Judon Fambrough, left, of the Texas A&M Real Estate Center, talks with Walter Ruzicka at the recent Central Texas Cow/Calf Clinic. PHOTO BY DAVID LOWE It’s not all about the money — at least when negotiating transmission line easements, one real estate attorney believes.

Judon Fambrough of the Texas A&M Real Estate Center last week spoke at the 2010 Central Texas Cow/Calf Clinic in Lampasas, giving participants advice about protecting property rights and negotiating easement agreements with utility transmission companies.

Because of mandates by the Texas Legislature for the state to increase its use of wind energy for electricity, in the coming years many landowners are likely to have wind power-carrying transmission lines installed across portions of their property, Fambrough said. Oncor Electric Delivery will build lines from Brown County to the west end of Kempner, and the Lower Colorado River Authority’s Transmission Services Corp. will build lines through parts of the Hill Country.

Last week, however, LCRA -- following direction from the state electricity grid operator -- decided to suspend indefinitely construction of new lines from Gillespie County to Lampasas County.

When negotiating with a condemnor, landowners who will have transmission lines crossing their property should consider the addendum to their easement agreement as carefully — or perhaps more carefully — than the easement payment they accept.

“If you haven’t properly negotiated the terms, you may be getting underpaid,” Fambrough said. “Focus on the property rights you’re giving up for that payment.”

Condemnors only need a certain width of land in order to construct and maintain transmission lines, said Fambrough, who encouraged property owners to limit easement agreements to the exact dimensions mentioned in the condemnor’s Certificate of Convenience and Necessity. He added, however, that in the 2004 case Hubenak v. San Jacinto Gas Transmission Co., the Texas Supreme Court ruled that a company may attempt to purchase additional property rights beyond what it legally can condemn.

The Supreme Court’s Hubenak ruling, Fambrough said, means landowners are responsible for enumerating all rights a condemnor may not take. If landowners do not “make a material issue” of additional property rights purchases before appealing to a special commissioners court, Fambrough said the issue cannot be contested.

The speaker said in the Hubenak case, the state Supreme Court dismissed the landowner’s complaint about efforts to purchase additional property rights because the property owner did not contest that issue initially.

“That’s what the Texas Supreme Court said the landowner did wrong, so you better not make the same mistake,” Fambrough said.

Easement agreements must be negotiated before appealing to a special commissioners court, Fambrough said. Landowners who plan to appear before a special commissioners court will need an appraiser and may want to hire an attorney, he said. Fees for those services are not recoverable, he added, even if a court awards landowners a large amount of damages.

The real estate speaker mentioned several specific limitations or phrases property owners may want to include in a draft of an easement agreement. A condemnor may not agree to all terms a landowner sets, but Fambrough said it is important to try to protect property rights as much as possible.

A granting clause, he said, should read something like the following: “Grantor grants to grantee a non-exclusive easement that is [blank] feet wide and [blank] feet high for the construction and maintenance [no relocating] of [blank number] of overhead lines to carry a maximum of [blank] kV of wind-generated electricity using [blank] type of support structures.”

Other conditions a property owner should consider putting in an easement agreement, Fambrough said, include:

· specified areas for transmission crews to enter and leave a property, with additional payment required if rough terrain prevents crews from staying strictly within the easement.

· after the construction phase ends, a requirement for 24- to 48- hour prior notice before utility workers go onto the property.

· a specification that “time is of the essence,” which Fambrough said ensures that “a deadline is a deadline.”

· no warranty of title.

· initial payment to cover only the damages that resulted during the construction phase.

· damages for loss of sites for building homes, stock tanks, etc.

· no free water for drilling.

· clarification of whether the comparable property values a condemnor’s appraiser offers include Hill Country lands affected by Florida Power & Light easements.

Whatever actions landowners take when facing eminent domain, they should use common sense and avoid letting emotions overrule sound judgment, Fambrough said.

“Take a deep breath, and say, ‘What’s the best I can do?’” the speaker said.

Electric delivery officials also say that, although eminent domain can be an emotional issue, condemnors will work with landowners to address concerns.

Oncor spokeswoman Catherine Cuellar, who has attended several public meetings in Lampasas County about Oncor’s transmission lines and easement acquisition efforts, has said in about 90 percent of easement matters the company reaches satisfactory agreements with landowners without going to court.

Also at the recent Cow/Calf Clinic, Dr. Rick Machen, a Texas AgriLife Extension Service specialist in Uvalde offered a beef market forecast during his talk, “Should I continue to participate in the cattle industry?”

Depending on one’s goals, potential ranch heirs and interest in producing beef, Machen said, now can be a good time either to end, expand or begin a cattle raising operation.

Those who do not think their descendants will want to work in agriculture, or those who simply have lost their passion for beef production, may want to leave the industry, he said. Property owners who stop producing cattle should consider the debt they owe for various facets of their operation, Machen said, and should consult a financial adviser to determine how capital gains from selling equipment or livestock may affect their income taxes.

Those who plan to quit the beef industry also should ensure they retain property tax exemptions on the agricultural land they own, Machen said. Leasing land for livestock production or obtaining tax exemptions for wildlife habitat preservation are popular solutions, the Extension specialist said.

Although some producers may be ready to retire from working cattle, Machen said the next few years also could give good opportunities for those who hope to increase the size of their livestock herds or begin ranching.

Cattle prices are relatively high, he said, in part because demand for American beef remains fairly high while livestock numbers have decreased.

In January, the United States had about 40.5 million cattle, with 31.4 million of those being beef cattle, Machen noted. That figure represents a 29 percent decrease in cattle since 1975-1976, when Machen said the United States reached its peak of 57 million cattle.

Shrinking cow herds in Canada and healthy markets in Mexico for U.S. beef give Machen a bullish outlook about demand by the two greatest importers of American beef. Japanese demand is increasing slowly, he said, and he added that beef exports to China are rising. The Chinese middle class, Machen said, generally prefers American beef to the meat of grass-fed South American cattle.

For beef producers, the future is bright, “maybe as bright as it’s been in the last 10 to 15 years,” he said.

The speaker encouraged those who plan to begin ranching to “buy low, sell high,” consult with trustworthy cattle marketing professionals, and think of themselves as beef producers rather than cattle producers.

Beef producers, Machen said, must meet higher consumer expectations than ever before. That challenge, the speaker said, requires producing appealing cuts of meat from conventionally raised cattle as well as satisfying a growing, but still relatively small, niche market for “all-natural,” “grass-fed” and “organic beef.”

Although nearly all beef qualifies as “natural,” Machen said, the Extension specialist added that beef marketed as grassfed, organic or “natural” accounts for less than 10 percent of total beef consumption in the United States.

“The biggest travesty is that some of these producers who are marketing these products are marketing them at the expense of conventional [beef],” he said.

Using an analogy of successful poultry farmers, Machen said beef producers can satisfy niche markets without implying that conventionally raised and grainfed cattle yield unhealthy meat.

“If consumers want brown eggs, sell them brown eggs; don’t sell them anti-white eggs,” Machen said.

Other topics at the recent clinic included marketing strategies to boost income at cattle auctions and mineral supplementation for beef cattle.