Mineral rights are an important issue when considering a conservation easement for most landowners and land trusts, particularly in the western portion of the US. This is because the mineral rights on many properties are not fully controlled by the landowner because they have been transferred to third parties or retained by governmental entities. A key component of any conservation easement is a prohibition on surface mining. Since many landowners do not control all mineral rights, the IRS regulations state that a conservation easement can be granted only if the potential for surface mineral activity “is so remote as to be negligible.” In order for this determination to be made the landowner should engage a consulting geologist to determine if there is any likelihood of mineral development on the property. If after consulting mineral logs, maps and other geological sources the geologist can attest to the fact that mineral activity is unlikely, a “remoteness” letter can be issued to the landowner. Such an analysis generally satisfies the land trust that surface mining activity is unlikely.
The geologist will generally look at subsurface minerals as well in the report, including hydrocarbons. An easement can be granted if there is likelihood of oil and gas activity if the scope of that activity would likely not interfere with protection of the property’s conservation values. Some conservation easements have provisions that attempt to minimize the impact of subsurface mineral activity if it occurs on the property, such as minimizing new road construction, consolidating well pads or encouraging directional drilling. Depending on state regulations these provisions may or may not be effective since the mineral rights owner has rights to the extraction of the minerals. More and more land trusts are looking carefully at the potential for oil and gas development and if there is a high probability, refusing to accept easements on those lands as the mineral activity has been shown to be destructive to conservation values such as wildlife habitat, water quality and scenic qualities. |
