Law students, lawyers get energy lowdown March 29, 2013
Law students, lawyers get energy lowdown
A. Lee Graham
Solar energy’s future may be one of untapped and unlimited potential, but at least one attorney casts doubt on the industry as a client prospects for lawyers.
“There’s not a lot of lawyering in solar,” said John B. Holden, an attorney with the Dallas office of Jackson Walker LLP.
Speaking March 22 at Texas Wesleyan Law Review’s Fifth Annual Energy Symposium in downtown Fort Worth, Holden cited fewer property issues with solar contracts compared with those involving wind, geothermal, natural gas and other energy resources.
The primary challenge with solar, Holden argued, is moving energy generated from remote solar installations to densely populated urban areas where it is used.
Of total U.S. energy usage in 2011, only .158 quads came from solar, compared with 19.7 for coal, 24.9 for natural gas and 35.3 for petroleum, for example, according to the Federal Energy Regulatory Commission. A quad is 1 quadrillion British thermal units, an amount of energy equivalent to 170 million barrels of oil.
While his firm represents power companies in hammering out solar installation contracts, less client interaction is involved compared with other types of cases.
“We do the power contracts, but it’s not like you’re out there with the landowner,” Holden said.
Because solar installations mostly operate in remote desert locations, and involve fewer landowner interests than with other energy negotiations, property issues are commensurately smaller.
Still, Holden was not entirely dismissive of solar as one part of the future energy supply.
“There is a place for solar power,” Holden allowed.
Greater potential – as a source of power and legal work – lies with wind power, Holden said. “I like wind, but I think wind has some issues.”
Those challenges include birds and bats known to fly into wind turbines that generate electricity, as well as property condemnation issues arising from having to run large power lines through residential properties.
Holden told a roomful of attorneys and law students at the symposium that wind energy whips up several potential legal issues. One involves easements, needed for energy companies to work on private property, with another involving property rights stemming from allowed property uses.
Holden recalled a case where his firm preserved ranching and hunting rights while allowing drilling on the same land. The key is accommodating both activities simultaneously, but on different parts of the parcel.
“The developer was concerned that people with high-powered rifles might shoot at turbines and the workmen working on them by accident,” Holden said.
As with oil and gas leases, wind energy developers often aggregate enough land to making contracting it worthwhile. They option property for an initial time period and extend that term as development progresses.
Another issue requiring legal assistance is negotiating wind energy’s purchase price. Wind developers often pre-sell their product at a fixed rate, which is often lower than the market rate.
“If you really negotiate to protect yourself, you want the highest price, but that’s iffy,” Holden said.
A recent case saw his firm negotiate what Holden called a “basket price” combining those at different rates. “It gets pretty sophisticated,” he said.
Equally sophisticated – and far more controversial – are ongoing battles over whether hydraulic oil and gas drilling, also known as “fracking,” contaminates air and groundwater or causes earthquakes.
Since 2009, more than 50 lawsuits have been filed nationwide involving hydraulic fracturing in some capacity, according to a Columbia School of Law report released in February. Some of those cases only discuss the issue while not making it a central focus.
Some of those cases allege groundwater contamination by fracking, in which a pressurizing mix of water and chemicals is injected into the ground to release natural gas. Texas and Pennsylvania claim most of those lawsuits, at 14 and 15, respectively, but no court has ever found a connection between the drilling practice and groundwater contamination.