Condemning Open Space: Making Way for National Interest Electric Transmission Corridors (or Not)
By Nancy A. McLaughlin
INTRODUCTION
The Energy Policy Act of 2005 (EPAct) added a new section to federal law pertaining to the siting of interstate electric transmission facilities. That new section, referred to hereinafter as “SIETF,” directs the Secretary of Energy (Secretary) to periodically conduct a nationwide study of electric transmission congestion. SIETF also requires the Secretary to consult with affected states when conducting these studies and provide interested parties with an opportunity to offer alternatives and recommendations. Following consideration of such alternatives and recommendations, the Secretary is required to issue a report that “may designate any geographic area experiencing electric energy transmission capacity constraints or congestion that adversely affects consumers as a national interest electric transmission corridor.”
Once the Secretary designates a national interest electric transmission corridor (National Corridor), SIETF grants the Federal Energy Regulatory Commission (FERC) the authority to issue permits to public utilities to construct or modify electric transmission facilities in the corridor in certain circumstances, including where a state has withheld approval for the construction or modification of such facilities for more than one year, or has “conditioned its approval in such a manner that the proposed construction or modification will not significantly reduce transmission congestion in interstate commerce or is not economically feasible.” A FERC permit empowers its holder to exercise the right of eminent domain to acquire the necessary rights-of-way to construct or modify the needed facilities in the National Corridor. SIETF thus could operate to preempt a state's control over the siting of electric transmission facilities within its borders. In apparent deference to states' rights, however, SIETF also provides that the power of eminent domain granted to the holder of a FERC permit does not extend to “property owned by . . . a State.”
In August of 2006, the Secretary issued the Department of Energy's initial congestion study. The study identified a number of congestion areas, including two that were classified as critical--the Southern California area and the Atlantic coastal area from New York City to northern Virginia. In April of 2007, the Secretary issued two draft National Corridor designations: (i) the proposed Southwest Area National Corridor, which included counties in California, Arizona, and Nevada, and (ii) the proposed Mid-Atlantic Area National Corridor, which included counties in Ohio, West Virginia, Pennsylvania, New York, Maryland, and Virginia, and all of New Jersey, Delaware, and the District of Columbia. Six months later, after considering additional comments from the affected states, regional entities, and the general public, the Secretary formally designated the Mid-Atlantic Area National Corridor and the Southwest Area National Corridor, with the only change from the draft designations being that the Southwest Area National Corridor no longer included any land located in Nevada.
The Mid-Atlantic Area National Corridor includes fifteen counties in Virginia, and some of the land in those counties is encumbered by conservation easements. Conservation easements restrict the development and use of the land they encumber for the purpose of preserving the natural, open space, scenic, historic, or ecological features of the land. Such easements are generally conveyed by landowners to charitable conservation organizations (typically referred to as land trusts) or government entities to be held and enforced for the purposes stated therein for the benefit of the public. Most conservation easements are granted “in perpetuity,” which means they are intended to restrict the development and use of the land they encumber “forever,” or at least until circumstances change so profoundly that the continued protection of the land for conservation or historic purposes becomes impossible or impractical.
Virginia has encouraged the use of conservation easements to protect the conservation and historic values of privately-owned lands within its borders for over forty years. In 1966 the Virginia General Assembly enacted the Open-Space Land Act, which authorizes the creation and enforcement of conservation easements held appurtenant or in gross by certain public bodies (referred to hereinafter as “open-space easements”). In that same year, the General Assembly also created the Virginia Outdoors Foundation (the VOF), a state entity that acquires and administers most of the open-space easements conveyed in Virginia. In 1988, the General Assembly enacted the Virginia Conservation Easement Act, which authorizes the creation and enforcement of conservation easements held appurtenant or in gross by certain charitable organizations, such as The Nature Conservancy (referred to hereinafter as VCEA easements). And since 2000, “to further encourage the preservation and sustainability of Virginia's unique natural resources, wildlife habitats, open spaces and forested resources,” Virginia has offered generous state income tax credits to landowners who donate either open-space easements to public bodies or VCEA easements to charitable organizations (open-space easements and VCEA easements are referred to hereinafter collectively as “conservation easements”). Virginia is also one of the few states in the nation that permits a landowner donating a conservation easement to sell or otherwise transfer any unused state income tax credit to other Virginia taxpayers, thus extending the benefit of the credit to “land rich, cash poor” farmers and other landowners who do not have sufficient Virginia income tax liability to fully absorb the credit.
These statutes and incentives are effective in promoting the use of conservation easements as a land protection tool in Virginia. Although figures for the total acreage encumbered by conservation easements in Virginia are not readily available, the VOF, which holds most of the easements conveyed in the state, reports that as of October 2007, it held 2217 open-space easements encumbering 409,383 acres of land in Virginia (or more than 1.5 percent of the total acreage of the state). Moreover, the number of open-space easements conveyed to the VOF and the number of acres encumbered by such easements more than tripled during the seven year period in which the state income tax credits have been available.
Questions have been raised in Virginia regarding the extent to which public utilities can exercise the power of eminent domain to condemn land encumbered by conservation easements to make way for the construction or modification of electric transmission facilities. Some worry that land encumbered by conservation easements, which by definition is largely undeveloped, will be a natural target for condemnation because of the political difficulties associated with locating large and unsightly steel towers supporting high voltage transmission lines in populated areas. Others believe that encumbering land with a conservation easement can insulate the land from condemnation, and there are reports of landowners in Virginia donating conservation easements encumbering land within the proposed path of the transmission facilities in an attempt to preclude condemnation. This outline discusses the extent to which public utilities may or may not have the right under Virginia or federal law to condemn conservation easements.
Questions regarding whether a public utility must condemn a conservation easement in whole or in part before constructing electric transmission facilities on the encumbered land, and the compensation that should be payable to the owner of the encumbered land and the holder of the conservation easement upon such condemnation are explored in a separate article.
The Energy Policy Act of 2005 (EPAct) added a new section to federal law pertaining to the siting of interstate electric transmission facilities. That new section, referred to hereinafter as “SIETF,” directs the Secretary of Energy (Secretary) to periodically conduct a nationwide study of electric transmission congestion. SIETF also requires the Secretary to consult with affected states when conducting these studies and provide interested parties with an opportunity to offer alternatives and recommendations. Following consideration of such alternatives and recommendations, the Secretary is required to issue a report that “may designate any geographic area experiencing electric energy transmission capacity constraints or congestion that adversely affects consumers as a national interest electric transmission corridor.”
Once the Secretary designates a national interest electric transmission corridor (National Corridor), SIETF grants the Federal Energy Regulatory Commission (FERC) the authority to issue permits to public utilities to construct or modify electric transmission facilities in the corridor in certain circumstances, including where a state has withheld approval for the construction or modification of such facilities for more than one year, or has “conditioned its approval in such a manner that the proposed construction or modification will not significantly reduce transmission congestion in interstate commerce or is not economically feasible.” A FERC permit empowers its holder to exercise the right of eminent domain to acquire the necessary rights-of-way to construct or modify the needed facilities in the National Corridor. SIETF thus could operate to preempt a state's control over the siting of electric transmission facilities within its borders. In apparent deference to states' rights, however, SIETF also provides that the power of eminent domain granted to the holder of a FERC permit does not extend to “property owned by . . . a State.”
In August of 2006, the Secretary issued the Department of Energy's initial congestion study. The study identified a number of congestion areas, including two that were classified as critical--the Southern California area and the Atlantic coastal area from New York City to northern Virginia. In April of 2007, the Secretary issued two draft National Corridor designations: (i) the proposed Southwest Area National Corridor, which included counties in California, Arizona, and Nevada, and (ii) the proposed Mid-Atlantic Area National Corridor, which included counties in Ohio, West Virginia, Pennsylvania, New York, Maryland, and Virginia, and all of New Jersey, Delaware, and the District of Columbia. Six months later, after considering additional comments from the affected states, regional entities, and the general public, the Secretary formally designated the Mid-Atlantic Area National Corridor and the Southwest Area National Corridor, with the only change from the draft designations being that the Southwest Area National Corridor no longer included any land located in Nevada.
The Mid-Atlantic Area National Corridor includes fifteen counties in Virginia, and some of the land in those counties is encumbered by conservation easements. Conservation easements restrict the development and use of the land they encumber for the purpose of preserving the natural, open space, scenic, historic, or ecological features of the land. Such easements are generally conveyed by landowners to charitable conservation organizations (typically referred to as land trusts) or government entities to be held and enforced for the purposes stated therein for the benefit of the public. Most conservation easements are granted “in perpetuity,” which means they are intended to restrict the development and use of the land they encumber “forever,” or at least until circumstances change so profoundly that the continued protection of the land for conservation or historic purposes becomes impossible or impractical.
Virginia has encouraged the use of conservation easements to protect the conservation and historic values of privately-owned lands within its borders for over forty years. In 1966 the Virginia General Assembly enacted the Open-Space Land Act, which authorizes the creation and enforcement of conservation easements held appurtenant or in gross by certain public bodies (referred to hereinafter as “open-space easements”). In that same year, the General Assembly also created the Virginia Outdoors Foundation (the VOF), a state entity that acquires and administers most of the open-space easements conveyed in Virginia. In 1988, the General Assembly enacted the Virginia Conservation Easement Act, which authorizes the creation and enforcement of conservation easements held appurtenant or in gross by certain charitable organizations, such as The Nature Conservancy (referred to hereinafter as VCEA easements). And since 2000, “to further encourage the preservation and sustainability of Virginia's unique natural resources, wildlife habitats, open spaces and forested resources,” Virginia has offered generous state income tax credits to landowners who donate either open-space easements to public bodies or VCEA easements to charitable organizations (open-space easements and VCEA easements are referred to hereinafter collectively as “conservation easements”). Virginia is also one of the few states in the nation that permits a landowner donating a conservation easement to sell or otherwise transfer any unused state income tax credit to other Virginia taxpayers, thus extending the benefit of the credit to “land rich, cash poor” farmers and other landowners who do not have sufficient Virginia income tax liability to fully absorb the credit.
These statutes and incentives are effective in promoting the use of conservation easements as a land protection tool in Virginia. Although figures for the total acreage encumbered by conservation easements in Virginia are not readily available, the VOF, which holds most of the easements conveyed in the state, reports that as of October 2007, it held 2217 open-space easements encumbering 409,383 acres of land in Virginia (or more than 1.5 percent of the total acreage of the state). Moreover, the number of open-space easements conveyed to the VOF and the number of acres encumbered by such easements more than tripled during the seven year period in which the state income tax credits have been available.
Questions have been raised in Virginia regarding the extent to which public utilities can exercise the power of eminent domain to condemn land encumbered by conservation easements to make way for the construction or modification of electric transmission facilities. Some worry that land encumbered by conservation easements, which by definition is largely undeveloped, will be a natural target for condemnation because of the political difficulties associated with locating large and unsightly steel towers supporting high voltage transmission lines in populated areas. Others believe that encumbering land with a conservation easement can insulate the land from condemnation, and there are reports of landowners in Virginia donating conservation easements encumbering land within the proposed path of the transmission facilities in an attempt to preclude condemnation. This outline discusses the extent to which public utilities may or may not have the right under Virginia or federal law to condemn conservation easements.
Questions regarding whether a public utility must condemn a conservation easement in whole or in part before constructing electric transmission facilities on the encumbered land, and the compensation that should be payable to the owner of the encumbered land and the holder of the conservation easement upon such condemnation are explored in a separate article.
