Expansion of wind energy generation into the Texas Panhandle and Rolling Plains region provides us with the ability to harness one of our greatest natural resources. This expansion will have an unprecedented effect on landowner rights. While we recognize and embrace this opportunity, we also understand that it is important for the development to be effective, efficient, and adequately compensate landowners for the rights used or taken.

The major issues faced by landowners during this development include:

• Wind Generation Easements and Agreements;
• the CREZ transmission routing process; and,
• the CREZ easement negotiation/condemnation and construction processes (in the event that your tract of land is selected as one of the transmission easement paths).

Farm and ranch land in our region is being sought by wind energy generation developers.

The standard form Wind Energy Easement Agreements are quite lengthy and complicated, and can substantially reduce your rights as a landowner unless certain provisions are added and others revised. The standard Wind Energy Easement Agreements offered by developers:

• restrict farming and irrigated farming;
• limit oil and gas, gravel and caliche exploration;
• prohibit conveyance or reservation of wind rights;
• affect hunting and wildlife management on the property;
• could convey a transmission easement without your approval or consent; and,
• contain no provision for removal and restoration of the property when the generators are no longer used.

“CREZ” stands for Competitive Renewal Energy Zones. The CREZ process was established by the Texas legislature in 2005. It was created to help encourage development of wind generation in Texas by facilitating the construction of electric transmission lines to areas of the state determined to have superior wind energy resources.

The Public Utility Commission of Texas (“PUCT”) has designated certain portions of West Texas and the Texas Panhandle and South Plains as CREZ zones and has selected a transmission scenario that will bring in 18,456 megawatts of wind power from these regions into the ERCOT electric market. The Electric Reliability Counsel of Texas (“ERCOT”) is an organization that is regulated by the PUCT and oversees the planning and operations of the electric grid that covers most of Texas. However, most residential and commercial customers located within our region are not connected to the ERCOT grid. Our region is connected to an interstate transmission grid that is overseen by a different regional transmission organization, the Southwest Power Pool.

On January 29, 2009, the PUCT designated numerous transmission service providers, (“TSP”) including Sharyland Utilities, Cross Texas Transmission, WETT, ETT, and others to construct specific portions of the CREZ facilities in our region.

Generally speaking, the Transmission Easement will be some 200 feet in width, and will employ a lattice or monopole structure. The TSP’s have been required by the PUCT to identify several routes which run throughout our region. Each of the TSP’s is required to file an Application with the PUCT for approval of the final route. In the event that one of the proposed routes crosses your property, you have an opportunity to participate in the route selection process.

Our law firm is currently engaged in representing clients in the route selection process at the PUCT. In order to participate in the route selection process, you must file a Public Protest or a Request to Intervene within thirty (30) days of the Application filing date for each of the CREZ transmission projects.

The following is a list of the transmission service providers, the counties affected by their designated project, and their Application filing deadline. Please consult our website to obtain a route specific map.

There are other CREZ transmission projects which are scheduled for construction throughout the state. Those are not listed in this letter as they do not directly affect our region. However, in the event that you need assistance or representation with regard to these other projects, we are capable of assisting or representing you in those matters as well.

It is important to note that you have the opportunity to contact these companies directly in an effort to provide information or reach an agreement about routing on your particular land. However, your only formal opportunity to participate in the routing process is the filing of a Public Protest or an Application to Intervene with the PUCT.

In the event that your property is selected during the routing process, the TSP is required by law to contact you and to make attempts to negotiate an Easement Agreement. These Transmission Easement Agreements are quite complicated and their provisions can have a substantial effect on you as a landowner. If you are unable to reach an agreement, the TSP's will exercise the power of condemnation. Our law firm has experience in representing landowners throughout the easement negotiation and condemnation process.

The condemnation process generally proceeds as follows:

Failing an agreement, the TSP will file a request with a County Court at Law or District Court in the county where the property is located. This request will require the Judge of the relevant Court to appoint three Special Commissioners to resolve disputes regarding the value. The Court can appoint any person who is a property owner within the county. You have a right to participate in this process. In most instances, you should hire an appraiser to provide the Special Commissioners with your position about the value of your property.

The Special Commissioners will establish the value of the "property taken" and damage to the "remainder", and then issue their decision. The TSP will have the right to begin construction once the amount established by the Special Commissioners' is deposited with the court.

Either party may appeal the decision of the Special Commissioners by filing a lawsuit. In this lawsuit, the parties will be entitled to a Judge or Jury trial to decide the condemnation issues.

We hope that this information makes you aware of the significant issues landowners in our region will be facing with the expansion of wind energy into this area. If we can be of further assistance, please do not hesitate to contact our law firm by telephone at 806-293-5361.