(Photo by Eric Harmatz via Creative Commons)

(Photo by Eric Harmatz via Creative Commons)

Report offers alternative to eminent domain for transmission

When developers of transmission projects become deadlocked with opposing landowners, they often resort to condemning the right-of-way through eminent domain.

Not only can that process be a bad deal for landowners, it can also be costly and time-consuming for developers.

The Center for Rural Affairs (CFRA), based in Lyons, Nebraska, recently published a report in which it outlines an alternative to eminent domain. Landowners – farmers, typically – in this scenario actually become shareholders, at least temporarily, in transmission projects.

Rather than being bystanders, they can have some influence in how transmission projects move ahead and can take home a larger share in the profits, said Johnathan Hladik, the Center’s senior policy advocate for energy and climate policy.

The CFRA is a member of RE-AMP, which also publishes Midwest Energy News.

This issue has taken on a high profile, particularly in the Midwest, where wind and the potential for wind energy abound, but systems for moving the energy to where it’s needed, do not.

‘Allow the free market to work’

Several proposals for major transmission projects are now moving through the regulatory process, and generating abundant opposition.

Two of the more contentious proposals are the Rock Island Clean Line, which would span Iowa and Illinois, and the Grain Belt Express, which would cross Kansas and Missouri, and likely Illinois and Indiana as well. Both lines are designed to move wind energy from rural areas eastward to where the electricity is needed.

At its core, the CFRA’s proposal gives landowners along a proposed transmission route a bit more control, and possibly a higher price, in the land-acquisition process.

Typically, if a landowner refuses to sell to the developer of a transmission line, the developer is granted the right to purchase the land anyway at a “fair market value.” That usually is determined by land appraisers hired by the developer.

The CFRA proposes offering landowners the option of trading their land for a certain number of shares in an entity known as a Special Purpose Development Corporation — created for the sole purpose of acquiring properties for a transmission project and then selling the bundled parcels to the developer. The number of shares granted would depend on assessed value.

The value of an SPDC “can go up or down,” Hladik said. “You allow the free market to work.”

But odds are good that the transmission district’s value would increase, said Rosalie Winn, a Georgetown University law student who helped research the report while interning with the CFRA last fall.

“Once the land is in a corridor, the land has a higher value because it’s used for a higher-value purpose,” she said. “When the SPDC is sold, they get a share of that higher transmission value.”

Shareholders in the SPDC ultimately would wield more clout in price negotiations with the transmission line developer than they would as individual landowners.

There could be benefits for the developers as well, according to Hladik.

“Eminent domain costs a lot of money, largely legal costs,” he said. “Eminent domain almost always delays projects. And delays cost a lot of money.”

And all of those costs, he said, “go to the ratepayer.”

‘A better alternative’

Hladik said the CFRA decided it needed to look for an alternative to eminent domain because “these transmission projects are getting more opposition than ever before. It’s not a great deal for the landowners. There’s got to be a better alternative out there.”

Hladik and Winn turned to the Special Purpose Development Corporation concept, developed by Israeli law professors Amnon Lehavi and Amir N. Licht. to address what they saw as the injustice and inadequate compensation paid in urban economic development projects

“We want the same thing to happen in transmission cases,” Hladik said. “Applying this to transmission is a new thing. There’s a lot of potential. In a world of merchant transmission, this is a structure that can really work.”

“Merchant transmission” refers to the development of transmission lines by third parties other than the utility serving the area.

At this point, Hladik said, “Our next step is to further discuss this idea with both developers and landowners – an effort aided by having something in hand to refer too. Where did we get it right? Where did we miss the mark? How can we make this better? Do we need to go back to the drawing board? It best serves as a conversation starter, and we look forward to more feedback.”

It could still prove to be a hard sell among landowners who are already actively opposing high-voltage transmission lines.

Diane Darr, whose Iowa farm is in the path of the planned Rock Island Clean Line, sees little to like in the CFRA’s proposal. She’s also a member of the board of Preservation of Rural Iowa Alliance, an entity formed to oppose the Rock Island project.

“I am concerned about this process moving in this direction as it appears to take the control of our private lands out of our hands,” she said. “I think it’s going to add another area of confusion to the whole process. It’s already confusing enough.”

Darr said it also doesn’t resolve other reasons landowners oppose transmission projects, such as interference with aerial spraying or the “very emotional attachment” that many people develop for land and farm operations, especially those that have been in a family for generations.

“Some people just are not going to sell. If they are going to do (the Rock Island transmission line) now, they are going to have to do a lot of condemnation.”

That kind of talk troubles Hladik.

“We’ve been using eminent domain for 200 years,” he said. “We have come up with nothing that helps us meet in the middle.

“We’re overdue for a better alternative.”

72 thoughts on “Report offers alternative to eminent domain for transmission

  1. “Transmission Summit” in St. Paul — guess only certain people with certain view points were included, again, as in Chicago a few years ago… and that’s par for the RE-AMP course! But hey, you’ve got to eliminate “transmission impediments!” I’ll note for the record that none of these usual NGO suspects are participating in the MN PUC’s Certificate of Need and Siting/Routing rulemaking, so they can’t be too interested in these proceedings, or maybe the fix is in, or Bill Grant has it covered, or ???, but whatever the reason, their failure to participate is noted.

  2. What CFRA is proposing is self-mutilation.

    To allow the free market to work make it so the developers go forward without eminent domain. Let them landowner get the highest price that the market will bear or exercise their right to say no.

    Opposition is appropriate.

    Wind from the west is not needed. It is better and possible to generate the energy closer to the point-of use.

  3. Um, no, Carol, that event was open to the public and was advertised in our email digest.

  4. Ken,
    I haven’t seen your response to the four articles I listed questioning the wisdom of using wind generation. It is relevant to the broader issue of allowing eminent domain authority to be used to construct huge transmission lines allegedly for wind generated electricity. Without the “clean energy” sales pitch, none of Clean Line’s projects would have been considered by our weak-minded politicians. Also, I cited an article where Clean Line admitted only 50% line capacity for wind generated electricity. You had asked an earlier respondent to give you a source for that statistic. Again, you haven’t responded to that post.

  5. “Great Plains Transmission Summit” is toadies all, utilities, transmission companies, and those paid to promote transmission. And Lauren Azar, she who represented ATC at its conception, and who was Obama’s shill “fast-tracking” transmission. The one supposedly neutral is Phyllis Reha, and she’s not even close, having campaigned for IGCC at NARUC conferences, and having promoted CapX 2020 as an example others could/should follow … and she’s the one who “mediated” the Chisago deal, and who stumped for it with Crocker on the stage of the Festival Theater trying to gain adoption of that payoff to the cities of St. Croix Falls and Taylors Falls, how improper can you get… thankfully CRVC had the sense to reject the agreement! Your “summit” had not one presenter that actually represents parties opposing transmission lines, not one presenter who represents landowners having to fight to elect “Buy the Farm.” No, that is not a “transmission summit, not even close. A “transmission summit” is a gathering such as that held by Sierra Club in West Virginia back in 2007, now THAT was a transmission summit.

  6. Joel, I think you’re misunderstanding what capacity factor means.

    As for the other articles, three are opinion pieces. My response is that those writers are entitled to their opinions.

    The Berkeley Lab study cited in the Forbes article was initially misunderstood by a lot of writers, as you’ll note from the correction at the bottom of Jeff’s post. You’re certainly entitled to your conclusion that it “questions the wisdom” of wind energy. The study authors, however, “conclude that as wind power penetration increases, pollutant emissions decrease overall due to the replacement of fossil fuels.”

  7. True “journalism” presents both sides of an issue and doesn’t take a position, Ken. Your “deliverables” require your publication to take a position supporting “clean” energy and transmission. Therefore, this publication is not a true “news” source but advocacy disguised as “news.” In truth, that’s known as propaganda. And before you spout off in an insulted fashion, why don’t you do some research on what the word “propaganda” truly means.

  8. Kitty, you’re certainly entitled to your opinion of our work, and I appreciate your input. You’re completely incorrect about our grant requirements, but there doesn’t seem to be much point in debating that further.

    I hope you’ll continue reading Midwest Energy News, but if we don’t suit your needs there are plenty of other options out there to choose from.

  9. I have to admit, I don’t “read” MWEN, and I suspect none of the other commenters on this article do either. We only show up when you write something about Clean Line, the CFRA, or other transmission line ostensibly for “clean” energy (but really for coal) such as Badger-Coulee. As you may have noticed, our numbers and geographic reach are growing. There’s really no other “news” source where the editor will take time to debate with us in the comments. So, if you want to keep increasing your page views and spending your days personally “informing” us, keep writing your “news.” But, in the end, it really doesn’t do any good. You’re not convincing any of us to change our minds (just as we cannot convince you to change yours.)

  10. I did. Once. But I was really more interested in reading the comments. That’s why we’re all here.

  11. Ken,
    I bow to your expertise on the 50% capacity factor. As someone knowledgeable in transmission issues, could you answer something please? In your honest opinion, what percent of electricity transmitted in the Plains and Eastern line will be wind generated? Maybe all the electricity on the line will be wind generated, with the reserve coming from generators at the TVA end? Which ever way it works, what percent do you think will be wind and what percent fossil or nuclear? I would also like your opinion about something else. Clean Line Energy has never built, operated, or maintained a transmission line. The company was formed in 2009. There are 43 employees, only three of which are engineers. None of those engineers are experienced in building transmission lines. (If you doubt those statements, the information is available on their website.). The company is now seeking regulatory approval on three major transmissions lines. Have you ever seen a company leap into existence and attempt to build mega wattage lines hundreds of miles long without any experience in the transmission industry?

  12. Joel – that’s an interesting question, we’ll take a closer look. Merchant lines are kind of a new thing but they’re still subject to the same regulatory process as everyone else.

  13. Kitty, the reason I ask is that you seem to have a lot to say about our ethics and integrity, but so far I haven’t seen much about what we should have done differently with this particular article. I’ve seen a few suggestions we include some additional anti-transmission talking points (which is why I keep asking for sources), but otherwise it’s been all ad hominem attacks on our credibility.

    You’re certainly free to do that, you can keep trying to discredit us all day and I’ll keep approving those comments. But do you have any constructive comments about the reporting specifically?

  14. “Merchant lines are kind of a new thing but they’re still subject to the same regulatory process as everyone else.” Are you kidding me? It glaringly obvious that you haven’t read what’s coming out UNDER OATH at the Illinois Commerce Commission. RICL thinks they don’t have to prove need, best solution, lowest cost, etc. Read the opposing briefs for yourself, starting with the recommendation of the ICC staff that the commission turn down RICL’s application. Opposing briefs (LOL) can’t be found on “Clean” Line’s website, so read them on ICC docket 12-0560 or linked on http://www.BlockRICL.com.

  15. Ken,
    I’m disappointed. You ignored or dodged every question in my last post. Please answer those questions. I’m sure you are well qualified to venture an informed opinion. If you feel that you can’t afford to offend Clean Line, I understand.

  16. Sorry, Joel – didn’t mean to disregard your questions. The answer to both is that I really don’t know, and don’t intend to speculate without further information.

    The issue of “how much wind energy will the line really carry” frankly comes across as a bit of a red herring. Whether X percent of electrons on the line came from a wind farm isn’t really the test (and can’t be ascertained anyway). The question, as I understand it, is whether the lines facilitate power purchase agreements for new wind capacity.

    But either way, our role here is not necessarily to adjudicate disputes over the merits of specific projects, or take positions on them. That’s what the regulatory process is for. And if there are breakdowns in the regulatory process, that’s where we can step in and do some reporting.

    So we’ll look into the docket that BlockRICL mentioned, and any other specific issues mentioned here (other than the personal attacks and speculation, of course). Feel free to email me directly if you have other questions that you think should be looked into.

    Sorry if that’s not the answer you were hoping for.

  17. The reason I’m interested in the percent of electrons on the line produced by wind energy is because it relates to the way Clean Line Energy is selling itself to the public and to elected officials. Just the choice of their company name shows their intent to mislead the public. Their main sales pitch is clean energy. These long transmission lines seem kind of strange if the whole point is wind energy. The Plains and Eastern line doesn’t seem necessary. The proposed customer is the TVA. There are good wind areas in the Blue Ridge Mountains, the Crowley Ridge area of Arkansas, and the Carolina coast. Shorter, possibly buried, transmission lines to the customers. The Plains and Eastern runs through central Oklahoma. Seems kind of foolish to run a mega wattage line through the most tornado prone region on Earth. Apparently Senator Lamar Alexander also has questions about the reliability of the Plains and Eastern line.

  18. There is no “reasonable” middle ground when this is the front line in America’s Energy War. If Re-AMP, and it’s subsidiary, Midwest Energy News, plus the Center for Rural Affairs chooses to be the advocacy for Big Wind Corporations, actual rural residents will aggressively oppose them.

    Midwest residents have resoundingly spoken against eminent domain for a private speculation project desiring to be considered a utility. These projects desire to make up their own special rules as they go. The basic utility model doesn’t apply to them. Consider RICL argued to PJM they were not necessary and not a part of long term planning, therefore RICL should not have to comply with the disclosure requirements of other transmission utilities.

    In other meeting RICL has argued they deserve eminent domain authority because their project is necessary. Illinois and Iowa have a long history of procedures to protect landowners from eminent domain abuses, including various checks and balances. The Center for Rural Affairs idea for an SPDC instead of the traditional procedures is a dumb idea. It favors transmission companies. It is irrelevant RICL claims it is being biased towards wind energy. That in itself is not a virtue. Claims of wind energy being “clean” are irrelevant. That doesn’t allow wind energy generation or wind energy transmission to play by a more lenient set of rules.

    The CFRA suggests we should “sacrifice” and “give back”, but there is no limit on the amount of sacrifice to the benefit for big wind corporations. PURPA was to benefit wind corporations. Repealing PUCHA was to benefit transmission for wind corporations. The Production Tax Credit was another sacrifice Americans have made for the Wind Corporations. We then sacrificed and gave Big Wind the Investment Tax Credit. Now we are beign asked by friends of the Wind Energy to sell easements at prices below real utility companies would pay.

    Who profits with this sacrifice?

    Why should be sacrafice so Michael Skelly and Jimmy Glotfelty can make a substantial profit when they sell RICL to National Grid? These men want to be considered “visionaries” and “entrepreneurs” and millionaires, but rural America is asked to sacrifice.

    So why is the Center for Rural Affairs advocating for the Rock Island Clean Line?

    What is in it for CFRA?

    How do they profit by being an advocate for RICL?

    Is there a relationship between CFRA’s funding and their advocacy for RICL?

    These are logical and fair questions. .

  19. “America’s Energy War”?

    Has it always been a “war,” or did this just start recently?

  20. http://www.amazon.com/Powerline-First-Battle-Americas-Energy/dp/0816643849

    If a person is going to report on the industry, it would be a good idea to read about the history. Former Minnesota Senator Paul Wellstone wrote a rather interesting book about transmission to promote a political agenda.

    It’s a good history lesson for “community organizers” in Lyons, Nebraska also.

    Maybe a “community organizer” can write a white paper on the mistakes made in the 1970’s.

    Re-AMP needs a reboot.

  21. Thanks Scott, and yes, I’m familiar with that story.

    So how do we sort out which transmission lines are for the public good and which are naked, corporate greed? That’s what the regulatory process is for, right?