Whose Land Is It Anyways?

The development of energy resources is typically dependent upon the availability of infrastructure such as hydrocarbon pipelines and transmission lines. Many of the issues concerning energy development and consequently infrastructure construction focus on the impact of climate change generated by a particular energy resource. The continuing controversy over the permitting of TransCanada’s Keystone XL pipeline is a flashpoint in the debate over the development of Canada’s tar sands and its impact on climate change. Likewise, many wind- power advocates champion this use of renewable energy to significantly reduce carbon dioxide emissions and catastrophic climate change.

The issues regarding energy resources and their impact on climate change are paramount to future energy policies. However, there is another significant concern tied to energy/infrastructure development, and that is the associated landowner-eminent domain problem. The movement of energy, whether it is hydrocarbons or electricity, involves infrastructure that is built in large part, on private property. When energy infrastructure is built by private corporations, these entities need to deal with private landowners so that infrastructure can be constructed on their lands. Ideally this is accomplished by corporations and landowners negotiating a fair price for the use of their lands. However, that is truly an ideal world scenario. The reality is that private corporations have lately pushed legislation through numerous state legislatures and court systems to gain the right of eminent domain for their infrastructure projects. The right of eminent domain has historically been used by governments to seize private property for public use and then to fairly compensate the owner for that ”taken” property. However, eminent domain usage for recent private infrastructure projects becomes one where private corporations can take private lands for their private gain. For example, the Montana 2011 legislature passed legislation via House Bill 198 that gives private corporations the right of eminent domain for projects such as nuclear generation and storage, hydro, certain transmission lines, certain major pipe lines, geothermal exploration, transportation links, pump stations and other facilities associated with the delivery of energy that receive permits through the Montana Major Facility Siting Act (see the Concerned Citizens Montana website for background on HB 198 and Geopostings.com for a review on Montana Senate Bill 180, the bill intended for repealing a part of HB 198 during the Montana 2013 legislative session).

In a needed first step for educating the Montana legal and legislative communities about the recent changes in eminent domain law, the State Bar of Montana CLE (Continuing Legal Education) Institute will convene a course on Montana Condemnation Rights on February 14, 2014, at Fairmont Hot Springs, Fairmont, Montana. A link to the course brochure is: MT Condemnation Rights.

The MT CLE course is well balanced in that it contains presentations from many sides of the eminent domain issue. More specific information on the CLE course presentations includes:

–          CONDEMNATION 101—What every real estate practitioner should know about condemnation. An overview of condemnation law in Montana, including condemnation authority, time frames, notices, rights of possession, valuation and attorney fees and expenses. [This element of the program is intended as an overview and not a detailed consideration of the latest developments in Montana law.  However, there should be a brief introduction to the US  Supreme Court decision in Kelo v. City of New London (propriety of using the power of eminent domain for economic development purposes) which placed new focus on the intended scope of the power of eminent domain as well as the Montana response.]  (1 hour presentation by Hertha L. Lund, Lund Law PLLC, Bozeman, Montana.)

–          TAKINGS AND TRANSMISSION— This presentation will explore the range of state laws governing eminent domain authority for interstate transmission lines, particularly those designed to bring renewable energy generated in one state to customers in other states.  It will focus in particular on various state approaches to granting private merchant transmission lines eminent domain authority to build transmission lines, and whether such lines are a “public use” for purposes of meeting state statutory eminent domain requirements.  In addressing these issues, this presentation will discuss the Supreme Court’s Kelo v. City of New London decision, the litigation and legislative activity surrounding the Montana Alberta Tie Line (MATL) project, some historical context with regard to state constitutional and statutory grants of eminent domain to private parties in the West, and the role of “just compensation” in eminent domain disputes involving transmission lines. (1.25 hours presentation by Professor Alexandra B. Klass, Professor of Law, the University of Minnesota Law School.)

–          THE EASEMENT:  PROCESS, TACTICS AND SUBSTANCE- How and what to negotiate to fully protect landowners’ property rights when confronted with the possibility of transmission lines burdening their land. A negotiation/drafting checklist will emerge which prove extremely helpful for any practitioner handling future utility easements. (1 hour presentation by Dennis R. Lopach, Attorney, Helena, Mt.)

–          THE MONTANA BATTLE: LITIGATION/LEGISLATION RELATING TO PRIVATE EMINENT DOMAIN FOR TRANSMISSION LINES AND OTHER CONTESTED CONDEMNATION ISSUES. A debate to highlight the opposing views by lawyers intimately involved in the process. Participants include: Hertha L. Lund (Private Landowners) Lund Law, PLLC, Bozeman, MT and John Alke (Utilities) Hughes, Kelner, Sullivan and Alke, Helena, MT. Each lawyer will be given 30 minutes to present their case in chief. (Total debate time: 1.5 hours.)

–          HOT TOPIC ROUNDTABLE-  A facilitated panel discussion including all speakers will address “Hot Topics” which have emerged throughout the day. (Facilitator:  Brian Kahn, Attorney, Helena, MT. Total Roundtable time is 1.25 hours.)

The potential use of eminent domain by a private corporation, Northwestern Energy, to build a high-voltage transmission line through a southwestern Montana community.

The potential use of eminent domain by a private corporation, Northwestern Energy, to build a high-voltage transmission line through a southwestern Montana community.

Power Companies Losing Out To Rooftop Solar??

by John Vincent, former Montana Public Service Commissioner

America’s utility industry, “Big Power,” is, by their own admission, scared.  Made up of large corporations with huge and profitable investments in centralized generation and long distance, high voltage transmission (profits mostly guaranteed by monopoly status and government regulation), they are facing what their own industry calls a “death spiral,” – the likelihood that the loss of demand (need) for the power they sell will put an end to “business as usual,” (the old energy paradigm).

On Rooftops, A Rival For Utilities”, a 7.28.2013 NY Times article by Diane Cardwell, details the industry death spiral, and ties the spiral into net metering and its strong appeal to potential rooftop solar users:

Net metering right now is the only way for customers to get value for their rooftop solar systems,” said Adam Browning, executive director of the advocacy group Vote Solar.

Mr. Browning and other proponents say that solar customers deserve fair payment not only for the electricity they transmit but for the value that smaller, more dispersed power generators give to utilities. Making more power closer to where it is used, advocates say, can reduce stress on the grid and make it more reliable, as well as save utilities from having to build and maintain more infrastructure and large, centralized generators.

But utility executives say that when solar customers no longer pay for electricity, they also stop paying for the grid, shifting those costs to other customers. Utilities generally make their profits by making investments in infrastructure and designing customer rates to earn that money back with a guaranteed return, set on average at about 10 percent.

“If the costs to maintain the grid are not being borne by some customers, then other customers have to bear a bigger and bigger portion,” said Steve Malnight, a vice president at Pacific Gas and Electric. “As those costs get shifted, that leads to higher and higher rates for customers who don’t take advantage of solar.”

Whether it’s on-site solar (the main focus of this article), conservation, efficiency, distributed on-site or locally distributed power from other alternative energy sources, smart grid and micro grid technology or more efficient home appliances (the new energy paradigm), “Big Power” sees the day coming when sufficient need and market demand for the power they sell will no longer exist. Of course, they will do all they can to prevent that from happening, and that fight will be coming soon to a legislature and public utility/service commission near you.

One of the huge benefits of the new energy paradigm will be the rapidly decreasing need for any new high voltage, long distance transmission lines. Every day the new energy paradigm gains strength and momentum is a day that further diminishes the need for projects like NorthWestern Energy’s MSTI line and all the environmental, financial and private property rights problems it raises.

So, whether it’s rooftop solar in California or energy efficiency programs and small scale, on-site solar, wind or micro hydro projects in Montana, it all pushes the new energy paradigm forward. And that’s a good thing.

Energy Conservation And Efficiency….. Good For People, Business, And The Environment

– By John Vincent, Former Montana Public Service Commissioner

It’s recently become all too clear that “big power” is “waging war” on energy efficiency and conservation because it reduces the amount of power they sell and cuts into their profits. But for others (residential consumers, private businesses – both large and small, and corporations), energy efficiency is saving energy, saving money, and improving bottom lines. And it’s good for the environment, too. Less generation, especially, but not exclusively, coal fired generation, reduces CO2 emissions (natural gas produces about half the CO2 of coal but also emits high quantities of methane,  a “green house” gas 20 times more potent than CO2).

IDAHO’S J.R. SIMPLOT COMPANY LEADS THE WAY ON ENERGY EFFICIENCY

The J.R. Simplot Company shows the way to energy conservation and efficiency. This is a great example of the conservation/efficiency ethic being taken to heart by a major American business. With more than 10,000 employees, the J.R. Simplot Company is one of the nation’s largest privately owned companies. And, it’s no secret that the Simplots are a politically conservative family and business. They have fully embraced (dare it be said) a good, old fashioned conservative ethic; saving money……….. by using less energy and consequently also cutting costs.

Here’s what they’ve accomplished through energy efficiency and conservation since 2009:

–  saved 1.3 trillion btu’s of natural gas (enough to take 29,929 cars off the road and keep 95,056 tons of co2 out of the air),

–  reduced electrical use by 390,821,028 kilowatt hours (enough to take 35,400 homes off the grid),

– saved millions of dollars*.

Of course, when individuals and businesses save energy it also reduces the need for new and extremely costly centralized electrical generation plants and long distance, high voltage transmission lines – both of which would cost (not save) electric customers billions of dollars, pose a threat to the loss of private property rights through eminent domain, and harm the environment. When asked recently by the Idaho Statesman newspaper why they undertook their energy saving efforts, the Simplot family fell back on the words of the company’s founder, J.R. Simplot: “do well by doing good.”

Good advice.

*actual dollar amount of savings to be posted soon

Eminent Domain in Montana – The Montana House Fails Landowners

Now that the Montana legislative session is over, here is my tally is on what landowners got out of the session regarding private property rights and specifically those rights related to merchant transmission lines:

–          HB 417: this bill requires that a condemnor provide landowners a final written offer prior to initiating a condemnation complaint. This is helpful to landowners because condemnors often manipulate offers before a final award for damages and this can adversely affect the determination of the prevailing party for reimbursed attorney fees. This bill passed the Legislature on 4/24 and was signed by the Governor on 5/1.

–          HB 45: this bill requires that the current Environmental Quality Council handbook on eminent domain be included in the condemnation complaint. This booklet may provide landowners with some information relative to their rights under Montana law. This bill was signed into law by the Governor on March 28.

All in all, not much for landowners came out of this past session, and nothing was really gained for landowners regarding private property rights in relation to merchant transmission lines. SB 180, a bill that would have repealed the power of eminent domain granted to private, for-profit corporations via the Major Facility Siting Act (MFSA), made it through the Senate and then was tabled in the House Federal Relations, Energy & Telecommunications Committee. Leesa Zalesky, of Western Ag Reporter, wrote a good summary of what happened to SB 180 during the session, and I’ve included it below. There are a couple of points in Leesa’s article that are slightly in error, such as HB 198 was more related to a patch for MATL (Montana-Alberta Tie Line) than explicitly written for MSTI, and the extent of an HB 198 repeal via SB 180, but at least there’s information about what happened to SB 180 out in the media. It is also important to note that SB 180 was traded for HB 417 by some House legislators/lobbyists, and that became a major obstacle in trying to get SB 180 through the House.

Here’s Leesa’s article:

Montana House Fails Landowners

By Leesa Zalesky – published in Western Ag Reporter, May 2, 2013

When the Montana legislative session ended last week, Senate Bill 180 — sponsored by Senator Debby Barrett, a Republican from Dillon, MT — died for lack of a champion in the Montana House of Representatives. SB 180 would’ve restored landowner protections and private property rights by repealing the expansion of eminent domain powers granted through last year’s passage of HB198.

Eminent domain is the power to take private property necessary for public use, a power typically held by the individual states and the federal government. Readers will remember that, during its previous session, the Montana Legislature passed the highly contentious HB 198, which delegated the power of eminent domain to an entity or a person issued a permit by the Montana Department of Environmental Quality (MDEQ). The controversy over the bill surrounded Northwest Energy’s planned Mountain States Transmission Intertie (MSTI), a 500 kV electric transmission line that would extend from Townsend, Montana, through the Whitehall and Butte areas south along the Interstate 15 corridor to a substation in south-central Idaho, a route that involves a great deal of privately owned land.

The passage of HB198 left Montana landowners vulnerable to private property takings whether the land usage would be related to the public good or private use. SB180 would have protected landowners’ rights and would have ensured they received procedural and constitutional protections for private property. SB180 would NOT, as some opponents claimed, have brought development in Montana to a screeching halt, and utility companies like NWE and rural electric cooperatives would have been able to construct distribution power lines. It would have, however, protected private property rights in the process.

SB180 passed through the Montana Senate on February 27 in a 28:22 vote. But when it arrived in the House, the bill was assigned to the House Federal Relations, Energy & Telecommunications Committee (FRET) on March 27, essentially a political strategy to kill the bill. Knowing the FRET Committee would be unfriendly to the bill, SB180’s original sponsor asked House leadership to route the bill through the House Natural Resources Committee, but the request was rejected, and sure enough, the bill was promptly tabled by the FRET Committee. Proponents of the bill were unsuccessful at blasting the bill out of the FRET committee (60 votes are needed for a successful blast), and the bill simply died when the legislature adjourned. Rob Cook — a Republican from Conrad, Montana, and chair of the legislature’s Joint Appropriations Subcommittee on Long-Range Planning — was one of the most vocal opponents of the bill. In fact, supporters of the bill found not one single champion on the Republican side of the House, where they expected to find their strongest support.

Deb Hanneman, PhD, is a landowner and geologist who lives near Whitehall, Montana. Hanneman is a member of Concerned Citizens Montana, a group that fought HB198 last year and supported SB180 during the latest legislative session. Hanneman, who worked the Montana legislature seeking support for SB180, summed it up: “A lobbyist that has been in Helena for decades pulled me aside during the last part of this session and told me,”You need to understand that Anaconda Company, then Montana Power and now Northwestern Energy, have owned the Montana legislature since day one. They found it easier to control 150 people in a confined space than to deal with people spread all over the state. You’re just beating your head against the wall trying to get your vote through.”

 

Montana Senate Bill 180 Goes To The House

Montana rural landowners are gearing up to push Senate Bill (SB) 180 through the Montana House. SB 180 will repeal the power of eminent domain granted via the Montana Major Facility Siting Act (MFSA) as legislated in the 2011 session under House Bill 198. I’ve spent much time since the last Montana legislative session delving into how eminent domain law in Montana was changed by the enactment of HB 198 and also dealing with the potential impact of this on rural landowners.

I view this change in eminent domain law as largely a decision that favors economic development in rural areas being done at the expense of landowners. That may be a decision that the Montana legislature ultimately agrees upon, but it was a decision that did not result from an honest, open debate during the last legislative session. I think that this type of decision is best done via an interim study that incorporates input from a diverse set of Montana citizens.

However, for the moment, I think that SB 180 sets us on the path for a meaningful debate on how to handle eminent domain and merchant transmission lines. SB 180 will pull the power of eminent domain out of MFSA, and this first step is essential to take before any meaningful debate can occur. I say this because MFSA is basically an environmental review process that does not contain any vehicle for determining the facts necessary for condemnation, yet it gives the successful applicant the power of eminent domain. MFSA has also become more a political process than true environmental review process as evidenced by the fact that out of 37 projects proposed during the lifetime of MFSA, only one project has not been granted a certificate of compliance.

Additionally, I believe that the eminent domain power conferred via MFSA opens the gate for a variety of other energy facilities, in addition to the merchant transmission lines that have been central to most of the legislative debate on this issue. The power of eminent domain will go to any “person” who is granted a certificate of compliance for the following projects:

1. Nuclear (generation and storage: MCA 75-20-104 and 75-20-1202), hydro (MCA 75-20-104 and 75-20-204), and geothermal (MCA 75-20-104 ) energy generating facilities,

2. Certain transmission lines (MCA 75-20-104),

3. Certain major pipe lines (MCA 75-20-104),

4. Geothermal exploration (MCA 75-20-104),

5. Transportation links, pump stations and other facilities associated with the delivery of energy (MCA 75-20-104).

Some of the listed projects above requiring a MFSA Certificate are expressly identified as a public use in the Montana eminent domain statute 70-30-120, but others are not identified in this manner.  That means entities can be granted the power of eminent domain for projects that are not considered a public use. This is further evidence that use of the MFSA to delegate eminent domain was not fully considered.

Obviously the focus of last session’s HB 198 and the current session’s SB 180 is merchant transmission, but the questions of public uses and whether or not an entity must expressly be granted the power of eminent domain should be resolved given the variety of facilities that are still covered under MFSA and could be built using eminent domain. With no large impending projects looming under MFSA, we have time now to have a true public debate on these questions. This time we should do it correctly, and the goal of SB 180 is to start us on that path.

I’ve been asked how we can proceed with building merchant transmission lines as we sort this out. First of all, it is important to remember that many other kinds of entities, including various types of power companies, have existing authority to condemn property for construction of power lines in statute that is unaffected by SB 180: including the State of Montana, Municipal Utilities, Rural Cooperative Utilities and Public Utilities.

For building “merchant lines” specifically, there are currently a few options:

—–Use federal energy corridors that were established by several federal agencies in eleven Western states expressly to expedite the construction of high voltage transmission lines (established under the Energy Policy Act of 2005),

—– Bury high voltage direct current transmission lines in state highway and/or railroad right-of-ways,

—-The private, for-profit company can negotiate with a landowner for a true business partnership. This could include yearly royalties per tower, a fair one-time payment, or some other actual business partnership arrangement.

Montana citizens and legislators need to get behind SB 180 and get it to the governor’s desk!