A clash of conservation efforts in rural Louisiana pits crawfish ponds and tree plantations against each other, demonstrating new complexities posed by an emerging market for carbon credits.
The unusual land dispute highlights the national spotlight on Louisiana’s open space as market pressures and governments around the world force companies to find ways to offset their carbon emissions. . It includes approximately 850 acres of rice farms and crawfish and catfish ponds northeast of Lake Charles near the Kinder and Calcasieu rivers.
Litigation is currently underway over the future of land that not too long ago would have attracted little attention outside the surrounding area.
The story that led to the conflict began about four years ago. A Georgia nonprofit dedicated to protecting critical forests and farmland has locked in a deal with the owners to permanently store them in rice fields and crawfish and catfish ponds, regardless of who owns them in the future. It was then.
The nonprofit Southern Conservation Trust said regularly flooded farms and ponds provided important habitat for wildlife, including migratory waterfowl, shorebirds, wading birds and other bird species. There is. But in late 2023, an out-of-state company specializing in carbon credits purchased the lands from intermediaries who had just scooped them up from landowners who had signed the original preservation agreements.
With new land in hand, New York startup Chestnut Carbon began clearing rice fields and ponds to plant trees for a carbon credit program. In response, the trust earlier this year filed a lawsuit against the Diocese of Allen seeking a halt to work and an estimated millions of dollars in damages.
These former agricultural and aquaculture sites near the Calcasieu River in southwestern Louisiana, west of Kinder, will be removed from old use by February 9, 2024, in preparation for reforestation for carbon credit programs. It happened. A judge later halted further construction on the land amid a lawsuit over allegations that past land restrictions should have kept the land in agriculture.
Chestnut Carbon is accused in this lawsuit. Intermediary landlord Manchester Investments. The former landowner corporation also failed to notify the change of ownership as required and engaged in civil conspiracy to circumvent the trust’s land restrictions. The trust also accused Chesnutt of destroying the farm and pond, even though the sales agent was told he was not allowed to plant trees under a preservation agreement known as a “conservation easement.” did.
“We have never before had a conflict of this scale and nature with our landowner partners,” said the chief executive of the nonprofit, which has protected 55,000 acres of land in the Southeast over its nearly 32-year history. He said the act was “special.” terrible. ”
Chestnut Carbon filed its own counterclaim, alleging that it had also been misled and pointing out that it benefited from a complex land deal.
CO2 increases interest in forests
Carbon credit markets have received less attention than underground carbon sequestration in Louisiana. The state is a hotbed of proposals for sequestration projects that involve pumping CO2 underground and storing it permanently. Most are planned under rural or forested areas, according to state permit applications.
But state forestry association officials say landowners are also turning to carbon credit programs to generate income. These efforts can involve heavily funded out-of-state players, like Kinder Dispute Land, court and business documents show.
Earlier this year, Aurora Sustainable Lands, a North Carolina startup backed by Wall Street financial firms, said it would buy about 100,000 acres of lowland hardwood forest in the upper Atchafalaya Basin to manage carbon credits. Announced.
The company plans to spend $1.8 billion to buy an estimated 1.7 million acres of industrial forestland across the eastern United States for carbon credits, essentially taking advantage of trees’ natural ability to store carbon in their wood. You will be selling your abilities.
Chestnut Carbon, led by the co-founder of energy investment firm Kimmeridge, wants to buy and replant up to 500,000 acres nationwide by 2030 to sell carbon credits.
The Allen Parish lawsuit was part of Chesnutt’s $23.4 million acquisition of 6,921 acres in Allen and Jefferson Davis parishes for forestry-related carbon management, according to court documents.
Three Missouri land corporations sold to Manchester Investments, a brokerage firm with similar ties to Missouri, also have out-of-state investors involved in real estate, tax credit financing and venture capital, according to Louisiana business records. There is.
Since the trust filed its lawsuit in late March, a state district judge has temporarily barred Chesnutt from continuing to clear the land and plant seedlings. According to court documents, the parties are conducting interviews, gathering documents and moving forward with the early stages of litigation. The trust wants to restore the pond and rice field.
“To be clear, the Trust is prepared to work with landowner partners to respond to requests to utilize carbon sequestration and other beneficial uses that do not impact protected conservation values or habitats. ,” said Chris Doan, president of the trust. said the CEO in a statement. “But no amount of greenwashing automatically excuses the destruction of the habitat protected by those easements.”
The agreement was a donation that could provide tax benefits to landowners.
In response to the lawsuit, Mr. Chesnut filed a counterclaim against other defendants named in the trust’s lawsuit and a local real estate agent allegedly involved in the transaction, and agreed to a court-ordered halt to tree planting. .
Chestnut Carbon’s Louisiana attorney declined to comment. The other defendants deny the charges in court documents and through their attorneys.
Gum Bayou Properties, one of the previous landlords who sold to Manchester, said the company approached them about the sale “out of the blue.”
Hansel Harlan, a Baton Rouge attorney who works with Miami Beach investors, said Manchester’s plans to reverse course and sell the land to Chestnut also suggests that Manchester will “clarify” the trust’s restrictions on the 240 properties. The client said he was unaware of what he was trying to do. Acquired acres in the weeks leading up to the sale.
He added that his clients believed their land was still subject to trust restrictions at the time of the sale to Manchester.
“My clients are frustrated and angry about these allegations,” Harlan said.
According to court documents, the ownership exchange between Gum Bayou and two other landowners who sold to Manchester Investments occurred several times after Manchester was sold to Chestnut Carbon on Nov. 15, 2023. It was said that it was done within days.
“That can’t be allowed.”
The dispute is likely to focus on what Manchester and the real estate agent shared with Chestnut about whether the trust’s preservation agreement prevented tree planting, according to court documents. The trust acknowledged that the farm and pond conservation agreement did allow for a “carbon sequestration program.”
But there are many types, and in court papers, the nonprofit argues that the deal did not allow for the type of carbon sequestration Chesnutt wanted, namely tree planting. This is because it would undermine the conservation value of those conservation transactions.
Chestnut officials countered that they foresaw potential problems and asked Manchester Investments to confirm whether the trust would agree to an amendment to allow tree planting before the sale was completed in the fall of 2023. the complaint states.
In response, Jesse Woodsmith, director of conservation at Southern Conservation, sent two emails to Manchester Investments executive Stephen Lacey, most directly on October 12, 2023, stating that I told him it wouldn’t work.
“If participation in the carbon program involves planting or reforesting those rice farming and aquaculture areas, it will not be allowed,” Woodsmith wrote.
On the same day, Andrew Vanciere, a Rutter & Bloom real estate agent involved in the sale, asked the trust’s attorney Ryan Pulver about the same tree-planting amendment.
Mr. Pulver responded in an email to Mr. Vanciere, two Manchester Investment executives, another real estate agent and another attorney that the trust could not add the tree-planting amendments “that you requested.”
But Pulver added that the agreement already allows for “participation in ecosystem programs” and “also includes carbon sequestration.”
In court papers, Chestnut officials say Manchester Investments provided only an email from the trust’s attorney and used it as permission to plant trees to complete the sale.
The company said Chesnutt was unaware of Woodsmith’s opinion until the trust filed suit earlier this year.
Jonathan Shultis, an attorney with Vanciere, Rutter & Blum, said his clients deny the allegations raised in the lawsuit. The trust claims it was clear what was permitted.
Doan, CEO of the Trust, said: “Seeking forgiveness after a permit has been forcefully refused is unacceptable and the Trust will continue to advocate against any party seeking to circumvent or ignore the terms of the easement.” We will file a vigorous lawsuit.”
