1	ManSEA Conference What To Do When An Opportunity Presents Itself Energy Sources, Developers, Landowners and Legal Issues Jeff McConnell McNeill Harasymchuk McConnell Virden, Manitoba
2	Energy Sources, Developers, Landowners and Legal Issues Presentation is focused primarily on Wind Energy. Introduction to some of the issues landowners will face. Not a comprehensive review of all the issues.
3	Agenda Surface Rights: what are they? Wind Rights: what are they, do I have any? What can I do with them?
4	"Wind rights" Wind rights Surface rights
5	Surface Rights The use of the surface of the land Rent pasture land to another for cattle, rent crop land to another Same is applied to energy industry: Oil well on agricultural land pays for use to surface rights holder Alternative energy industry will pay as well Oil and gas industry legislated Alternative energy industries are not legislated Legislation was developed after years of negotiations between land owners and developers.
6	Surface Rights Some things watch for in a lease: Compensation – per fan, per quarter? Construction phase – oil well pays more in first year based on construction and other issues. Is construction all at once or phased in. Access rights – how the developer intends to access the windmill or other development, will you have input as to location of road. consider how it would affect your farming operation to have roads put across the field. Should be no built up roads, unless absolutely necessary
7	Surface Rights Some things to watch for in a lease: The development Where will it be, the lease option may say at discretion of developer. What about your house location? how big, what will it be. Hydro lines, power lines, where will they be? Should be underground. Term of Agreement How long is it for 5, 10, 20 years, longer? How does it renew (automatically)? Indemnity – Will they make sure you aren’t responsible for their accidents
8	Surface Rights Some things to watch for in a lease: Type of Agreement – Study or Production lease. Should be no more than one ¼ section per lease. Retention of surface rights after a sale of the land What happens if the developer abandons it, or goes bankrupt? Is the lease for the developer or are they negotiating for another?
9	Wind Rights (Energy Production Royalties) What are wind rights? Air above you, do you own it? Can build a tall building, subject to zoning, so you must have some rights Can’t stop a plane from flying overhead though Consider it is as a percentage of the sales from the energy sold, regardless of type of energy produced! Oil and Gas Wells pay, on average, from 12.5% to 15% of the production to the mineral rights holder, titled ownership No title to “Wind Rights” but they wouldn’t be there without your land so the industry pays a percentage to the surface owner.
10	Wind Rights (Energy Production Royalties) Some things to watch for in a lease: Royalty rate Term & Renewal – what triggers renewal, can it happen without my consent? Type – development or production If development, what are the production lease terms to be? Pooling? Neighbours have a windmill, I have a lease but no windmill, now what? Retention of Royalty – can I sell the land and keep the royalties? Indemnity. What happens if the developer abandons it, or goes bankrupt? Is the lease for the developer or are they negotiating for another?
11	General Items to Consider Confidentiality clauses There should be a clause with respect to privacy legislation. However some of the confidentiality clauses go further and state that the Lessor (Landowner) can’t release information. Question if the developer really needs this.
12	Summary See a lawyer before signing anything! Have all agreements reviewed. You don’t have to accept the first thing that is offered. A good resource: Article by Robert R. Nardi & John H. Daniels, Jr. of Minneapolis. www.windustry.org/opportunities/easements.htm American Law.