Last week CEP attended a continuing legal education seminar that helped Kansas lawyers to catch up on wind energy law. The morning session was aptly titled the “Whirlwind Tour” - in four days, the presenters hit Garden City, Hays, Wichita, and Salina.
The event was sponsored by the Kansas Bar Association, the Kansas Farm Bureau Legal Foundation for Agriculture, and the Kansas Corporation Commission (KCC), among others. More than 200 lawyers total attended.
The presenters were well-chosen - Bob Glass and Thomas Stratton of the KCC, Krista Gordon, native Kansan and also wind developer for Iberdola, Melvin Sauer of Dreiling, Bieker et al, and Prof. Roger McEowen, the Leonard Dolezal Professor in Ag Law from ISU. Mike Irvin of Farm Bureau acted as the master of ceremonies.
A bunch of lawyers all sitting around and looking at powerpoints. Wind energy law. For those of you who are about to stop reading right now, please don’t! This is neat stuff.
Neat legal stuff, though, which means about here I must offer a disclaimer - never mistake ANYTHING you read in a CEP blog entry as legal advice. Not that I’m remotely afraid of that happening. But it still has to be said. For online links on wind law, check the resources section of our main website’s wind page. Scroll clear to the bottom.
Why wind law now? Because Kansas lawyers are desperate for the information. They need it to protect their clients.
Most folks around here know that a wind rush is going on - the wind-rich areas of Kansas are currently swarmed with leasehounds. Leasehound is the colloquial term for wind speculator. These speculators try to tie up all the air rights in a good wind area, and then re-sell them to established wind developers.
Leasehounds try to make money off being the middlemen. They hurry up and try to stand between the owner of the air rights, and a wind developer who has the track record, financing, etc., to actually pull off the project. Melvin Sauer pointed out that allowing this pattern of leaseholding to develop creates an irresponsible, patchwork method of resource development.
Leasehounds also aren’t famous for good legal contracts. The 50-60 page documents often come with stringent, scary (and probably unenforceable, but what normal person is going to know that?) confidentiality agreements. They tie up rights for extremely long terms. They often also risk infringing on mineral rights already assigned to other leaseholders. Etc.
How many of these lawyers have seen documents from leasehounds? When asked, 50% of the Salina crowd raised their hands. Apparently in Garden City, the number was closer to 90%.
It’s not supposed to work this way - but lawyers are turning into the de facto front line of wind policy in Kansas. This is happening because the Kansas legislature has not created clear wind policies (such as assigning clear direction to the KCC on how to deal with wind development). One presenter called it the “laissez-faire” approach to wind development.
When there’s a powerful need, yet no established policy guidelines, the job inevitably falls to lawyers and the justice system. Lawyers all across Kansas are finding themselves dealing with wind issues, far ahead of the legislature.
When lawyers see these leasehound contracts, what do they do? “Pray your clients haven’t signed it,” one lawyer cracked. True enough - but the problem is, lots of people already have. It won’t be too surprising if those contracts start to end up in court.
What policy model might the legislature follow for developing renewables? Existing oil and gas law. Kansas has very well developed oil and gas laws. The KCC also has a long history of oil and gas regulation. The existing structure could be adapted to wind. In fact, wind and oil and gas leases NEED to be compatible - no point developing one industry at the expense of another.
KCC Chief Litigation Counsel Thomas Stratton listed three major policy needs that the legislature might consider extending to the KCC: (1) standardized lease agreements and compensation to landowners, (2) harmonizing wind leases with oil and gas leases, and (3) decommissioning.
The latter means - how, when, and who pays for a wind farm installation to be broken down and removed. Huge costs, huge potential problems. Definitely a good area for state oversight.
I attended a wind forum sponsored by the KRC out in Phillipsburg a while back. My favorite quote of that day came from an older gentleman, a farmer, who was sitting to the back of me.
If you’ve been to any of these wind events, certain patterns emerge - for instance, someone will always tell the audience (an audience of full of potential wind farmers, mind you) that wind is an expensive source of power and coal is cheap and so why are we developing wind.
This man to the back of me snorted.
“Ha!” he said. “Damn right wind ain’t cheap! Better for me that way! I need a cash crop. I thought corn was going to be it, finally I get a good price for a bushel, first time in my life - and now they tell me I’m starving people, selling it for ethanol. Damnit. Wind ain’t cheap? That’s good.”
The reason I’m telling this story now, in terms of the wind seminar: That older gentleman was thinking of wind as a PRODUCER. Not as a CONSUMER. If you’re a producer, a fair price for your product is a good thing - and so are supportive resource development policies.
In the meantime, find a good lawyer!
I’ve skipped all the many details of negotiating wind contracts (sorry). I’ll continue to do so, because I am not a lawyer. However, Mike Irvin did mention that Farmers Bureau was planning on possibly developing wind law resources and checklists on their website.
— Maril Hazlett, www.climateandenergy.org
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