4.8.2. Highest and Best Use and Natural Resources.The mere presence of minerals or other resources in a property does not allow the appraiser to forego a careful analysis of highest and best use (discussed in Section 4.3).969 “The mere adaptability of [a mineral] deposit to a use does not establish a market.”970 Federal courts require “a showing of some sort of sort of market, poor or good, great or small, for the commodity in question before the quantity and price of the commodity or substance may . . . be used as a factor in the expert’s opinion . . . .”971 

In valuing property with mineral or other subsurface resources, appraisers must carefully distinguish between a highest and best use of mineral extraction972 and a highest and best use of mineral exploration.973 “Where a proffered highest and best use is extraction of some sort of mineral, the landowner must show not only the presence of the mineral in commercially exploitable amounts, but also that a market exists for the mineral that would justify its extraction in the reasonably foreseeable future.”974 For example, a highest and best use of quarrying requires supporting evidence that is 

specific as to the suitability and availability of the property for a quarry, considering all factors, such as . . . plant expense, operation expense, transportation, and the presence or reasonable probability of a commercial market, . . . that would have affected the market price of the property on that date.975 

On the other hand, a highest and best use of mineral exploration requires a reasonable probability that market participants would attempt to explore the property for such a use—and would pay more for property on the date of value with such a prospect than without.976 That reasonable probability can be demonstrated “from the fact that such prospects are the constant subject of barter and sale.”977 

With a proposed highest and best use of holding for future mineral extraction, the timing of future use and its relation to current market value (i.e., as of the date of valuation) are critical.978 Similarly, extraction of a mineral or other resource cannot be considered as a highest and best use absent “proof that it would be legally permissible to exploit that resource” in the reasonably near future.979 Accordingly, the First Circuit recently held that sand extraction could not be considered as a highest and best use because there was no proof of “a reasonable probability that the property would be rezoned or that a variance could have been obtained in the near future” to make sand extraction legally permissible.980 

Moreover, to prevent confusion, injustice, and improper duplication of value, market value cannot be premised on inconsistent or incompatible uses.981 Of particular importance in properties with minerals or oil and gas resources, “[t]he fact that the minerals, if any, are located beneath the surface of the parcels condemned cannot be ignored.”982 Thus, while a parcel’s surface might be suitable for subdivision purposes and the same parcel’s subsurface oil and gas resources suitable for extraction, “[c]ertainly, the surface could not be used for a residential subdivision if oil wells were drilled and producing. These are inconsistent uses.”983 This would not prevent a well-supported determination that different parts of a property have different highest and best uses—as long as those uses are compatible and consistent (for example, residential or commercial use along highway frontage and agricultural use for the rear land).984 To avoid improper duplication of value, a determination of multiple highest and best uses must not (1) attribute two highest and best uses to the same acres, or (2) accept conflicting and incompatible uses.985