Eminent domain ruling could derail Mont. renewables industry -- governor

A Montana judge's decision that an energy company cannot seize private property to build an electricity transmission line through the state has sent shudders through Montana's political and economic development communities, who fear the case could prevent the state from fully tapping its vast wind power resource.

At issue is Montana District Court Judge Laurie McKinnon's decision last week that the developers of the Montana Alberta Tie Line do not have authority to use eminent domain to take private property along the 215-mile-long transmission line route. The MATL project is designed to carry wind-generated electricity from the Great Falls, Mont., area across the Canadian border into Lethbridge, Alberta.

McKinnon ruled that only the state retains authority to condemn and seize private parcels, although she allowed that the Montana Legislature could grant eminent domain authority to transmission line developers or other special interests.

That is exactly what Gov. Brian Schweitzer (D) said he plans to do next month when the Legislature kicks off a 90-day session.

Schweitzer, whose administration has been a strong supporter of the Obama administration's push to promote renewables development, vowed "to be instrumental in drafting legislation" during the upcoming session that gives companies with permitted projects found to be in the public interest the right to take property.


"We want landowners to try and work with transmission line owners, and we want landowners to have input. But at the end of the day, if 99 percent of the stakeholders say a project is a good idea, the 1 percent that don't should not be able to stop it," Schweitzer said in an interview with Land Letter. "So I look forward to helping craft legislation that will encourage energy development in Montana and that will also be fair to landowners and create high-paying jobs."

Montana ranks fifth nationally in wind power resource potential, according to the American Wind Energy Association, and one recent Harvard University study estimated the state trails only Texas in that category. But the state ranks only 21st in total installed wind power capacity with a paltry 385 megawatts, according to AWEA, and that is due in part to Montana's inadequate electricity transmission system.

Without broad authority to site new lines, energy companies will not be able to develop renewable energy projects in the state, said Richard Opper, director of the Montana Department of Environmental Quality.

"It's difficult if companies can't fall back on what everyone agrees is the last resort of eminent domain," Opper said. "Taking away eminent domain as a last resort in the tool box means that every single landowner in the proposed pathway of a power line has veto power on that project."

'David versus Goliath fight'

The controversy stems from a 150-foot-wide property easement stretching about three miles on the north end of the proposed MATL route, near Cut Bank, Mont., where project developer Tonbridge Power Inc. wants to run the 230-kilovolt line.

MATL LLP, Tonbridge Power's subsidiary in Helena, Mont., began condemnation proceedings in July against property owner Shirley Salois, who wants Tonbridge Power to route the line away from wetlands and teepee rings on her property.

But changing the route to avoid the areas would move the transmission line outside of the corridor approved by Montana DEQ, requiring the months-long environmental review and permitting process to be reopened.

The Salois family challenged Tonbridge Power's right to condemn their property, arguing that only the state has the power to take private property, said Hertha Lund, a Bozeman property rights attorney representing the landowners.

McKinnon agreed, ruling that the Legislature would have to expressly grant authority to a "private merchant" to use eminent domain, and there is no record that state lawmakers have ever done so.

"It's a David versus Goliath fight, and we won this round," Lund said.

Harley Harris, vice president and general counsel for MATL LLP said Tonbridge will continue to negotiate with the Salois family, but the company is also considering appealing McKinnon's decision to the Montana Supreme Court.

"Obviously, we're accessing all of our options," Harris said.

But the ruling has placed Tonbridge Power in a difficult position.

The company has already started construction on the $209 million power line, which is expected to be completed by next September. And there are greater concerns than just construction delays and permitting problems. Tonbridge worked closely with the Western Area Power Administration to secure a $160 million loan from the Energy Department that will cover most of the project's cost (Land Letter, Nov. 4).

Several wind power generation companies have signed on to use the line, including San Francisco-based NaturEner USA LLC, which plans to build the 309-megawatt Red Rock Wind project as soon as MATL is completed. The $750 million wind farm would take about 12 months to complete.

"It's not an option to not build the line," Harris said. "This project will get built. It stands on its own. This is obviously a setback and we wish we weren't in this situation, but it won't change the need for the line or the end result. It's too important for Montana and too important for the nation."

Slow going

MATL's progress has been cited as an industry bright spot in a down economy that has slowed or stopped a number of other large transmission projects as developers struggled to secure contracts with renewable energy providers.

The largest project to falter is TransCanada Corp.'s $3 billion Chinook high-tower transmission line, which was proposed to carry as much as 3,000 megawatts of mostly wind-generated electricity from new and expanding wind farms in Montana to large population centers in Arizona, California and Nevada.

The company in September announced it might have to cancel the project due to lack of interest from wind power developers, raising concern among some industry observers who fear that renewables development is faltering after experiencing record investment over the last 18 months (Land Letter, Sept. 23).

Another example is the Mountain States Transmission Intertie, a $1 billion, 400-mile line intended to carry electricity from wind farms in southern Montana to southeast Idaho. That line met with an underwhelming response this year when its developer, NorthWestern Energy, solicited bids from generation companies seeking to place power on the grid.

But MATL has had no trouble getting wind power developers to sign up.

In addition to tying its proposed Red Rock Wind project to the power line, NaturEner USA is also considering expanding its 210-megawatt Glacier Wind Farm near Cut Bank, Mont., thanks to the MATL project, NaturEner officials said.

Lund, the property rights attorney in the Tonbridge Power case, said projects like those proposed by NaturEner USA are years away and that there is no urgent need to take her client's property to build MATL. "Right now, we don't have a lot of wind energy we need to get out," she said.

But with powerful figures like Schweitzer and other state lawmakers pushing for eminent domain, Lund said she realizes McKinnon's ruling may not stand for long.

Schweitzer said if Montana is serious about developing its wind power resources, then it cannot allow the judge's ruling to stand.

"Across the political spectrum, people believe that Montana is an energy state, that there's a market for our energy supply and that to get that supply to market we need pipelines and we need transmission lines," Schweitzer said. "It's simple. To get the energy from where the wind flows to where the homes are located and the cars are plugged in, you need transmission lines."

Streater writes from Colorado Springs, Colo.

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