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When an energy company representative comes knocking on your door with a wind lease or to purchase a wind easement, there are a number of things you should consider.

Source: GreenStone FCS Dollars and Sense Column in Michigan Farm News

Negotiating Wind Turbine Leases

An increasingly important issue for Michigan’s farmers is wind energy development. Two wind parks have been completed in the state and several others are planned or under construction in response to a legislative mandate requiring 10% of Michigan’s electricity production to be from renewable sources by 2015. When an energy company representative comes knocking on your door with a wind lease or to purchase a wind easement, there are a number of things you should consider.

1. What activities are being requested? Obviously, construction and operation of a wind turbine, but what about substations, MET towers, and powerlines? The document should be specific about which structures or infrastructure you are agreeing to.

2. How many years are involved? Typically there is an initial assessment period, followed by an operational period. Is the lease renewable? By whom?

3. Where will the structures and infrastructure be placed? Buried powerlines should be below tile depth. Get assurance that all reasonable steps will be taken to assure placement that will minimize the impact on your operation.

4. How, and for what will you be compensated? Will you be paid if no turbine is built? What if a turbine is built next door and all you have are the powerlines or access road? What if your turbine is down for repairs for an extended period of time? What about crops damaged during construction, or crushed drainage tile or damaged irrigation pipes? Soil compaction? Inquire about MET towers and substations or other structures?

5. What happens when the turbine wears out? Who removes it? The site should be restored to its original condition, or to one acceptable to you. Insist on bonding, to ensure that 30 years from now your kids are not faced with removal of a rusted 500’ monument to Dad’s lack of foresight.

6. Who pays the property taxes on the structures? What if your real estate taxes increase because of the turbine?

7. What kind of liability do you have if someone is injured as a result of an incident related to the wind energy structures? What if someone hunting on your farm accidentally shoots a turbine? Or a snowmobiler runs into a power pole and is injured?

8. If there are problems, under which state laws will the issue be settled?

9. How close can a turbine be built to your house…or your neighbor’s house?

10. Can you sell your farm and keep the lease or easement payments – or does that need to go with the farm?

11. For dairy farmers, will stray voltage be an issue?

12. Will this agreement affect your ability to borrow money against the farm? Check with your lender.

Do not agree to anything without consulting a qualified real estate attorney experienced in this field. Consider joining forces with your neighbors to negotiate as a group. Talk with your landlords, they would probably be relieved to have someone help them through the process. There is strength in numbers. Negotiate with thousands of acres backing you rather than as an individual. Keep in mind, you have something they need (wind and land). Assume nothing. Insist on specific language regarding what is and is not allowed. Resist the temptation to accept a simple document to address a very complex matter. Review every word in the contract to protect you, your operation, and your heirs. Good luck, and may the wind always be at your back.