La. Admin. Code tit. 43 § I-4107

Current through Register Vol. 50, No. 6, June 20, 2024

Section I-4107 - Standards for Certification

A. Requirements. An applicant shall establish that it meets all of the following requirements for certification.

1. The applicant is a legal entity, other than a natural person, created or organized in the United States or any possession thereof or under the law of the United States, any state, the District of Columbia, or any possession of the United States.

a. The applicant shall provide copies of its articles of incorporation or organization (or other organizing documents) certified by the Louisiana Secretary of State or, if created or organized under the law of the United States, any state other than Louisiana, the District of Columbia, or any possession of the United States, by the official custodian of such records thereof.

2. The applicant is in good standing in the State of Louisiana.

a. The applicant shall provide a current Good Standing Certificate from the Louisiana Secretary of State.

3. The applicant is recognized under 26 U.S.C. § 501 (c)(3) and 26 U.S.C. § 170 as being organized and operated as a public charitable organization.

a. The applicant shall provide copies of the most recent determinations by the United States Internal Revenue Service (IRS) regarding the status of the applicant under 26 U.S.C. § 501 (c)(3) and/or 26 U.S.C. § 170.

b. The applicant shall provide copies of its latest federal and state tax returns.

4. The actions, inactions, and anticipated actions and inactions of the applicant are consistent with, and not contrary to, any Comprehensive Master Coastal Protection Plan or any Annual Plan adopted by the Coastal Protection and Restoration Authority and the Legislature under Louisiana Revised Statutes Title 49, Part II, Subpart A, or any plan or project included in any such Master Plan or Annual Plan.

a. The applicant shall submit a written statement to this effect, signed by an officer of the applicant authorized to make such statements on behalf of the applicant.

B. Organizational Considerations. In addition to determining that an applicant meets all requirements of §4107 A, in considering any application the secretary may consider an application according to the manner and extent to which the applicant meets each of the following considerations.

1. Standard 1-Mission. The applicant has a clear mission that serves a public interest, and its programs support that mission.

a. Mission. The applicant's mission (or a primary component of the applicant's mission) is conserving land by undertaking or assisting in land or easement acquisitions, or by engaging in the stewardship of land or easements.

b. Planning and Evaluation. The applicant regularly establishes strategic goals for implementing its mission and routinely evaluates programs, goals, and activities to be sure they are consistent with the mission.

c. Ethics. The applicant upholds high standards of ethics in implementing its mission and in its governance and operations.

2. Standard 2-Compliance with Laws. The applicant fulfills its legal requirements as a nonprofit tax-exempt organization and complies with all laws.

a. Compliance with Laws. The applicant complies with all applicable federal, state, and local laws.

b. Nonprofit Incorporation and Bylaws. The applicant has incorporated or organized according to the requirements of state law and maintains its corporate status. It operates under bylaws based on its corporate or company charter and its articles of incorporation or organization. The applicant periodically reviews the bylaws.

c. Tax Exemption. The applicant has qualified for federal tax-exempt status and complies with requirements for retaining this status, including prohibitions on private inurement and political campaign activity, and limitations and reporting on lobbying and unrelated business income. The applicant also meets the IRS public support test for public charities. Where applicable, state tax-exemption requirements are met.

d. Records Policy. The applicant has adopted a written records policy that governs how organization and transaction records are created, collected, retained, stored, and disposed.

3. Standard 3-Board Accountability. The applicant has a board that acts ethically in conducting the affairs of the organization and carries out the board's legal and financial responsibilities as required by law.

a. Board Composition. The board is of sufficient size to conduct its work effectively. The board is composed of members with diverse skills, backgrounds, and experiences who are committed to board service. There is a systematic process for recruiting, training, and evaluating board members.

b. Board Governance. The applicant provides board members with clear expectations for their service and informs them about the board's legal and fiduciary responsibilities. The board meets regularly enough to conduct its business and fulfill its duties. Board members are provided with adequate information to make good decisions. Board members attend a majority of meetings and stay informed about the applicant's mission, goals, programs, and achievements.

c. Board Approval of Land Transactions. The board reviews and approves every land and easement transaction, and the applicant provides the board with timely and adequate information prior to final approval. However, the board may delegate decision-making authority on transactions if it establishes policies defining the limits to that authority, the criteria for transactions, the procedures for managing conflicts of interest, and the timely notification of the full board of any completed transactions, and if the board periodically evaluates the effectiveness of these policies.

4. Standard 4-Conflicts of Interest. The applicant has policies and procedures to avoid or manage real or perceived conflicts of interest.

a. Dealing with Conflicts of Interest. The applicant has a written conflict of interest policy to ensure that any conflicts of interest or the appearance thereof are avoided or appropriately managed through disclosure, recusal, or other means. The conflict of interest policy applies to all insiders. Federal and state conflict disclosure laws are followed.

b. Transaction with Insiders. When engaging in land and easement transactions with insiders, the applicant: follows its conflict of interest policy; documents that the project meets the applicant's mission; follows all transaction policies and procedures; and ensures that there is no private inurement or impermissible private benefit. For purchases and sales of property to insiders, the applicant obtains a qualified independent appraisal prepared in compliance with the Uniform Standards of Professional Appraisal Practice by a state-licensed appraiser who has verifiable conservation easement or conservation real estate experience. When selling property to insiders, the applicant widely markets the property in a manner sufficient to ensure that the property is sold at or above fair market value and to avoid the reality or perception that the sale inappropriately benefited an insider.

5. Standard 5-Fundraising. The applicant conducts fundraising activities in an ethical and responsible manner.

a. Legal and Ethical Practices. The applicant complies with all charitable solicitation laws, does not engage in commission-based fundraising, and limits fundraising costs to a reasonable percentage of overall expenses.

b. Accountability to Donors. The applicant is accountable to its donors and provides written acknowledgment of gifts as required by law, ensures that donor funds are used as specified, keeps accurate records, honors donor privacy concerns, and advises donors to seek independent legal and financial advice for substantial gifts.

6. Standard 6-Financial and Asset Management. The applicant manages its finances and assets in a responsible and accountable way.

a. Annual Budget. The applicant prepares an annual budget that is reviewed and approved by the board, or is consistent with board policy. The budget is based on programs planned for the year. Annual revenue is greater than or equal to expenses, unless reserves are deliberately drawn upon. The applicant should attach its latest budget.

b. Financial Records. The applicant keeps accurate financial records, in a form appropriate to its scale of operations and in accordance with Generally Accepted Accounting Principles (GAAP) or alternative reporting method acceptable to a qualified financial advisor.

c. Financial Review or Audit. The applicant has an annual financial review or audit, by a qualified financial advisor, in a manner appropriate for the scale of the organization and consistent with state law.

d. Investment and Management of Financial Assets and Dedicated Funds. The applicant has a system for the responsible and prudent investment and management of its financial assets, and has established policies on allowable uses of dedicated funds and investment of funds.

e. Funds for Stewardship and Enforcement. The applicant has a secure and lasting source of dedicated or operating funds sufficient to cover the costs of stewarding its land and easements over the long term and enforcing its easements, tracks stewardship and enforcement costs, and periodically evaluates the adequacy of its funds. In the event that full funding for these costs is not secure, the board has adopted a policy effectively committing the organization to raising the necessary funds.

7. Standard 7-Volunteers, Staff, and Consultants. The applicant has volunteers, staff, and/or consultants with appropriate skills and in sufficient numbers to carry out its programs.

a. Capacity. The applicant regularly evaluates its programs, activities, and long-term responsibilities and has sufficient volunteers, staff, and/or consultants to carry out its work, particularly when managing an active program of easements.

8. Standard 8-Evaluating and Selecting Conservation Projects. The applicant carefully evaluates and selects its conservation projects.

a. Project Selection and Criteria. The applicant has a defined process for selecting land and easement projects, including written selection criteria that are consistent with its mission. For each project, the applicant evaluates its capacity to perform any perpetual stewardship responsibilities.

b. Public Benefit of Transactions. The applicant evaluates and clearly documents the public benefit of every land and easement transaction and how the benefits are consistent with the mission of the organization. All projects conform to applicable federal and state charitable trust laws. If the transaction involves public purchase or tax incentive programs, the applicant satisfies any federal, state, or local requirements for public benefit.

c. Site Inspection. The applicant inspects properties before buying or accepting donations of land or easements to be sure they meet the organization's criteria, to identify the important conservation values on the property, and to reveal any potential threats to those values.

d. Project Planning. All land and easement projects are individually planned so that the property's important conservation values are identified and protected, the project furthers the applicant's mission and goals, and the project reflects the capacity of the organization to meet future stewardship obligations.

e. Evaluating Risks. The applicant examines the project for risks to the protection of important conservation values (such as surrounding land uses, extraction leases or other encumbrances, water rights, environmental protection issues, potential credibility issues, or other threats) and evaluates whether it can reduce the risks. The applicant modifies the project or turns it down if the risks outweigh the benefits.

9. Standard 9-Ensuring Sound Transactions. The applicant works diligently to see that every land and easement transaction is legally, ethically, and technically sound.

a. Legal Review and Technical Expertise. The applicant obtains a legal review of every land and easement transaction, appropriate to its complexity, by an attorney experienced with real estate law. As dictated by the project, the applicant secures appropriate expertise in financial, real estate, tax, scientific, and land and water management matters.

b. Easement Drafting. Every easement is tailored for the property according to project planning and: identifies the important conservation values protected and public benefit served; allows only permitted uses and/or reserved rights that will not significantly impair the important conservation values; contains only restrictions that the applicant is capable of monitoring; and is enforceable.

c. Recordkeeping. Pursuant to its records policy, the applicant keeps originals of all irreplaceable documents essential to the defense of each transaction (such as legal agreements, critical correspondence and appraisals) in one location, and copies in a separate location. Original documents are protected from daily use and are secured from fire, floods, and other damages.

d. Title Investigation and Subordination. The applicant investigates title to each property for which it intends to acquire title or an easement to be secure that it is negotiating with the legal owner(s) and to uncover liens, mortgages, mineral or other leases, water rights, and/or other encumbrances that could result in extinguishment of the easement or significantly undermine the important conservation values on the property are discharged or properly subordinated to the easement.

e. Purchasing Land. If the applicant buys land, easements, or other real property, it obtains a qualified independent appraisal to justify the purchase price. However, the applicant may choose to obtain a letter of opinion from a qualified real estate professional in the limited circumstances when a property has a low economic value or a full appraisal is not feasible before a public auction. In limited circumstances where acquiring above the appraised value is warranted, the applicant documents the justification for the purchase price and that there is no private inurement or impermissible private benefit. If negotiating for a purchase below the appraised value, the applicant ensures that its communications with the landowner are honest and forthright.

f. Selling Land or Easements. If the applicant sells land or easements, it first documents the important conservation values, plans the project according to the practice outlined in §4107. B.8 d, and drafts protection agreements as appropriate to the property. The applicant obtains a qualified independent appraisal that reflects the plans for the project and protection agreements and justifies the selling price. (The applicant may choose to obtain a letter of opinion from a qualified real estate professional in the limited circumstances when a property has a very low economic value.) The applicant markets the property and selects buyers in a manner that avoids any appearance of impropriety and preserves the public's confidence in the applicant, and in the case of selling to an insider, considers the issues set forth in §4107. B.4 b

g. Transfers and Exchanges of Land. If the applicant transfers or exchanges conservation land or easements, the applicant considers whether the new holder is a certified land conservation organization and can fulfill the long-term stewardship and enforcement responsibilities, ensures that the transaction does not result in a net loss of important conservation values and, for donated properties, ensures that the transfer is in keeping with the donor's intent. If transferring to a party other than another certified land conservation organization, nonprofit organization, or public agency, the consideration is based on a qualified independent appraisal (or letter of opinion when the property has a low economic value) in order to prevent private inurement or impermissible private benefit.

10. Reserved.

11. Standard 11-Conservation Easement Stewardship. The applicant has a program of responsible stewardship for its easements.

a. Funding Easement Stewardship. The applicant determines the long-term stewardship and enforcement expenses of each easement transaction and secures the dedicated or operating funds to cover current and future expenses. If funds are not secured at or before the completion of the transaction, the applicant has a plan to secure these funds and has a policy committing the funds to this purpose.

b. Baseline Documentation Report. For every easement, the applicant has a baseline documentation report (that includes a baseline map) prepared prior to closing and signed by the landowner at closing. The report documents the important conservation values protected by the easement and the relevant conditions of the property as necessary to monitor and enforce the easement. In the event that seasonal conditions prevent the completion of a full baseline documentation report by closing, a schedule for finalizing the full report and an acknowledgment of interim data [that for donations and bargain sales meets Treasury Regulations §170A-14(g)(5)(I)] are signed by the landowner at closing.

c. Easement Monitoring. The applicant monitors its easement properties regularly, at least annually, in a manner appropriate to the size and restrictions of each property, and keeps documentation (such as reports, updated photographs and maps) of each monitoring activity.

d. Landowner Relationships. The applicant maintains regular contact with owners of easement properties. When possible, it provides landowners with information on property management and/or referrals to resource managers. The applicant strives to promptly build a positive working relationship with new owners of easement property and informs them about the easement's existence and restrictions and the applicant's stewardship policies and procedures. The applicant establishes and implements systems to track changes in land ownership.

e. Enforcement of Easements. The applicant has a written policy and/or procedure detailing how it will respond to a potential violation of an easement, including the role of all parties involved (such as board members, volunteers, staff, and partners) in any enforcement action. The applicant takes necessary and consistent steps to see that violations are resolved and has available, or has a strategy to secure, the financial and legal resources for enforcement and defense.

f. Amendments. The applicant recognizes that amendments are not routine, but can serve to strengthen an easement or improve its enforceability. The applicant has a written policy or procedure guiding amendment requests that: includes a prohibition against private inurement and impermissible private benefit; requires compliance with the applicant's conflict of interest policy; requires compliance with any funding requirements; addresses the role of the board; and contains a requirement that all amendments result in either a positive or not less than neutral conservation outcome and are consistent with the organization's mission.

12. Standard 12-Fee Land Stewardship. The applicant has a program of responsible stewardship for the land it holds in fee for conservation purposes.

a. Funding Land Stewardship. The applicant determines the immediate and long-term financial and management implications of each land transaction and secures the dedicated and/or operating funds needed to manage the property, including funds for liability insurance, maintenance, improvements, monitoring, enforcement, and other costs. If funds are not secured at or before the completion of the transaction, the applicant has a plan to secure these funds and has a policy committing the funds to this purpose.

b. Land Management. The applicant inventories the natural and cultural features of each property prior to developing a management plan that identifies its conservation goals for the property and how it plans to achieve them. Permitted activities are compatible with the conservation goals, stewardship principles, and public benefit mission of the organization. Permitted activities occur only when the activity poses no significant threat to the important conservation values, reduces threats or restores ecological processes, and/or advances learning and demonstration opportunities.

c. Monitoring Applicant Properties. The applicant marks its boundaries and regularly monitors its properties for potential management problems (such as trespass, misuse or overuse, vandalism or safety hazards) and takes action to rectify such problems.

d. Land Stewardship Administration. The applicant performs administrative duties in a timely and responsible manner. This includes establishing policies and procedures, keeping essential records, filing forms, paying insurance, paying any taxes and/or securing appropriate tax exemptions, budgeting, and maintaining files.

e. Community Outreach. The applicant keeps neighbors and community leaders informed about its ownership and management of conservation properties.

C. General Considerations. In addition to determining that an applicant meets all requirements of §4107 A, and considering the manner and extent to which the applicant meets each of the organizational considerations of §4107 B, in considering any application the secretary may also consider an application in light of each of the following general considerations:

1. the length of time that the applicant has been incorporated or organized;

2. the nature, extent, and number of land conservation projects that the applicant has undertaken or completed;

3. submission by the applicant of a resolution adopting the most current edition of the Land Trust Alliance Standards and Practices as its operating guidelines; or other standards and practices, a copy of the table of contents of which shall be provided with the application, and specific portions of which shall be provided upon request by the secretary;

4. the manner and extent to which the applicant adopts and pursues sound policies and practices regarding furthering and not interfering with or impeding coastal conservation, restoration, protection, or management, including hurricane protection and flood control, including with respect to any Comprehensive Master Coastal Protection Plan or any Annual Plan adopted by the Coastal Protection and Restoration Authority and the Legislature under Revised Statutes Title 49, Part II, Subpart A, or any plan or project included in any such Master Plan or Annual Plan;

5. the manner and extent to which the application agrees to permit access to or use of property owned or to be acquired by the applicant, for construction, placement, drainage, flowage, or other purposes necessary or appropriate for any plan or project included in any Comprehensive Master Coastal Protection Plan or any Annual Plan adopted by the Coastal Protection and Restoration Authority and the Legislature under Revised Statutes Title 49, Part II, Subpart A;

6. the manner and extent to which the applicant adopts and pursues policies and practices regarding environmental impacts of oil and gas and other activities on land owned or to be acquired by the applicant, such as requiring such activities to use best available practices regarding environmental impacts, requiring site restoration, using habitat enhancement projects, and other considerations related to environmental protection, conservation, restoration, and enhancement;

7. status of the applicant, as determined by the IRS, as a public charity under 26 U.S.C. § 509 (a) or a private operating foundation with a purpose of land conservation efforts under 26 U.S.C. 4942(j)(3);

8. any other matter that the secretary deems relevant to the application.

D. Extraordinary Considerations Potentially Barring Certification. The secretary may deny certification, regardless of whether the applicant otherwise meets the requirements or considerations of this Chapter, upon determining that:

1. the applicant or any of its officers, directors, or owners has been convicted of any felony under the laws of the United States or any state;

2. the applicant or any of its officers, directors, or owners has been convicted of any crime involving fraud, dishonesty, or misrepresentation under the laws of the United States or any state;

3. the applicant or any of its officers, directors, or owners has been convicted of any crime or found by any administrative agency (after expiration of the time period for any appeal or final determination of any appeal) to have violated any statutory or regulatory provision involving fish and/or wildlife, environmental protection, or minerals under the laws or regulations of the United States or any state;

4. the applicant is insolvent, or there is a significant risk of insolvency within the foreseeable future.

La. Admin. Code tit. 43, § I-4107

Promulgated by the Department of Natural Resources, Office of the Secretary, LR 35:74 (January 2009).

AUTHORITY NOTE: Promulgated in accordance with R.S. 31:149 and R.S. 41:1702.