"Good Neighbor Agreements" are "Bad Neighbor Licenses",

or: Don't Take Any Wooden Nickels When You Sell Your Soul

Jane Batha of Mineral Point recently wrote a thoughtful Letter to the Editor noting some of the dangers relating to “Good Neighbor Agreements”.  Ms. Batha’s letter is my inspiration for this brief analysis of the Uplands Wind L.L.C. (“Wind Company”) Wind Farm Neighbor Easement Agreement (“Encumbrance” or“Good Neighbor Agreement”). I think the “Good Neighbor Agreement” should be called the “Bad Neighbor License”.

I call the “Good Neighbor Agreement” the “Bad Neighbor License” because of the nature of the deal.  The property owner (“Owner”) receives an uncertain and laughably small amount of money.  For that money, the Owner sells many of its rights to the Wind Company.  This includes the right of the Wind Company to create all sorts of annoyance and damage for no additional compensation to Owner.

I.  THE MONEY:  UNCERTAIN AND LAUGHABLY SMALL

A.  THE UNCERTAINTY OF THE MONEY.  The reason the money is uncertain is that, in Section 4 of the Encumbrance, the Wind Company “has the right to terminate this Easement Agreement at any time and for any reason or for no reason.”  The Owner has no such reciprocal right, but agrees to be bound for decades.  See Section 4 of the Encumbrance.

Most shockingly, Section 12 provides that “[t]he Easements shall not be terminable by Owner under any circumstances.”  To me, "any circumstances” would include Wind Company’s failure to pay Owner.  My review of wind and solar agreements was the first time in my memory that I saw that someone could not be paid and still not be able to end a deal.

B.  THE RELATIVELY TINY PAYMENT.  Many of us are hurting financially now, so I do not mean to suggest that the Section 3 payments could not be helpful to some people.  The most important things to consider, however, are what an Owner is selling in exchange for the payments and what those payments will be worth in the future.   

For detail as to what an Owner is selling for the small dollars, read on.  For what the payments will be worth in the future, see Section 3.c.iii.  That Section, provides for a ceiling increase in the $3,000 annual payment of 2.5%.  My farm truck insurance went up about 35% this year.  I do not even know how to calculate the increase of my medical insurance.  Our grocery bills have nearly doubled in the last three years.

The Rule of 72 shows that, if we have 3% inflation, the value of money will halve every 24 years.  If we have 7.2% inflation, the value of money will halve every 10 years.  So, if we have crazy inflation over the next decade, an Owner will have sold critical rights, rights possibly worth millions of dollars, for $3,000 annually.  However, $3,000 might have the purchasing power of $1,500 or less in 2024 dollars.

II.  THE RIGHTS AN OWNER IS SELLING AND THE LIABILITIES AN OWNER IS CREATING FOR $3,000 A YEAR

Section 13 of the Encumbrance says that “[t]his Easement Agreement shall be deemed an interest in and encumbrance upon the Owner’s Property…”.  In my over 20 years as an attorney, I have found that an encumbrance often makes the pool of potential buyers smaller for an encumbered property.

I have also found that encumbrances can significantly diminish the value of real estate, especially when that encumbrance dramatically affects the rights of the owner.  We must remember that the Encumbrance follows the land to future owners, including Owners’ heirs and future buyers.

In this case, the question is how much less is a property worth with a Wind Company Encumbrance?  My bet would be multiples of the $5,000 Signing Payment, $3,000 Construction Impact Payment, and $3,000 Annual Payment that the Wind Company provides in the Encumbrance (“Payments”).  This is because the Owner sells so many rights and creates so many liabilities in exchange for the Payments.

A.  GIVING UP THE RIGHT TO DAMAGES FOR ANNOYANCE, PHYSICAL HARM, OR DEATH.

To my reading, one of the two most profound rights that the Owner sells to the Wind Company is the right to damages if the turbines annoy, hurt or kill the Owner.  In Section 1 of the Encumbrance, Owner accepts any “audio, visual, view, light, shadow, sound, flicker, vibration, air turbulence, wake, electromagnetic or other effect of any kind or nature whatsoever…(emphasis mine).

A quick internet search will show that many turbine neighbors complain of the noise, infrasound, and shadow flicker created by these enormous machines.  People have sued and have been successful for becoming sick from turbines.  Potentially trading the right to pursue large damages in exchange for $3,000 a year seems exceedingly risky.

B.  LOSING THE ABILITY TO FIGHT AN EMINENT DOMAIN TAKING

On its surface, Section 5 of the Encumbrance looks onerous.  Owner waives setbacks and essentially agrees to be a supportive lap dog for the Project.  The effect of Section 5, when read with Section 6, I believe, is much worse. I think the Sections disallow Owner to challenge an Eminent Domain proceeding or to request more money from the entity seeking to take the land. To my mind,  one of the core underlying goals of the Encumbrance is to allow the taking of additional rights for minimal compensation and to limit Eminent Domain challenges.

Section 6 of the Encumbrance allows the Wind Company to “sell…all or any portion of the Easement Agreement” to virtually anyone.  This could include a public utility or ATC.  The public utility or ATC could have the rights under Section 5 of the Agreement.

Section 5 of the Agreement requires Owner to not “hinder or delay…approvals or determinations in any way related to the construction of public works.”  My reading is that, if : ATC wants to put up a transmission line (possibly a “public work”);  ATC has purchased rights under the Encumbrance; ATC wants to take some of Owner’s rights; and Owner does not accept ATC’s first offer of compensation, then Owner could be hindering or delaying its approval related to the construction of public works.  Thus, it could be that Owner is selling a right to fair compensation and a right to negotiate for itself if an eminent domain taking is attempted.

C.  OTHER IMPORTANT RIGHTS SOLD BY OWNER AND LIABILITIES ACQUIRED BY OWNER

In Section 18 of the Encumbrance, Owner waives its right to a jury trial.  A jury trial is one of the most protective rights ordinary people have.

Section 15 of the Encumbrance creates potential liability for the Owner.  This liability could include requiring an Owner to pay a Wind Company’s attorneys’ fees, if Owner’s Relative becomes a Municipal Officer.

Section 1 of the Encumbrance allows Wind Company to determine the placement or prohibit the location of new structures proposed of a height greater than 45’.  A superficial reading would suggest that 45’ is quite tall, and not many people are building tall barns and vertical silos anymore.  However, a strict reading of this leads me to believe that the Wind Company could prohibit the planting of trees expected to grow taller than 45 feet.  A structure can be a natural object such as a tree.

III.  CONCLUSION

“Good Neighbor Agreements” should be called “Bad Neighbor Licenses”.  For a pittance, property owners are asked to give up their right to a jury trial, give up their right to seek damages for noise, infrasound, shadow flicker, give up their right to sue for bodily injury or death, and potentially put themselves in a horrible negotiation position with entities seeking to exercise eminent domain.

If I paid you $8,000 plus $3,000 a year would you sell me the right to: lower your property value, make your property harder to sell;  shine a strobe light in your bedroom; blast loud noises, damage your health; and contaminate your drinking water?  If so, have I got a deal for you.  If not, why would you trust global capital more than me?

Please Note:  My writings do not create or seek to create an attorney-client relationship.  Anything I publish is not legal advice, but is provided for educational purposes only.  If I am wrong about anything I write, I will correct it.  If Pattern, Uplands Wind L.L.C., or and wind or solar company would like to challenge anything I write, I am open to a well-advertised public debate.