Category: Utilities

New Report on Renewable Energy as an Airport Revenue Source

The Airport Cooperative Research Program (ACRP) has recently published a guidebook on Renewable Energy as an Airport Revenue Source. The link to the guidebook on the ACRP website is here. David Bannard is a co-author of the guidebook, for which the lead authors were Stephen Barrett and Philip DeVita of HMMH.

solar energy, sustainable, clean power, renewable, source, sun

Airports are exploring non-traditional revenue sources and cost-saving measures. Airports also present a unique and often accommodating environment for siting renewable energy facilities, from solar photovoltaics (PV) to thermal, geothermal, wind, biomass and other sources of renewable energy. Although the guidebook focuses on the financial benefits of renewable energy to airports, it also notes other business and public policy benefits that can accrue from use of renewable energy at airports.

The guidebook includes case summaries of 21 different renewable energy projects at airports across the United States and in Canada and the U.K. Projects summarized include solar PV, wind, solar thermal, biomass, and geothermal technologies. In addition the guidebook examines factors to be considered when evaluating airport renewable energy projects, conducting financial assessments of airport renewable energy and issues relating to implementing airport renewable energy projects. Airports present unique challenges and opportunities for development of renewable energy facilities. The ACRP’s recent publication helps both airport operators and renewable energy providers and financiers understand and address many of these complex issues presented in the airport environment.

ARTICLE BY David Y. Bannard, Jason W. Allen & Jeffery R. Atkin of Foley & Lardner LLP

© 2015 Foley & Lardner LLP

No Bright Lines for Pipelines

The United States Supreme Court recently issued a 7-2 decision that dismantled almost 70 years of bright-line jurisprudence in the energy industry and, instead, instituted a “make-it-up-as-you-go-along” approach. The decision upholds states’ rights to regulate conduct under antitrust principles in the energy industry even though the same conduct is concurrently subject to federal regulation. While some may consider the case to be isolated and insignificant, perhaps the better view is that the decision signals a shift toward greater tolerance for state regulation of conduct that would otherwise fall under federal province. The impact may be to subject businesses in a host of industries, many of whom rely heavily on the uniformity that federal regulation provides, to inconsistent regulation across all 50 states.

The Issue Before the Supreme Court

In Oneok, Inc. v. Learjet, Inc., a class of retail natural gas purchasers sued the provider-pipeline under state antitrust laws. The pipeline defended on the basis that the Natural Gas Act, which governs wholesale providers such as the pipeline, preempted state antitrust regulation of the same transaction. The district court agreed and dismissed the buyers’ claims, but the Supreme Court concluded that states could properly regulate practices in the energy industry, even when those same practices are concurrently regulated at the federal level.

By way of background, the natural-gas-purchasing cycle has three steps. A producer extracts the gas from a well and provides it to a pipeline for transport. The pipeline carries the gas across state lines and sells it wholesale to distributors, and the distributors provide the gas to retail purchasers. States have historically been allowed to regulate the process at steps one and three—extraction by the producer and retail sale to the consumer. The second step—the interstate transportation and wholesale transaction—is left squarely and exclusively to federal regulation. However, in the Oneok case, the retail purchases were made directly from the pipeline, meaning that the same conduct affected both wholesale and retail sales pricing. Thus, the issue became a question of whether a practice that affects both wholesale and retail sales was subject to federal, state, or concurrent regulation.

Was State Regulation Preempted?

Conflicts between concurrent state and federal regulation occur frequently and can be seen in all kinds of industries. In this case, the Court considered only whether the Natural Gas Act preempted state antitrust law under the theory of “field preemption.” Field preemption applies when Congress has intended to “occupy the field” in a particular regulatory subject. This theory of preemption is only one among several others.

The Oneok Court expressly declined to look at the issue from a “conflict preemption” perspective, when courts look at whether it is impossible to comply with both state and federal law on an issue or whether a state law interferes with or is an obstacle to the federal counterpart. The Court certainly could have analyzed the issue under conflict-preemption principles, which might have provided greater clarity for businesses operating in these areas, but it declined to do so.

From Bright Line to No Line

Instead, the Court took what was widely considered, for almost 70 years, to be a bright-line jurisdictional test for Natural Gas Act cases and “smudged” that line, to quote Justice Scalia’s scathing dissent. Indeed, in previous cases assessing practices under the Natural Gas Act, the Court had used the term “bright line” to describe the divide between state regulation of retail sales and federal regulation of wholesale transactions. As such, the “line” analogy has long functioned in these cases.

However, not only did the Oneok Court blur the line, it also reasoned that there was no line to be drawn at all, stating, “[The pipeline] and the dissent argue that there is, or should be, a clear division between areas of state and federal authority in natural gas regulation, but that platonic ideal does not describe the natural gas regulatory world.” In the end, the Court settled on a new metaphor: Courts will disregard how the parties have styled their causes of action in litigation and will look at the target the state law aims to regulate. If the target is one historically left to state regulation, it will not be preempted. Justice Scalia’s dissent termed the majority’s new approach the “make-it-up-as-you-go-along approach to preemption.”

How Far Will the Oneok Holding Reach?

Again, on its face, this case has a fairly limited impact, reserved for natural-gas cases involving practices that simultaneously impact wholesale and retail transactions. However, as a practical matter, the holding has a much broader potential to be impactful. First of all, the case is not limited only to claims involving natural gas. It could apply much more generally to energy-industry cases under the Federal Power Act, which also draws a line between retail and wholesale.

Furthermore, there is potential for the decision to extend to virtually every case during which preemption might be raised as a jurisdictional defect. In particular, businesses operating in an industry primarily regulated under a single statutory scheme should be concerned that the opinion will subject them to state regulation even though they have traditionally relied on federal governance. Because antitrust laws are geared toward the marketplace in general, and certainly not toward natural-gas companies alone, a host of industries may be impacted. In the antitrust context specifically, any entity engaging in a purely wholesale practice that has some attenuated impact on retail pricing might become subject to state regulation.

The Trouble with Concurrent State Regulation

If such is true, then what is the problem with allowing concurrent state regulation in these matters? The answer is that businesses face the loss of predictability and uniformity that exclusive federal regulation provides. As Justice Scalia summarized, “Before today, interstate pipelines knew that their practices relating to price indices had to comply with one set of regulations promulgated by the [Federal Energy Regulatory] Commission. From now on, however, pipelines will have to ensure that their behavior conforms to the discordant regulations of 50 States—or more accurately, to the discordant verdicts of untold state antitrust juries.”

To illustrate, let’s consider a scenario in which a company engages in a practice that illegally sets wholesale pricing. That practice would, undeniably, be subject to federal regulation. However, the practice also impacts retail pricing for consumers in five different states. Consumers file suit in State A in state court, alleging violations of state antitrust statutes. In the meantime, the Federal Energy Regulatory Commission (FERC) determines that the practice is lawful, and the attorneys representing a class of potential plaintiffs in State B decide against filing suit because State B has no concurrent regulation. State C also has no such antitrust regulation, but it recognizes common law claims for unfair business practices and upholds a duty to refrain from making fraudulent statements.

Despite the FERC’s decision, the court in State A determines that the practice is unlawful. As such, the company is still subject to civil liability for the suits in States A and C on different theories. There are also potential claims in States D and E, but suits have not yet been filed. That means that the company has to wait out statutes of limitations in each of those states for both state statutory and common law claims.

This is an extreme example to be sure. However, it highlights the problems inherent in operating a business that relies heavily on the uniformity of federal regulation when establishing its business practices and subsequently becomes subject to varying and discordant state regulation.

To date, states have been vigilant in defending their rights to regulate in these areas. The attorney generals in 21 states filed amicus briefs defending state regulation in the Oneok case. As a result, businesses now need to be concerned with a host of problems including inconsistencies between state and federal regulations, inconsistencies from state to state within individual state regulations and common law issues, varying statutes of limitations on claims, and variances between class action rules from state to state and in federal court.

There is also the possibility, as noted, that the holding in this case could extend to preemption concepts more generally. If that is the case, where once we had bright lines between state and federal regulation, we may see far more “smudges.” Instead, litigators may find themselves looking at the “make-it-up-as-you-go-along approach” that requires examination of the state regulation’s target in assessing field preemption. While some clarity may be reached in the Oneok case on remand, or in other cases looking at conflict preemption, the likelihood is that concurrent state regulation just gained a major foothold in many industries.

Does the Oneok decision make sense to you? Are there other areas or industries into which you can see the decision extending? Do you think it’s a more limited decision or one with broader implications? Let us know your thoughts.

Authored by: Ryan Thompson  of IMS ExpertServices

Chase Barfield v. Sho-Me Power Electric Cooperative: Major Verdict in Electric Utility Easement Case

Lewis Roca Rothgerber LLP

More than five years after starting in state court before later restarting in federal court, a federal court jury in Missouri has issued a major verdict in litigation concerning the use of electric utility easements for commercial telecommunication purposes.  On February 6, 2015, the jury in Chase Barfield, et al., v. Sho-Me Power Electric Cooperative, et al., (U.S.D.C. Western District of Missouri, 2:11-cv-4321NKL), found that the compensation owed to the plaintiff-landowners totaled $79,014,140 representing the fair market rental value of the defendants’ use of the utility easements for commercial telecommunication purposes.  While there have been other cases around the country alleging similar misuse of utility easements, those cases have all settled and the Sho-Melitigation appears to be the first to proceed through trial to a final jury verdict.

In 2010, a small group of Missouri landowners filed a state court lawsuit, which was subsequently dismissed and refiled in federal court the next year, alleging that certain electric utilities and affiliated entities in Missouri and Oklahoma installed and operated commercial fiber optic lines on the plaintiffs’ properties without the right to do so and without paying compensation to the landowners.  The lawsuit alleged that Sho-Me Power Electric Cooperative and its subsidiary Sho-Me Technologies, LLC, KAMO Electric Cooperative and its subsidiary K-PowerNet, LLC, and Cooperatives’ Broadband Network, collectively installed over 2,000 miles of fiber optic lines within easements that were limited to electric transmission and distribution line purposes.

While some of the fiber optic capabilities were utilized for the utilities’ own operations consistent with the underlying easements, the plaintiffs alleged that some of the fiber optic lines were used by the defendants or leased to third-parties for commercial telecommunication purposes in violation of the limited utility easements that had been granted.  The landowners asked the court to declare that the defendants had no legal rights to use the easements for commercial telecommunication purposes and also brought claims for trespass, disgorgement of profits, an injunction to prevent future commercial fiber optic uses of the easements, and punitive damages.  The defendant utilities and their subsidiaries admitted many of the facts related to their telecommunication activities, however, they denied that such activities were inconsistent with their easement rights.

In 2013, the federal court granted class status thereby allowing the named plaintiffs to represent the interests of more than 3,000 landowners who were crossed by the defendants’ fiber optic lines.  After many months of complex litigation addressing multiple issues, in March, 2014 the federal court issued its summary judgment decision on the primary claims.  The court adopted the plaintiffs’ categorization of the nearly 6,500 express easements and condemnation orders describing the property rights at issue; then proceeded to conduct a detailed analysis of whether the defendants’ fiber optic lines and the uses thereof were permitted under the terms of the easements and orders.  The court concluded that, under Missouri law, the defendants’ actions were inconsistent with the easements and court orders in three of the eight categories, totaling more than 3,000 individual easements and orders.

The jury’s recent decision sets the damages attributable to the defendants’ breach of the easements and court orders and resulting trespass, as found by the court.  In determining this amount, the jury considered the parties’ evidence that the value of the landowners’ claims was between $100,000, as argued by the defendants, and in excess of $100 million dollars, as argued by the landowners after considering the revenue the defendants received from the fiber optic lines and the associated expenses.  The jury’s award covered only the ten year period prior to the judgment and did not include prejudgment interest, attorney fees and costs, or future compensation.

Lessons Learned

As the national demand for improved and expanded electrical and telecommunication infrastructure continues to grow at an apparently ever-increasing pace, utilities and telecommunication service providers are faced with the challenge of where to locate such new and improved infrastructure.  Opportunities to site brand new infrastructure corridors are becoming more limited.  To the extent such opportunities exist, many landowners do not welcome such uses on their property and some complain of “easement fatigue” as a result of requests from multiple utility, telecommunication, pipeline, and other infrastructure companies.  As a result, local governments frequently require infrastructure companies to consider first the use of existing easements and corridors so as to minimize impacts on private property and to optimize the land uses within their jurisdictions.

Whether motivated by landowner concerns, local government requirements, or other project considerations, utilities and other infrastructure companies are trying to squeeze every permissible use out of their existing land rights.  For example, use of technologies such as fiber optic ground wires that combine an electrical ground wire with bundled fiber optic lines allow electric utilities to maximize the use of their existing easements with little or no physical intrusion on the property on which the infrastructure is located.  This technology was at issue in theSho-Me litigation.  However, the analysis is not limited to the extent of the physical intrusion on the underlying property.  At the heart of such disputes is the landowner’s right to control and be compensated for the beneficial use of his or her property.

The Sho-Me court explained that resolution of such issues requires consideration of “how changing technologies should be harmonized with historic real property principles.”  Furthermore, “[w]hether an additional use is reasonable and necessary depends on whether the additional use represents only a change in the degree of use, of whether it represents a change in the quality of the use.  If the change is in the quality of the use, it is not permissible, because it would create a substantial new burden on the servient estate.”  As the court concluded, where the additional use exceeds that which is authorized by the easement, a trespass occurs and a landowner may be entitled to compensation.

As demonstrated by the recent decision in the Sho-Me litigation, such compensation can be substantial.  Given that most instances of this type of dispute involve lengthy linear infrastructure projects – electric transmission or distribution lines, pipelines, railroads, etc. – crossing many landowners’ properties, the risk associated with large awards for trespass or unjust enrichment cannot be ignored.

It is important to note that real property law is, for the most part, a matter of state law.  While the basic principles of real property law are generally similar among most jurisdictions, the specific law and the analysis of the facts under that law will vary from state to state.  Therefore, before proceeding with a new or additional use on an existing easement, utilities and other infrastructure companies must conduct a careful analysis of the land rights supporting a particular project  considering the laws of the specific states involved.  The decisions and jury verdict in the Sho-Me litigation should provide an instructive, cautionary tale.

ARTICLE BY

Thomas J. Dougherty
OF
Lewis Roca Rothgerber LLP

What You Need To Know: Boston and Cambridge Energy Use Disclosure Ordinances

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On July 28, 2014, Cambridge, Massachusetts enacted an energy use disclosure ordinance, joining Boston and several other cities.  The Cambridge ordinance is similar to its Boston counterpart, but contains several differences.  Property owners in each municipality should be familiar with these ordinances.

1.  Properties Covered By Each Ordinance

Cambridge:

  • Municipal buildings of 10,000 square feet or larger;
  • Non-residential buildings of 25,000 square feet or larger; and
  • Multi-family residential buildings with 50 or more units.

Boston:

  • City buildings (those the City owns or for which the City regularly pays energy bills);
  • Non-residential buildings (those located on a parcel of land with one or more buildings of at least 35,000 square feet and of which 50% or more is used for non-residential purposes, and which are not City buildings); and
  • Residential buildings (i) (a parcel with one or more buildings with 35 or more dwelling units that comprise more than 50% of the building, excluding parking, or (ii) any parcel with one or more buildings of at least 35,000 square feet and that is not a City building or a non-residential building, or (iii) any grouping of residential buildings designated by the Commission as an appropriate reporting unit).

2.  Obligations of Owners and Tenants of Covered Properties

Both ordinances broadly defined “Owner” to include owners of record or a designated agent, and net lessees for a term of at least forty-nine years.

Cambridge:

No later than May 1st of each year, all covered properties must disclose energy consumed by such property during the prior year, together with other information required by an EPA Benchmarking Tool:  (i) address; (ii) primary use type; (iii) gross floor area; (iv) energy use intensity; (v) weather normalized source energy use intensity; (vi) annual greenhouse gas emissions; (vii) water use; (viii) energy performance score; and (ix) compliance or noncompliance with ordinance.

Tenants (those who lease, occupy, or hold possession) of a covered property must comply with an owner’s request for information within thirty days or risk a fine.

Boston:

No later than May 15th of each year, owner of each covered non-city building shall accurately report previous calendar year’s energy, water use, and any other building characteristics necessary to evaluate absolute and relative energy use intensity of each building through Energy Star Portfolio Manager.

Owners must request information from tenants separately metered by utility companies in January for the previous year, and tenant must report information to owner no later than end of February, though a tenant’s failure to respond does not relieve an owner’s duty to report.

Enforcement and Penalties

Cambridge:

Failure to comply with the ordinance or misrepresentation of any material fact may result in a written warning on the first violation, and a fine of up to $300 per day for any subsequent violation.

Boston:

The Air Pollution Control Commission may issue written notice of violation, including specific delinquencies, to those failing to comply, giving thirty days within which an owner may cure the violation or request a hearing.  The Commission also may seek injunctive relief requiring an owner or non-residential tenant to comply with the ordinance.

Boston provides a sliding scale fine schedule for failure to comply with a notice of violation, depending on the type of property, which ranges from $35 per violation up to $200 per violation.  Each day of noncompliance is a separate violation, but owners or non-residential tenants may not be liable for a fine of more than $3,000 per calendar year per building or tenancy.

Both cities are actively developing programs to address climate change and adaptation.  Property owners should monitor these efforts as well as similar initiatives by federal and state agencies.

ARTICLE BY

Jennifer L. Ioli
OF
Sherin and Lodgen LLP

Proposal to Resuscitate Federal Highway Funding

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House Republican leaders, Boehner, Cantor, and McCarthy have a proposal to address the Highway Trust Fund’s desperate funding problems and the reauthorization of MAP-21, which is set to expire on September 30, 2014.

As discussed in an earlier post, one of the biggest challenges facing Congress in the MAP-21 reauthorization process is what to do about the fiscal condition of the Highway Trust Fund (HTF) which supports funding of the federal highway and transit programs.  Simply stated, the HTF is on the verge of insolvency.  It has both a short term and long term problem.  In the short term, the HTF will not have sufficient revenue to pay the bills through September 30 and it will go into the red sometime in August.  In the long term, the HTF simply cannot support current highway and transit funding levels much less the higher levels that are needed to modernize the Nation’s national transportation network so that American businesses can compete in today’s highly-competitive global marketplace.

The House Republican Leaders’ proposal has three parts to it.  First, the proposal would transfer about $12 billion in general revenues into the Highway Trust Fund.  This would keep the HTF solvent until May 2015 at current funding levels.  Under current House Rules and under recent practice, a transfer of general funds into the Highway Trust Fund must be offset.  The Leaders’ memorandum suggests two potential offsets:  ending the delivery of some Saturday mail; and transferring the current balance remaining in the Leaking Underground Storage Tank Trust Fund.

Adoption of both suggestions would offset the $12 billion general fund transfer into the HTF and would allow MAP-21 to be extended until May 2015 at current funding levels.  It would solve the HTF’s short-term funding problem but it would not address the long-term issues.

Second, with MAP-21 expiring this September 30th, the memorandum contemplates a short-term extension, probably until May 2015, of MAP-21 programs rather than a multi-year reauthorization of the programs.  This short-term extension would be combined with the HTF short-term fix discussed above into one bill that Congress would consider over the next couple of months.  The goal would be to enact it before the August recess.

Third, consideration of the HTF’s long-term funding problems and MAP-21 reauthorization would be put off until 2015.  The rationale for this approach is that the serious work needed to achieve this structural reform has not been done yet.

This overall approach will undoubtedly disappoint many in the House and Senate who wanted to enact a long-term reauthorization bill this year.  There will also be considerable controversy over the postal reform offset.  But the bottom line is that something has to be done by the end of July or there will be a disruption of ongoing construction projects in August—right in the middle of the construction season and just months before congressional elections.

Article By:

Jack L. Schenendorf
Of:
Covington & Burling LLP

Colorado’s Cutting Edge Legislation Fosters Clean Fuel Truck Adoption

Lewis Roca Rothgerber

 

The State of Colorado recently passed HB 14-1326, the “Clean Trucks Bill,” catapulting itself into the group of cutting edge states that are on the forefront of the clean fuel issue. Recognizing that trucks represent a huge opportunity for emissions reductions by replacing diesel engine trucks with trucks reliant on clean fuels, the Clean Trucks Bill paves the way for improved air quality, reduction in greenhouse gases, promotion ofdomestic energy sources and ultimately, cost savings for industry and for consumers. The bill, which passed the Colorado Senate unamended from the version previously passed by the House, was sent to Governor Hickenlooper on May 12, 2014. The Governor is expected to sign the bill and pass it into law soon.

The Clean Trucks Bill employs several components to promote clean fuels. The bill recognizes that the expense of clean fuel trucks over their traditional fuel counterparts leaves clean fuel trucks at a competitive disadvantage, with clean fuel trucks costing between 25 and 75 percent more. As such, the bill expands the alternative fuel tax credit targeting trucks. While existing tax credits provided incentives for compressed natural gas and propane trucks, the bill broadens the category of eligible fuels by incorporating hydrogen and liquefied natural gas into the credit-eligible fuels. Electric or hybrid-electric vehicles greater than 8,500 pounds in gross vehicle weight ratio (GVWR) also become eligible for the tax credit. Additionally, the bill introduces tax credits for heavy duty trucks (greater than 26,000 GVWR) and expands tax credit eligibility to light and medium-duty trucks.

By promoting broader adoption of clean fuel trucks, eventually market development and economies of scale will cause clean fuel trucks to become more cost competitive. The bill provides an 8-year period to achieve those economies of scale, paring down the percentage of a clean fuel truck purchase or conversion that is eligible for the tax credit over that time period. However, the maximum amount of the credit remains constant over the life of the legislation; heavy-duty trucks are eligible for up to $20,000 in tax credits per income tax year, medium-duty trucks up to $15,000 per income tax year, and light-duty trucks up to $7,500 per income tax year.

But the Clean Trucks Bill didn’t stop at a package of clean fuel truck purchase or conversion tax credits. Aerodynamic technologies proven to improve fuel efficiency and clean fuel refrigerated trailers also gained eligibility for tax credits. (Previously, tax credits were only available for idling reduction technologies.) The importance of the inclusion of clean fuel trailers cannot be understated, as fleets prefer to use the same fuel for the truck as the trailer, and the tax credit provides an incentive for the purchase or conversion of the clean fuel trailer in companion with the clean fuel truck.

The Clean Trucks Bill also updates the sales tax exemption for low-emitting vehicles over 10,000 GVWR. Today, virtually every vehicle over 10,000 GVWR meets the eligibility requirements for the sales tax exemption. The Clean Trucks Bill limits that sales tax exemption to trucks meeting more stringent standards.

The final element of the Clean Trucks Bill eliminates the specific ownership tax penalty for purchasing a clean fuel truck. Because the specific ownership tax is based on the purchase price of a vehicle, clean fuel trucks with their higher purchase price stand at a disadvantage to traditional fuel trucks with a lower purchase price. The Clean Trucks Bill abrogates that penalty by reducing the price at which clean trucks are valued for purposes of the specific ownership tax to an amount comparable to traditional fuel vehicles. By equalizing the tax value of a clean fuel truck with a traditional fuel truck, local government recipients of specific ownership tax revenues are unaffected from a revenue standpoint.

The benefits of the Clean Trucks Bill are many. First, the bill stimulates Colorado’s economy by promoting trucks using clean fuels, of which Colorado is a major producer. The bill also supports reduced emissions and improved air quality by providing an incentive for cleaner fuel trucks. Finally, the bill encourages energy independence through the promotion of domestically-produced clean fuels like natural gas and propane, as well as hydrogen and liquefied natural gas. It’s not often legislation of this magnitude can be widely perceived as a win-win, but Colorado is on the eve of becoming one of few states to accomplish such a feat.

Article By:

Dave McGimpsey
Of:
Lewis Roca Rothgerber LLP

"Rails to Trails" or "Rails to Trespass": Supreme Court Speaks on the Abandonment of Certain Railroad Rights of Way

Womble Carlyle

Last month, the Supreme Court of the United States (please, there is no such thing as the “United States Supreme Court”) decided a very interesting case about easements.  “Easements?”, you ask.  Yes, easements.  We use them almost every day.  Well, every weekend, perhaps.  Greenways.  Rails to trails.  Beach access.  You name it.  Also, the case is interesting because it holds the Federal Government to a much older (1940-old, which is old) argument it made about easements, and which contradicts the Government’s argument in this recent case.

We’re talking today about Marvin M. Brandt Revocable Trust v. United States, No. 12-1173 (March 10, 2014).

Facts.

In 1875, to encourage settlement of the West and to entice railroads to develop, Congress passed the General Railroad Right-of-Way Act, which granted to “any railroad” a “right of way through the public lands of the United States” to the “extent of 100 feet on each side of the central line” provided the railroad either (1) actually constructed its railroad or (2) filed a proposed map of its rail corridor.  From that day forward, after the right of way is obtained, “all such lands over which such right of way shall pass shall be disposed of subject to the right of way”.

In 1908, pursuant to the Act, the Laramie[,] Hahn’s Peak & Pacific Railway Company obtained a 66-mile, 200-foot wide right of way through southern Wyoming.  By 1911, the Railway had completed construction of its railroad over the Act-granted right of way.

In 1976, the United States patented an 83-acre parcel to the Brandt family, conveying fee simple title but reserving and excepting certain rights-of-way and easements “to the United States”.  For purposes of our discussion today, we’ll focus on the reservation and exception that the land was patented “subject to those rights for railroad purposes as have been granted to the Laramie[,] Hahn’s Peak & Pacific Railway Company.”  That right of way stretched for nearly 1/2-mile across the Brandt parcel, covering 10 of the 83 acres.  As noted by the Court, “[t]he patent did not specify what would occur if the railroad abandoned this right of way”.

The rail line owning the right of way changed hands a number of times, ending with the Wyoming and Colorado Railroad.  In 1996, the Railroad notified the Surface Transportation Board of its intention to abandon the right of way.

The Lawsuit.

In 2006, the United States filed this lawsuit seeking a judicial declaration that the right of way had been abandoned and an order quieting title to the right of way in the United States.  All property owners along the right of way settled or defaulted but for the Brandts, which took issue with the attempt to quiet title in the United States.

The Brandts contend that the “stretch of the right of way crossing [the Brandt] family’s land was a mere easement that was extinguished upon abandonment by the railroad, so that, under common law property rules, [the Brandts] enjoyed full title to the land without the burden of the easement”.

The United States “countered that it had all along retained a reversionary interest in the railroad right of way—that is, a future estate that would be restored to the United States if the railroad abandoned or forfeited its interest”.  In this sense, the United States is arguing that the 1875 Act created something more than an easement, the latter working as the Brandts indicate.  It is this “implied reversionary interest” in the United States that underlies the dispute.

The trial court granted summary judgment to the United States, and the appellate court affirmed.  The Supreme Court granted certiorari, and reversed.  In an 8-1 decision, the Court determined the Brandts held title to their 83 acres free and clear of the abandoned easement.  The other landowners are SOL.

The Majority.

The Majority’s decision sits on two pillars: (1) the common law nature of easements and (2) an earlier argument from the United States’, on which the United States succeeded, that supports the Brandts’ position and contradicts the United States’ position in this lawsuit.

First, the common law nature of easements.  Citing myriad secondary sources, the Court notes that an easement is a “nonpossessory right to enter and use land in the possession of another”, which “disappears” if the beneficiary “abandons” at which point “the landowner resumes his full and unencumbered interest in the land”.  Thus, the railroad’s decision to abandon and ruling that it had abandoned “resume[d]” in the Brandts their patented interest in the property.

Second, the United States’ inconsistency.  In what appears to be a point of order first raised before the Supreme Court — there is no mention of this at either the trial court or the appellate court level — the Court notes that the United States argued successfully in 1940, adopted by the Court “in full”, that the 1875 Act “clearly grants only an easement, and not a fee”.  See Great Northern Railway Co. v. United States, 315 U.S. 262 (1942).  Thus, the United States cannot now argue that the 1875 Act creates something more than an easement, with an implied reversionary interest in the United States after abandonment.  Of course, if you’re the United States, there is likely nary an argument you haven’t made before.

 The Dissent.

The dissent takes the position that railroad rights of way have always been treated differently than ordinary easements, and rightfully so, as sui generis property rights not governed by the common law regime.  In the context of railroad rights of way, the dissent points out, “traditional property terms like ‘fee’ and ‘easement’ do not neatly track common-law definitions” as the rights of way have characteristics of both easements and fee.  The dissent insists that precedent, including the decision in Great Northern Railway, is clear that railroad rights of way were granted by the 1875 Act “with an implied possibility of reverter in the United States”.

And then the dissent gets real, which is our jam:  “By changing course today [from prior precedent regarding railroad rights of way and implied reversionary interests in the United States], the Court undermines the legality of thousands of miles of former rights of way that the public now enjoys as means of transportation and recreation.”  Yep, those trails, which had been rails, could likely fail.

rails to trails
“Trespass your way around Town by bike, jog, or stroll.”

Article By:

Michael C. Thelen
Of:
Womble Carlyle Sandridge & Rice, PLLC

 

Federal Energy Regulatory Commission (FERC) Delays Electric Quarterly Reports (EQRs) Filing Deadline

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On October 10, after many weeks of speculation, the Commission issued an order extending the filing deadline of the 2013 Q3 Electric Quarterly Reports (EQRs) filings from October 31 to “a date to be determined.”  This extension follows a series of similar delays and significant technical issues associated with the revised EQR filing requirements put in place by Order Nos. 768, 768-A, and 770.

As part of the preparation for the new filing requirements, FERC had made available to the public an EQR Sandbox Electronic Test Site (Sandbox) that was meant to be a testing platform to help users acclimate to and prepare for the new filing requirements and system.  The Sandbox was made available on July 12 and was meant to be available until September 1.  Following the testing period, the Sandbox would be taken offline to prepare it to go live well in advance of the original October 31 filing deadline.  Commission Staff encouraged filers to utilize the Sandbox “as often as possible” and to contact Staff with questions and concerns during the planned six week testing period.  From the beginning of the testing period, there were significant and wide-ranging problems encountered with the Sandbox.  After vocal feedback from industry, the Commission extended the Sandbox availability from September 1 to September 15.  It was hoped that this extension would allow ample time to address and resolve the problems and allow filers additional time to test a functioning Sandbox.  Unfortunately, the issues were not resolved, and on September 13 the Commission extended the availability of the Sandbox “until further notice.”

Since the indefinite extension of the Sandbox availability, filers have continued to experience difficulties.  As a result of these ongoing issues, the Commission has implemented a similar indefinite extension of the filing deadline.

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Watt's New? Michigan Energy News – September 2013

Varnum LLP

Still Getting Ready to Make Good Energy Decisions

After reviewing and analyzing the submissions from seven public forums and from the 114 questions posted on the web for feedback, Energy Office Director Steve Bakkal and MPSC Chairman John Quackenbush will be issuing four reports on the following schedule:

■ Renewable Energy: Draft report release for comments – 9/20/13

Due date for public comments – 10/11/13

Release final report – 11/4/13

■ Additional Areas: Draft report release for comments – 10/1/13

Due date for public comments – 10/22/13

Release final report – 11/15/13

■ Electric Choice: Draft report release for comments – 10/15/13

Due date for public comments – 11/1/13

Release final report – 11/20/13

■ Energy Efficiency: Draft report release for comments – 10/22/13

Due date for public comments – 11/6/13

Release final report – 11/26/13

All this material will be posted at: www.michigan.gov/energy

Net Metering Participation Increases

The Michigan Public Service Commission issues an annual report on electric customers participating in the statewide net metering program required under the Clean, Renewable, and Efficient Energy Act of 2008. [Under net metering, when a customer produces electric energy in excess of its needs, energy is provided back to the serving utility and the customer receives a credit.] In 2012 the size of the net metering program increased 55 percent to 9,583 kW. The number of net metering customers has gone from 53 in 2008 to 1,330 in 2012. While most of the recent increase was due to new solar installations, a 535 kW methane digester in Great Lakes Energy Cooperative’s service territory is Michigan’s first Category 3 (methane digester up to 550 kW) modified net metering project.

Methane-to-Methanol Plant Operational

Oil wells also produce natural gas. When there is no way to get the natural gas to market it is usually “flared”. Now Gas Technologies LLC of Walloon Lake has demonstrated its 25-foot, portable, singlestep, gas-to-liquids plant in a Kalkaska County oil field. This first in the industry process can monetize stranded natural gas, biogas, coal mine methane, and landfill gas. www.gastechno.com

Adopt-A-Watt Helps Library

Dearborn’s Henry Ford Centennial Library has installed 25 energy efficient street lights and an electric vehicle charging station under the national Adopt-A-Watt program. Modeled on the AdoptA-Highway program, sponsorships are sold to fund new, energy-efficient equipment, alternative fuel vehicles and other green technologies for financially challenged public agencies. The agencies then realize the cost savings into the future.

Restrictive Wind Zoning Struck Down by Michigan Court

Forest Hill Energy recently won a court order striking down alleged “police power” ordinances passed by townships attempting to regulate the construction and operation of wind turbines. The Clinton County Zoning Ordinance already had extensive wind energy provisions. Nonetheless, three townships passed ordinances that were more restrictive to wind energy development than the county zoning. The additional restrictions related to height, noise, setbacks, and shadow flicker. Forest Hill Energy brought suit seeking a declaration that the townships’ “police power” actions were really zoning ordinances in disguise. The Clinton County Circuit Court ruled that since the townships were subject to the county’s zoning, the township ordinances were invalid because they were inconsistent with the county’s zoning plan—the townships could not get a “second bite at the zoning apple.” Forest Hill Energy had already obtained a special use permit for the construction of a 39 turbine project in January of 2012, and now expects to move forward with construction in late 2013.

More Wind Farms to Commence Construction in 2013

NextEra’s 150 MW Pheasant Run Wind projects are commencing construction this fall, with the energy to be sold to DTE Electric Company. The two projects will be located in Brookfield, Fairhaven, Grant, Oliver, Sebewaing and Winsor townships, all in Huron County. The Michigan Public Service Commission approved a 20 MW power purchase agreement (PPA) for DTE Electric Company with Big Turtle Wind Farm, LLC. The twenty year PPA has estimated pricing of up to 5.3 cents per kilowatt-hour. The project will have more than 50 percent Michigan-sourced content, and brings the DTE renewable energy portfolio to 9.8 percent. Consumers Energy will begin construction on its 105 MW Cross Winds Energy Park in Akron and Columbia townships in Tuscola County before the end of the year.

Michigan Shorts

ΩΩ Bay City Electric, Light & Power has signed a 20-year contract to purchase 4.8 MW of energy from the Beebe Community Wind Farm at a price starting at 4.5¢/kWh and increasing to 7.2¢/kWh Ω Revolution Lighting Technologies has acquired Relume Technologies, a Michigan manufacturer of LED lighting products and control systems Ω The City of Ypsilanti has set a goal to have 1000 solar roofs within the city limits by 2020 Ω DTE Energy is offering its customers the opportunity to buy BioGreenGas derived from the Sauk Trail Hills Landfill in Canton Ω Lansing Board of Water & Light has announced it will purchase energy from eight wind turbines in Gratiot County under a power purchase agreement with Exelon Wind ΩΩ

Virtual Solar Engineering Center Meeting with Success

GreenLancer.com, a Detroit-based solar energy technology company, has announced its initial $500,000 in funding. The company, launched in 2011, combines state-of-the-art cloud computing with a national network of green energy engineering freelancers (“greenlancers”). Their goal is to reduce the soft costs associated with solar energy projects. Initial investors include Bizdom (Detroit), Start Garden (Grand Rapids), Blue Water Angels (Midland), Northern Michigan Angels (Traverse City), and a private investor. The company has projects in 33 states and six foreign countries.

Converting Corn Stalks into Biofuel

Using a fungus and E. coli bacteria, University of Michigan researchers have turned inedible waste plant material into isobutanol. The waste used in the initial work was corn stalks and leaves. Isobutanol has 82 percent of the energy in gasoline, whereas ethanol has only 67 percent. It also has the added advantage over ethanol of not mixing easily (or absorbing) water. So it is a viable candidate to replace ethanol as a gasoline additive. The fungi turns the plant roughage into sugars that are then converted by escherichia coli to isobutanol. Through bioengineering the researchers believe they can produce a variety of petroleum-based chemicals through this same process.

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Argentina Legal Highlights (Volume II, 2013)

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Latin American Region Enviromental Report, Second Quarter, 2013

Packaging Waste Management Bill Introduced in Chamber of Deputies

On April 11, 2013, a bill (No. 1859-D-2013; the “Bill”) was introduced in the Chamber of Deputies that would create a national, comprehensive packaging-waste management system. The Bill would apply to most packaging and packaging waste, and would regulate most entities that are involved with the packaging of products, the marketing of packaged goods, or the recycling or recovery of packaging waste. (Arts. 2, 7) A covered entity could comply with its responsibilities through one of two methods. (Art. 9) One option would allow it to pay a fee and participate in a provincially or municipally administered Packaging-Waste Management Program (Programa de Gestión de Residuos de Envases), which would set requirements for collection, transportation, temporary storage, processing, and recovery of packaging waste. (Arts. 10-23) Alternatively, a covered entity could administer its own government-approved Deposit and Return System (Sistema de Depósito, Devolución y Retorno). (Arts. 24-26) The Bill was referred to the committees on Industry, Natural Resources and Conservation of the Human Environment, and Budget and Finance.

Reference Sources (in Spanish):

Battery Waste Bill Introduced in Chamber of Deputies

On April 25, 2013, a battery waste management bill (No. 1859-D-2013; the “Bill”) was introduced in the Chamber of Deputies. The Bill would cover nearly all batteries, with the exception of industrial and car batteries. (Art. 2) Most of the obligations established by the Bill would fall on battery producers: i.e., manufacturers, importers, brand owners, and resellers. These companies would be responsible for collection and management of battery waste and required to implement one of the following waste-management options: (a) establishing their own Individual Battery Waste Management System (Sistema de Gestión Individual de Residuos de Pilas y Acumuladores ); (b) participate in an Integrated Battery Waste Management System (Sistema Integrado de Gestión de Residuos de Pilas y Acumuladores); or (c) establish a deposit-and-return system. (Art. 5) Regardless of the option chosen, approval of the Secretariat of Environment and Sustainable Development (Secretaría de Ambiente y Desarrollo Sustentable) would be required. (Arts. 6-8) The Bill would also set standards for battery collection, treatment, recycling, and disposal (Arts. 9-10), impose labeling requirements (Art. 15), and require equipment manufacturers to make battery removal easy (Art. 16). Under the Bill, as under current Argentine law, used batteries would be deemed hazardous by definition, and thereby subject to Argentina’s extensive restrictions on transport, storage and handling of hazardous wastes. (Art. 3)

Reference Sources (in Spanish):

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