Is it legal to lease your land to more than one type of energy company? Yes, it is. In order to protect yourself, you will need clearly drafted accommodation agreements.
When you sell or lease part of your land to an energy company, you are probably going to use some of that land concurrently for purposes such as ranching, farming or hunting. Whenever you negotiate an energy lease, you should find out what concurrent uses are possible and how much of the land will be completely off-limits to you.
The same principle applies when more than one company is interested in using your land for mineral or energy purposes, such as a wind farm, a solar array or an oil or gas pipeline. You can lease different parts of your land for different purposes, or you could, in theory, lease the land for concurrent uses by multiple parties.
The trick is to make sure everyone understands their rights. That is often done with a type of contract called an accommodation agreement.
If you’re thinking about multiple, concurrent uses of your property, you are probably in the position where you have one energy or mineral lease in place and are looking at your options for another lease.
Is your land use restricted by your current lease?
The first step is to have a lawyer examine your existing lease to determine if it restricts other concurrent uses at all. If it does, your lawyer can explain what restrictions are in place and whether they apply to your entire parcel, for example.
Many energy leases allow concurrent use in principle, at least on parts of the property that aren’t reserved for the energy company’s exclusive use. Practically, there may be challenges using land for more than one purpose.
For example, a solar array may effectively “use up” the land it’s situated on. There is little room for grazing or even hunting near the array. A pipeline, on the other hand, has a limited footprint. Other than the pipeline itself, the land can often be used for a concurrent purpose.
Indeed, it is most common that only parts of your property are reserved for the exclusive use of the mineral or energy company you have already signed with. Some parts of your property will essentially be shared, as you are required to provide ingress and egress by the company to the project site. The remainder is yours to use as you see fit.
Once your lawyer has interpreted your existing lease, he or she will take a look at the new company’s proposal to determine if there are any incompatibilities with the existing lease. Assuming there are not, your attorney will draft an accommodation agreement that clearly lays out each party’s rights and responsibilities. This includes the company you have already signed with.
Each company involved — and you — should understand from the accommodation agreement exactly what concurrent uses are possible and allowed and exactly where. Many accommodation agreements also specify what should happen in the event a dispute arises.
If you are ready to explore a concurrent use for your property, be sure to work with an attorney who has significant experience negotiating, drafting and reviewing mineral or energy leases and accommodation agreements.