23 CALF News • February | March 2022 • www.calfnews.net TEXAS FEED FAT CO., INC. P.O. Box 1790 • Durant, Oklahoma 74702 Ted Kirkpatrick, Owner We specialize in Quality Feed Fat and Quality Service. Leaders in the feed fat industry since 1974! With 2 locations to serve you. Call Us Today! TEXAS FEED FAT CO., INC. Durant, Oklahoma Kirk Sehi (580) 924-1890 Hereford, Texas (806) 363-6490 anywhere. This can lead to confusion when dealing with land sales and estate settlements. Carbon contracts impact environmental restrictions on inherited assets, as well as who controls or inherits these rights upon settlement of an estate. A long list of provisions needs to be addressed, some of which include who bears the cost of sampling and verification? Can the land be leased for other purposes, such as hunting or other conservation efforts? Also who establishes fluid metrics and standards of risk, eligibility requirements, loss of invested payments, consent to drone use and soil collection, loss of land use, audits and third-party verifiers, and effects on mineral rights and water use. Land sales for whatever necessary reason is a problem that has not been tested; there is potential for dispute in this matter. Aerts explained that carbon credit contracts are agreements between private parties. They are not necessarily legally registered and publicly available. Since there is no uniformity of law on this matter, it is very open ended. He said there is a real possibility of conflict. Additionally, if a carbon credit purchaser goes broke, there is no guarantee the landowner will be compensated. Some kind of mitigation arranged with the intermediary is best, for example, negotiating for a security interest. Terms of these contracts generally run from five to 15 years, and payments from $10 to $15 per acre. Whether it’s cost effective for a landowner will be case by case. Landowners are encouraged to form LLCs to protect their other assets. Watch out for what state law governs the contract. For example, if it says Delaware, and a problem arises, the landowner will need to hire a lawyer and go to court in Delaware. Many of the credit buyers will not live in the Plains states. They will be on either coast. The Upside Carbon credits represent a potential new revenue source for agriculture. The marketing and regulatory environment is rapidly evolving, eventually giving guidance to landowners. Be sure to negotiate and mitigate risks up front by thoroughly combing through contracts, fine print and even websites of contract purchasers. Treat your contract as a land encumbrance that may follow the next generation, and always use a lawyer. RIGHT: Anthony Aerts is a lawyer with the Rembolt Ludtke law firms in Lincoln and Seward, Neb. OPPOSITE PAGE: Less than one-tenth of one percent of agricultural land in the U.S. has been contracted under carbon credits. A lack of legislation giving framework and protecting landowners makes the process risky.