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Environmental, social, and governance risks and opportunities

Wind Rights are now Blowin’ In The Wind

The first time any Texas court has held that wind rights are severable from the land
wind turbine

The wind is blowing in Texas and the courts are making laws about the movement of air. With apologies to Bob Dylan given the recent $1.4 Million jury award for a trespass on wind rights this is more than just Blowin’ In The Wind.

A jury in Texas has awarded damages in a first of its kind wind rights trespass suit. At this time when government actions, including by the courts, around climate change represent much of the opportunities in the years ahead, including the increasing emphasis on renewable energy, the wind is key.

According to the pleadings, a wind rights lease was entered into in 2010 for a 256 acre property in Hale County, Texas. Of import, that wind lease had a 7 year development term, which provided unless electrical energy was being generated and sold by August 24, 2017, the lease terminated. It was not and the lease terminated by that provision. Before that date the property had been sold and the seller reserved the wind rights in that conveyance.

In 2018, the new owner of the property executed a subsequent lease for wind rights. Two wind turbines were erected and in June 2019 began producing thousands of megawatts of electricity.

In 2020, Ridge Renewables, LLC, bought all of the wind rights attached to the land from the former owner of the property who had reserved those rights in its sale. After failing to receive compensation from the wind turbine operator, on December 30, 2020, Ridge Renewables filed suit against the operator, asserting trespass and trespass to try title.  On March 23, 2022, District Judge Danah Zirpoli granted Ridge Renewable’s motion for partial summary judgment, including holding that Ridge alone owns the interest in the wind rights and to receive revenues from the wind and that Southwestern Public Service Company, in bad faith, trespassed and continues to do so with its wind turbines. The matter was set before a jury on the issue of damages. On May 11, 2023, the jury awarded $1,049,634 in damages with $115,848 in attorney fees, and $204,000 in interest.

It is being reported that the Judge’s ruling, in this case, is the first time any Texas court has held under Texas law that wind rights are severable from the land. Additionally, Her Honor expressly ruled that those wind rights were property rights subject to trespass. Moreover, the jury’s award is a first of its kind dollar damages arising out of wind rights.

Accepting that wind rights is a new body of American law, but not The Last Airbender cutting edge new, and yes, historically, the Dutch were paying ‘windrecht’ before the year 1800, a tax paid on the wind catch beneath a windmill, with our focus decarbonizing the economy resulting increasing numbers of wind turbines being erected, this case is of huge import.

And not all states may follow Texas’ lead. The Maryland appellate court in an admittedly very different set of facts declined to recognize a separable right to wind when it held in 2021, “This has been the settled Maryland law since at least 1857, when the Court of Appeals refused to apply the English common law rule of ‘ancient lights’ — that property owners could acquire negative prescriptive easements over neighboring properties for access to air and light.”

Nor is this Texas trial court decision dispositive of all issues, including exactly what interest in land is the underlying document, described as a Wind Easement Lease (.. is it an easement or a lease)? Can a lien on wind or wind rights be perfected and if so, how (i.e., by a mortgage or a UCC financing statement or ..). Where do air rights stop and wind rights begin absent some statute? Where is the intersection of wind and oil regulation (and other mineral rights) as both have rights being severed from the surface of land?

Having a regulatory scheme for the perceptible natural movement of the air is simply not something widely done in the U.S., which is something that strikes many as lacking when it would take 48,704 solar panels to equal the same kWh of electricity generated by one of the wind turbines on this Texas property. 

It is clear that these modern issues related to climate, including renewable energy, are resulting in a new and emergent body of law, but maybe not fast enough nor with a great enough urgency to make eolic energy expansion a reality. These new laws need to be enacted across the country to provide the certainty necessary and create a fertile environment to support the investment in wind turbines as a component of the move to a decarbonized economy. While we have been advising clients on some of these nascent legal issues including how to document these transactions for more than two decades, we are well aware that with new technology and the resultant engineering this law will continue to be Blowin’ In The Wind.

A live webinar “Greenwashing: How to Mitigate Your Risk” 30 talking points in 30 minutes, Tuesday, July 25 at 9 am ET presented by Stuart Kaplow and Nancy Hudes on behalf of ESG Legal Solutions, LLC. The webinar is complimentary, but you must register here.

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