[author: Robert Kuhn]
The International Transmission Line (“ITC”) and its subsidiary, the Michigan Electric Transmission Company, LLC (“METC”), are currently seeking easements to install new transmission lines as part of their Long-Range Transmission Line project in Gratiot, Ionia, Clinton, Eaton, Calhoun, and Branch counties.
Acquisition agents contracted by the ITC are now approaching property owners to purchase easements in informal negotiations, outside official condemnation proceedings and without providing an official good faith offer and professional real estate appraisal. Many of these informal offers being presented to property owners are in the form of an option contract. Under the option contract, the utility pays the property for the right to exercise the option and purchase a contractually defined easement at a set price. The option contract provides the utility the right to purchase the easement up to two to four years after the contract is executed.
Several of the agreement terms we have seen at Ackerman & Ackerman offered to property owners contain concerning features that could impose significant restrictions on the rights of owners and the use of their properties. Below is a helpful list of provisions in the proposed easement that property owners affected by the ITC project should be on the lookout for. The list also compares the easement provisions offered in this project to an easement used in another ITC project located in Tuscola County.
In a broader view, the agreement terms offered by the ITC in this project, when compared with the Tuscola County easements, provide a helpful model of “quick sign-offs” in eminent domain proceedings. The terms offered in this project provide important takeaways that property owners should consider during any incoming infrastructure project and in the granting of government or utility easements generally.
1. Permission to construct multiple “lines.”
The ITC is before the Michigan Public Service Commission (“MPSC”) to obtain regulatory approval for the transmission line project. Further information on the MPSC case can be found at this link. If the MPSC approves the line, the ITC will have regulatory approval to take private property to construct a single, interconnected transmission line. Nonetheless, easement terms currently offered to property owners provide the utility rights to construct not just a single identifiable “line” but, notably, multiple “lines.” Therefore, if property owners sign the easement, they may give the utility the right to construct multiple lines or additional lines in the future without the requirement that the utility obtain separate regulatory approval for an additional line and without the requirement that the utility provide additional compensation for each new line brought in. If the utility seeks new projects or new lines in the future, this provision could have significant long-term consequences for property owners and their rights to compensation.
By way of comparison, the ITC obtained an easement for electrical transmission lines in Tuscola County, Michigan. Instead of a broad provision allowing for the construction of any electrical transmission “line or lines,” the easement in Tuscola County stated that the utility had the right to construct an “overhead electric transmission line described in the order of the Michigan Public Service Commission dated XXXX [date removed], Docket YYYY [docket number removed].” Therefore, the provision in the Tuscola County easement was highly tailored to a specific and identifiable electrical transmission line, rather than a broad and undefined right for the utility to construct any “line or lines” as it wants, now and in the future.
2. No limitations on the location or number of poles.
The easements we have reviewed have contained no conditions that limit or describe the permissible placement or number of poles on affected properties. Poles that secure and support transmission lines can require an extensive construction process and can also substantially limit property owner’s use of the land for an indefinite period of time into the future. The lack of any specific limitation or description as to the location or number of poles allows the utility to place as many poles at different locations on the easement as the utility believes is necessary. These placements may be highly problematic to the property owner and substantially affect the owner’s use of the land.
Although utilities do not always agree to a set number of poles on a given property, the easement from Tuscola County provides a helpful comparison. In contrast to the easement offered in this project, the easement from Tuscola County stated that any poles or towers “shall be located on the centerline of the Easement Area.” Thus, the Tuscola County easement identified a specific location and portion of the easement where a pole or tower for the transmission line could be built.
3. Restrictions on the rights of property owners to sell, lease, or mortgage the property, even in those areas of the property outside of the easement.
Easements offered by the ITC that we have seen contain significant restrictions on the owners’ rights to sell their property or obtain mortgages. Unless the utility agrees to a transaction in writing, property owners who sign the option contract are prevented from selling, transferring, leasing, or encumbering the property affected by the easement, without any limitation to the area of the actual easement. Therefore, even if the proposed easement area is a small fraction of the property, the ability of owners to take out a needed mortgage or loan using the property as security, lease the property to a third party, or sell the property for a gain if the market goes up could require ITC review and approval. This restriction lasts for the duration of the option period, which is between two to four years. The right to sell, lease, and encumber property are foundational rights of ownership. Therefore, property owners should be well informed before signing these rights away to a utility for any period of time.
By contrast to the easement and option contract offered by acquisition agents for this project, the easement from Tuscola County did not restrict the owner's ability to sell, transfer, lease, or encumber any portion of the affected property.
4. Broad rights of the utility to access the easement across other portions of the property.
The easement terms we have reviewed give the utility broad rights to access the easement through and across other portions of the property outside the easement area. The terms do not include important limitations on the right of the utility to access the easement, such as requiring the approval of the homeowner or limiting the location where the utility can enter the property. This could potentially impose significant burdens on the property and its owners, as the utility can access the easement for transmission line construction and maintenance at locations convenient to the utility and its activities. However, these locations may be highly disruptive and inconvenient to property owners and their use of the land.
By contrast to the easement in this project, the easement from Tuscola County stated that the utility can access the easement over and across other portions of the property only at “reasonable location(s)” that are “mutually agreeable” by both the utility and the owner. Under the terms of the Tuscola County easement, if the owner and utility did not come to a reasonable agreement, the utility could access the land only through the easement area itself, unless there was an immediate threat to the transmission line. As compared to the easement being offered in this project, the easement from Tuscola County provided property owners substantially greater input and control over the use and enjoyment of their property.
5. Strict integration clause.
The easement terms we have reviewed contain a strict integration clause. Under that clause, no oral or verbal statements made by the utility or its agents to property owners surrounding the option or easement are binding on the utility. See UAW-GM Human Res Center v KSL Res Corp, 228 Mich App 486, 494 (1998) (“[B]oth Corbin and Williston indicate that an explicit integration clause is conclusive and that parol evidence is not admissible to determine whether a contract is integrated when a written contract contains such a clause.”). As a result, no matter what acquisition agents may state, explain, or promise as to the nature of the easement, the utility’s future actions, or the rights of property owners under the agreement, it is highly unlikely those statements would be binding on the utility in a court of law. Therefore, the terms of the easement itself must be examined very carefully to ensure that the property owner is fully aware of and consents to the terms being offered by the acquisition agent. Even if the agent states or promises that certain actions will or will not be taken, such as the prohibition of new mortgages on the property or access to the easement by the utility in a problematic manner, it is the written terms of the easement, and not the oral statements or promises, that control the property owner’s rights. The utility may very well take actions that are permitted under the terms of the easement that property owners did not contemplate when they signed the agreement.
For convenience and comparison, we have included as part of this article a copy of an easement offered by ITC in this project as well as an easement from Tuscola County. They can be found here: Example Easement Offered by ITC and Tuscola County Easement.
There are several takeaways from this ITC easement that can be relevant in the larger area of eminent domain and property law. In general terms, the easements offered for this project illustrate the dangers of a “quick sign-off” for property owners.
Every property must be viewed individually. The effect of an easement on a commercial property may differ from that of a residential property, and the impact on vacant land or forests may be different from that on farmland or industrial uses. One must understand that properties are unique, and the effects of the same easement may vary for different locations and uses.
Nonetheless, when reviewing similar easements, serious consideration should be given to the easement’s priority of rights to the “dominant estate,” which in the transmission line context is the governmental agency or utility acquiring an easement interest from the larger property. See Smith v Straughn, 331 Mich App 209, 215 (2020) (“The land burdened by the easement is the servient estate, and the land benefited by the easement is the dominant estate.”). Easement terms may describe the specific types of structures that the government or utility plans to build. However, the breath of easement terms may permit changes in use and construction. In the case of transmission lines, that includes new or additional poles, as well as revamped or expanded electricity transmission methods. While the easement may be for the transmission of electricity, for instance, technological changes may allow the utility or government to modify the type of construction and operations used on the subject property, such as the means and facilities used to transmit electricity. If the easement does not contain express limitations on the structures that can be installed or the methods and uses permitted on the easement, e.g., the number of electric transmission lines and poles, the value and potential uses of the servient estate may be materially affected in the future.
Moreover, any “expectation” interest the owner may have at the time the easement is obtained as to what will be placed on the easement or how the easement will be used may prove misguided or wholly incorrect. The express terms of the easement, in conjunction with a strict integration clause, may define a scope of rights substantially different than the property owner’s assumptions, even if verbal statements from agents of the utility itself created false expectations.
Any reasonable easement must address the consequences of entry and reentry. The dominant estate may have expansive use of servient property, with exceptions set out in the easement document. Therefore, the easement must include specific language indicating whether damages will be paid if the government or utility enters the servient property to access or use the easement. If farms are involved, crop loss and tile repair should be considered in any easement terms discussing damage reimbursement from the government or utility.
Property owners may wish to limit the substantive rights of the utility or government to access the easement across and through property outside the easement area. Easement terms can ensure that the government or utility can only enter onto other portions of the servient property at reasonable locations and upon the consent of the owner, perhaps with exceptions for emergencies. This provides property owners with far greater flexibility and control over their lands.
Finally, prior to signing an agreement for the provision of an easement, property owners must be vigilant for the existence of restrictions on the right to control and use their estate, including the right to sell, mortgage, or lease the servient property. These rights are foundational to full and effective property ownership. In many circumstances, the costs and potential burdens of property rights restrictions do not outweigh the benefits of compensation that the government or utility offers. Owners should subject proposed agreements that significantly restrict basic property rights, even for a period of time, to thorough consideration and scrutiny.
Easement terms currently being offered by the ITC’s acquisition agents can leave serious ramifications for the continued use, enjoyment, and utility of property. If you have any questions or would like to discuss the incoming ITC project, we are happy to talk. For over fifty years, our law firm has been dedicated to representing property owners in agricultural, residential, industrial, and commercial eminent domain proceedings. We have successfully handled hundreds of cases involving pipeline and electric transmission line takings with Consumers Energy, ITC, and Detroit Edison.
