Severing Wind Rights in Texas?

Monday, March 3, 2008
Contributed by: James Wester

A common topic of discussion is whether wind rights in Texas can be severed from the surface estate. While most people, including attorneys, are proceeding under the assumption that Texas law will develop to recognize wind rights as a separate property right capable of being severed from the surface estate, Texas law has not yet made that determination.

It was not that long ago that most of the residents of the Texas Panhandle did not give much thought to who owned the wind that seemed to constantly blow across their land. In fact, many landowners considered the wind to be more of a nuisance than anything else. In the last eight to ten years and particularly in the last two to three years, the issue of wind rights has come to the forefront in the Texas Panhandle due to the significant wind development. We are not alone - our neighbors in Oklahoma, Kansas, New Mexico and Colorado are also experiencing various levels of wind development.

As we have worked with the various landowners to reserve all or a portion of the wind rights when selling land or when selling a portion of the wind rights to a third party, we have advised our clients that there is no current case law or statute in the State of Texas that provides any type of guidance regarding the viability of severing wind rights. We have not been able to provide any assurance that the severance can be upheld if it is challenged at some future date; however, the common belief shared by most Texas lawyers is that a severance of the wind rights would be upheld.

Much like oil and gas in the Texas Panhandle, there are a variety of different types of payments that may or can be associated with leasing or selling wind rights. It is important that the parties (the landowner and developer) adequately define those payments. As wind rights are divided between multiple owners, it becomes important to clarify the entitlement to payments. For example, the parties need to adequately address rent or bonus payments, royalty payments, surface damage payments, and a number of other potential sources of revenue, e.g., loss of hunting revenue.

Parties reserving, buying or selling wind rights also need to address issues regarding the ability to actually grant a lease of the wind rights and determine what access or easements are transferred with the wind rights or retained by the surface owner.

Many of the wind leases currently being offered by various developers throughout the Texas Panhandle are starting to include various standardized provisions as the result of developers taking the landowner's attorney comments and incorporating them into newer and improved versions of their form leases. While wind leases are becoming more standardized, there is no current standard form that is being used by any significant number of developers and/or landowners.

Analogous to the oil and gas industry, all of us will be able to look back in a few years as Texas law develops and have answers to many of the questions that plague us today.

This column is published for informational purposes only. It should not be construed as legal advice and is not intended to create an attorney client relationship. The views expressed are those of the author and do not necessarily reflect the views of the author's law firm or its individual partners.