Although it is well established under Texas law that the fee simple owner of property can sever the surface from the minerals creating two separate estates, Texas law is silent on whether the right to develop (or not develop) the wind that flows across property may be severed from the surface estate.

With the widespread development of utility-scale wind energy projects, wind has proved that it, like minerals, can have a distinct value. But do wind rights retain their classification as property if “severed” from the surface? Can one really sever wind rights from the surface or are rights to the wind just another type of interest in the surface? These are questions lawyers are faced with as more landowners in Texas attempt to convey or reserve “wind rights.”

The Texas Tax Code defines “property” as “any matter or thing capable of private ownership,” and “real property” as “land; ...or an estate or interest, … in” inter alia, “land.” In this author’s view something is classified as property once the marketplace assigns value to that thing or concept and the law in turn endorses that classification.

In Theories of Legislation, Jeremy Bentham wrote, “Property is nothing but a basis of expectation; the expectation of deriving certain advantages from a thing which we are said to possess, in consequence of the relation to which we stand towards it.”

The advent of utility-scale wind turbines and the need for new energy sources has given individuals who own windy property the expectation of profit. Likewise, as wind turbines dot the landscape, a surface owner may place value on his neighbor not building a wind project and seek to purchase his neighbor’s wind rights. Hence, developed or undeveloped, wind rights do have value in the marketplace.

If we accept that wind is another stick in a property-holder’s bundle of ownership rights, what happens if wind is “severed” from the surface?

For purposes of this discussion, “severing wind rights” refers to conveying, in perpetuity, the right to use the surface of property for the limited purpose of developing the wind rights. Presently, there are no Texas cases and no statutes specifically validating a wind estate.

However, analogies can be drawn to other areas of the law. Just as the owner of the minerals retains the right to use so much of the surface as is reasonably necessary to enjoy that estate, the holder of wind rights could retain the right to use the surface to develop a wind project. California, which has a more mature wind industry, has already seen at least one case, upholding that right and the severance of wind rights from the surface. Contra Costa Water Dist. v. Vaquero Farms, Inc., 68 Cal. Rptr. 2d 272.

In Texas, the conveyance of wind rights to individuals or entities who do not own the surface estate has become a common undertaking by landowners. Consequently, in Texas we have the first part of the property equation: The marketplace has assigned value to severed wind rights. We do not, however, have the second part of the equation — the endorsement of the law and with it assurances that a severance will be upheld.

As such, anyone who undertakes a severance does so with no assurances that the severance will be upheld if challenged. Given this uncertainty, wind companies prefer that landowners not separate wind rights from surface rights. Therefore, at the outset of any discussion regarding the severance of wind rights, a landowner should be aware of the risks involved in doing so.

If, after understanding the uncertainty surrounding a severance a landowner still wishes to proceed, consider an instrument that does not wholly sever the wind estate from the surface but conveys the limited right to receive a percentage of royalties derived from wind-generated electricity. Such a conveyance should allow the grantor to retain the exclusive right to enter a wind lease or develop a wind project himself. This approach is similar to that of a non-participating royalty interest found in oil and gas law.

There are also many policy considerations. As an energy source like gas, coal, hydropower and nuclear, wind-generated electricity benefits the public as a whole. One risk is that a single person or entity could purchase wind rights for the sole purpose of preventing wind power from generating electricity. Therefore, it may be in our state’s best interest to formulate a policy for the best use of this natural resource.