Such funds as may be appropriated shall only be used by the department of land and natural resources (1) to acquire by purchase or exchange any land, or any interest in any land, within an area which the department has, pursuant to § 183-31 determined to be a watershed and (2) to acquire by condemnation forest reserve easements in any such area; provided that no land shall be subject to such condemnation by the department if the owner thereof, prior to commencement of condemnation proceedings, has surrendered in perpetuity the care, custody, and control of the land to the State as a forest reserve; provided that no funds appropriated by this part shall be used to condemn all or any portion of, or any interest in, any parcel of land now held in fee simple by one or more persons, which parcel has a total area of twenty acres or less, if on July 1, 1949, any portion of the parcel was improved or used for residential purposes, unless the lot or lots are, after July 1, 1949, subdivided for transfer of title into lot sizes of less than one-third acre, in which case all the lots of less than one-third acre may be condemned, and the prohibition thereof shall also be applicable to any lots into which any such parcel shall be subdivided whether or not the lots after the subdivision shall be improved or unimproved. Nothing herein shall prevent the department to accept surrenders for a term of years as provided in § 183-15.

The term “forest reserve easement” as used in this part means and includes the right to the possession and control of land for the purposes of protecting and promoting forest growth thereon and of protecting the surface and underground waters from pollution or contamination, including, without limitation to the generality of the foregoing, the right to exclude the owner in fee (except as hereinafter provided) and all others from the land; provided that the term shall not include any water right, nor shall it authorize the department to deprive the fee simple owner or the owner’s lessee of the right to enter upon the owner’s land for the purpose of taking, developing, or storing water, or for any other purpose incidental to the full use and enjoyment of the owner’s water rights, or of any other rights in the land, provided reasonable means be taken to prevent undue destruction of forest cover and pollution or contamination of water by such activity.

When any forest reserve easement is acquired, the department shall protect and promote the forest growth thereon to the end that the water rights of the fee simple owner will not be impaired.