By Claire Carroll, shareholder, Munsch Hardt Kopf & Harr PC
More than 400 miles of new transmission lines are moving closer to construction in Texas following the Public Utility Commission’s (PUC) approval of two major routes in August.
For commercial property owners and developers, those decisions are a reminder that the window to influence where a transmission line crosses private property can close long before construction begins.
The approvals, which are part of Texas’s Import Path 1 transmission expansion, mark a significant milestone for infrastructure creation, but the projects themselves are still years from completion. While the approved routes move toward land acquisition, easement negotiations and eventually construction, they also illustrate what’s at stake for other Texas landowners whose properties may be affected by proposed transmission projects.
For those landowners, the opportunity to influence where a transmission line goes begins well before regulators make their final routing decision. And because a proposed line can affect everything from property access to future development plans, knowing when and how to participate in that process is critical.
Responding to PUC Notices
If a utility company sends you a notice that it has filed an application with the PUC for a new transmission line that could affect your property, do not ignore it.
For a commercial property owner, a PUC transmission-line proceeding may be the most important opportunity you have to be heard about where the transmission line will be located and how it may affect your property.
A proposed transmission line does not simply appear on your property because a utility company has identified a preferred route. After a utility company files its application for Certificate of Convenience and Necessity (CCN), the PUC evaluates the proposed project and determines whether the transmission line should be approved and, if so, which route should be used. The PUC’s own guidance explains that any of the proposed routes may ultimately be selected and that additional routes may be developed during the proceeding.
That means the PUC proceeding is not simply a regulatory formality, but rather the process through which affected landowners can participate in the decision about where the transmission line will go.
How the PUC Decides Where Transmission Lines Go
Texas law generally requires an electric utility to obtain a CCN before installing, operating or extending a transmission line. According to the Texas Utility Code, the utility applies to the PUC, and the application is considered through a contested-case process in which interested parties may participate.
The PUC evaluates the proposed project and the proposed routes. Its consideration includes factors such as community values, recreational and park areas, historical and aesthetic values, environmental integrity, engineering constraints and costs. And according to Section 25 of Texas Administrative Code, the commission’s rules also require consideration of the impact on affected communities and landowners.
The utility may identify a preferred route in its application, but the utility does not get to unilaterally decide the final route. The PUC makes that decision. That distinction is extremely important for a landowner whose property appears on one of the proposed routes.
What It Means
A notice from a utility does not necessarily mean that the transmission line will ultimately cross your property. Your property may be affected, but the route may still change.
The PUC’s landowner guidance specifically explains that a CCN application may include multiple proposed routes and that additional routes may be developed during the case. The Commission conducts the proceeding to evaluate the proposed line’s impacts and decide which route should be approved.
The PUC proceeding is your opportunity to participate before that decision is made.
Once the commission approves a route, the nature of the dispute can and will change significantly. The question may no longer be whether the transmission line should cross your property, but instead what property rights the utility must acquire and what compensation is appropriate.
For that reason, commercial property owners should not wait until a utility approaches them about an easement — or until a condemnation proceeding is filed — to learn what is happening.
The First Question
The answer may not be as obvious as looking at a map and asking whether the transmission line runs through your building.
A commercial property can be materially affected even when the proposed transmission facilities do not directly occupy the building itself. Property owners should consider all aspects of their existing property and its current uses, including access, circulation, parking, buildings, loading zones, tenant operations, site visibility, signage, landscaping and stormwater or drainage facilities.
Landowners also need to also look past the current use of the property. For commercial real estate, one of the most important considerations may be what the property could be used for in the future.
Consider a commercial tract that is currently undeveloped. Today, the property may be vacant land. But the property’s value may be based in significant part on its development potential. The owner may be considering developing or expanding the property in the future. A proposed transmission line could constrain the property’s development potential, alter the configuration of a planned project, increase development costs or in some circumstances make a contemplated development economically or physically infeasible.
The practical question is: What would this route prevent, complicate, or make more expensive on this property?
The answer could involve more than the physical footprint of the transmission facilities. It could affect the property’s highest and best use, development configuration, access, operations or future value.
The earlier those issues are identified and supported with evidence, the better positioned a landowner may be to advocate for a route that avoids or reduces those impacts.
Directly affected landowners should consider whether intervening as a party to the proceeding is appropriate for their circumstances. That makes determining exactly how the proposed routes interact with your property one of the first things you should do after receiving notice.
Intervention Creates Involvement
The PUC distinguishes between submitting comments or a protest and formally intervening in the proceeding.
A person who merely submits comments is not a party to the case and does not have the same procedural rights as an intervenor. Protestors generally do not have the right to obtain discovery from other parties, receive the same notices and testimony, file testimony or cross-examine witnesses. An intervenor, by contrast, becomes a party to the case and may participate in the contested proceeding, subject to the PUC’s procedural rules and deadlines.
Intervention is the way to fully participate in the PUC’s decision-making process. For a property owner, this distinction is critical.
But intervention also comes with responsibilities. Parties may be required to respond to discovery, comply with procedural deadlines, file testimony and participate in hearings. This is one of many reasons why obtaining legal advice early can be valuable.
Mistakes To Avoid
For starters, it’s crucial that an intervenor review every proposed route—not just the utility’s preferred route.
A common mistake is to look at the utility’s preferred route and focus exclusively on how that one route affects your property. However, utilities routinely propose more than just their preferred route, and the PUC may approve routes other than the utility’s preferred route.
For a commercial property owner, the relevant question is therefore not simply: “How does the preferred route affect my property?” but rather, “How does each proposed route affect my property compared with the alternatives?”
An attorney can help you not only evaluate that question, but also develop a strategy for which alternative route, if any, you should advocate for — and what evidence may support that position.
It’s equally important to be mindful of PUC deadlines. Do not assume that you have plenty of time.
PUC proceedings operate under unique procedural schedules, and deadlines can be short. For example, the PUC has recently amended its rules concerning intervention in new transmission CCN proceedings, reducing the standard intervention period from 45 days to 30 days after the formal application is filed. The applicable deadline, however, depends on the particular proceeding and the notice you receive.
Lastly, affected landowners should not wait to retain counsel.
For a commercial property owner, the most important takeaway is simple: if a utility notifies you that a proposed transmission line may affect your property, consider consulting an attorney before the PUC’s routing decision is made.
An attorney experienced in representing landowners in PUC proceedings can help you:
- Meet the technical procedural deadlines
- Review the utility’s application and proposed route maps
- Analyze how each proposed route would affect the property
- Identify impacts to existing development, access, parking, circulation, tenant operations and other property uses
- Evaluate existing and planned development and the property’s future use
- Determine whether intervention is appropriate
- Identify and develop evidence supporting the landowner’s position
- Strategize which route, if any, the landowner should advocate for
This work needs to happen while the PUC is deciding where the line will go, not after the route has been approved.
Once the PUC approves a route, the opportunity to influence where the transmission line goes may be substantially different. If you receive notice that a utility has filed a PUC transmission-line proceeding that may affect your property, get advice before the route is decided.
Again, because the PUC operates under its own unique procedural schedule, it’s important that your potential attorney be familiar with PUC rules and procedure. Hiring the right lawyer matters. A prudent commercial landowner’s goal is not simply to oppose a transmission line. It is to protect the property owner’s interests while the decision about where the line will be located is still being made.
Claire Carroll is a Munsch Hardt shareholder whose practice focuses on complex real estate litigation. This article is provided for general informational purposes and does not constitute legal advice. Each transmission project and commercial property presents different legal, regulatory, development, and valuation considerations. Property owners should consult counsel regarding their particular circumstances and applicable deadlines.