Wyoming has excellent wind resource that could be developed and sold to western states that have a growing demand for electricity, especially electricity generated from renewable resources. The obstacle to selling Wyoming electricity to western states is delivery. The electrical grid (transmission) in the western United States is at or near capacity. In order to deliver more electricity from wind farms in Wyoming, a number of potential transmission line projects are being considered for the western grid.
Wind energy developers are acquiring lands in Wyoming in preparation for wind farm projects. These projects may contain a mix of private, public (BLM), and state trust lands. The project location must have developable wind potential without conflicts that might preclude development. An electronic plat book of Wyoming state trust lands is available to research surface and subsurface ownership of state trust lands
The process for leasing Wyoming state trust lands for wind energy developmentis facilitated through the use of a temporary use permit or special use lease depending upon the nature of the activity. The State has developed a wind lease template which is used as the starting point for negotiations related to the commercial development of state lands for wind energy generation. It should be noted that this lease template is subject to change during the negotiation process or as changes in circumstances dictate. During the process of approving a wind lease application, consideration is given to the compatibility between wind energy development and other surface uses such as agricultural operations.
For more information, please contact Don Threewitt in the Real Estate Management Division.
Leasing Wyoming State Trust Lands for Wind Energy Development
Wind energy development on Wyoming state trust lands is under the jurisdiction of the State Board of Land Commissioners (the Board) and administered through the Office of State Lands and Investments (OSLI). The Rules and Regulations of the Board of Land Commissioners allow for wind energy development through Temporary Use Permits (Chapter 14) and Wind Energy Leasing (Chapter 6).
Temporary Use Permits are non-exclusive permits issued for the installation and monitoring of meteorological towers and stations. They are generally limited to a 5 year term at an annual rent of $1,200 per tower. These permits do not guarantee or prioritize the permittee for future development of a project area. The process from application to final approval is relatively short, typically two months.
• Application and $250.00 application fee.
• Notification to existing surface lessees for their comment.
• Notification to Wyoming Game and Fish to determine what stipulations will apply to the permit if the location is within the Sage Grouse Core Area.
• Surface Impact Payments are made directly to existing surface lessees in accordance with the approved impact payment schedule.
• Preliminary approval shall be granted not less than 20 days nor more than 30 days by the Director of OSLI after receipt of the completed application.
• After preliminary approval, the applicant may commence installation and operation of the met tower facility but assumes the risk that the Board may ultimately disapprove.
• Final approval is made by the Board at their regular scheduled meetings (6/year).
Wind Energy Leases are leases made through a Wyoming Wind Energy Lease Agreement and provide the lessee with exclusive wind energy development rights of the state trust lands within the lease. The agreement is subject to any existing uses. There are three phases in the agreement: 1) Initial phase for determining feasibility such as collecting wind data; 2) Construction phase; and 3) Operation phase. The term of the lease is for the anticipated life of the project, usually 35 years and may be renewed for a period not to exceed a total of 75 years. A reclamation bond is required and at the end of the lease, the land will be reclaimed. The process from application final approval usually takes several months.
• Application and $250.00 application fee. (*If applying for a lease or permit in Sage-grouse core area, a Density Disturbance Calculation Tool (DDCT) worksheet must be submitted to the Wyoming Game and Fish Department. For more information and to download the worksheet, please visit https://wgfd.wyo.gov/Habitat/Sage-Grouse-Management.)
• Notification to existing surface lessees for comment to determine that their existing use is compatible with wind energy development.
• OSLI review of the applicant as to the applicant’s experience, financial ability, business licensing, and procurement of transmission and marketing agreements.
• OSLI determination that state trust lands being applied for has access and site control by the applicant. In the event that multiple applications are received for the same parcel(s) or the State parcel is large enough to be a stand-alone project, a competitive bid process may be offered before leasing to the applicant.
• OSLI review of the state trust lands being applied for to determine that potential conflicts can be and will be mitigated by the wind lessee. Such conflicts could include those with existing uses, wildlife, cultural and historic, and other conflicts as identified.
• Determination made as to whether the parcel is within a Sage Grouse Core area and appropriate stipulations applied.
• Negotiation and agreement of the terms and conditions of the lease to fair market value that include: 1) Annual rents per acre until operation; 2) An installation fee based on generating capacity (50% payable at commencement of construction and 50% prior to operation) and; 3) Operating rent equal to the greater of a percentage of gross revenue, a rent based on generating capacity, or a rent per acre.
• After staff review, the Director of OSLI will recommend that the application and lease agreement be approved or disapproved by the Board.
• Final consideration is made by the Board at their regularly scheduled meetings (6 per year).
• A Surface Impact Payment is negotiated between existing lessees and the wind lessee for negative impacts to the state trust land and the leasehold estate. These payments are paid direclty to the existing lessee according to Chapter 6 of the Rules. Prior to surface disturbance, the wind lessee must have made the surface impact payment.
• The State Wind Lease Agreement requires compliance with other governmental agencies.
Development and Surface Uses
Wind Energy Development and Agricultural Operations on State Trust Lands
In most cases, wind energy development and agricultural operations are compatible uses of state trust lands. There are many practices that will insure compatibility of the two uses beginning with open discussion between the wind developer and the agricultural operator. The State requires that a wind lease applicant contact the existing agricultural lessees for their comments and concerns as to how the proposed wind energy development might affect their agricultural lease. The State Board of Land Commissioners will consider these comments prior to approving a Wind Lease on state lands for purposes of determining whether the two uses are indeed compatible under the terms and conditions of the proposed lease. Also, an approved State Wind Lease requires compensation for those negative impacts associated with the wind energy development to the existing agricultural lessees. Issues concerning appropriate compensation by the wind developer to the agricultural lessee are left to the surface impact payment negotiation process described more fully below.
State Wind Lease Agreements define the uses, requirements, and limitations of the wind developer to give assurances to the existing grazing and other lessees. Examples of such language in the State Wind Lease are:
(In these wind lease excerpts, Lessee is Wind Lessee and lessee is any existing lessee)
3.1 Uses. The Property leased under this Lease Agreement is leased to Lessee for Wind Energy Development on the Property and shall be used by Lessee only for those purposes.
3.7 Interference with Existing Uses. Lessee's use of the Property for Wind Energy Development, including, without limitation, its installation and operation of Windpower Facilities, shall not unreasonably disturb any Existing Uses of the Property.
3.8 Post-Construction Reclamation. Upon the completion of the construction of the Lessee Improvements, all Property disturbed by Lessee, its agents, contractors, and/or employees, and not required for continuing operations of the Windpower Facilities, shall be restored to a condition and forage density reasonably similar to its original condition and forage density. Reclamation shall include, as reasonably required, leveling, terracing, mulching and other reasonably necessary steps to prevent soil erosion, to ensure the establishment of suitable grasses and forbs, and to control noxious weeds and pests.
6.2 Surface Impact Payments. Prior to surface disturbance, a surface impact payment shall be negotiated with the existing surface lessee of the Property and paid pursuant to Chapter 6 of the Board of Land Commissioners Rules and Regulations.
6.3 Reclamation Bond. No later than the Commencement of Construction, Lessee shall provide Owner with a Bond, to cover Lessee’s estimated removal and surface restoration costs as provided in Article 11.
7.1 Insurance. Lessee shall provide, at its expense, coverage against claims arising out of Lessee’s, Sublessee’s, or their respective contractors’ and agents’ occupation and use of the Property under this Lease Agreement for bodily injury and death, and from damage to or destruction of property of others, but excluding loss of use thereof.
7.2 Indemnity. Owner instructs Lessee to take safety measures to reduce the risk that its operations and the Lessee Improvements will cause harm or injury to people, property, livestock or other animals.
11.1 Removal of Lessee Improvements. Upon the expiration or termination of this Lease Agreement, Lessee shall, within the Removal Period, satisfactorily accomplish each of the following items:
(a) Remove from the Property all above-ground and below-ground Lessee Improvements to a depth of not less than two (2) feet below the surface grade, all in a manner which minimizes injury to the Property, by:
(i) removal of all concrete footings, foundations, and other fixtures to a depth of not less than two (2) feet below the surface grade; and
(ii) hauling away and disposing of, in a lawful manner, all removed concrete and other waste materials.
(b) Reclaim and restore the Property disturbed by Lessee, or any permitted Sublessees or Assignees, to a condition and forage density reasonably similar to its condition and forage density on the Effective Date, consistent with the uses permitted by this Lease Agreement, by reseeding any disturbed soil surface with suitable flora and restoring the terrain and contour to as close as reasonably practicable to their condition as of the Effective Date, and, as reasonably required, all leveling, terracing, mulching and other reasonably necessary steps to prevent soil erosion, to ensure the establishment of suitable grasses and forbs, and to control noxious weeds and pests.
13.3 Requirements of Governmental Agencies. Lessee, at its expense, shall comply in all material respects with valid laws, ordinances, statutes, orders, and regulations of any governmental agency applicable in connection with its possession of, construction upon and use of the Property.
13.4 Hazardous Materials.
(a) Lessee’s use, possession, or control of the Property shall not cause the contamination or pollution of any environmental medium, including soil, surface waters, groundwaters, sediments, and surface and subsurface strata, ambient air or any other environmental medium in, on, or under, the Property, by any waste, pollutant, or contaminant in violation of Environmental Laws. Lessee shall use the degree of care required by applicable Environmental Laws to prevent the contamination or pollution of the Property. Lessee and its Sublessees, contractors or agents shall not bring on the Property any Hazardous Materials, except in compliance with Environmental Laws or in ordinary products commonly used in connection with the permitted use of Property and stored in the proper manner and quantities and in accordance with all applicable Environmental Laws. Any such products, including but not limited to oils or solvents, which become a regulated waste when spent shall be manifested and removed for offsite disposal at an authorized facility in accordance with applicable law. Lessee shall not engage in or allow any activity on the Property that requires a solid or hazardous waste management permit without specific prior written approval from Owner.
13.5 No Interference; Compatible Use of the Property.
(b) This Lease Agreement is subject to any and all Existing Uses which now cover some or all of the Property.
The State Wind Lease requires compliance with all applicable local, state and federal regulations.
With proper planning, construction, operation, and maintenance, a wind energy developer may minimize negative impacts to a grazing operation. Some suggestions to minimize impacts:
Review the development site plan with agricultural operators and consider their suggestions as to locations of improvements.
The development of a site plan should utilize and improve existing roadways, easements, drainages, and erosion controls on state trust lands.
New roadways and distribution lines should be located and designed in such way as to minimize their footprint and not change the natural environment as to drainage, erosion, water resources, animal pathways, privacy, and public access.
Access to lands adjacent to state trust lands should not be designed through state trust lands if such access is available otherwise.
Signage as appropriate and legal should be placed on roadways to regulate traffic safety.
Signage should be used to prevent trespass on private lands, prohibit use of private roads, and give notification when leaving state trust lands or entering private lands.
In some cases, locked gates may be allowed to prevent traffic from entering state lands.
Any existing improvements such as fencing, gates, cattle guards, and water wells should not be damaged by the wind energy developer. If such improvements are to be disturbed by the wind energy developer, it should be done after agreement with and the payment of surface impact payments to the existing lessee.
The wind energy developer should make necessary improvements to minimize nuisance to agricultural users such as installing cattle guards.
Use construction techniques to minimize surface disturbance, erosion, and dust.
Keep state trust lands clean. Have appropriate trash bins.
Organize the storage of equipment, parking, and lay-down areas.
Train wind energy employees regarding working within agricultural operations.
Police during construction for trespass, driving, littering, negligence, courtesy, property damage, substance abuse, and safety.
Post-construction reclamation should result in full restoration of the agricultural value of the state trust lands including vegetation, weed control, drainage, and erosion control. Re-seed, control weeds, and prevent erosion throughout the life of the project as a result of project activities.
Reduce risk to livestock by fencing off dangerous areas and compensate ranchers for any injuries or loss to their livestock resulting from the wind energy development.
Responsibly maintain the state trust lands and improvements thereon such as roads.
Monitoring activities to insure that adverse impacts are properly mitigated.
Surface Impact Payments means money paid by a user of state lands in compensation for potential negative impacts to state trust lands and state the lessee, including, but not limited to, destruction of forage, disruption of grazing, agricultural, or commercial operations, nuisance, inconvenience, and for incidental use of the land surface. In the State Wind Lease, the Surface Impact Payment must be paid prior to surface disturbance by the wind developer. This payment is negotiated between the agricultural lessee and the wind developer. In the event they are unable to agree, the Director will determine the surface impact payment. This payment should compensate the agricultural lessee for the interruption to his operation and the reduction in agricultural acreage as a result of surface disturbance during construction and the final project footprint after post-construction reclamation. It is impossible to know the actual number of acres to be impacted until the project design plan has been completed which may take several years. It is possible to agree to an impact payment based on a unitized price for each acre that is disturbed during construction and lost to the final footprint.
The wind energy development process may take several years to complete. The developer begins by targeting an area with desirable wind resource and potential for transmission to an area with demand for electricity. Preliminary studies will be completed to be sure there are no conflicts that would prevent wind energy development. Land representatives will then contact landowners to determine interest in wind energy development. If interest is positive, then lease negotiations are made to acquire a block of land with wind resource to support the size of the project to be planned. State trust lands are generally brought into the project after the developer has acquired enough private lands to assure project viability. The leasing process may take several months.
After the project lands have been leased, the developer will begin an initial process to gather information such as meteorological, environmental, wildlife, surveying, engineering, soil evaluation, and cultural to determine the site plan for the Project. Most wind development projects will require county and state permitting which is a review of the plan to assure compliance with government regulations. During the permitting process there is requirement for comment by government agencies such as Game and Fish and opportunities for public comment. The initial process and permitting may take several years.
During the initial process the developer will be acquiring transmission capacity and market contracts for delivery and sales of generated electricity. The primary energy markets for Wyoming energy are Colorado, Utah, the Desert Southwest, California, and the Pacific Northwest. Several major transmission lines are proposed to carry the electricity to those markets. These proposed lines may be operational between 2014 and 2020. Some existing transmission lines may have capacity or with upgrades may add capacity such that they could begin delivery in the near future.
The construction phase of the wind farm will begin such that completion coincides with transmission availability. The construction process generally lasts up to one year. Many projects are built in phases such that the generation capacity of the project is built in increments.
Operation and maintenance of wind farms is expected to last for 25 to 30 years before the useful life of the facility is reached. When the facility is no longer useful it may be repowered through retrofitting and redevelopment, or the facility may be removed and the land reclaimed.
Terms and Conditions within the State Wind Lease are usually similar to those of other landowners within the project. An analysis of the wind resource is made to be sure the State receives fair market value. The lease term is generally 35 years, the useful life of the project, with an opportunity to renew for an additional period not to exceed a total of 75 years. During the initial phase, the rent is based on a per acre charge that continues until operation. The lease can be terminated if the developer fails to develop within a time period specified in the lease, usually four to eight years. At time of construction there is an installation charge per megawatt of design capacity. Any lands that are not developed may be removed from the lease. When operation begins the rent is a percentage of the gross revenue with a minimum charge based on design capacity or acreage. At the termination of the lease the developer is required to remove the facility and reclaim the land.
State Trust Land Management
proper post construction reclamation where a wind farm exists will be accomplished through the use of field representatives of the Office of State Lands and Investments (OSLI) and other agencies within the State. OSLI will make a post construction inspection of the facility to determine that the project was constructed as specified in the siting plan. An OSLI field representative will inspect the State Trust Land periodically for:
re-seeding and weed control
drainage and erosion
trash and stockpiling
maintenance of roads
As an example, to put a wind farm into perspective,
33,000 acres of project area some known information regarding an existing wind farm will illustrate a typical wind energy development:
148 acres final footprint after post construction reclamation
300-450 acres of surface disturbance during construction
10 month construction period
300 Megawatts of generation capacity
$490,000,000 total cost (three years ago)
1 Maintenance building
Underground collector lines at 34.5 kilovolts
Transmission line at 230 kilovolts
Current agricultural use is livestock grazing
Hunting is allowed on the project and is creating no problems