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Published April 21, 2009, 10:00 PM

OUR OPINION: Stop hiding terms of wind leases

A confidentiality clause is so powerful and so transparently in the sole interest of the wind-power industry, not the landowner, that it really has no business in a negotiated contract.

Confidentiality requirements may well be “common in wind projects across the country,” as a Bismarck lobbyist for the American Wind Energy Association told The Associated Press.

And wind-power companies surely want to keep it that way.

But in this case, what’s good for the industry is bad for the landowners who are contracting with those companies.

The North Dakota Legislature is debating a bill that would ban confidentiality requirements in wind leases, the AP reported. Lawmakers should pass the bill and even the scale, which right now is tilted too far in the direction of the wind-power industry.

Wind leases tend to be lengthy documents involving long-term easements, liability issues, property-use restrictions and other complicated legal issues. So, the best advice for any owner of a breezy parcel that’s drawing wind-industry interest is this one: Hire a lawyer to help negotiate the lease.

That being said, the state also has a right and duty to set some minimum conditions on wind leases, exactly as it does on mortgage contracts, insurance contracts, oil-and-gas leases and so on.

One of those rules should specify, “No confidentiality agreements allowed.” A confidentiality clause is so powerful and so transparently in the sole interest of the industry, not the landowner, that it really has no business in a negotiated contract.

The reason why it’s so powerful is this. It deprives one side — the landowner’s side — of a critical negotiating tool: good information about the market price.

At the negotiating table, the industry representative will know the prices that all of the other local landowners have settled for, but the landowner won’t have that information. Even worse, he or she basically will be barred by law from getting the info because the neighbors won’t be able to provide the figures without violating their contract.

That’s a tremendous handicap, and it almost certainly results in landowners signing leases that give them much less money than they otherwise could have received. Imagine trying to price your home when previous sellers in your community have been barred under threat of fines or arrest from revealing their own sales prices. You’d basically have to guess at a figure and hope that the prospective buyer you’re dealing with isn’t hiding his glee at the fire-sale price he’s being offered.

Because that buyer, you see, does have access to the sale prices of nearby homes.

For many landowners, signing a wind lease is a once-in-a-lifetime event. That means too few landowners can develop the highly specialized skills and knowledge needed to master the subject.

At the same time, the leases are hugely important contracts whose income and property-rights clauses echo through the decades.

North Dakota lawmakers are being wise when they help landowners negotiate from positions of knowledge and strength.

— Tom Dennis for the Herald

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