Tough Choices on Mineral Rights

At the October 2014 meeting of the Unitarian Universalist Association's Board of Trustees, I informed the Board that the UUA administration had recently sold mineral rights in Texas for just shy of one million dollars. This information was included as part of the budget update that I presented at that meeting and was reported on UUWorld.org.

Given the budget shortfall of the previous fiscal year, I considered this sale to be good news for the finances of the Association. But there were others in the UU community who viewed this transaction through a different lens—that of climate change and our moral imperative to address that crisis.

Here is some background to the decision. In the early 1990s the UUA received a contribution in the form of mineral rights from a generous donor. Mineral rights are a claim on revenues from the extraction of resources from the ground, such as iron ore, gold, sulphur, coal, or in this case, natural gas and petroleum. Mineral rights are owned and sold separately from the rights to use the land.

More precisely, the UUA received what is called a "fractional interest" in mineral rights from a particular piece of land. That means that if the mineral rights ever generated any money, the UUA would receive a percentage of that revenue. The UUA never owned any land—you couldn’t put a fence around our fractional interest—and we never had any control over the use of that land. We simply had a claim on a fraction of the revenue generated from that plot. In the fall of 2014, the UUA’s interest amounted to about 5%. The remainder—95%—was controlled by others.

Mineral rights can be sold or leased. The holder of a lease has the right to drill for a specified period of time, often three years. If the lessee drills a producing well during the lease period, that company has the right to continue operating the well for as long as the well produces. During active production, the company pays the owner of the rights a royalty, or a percentage of the revenue produced from the well. If the company does not drill during the lease period, the lease expires and the rights revert to the owner of the mineral rights.

The mineral rights in which the UUA held a fractional interest had been leased several times since the original gift, but no well had been drilled. The current lease was expiring in the fall of 2014, and those with the 95% controlling interest in the rights sought to re-lease or sell the rights. They could do this because there was no productive well on the land. 

The UUA was thus presented with three options: (1) lease our 5% interest in the rights; (2) sell our interest; or (3) do nothing and receive royalty payments if drilling produced a successful well. As an owner of a fractional interest in these rights, the UUA had no control or influence over how those rights were exploited. Our only choice was how we got paid. 

In the end we chose to sell our fractional interest for $940,000. These funds helped us to balance this year’s budget without cutting programs or eroding the endowment, and they will provide funding for future programs.

I do not believe that our actions contributed in any way to more greenhouse gasses being pumped into the atmosphere, but at the same time, we clearly did benefit from the oil and gas exploration business. Quite frankly, though, I am relieved that the UUA is out of that business. In one sense, the sale was an act of divestment, not unlike an investor who chooses to sell stock in a coal company and then receives the market value of those securities in return.

At the same time, I understand and accept the moral ambiguity of benefiting from the sale of rights to extract more oil and gas from the ground. Reflecting on and discussing this complicated moral situation is a healthy process. To me, as someone who cares deeply about how the UUA administration lives out the values of our Unitarian Universalist faith, the important thing is how these financial resources are being and will be used. I am proud of our recent efforts. For example, we devoted significant time and resources to building a new Headquarters that reflects the highest environmental standards for construction and energy management and was awarded LEED Platinum certification from the U.S. Green Building Council in recognition of that achievement.

We are also addressing the crisis of climate change by supporting and collaborating on Commit2Respond, an unprecedented coalition of UU groups devoted to achieving climate justice. We continue to work for climate justice through our shareholder advocacy efforts. We have implemented the greenest meeting practices at our annual General Assembly. And we continue to produce and support resources like the Green Sanctuary Program—recently updated to focus more explicitly on environmental justice.

As we move forward, we need to view all of our actions in the context of climate change. We are called to make responsible choices in our personal lives and to advocate strenuously for the policy solutions the world so desperately needs. I think we can all agree that there is much work to be done. 

Tim Brennan is Treasurer and Chief Financial Officer of the Unitarian Universalist Association.


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  • commented 2015-06-16 13:09:07 -0400
    Unless you yourself have divested yourself of fossil fuel usage, moral outrage seems hypocritical. The move against fossil fuel will happen gradually.

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