Farm Progress

Legal Issues: Landowners need to ask key questions when evaluating alternative-energy leases and easement opportunities.

4 Min Read
LEADER: Iowa generates more than 36% of its electricity from wind power, ranking first in the nation for wind energy as a share of total electricity generation, according to the American Wind Energy Association.

The past few months, we’ve received questions from Iowa landowners regarding easements and leases for alternative-energy projects proposed across the state. Some landowners have been contacted by company representatives, proposing to lease land or gain easement rights for solar or wind installations.

Just like when the Bakken and Dakota Access pipeline was proposed, or the Rock Island Clean Line Energy project and other wind energy projects before, landowners are receiving letters and being contacted by company reps to begin discussions or negotiations if a landowner appears to be interested.

As you may guess, landowners have different opinions on these alternative-energy projects. Some are very interested in entering into agreements for a variety of reasons, such as interest in renewable energy and protecting natural resources. Some view potential payments they might receive as an additional source of revenue in a slow farm economy and a way to increase the value of their land.

Some of our readers have expressed concerns regarding the environment, aesthetics, land use and uncertainty about the industry. Some landowners ask, “Who is going to pay to dismantle these installations, or in the case of a wind turbine, remove the concrete foundations?” Another question is, “With new technologies being developed every year, will these installations become obsolete 10 years from now and how will that impact the value of my land?” And, “If government support for alternative energy disappears, what will the company’s financial situation be and how will that affect our ability to receive payments?”

Get questions answered before signing
In the past year, companies like MidAmerican Energy Co., based in Des Moines, and other wind and solar companies have proposed multiple projects across our state. According to MidAmerican, by the end of 2017, they will own and operate 23 wind projects consisting of about 2,190 wind turbines in Iowa and have created thousands of construction jobs and hundreds of permanent jobs servicing the installations.

All of that aside, for landowners affected by the construction of these projects, the biggest question is what rights and legal responsibilities will they assume if they enter into an easement or lease agreement with the company proposing the installation? As with any document affecting your property rights, asking the right questions and having the document reviewed by your attorney or other trusted adviser is key to making the best decision.

Tip 1. Stay informed. If the company sends you a notice of public information meetings to inform landowners of the process, you should attend.

Tip 2. Location, location, location. Many landowners have owned their land for many years and have concerns about the location of these installations. Ask the company where they plan to install solar or wind installations. It is advisable that you reserve the final right to terminate the contract if you cannot agree on a final site plan. A caveat: Some companies may not agree to provide you with a final location of turbines or solar installations as plans are often fluid during the stage when they are securing signed agreements.

Tip 3. Read the agreement and take the time to understand it. Like many legal documents, these agreements can be overwhelming and lengthy. If you are presented with an easement by the company or any other document affecting your property rights, it is important to review the agreement and have your attorney do the same before signing anything.

Questions to ask
Here’s a list, though not exhaustive, of important questions to ask:

• What is the term of the easement? How many years? Are there renewal periods?

• Will the entire easement be recorded at the county recorder’s office or just a memorandum of the agreement?

• Is the agreement assignable? (Can the company assign or transfer their rights in the agreement to another company?)

• What is the payment and how is it structured? Is the payment adequate for the rights in my property I am giving up?

• Do you, as a landowner, have a right to terminate the agreement in certain situations, and what are those situations? Does the company have an unlimited right to terminate?

• Am I protected from liability as a landowner, if there is a liability issue that is the fault of the company?

• How will my farming operation be impacted and for how many years? For instance, does the agreement cover the repair and replacement of underground tile during and after construction of the facilities? Is soil compaction and soil fertility addressed in the agreement? In other words, how does the company propose to remove topsoil and replace it? Will it be stockpiled? And what areas will be most traveled by construction equipment?

• What access rights, and through what routes, does the company have?

• In the event of a legal dispute, is there a mandatory arbitration or mediation clause?

Aside from alternative-energy projects proposed, landowners are approached by their county governments with easements or offers to purchase small portions of land for the improvement of highways, bridges or other infrastructure. The same principles apply: review the documents, ask the right questions, and consult with experts and your attorney. That is the key to understanding the rights and responsibilities you may assume by entering into a long-term agreement.

Herbold-Swalwell is an attorney with Brick-Gentry PC in Des Moines. Contact her at [email protected].

 

About the Author(s)

Erin Herbold-Swalwell

Erin Herbold-Swalwell is an attorney with Wickham & Geadelmann PLLC.

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