Speaker's Corner: The reality of wind power contracts

Rural landowners who are approached to permit a wind turbine or turbines or associated equipment on their acreage badly need sophisticated legal advice on these complex agreements. 

What happens too often, however, is that landowners simply tick the box in the documents presented to them that says they waive independent legal advice. 

As a public service, lawyers should change this practice, and soon.

Wind power projects are part of a policy for renewable sources of power within Canada. In Ontario, many projects are already operating in rural parts of the province with an additional 600 megawatts scheduled to be added in 2017. More are planned for several other provinces, including Alberta and Saskatchewan.

Lawyers advising rural landowner clients considering such agreements should be aware of the characteristics of these leases in order to advise clients appropriately. Often clients focus on the dollar amount offered by the developer without considering other important impacts of the agreement.

Typically, the wind power proponent incorporates a subsidiary for each individual project. Its agents obtain turbine sites from farmers who have limited understanding of what they’re being asked to do, which is to sign an Option to Lease many pages long; in this option may be a “further assurances” clause that obligates them, if the option is exercised, to sign a form of lease. 

That document, many more pages long, is by far the most lessee-friendly imaginable to any real property lawyer, experienced or otherwise. 

Those farmers badly need legal advice; local law associations should emphasize this to their members.

The corporate subsidiary accumulates as assets its Renewable Energy Approval, its contract with a government agency (in Ontario, the Independent Electricity System Operator) to supply power, the site leases and any agreements such as for road use with municipalities. 

It pledges them for its financing. Registered against title of the farmers’ lands are notice of the lease (20 or more years), the pledge and possibly construction liens. 

All these assets can be assigned without consent; the assignee could be a corporation without resources and unable to fulfil the assignors’ promises, including promises such as decommissioning industrial machines taller than the Peace Tower in Ottawa and that contain dangerous materials, in approximately 20 years’ time.

The lawyer should read every word of those two documents. He or she will then find that the farmer client is granting full access to the entire acreage at all times, and that the turbine(s) and access roads can be sited anywhere. 

They could also discover normal farm practices such as manure spreading could be affected, hunting might be prohibited and the ability to sell or finance the property will be affected because of the title registrations referred to above. 

They may even encounter a confidentiality clause that forbids any discussion of the arrangements and, even more specifically, avoiding liability for any adverse effects of turbines such as noise, vibration, effect on water wells and other effects of the power-generation equipment. 

The lawyer will also need to consider the client’s exposure to being sued by neighbours for loss of property or business value and the loss of quiet enjoyment of their own properties because of the presence and operation of turbines. 

As well, lawyers need to consider that “further assurances” clause obligating the client to sign just about anything the lessee needs, such as building permits. Even if an inadequate letter of credit is offered to ensure eventual demolition of the turbine, the farmer could be left holding the bag for the very substantial difference: industrial-scale wind turbines contain dangerous materials such as petrochemicals and rare earths, which require costly expert attention and disposal.

The list goes on. The client may be unable to add an addition to the existing home because of the siting of a turbine, which only the lessee can decide. It may be impossible to sever part of the acreage to provide a separate home for a relative for example, a common practice in rural Canada. 

Each turbine requires some 50 truckloads of concrete for its base; not only will these arrive at times possibly inconvenient or harmful to farming operations, but there is no guarantee that the concrete and underground transmission lines will ever be removed. 

During construction, the farm will be populated with workers and the massive equipment required to erect industrial machines of this size. 

It is likely that no regard will be given to customary farming schedules, such as animal feeding or planting. 

Should the client sign the documents, in effect, he or she is affecting the use and viability of the property and any family plans for it for a minimum of 20 and perhaps as much as 40 years. From the Ontario experience, we know that neighbours are rarely appreciative and old friendships often suffer.

Many of us went to law school in the belief that lawyers help people in trouble. Here is a golden opportunity for lawyers to step up and provide the advice that is so badly needed.

Garth Manning is a retired lawyer with almost 50 years in practice in two jurisdictions, and a former president of Ontario Bar Association, now living in Prince Edward County.