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Prospective, current attorneys become versed in wind law

Here’s another sign that wind energy is coming of age: Wind law is now piling up in court precedents and is being taught at law school.

Drake University law professor Neil Hamilton, the director of the school’s Agricultural Law Center, has just finished teaching the school’s first class in wind law to eight law school students and three practicing attorneys.

The students are taking their exams this week, and Drake plans to make the law class permanent.

Hamilton’s wind law course covers the gamut of the legal nitty-gritty about wind energy, including easements and leases, property issues, land-use regulations, utility regulation, metering and financing, and state and federal tax, energy and environmental policies.

Hamilton’s class is one of three in the United States. The University of Texas at Austin has a wind law class and so does the University of Oregon in Eugene.

“With turbine farms going up all over Iowa, it’s the next logical step,” said Hamilton, who grew up on an Adams County farm and has taught agricultural law at the Drake Law School for 25 years.

One student, John Hibschman of Logan, Utah, plans to return to Utah and said he thinks the field will be wide open for wind law practitioners.

“Wind energy isn’t as well-developed in Utah as here,” Hibschman said. “But you can tell it’s coming. I hope to be able to specialize in a practice.”

Iowa has done some serious bragging about its wind energy structure, with the figures from the American Wind Energy Association ranking Iowa first in percentage of wind generation with 5.5 percent of the electricity on its grid coming from turbines. Iowa has 1,271 megawatts of wind capacity, about the equivalent of two baseload fossil-fueled generators.

Hamilton became interested in wind energy and its legal ramifications when he attended the opening of the new turbine center in Jefferson County last year.

“A lot of people really need help when a proposal comes their way,” Hamilton said.

While wind has a gentle image, the industry has had its share of disputes.

Some farmers in Buena Vista and Cherokee counties were angered earlier this year when the owner of the 10-year-old wind farm on their properties cut their annual payments, which totaled up to $2,100, by two-thirds.

“We had no idea they could do it,” said retired farmer Ronovan Meyer of Alta, who signed a lease with what was then an Enron subsidiary to allow a wind turbine on his 160-acre farm.

The lease Meyer and about 30 other farmers signed provided for payments amounting to about 6 percent of the value of the energy produced. The new terms cut the payments to 2 percent. The landowners are guaranteed at least $750 per year, no matter what.

“It was disappointing, but the amount of money is so small that it probably wouldn’t be worth it to sue,” Meyer said. “We may go through arbitration, though.”

Hamilton said most wind leases today don’t have royalty clauses for electricity production, like the lease Meyer signed. Rather, they tend to pay $3,500 to $4,000 per year to lease land, with no production royalties. This differs from the structure of many oil and gas lease agreements.

“You can claim your land rights, but how can you claim the wind?” Hamilton said.

From what Hamilton has seen in leases so far, he’s doubtful wind energy will be an economic windfall for rural Iowa.

“What you’re seeing is income amounting to 1 or 2 percent of the total electric output from a turbine that goes back to the landowner,” Hamilton said. “Is that economic development?”

Hamilton also said he believes there will be more resistance to wind projects from landowners and communities who may become quicker to see the nuisance effect of the giant towers and turbines on rural properties.

Where wind law may really join the legal big leagues will happen in the near future if and when Congress passes, as expected, some kind of carbon emissions control system.

A cap-and-trade system – in which owners of green energy systems such as wind farms can sell their energy credits to owners of polluting fossil-fueled generating plants – has been speculated as the most likely type of control.

“That will mean that people with the so-called ‘green tags,’ or energy credits, can sell them,” Hamilton said. “There may be some windfalls there.”

A problem at present is that only for-profit entities such as investor-owned utilities and corporations can qualify for green tags, Hamilton said.

Nonprofit organizations such as schools, municipal power systems and even farms and neighborhoods that want their own wind power would be less likely to participate in energy credits or swaps.

By Dan Piller

The Des Moines Register

6 May 2008