Minnesota legislature expands ‘buy the farm’ law

During the final days of its 2013 session, the Minnesota Legislature amended then passed an energy bill, House File (H.F.) 854, with language that expands the benefits available to property owners under the state’s “buy the farm” law.

Under existing law, certain landowners whose property is subject to an easement for a transmission facility of 200-kV or higher can elect to have the utility buy his or her entire property, not just the portion required for the right-of-way (ROW) or easement. However, current law exempts utilities from the requirement to pay relocation benefits under the state’s eminent domain laws to landowners who elect to sell their entire property.

Two bills introduced early in the session, H.F. 338 and companion Senate File (S.F.) 183, sought to change that exemption, and to require that a utility make a written offer to buy the property within 90 days when a landowner chooses to exercise the right to sell his entire property.

As S.F. 183 sat in the Senate Judiciary Committee where it had languished since March 14, its primary author Sen. Kevin Dahle on Sunday May 19 moved to amend H.F. 854 to include language that would expand the existing “buy the farm” law to require that utilities pay relocation benefits. It also set a time limit of 120 days by which utilities must tender a written offer for subject properties. The amended bill passed the Senate 49 to 16, then passed the House on May 20 by a vote of 114 to 18. It now goes to Gov. Mark Dayton for action.

Xcel Energy (NYSE:XEL), which does business in Minnesota as Northern States Power, is working with several property owners who have opted to have the utility by their farms. Company officials say they can live with the procedural changes contained in the legislation but caution that the bill could create more problems than it solves.

“In this statute, they have put all the emphasis on commercial viability with no mention of reasonableness,” an Xcel Energy spokesperson told TransmissionHub May 21. Two previous Supreme Court decisions, in 1980 and 1984, directed that, to be constitutional, properties sold under the “buy the farm” election must be commercially viable and the offer must be reasonable, the spokesperson said.

The bill includes a provision making it effective the day following final enactment, but also includes an exemption for “proceedings or actions before the Minnesota Supreme Court on the effective date of this act,” a reference to the case of Northern States Power v. Aleckson, et al. (Case #A11-1116), for which the court heard oral arguments in April.

Those arguments stemmed from an August 2012 decision in which the state Court of Appeals ruled that a landowner is not entitled to relocation expenses. The appeals court held that a landowner who makes an election to have a utility buy his or her entire parcel of property is not considered an owner “who ‘must relocate’” under Minnesota law, nor is he considered a “displaced person.”

The Supreme Court justices are currently in the process of deliberating. Although there is no deadline for a decision, a court spokesperson noted that it is about 4.5 months on average after oral arguments before a decision is reached. Based on that time frame, a decision might be expected by mid-August.

“We’ll see when the Supreme Court decision comes out whether it reaffirms the [need for] reasonableness,” the spokesperson said. “This [bill] certainly doesn’t do anything to clarify; it just adds more confusion … on that very important issue.”

In addition to the amending the state’s “buy the farm” law, H.F. 854 also expands the provisions of existing law regarding low-income programs by utilities and associations. The bill requires a larger contribution to such programs by public utilities than municipal utilities, requiring that a public utility furnishing gas service spend at least 0.4% of its most recent three-year average gross operating revenue from residential customers in the state on low-income programs. By contrast, a municipal utility that furnishes gas service must spend at least 0.2% of its most recent three-year average gross operating revenue from residential customers in the state on low-income programs. Previously, all utilities and associations were required to spend at least 0.2% on such programs.

H.F. 956, the state’s omnibus energy bill which has passed both houses and emerged from a six-member House/Senate conference committee on May 14, died when the legislature adjourned on May 20.

That bill, as amended by the committee, would have given the Minnesota Public Utilities Commission (PUC) authority to approve an automatic annual adjustment for costs incurred for new transmission facilities that benefit the regional integrated transmission system. Existing state statutes limit such adjustments to transmission projects that benefit the individual utility.

The conference committee version retained an amendment added to the House version by the Senate, stating the intent to make Minnesota the first state in the nation to use 100% renewable energy.

Though the report did not amend the state’s existing renewable portfolio standard (RPS), it directed the PUC to order all Minnesota electric utilities and all transmission companies “to study and develop plans for the network enhancements necessary to support increasing the renewable energy standard in Minnesota to 40% by 2030.”

The current state RPS standard requires Xcel Energy to obtain 30% of its electricity from renewable sources by 2020, including up to 1% from solar, while other utilities must obtain 25% of their electricity from renewable sources by 2025.