This blog highlights some legal considerations for landowners and tenant farmers to bear in mind when applying to the Government’s new Woodland Carbon Guarantee scheme (WCaG), supported by an associated woodland creation project.
The long-term nature of the commitment and the change in use of the land is what makes these schemes different from, for example, a mid-tier countryside stewardship agreement.
The application
The application to take part in the WCaG auction is not in itself binding. A draft contract will be issued if you are deemed to be eligible and are successful with your auction bid. However, the contract refers back to the application and you will be required to warrant that you have the necessary consent and that the information you have given is true and accurate.
For freehold owner/occupiers of land
- It is the freehold owner of the land which will be planted with trees who must sign the application to the WCaG scheme.
- This is not an issue where there is a single freehold owner. However, if the land is owned by trustees of a trust, or there are joint owners, this will need to be dealt with. You should decide who the lead applicant is going to be, and the other trustee(s)/co-owner(s) should provide a signed written consent in support of the application. This should be worded in a way that signifies liability for delivery under any ensuing contract. Consents can be submitted with the application form.
For tenant farmers
- You will need your landlord’s written consent and will need to provide that as part of your application to the scheme. Your landlord will need to accept liability for fulfilment of your obligations under any resulting contract if you no longer have control of the land (e.g. because your tenancy has ended).
- You should also check the terms of your tenancy. Is there a reservation in favour of the landlord? Something along the lines: “The Landlord reserves the exclusive right to all timber and other trees, underwood, pollards and saplings on the Holding, together with the right to enter upon the Holding in order to mark, fell, cut, process, extract and remove such timber and trees and to replant trees”.
If so, then any trees you plant on the Holding will belong to the Landlord rather than you. As part of your discussion with your Landlord, in order to avoid any uncertainty down the line, you will probably want to seek not just his consent for you to enter the scheme but a variation of the tenancy.
- If you are a joint tenant, the same position applies to joint owners. You will need to decide who the lead applicant is to be, and the other joint tenant(s) should provide their signed written consent in support of the application.
Where multiple landowners are involved
- The scheme envisages the possibility of applications involving multiple landowners. This could even be a mix of owner-occupied and tenanted land.
- Again, a lead applicant will need to be chosen, and signed written consents will need to be completed by other participants as part of the application process.
- Given the liabilities of the lead applicant under the WCaG contract, participants should consider drawing up an agreement between themselves, dealing with e.g. apportionment of any income, liability for delivery and access to the woodland that is planted.
The contract
- The lead applicant named in the WCaG application will be the Seller under the resulting contract. The Secretary of State for Environment, Food and Rural Affairs, acting through the Forestry Commission, will be the Purchaser.
- The Seller is required to warrant that the information contained in the application and other documentation remains true and accurate as of the contract commencement date, other than matters expressly notified in writing to the Forestry Commission before the contract is concluded.
- The Seller is under no obligation to sell Woodland Carbon Units to the Purchaser. They have an option to sell them elsewhere.
- However, if the option is exercised, the provisions of the contract e.g. regarding repayment of sums paid (with interest) on early termination, will apply.
- The Seller is required to maintain control of the woodland for the full duration of the contract and must notify the Forestry Commission without delay if there is any proposed change in control over all or part of the woodland. In contrast to the application (see above) it is the Seller who remains liable under the contract unless a novation to a third party/third parties is agreed by the Forestry Commission.