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Rescuing Private Property Or The Ruination Of Future Generations?

Part III-Long Term Implications

Conservation Easements

Rescuing Private Property Or The Ruination Of Future Generations?

Part III-Long Term Implications

By J. Zane Walley

Article and research funded by a grant from the Paragon Foundation

 

"Private ownership advocates, alert to regulatory takings, appear lulled and beguiled by a modern ritual of property hara-kiri* known as a conservation easement. This freshest destruction of the fundamental stick in our bundle of real property rights is, like hara-kiri, self-inflicted. Willingly, voluntarily and deliberately, landowners -- large in numbers and small in holdings -- are signing away the basic stick that is owner choice of land use and disposition."

Dr. Floy Lilley University of Texas at Austin, Texas

*Hara-kiri: Ritual suicide formerly practiced by Japanese samurai.

 

"A conservation easement is a voluntary legal agreement between a landowner and another party that restricts the development of a tract of land. If permanent, held by a qualified easement holder and for valid conservation purposes, the conservation easement is recognized by the U.S. Internal Revenue Service (IRS) and the landowner may qualify for certain tax incentives.

A conservation easement restricts development of the land. Ownership of land includes a number of legally recognized rights, including the rights to subdivide, sell, farm, cut timber and build. The heart of a conservation easement is the landowner's voluntary agreement to give up one or more of these rights in order to protect a resource or conservation value."

Georgia Environmental Policy Institute

Conservation easements, (CEs) should properly be termed "restrictive covenants" or "land in servitude" because they have little resemblance to the common easements with which most landowners are familiar, such as those for public utilities. The CE expression seems to be one that was invented by the land trust industry to soften the significance of asking a landowner to surrender the most valuable segment of their property rights, the development potential.

Call it what you may; CEs are forever. A property owner must grant restrictive covenants in perpetuity to a federal agency or federally recognized land trust to obtain any federal tax benefits. Landowners who agree to such a contract not only sign away their rights to change the use of the land, but also give away the rights of any future owner. Consequently, the long-term implications are simply forever.

Research on the behalf of the reader is necessary to determine precisely how CEs apply in their respective states. The rules and regulations regarding CEs vary slightly from state to state. Some states such as Wyoming, have adopted codes that provide some protection for CE encumbered landowners. New York and Georgia created bodies of law that diminish the rights of property owners laboring under restrictive covenants.

In general, most states have simply elected to use the Uniform Conservation Easement Act, (UCEA) a document that was created by the National Conference Of Commissioners On Uniform State Laws. UCEA was reviewed and approved by several law schools and received a final stamp of approval from Glenn T. Tiedt, U.S. Department Of The Interior.

Several restrictions placed on private property by the covenants are common to all states. One of those states that, "All owners, (the Grantors) of the lands that are encumbered by a CE must forever continue to execute the contractual conservation practices to the satisfaction of the organization holding the CE, (The Grantees) or they can be sued under a legal standard known as "third-party right of enforcement."

Commonly, CE contracts give Grantees unbounded power in suing Grantors. A sample clause illustrating this is: "Grantee shall be entitled to recover damages for violation of the terms of this easement or injury to any conservation values protected by this easement, including, without limitation, damages for the loss of scenic, aesthetic, or environmental values. Without limiting Grantor's liability therefore, Grantee, in itsí sole discretion, may apply any damages recovered to the cost of undertaking any corrective action on the property."

A clause like this is alarming, but potential Grantors should be acutely aware that CEs may be, and frequently are, transferred to federal agencies such as the U.S. Fish and Wild Service, or federally recognized land trusts like The Nature Conservancy or the Sierra Club.

As environmental codes become more severe, so do the regulations influencing lands that are encumbered by CEs. But in addition to regulatory agencies demanding that a land owner comply, CE lands are subjected to third party scrutiny.

A clause that clearly denotes the sweeping authority of the Grantee to sue the landowner is: "If, at any time, there occurs, or has occurred, a release in, on, or about the property of any substance now or hereafter defined, listed, or otherwise classified pursuant to any federal, state, or local law, regulation, or requirement as hazardous, toxic, polluting, or otherwise contaminating to the air, water, or soil, or in any way harmful or threatening to human health or the environment."

A hypothetical, but likely situation under this clause would occur as follows:

A landowner signs a CE with a small local land trust. That land trust then sells or conveys the easement to a large environmental group such as The Nature Conservancy. Then, in a new regulation, the EPA elevates water quality standards. The landowner must comply with the regulation not only by force of federal law, but also under the pressure of a lawsuit brought by the land trust holding the CE. Since the agreement spells out that the owner is responsible for damages, merely defending such a legal action, much less paying damages, could well bankrupt any owner.

Severe restrictions and predictable financial repercussions critically damage the value of property burdened with a CE and vastly diminish the pool of potential buyers.

Gina Brosig, of the American Farm Bureau Federation sums up the long term implications, "By encumbering the property through such a mechanism, property owners have denied all future owners the right to decide how they wish to use the land. By entering a conservation easement, the private property owner has set the stage for the government to eventually take full possession of the land.

In the next column, Iíll "follow the money" and explain how land trusts are funded and stand to reap huge profits from investing in conservation easements.

To contact the author with your opinions on CEs, email frc@pvtnetworks.net or write, J. Zane Walley, P. O.161, Lincoln, NM 88338. Please visit the Paragon Foundation Website at http://www.paragonpowerhouse.org. To receive the free monthly Paragon Foundation Newsletter call toll free 1-877-847-3443.