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Farmers advised: Watch your back when wind companies call
Wind farms will be part of Michigan's energy future, so farmers are urged to review wind leases carefully, and consult an attorney before signing any lease agreement.
The two most important rules about entering a lease agreement for a windmill are most obvious to folks who've already gained experience from oil and gas leases, according to Michigan Farm Bureau attorney David VanderHaagen.
"The first rule and the last rule are the same," he said. "Consult an attorney."
But while you're between those two rules, he said, keep in mind that everything is on the table.
"Everything is negotiable," VanderHaagen said. "And there are probably fewer so-called standard provisions with wind than with an oil and gas lease, which is the more established contract with which farmers may be familiar. But there's no reason to be intimidated."
Farm Bureau members have reported at least five companies actively working to secure leases in the Thumb region, said Matt Kapp, land stewardship specialist with Michigan Farm Bureau.
"Those are the companies we're aware of," he said. "There are probably a lot more companies working Michigan, and each one may have a slightly different proposal. That's why everyone needs to negotiate with their eyes wide open. We don't want anyone to be discouraged from leasing easements for wind power. On the contrary, Farm Bureau encourages and supports wind development. We just want to be sure that farmers are educated and consider things carefully before entering a legal agreement that involves their land. "
Michigan Farm Bureau is grateful for the efforts of professors at Michigan State University, Kapp said. They've developed a work sheet for wind leases, which can be found at mfb.com. Under the farm organization heading, click on the "worksheet for evaluating wind leases" under the quick reference column.
The worksheet takes you through the leasing process by allowing you to evaluate the goals for the proposed wind turbine location. The worksheet goes through the basics of wind leasing, posing questions that are unique to wind. It poses other questions that may be more common in similar leasing agreements from gas and oil companies, and details payment options and many other issues.
"We think this worksheet is a very good tool for our members to use when approached by a company that wants to lease an easement for a potential wind turbine," Kapp said. "We want everyone to be informed, because there likely will be more and more companies popping up, and caution is always the best way to go. And remember that some companies are buying up easements to keep other companies out, and a wind turbine may never be built on your property. In that case, the situation is quite similar to oil and gas leases."
On the positive side, VanderHaagen said, if a wind company approaches you and is serious about producing energy from wind, they likely will already have performed analyses to determine if a wind turbine will be profitable on your farm. That's in contrast to oil and gas leases, which in many cases have lots of exploration to do, and need a lease before they can do it.
"I think wind leases are more likely than oil and gas leases to earn the farmer money," he said. "There's not as much post-lease exploration to be done. But remember that agreements are complicated, and no one wants to enter a 99-year lease by accident or because he didn't read the fine print."
Reading fine print, after all, is why there are attorneys.
Landowners who have comments about the worksheet should contact Matt Kapp at (800) 292-2680, ext. 2027.
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