California Eminent Domain Report : a blog following condemnation, inverse condemnation, and regulatory takings written by attorneys with Nossaman LLP.

Earlier this week, Chino Hills voted 3-0 (with two members abstaining for conflict reasons) to appeal an earlier court ruling that the Public Utilities Commission has "exclusive jurisdiction with regard to the right-of-way property rights issue between the City and SCE regarding the Tehachapi Renewable Transmission Project route through Chino Hills."  

Southern California Edison's Tehachapi Renewable Transmission Project is a massive, $1.8 billion project designed, in large part, to connect wind farms in the Tehachapi area to the main electrical grid.  The project involves installation of approximately 175 miles of transmission lines, much of it through remote, undeveloped area and within existing Edison right-of-way. 

Some new right-of-way is required, and SCE has been acquiring that right-of-way through a combination of negotiated acquisitions and eminent domain actions. 

One segment, in particular, has been the subject of controversy.  Segment 8a focuses on replacing existing 220-kV lines in the Chino Hills area with new, larger 500-kV lines.  SCE describes this segment as follows:

Replacement of existing single-circuit, 220 kV line that runs from the existing Mesa Substation area to the Chino Substation area and existing double circuit, 220 kV line from Chino Substation to the existing Mira Loma Substation with a 32-mile double-circuit, 500 kV line.

Residents in Chino Hills don't like the plan, and the City has been fighting with SCE over possible alternatives.   The latest skirmish involves an April 2010 decision, in which the court ruled that it has no jurisdiction over SCE's route-selection process.  The ruling allows a December 2009 decision by the PUC approving the Project, including Segment 8a, to stand.   The PUC's order approving the project makes clear the high stakes involved:

It is imperative that California sites and constructs transmission more expeditiously, and this Decision is a step in the right direction. It is important that we invest in the critical infrastructure that will move us incrementally closer to our renewable energy goals while fostering green collar jobs opportunities.

Now, the City has decided to appeal the court's ruling, hoping to overturn the PUC's approval.  An April 15, 2010 Press Release provides more details and background on the City's arguments and the history of the dispute.

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Yesterday, I chaired the International Right of Way Association Chapter 67 (Orange County) spring seminar, focused on the interrelationship between renewable energy, right-of-way acquisitions, and eminent domain.  It was a great success.  For those of you who were in attendance -- or for those of you that missed the seminar but would like a recap -- all of the speakers were generous enough to allow us to make their presentations available.

• Dave Kilpatrick's presentation, titled "Energy Independence -- the Impossible Dream?" [PDF], focused on our nation's overall energy policy, dependence on foreign oil, and how reliance on renewable energy can solve -- at least partially -- our energy issues.  Mr. Kilpatrick painted the picture that while our decreasing supply of traditional energy sources is problematic, our bigger concern is the increasing demand not just from the US, but from other countries like India and China.  Mr. Kilpatrick also pointed out that while there are renewable energy options that could play a large part in helping solve our energy crisis, most of these options are plagued with economic limitations.
• Rick Rayl's presentation, titled "Renewable Energy Meets Eminent Domain -- When Grandma's House Gets in the Way of Windmills" [PDF], focused on some of the unique laws that allow privately held utility companies to condemn property for energy projects, and some of the legal issues that arise in valuing impacted properties.  A hot discussion point was whether private utility companies should offer to pay impacted property owners up to $5,000 to obtain an independent appraisal.  Mr. Rayl concluded that while utility companies may not technically be required to make such an offer (an issue that remains unclear under current law), it makes good sense to do so.  Mr. Rayl pointed out that such an offer allows the property owner to feel secure in the utility company's offer, and it may result in the utility company's avoiding having to pay thousands -- and potentially hundreds of thousands -- of dollars in legal fees in an eminent domain battle.
• Elizabeth Kiley's presentation, titled "Kicking the Dirt -- How Energy is Changing Land Use and Values" [PDF], focused on various appraisal issues involved in renewable energy projects and right of way acquisitions for such projects.  Ms. Kiley presented a somewhat rosy picture for those properties out in the "middle of nowhere" that previously had no real value, as they may now have a highest and best use as a solar or wind farm site, especially where the properies lie near major transmission corridors.  Although there have not been many "closed' transactions yet, many deals are in the works pending entitlement approval, and desert property values are experiencing an uptick.
• Cliff Clement's presentation, titled "A Walk in the Wind" [PDF], walked us through a wind farm project from concept to entitlement to construction and, finally, to completion.  Going through the Power Point is definitely a must, as you'll be amazed at what goes in to selecting an appropriate site and constructing these massive wind turbines.

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Next week, I'm speaking at the IRWA Chapter 67 Spring Seminar, which is focused on renewable energy issues.   So it was pretty timely when I came across an article this week involving efforts in Wyoming to curtail eminent domain power to address that state's push for increased renewable energy. 

According to a Casper Star-Tribune article by Dustin Bleizeffer, Wind boom inspires another look at state's eminent domain laws: Crossing private property, Wyoming has seen a wave of efforts to use eminent domain to acquire right of way for "collector lines," used to connect wind turbines to the electrical grid.  And, these efforts have not been limited to connecting built turbines to the grid:

[T]he recent realization that this power can be used to acquire easements for "collector lines" to connect yet-to-be-installed wind turbines to the electrical grid has raised concern among Wyoming politicians.

Wyoming's governor signed a one-year moratorium on the use of eminent domain to acquire collector-line easements, but the state is considering a more permanent ban.  According Governor Dave Freudenthal, "because the potential scope and impact of the collector line build-out affects so many Wyoming citizens, the issue deserves to be at the top of the state's legislative agenda."

One problem legislators face is that they appear willing to consider restricting the use of eminent domain for the collector lines, but fear that openly discussing the issue will lead to a push for restrictions on other uses of eminent domain.  This is not surprising, given broader attitudes about eminent domain since 2005's Kelo decision.

Aside from discussing the basic right to take property for collector lines, Wyoming is also confronting how one establishes fair market value if such condemnation is allowed.  Mr. Bleizeffer's article mentions concerns about valuation. 

He addresses problems involving highest and best use, as the property condemned for collector lines is typically valued at an agricultural highest and best use, even though it is being acquired for an industrial use.  He also raises an issue that has appeared in various states over the past few years:  whether it is fair for owners who have collector lines through their properties to receive only a single payment, even though neighboring owners who have actual wind turbines on their property typically receive annual payments in perpetuity. 

It's a complicated issue, and one that will undoubtedly play out across the country as we push to meet increasing renewable energy targets. 

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On May 11, Chapter 67 of the IRWA (Orange County) is hosting a half-day seminar focused on the interrelationship between renewable energy, right-of-way acquisitions, and eminent domain.  If tying renewable energy to eminent domain sounds like a bit of a stretch, you apparently haven't been following all the recent news about the struggle to entitle and build renewable energy projects.  Just yesterday, the White House Blog featured a profile on federal energy policies entitled Building a New Foundation for Energy and the Environment. 

Between the project facility itself and the right of way necessary to connect renewable energy projects to the grid, myriad eminent domain issues arise.  And, fights over energy projects in particular have made news lately in the ongoing battle over eminent domain reform.  Stories about eminent domain issues involving natural gas pipelines and wind farms have gone viral in the past six months -- and this is likely just the tip of the iceberg. 

The panel for May 11 includes a range of practitioners:

• David Kilpatrick, President of Kilpatrick Energy Group will speak first.  He will talk about our overall energy policy, dependence on foreign oil, and how (if at all) reliance on renewable energy can solve our energy issues.
• I will speak second about the legal intersection between renewable energy and eminent domain.  I will talk about some of the unique laws that allow utility companies (and, in particular, privately held utility companies) to condemn property for energy projects.  I will also talk about some of the legal issues that arise when trying to value a property both for energy projects themselves and when an energy use may qualify as the highest and best use for property being condemned for some other purpose.
• Elizabeth Kiley, President of Kiley Company, will speak third.  She will talk about various appraisal issues involved in renewable energy projects and right of way acquisitions for such projects.
• Finally, our lunch speaker will be Clifford Clement, Vice President, Land, for Third Planet Windpower, LLC.  Mr. Clement will walk us through a wind farm project, from concept, to entitlement, to construction, and, finally, to completion. 

If any of this sounds like it may impact your practice, please come spend the morning with us.  And, even if none of this sounds remotely interesting, come spend the morning anyway.  My colleague, Brad Kuhn (who is Chairing the Seminar), has worked hard to ensure attendees will receive four hours of credit for OREA, MCLE, and/or SR/WA. 

And, most importantly, if nobody shows up, I'll have to spend the morning talking to myself -- and while I do that on a regular basis, I try not to do it in public.  See you there.

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We've previously reported on the increase in renewable energy projects in California, such as Southern California Edison's ("SCE") Tehachapi Renewable Transmission Project.  When it comes to wind farms, General Electric now takes the cake:  it has brokered a $1.4 billion contract to supply wind turbines and services for a wind farm that would be larger than any wind farm currently in operation in the world. 

According to a December 10 Bloomberg article GE Wins $1.4 Billion Order for Oregon Wind Farm, the 338-turbine wind farm will stretch across 30 square miles in Oregon, and will help the slumping economy by providing 400 jobs during construction.  With GE already obtaining most of the necessary government permits, the two-year construction project is set to begin in 2010, and will require building 85 miles of road and 90 miles of power lines. 

What does this mean for California?  The wind farm will provide enough clean energy power to power approximately 235,000 California households, and it will supply a tenth of SCE's renewable energy. 

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