Who says “bad things come in threes”? This week good things came in threes. This issue of Wind News is important for all Wind Warriors. We bring you news of two court decisions that rule in favor of citizens litigating the encroachment of wind turbine effects on non-participating property. The third piece of good news came in the tax reform proposal released in Congress this week. It is certainly likely that the final tax package will change before it is adopted and whether the special breaks for wind survive is up in the air. It could potentially cripple many projects.
In a left-over Halloween scare – Wind Power Engineering published a story which implies that “retired” Senator Cliff Hite continues to advise pro-wind advocates on how to counter those noisy wind-warriors in NW Ohio. “Hite says experience shows that about 20 to 30% of people have misinformed themselves and will be anti-wind no matter what. “But a large majority support the industry. Some of those supporters are very quiet. They don’t like coming under verbal attack by people who are against it. That’s fine. I get that. They’re humble people.” Advisor Hite goes on to warn: “Be armed with everything, cautions Hite. For instance, one argument is that wind turbines cause schizophrenia. Some argue that they cause droughts and floods. None of that is true. Ice throw from blades in winter is another.” [Are you kidding!]
Staying with the Cuban sonic attack story, we were interested to see the Chairman of the American Board of Audiology thinks there could be something to the argument that infrasound may be involved. He bases his position on the accepted science that wind turbine infrasound has similar effects on humans.
When the Production Tax Credit was first implemented, it paid 1.5 ¢ per kwh. But a cost-of-living inflation adjustment enabled the subsidy to balloon to today’s rate of 2.4 ¢. The tax reform bill repeals the inflation adjustment and continues the phase out of the PTC. The language states “The inflation provision of the PTC shall not apply to any electricity…produced at a facility the construction which begins after the date of the enactment of this subparagraph.”
Readers will recall the phase-out of the PTC was enacted in 2016 over a five year period with each year stepping down by 20%. But in a gift to the industry, under Obama, the IRS provided “guidance” that was never properly considered under the Administrative Procedures Act. This guidance provided that if a project paid 5% of its costs, it would be granted safe harbor if it demonstrated “continuous construction” by commencing to build within two years. This ensured the full 100% PTC during the phase out and nearly every developer filled up the pipeline by qualifying for safe harbor.
The language of the tax reform proposal states “Construction…shall not be treated as beginning before any date unless there is a continuous program of construction which begins before such date and ends on the date…placed in service.” According to Lisa Linowes, if a developer satisfies the safe-harbor rule for PTC-eligibility by committing non-refundable payments totaling 5% of project capital costs, and then sits on the project for a few years before building, they will fail the bill’s continuous construction test and will have to accept a 1.5¢ (or lower) PTC. Experts say that this would immediately destabilize the tax equity market, wreck the repowering plans of many developers, blow up the safe harbor, curtail the four-year installation forecasts and freeze turbine procurement. Wind News thinks that just about every Ohio project is vulnerable to failing the continuous construction test as proposed in tax reform.
Many think it is unlikely that the bill will pass as introduced and will be met with opposition in the US Senate. Notwithstanding, tax reform is so critical to Republicans that appetite to defend the PTC may be compromised. The cost of the wind subsidy is huge and Congress is looking offsets. According to the Joint Committee on Taxation, this change will save taxpayers $12.3 billion over 2018-2027. Of course AWEA and left-wing eco-nuts are screaming. We provide a smattering of reports from mainstream media as well as from the “other side”.
MICHIGAN FEDERAL COURT RULING
Attached is a ruling from the Eastern Michigan Federal District Court. In this case the wind developer, Tuscola Wind, argued Almer Township’s zoning for wind turbines would result in exclusionary zoning. Kevon Martis reports “Specifically, Tuscola argued with respect to noise measurement that “[u]sing an Lmax metric would make development of commercial wind energy in the Township impossible because a single wind turbine could not be sited within at least a half-mile of a nonparticipating line. The court found “This conclusory argument has no merit.”
Under Michigan law, “a zoning ordinance may not totally exclude a land use where (1) there is a demonstrated need for that land use in the township or surrounding area, (2) the use is appropriate for the location, and (3) the use is lawful.” Eveline Twp. v. H & D Trucking Co., 448 N.W.2d 727, 730 (Mich. Ct. App. 1989). See also M.C.L. 125.3207. Even assuming that the Township Board’s interpretation of the ordinance completely excludes wind energy development in the Township, Tuscola cannot prevail.12 Tuscola has made no attempt to show that there is a “demonstrated public need” for wind turbines in Almer Township, and the Court cannot comprehend why such a need would exist. “Presumably any entrepreneur seeking to use land for a particular purpose does so because of its perception that a demand exists for that use. To equate such a self-serving demand analysis with the ‘demonstrated need’ required by the statute would render that language mere surplusage or nugatory, in contravention of usual principles of construction.” Outdoor Sys., Inc. v. City of Clawson, 686 N.W.2d 815, 819 (Mich. Ct. App. 2004).
Further, “the public need must be more than mere convenience to the residents of the community.” DF Land Dev., LLC v. Charter Twp. of Ann Arbor, No. 291362, 2010 WL 2757000, at *6 (Mich. Ct. App. July 13, 2010). Wind turbines produce energy, which is, of course, needed by the Almer Township community. But Tuscola cannot reasonably argue that the Township will have inadequate access to energy absent the wind energy project. The Michigan Court of Appeals has explained that, to show demonstrated public need, the plaintiff must do more than show that “residents of the township would benefit from” the excluded use. Id. (emphasis in original). Tuscola has not carried that burden here.
The footnote regarding noise standards:
12 And that assumption is questionable. Tuscola asserts that application of an Lmax standard would prevent the company from siting a turbine within 2,775 feet from a nonparticipating property line. See Dec. 22, 2016, Supp. Info. at 1. Thus, Tuscola would be forced to reach agreements with a significantly larger number of property owners in order to build the turbines as currently planned. But it seems plausible that Tuscola might be able to enter into more land use contracts with property owners and/or site a fewer number of turbines in Almer Township. Both of those alternatives would undoubtedly impact the profitability of the project, but Tuscola has not demonstrated that it is entitled to deferential or economically favorable conditions. Perhaps application of an Lmax standard creates such an economic hardship that it constitutes de facto exclusionary zoning. But Tuscola’s conclusory briefing on this point falls far short of showing that to be true. 1:17-cv-10497-TLL-PTM Doc # 39 Filed 11/03/17 Pg 45 of 46 Pg ID 4913
NEW YORK COURT RULING
In New York State, citizens argued that wind turbine setbacks encroached upon their private property. In Ohio we have argued this is in effect an “uncompensated easement” granted by the state. In New York, the neighbors claimed the local Planning Board unlawfully granted a permit for a wind facility which curtailed their use of their own property. The court this was a partial taking and invalidated the permit. The attached ruling states at pages 16 and 17:
“With respect to the impact upon adjacent properties, the record reflects that the 1750 foot setbacks which had been established by the applicant to insure safety within proximity of the proposed location of the six turbines extends onto nearby non-participating properties. Page 29 of the Record, which is the Update Project Layout depicting the location of turbines one and six, demonstrates that the 1750 foot setback extends beyond the properties of the participating landowners onto the properties of non-participating landowners both within and without the Town of Richfield. The property of non-participating landowner Mezik is encroached upon as is property located beyond the geographical confines of the Town of Richfield and the County of Otsego, extending into the County of Herkimer.3 The setbacks depicted on Page 30 of the Record, which fixes the locations ,of turbines 2, 3, 4 and 5, also extend onto the properties of Reid and Gigliotti /Auger who are also non-participating, non-consenting landowners.
With respect to wind turbines, setbacks are generally implemented to insure sufficient turbine spacing; to maintain a distance from non-participating landowners; to maintain an appropriate distance from residences so as to minimize visual, sound and shadow-flicker effects from the operation of the turbines; to maintain an appropriate distance from roadways; and to minimize interference with wetlands and water bodies, interference with communications and cultural resources. (RA123). In addition, safety issues such as ice throw, fire, tower collapse and rotor fragmentation are taken into consideration when establishing setbacks. Generally, the location of a wind turbine is “set back” from a specific location such as a roadway or property line rather than, as here, emanating from the chosen location of the wind turbine outward. Here, though the applicant has stated that the l750 foot setback exceeded the industry standard, such setback has impacted upon the use and /or prospective use of adjacent properties of non participating landowners without their consent. The “setbacks” are, in reality, “set offs” commencing at the point of the wind turbines’ location and then “set off’ 1750 from there. The property, then, of the non-participating landowners is, in effect, “taken” by this governmental action without compensation or consideration. The non-participating landowners’ property is therefore adversely impacted by the location of the wind turbines as development of a use other than agricultural is curtailed. As such the decision of the Board to grant the special permit is without substantial support in the record nor otherwise deemed to be rational given the facts contained in the record.”
And in one last report from Canada, Wind Concerns Ontario reports on the dirty tricks of Invenergy to smear the reputation of real estate appraiser Mike McCann. This may be a new low for the wind industry – if that is possible. Invenergy trumped up a complaint against McCann, took a photo of it and then filed it with Illinois regulators. The complaint was immediately dismissed as unfounded but Invenergy took their photo to community meetings to argue that McCann was under investigation and should be disqualified from testifying that wind turbines devalue neighboring properties. All false. We hope McCann gets his day in court against Invenergy!
Thank you for reading Wind News. Education and vigilance are powerful tools to use in our communities.
Key energy breaks survive in House overhaul
Geof Koss, E&E News reporter
Published: Thursday, November 2, 2017
The House tax reform bill released this morning would maintain several key breaks for the oil and gas and renewable sectors, the chamber’s top tax writer said.
Among the allowances retained for the oil and gas industry are “last-in, first-out” inventory accounting, intangible drilling costs and the oil percentage depletion allowance, Ways and Means Chairman Kevin Brady (R-Texas) told reporters.
However, the bill would scrap two other oil and gas incentives: the marginal well and enhanced oil recovery credits, he said.
The renewable production (PTC) and investment tax credits (ITC) for wind and solar are retained, along with the phase-down according to a schedule laid out in a 2015 deal, Brady said.
However, the bill would repeal the inflation adjustment for the PTC, meaning new facilities that break ground after Nov. 2 would qualify for 1.5 cents per kilowatt hour instead of the existing 2.3 cents per kilowatt hour credit.
That tweak would increase revenues by $12.3 billion over five years, according to a summary.
In an email, Gregory Jenner, a Stoel Rives LLP partner and former head of the Office of Tax Policy, called the change a “pure revenue grab.”
The bill would fully repeal the ITC for commercial properties after 2027, which under current law is reduced to 10 percent after 2021.
The legislation would extend the ITC for fuel cells, small wind, combined heat and power, and geothermal sources.
These “orphan” credits were left out of the 2015 agreement because of what Democrats have portrayed as a drafting error.
The tweaked Section 45J tax credit for advanced nuclear is also in the bill. Members of Georgia’s delegation this week had pressed for the provision with an eye toward helping the ongoing Plant Vogtle project in their state.
An extension and tweaks for an existing carbon capture and sequestration tax break that enjoys broad bipartisan support in the Senate is not included in the House bill.
Supporters of that credit are redoubling efforts to see it included in the Senate Finance Committee’s draft, which is expected as early as next week.
The House Ways and Means summary says the “Tax Cuts and Jobs Act” would lower the corporate rate from 35 percent to 20 percent, a top priority of President Trump.
It would also allow businesses to “immediately” write off the full cost of new equipment — a perk that Republicans say would benefit a wide range of businesses, including energy firms, across the board.
The measure would additionally allow the write-off of the cost of state and local property taxes up to $10,000, said the summary.
That was a compromise for Republicans from high-tax states such as New York and New Jersey, who were upset by the elimination of the broader deduction for state and local taxes.
Brady intends to start marking the bill up in committee next week.
Early reaction was mixed. The U.S. Chamber of Commerce applauded the measure, but its statement also acknowledged “more work needs to be done.”
Changes to the mortgage interest deduction, which under the House bill is capped at $500,000, prompted the National Association of Home Builders to slam the proposal.
“The House Republican tax reform plan abandons middle-class taxpayers in favor of high-income Americans and wealthy corporations,” the group said in a statement.
Oil Change International also criticized the legislation, which it noted was released as the Senate Energy and Natural Resources Committee was holding a hearing on opening the Arctic National Wildlife Refuge to oil and gas drilling.
The ANWR provision is expected to be folded into the Senate’s tax reform bill, which under special budget rules is exempted from a Democratic filibuster.
“The GOP is once again trying to hand the super-rich and their friends in corporate America lavish tax breaks — and they expect us to pay for them by giving up our health care, our safety and our children’s future,” said Oil Change International’s U.S. policy director, Janet Redman.
“Republicans want to open up sacred land in the Arctic Refuge for oil drilling allegedly to raise money to cover their cuts,” she said, “but they leave in place tens of billions in tax giveaways to oil, gas and coal companies.”