receiving royalties or other income from a wind lease, you can still transfer or assign those payments to someone else,” he says. “If someone sold the land, that doesn’t mean they can’t continue to derive income from the lease.”
“I think you ought to be allowed to – just like any mineral interest – retain a royalty if you want to or convey them if you want to. Why should wind be treated any differently than any other property right?” asks MacPherson.
MacPherson says one benefit of severing wind rights would be if a neighboring landowner wanted to preserve a pristine open viewshed, he could go to his neighbor and purchase that land’s wind rights, which would ensure that a wind farm would never be developed.
Rancher Jim Rogers of Laramie says his ranch is for sale and he has considered an attempt at retaining the wind rights. “If somebody walked in and gave me full price, I’d probably just say thank you. But if they want to dicker on the price, we could use wind rights to negotiate,” he says.
Rogers estimates the effect on his land’s price would be three to five percent if he retained the wind rights. “If I retain those rights and they’re developed, I’d be way ahead. But if they’re never developed, I’d be better off to take a little more in purchase price. There’s way more I don’t know than I do know.”
Rogers says the Windy Ranches Wind Energy Association, of which he is chairman, had a lease from a wind company until it fell through along with the nation’s economy.
“If we’re going to embark on this development of new kinds of energy rights, then we need to do it with our eyes open because of the kinds of issues that have been encountered on mineral rights, water rights and also with solar rights,” notes Stickley. “We’d be creating another class of property rights around wind energy, and how are we going to deal with that?”
“I think, from a rancher and landowner perspective, his interests will be a lot better served if he has the ability to deal with those rights without a state restriction that says, ‘We’re not going to let you deal with them as you would with other property rights,’” says MacPherson.
“It’s getting more complex all the time as these different property rights are being created to deal with various kinds of energy,” says Stickley. “Ranchers and farmers will have to make decisions about the tradeoffs, not just between minerals or wind, but also their livelihood on the surface.”
“I’m not so sure that the state wouldn’t be prudent to spell out who owns the wind,” says Rogers.
Stickley says if the issue of wind rights and severance from the surface is not addressed by the Legislature, it will be left up to the courts to decide and wind energy may very well start down the 150-year litigation path of oil and gas.