Interesting Article on Eminent Domain and Property Owner's Right

http://texas-wildlife.org/files/Texas%20High%20Wires%20article,%20electronic%20copy,%

Texas High Wires
A Balancing Act for Private Landowners
article by Lorie Woodward Cantu

Today, because of a confluence of factors, more landowners are finding themselves
in the path of electrical transmission lines than ever before. Like most issues affecting private
property rights, land use, and the law, it is important to be informed.

Competitive Renewable Energy Zones (CREZ)
Beginning in 1999 with Senate Bill 7, the Texas Legislature made a decision to position Texas
as a leader in the production of wind energy. The combination of federal tax incentives and state mandates, including the Renewable Portfolio Standard, caused wind energy production to boom in Texas.

In 2006, Texas surpassed California as the nation’s top producer of wind-generated electricity. Currently, the state has the ability to produce 8,000 megawatts annually, but the Electrical Reliability Council of Texas’ system can only handle 4,500 megawatts. As a result, the wind energy production companies, which include some of the world’s largest corporations, are “curtailed,” meaning that they cannot introduce all the energy they produce into the system. The wind production companies can only earn federal production tax credits and sell renewable energy credits for electricity that actually enters the system, so there is a very strong incentive for the utility companies to press for additional transmission infrastructure.

“The renewable energy industry fundamentally changed the American business model, because success in renewable energy is based on government policy, not on profit,” said Glen
Webb, an attorney in Abilene who specializes in wind energy issues. “Congress is gambling that subsidizing renewable energy, which currently is not competitive with traditional energy sources, will pay off in the long-term. Whether they are right or not remains to be seen, but their bet is leaving a big footprint on the private lands of Texas.”

While transmission lines are being constructed throughout the state, the mark of utility transmission lines will soon be very obvious throughout west Texas and the Panhandle. In response to a legislative mandate issued through Senate Bill 20 passed in 2005, the Public Utility Commission (PUC) designated five areas as Competitive Renewable Energy Zones (CREZ).

The zones are part of a statutory plan to build single-circuit and double-circuit
345 kV lines to carry electricity from the Panhandle and west Texas to the
metroplex and the I-35 corridor. Under the plan, an additional 2,334 miles of 345
kV transmission lines, capable of handling 18,456 megawatts, will be completed
by 2013; with a 200 foot-right-ofway, the projects will impact 56,581 acres
of potential wildlife habitat. The PUC has determined a maximum cost for the
CREZ projects of $4.93 billion.

“When this law passed, landowners were up in arms about the eminent domain
provisions involving the Trans-Texas Corridor,” Webb, who also serves
as TWA Treasurer, said. “Despite its huge potential to impact private property and
change the face of Texas, Senate Bill 20’s massive transmission plan with large
grants of eminent domain authority flew right under the radar. Now, landowners
have to deal with it.”

Terry Hadley, PUC spokesman said, “The CREZ process is different, because
the commission, under direction from the Legislature, actually chose areas for transmission
line development and then allowed transmission service providers to
bid on the projects within these areas.” Traditionally, transmission service providers
have owned and operated the power lines in a particular region of the
state, suggesting and building lines as they have needed them. In March 2009, the PUC selected eight transmission service providers to complete projects as part of the overall CREZ initiative.

“Now that the PUC has fulfilled the legislative mandates associated with CREZ, these transmission service providers will follow the same procedure that transmission service providers throughout the state have followed traditionally, but the CREZ projects have been given a priority status to ensure the lines are completed by 2013,” Hadley said. The providers will lay out the specific routes, negotiate easement agreements with landowners, obtain PUC’s final approval in the form of a Certificate of Convenience and Necessity, and then build
the transmission lines.

Certificate of Convenience and Necessity (CCN) Before a transmission service provider
can begin constructing a transmission line, it must be granted a Certificate of Convenience and Necessity (CCN) by the PUC. The CCN is important, because it brings two things: the power of eminent domain and the power for the transmission service provider to charge back its
costs for the project, plus earn a reasonable profit as provided in Section 36.051 of the Texas Utilities Code, part of Senate Bill 20. Webb said, “Essentially, when the PUC grants a CCN, it makes a transmission service provider a representative of the state, granting the provider the state’s power of eminent domain to condemn private land plus the ability to charge all of
their costs back to Texas electric consumers.

Think about this: Senate Bill 20 grants the transmission service providers
the power to take your property through eminent domain. But, if you as a landowner
choose to fight them, you as an electric consumer will be subsidizing the
cost of the very same transmission service provider that is taking your land through
eminent domain.”

During the CCN application process, the provider must outline its route and
provide a cost estimate. It is during this phase that landowners and interested parties
have the opportunity to intervene by commenting on the routes, negotiating alternatives
and possibly affecting the outcome of the process.

When a landowner signs the paperwork granting a transmission company an easement, it gives the utility unlimited access to the property, which could disrupt both wildlife and livestock.

The Texas Parks and Wildlife Department (TPWD) also reviews the proposals
to ensure providers are complying with all state and federal environmental laws. The
PUC requires the consultants who conduct the environmental assessments for each
project to submit a signed affidavit verifying that they have submitted their reports
to TPWD for review. In a traditional CCN case, the deadline for issuing the final order
is up to one year. By law, the CCN process for the CREZ cases must be completed
within six months.

The transmission service providers usually hold town hall meetings to discuss
the potential routes, but they are only required to directly notify parties who are
potentially “affected” by the proposed lines, not those who are just “interested.”
Interested parties must keep themselves up-to-date using filings posted on the
PUC website or through required public notices in local newspapers.

Milton Greeson, a rancher near Victoria who unsuccessfully opposed the
building of transmission line on his family’s property, said, “The best advice I
can give anyone is to get involved in the process early, stay informed because the
situation can change quickly, and develop suitable alternative routes that will provide
the utilities a feasible option for relocation.”

Easements
An easement is the right to use another person’s real estate for a specific purpose,
which in this case is the placement of electrical transmission lines. In legal
terms, the property owners who are subject to easements are said to be “burdened”
with the easement, because they are not allowed to interfere with the easements’
use.

Derry Gardner, president of the Gardner Appraisal Group in San Antonio,
said, “Every property comes with a bundle of rights that belongs to its
owner. When you grant an easement to a transmission service provider, you
give them about 90 percent of the rights in your bundle for the land covered by
the easement.”

In a perfect world, the transmission service providers will stick with already
established corridors and, in fact, that is the government’s — including the PUC
and the Texas Parks and Wildlife Department – preferred option. In reality,
though, utilities and other transmission service providers constantly need new
corridors to expand their service and increase their options for siting future
projects, Greeson said.

Gardner, who is a former TWA president, said, “If the government put a highway
through the middle of your ranch, theland clearly would not be the same as before.
You would ask: ‘What am I left with? What has been damaged?’ You
need to ask the same sort of questions about power lines.”
Greeson added, “Once the proposed routes have been established, take time
to consider how each one could affect your ranch operationally, visually, environmentally
and economically. Whether you’re opposing the line or negotiating an acceptable agreement, you need to know exactly what you have and what its value is – economically and for the
greater good.”

If landowners are trying to get the line relocated, it is important that the reasons
offered for relocation are broader than “My family doesn’t want this line on our
land,” Greeson said. The PUC and the utilities are hard to sway, so the reasons
have to be compelling and, if possible, recognized as public benefits in their own
right, he said. Examples include endangered species, unique habitat, significant
archeological or historical sites, identified flyways or migratory corridors.
Towers have to be big to support 345kV lines. Some are made of concrete, others are made of galvanized metal. 

“When you’re dealing with the service providers, it’s important to remember that
the transmission line has to go somewhere,”Greeson said. “And if it doesn’t
cross you, it’s likely to cross your neighbors. You need to be aware of the potential
for hostilities, if you don’t handle the negotiations and potential relocation with
tact, care and regard for your neighbors.”

Utilities prefer to use the least contentious routes, so if landowners and their neighbors
can come up with an amenable alternative, the utilities are generally willing to
listen, even if it means spending more money to re-route, Greeson said.
Considerations Regardless of whether landowners are preparing to oppose a proposed power
line or to negotiate an easement agreement, it behooves them to create an inventory
of assets and potential damages.

“Information is power,” Greeson said. “I suggest creating a team that includes an
informed attorney and/or a utility expert, someone who understands the industry
and the inner workings of the PUC; environmental experts such as range managers
or wildlife biologists and, if applicable, a field archaeologist to help you gather the
best information possible.” For the purposes of negotiation, it is important to not
only identify potential resources, but to assign a reasonable monetary value to
them, he said.

In Greeson’s opinion, the first thing that landowners need to determine is the
likelihood of prevailing in a battle to have the power line relocated.
“We lost our battle with the utility and ended up with the transmission line running
right down the middle of our ranch,” he said. “If I’d known that the chances of
us prevailing were slim, I would have focused our resources and our energy on
having the line sited in a much less obtrusive location.”

Even if landowners are optimistic about the chances of prevailing over the
utility company, they should spend time considering the impact of the transmission
line from every angle.

“Consider all the ramifications of any potential line,” Gardner said. “From
strictly an economic standpoint, I’ve seen the presence of a transmission line lower
the market value of a property by 20 percent to 35 percent. From a broader perspective,
the lines change your land and the way you use it – forever.”

For instance, he said, during the construction phase, a ranch will be subjected
to heavy traffic by heavy equipment, which can damage ranch roads, cattle
guards and low-water crossings. Unlike oil companies, utility companies do not
build new roads for their use. If there is damage to the land or to the
infrastructure, the utilities are required to return the property to its original condition,
Hadley said. But the damages have to be documented by the landowners if
they are going to recover the damages, Gardner said.

Gardner listed other issues that landowners should consider: Liability: Even though landowners have sold the easement to the transmission service provider, the landowners can
be held responsible for injury or death sustained by any people constructing or
working on the power line. Damage outside of easements: During construction, it is likely that heavy equipment will maneuver outside the easement’s boundaries because of the
sheer scope of the work, potentially damaging property that doesn’t “belong” to
the transmission service provider.

Travel corridors: In south Texas, the utility right-of-ways, with their clear-cut
corridors and highly visible towers, serve as “highways” for illegal immigrants and
illicit drug trade. Power transmission lines cut a 200-foot-wide swath through the land. By 2013, some 2,300 miles of new lines will affect more than 56,000 acres of potential wildlife habitat.

Wildfires: One of the leading causes of wildfire is sparks from electrical transmission
lines. Their presence increases the likelihood of an uncontrolled burn.
Creation of “easement corridors:” The construction of a power line and its attendant
easement creates a corridor for other easements. Several contiguous easements
through a property can change the land’s character, making it more suitable for industrial
or corridor-use. Plus, the service providers can hang additional lines, such
as fiber optic cables, from the towers, increasing the company’s revenues, without
benefiting the landowners.

Disruption of livestock and wildlife: The landowner has granted the utility unlimited
ingress and egress, so it is possible that the traffic can disrupt feeding patterns
of both livestock and wildlife. The overall impact on wildlife is another
consideration.

Kathy Boydston, leader of TPWD’s Habitat Assessment Program, said, “Linear
projects such as transmission lines tend to fragment habitat more than other
types of projects. Of course, the impact on individual species has to be considered
on a case-by-case basis. What harms one species might actually help another.”
For example, in the case of clearing utility rights-of-way, some species benefit
from the additional edge created when the lines are cut through the brush, she said.
Others are subject to more predation.

Although transmission service providers often prefer the ease of clear-cutting,
TPWD offers guidelines that demonstrate how brush can be trimmed to benefit
wildlife without interfering with transmission lines, Boydston said. If all of the native
plants are removed, TPWD suggests replanting the area with natives to preserve
the value of habitat and to help prevent invasive species from establishing
themselves.

Of course, these are just guidelines but, if desired, landowners can possibly include
them as part of an easement negotiation, she said. Transmission lines seem to have inordinate
impact on large birds, including waterfowl and raptors, she said. Raptors tend to perch on line and suffer from electrocution, but there are design guidelines available from TPWD for transmission service providers to help minimize this impact.
“Flying birds cannot differentiate between lines and the line of the horizon, which can lead to deaths by collision,”Boydston said. “If possible, transmission lines should not be sited across creeks or riparian corridors where birds fly up and down.” If the lines have to cross creeks
or riparian corridors TPWD recommends the lines be marked with bird flight diverters to help birds identify the presence of new lines, she said. TPWD provides specific guidelines to help transmission service providers site lines to help buffer wildlife from negative impacts.
In the case of lesser prairie-chickens, which live in the Panhandle, the transmission
lines required through the CREZ process may further fragment their already
diminished habitat, Boydston said. A Kansas study shows greater prairie-chickens,
close relatives of the lesser prairiechickens, tend to avoid areas with tall
structures such as wind turbines and transmission lines, abandoning areas that were
previously used for brooding and rearing chicks.
While it may seem that the impacts to wildlife are not significant, they are cumulative,
Boydston said. In the case of the CREZ project, it could affect up to 56,000 acres of land. Because of the large footprint that transmission lines can leave across Texas, TPWD is considering creating a process for compensatory mitigation, she said. Build it and they will come: new transmission lines, new sources of electricity, new subdivisions, and thousands more people making demands on the land.

“The department is charged with protecting the state’s natural resources, and
we would be remiss if we didn’t recommend that the utility companies somehow
compensate for these wildlife losses,” Boydston said. In addition to the impact on wildlife,
landowners should consider how the transmission line will affect their everyday
operations. “It’s important that landowners anticipate how the presence of the transmission
lines and towers will change the way they do business daily,” Greeson said. “Look
around and ask: ‘Will I have to move my working pens? My hay barn? My equipment
shed? My water troughs? My feeders? My deer blinds? If so, how much will
it cost to move them or rebuild them?’ If you want to recover those costs, they need
to be documented and presented when you negotiate your easement.”
Gardner noted that landowners have one chance to negotiate an acceptable
easement, and once the papers are signed, there is no going back to ask the transmission
service provider for additional considerations or damages; therefore, it is important
that the initial agreements cover as many eventualities as possible. “You must position yourself to maximize the value of your property,” Gardner said.
Eminent Domain
Eminent domain is the power of the federal or state government to take private
property for a public purpose, even if the property owner objects. Under the Fifth
Amendment to the U.S. Constitution, the government can take property if it is for
public use and the owners are “justly compensated” for their loss. Experts say
that the phrase “justly compensated” is a point of contention in Texas.
David K. Langford, TWA’s Vice President Emeritus, said, “The U.S. Constitution
says private land may be taken for public use if the owners are justly
compensated. It does not say that private land may be taken for public use, unless
it’s too expensive. Excessive expense is the primary justification utility companies
give for their cut-rate offers.”

He continued, “In a nutshell – and in an act of ultimate unfairness – individual
landowners, because of the misfortune of location, bear the burden of cost for society.
Just compensation cannot happen in Texas as the eminent domain laws are
written now, so the only way to ensure just compensation is to fix our state’s
eminent domain laws.”

Webb said, “Because the transmission service providers have the power of eminent
domain, landowners start with their backs against the wall, and the service
providers know it. Why should they pay fair market value when they can just take
it from you?” “The settlement offers are generally based on production value, not market
value, and they don’t include damages.

As a landowner, you don’t really have a choice — you can take the low-ball offer
or you will find yourself in condemnation court.” Landowners who choose to oppose the
transmission service providers must complete an administrative process before
their case ever reaches civil court, Webb said. While it might be tempting to tackle
the process without legal counsel, it could be disastrous because one misstep during
the administrative process can prevent the landowner’s right to appeal the administrative
phase to a civil phase, he said.

Venue for a condemnation proceeding is the county where the land is located.
The condemning authority’s (transmission service provider’s) burden is to prove that
there is a public necessity for the eminent domain and obtain a public necessity
resolution from the condemning authority’s Board of Directors.
“At this point, the condemning authority makes a final offer, and if the landowner
refuses to accept it, the case then moves to court, but it’s not a trial proceeding,”
Webb said. The judge, who can be a district judge or a county court-atlaw
judge, appoints three “special commissioners,” who are disinterested parties
charged with considering and assessing damages to the property being condemned.
After hearing the evidence and assessing damages, the special commissioners
must make a written statement of the damages and file the statement with
the court on the day the decision is made.

If the landowner disagrees with the assessment of the special commissioners,
the landowner may object and appeal the commissioners’ decision. Upon filing objections,
the commissioners’ award is vacated and the judicial phase begins. But,
at this point, the condemning authority clearly has the upper hand, because it can
deposit an amount equal to the special commissioners’ award with the court and
take possession of the property, before the judicial phase ever begins.
“Right now, the process is stacked against landowners, but you are not helpless,”
Webb said. “Get informed and be prepared. The law of eminent domain is
full of pitfalls for landowners. Without information and preparation, landowners
will lose their property rights and lose just compensation for the loss of those rights.”
Epilogue: A Private Alternative While most transmission service providers
in Texas apply for a CCN to obtain its attendant powers, there is one notable
exception. Recently, Next Era Energy (formerly Florida Power and Light), the
nation’s largest domestic supplier of electricity, built a private transmission line
from its Horse Hollow Wind Energy Center located near Abilene to Comfort.
The entire project was completed with private money – and without the power of
eminent domain.

“I’ve always said that I’d rather do business with a company that didn’t have
eminent domain than one that did,” Webb said. “And the experiences of landowners
along this line bear out my opinion. Because Next Era did not have the power of
eminent domain, landowners could say ‘No’ to the project. Landowners could
walk away from the table until the company brought an offer that was acceptable.”
In many cases, the company was paying above market value for these lines
plus damages, he said.

Next Era took this route, not because of a philosophical shift, but because, under
the circumstances, it made good business sense, Webb said. The production of the Horse Hollow
Wind Energy Center, the world’s largest wind farm, was curtailed because its production
capacity exceeded the local transmission capacity, Webb said. As a result,
Next Era was not receiving all of its benefits from state and federal policy: federal
production tax credits and revenue from the sale of state renewable energy credits.
The company made a business decision that it would be better off compressing the
traditional three-year time span for building a transmission line into an 18-month
period, Webb said. Why? Because the faster the line was built, the faster the
company would receive its benefits under state and federal law.

To expedite the process, the company negotiated exceptional easement agreements
to avoid conflict along the route, knowing that the additional tax credits would help the company recoup its investment in the long-term, he said. Plus, the company, not the state of Texas, would
own the line and be able to count it among its assets. “In this case, it made good business
sense for Next Era to reach into its own deep pockets and construct the line,”
Webb said. “This one example doesn’t signal a shift for the entire industry.”
Notwithstanding the private line, Next Era created a subsidiary, Lone Star Transmission
LLC, which has been awarded one of the CREZ priority projects. The
company will be applying for a CCN to complete that line.
Gardner said, “The fact that Florida Power and Light through Next Era Energy
was willing to include damages in their easement agreements is a landmark. Prior to
this time, utilities refused to admit that the presence of a transmission line could result
in damages. Now, the largest utility company in America has not only recognized
that there could be damages, but h