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A guy in a suit knocks on your door and says he's a wind farm developer and wants to put a big wind turbine on your farm.
He offers you thousands of dollars for a long-term lease and says you can still farm the land and make some good money, too, just by signing a piece of paper.
Sounds tempting. What do you do?
It's a scenario that is becoming commonplace, especially in areas where winds blow strong.
The U.S. is in a wind energy boom. Private developers and electric utilities are building more wind farms this year than in 2007 - a record year for the wind energy industry, according to the American Wind Energy Association.
Nebraska ranks sixth in the nation for strong winds, but lags behind in developing wind farms, compared to states like Texas, California and Iowa.
That's slowly changing. Private companies are working on projects in northeast Nebraska and some are even eyeing other less-desirable parts of the state - in terms of wind: better-than-average winds but good access to power transmission lines.
The state's two largest electric utilities - Nebraska Public Power District and Omaha Public Power District - each want to add 80 megawatts of wind energy in the next few years. The utilities plan to purchase the electricity from wind farms owned and operated by private companies.
NPPD is targeting the Broken Bow and Petersburg areas where it has some high-power transmission lines. Some developers also are looking in Cass, Otoe and Saline counties in southeast Nebraska and are talking to landowners about building wind turbines on their land.
That's why University of Nebraska-Lincoln Extension in Otoe County and River Country Economic Development Corp. in Nebraska City recently sponsored an informational meeting on legal issues for landowners who are considering an offer from a wind energy developer.
Erin Herbold, a staff attorney for the Iowa State Center for Agricultural Law and Taxation, was the featured speaker. About 60 people, mostly farmers, attended the two-hour meeting held Tuesday at the Kimmel Event Center in Syracuse.
Here is some of the information Herbold presented, based on her experience with wind energy developers and landowners in Iowa, which ranks third in the nation in wind energy production. Even though Nebraska is a public power state, she says, landowners here could be facing similar legal issues.
Q. What should a person do when approached by a wind energy developer? Don't sign anything unless you read and understand what you are signing, Herbold says. Better yet, contact your attorney or someone who is familiar with such legal documents. It's important to be cautious and do your homework because you may be signing away an interest in your land to someone for decades. Another good piece of advice: Get everything in writing.
Q. How do I know if my property is a potential target for a wind farm? Here are some indicators: constant wind speeds of 11 to 13 mph on your land; close proximity to existing power transmission lines; no endangered species; no high bird activity; no highly valued aesthetics (like scenic views), and local community and political support.
Q. Will wind energy development continue to grow? Wind farms will generate just over 1.5 percent of the U.S. electricity supply this year, according to the American Wind Energy Association. That figure is expected to increase to 6 percent by 2020.
Q. What's driving wind energy development in this country? Improvements in wind energy technology, high and volatile fuel prices, federal tax credits and difficulty in building new power plants are some of the factors cited by Herbold.
Q. Which states are the leaders in wind energy development? Texas with 6,297 megawatts; California, 2,493 megawatts; Iowa, 1,394 megawatts; Minnesota, 1,377 megawatts, and Washington, 1,367 megawatts. Nebraska currently has 73 megawatts of wind generation capacity.
Q. Are wind turbines getting bigger? Yes. Newer wind turbines can produce about 2.5 megawatts of electricity, compared to the 1 to 1.5 megawatts for older turbines. Wind turbines range from 170 to 320 feet in height. A typical wind turbine costs about $1 million to install. The maximum wind speed for a wind turbine is 30 to 35 mph. A 1.5 megawatt turbine can generate enough electricity to power 400 to 500 homes annually.
Q. How much land is required for a wind turbine? A single commercial wind turbine needs about 1.5 acres. Typically, a developer will invest about $100 million into a wind farm.
Q. Are wind turbines noisy? Herbold says there have been legal cases where people have complained about noise and flicker and strobe-light effects from wind turbines. But normally wind turbines are not that loud. Her advice is to visit a wind farm first before signing any agreement. Site selection is the key, Herbold said.
Q. What type of agreement should I have with a wind developer? Most developers will present you with a legal document called an easement. It allows the developer to build a wind turbine but gives a landowner the right to continue using the property for agriculture, hunting and recreational activities. Always evaluate the agreement with an eye toward the risk faced by the landowner, Herbold advises. Look at such things as environmental concerns, potential for nuisance complaints from neighbors, zoning, and trespass and liability insurance issues.
Q. How many years should an easement be for? A typical easement for a wind turbine should range from 25 to 40 years. That's about the operational life of a wind turbine. Landowners can consider an option to renew. They should also negotiate a construction clause (how many years the developer will take to build a turbine) as part of the easement. Also check out whether the developer has the right to assign the agreement to a third party, how many projects they have completed and if they have financing in place.
Q. What can I expect for payment? Landowners can expect to receive $2,000 to $5,000 per year for each wind turbine on their land, according to the U.S. Department of Agriculture. But you can try to negotiate for more money. Payments can be based on the amount of power generated by each turbine annually or a fixed rate based on kilowatt hours or megawatts, regardless of the size of the wind turbine.
Q. Are there tax consequences related to the payments? Yes. The landowner or the developer will have to pay property taxes. Landowners can negotiate who pays, Herbold says. If a developer pays, the landowner should insist on notification when a payment is made to avoid tax problems down the road.
Q. Can payments affect the benefits I receive from federal farm programs? Possibly. Herbold says wind turbines can be placed on Conservation Reserve Program land but the U.S. Department of Agriculture has veto rights. She advises farmers to contact their local Farm Service Agency for more information.
Q. What about confidentiality clauses? Herbold advises landowners to not sign an easement that limits what you can say about your payment or rights. She said it's good to talk to your neighbors so you can make sure you are getting the best deal you can. If a developer is contacting a large number of landowners in an area, landowners might consider forming an association or cooperative.
Q. Who dismantles a wind turbine when it gets too old? Landowners should negotiate that into an easement. Herbold says taking down an old wind turbine and removing the concrete pad can be costly, and it's something you don't want to leave for your children to deal with. Lastly, have the easement recorded at the county courthouse - just in case your copy is lost.
Wind legal issues:
The Iowa State Center for Agricultural Law and Taxation has more information about legal issues surrounding wind energy development and related liability concerns for landowners. Visit: www.calt.iastate.edu/. Or e-mail the center's staff attorney at: eherbold@iastate.edu.
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