Entries in wind farm lease option (1)

If you're interested in leasing your land to a wind developer, you should be interested in this:

Fargen, Olson propose changes to wind-energy leases
By CHUCK CLEMENT, Staff Reporter


Mitch Fargen

South Dakota landowners interested in leasing their property to wind-energy developers should have an interest in bills to be presented to the State Affairs Committee on Thursday afternoon.

Three bills that the State Affairs Committee has scheduled for testimony at 4 p.m. deal specifically with the contracts that landowners can sign for leasing land to wind farm developers. Two of the bills have District 8 state legislators as their prime sponsors.

State Rep. Mitch Fargen, D-Flandreau, has proposed adding several new requirements and restrictions to state law in HB 1268 that are intended to protect landowners. Fargen has proposed a waiting period between a property owner's decision to sign a lease agreement and the actual signing of the contract.

"When developers sit down to talk about leasing your land, the details can get complicated and a landowner can wind up looking at a 20-page contract," Fargen said. "In my bill, when you sit down with me to talk about development, I have 10 days before I have to sign so I can talk to a lawyer."

Fargen's bill also contains other clauses that:

-- Disallow confidentiality agreements about negotiations or proposals, unless both parties agree to a mutual confidentiality agreement in the final executed lease or easement.

-- Ensure property owners have the right to continue conducting their business operations during the term of the agreement.

-- Ensure that the property owner is not held responsible for the facility's property taxes or damages caused by the equipment.

-- Disallow any requirement for the arbitration of disputes that would replace the landowner's option of taking disagreements to court.

Fargen said his bill is scheduled for a hearing on Thursday along with HB 1194, sponsored by state Sen. Russell Olson, R-Madison, and HB 1263, sponsored by Rep. Kristi Noem, R-Castlewood.

Olson's HB 1194 would specify the state's definition of development to actual construction at a wind-turbine site.

State law currently places a five-year time limit on wind-energy development that makes a lease void if the developer has not started construction within five years of the contract's signing. Current law provides protection against speculators who could hold land "hostage" to drive up the price that they would receive from an actual energy developer.

HB 1194 specifies that development means that a turbine foundation has been constructed on the property. According to Fargen, some development companies want the definition of development to include contract negotiations.

Noem has sponsored HB 1263 that would strip the five-year deadline for property development. Instead, Noem's bill would allow the term of an easement to become whatever length of time is agreed between wind-energy developers and property owners. The law would still require that the term of any such easement could not exceed 50 years.

HB 1263 also allows the developer to only need to file a memorandum of easement, not the actual easement, with the county register of deeds.

According to Fargen, plans have been made for the sponsors of the three bills to meet before Thursday to see if a compromise is possible.

"Hopefully, all of the parties involved can meet and work together to make a good bill," Fargen said.

Fargen is currently scheduled to offer testimony on Thursday regarding all three bills before the State Affairs Committee.

Blender pumps bill

Fargen is also scheduled to speak on Thursday before the State Affairs Committee on HB 1192, which would create an ethanol blender-pump incentive program.

HB 1192, which is sponsored by Fargen, would create incentive grants so that retailers could install ethanol blender pumps at their facilities. Each retail location could receive up to $5,000 out of a $1 million fund created from federal economic stimulus dollars.

Fargen has cut the fund amount in half -- from $2 million -- since the bill was submitted. He expects to see support for the bill at this week's hearing from the Rounds administration.