Monday, May 12, 2014

Korngold on Conservation Easements and the Development of New Energies

GKorngoldGerald Korngold (New York Law School) has posted Conservation Easements and the Development of New Energies: Fracking, Wind Turbines, and Solar Collection (LSU Journal of Energy Law and Resources) on SSRN.  Here's the abstract:

Conservation easements have revolutionized land preservation during the past thirty years by permitting nonprofit organizations and governments to hold rights that prevent fee owners from altering the natural and ecological features of their land. There has also been an increase over recent years in the development of new energies, both renewables (solar and wind) and carbon-based (oil and gas) through the use of hydrofracturing combined with horizontal drilling (“fracking”). Questions have begun to emerge whether and how these two major directions — conservation easements and new energy development — are compatible, yielding a variety of reactions and answers.

There have been some indications of conflicts coming to the fore such as a few decided cases involving fracking on conservation easement land, reports of differing views among conservation organizations about drilling on easement property; and community debate about siting wind turbines on easement land. This article examines the tension between conservation easements and new energy trends.

Specifically, the article explores whether new energy creation can take place on a property that is subject to a conservation easement in light of the parties’ express agreement and argues for specific interpretative devices that will best find the parties’ intention, while respecting public policy considerations, when that intention is not made clear in the writing. It also analyzes the effect of the Internal Revenue Code and how federal deductibility has driven structuring of transactions and perhaps state policy goals. The article then examines whether a conservation easement subsequently can be amended by the fee owner and easement holder to permit new energy development and who must participate in this process. The article suggests that the rules concerning modification and termination need to be clarified. The current confusion potentially frustrates environmentally rational decisions and the vindication of other public policies.

Finally, the article explores non-consensual alterations to conservation easements — by judicial action or eminent domain proceedings — that would permit new energy activities on the land and concludes that they are of limited application. Throughout, the article examines the issue of conservation easements and new energies by juxtaposing “environmentally friendly” renewables and “environmentally threatening” fracking in order to provide a deeper inquiry into the question and to force the various players to search for a result with fewer predispositions about preferred outcomes.

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