ment, I really wanted to be able to deal with people who understand agriculture. Because even though these are highly negotiated agreements, it may not be as enjoy- able or as good of an experience if you’re dealing with someone who has no concept of agriculture,” he says. Anderson also chose TALT because of their hands-
off approach to day-to-day management. “How you run cattle, if you choose to farm some of
the land, how you do things in general — they don’t get into the management of the land at all,” he says. Texas Agricultural Land Trust CEO Blair Fitzsimons
says it’s right there in the governing principles: Trust the landowner to manage. TALT believes that the landowner knows best how to manage his or her property. We are interested in conserving open space, thereby preventing the loss of rural land to development or the fragmenta- tion of properties into smaller and smaller parcels. She says TALT seeks to work with conservation-
minded landowners and believes they know best how to manage their own properties, “so we write easement agreements that don’t interfere with day-to-day manage- ment. We don’t require a grazing plan, for example.” Anderson says this is in stark contrast to how some
easement holders operate. “Now, some organizations will tell you that you can’t
move a fence, you can’t build a corral or you can’t get off of this road or that kind of thing. And while any conservation easement will protect your land, the ad- ministration of the monitoring of some of them could be quite irritating,” he says.
Oil, gas and the IRS Since a conservation easement is a negotiated doc-
ument, what it does and does not allow is entirely dependent on the negotiated terms of that particular conservation easement and the purposes of the ease- ment. However, if the landowner is going to seek tax treatment and deductions for the value of that donated easement, there are certain IRS rules that have to be followed. Joseph B.C. Fitzsimons, a natural resources, oil
and gas, and water law attorney and third-generation rancher in South Texas, says it is possible to make your conservation values and the restrictions in your conservation easement compatible with oil and gas development. He says that while surface mining on the property
is prohibited by Internal Revenue Service Code Section 170(h), oil and gas exploration is allowed by the Code so long as the impact is restricted to limited, tempo-
tscra.org
Coexistence must-knows:
• Do your research (and negotiating). Not all conservation easements are equal when it comes to managing your land.
• Pick a good partner. Choose an easement holder whose philosophy and mission matches your own. Each land trust is mission-driven: Some are focused on endangered species or specifi c water resources, for example.
• Know the codes (or someone who does). Especially when it comes to oil and gas, the tax codes can be complicated. Do your homework and consult with your attorney if necessary.
rary and localized impacts that are not irremediably destructive of signifi cant conservation interests. “This means oil and gas development on the property
puts the IRS tax benefi ts of the conservation easement at risk, but the two can potentially coexist,” Joseph says. Blair agrees. “The IRS allows oil and gas mineral development as
long as there is minimal long-term impact to the sur- face,” she says. “Therefore, we work with landowners to ensure that there are surface protections in place, either in the lease or through a surface use agreement.” Joseph says that means you need to have previously
negotiated a sophisticated and comprehensive surface use agreement. “Because without a surface use agreement, you’re
limited to the common law protections of a surface owner, which are extremely limited — almost to the point of being non-existent,” Joseph says. It is important to mention, though, that only some
types and degrees of mineral development are allowed. According to IRS Code 1.170A-14(g)(4), Joseph says, “a deduction under this section will not be denied in the case of certain methods of mining that may have limited, localized impact on the real property but that are not irremediably destructive of signifi cant conservation interests. For example, a deduction will not be denied in a case where production facilities are concealed or compatible with existing topography and landscape, and when surface alteration is to be restored to its original state.” He says insuffi cient case law and regulatory rulings
exist to determine exactly what constitutes a permis- sible level of “limited and localized impacts.” Joseph says IRS Letter Ruling #9318027 (1993) found
August 2016 The Cattleman 75
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