When a surface owner leases land for renewable energy development, there are implications for mineral owners looking for mineral leasing options. These implications can vary depending on the terms of the lease agreement and the laws of the state where the property is located. Surface and mineral ownership in the U.S. are separate, so different people can have ownership over one parcel of land.
Restrictions on Mineral Leasing Exploration and Extraction
A lease agreement for a solar or wind energy farm typically grants the lessee exclusive use of the surface of the land. This is for the purpose of constructing the wind or solar energy farm and operating renewable energy infrastructure. This means that the mineral rights owner may be restricted from accessing or exploring for minerals on the surface of the land.
If the lease is exclusive, the mineral owner may not be able to lease their minerals to a third party. They would need the consent of the lessee. Drilling operations can affect the surface estate that the energy project was developed on.
Solar panels take up a lot of surface space, which can hinder the areas for a drill site.
For wind farms, it is a bit easier to work around turbines since they take up less of the surface.
It is important to remember that mineral rights are usually considered separate from surface rights in the United States. A mineral owner still has the right to explore and extract minerals beneath the surface. The options available to mineral owners who want to explore and get an oil and gas lease on leased land depend on the terms of the lease agreement and the laws of the state.
The mineral rights holder may be able to negotiate with the surface owner to modify the lease agreement. Or they can obtain consent to access the land for mineral leasing exploration and extraction. This may require the mineral owner to compensate the surface owner or make other concessions in exchange for access.
If the lease agreement between the surface owner and renewable energy company includes provisions that restrict mineral leasing exploration and extraction, the mineral owner may be able to seek a law firm to take legal action to challenge the agreement.
However, this can be a complex and costly process. The outcome may depend on many factors. The language of the lease agreement and the laws of the state where the property is located are two of them.
Mineral Leasing: Payment of Royalties
The lease agreement may include provisions for the payment of royalties to the surface owner, which could affect the mineral owner's profits. For example, if the surface owner receives a percentage of the revenue generated by the solar or wind farm. This could reduce the amount of money available to the mineral owner if they are also receiving royalties for mineral extraction. However, if the lease is non-exclusive, the mineral owner may be able to negotiate. They can negotiate a separate lease agreement for their minerals and receive royalties independently of the surface owner. The wind or solar developer has not begun building the infrastructure. This gives the mineral owner a better chance of developing their minerals. As mentioned already, wind turbines do not take up a lot of surface area unlike solar farms. So if a solar company is able to negotiate with the mineral developer around promising drill sites, then the mineral owner will be able to generate mineral interest.
Potential for Damage to Mineral Resources
Constructing and operating a solar or wind farm can cause damage to minerals beneath the land. This damage can be to the resources located underground. For example, heavy equipment used in the construction process could damage underground pipelines or wellheads. The mineral owner may wish to add specific protections for their resources in the lease agreement. For example, requiring the lessee to obtain insurance for potential damages or providing compensation if damage occurs. They could request for a portion of the surface not to be built on so they can partake in the mineral estate they own.
Impact on Property Value
The presence of a solar or wind farm could affect the value of the property, including both the surface and mineral rights. The lease agreement may allow for the installation of large-scale infrastructure such as transmission lines or substations. This could negatively affect the property's attractiveness to potential buyers or lessees in the future. The mineral owner should think about the long-term effects of the mineral leasing agreement. These effects could impact the value of their mineral rights.
The implications for mineral owners when a surface owner leases for solar or wind farms can be complex. These implications vary depending on the specific terms of the lease agreement. It is essential for mineral owners to review lease agreements thoroughly. They should negotiate to safeguard their rights and make sure they receive a fair payment for their resources.