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First in Time; First in Right
This regulatory model approach is essentially what the title implies. In typical western water law, the first user to develop a qualified use of water (i.e., irrigation) from a flowing stream develops certain rights to divert a defined quantity of water from the stream if it is available. That diversion quantity is allocated or "adjudicated" to this user according to applicable state laws.
Later users of water from that stream can still divert water from that stream, but only in quantities that do not affect the earlier users' ability to divert the allocated quantity of water. A priority system exists where later users must recognize earlier users' rights to divert their allocated quantities of water.
This legal model could be applied in a similar fashion to wind rights. If a wind turbine is built, it would have first rights to the energy in the flowing air within a reasonable distance around the turbine. Subsequent developers would need to maintain an adequate distance from first developer's turbines to avoid significant impacts to the earlier turbine's production. A suggested distance might be five rotor diameters in the predominant wind direction and three rotor diameters in the crosswind direction as earlier described.
The advantages of this model are simplicity and increased investor confidence that a wind project will not be subject to litigation over the wind rights from nearby landowners.
The disadvantage of this model is the perception of nearby landowners that the development of a wind project could affect their ability to develop a project on their own property.
Unitization
This model would somewhat mimic the concept used in oil field unitization. When an oil well is drilled, the oil flows to the well from all directions, without regard for ownership of mineral rights. Thus adjacent mineral rights holders could theoretically have their oil drain to the nearby well, without recompense. To address the rights of all owners of mineral rights, the oil field is unitized under a formal procedure. Under unitization, the production of an oil field is then allocated proportionally to the surrounding mineral rights owners, in accordance with pre-determined impact.
This concept could be applied in a similar fashion to wind rights. Conceptually, the affected areas of a wind resource could be allocated either on the basis of a defined wind project boundary containing multiple turbines, or on an individual turbine basis, with the wind resource around each turbine allocated on a proportional basis.
In the case of wind resource allocation, benefits such as wind lease payments would need to be allocated in more than one component. This is due to the fact that the property on which turbines are placed will experience more impact than nearby landowners. A potential allocation of payments among landowners might be:
- Payments for the general wind resource, allocated on a proportional share of the landowners within the affected area (either within the project boundary, or within, say five rotor diameters of each individual wind turbine).
- Payments for direct surface impacts to landowners receiving turbines.
- Payments to landowners with direct surface impacts such as roads and cable easements.
- Payments for other real or perceived impacts.
The disadvantages of the unitization model are its complexity and the potential for unwilling landowners to be drawn into a project in which they do not wish to participate. However, this could be the case, whether or not an unwilling landowner would have a turbine placed on or near their land.
Another challenge would be determining the appropriate allocation of payments to the various stakeholders. Obviously, a landowner with a turbine would be affected more than a nearby landowner, who would experience no physical impacts whatsoever. Another complication might be the case where a landowner is also the project developer and an area-wide payment schedule for leases does not exist. Defining an adequate payment would be difficult as each party would have opposing incentives for determining payments.
Absent a regulatory formula defining payments, project developers would be challenged on many fronts to achieve a satisfactory balance among the various stakeholders.
Conclusions
To allow a resource as important as wind energy to develop to its fullest potential, legal certainty will be required for investors to continue to commit the enormous funds involved in development of a wind project. The state must define ownership of wind resources and the boundaries and limits of that ownership.
In considering the allocation of wind rights, it may help to consider how modern technologies already affect the airspace above landowners' surface rights. For instance, aviation already uses the airspace above property surfaces, and a landowner (or a wind developer) cannot erect a structure above certain heights near an airport. Also, microwave and radio towers use the airspace above private property for radio signals without consent of the landowners. Indeed, wind developers must avoid placing turbines within existing microwave paths or where those turbines might affect other technologies, such as military radar, television or radio.
Either of the above models, as well as other models or combinations thereof, would suffice to address the allocation of the wind resource. It is important to not infringe on landowners' property rights within the boundaries of a landowner's property. It is equally important that a landowner not be able to infringe on the rights of his/her neighbors to develop wind resources. In any case, it will be critical to preclude the ability of any landowner to veto development of a wind turbine or facility when that turbine or facility is not located on his/her property.
As an example, a Texas court recently ruled on the issue of "viewshed," where nearby landowners filed suit claiming impacts to their views. The court essentially ruled that property rights to viewshed "end at the property line," hopefully settling that potentially debilitating issue for wind development.
Wind is a free-flowing natural resource that crosses property boundaries and is not "owned" by anyone; nor is it "produced" on any one property. Allocation of that valuable natural resource by state or federal authority is needed soon or the industry will be inhibited by litigation, uncertainty and increased costs -- all of which will divert productive investment from an industry that has great potential to enhance national energy security.
