Renewable Energy and Electric TransmissionWomen Managing the Farm, February 14, 2020
Mission
We are dedicated in providing education, informationand research that will provide the continued well-beingof all persons directly engaged in agriculture or relatedenterprises. We advocate for the agricultural industryand defend social and economic justice for farmers andranchers. We want to unlock the potential in agriculturalproducers to improve their quality of life.
• Amicus briefs
• Regulatory comments
• Coordination with other state Farm Bureaus
Legal Advocacy
• Website: www.kfb.org/legalfoundation
• Ag Law Briefs – webinars for our members and attorneys
• County meetings on legal topics of local interest
• Written materials on current issues
Member Education
• Direct answers to member questions
• Financial support in legal mattersService
KFB Legal Foundation Website• www.kfb.org/legalfoundation
• Current news
• Legal Resources:
Administrative Law Agritourism Business Basics
Corporate Farming Dispute Resolution Environment
Estate Planning & Taxation Food Industry Labor
Liens Litigation Livestock and other Animals
Real Property Renewable Energy Right to Farm
Transportation Other Helpful Websites
Ag Law Briefs
• www.kfb.org/aglawbriefs
• Topics covered:
Solar Energy (Nov 2019)
Rails-to-Trails (Dec 2019)
Wind Energy (Jan 2020)
Electric Transmission (Jan 2020)
• Future topics:
Feb 26: Ag Transportation (Hours of Service, Electronic Logging Devices)
Mar 25: Livestock Marketing under the Packers and Stockyards Act
Estate Planning
Renewable Energy – KFB Policy• Energy TU – 6
We support:
1. Development of a statewide energy plan that promotes the use of renewable energy and the use
of tax credits and other incentives to achieve this plan.
2. Expansion and development of transmission capacity to create opportunities for the
development of alternative energy resources across the state.
…
8. Increased use of nuclear and solar power generation.
…
We oppose:
1. The legitimization of “wind rights.”
2. The imposition of a moratorium on the production of wind energy in Kansas. Legislative or regulatory efforts should not prevent agricultural producers from voluntarily participating in this industry.
Renewable Energy Electric energy generation in Kansas
Coal
Wind
Nuclear
Kansas Corporation Commission
NG
Wind Energy – Kansas Facts Wind Projects 2018 Wind Generation
• Installed wind capacity (MW): 5,653 MW
• State ranking for installed capacity: 5th
• Wind projects online: 37
• Number of wind turbines: 2,996
• Under construction wind capacity: 871 MW
• % of in-state energy production: 36.4%
• 1st in the country
• Equivalent of U.S. homes powered: 1,855,300
2018 Jobs & Economic Benefits Environmental Benefits
• Wind industry employment: 5,001 to 6,000
• Wind manufacturing facilities: 4
• Total project investment: $10.5 billion
• Annual state and local tax pmts: $28 million
• Annual land lease payments: $15 – 20 million
• Annual water savings (gallons): 4.7 billion
• Equivalent bottles of water saved: 35 billion
• CO2 emissions avoided (metric tons): 9.0 million
• Equivalent cars worth of emissions avoided: 1.9
million
Source: American Wind Energy Association, State Fact Sheets (2018)
Wind Leasing – Background• 2005 (Sebelius) – Temporary moratorium in the
“Heart of the Flint Hills”
• 2011 (Brownback) – Expansion (nearly doubled) of the moratorium in the “Tallgrass Heartland”
• Zimmerman v. Wabaunsee County, 293 Kan. 332 (2011).
Holding: Interests in developing wind farms were not vested rights to support taking claim
These interests were conditioned upon discretionary issuance of conditional use permits by the county board of commissioners
Zoning regulations granted absolute discretion to the board for issuing conditional use permits
2.15.2019
Wind Energy
Solar Energy
#11
https://www.seia.org/initiatives/whats-megawatt, obtained 11.18.19
Solar Energy – Kansas Facts
National Ranking: 46th (42nd in 2018)
State Homes Powered by Solar: 4,174 homes
Percentage of State's Electricity from Solar: 0.02%
Total Solar Investment in State: $69.40 million
Prices have fallen 36% over the last 5 years
Source: Solar Energy Industries Association, State Factsheet, current through Q3 2019
Solar Installed: 33.72 (MW)
Solar Energy – Kansas Facts• Notable Projects:
Johnson Corner Solar I, 20 MW (under construction)
Midwest Energy Solar Array, 1 MW (2/2015)
City of Pratt Solar, 6 MW (3/2019)
Westar Cities Solar, 1 MW (7/2017)
Prairie Sky Solar Farm, 1 MW (2/2017)
Wide Open Spaces
Limiting Factor: Transmission Capacity
Current electric transmission in Kansas
Source: Testimony of Mike Ross, SVP Govt Affairs, SPP, to House Energy, Utilities, and Telecommunications Committee, February 08, 2017.
Transmission Easements – KFB Policy• Energy, TU-6
We support:
Expansion and development of transmission capacity to create opportunities for the development of alternative energy resources across the state.
Agriculture land with utility easements should be taxed at agriculture use value.
Property rights of all landowners in areas developed for wind power energy generation and transmission should be protected. Decisions regarding siting guidelines and other potential zoning or restrictions are best made by state government after public input and comment.
Landowners should be annually compensated at comparable rates as similar structures for property condemned by utilities for new transmission lines or any other below-ground utility equipment. Transmission lines and other utilities should be situated on section lines or property lines when practical. Further, landowners and/or tenants should not be liable for unintentional or inadvertent damage to utility structures.
Electric Transmission – GBX
• What is the Grain Belt Express Line?
800-mile,
600-kilovolt
high voltage direct current (HVDC)
• Plans to deliver up to 4,000 megawatts (MW) power from western Kansas and the surrounding area to customers in Missouri and states farther east.
• Picking up some regulatory steam
Electric Transmission - GBX• Grain Belt Express Line Kansas / KCC timeline
2011 – Clean Line’s Application for Certificate of Convenience (transmission only) – granted 2011
Docket 11-GBEE-624-COC
Eminent domain authority
2013 – Clean Line’s Petition Initiating Docket for transmission line siting application – siting permit granted 2013
Docket 13-GBEE-803-MIS
Original sunset to start construction was November 7, 2018, and approvals in Missouri, Illinois, and Indiana must be obtained first
Litigation delays in other states, and the purchase of the Grain Belt project from Clean Line by Invenergy Transmission LLC, resulted in extension of deadlines
Invenergy’s acquisition of project approved June 18, 2019 (closed January 2020) (Docket 19-GBEE-253-ACQ)
Extension of sunset, initially temporarily, then permanently on September 26, 2019
Electric Transmission - GBX• Grain Belt Express Line - Current status in other states:
Missouri
August 2017 – Missouri Public Service Commission declined to issue Certificate of Convenience and Necessity, but that was reversed by Eastern District Appellate Court in February 2018
Certificate of Convenience granted April 19, 2019
Acquisition approved September 21, 2019
2019 and 2020 legislative efforts to block project
Illinois
Certificate of public convenience granted by Illinois Commerce Commission, but that was reversed on March 13, 2018, by Illinois 5th District Appellate Court
Indiana
Transmission-only public utility status granted May 22, 2013
Acquisition of project by Invenergy approved January 2, 2020
• More information at www.grainbeltexpressline.com
Wind and Solar Leasing– Is it right for you?
• Big picture Impact to land
Land where project is located (now and long-term)
Wind turbines could be an enhancement to agricultural income, whereas solar leases would be agricultural income replacement
Effects on non-leased/adjacent land (access, shade or wind flow (existing structures?), dust control, aerial applications, burning, development of mineral interests)
USDA program compliance – talk to your local FSA office Energy company may buy out government program participation
Solar - Not considered agricultural land
Wind and Solar Leasing– Is it right for you?
• Big picture Consult with your legal and tax advisors
Attorney with a lot of real estate experience (wind/solar experience preferable)
Is this the right company?
Is the landman working directly with the developer or independently?
Internet research
Business name, BBB, Secretary of State business entity search
Existing leases (farm, hunting)
Wind and Solar Leasing – Lease provisions
• Lease term – pretty similar for wind and solar
Option term (feasibility period) – 2-5 years
For the owner, the shorter the better
Access, surveys, environmental studies, maybe panels placed for data collection, developer working to get regulatory approvals
Construction term – ~1 year
Lease term – 20-30 years
Initial term, plus renewal options (incrementally for 20 more years?)
May want to tie this to the life of the project
Developer needs: duration of power purchase agreement (PPA), loan payment demands, maximum return on investment
Decommissioning period – 1-2 years
Wind and Solar Leasing – Lease provisions
• Compensation
Signing bonus
Option period payments
Wind: Lump sum ($500-$1000, $1-10/acre)
Solar: Fixed per acre/year ($10-40 during feasibility, construction)
Payment for easements separate from leases
Wind and Solar Leasing – Lease provisions• Compensation
Lease compensation Wind: Fixed per turbine ($2,000-10,000 annually) or production
capacity ($2,000-10,000/MWh annually), royalty ($1.30-3.50/MWh, or 2-6.5% of gross revenue, what goes into gross revenues?)
Solar: Most often, fixed per acre/year ($500-800 during operation – up to thousands of dollars per acre in the U.S. depending on location) Typically unlike wind leases, which can include fixed per
megawatt capacity or royalty Automatic inflation annual increase to base rents Timing
Ultimately, a landowner must figure out what makes a lease a good deal for them
Wind and Solar Leasing – Lease provisions
• Taxes Solar - Likely lose agricultural classification
Can get developer to pay the additional taxes.
Require reserve or bond if a party challenges taxes without payment
• Operations Maintenance of roads, vegetation clearance, drainage
(erosion/flooding), buffer zones, fire safety, and wildlife
If developer is responsible but fails to maintain, can landowner maintain and be reimbursed for expenses?
Installation of livestock fencing, gate procedure/cattle guards for adjoining ag operations?
Wind and Solar Leasing – Lease provisions• Indemnification – one of the most important contract provisions!
Make sure to have strong requirements for indemnification from developer
Does it cover environmental impacts/regulatory violations?
Look for this term in other sections, too, like hazardous materials
If required from landowner, make sure insurance policy covers it
Will it apply to negligent and willful acts, or grossly negligent and willful acts?
• Mechanic’s Liens
Require developer to keep land free of liens
Require a reserve or bond if challenged
Wind and Solar Leasing – Lease provisions
• Preserve landowner’s rights
For agricultural, recreational, and other desired uses (to maximum extent possible)
To mortgage or sell property
Plus, consider a blanket reservation for all other rights not granted to the lessee
Wind and Solar Leasing – Lease provisions
• What happens to the improvements at the end of the lease (decommissioning)? Make sure remediation obligations apply no matter how lease ends
(termination, release, surrender, cancellation or forfeiture in bankruptcy, condemnation, casualty, etc.)
Remove and return land to original state (regrade and restore) – be even more specific
Remove turbines/panels and footings to 4’ depth below surface
Topsoil replacement
Drainage restored
Don’t just require seeding, but require replacing vegetation (seeding and care until established). What type of seed or who selects it, application rate?
Expensive – require a performance bond of the energy company
•Zoning Approximately 1/2 of Kansas counties have
zoning regulations
Common provisions
Safety (access, proof of insurance), height (minimum and maximum), function (e.g. braking)
Siting and installation (location near and connection to existing roads and facilities if possible), wiring under or aboveground, environmental impacts, setbacks (e.g. 1 ½ times the height of the system)
Permit requirements (permit or conditional permit),
Nuisance (noise limits, minimize impacts with radio/phone/tv signals)
Removal after no longer in operation (e.g. 6 months)
Renewable Energy –
County Considerations
Renewable Energy - County Zoning
Counties with: Wind (16), Zoning, Wind & Zoning (17)
Data compiled from 2019 list of Zoned Counties in Kansas from the Kansas Association of Counties, and the Wind Resources of Kansas map and list from the Kansas Corporation Commission (15 Feb 2019).
Renewable Energy –
• Taxes
10-year tax exemption on new projects (wind, solar, transmission)
Means loss of tax revenue for counties
• PILOT Payment in lieu of taxes
Agreements reached with County Commission
• Road, bridge maintenance
• Disposal of waste at end of useful life
County Considerations
Disclaimer• This presentation is intended for informational and educational purposes
only and NOT provided as legal advice. Information contained in this
presentation is limited by considerations of time and the industry conditions
and laws that exist at the time of its recording. The renewable energy
industry is ever-changing, and our laws are subject to change yearly through
legislative procedures, regulatory rulemaking, and judicial determinations.
Additionally, this presentation does not and shall not be construed to
establish an attorney-client relationship. If you have legal questions, you
should contact a private attorney with experience in this area for advice
relating to your specific facts and circumstances.
Any Questions?
Contact information:Wendee Grady
785-587-6101
https://www.kfb.org/legalfoundation