Transmission Lines Information and Options for Landowners

August 30th - San Angelo

Texas AgriLife Research & Extension Center

7887 US Hwy 87 North

September 1st -Wichita Falls

Clark Student Center, Shawnee Theatre

Midwestern State University

3410 Taft Blvd.

October 8th - Kerrville

UGRA Guadalupe Basin Natural Resources Center

125 Lehman Dr., Suite 100

October 13th - Cleburne

Johnson County Cattle Auction

3119 N. Main Street

October 27th - Lubbock

Texas AgriLife Research & Extension Center

1102 East FM 1294

All Meetings are 1:30-4 p.m.,

except in Lubbock, which is 3-5:30 p.m.

Join attorneys Glen Webb and Judon Fambrough for expert information on the electric

transmission line process, CREZ, and options for private landowners who may be impacted by

proposed transmission line routes. These seminars are free and open to the public.

(800) 839-9453 (800) 242-7820

10/14/2010

1

AT TEXAS A&M UNIVERSITY

Judon FambroughAttorney at Law

Electrifying Speaker withShocking News!

PUBLICATIONS OF INTEREST FROM THE REAL ESTATE CENTER

• Hints on Negotiating an Oil & Gas Lease.• Wind Rights and Wrong (How to Nego. Wind

Leases).• Secrets on Negotiating Groundwater Leases • Secrets on Negotiating Groundwater Leases. • Understanding the Condemnation Process

(with emphasis on Pipeline Easements). • Shock Treatment: How to Negotiate

Transmission-Line Easements.• Texas Deer Lease (w/ Landowner Liability).• Texas Easements.

recenter.tamu.edurecenter.tamu.edujudon@ recenter.tamu.edu judon@ recenter.tamu.edu

MY HOME TOWN!

POTENTIAL TOPICS?

DISCRIMINATION?

10/14/2010

2

Condemnation from the Landowner’ Perspective?

IT’S ALL BAD!

So, don’t let your emotions overrule common sense.

Three Possible Responses:

1) Resignation: They’re coming and there’s nothing we can do.

2) Over Reaction: We’ll hire the meanest SOBattorney and show them whose boss!attorney and show them whose boss!

3) Common Sense: Let’s negotiate the best deal possible and then see if we need to hire an appraiser and/or an attorney. But what is negotiable and how do we negotiate?

I AM SITTING ON A POT OF I AM SITTING ON A POT OF GOLDGOLD!!

“Far too many landowners focus on the amount ofthe payment and not the property rights beingtaken for that payment.”

“EMINENT DOMAIN”versus

“CONDEMNATION”

PRONUNCIATION of“CONDEMNATION” DIFFERS

• Afterwards, “CONNED! DAMN NATIONS!”NATIONS!”

• I know I was “CONNED” but not sure how or why.

• Insight gained in Hubenak Case decided by Tx Supreme Court in 2004.

Make Sure You UnderstandAll the Terms.

For example, when will an easement terminate?

Answer: When the condemnor “Abandons” the line.

10/14/2010

3

“I’m going to make you smarter than the average Mineral Owner.”

At least “Smarter Than

The Average AGGIE.”

Can you find the Aggie in this picture?

WHERE WOULD YOUR FIND THIS SIGN?In front of my designated

parking place at work?

AT THE ENTRY TO THIS GATED SUBDIVISION?

At the City Park next

to a Trash Dumpster?

What does the term “Abandonment” mean?

10/14/2010

4

THE CONDEMNATION PROCESS Here’s the Facts

• Currently, wind power can generate 8,000 MW of electricity, but existing power lines can carry only 4,500 MW.

• Plans are underway to construct an addition 2 334 il f i i li 2,334 miles of transmission lines to carry 18,456 MW of electricity. These will encompass 56,581 acres of land AND affect ____Landowners.

• It takes one year to construct a wind farm and 5 years to build the transmission lines to serve it.

Preliminary Questions

• Can you deny the survey crew entry onto your property?

• Are they liable for damages?

• Can they get outside the proposed easement boundaries?

• Does the proposed easement agreement contain only the rights the power-line company can condemn?

What Three Four Questions Should You ask the Right-of-Way

Agent when contacted for a proposed Transmission Line p p

Easement?

List Them in Order of Priority.

Order of Questions:1) Show me a copy of your application of the CCN

(Certificate of Convenience and Necessity) presented to the PUC (Public Utility Commission).

2) Prepare a list of the property rights you can condemn and the ones you cannot condemn that appear in the proposed Right-of-Way Agreement. P i h Put a price on each one.

3) Show me a copy of the appraisal. Does it comply with the recoverable items allowed for a partial taking under Texas case law?

4) Show me a copy of your policies and procedures for condemning land. What happens if you violate them? Who’s your supervisor?

Four Legal Restraints

• Public Purpose (Public Use)Kelo v. New London (Addressed in Proposition 11 in November 2009)

• Public Necessity (Cannot take more land or property rights than needed for project.)or property rights than needed for project.)

• Just Compensation (Questionable after Hubenak) Difference in what is initiallyoffered and what is ultimately paid if contested.

• Due Process – Three Stages outlined in Chapter 21 of the Texas Property Code–Reinterpreted after Hubenak.

10/14/2010

5

“Traditional” Texas Due Process(Three Stages)

1st Bona Fide Attempt to Purchase: (Negotiate in Good Faith based on a Fair-Market-Value Offer.) If “Unable to Agree on Damages” go to next stage.

2nd Special Commissioners Hearing before 3 p gFreeholders: (Project may begin immediately after award posted.) You need an appraiser and probably an attorney.

3rd If either party dissatisfied with award, Appeal to court for trial. It can go all the way to Texas Supreme Court. Judicial Rules of Procedure apply. You need both an appraiser and an attorney.

In 2004, HUBENAK DECISIONby TxSCt.

Inadequate offer made to landowners in Stage I for pipeline easement, and

Condemnor attempted to purchase 3 p pproperty rights it could not later condemn:

Warrant and Defend Title

Transport both Oil and Gas

Right of Assignment.

3 Issues on Appeal

1) Does the “Unable-to-Agree-on-Damages” Standard in Stage I require a Bona Fide Offer based on Fair Market Bona Fide Offer based on Fair Market Value?

2) If the Bona-Fide-Offer Rule is violated, does it deprive the court of jurisdiction and result in a dismissal of the lawsuit in Stage III?

First Answer

• “The dollar amount of the condemnor’s offer should not be scrutinized nor compared with other indications of value. compared with other indications of value. A single offer by the condemnor satisfies the requirement regardless of the amount.”

• No more negotiations (about money) required in Stage I. Take it or leave it.

Second Answer?

• “Negotiating in Good Faith is no longer required to confer jurisdiction on the court.”

• The issue will never be dismissed for lack of jurisdiction based on the amount of the offer.

Third Issue

3) Does the “offer to purchase” in Stage I have to match the property and property rights that can subsequently be condemned?Answer: No.The parties must negotiate for the same physical property and but only for the same general use or uses when it comes to property rights.

10/14/2010

6

Caveat Emptor“Here’s the Con”

The rights (property rights) that the Condemnor attempts to purchase in-lieu-of-condemnation (Stage 1) do not have to of-condemnation (Stage 1) do not have to match (mirror) the rights the Condemnor may ultimately condemn in Stage 3.

Do you know which ones these are?

Only limited by the Public-Necessity Requirement.

What the Landowners Did Wrong in Hubenak?

1) The issue was not discussed by the parties in the Stage I negotiations.

2) No issue raised as to the value of these property rights in Stages I or II.

3) No evidence the L O would have: (1) accepted 3) No evidence the L.O. would have: (1) accepted the offer had these property rights had been omitted from the offer or (2) purchased separately?

4) No evidence these matters were material to the negotiations.

5) YOU (the landowners) MUST FIX THE PROBLEMS IN STAGE 1.

Recovery of Expert Witness Fees and/or Attorneys’ Fees

If you successfully contest the offer in If you successfully contest the offer in Stages II and/or III, can you recover your appraiser’s fees and/or attorneys’ fees?

THE COURT “CON”(Attorney Fees)

“If the commissioners award greater damages than the condemnor offered to pay before the proceedings began or if the decision of the commissioners is appealed and a court awards greater damages than the commissioners awarded, the condemnor shall pay all costs.”

Section 21.047, Texas Property Code.

Query?

• Do you “Aggies” know the difference between a “Cost” and an “Expense”?

GET THIS!

• Attorney fees and expert witness fees are “expenses” for preparation of trial. They may not be recovered as an item of “cost” unless the statute specifically provides. Otherwise, they are merely incidental non-recoverable expenses.

City of Houston v. Biggers, 380 SW2d 700, 1964

10/14/2010

7

Things to Rememberafter Hubenak (The BOR)

1) You are not entitled to AN OFFER based on FMV in Stage I for your land.

2) You cannot recover attorneys’ fees and appraisers’ fees if you successfully contest FMV in Stages II and/or IIIFMV in Stages II and/or III.

3) The property rights they attempt to purchase in lieu of condemnation in Stage I do not have to match (will not) the actual property rights they can later condemn. (They ALWAYS attempt to purchase more rights without paying extra.)

NEGOTIATING TRANSMISSION‐LINE EASEMENTS IN LIEU OF CONDEMNATION

First Things First• Remember the CCN (Certificate of

Convenience and Necessity) issued by the Public Utilities Commission (PUC). Why ask for a copy?

• This clothes them with the power of eminent This clothes them with the power of eminent domain.

• More importantly, it specifies the minimum specifications for the transmission line. These are the DIMINSIONS you are looking for to include in the easement!

Here’s How the Granting Clause Should Read:

The Grantor grants to the Grantee a non-exclusiveeasement that is __’wide and __’high for the construction and maintenance (no relocation or replacement) of __ overhead line(s) to carry a maximum of __ kV of Wind-Generated electricity using type of support structures using ___ type of support structures.

(The CCN issued by PUC contains ALL the information needed to fill in the blanks.)

• Why limit Easement to Non-Exclusive?• Why Overhead Lines only?• Why Wind-Generated Electricity only?• Why no Relocation or Replacement?

From the Deed Records…

“Grantor grants a permanent, irrevocable, exclusive easement ___’ wide for the construction, installation maintenance, use, operation, repair, replacement, relocation

d l f T i i F iliti d and removal of Transmission Facilities and Telecommunication Facilities…to deliver electrical power to an electrical power grid or other systems… with both overhead and underground electrical transmission lines and interconnection facilities…”

Recommendations

• 1) Never grant a permanent, irrevocable easement. You are basically granting fee title, not an easement. Insert that non-use for _______ continuous months terminates easement. Do not rely on “Abandonment.”

• 2) Limit communication lines to private use only. (Centerpoint Energy v. Bluebonnet Drive, 264 SW 3rd 381 [2008]) No Broadband Towers or equipment permitted.

10/14/2010

8

Continued

3) Specify where can they enter and leave premises. Require additional compensation for use of roads if they cannot stay within easement. (Consult their appraisal.)

4) Require 24- to 48-hour prior notification before entering after the construction phase ends. But, only employees and contractors permitted.

Damages

5) Never allow initial payment to cover ALL damages to property. It covers damages only through construction phase.

6) Always get damages for the reduction in value to the remaining, uncondemned land when a partial taking occurs. (Loss of building sites, loss of location for ponds or lakes, etc.) Did their appraisal addressed this issue? What about loss of value of property for presence of lines?

Continued

7) Give no warranty of title. No return of consideration if title fails.

8) No free water for drilling. No blasting allowed allowed.

9) Specify that “Time is of the Essence.”

10) Firefighting crews must accompanied welding crews to fight and/or prevent wildfires. Liability for fires.

Continued

• Wash and clean vehicles before entering to avoid transfer of noxious weed seed, etc.

• Do not use chainsaws to cut or trim trees. Treat all wounds on trees to avoid contamination. (Don’t spread Oak Wilt.)

• Removal of property and restoration of land when easement terminates. (What if property is not removed?)

Maintenance of Easement

Can they use chemicals to control weeds and brush?

Must they remove and pile rocks exceeding a certain diameter? (Where must they pile certain diameter? (Where must they pile them?)

Must they chip and spread trees and brush they remove? (Or, must they be buried or burned?)

Can the move hunting blinds, deer and cattle feeders without your consent? (Will they reset them where you want them?)

Maintenance of Easement

No mowing or bush hogging during or within a certain number of weeks or months before and after Deer Season Opens.p

No mowing of mesquite trees or sprouts. Here, you may want to have them chemically treated by them or reimburse you for doing so.

10/14/2010

9

Continued

Must be install cattleguards or gates where they enter and leave premises? (Put gates on cross-fences?) How long must they be maintained the gates?

Must they brace fences before cutting? (Give y g (precise instructions. Is 3’ deep sufficient?)

How will they insure against lost of wildlife when cutting high fences? How will they keep livestock in or out? How can they keep coyotes out?

Leave gates as found or keep them closed?

Continued

Ask for Favored Nation’s Clause?Have you contacted your lender

(mortgagee)? Case law and the deeds of trust generally indicate that ALL the g ymoney awarded to landowners goes to lender to satisfy debt even if partial releases available.

Ask lender’s appraiser to review report or represent you in Stage 2.

TAXATION(For Involuntary Conversion)

• Property Taxes…reduction for loss of value caused by the easement. (Damages to the remainder.)

• Income Taxes To the extent the • Income Taxes…To the extent the proceeds do not exceed the basis, it is nontaxable, but it reduces your basis. If it exceeds basis, you can purchase replacement property to avoid taxes.

Finally

• Stipulate that any breach or violation of this agreement if not cured within 30 days after receiving written notice shall constitute a material breach.

• Likewise, provide that any gates left open three times shall constitute a material breach.

• A material breach allows you to terminate the agreement under contract law.

Remember:

• The condemnor does not have to offer FMV in Stage 1.

• You cannot recover attorney fees or expert witness fees if contest the offer.

• The written offer to purchase in lieu of • The written offer to purchase in lieu of condemnation always contains property rights they cannot later condemn.

• A good addendum is worth far more than a few extra dollars.

MINE AND BARBARA SUE’S TIME 

HAS EXPIRED !

4:54

10/14/2010

10

You Aggies Don’t ForgetAnything on the way Home.

1:55

Question

Should you file as an intervener concerning the proposed route and pole structures, etc. ?

(Determining Location of Lines)

recenter.tamu.edurecenter.tamu.edujudon@ recenter.tamu.edu judon@ recenter.tamu.edu