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Legal Issues Update
Aug. 2010
Negotiating
Transmission Line Easements
Kansas Farm Bureau Legal Foundation
Michael Irvin
Recently, the Kansas Corporation Commission has approved several new
massive electric transmission lines (two phases) that will run from
Spearville to the Nebraska border. Other lines are in the planning
and development stages. They will travel south from Spearville to
Coldwater and then on East to Wichita.
The lack of transmission lines have been a fundamental issue in Kansas and are
becoming more and more of an issue elsewhere. These projects should improve the
state’s power grid system that is somewhat antiquated. It will also ease a
bottleneck that has become a major obstacle to the development of wind rich
Kansas plains and other areas suitable for wind generation.
Kansas is already one of the largest producers of wind power, with over 1,000
megawatts installed. However, this growth has all but stalled in recent years
partly due to lack of capacity to move electricity to major markets.
With the encouragement of state officials, new transmission lines will be
sprouting up across Kansas. Many landowners will be approached by an agent for
the developer seeking an easement across their land. In order to run these
electricity lines on your property, the power company will want the landowner to
sign an agreement. During this process, the power company will need to acquire
what is known as a "Transmission Line Easement". In layman's terms, you will be
asked to allow the power company to take some of your rights in order to use
your property under certain conditions. Consequently, landowners need to arm
themselves with knowledge and understand the legal ramifications of entering
into these agreements.
The developer seeks to obtain a Transmission Line Easement to acquire the
property rights necessary to construct electrical distribution system such as
electrical lines, substations, switching facilities, and operation and
maintenance structures. The property rights to be taken are normally spelled
out within the easement instrument.
Once a legal easement has been established, utility companies
move forward with construction. Construction involves clearing of trees and
other obstructions from the 150’ (up to 250’) wide easement, erecting towers
that are at least 70’ to 125’ tall, and using cranes and whatever other special
equipment is necessary to complete and maintain the project.
A number of issues should be addressed prior to signing any type of agreement.
The Transmission Line Easement, like any easement agreement, is a legally
binding agreement that needs to be carefully reviewed and understood before
executing the same. This type of agreement will have a long-term effect on you,
your land and future generations. It is important that you not agree to or sign
any agreement until you have had an opportunity to discuss it with your
attorney.
If you are approached by an agent of the transmission line company wanting you
to execute such an agreement, take your time, and consider all the aspects of
it. These agreements usually are in perpetuity. This means the easement will
last forever.
The following is a checklist provided as a guide when reviewing Transmission
Line Easements. The document represents the types of issues landowners may wish
to consider as they enter into an agreement. Every contractual agreement
between a landowner and a developer has unique possibilities that differ across
regions and operations and must be negotiated with the help of legal counsel.
AGRICULTURE
Landowners typically retain existing
surface or sub-surface rights when entering a transmission line agreement,
including rights granted by existing mineral leases, special use leases,
temporary use permits, and easements.
However, landowners and
developers must consider the compatibility of transmission line development with
existing uses of agricultural land.
LANDOWNER CHECKLIST
General Purpose of Transmission Line Easement
·
Allow surveying and testing to be done for the purpose of determining
the feasibility of building a transmission line (structure) on your property
·
Allow construction, operation and maintenance of transmission lines
Scope of agreement
- amount of property covered
·
How much of my land will be tied up?
·
What land rights am I giving up?
·
What activities can I continue on this land?
·
What restrictions may be placed on my land – farming, hunting?
Easement
– An easement is an interest in land in the possession of another that entitles
the
holder of the interest to
a limited use or enjoyment of the land.
·
Easements are either exclusive or
nonexclusive
o
Exclusive easement - the easement rights
are held solely by the holder
o
Nonexclusive easement - others could have
the right to use the land concurrently
·
The rights granted are permanent in this
type of agreement
·
Payment for these easements can be either
in a lump sum or through periodic payments, but most of the payments consist of
a lump sum
Transmission Line Easement Provisions
1.
Area leased
·
Limit to only the land or space that is necessary to serve its purpose
·
The legal description should be clearly described and checked for its
accuracy
·
Typically, developer is seeking between 150’– 250’ width for the
right-of-way
·
Access from public roads to and from the land where the line and other
physical structures are located
·
Consider
o
desired setbacks from farming operations
o
desired setbacks from residences and property lines
o
location of general exclusion areas for development and for access
o
questions of privacy, access, general disruption, and safety
o
how to mitigate privacy, access, safety and general disruption issues
o
controlled access points
o
smoking ban
o
access exclusion areas
o
no living quarters for personnel
2.
Term of Agreement
·
Usually most agreements are for a number of years, but these
agreements are in perpetuity or forever
·
Landowners should understand that you will not be given a choice - the
agreement is perpetual
o
Because the easement is perpetual, there are typically no
renegotiations once the agreement is signed
o
This means that you have only one chance to reduce unnecessary terms
of the easement agreement while maximizing easement compensation
3.
Compensation for the Easement
·
Amount of compensation
o
Generally, transmission line easement compensation involves a one-time
payment
o
However, in private transmission lines it is not uncommon for the
developer to offer a lump sum or yearly rent
·
Compensation for a distribution easement depends on several factors
o
The general location
o
Type of land involved
o
The width and length of the easement
o
Value of the land
o
Damages to the property caused by installation, maintenance and/or
operation of the structures and lines
o
Usually you are paid 80% to 90% of the fair market value (FMV) of the
land, especially if it is a public line. This amount will rise significantly if
it is a private line due to the lack of eminent domain power
o
The differences in compensation are similar to differences in property
value – there are many conditions that would increase or decrease compensation,
such as whether it is irrigated, dry land, grassland or wasteland
o
Also you may request additional compensation for interference with
normal farming activities or the aesthetic appearance of the property (this may
prove difficult, but should discussed)
o
Landowners may need to factor in possible increases in insurance
premiums, especially if the agreement requires the landowner to indemnify for
potential damages in the future
·
Consider the advantages and disadvantages of payment structures
o
Lump sum
§
Consider potential tax consequences
o
Compare the lump sum payments using a standard financial annuity
formula to find the annual payment equivalent that is sometimes offered by
private transmission line companies
o
Become familiar with typical compensation rates for other transmission
line access for the private sector or offered by other companies building public
lines in this state or in other states
·
Economic arrangements
o
Compensation for any loss of viable agricultural operations
o
Compensation for property damage
o
Non-conventional compensation
4.
Rights that Developer will Want
·
Right to conduct certain activities on the land prior to construction
o
Surveying
o
Taking soil samples
o
Environmental and/or wildlife studies
·
Right to construct and install transmission lines and structures
o
Foundations, concrete pads and footings
o
Guy wires, support fixtures, anchors and fences
o
Electrical transformation, electric distribution and transmission
towers (poles – wood/steel structures) and lines above ground or underground
o
Substations or switching facilities
o
Buildings needed for maintenance or storage
o
Private roads providing access from public roads to facilities or
structures
5.
Rights Reserved for the Landowner
·
Landowner should concentrate on reserving any rights that are unique
to his/her agricultural or other operations on the land
·
Landowner may want to include a “catch all” provision
o
Rights with respect to the use of the land not given explicitly to
developer are retained
o
If you are unable to use this phase, specific provision can be
incorporated into the agreement
* Right
to conduct farming or agricultural activities on the land or other activities
involving the land such as mineral, oil, gas, or other natural resources
*
Right to use land to harvest crops, graze and/or hunt
6.
Minimum Duties and Obligations of Developer
·
Reclamation of premises
o
Long-term weed control?
o
Standards for reclamation?
o
Seed mix specifications?
o
Procedure for topsoil stockpiling, storage, and future use?
o
Party that will conduct reclamation?
o
Disruption of major rock outcropping or trees?
·
Consider operation compatibility
o
Potential livestock displacement
*
Alternative grazing locations
*
Install cattle guards or gates where developer enters or leaves
premise
·
Who must maintain
·
How maintained
*
Brace fences before cutting
*
Notification the construction completed
*
Reseed cleared areas with original or native grass after construction
completed
·
Alternative - pay landowner the cost of reseeding and allow him/her
the opportunity to replant grass seed
*
Compensation for costs incurred from displacement and loss of native
grassland cover
o
Gates and locks
*
Location
*
Personnel with access
o
Temporary protective fencing
*
Location
*
Maintenance
o
Fences and cattle guards
*
Location
*
Maintenance
*
Immediate repair of fences if damaged
o
Remove and pile rocks exceeding a certain diameter
o
Chip and spread trees and brush that are removed
o
Where the developer can enter and leave premises
o
Use of chemicals to control weeds and brush
o
Consider the viability of terrain
*
Gentle grade
*
Smooth terrain
*
Accessible for heavy machinery
o
Consider transmission capacity issues
*
Provide survey and transmission plan to landowner
o
Consider potential environment and wildlife concerns
*
Sensitive wildlife habitat
*
Species of concern or of potential concern
*
Invasive species control
·
Annual weed abatement program
o
Consider potential archeological/historic concerns
*
Identify archeological sites, especially places listed on the National
Register of Historic Places
*
Outline a procedure for dealing with archeological sites if they are
uncovered
o
Waterlines
*
Immediate repair of water lines if damaged
*
Responsibility to haul water until waterline is repaired
o
Access stipulations
*
Maintenance and repair of access roads
·
Location
·
Direction
·
Snow removal
·
Keep lands free from liens such as mechanic’s liens
·
Option of contesting the validity of liens
o
No cost to Landowner
o
May post a bond or escrow to cover the cost of removing lien
·
Comply with all federal, state and local law and regulations
·
Obtain and comply with all permits
·
Ensure proper usage, storage, disposal and release of hazardous
substances on the premises
o
Developer may be allowed to use hazardous substances in its normal
business operations provided such use is not harmful to landlord and in
compliance with all applicable laws
o
Developer should indemnify landowner for any losses from the use or
handling of such substance
7.
Minimum Duties and Obligations of Landowner
·
Allow developer the quiet use and enjoyment of the land without
interference
·
Landowner will not engage in any activity that would hinder the
developer
·
Landowner will have to ensure the proper usage, storage, disposal and
release of hazardous substances on the premises
o
Landowner should carve out an exception for the use hazardous
substances in its normal business operations (agriculture use)
o
Landowner will have to indemnify developer if he or she mishandles the
hazardous substances
·
Landowner will have to cooperate with developer in obtaining any
necessary subordination agreements or approvals from existing lien holders
8.
Taxes and Utilities
·
All tax (personal or real estate) increase due to improvements
associated with the project, as well as all sales and use taxes should be the
sole liability and responsibility of the Developer
o
This also includes, but not limited to the installation of the
transmission line, structures, substations, switching facilities and/or
maintenance buildings
·
Developer should be responsible for all water, electric,
telecommunications, and other utility services used for the transmission line
9.
Assignment Rights
·
Developer normally wants to be able to assign all or portion of
their/its easement rights to another without consent from the Landowner.
Includes:
o
Right to grant to a utility company the right to construct, operate
and maintain the transmission line, interconnection and switching facilities on
the premise
o
Right to sell or otherwise transfer the easement to another party
o
Right to grant subleases or sub-easements
·
The assignment usually allows the original developer to be released
from further obligations
o
Usually the party receiving the assignment agrees to assume all
responsibilities
o
Landowner should understand the broad grant they are giving to
developer and should exercise caution
·
Landowner should request that developer provide prior written notice
of any assignments. Including:
o
Name, address and phone number of assignee
o
Liability assumed by assignee
10.
Indemnification and Hold Harmless
·
Most of these provisions describe who protects who
o
Developer should be 100% responsible for all costs associated with
transmission line activities/operations, both pre and post completion of the
project
·
Usually provide for indemnification for damages arising out of:
o
Any operations or activity of the indemnifying party on the premise
o
Any intentional act or omission on the part of the indemnifying party
o
Any breach of the agreement
o
Be aware of language that forces the landowner to indemnify the
developer for activities of any tenants or guest
o
Developer should indemnify and hold harmless landowner for damages
sustained as a result of any claim made by a neighbor or other party arising out
of the activities of developer. Including, but not limited to:
*
Nuisance, trespass and medical claims
*
Other damages
o
Safety risks (ex. electromagnetic field effects): human, livestock and
structures
o
Risk of storm damage
o
Loss of TV, radio, telephone, cell phone and GPS use
·
Finally, most easements contain a provision that includes paying the
reasonable attorneys’ fees for the party being indemnified.
o
Note – this may work very well if you are the party that has been
damaged, however this can also work against you. Here is a quick example:
*
If your farm tenant were to fall asleep while driving a tractor and
hits one of the transmission line structures and cuts off the electrical power
*
What would it cost to restore power and fix the tower/structure?
*
Who would pay for the damages?
*
What would litigation cost and could you be responsible for the
developer’s attorney fees if you lost?
o
We recommend that you speak to your insurance agent about exposure to
future liabilities and the possibility of insuring that you are covered in this
type of an event
11.
Insurance
·
The easement should require that developer maintain appropriate
liability insurance covering all of its activities on the premises and name
Landowner as an additional insured
o
The policy should require sufficient liability limits to protect
landowner
*
This amount should be at least 1 million dollars and up
*
The amount of insurance should also adjust over the course of time
(inflation)
*
Developer should provide a certificate of insurance annually
*
The policy should provide that it cannot be cancelled without at least
30 days written notice to landowner
o
Developer should reimburse for any increases in premium by landowner
for additional coverage of transmission line, structures, buildings or
operations
*
Landowner should factor in yearly premium increases over the life of
the agreement
o
Landowner should be careful about agreeing to language in the easement
that allows developer to “self insure”
12.
Eminent Domain
·
If a landowner ultimately declines the developer’s offer for the
easement, they may have the right of eminent domain (condemnation) to take the
easement
·
The power to condemn rest with developers who are public utilities and
as well as some private companies (ex. transmission line development)
o
The developer can take the portion of the property from the landowner
for just compensation
o
These matters are usually filed in the local District Court
o
These proceedings usually happen very quickly. It is always prudent
to consult with an attorney prior to this type of hearing
o
After the court finds that the developer is qualified to use eminent
domain, it will appoint three appraisers and assign them the task of determining
the FMV of the taking by the developer
o
The court will then consider the loss in value assessed by the
appraisers to the premise and determine just compensation
13.
Default and Termination
·
Events that normally cause a default on the part of the developer and
allow for the termination of the easement
o
Failure to make the required payment(s)
o
Failure to pay for damages
o
Usually the agreements require a written notification of lack of
payment or damages incurred by the landowner
o
If developer has a perpetual easement, it will be able to continue
indefinitely unless it voluntarily discontinues the easement
o
The easement should provide that upon termination, developer must
remove all towers, substations, switching facilities, equipment, machinery and
any other structures on the premise
*
A time frame should be set for the developer to remove all materials
and structures from the land in a timely fashion
*
Any concrete pads should be removed to a depth below ground of three
feet
*
All debris removed from site
*
Payment for any property damages, tile damage, crop loss, seeding,
fencing and/or soil compaction
*
All easements released after decommissioning
o
If termination should occur, developer should provide and execute a
recordable document evidencing the termination of the easement
14.
Miscellaneous
·
Change in land use options
o
Consider the potential loss of some of those uses
o
Hunting
o
Other recreational uses
·
Determine location of Transmission Line, substations, switching
facilities and other structures to residence, viewscape, livestock facilities
and important wildlife areas
o
Consider the disruption to farming operation
o
Consider negotiating mitigation strategies
o
Consider and prepare for aesthetic changes to viewsheds and landscapes
·
Farm Tenants
o
Make sure that you inform any farm tenants of the easement
*
The easement is an agreement between the landowner and developer and
not the farm tenant. The tenant has a separate agreement with the landowner
which may be adversely affected by the easement (ex. lost acreage to farm, work
around towers/structures and inability to conduct aerial spraying)
*
Landowner and farm tenant may need to modify their agreement regarding
the new easement
·
Farm Service Agency (USDA) implications
o
Before signing an easement, landowners need to consult the local FSA
office to be sure or at least aware of any problems that transmission line may
cause if construction occurs over land in contract with the Federal Government
(ex. CRP)
o
Therefore, landowner should seek USDA approval if participant in USDA
programs, so payments are not lost or financial penalties are not triggered
·
The manner in which notices are to be given to each party should be
specified
·
The easement should only be interpreted under the laws of the state in
which the property is located
·
Recording of Memoranda of the easement
o
An easement is usually filed with the county Register of Deeds
o
However, sometimes an easement may not be recorded, but a Memorandum
that memorializes the terms so the existence of the easement will be filed in an
abstract format. This prevents the financial terms from being disclosed.
KFB to Supreme Court, ‘Support Kansas
landowners’
Feb. 2010
Kansas Farm Bureau’s Legal Foundation
is lending its expertise in two private property cases now before
the Kansas Supreme Court.
One deals with “just
compensation” for land the government took in a “Rails-to-Trails” conversion of
an abandoned rail line. The other involves what might be the first outright
zoning ban of commercial wind energy development in the United States.
“The 5th Amendment remains the
bedrock principle to protect property because that is the basis of this
country’s economic production,” says Mike Irvin, KFB Legal Foundation. “This
amendment states…’nor shall private property be taken for public use, without
just compensation.’”
Irvin recently filed amicus
briefs. In the first case, landowners have sued the federal government and asked
for payment for property taken in conversion of an abandoned rail line.
The National Recreational Trails
Act gave the federal Surface Transportation Board authority to create “public
recreational corridors.” This allowed a non-profit group to take over the
abandoned easements across Kansas landowners’ property.
KFB argued that under Kansas law,
once the railroad stopped using the land, the easement ended and the land
reverted back to the landowner.
In the event this court were to
change its interpretation of many years on property rights to abandoned railroad
right-of-way, thousands of landowners would be affected, and thousands of miles
of track would be subject to a taking by the government without just
compensation, KFB’s Legal Foundation argued.
At the heart of the second case
is the Kansas Supreme Court’s approval of Wabaunsee County’s ban of wind energy
conversion systems. Farmers and landowners challenged the county zoning
decision banning such facilities of more than 120 feet or 100 kw.
The Kansas high court agreed with
the Board of County Commissioner’s findings, which was based on aesthetics.
There are two key issues in this
case, according to Terry Arthur, KFB general counsel. First, whether
the zoning regulations violated
the ”takings clause” and the landowners should be compensated; and secondly, the
zoning ordinance interfered with the rights of the landowners to participate in
the generation of electrical power under the Commerce Clause of the United
States Constitution.
Hunting Leases
May 29, 2009
With public land in short supply, hunting leases are becoming
more common every year. Good business practices suggest all types of hunting or
recreational leases should be in writing and signed by both parties.
A well written lease helps avoid misunderstandings. The
agreement should outline the rules of the lease and help protect the interest of
both the landowner and the hunters.
You should consider some of the following points when drafting
an agreement:
Description of the land, including a map
Terms of payment, including quality of habitat and hunting
experience,
number of people involved in the lease, rights, service and
facilities being leased and type of game
Duration of lease
Vehicle use (off/on road, ATV, truck and/or trailer)
Fences and other enclosures
Dogs and use of kennels
Habitat development, trees stands and camp facilities
- Establish and maintain
- Where place
- Use of utilities
Liability – responsibility for damages
Manage risk – minimize the threat of injury to third parties
(remove hazards) and insurance coverage
Misc. - littering, alcoholic beverages, camp fires and guest
privileges
It is suggested a written lease agreement be reviewed by an
attorney.
KFB
Legal Foundation Enters Atrazine Lawsuit Effort
May
'09
The
KFB Legal Foundation is working with
County Farm Bureaus to
engage their locally elected government bodies to keep a
key farming tool in the toolbox.
A group
of Texas trial lawyers are making the rounds to
local governments in Kansas, shopping participation
in a class action lawsuit that would essentially
halt the use of atrazine, commonly used on corn,
grain sorghum, sugar cane and residential lawns.
The
lawsuit is based on the notion that acceptable
levels of the atrazine in drinking water are not
adequate. This contention flies in the face of
extensive science-based research and subsequent
regulation from the U.S. Environmental Protection
Agency.
The
consensus from the scientific and the government
regulatory community in the U.S. is that atrazine is
safe at the limits established by the EPA.
For
no-till systems, atrazine is one of the most widely
used and effective herbicides. No-till farming keeps
the soil in place, increases water infiltration and
improves soil quality. Loss of atrazine as a tool in
no-till farming would be a step backwards for
efficient and safe crop production in an
environmentally conscious manner. KFB Legal
Foundation Director Mike Irvin has some tools and
advice for County FBs. Contact him at irvinm@kfb.org
or 785/587-6621.
County
Farm Bureau organizations to engage with their
locally-elected local government bodies to keep a key
farming tool in the toolbox.
A group
of Texas trial lawyers is making the rounds to local
governments in Kansas , shopping participation in a
class action lawsuit that would essentially halt the use
of atrazine, commonly used on corn, grain sorghum, sugar
cane and residential lawns.
The
lawsuit is based on the notion that acceptable levels
of atrazine in drinking water are not adequate. This
contention flies in the face of extensive science-based
research and subsequent regulation from the U.S.
Environmental Protection Agency.
The
consensus from the scientific and the government
regulatory community in the U.S. is that atrazine is
safe at the limits established by the EPA.
For
no-till systems, atrazine is one of the most widely used
and effective herbicides. No-till farming keeps the soil
in place, increases water infiltration and improves soil
quality. Loss of atrazine as a tool in no-till farming
would be a step backwards for efficient and safe crop
production in an environmentally-conscious manner.
KFB
Legal Foundation Director Mike Irvin has some tools and
advice for County FB’s. Contact him at
irvinm@kfb.org or 785/587-6621.
AFBF files motion to intervene on prairie dog lawsuit
Last February, the Forrest Guardians and other environmental activist groups
filed a lawsuit challenging the U.S. Department of Interior’s 2004 decision not
to list the Black-tailed Prairie Dog as “threatened.” This suit contends U.S.
Fish and Wildlife Service (USFWS) should have placed the prairie dog under the
protection of the Endangered Species Act (ESA). The suit was filed in the U.S.
Federal District Court in Denver, Colo. seeking an order for the USFWS to take
action to protect this species.
In
August 2004, the U.S. Fish and Wildlife Service determined the Black-tailed
prairie dog was not likely to become an endangered species within the
foreseeable future and did not meet the ESA definition of “threatened.”
Consequently, the Black-tailed prairie dog was removed as a candidate for
listing under the ESA.
The historic range of the Black-tailed prairie dog included parts of 11 states,
Canada and Mexico. Today the species are present in 10 states including Kansas.
In 2004, the USFWS estimated the range of the prairie dogs occupied habitat to
be 1,842,000 acres.
At
the urging of Kansas Farm Bureau and other state Farm Bureaus, the American Farm
Bureau Federation filed a motion to intervene in this lawsuit. AFBF will support
the government’s decision not to list the Black-tailed prairie dog as a
threatened or endangered species under the Endangered Species Act.
Below are Court rulings that could impact farmers
and ranchers of this state.
David et al. v. Board of County Commissioners of
Norton County, Kansas
Background:
Operators of confined animal feeding operations (CAFOs), who held state permits
allowing expansion of their CAFOs, brought action challenging county board of
commissioners' use of home rule power to pass ordinary resolution that regulated
CAFOs. The District Court, Norton County, Michael A. Barbara, Senior Judge,
ruled that the resolution exceeded the county’s home rule authority. County
appealed.
Holdings:
The Supreme Court, Beier, J., held that:
(1) resolution was invalid
attempt by county to exempt itself from, or effect change in, state statutory
provisions;
(2) resolution was invalid
attempt to prohibit what state law permitted; and
(3) exercise of police
power was not justification for resolution.
KFB Legal Foundation
participated in this case as an Amici (Friend of the Court)
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Kansas Farm Bureau Legal Foundation
for Agriculture
2627 KFB Plaza, Manhattan, Kansas
66503 785.587.6000 |
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