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Farmers: Beware The Wind (Prospector)

By Jim Chen at al.

With the prospect of carbon emissions legislation and renewable portfolio standards in place in more the half the United States, interest in wind energy continues to increase. Although the recent drastic reduction in oil prices seems to have tempered some enthusiasm, wind energy will have a significant role in the new energy mix.

As the need for wind energy and related transmission infrastructure projects increases, the need for rights of way in key areas will become paramount. Wind ?prospectors? have begun the process of gathering rights to land in wind-rich areas, which usually means contracting with farmers in rural areas in states like North Dakota, Iowa, and Wyoming. Anecdotally, I have heard of several farmers who have had such offers. Some of these offers border on the absurd: as low as $40 per year for 8 to 10 years to put between 10 and 15 wind towers on the farmer?s land.

The New York Times recently reported that farmers in Wyoming have begun setting up cooperative associations to help the farmers to bargain as a group for a better price and provides the members with information and support in the face of aggressive offers. These tactics almost always include ?pay now? offers and confidentiality agreements that prevent farmers from discussing (and comparing) their lease deals with one another. The article notes that

as developers descend upon the area, drawing comparisons to the oil patch ?land men? in the movie ?There Will Be Blood,? the ranchers of Albany, Converse and Platte Counties are rewriting the old script.

Cooperatives are one way for farmers to protect themselves, and such cooperatives could help facilitate wind development by providing larger, contiguous rights of way. Whether it is through cooperatives or other processes, farmers need to educate themselves about the risks and opportunities related to wind leases. A number of resources are available, including information from the Wind Farmers Network, the Agricultural Law Center at Drake University, Center for Agricultural Law and Taxation at Iowa State University, and the American Wind Energy Association.

As with any contract, and especially property-related contracts, good advice can help ensure a fair deal for all involved. Wind energy can be a great resource for farmers and the country, but good information, on both sides of the transaction, is essential to ensure equitable and efficient development.

Full post as published by Agricultural Law on November 29, 2008 (boomark / email).