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Conservation Easements

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More than 50 million acres across the United States – including 295 acres at the Smith Family Farm in New Haven, Vermont – are currently protected by conservation easements. Photo courtesy of the Smith Family Farm.

How Long Is Forever? And Can Anything Be Done in the Meantime?

My wife and I own a 100-acre farm in eastern Vermont, where we raise and sell lambs, chickens, vegetables, honey, maple syrup, firewood, and sawlogs. The land has been in commercial production for more than two centuries. The 1850 census of agriculture lists wool, butter, cheese, honey, and maple sugar (not syrup) as the main cash crops from our farm. In honor of this history, and with an eye to the next two centuries of production, my wife and I donated a conservation easement on the farm to our local land trust nearly a decade ago.

A conservation easement is a legally binding agreement that protects land from future development. In our case, the easement allows the land to be used for farming and forestry by ruling out future house lots and driveways. Easements like this have become increasingly popular in recent decades and more than 50 million acres across the United States are currently protected by them, according to the nationwide Land Trust Alliance. Here in the Northeast, we’re leading the charge, with nearly six million acres protected. Maine has a million acres under a single easement.

The easement on our land clearly delineates where we can farm and where we can build barns and agricultural structures. It talks about how our proximity to federal land increases the farm’s scenic value. It also focuses on wildlife habitat, the importance of open space, and the value of farming for the community.

All of which is well and good, except for one thing: what happens if these things change? What happens if the habitat loses its value and the wildlife move on, perhaps pushed by a changing climate? What if, in order for the farm to be economically viable in the twenty-second century, the rolling pastures need to be terraced and leveled out?

The “forever” clause that makes conservation easements so popular and powerful also means that every conceivable scenario under which they might be modified will some day come to pass. Many such scenarios already have, and states and land trusts across the country are wrestling with how to address them. The northeastern states are pursuing independent versions of a solution, while in Washington D.C. the Internal Revenue Service is searching for a solution that would apply to all 50 states.

Making modifications to something that is viewed as permanent is a touchy subject. When proposed legislation to establish a uniform amendment process in Vermont hit the state’s newspapers last year, the public’s response was a general astonishment that amendments were ever permissible. This despite the fact that land trusts across the country have been granting amendments, if not routinely, then on an as-needed basis for decades. Land trusts were trying to solve a problem that, it turns out, the public didn’t even know existed.

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The Cook family signs a conservation easement to their land in Bradford, Vermont. Conservation easements are legally binding documents; their permanence makes them popular and powerful, but also potentially problematic. Photo courtesy of the Upper Valley Land Trust.

How Easements Work

Conservation easements are public-private partnerships that first came into general use in the 1980s as a way to compensate landowners for protecting values that their lands provide to the public, such as scenic beauty or wildlife habitat or clean water. Previously, the public’s only option had been to purchase such land outright, creating a national forest or state park, for example. But purchasing land is expensive, governments move slowly, and lots of landowners have no desire to sell. Under a conservation easement, the public purchases only the values that they are interested in, while the landowner retains the right to do everything else.

Public benefits might include the preservation of wildlife habitat; the protection of lovely scenery; the opportunity for outdoor recreation and education (on easements that include public access to the land); the conservation of natural resources needed for farming and forestry; and a reduction in governmental services that would otherwise be needed to support developed land. All at much less cost than outright land ownership.

There are private benefits for the landowner, as well, not the least of which is financial. Public funds can be used to purchase easements, or a landowner can donate an easement in exchange for an income tax deduction. There is the opportunity to help meet community goals without having to sell the land altogether, plus the ability to make investments for the long term – in a barn, perhaps, or in timber stand improvement – without having to fear that those investments will be worthless if the land gets developed. Landowners generally do not receive a property tax deduction for having an easement on their land, in part because such a deduction would be difficult to calculate and in part because current use programs already generally adjust land values to market conditions.

Regardless of how an easement is acquired, it is then held in perpetuity, either by a public agency or by a nonprofit charity set up for just that purpose, called a land trust.

Can An Easement Be Amended?

“The regulations specifically allow for extinguishment [of an easement] when there’s impossibility or impracticality,” said Karin Gross, supervising attorney in the IRS Office of the Chief Counsel, speaking about conservation easements last November at the Vermont Law School. Extinguishment, which is to say getting rid of a conservation easement altogether, is only allowed in the rare event that the terms of an easement can no longer be enforced, for example, if floodwaters washed a farm field away or destroyed rare wildlife habitat along a riverbank. In such a case, the courts would decide how to protect the public’s interest in the conserved property, similar to the way they’d decide what to do with a hypothetical university endowment at a school that closed its doors. Conservation easements can also be extinguished through eminent domain, since whatever governmental body is deciding to take over a parcel of land is, by definition at least, acting in the public’s interest.

“But there’s nothing at all in the federal statutes or regulations that talks about amendments,” continued Gross. “So the question comes up: can you have an amendment?” Practically speaking, yes. Land trusts are already granting amendments, typically to correct administrative mistakes (typos in the document, hand-drawn maps that misrepresented property lines) or to increase the strength of the original easement.

Our farm in Vermont provides a potential example of the latter. My wife and I reserved the right to build a seasonal cabin somewhere on our property at any time in the future. If we were to decide to give up that right and never allow a cabin to be built – a modification that would strengthen the protections that our easement gives to wildlife and scenic value – our land trust would likely agree to such an amendment.

But here’s where it starts to get sticky: who gets to decide what constitutes ‘strengthening the protections?’ Who gets to decide what’s best for wildlife and what’s best for the scenery? My wife and I? Our land trust? Our state? The IRS?

State-By-State Solutions

Conservation easements are enabled by state statute, and since laws vary from state to state, the northeastern states are pursuing amendments in different ways. The most comprehensive process is in Massachusetts. “Amendments have to meet specific criteria,” said David Graham Wolf, deputy director of the Mount Grace Land Conservation Trust in the central part of the state, “and there can’t be any loss in conservation value. Both the land trust and the Department of Environmental Protection need to sign off on any amendments.” Local conservation commissions and selectboards also review proposed amendments, because in Massachusetts, unlike any other state in the union, these local boards are signatories to the original conservation easement. “The system works pretty well,” said Wolf.

The Massachusetts approach ensures that interests beyond those of the landowner and land trust are represented. Everyone from a local conservation commissioner to a state biologist has the chance to weigh in. But for states not accustomed to this degree of local oversight, Massachusetts’ approach seems onerous. Maine, for example, explicitly ruled out local government participation for fear that requiring landowners to appear before their local selectboards would greatly diminish the appeal of conservation easements in the first place.

Maine and New Hampshire follow a more judicial approach. “The attorney general has standing to review easement amendments,” said Jane Arbuckle, director of stewardship for the Maine Coast Heritage Trust (MCHT). “At this point, there’s a clear mandate for any land trust that’s considering an amendment that they feel might not maintain the intent or the conservation values of the easement to take it to court.” Added Arbuckle, “If we have to run an amendment by the AG’s office, it’s a big deal for us. It puts our reputation on the line.”

Involving the court system has the advantage of meeting the IRS’s desire for a clear judicial process. Questions about conservation value, though, may require outside expertise, and Arbuckle described a situation that occurred prior to Maine having its current review process in place. “We had an easement on a coastal island, with a building envelope [reserved house site] on it. It was one of our older easements. Everything was fine until the bald eagles showed up. They nested right in the middle of the proposed building envelope, which the owners then wanted to develop.”

The easement was clear that its primary purpose was to protect wildlife on the island. But suddenly, adherence to the letter of the easement would have meant bulldozing the eagle nests. “Working with Fish and Wildlife, we identified an alternative building site. We amended the easement and put the envelope in a different place. It was smaller, it was agreeable to the landowner, and we added additional restrictions. Then we got an appraisal that showed that the amendment wasn’t creating private value for the landowner.”

Private vs Public Benefit

The question of private value is a big one. If landowners are taking tax deductions for donating an easement, or receiving public money for selling an easement, and then are turning around and seeking amendments that allow them to develop the property anyway, the public is being defrauded. “Congress was worried about abuse,” said Karin Gross of the IRS, noting that there were 170 easement cases in tax court in 2013 alone. “A donated easement is not simply an agreement between the donor and the donee. The federal government is very heavily involved because it is subsidizing it.”

But what happens in cases less clear than that of Maine’s eagles, where the landowner and land trust don’t agree, where expert testimony from biologists or other conservation experts might be required, where a post-amendment appraisal is too expensive, or where neither the landowner nor the land trust have the wherewithal to pursue an expensive court decision? Gross recognized that the tax code may need clarification to reflect some of these scenarios. “We need suggestions for how we can make this work within the framework of the statute,” said Gross. “I’ve heard scenarios that sound very sympathetic for amendments, in which amendments would clearly benefit conservation. And yet there’s nothing that the IRS has – there’s no policy and nothing in writing – that says that amendments are OK.”

What Are Easements Protecting, Exactly?

The language that’s used to talk about conservation easements is part of the problem. We say that easements are about protecting land, but in actual fact they’re about protecting relationships that surround land. The easement on our farm in Vermont makes little mention of the land itself – the mineralogy of the soil, the depth to bedrock, the hydrological regime, or how the land came to be created when North America crashed into Eurasia a third-of-a-billion years ago. But it talks at length about agriculture, about maintaining the possibility of a long-term, continuous flow of forest products, about the beauty of the scenery around the farm, about public recreation, and about the evolving needs of the animals and plants in residence. In short, it talks about a bunch of relationships, some of which are economic, none of which are static, and all of which are subject to the eye of the beholder.

An amendment process that’s too subjective will allow opportunistic landowners (and land trusts) a feast of private benefits, while one that’s too rigid to accommodate changing relationships, both natural and human, risks souring the public on conservation easements. Imagine the public’s reaction if a judge or bureaucrat in a distant jurisdiction, perhaps one with no knowledge of conservation or the land in question, denied an amendment that was widely desired by experts in a local community. Easements could end up being seen as tools that discourage conservation, not promote it.

New York, like most states, takes a less centralized approach to easement amendments than Massachusetts, New Hampshire, or Maine. It’s primarily up to the landowner and the land trust to work things out. “In New York State, we do not need to get attorney general approval,” said Heidi Block, conservation easement stewardship manager for the Columbia Land Conservancy (CLC), a land trust in the Hudson River valley. “We get board approval. We have our own attorney review it, and we look at a whole series of considerations around any potential amendment. The idea that easements are permanent is something that we adhere to very closely, and we work hard with landowners to find a way, so that an amendment doesn’t have to happen if possible.”

“The process is working for us,” said Block. “If [a process] came up statewide, we would definitely participate, but New York is so huge, I’m not sure that what works here in Columbia County would work well in western New York.” CLC, for example, is focused on conserving active farmland, and they’ve developed a different easement template for farmland than for other types of projects. “We have our ag model and what we call our scenic resources model, and while a lot of things are similar between them, we do provide more flexibility in the farmland model for commercial ag structures and those sorts of things.”

What About Economic Considerations?

The Vermont Land Trust (VLT) also allows more flexibility when it comes to working lands. “Protecting farms is a much bigger part of what we do than it is in some other places,” said Gil Livingston, president of VLT. “But it’s nuanced. We certainly take many easements whose primary goal is habitat protection, and we’re much less inclined to consider amending an easement whose primary purpose is natural resource protection, where there’s not an economic piece. Whereas the farm easements we take, and the larger forest easements, recite specifically in their purposes that supporting the farm- and forest-based economy is a driver of the easement.”

Livingston said that for VLT, one of the most frequently requested amendments is a reconfiguration of a farmstead complex. “The farm economy, the new enterprises, the innovation, the methods of production, the types of on-farm processing, the scalability of that – all of that’s changing really quickly in the ag sector.” Livingston added, “We don’t want to disadvantage farmers or foresters who conserve their land, who are in a competitive economic environment.”

The federal tax code says, “Conservation purposes means…the preservation of open space (including farmland and forest land) where such preservation is pursuant to a clearly delineated federal, state, or local conservation policy, and will yield a significant public benefit.” Vermont’s state and local governments have numerous such policies, believing that keeping farmers on farms and loggers in the woods is the most efficient way to conserve undeveloped land. This might seem odd from, say, a Midwestern perspective, where conservation easements are sometimes used to prevent farmers from plowing up sensitive areas, but it follows a long tradition in Vermont, where the landscape and economy are seen as inseparable. Said another way, if farming and forestry were to vanish in Vermont, recreation, outdoor education, wildlife habitat, and open space – the four values that the federal code intends to protect – would be in big trouble.

Vermont is one of the states where the attorney general’s office has not historically been involved in land conservation issues and where it lacks conservation expertise. Livingston looks to Montana as a possible model for Vermont. There, the state’s land trusts formed a coalition, adopted the procedural recommendations of the national Land Trust Alliance, created a panel for reviewing amendments, and also set up a statewide registry (similar to Maine’s) where the general public can access easement documents and related amendments.

Walking the Line

To some extent, the solution to the amendment issue depends upon which problem you’re most worried about. Fraud? If so, the courts and the attorney general look good. Changing circumstances, avian or entrepreneurial? Then natural resource professionals seem like a logical choice.

Jeanie McIntyre, president of the Upper Valley Land Trust (UVLT), whose service territory straddles the Connecticut River and includes two states, feels the lack of a solution acutely. McIntyre was part of a coalition that helped formulate New Hampshire’s amendment procedures and has participated in efforts to do so in Vermont. She sees the judicial approach as being easier to harmonize with the IRS’s desires, but recognizes that in order for the judicial approach to work, “the land trust community needs to help develop the capacity of the judicial branch to be able to understand the kinds of issues we face and help us resolve them in a way that is cost effective.” She pointed out that “this is much easier to do in small states, especially small states with high densities of land that have already been conserved.” New Hampshire and Vermont, for example.

McIntyre mentioned a 20-year-old easement held by UVLT on forestland in Vermont that included a future house site right in the middle of the property, on an old log landing with a view. Both the owner and the land trust now recognize that, from a habitat perspective, the interior site was a poor choice, yet no other potential house site was outlined in the original easement. The owner has subsequently purchased adjacent land, which he proposes to add to the easement in exchange for allowing a new house site to be created in the previously protected area. Should this be allowed? “If there were some sort of third-party review that was independent of the land trust and the donor, that would be helpful,” said McIntyre. “Some level of science being involved wouldn’t be a bad thing. Perhaps the state agency of natural resources, or some authority where there’s something objectively that could be measured, that would go a long way.”

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Photo courtesy of the Upper Valley land Trust.

It’s a Good Problem, But it’s Still a Problem

The amendment discussion is a sign that the land trust community is coming of age, entering a new phase, in which caring for existing easements is just as significant as acquiring new ones. With millions of acres already protected nationwide, and with some land trusts now approaching a half-century of experience, the amendment debate indicates just how successful and important conservation easements have become. If easements weren’t popular, amendments wouldn’t be a major issue.

Yet they are. As Vermont’s experience last year demonstrated, the public is taking notice. If there isn’t a process in place that’s rigid enough to protect the public interest yet flexible enough to honor the easement’s original intent in the face of an ever-evolving world, conservation easements will cease to be useful. Public confidence and funding are what make conservation possible in the first place.

“There’s a reputation of integrity to uphold among the land trust community, and it’s really important for land trusts to do that on both sides. To be fair and honest with the donor and to be upholding forever whatever the restrictions are,” said Jane Arbuckle of the Maine Coast Heritage Trust. “In the land trust community, there are really valid, completely different opinions. It’s hard that there’s not a common belief and understanding.”

What might such a common understanding look like? From the states, a recognition that the IRS has jurisdiction and, unless donated and purchased easements are to be handled differently from one another (a confusing outcome that nobody seems to want), there will need to be judicial review at some level. From the IRS, clarification that amendments are both inevitable and necessary, and a recognition that individual states have latitude in how they approach the issue. As long as the public interest is protected through some sort of third-party review, a variety of approaches might work, be they executive and legislative (Massachusetts), primarily judicial (Maine and New Hampshire), or review by subject-matter experts (Vermont and New York).

Jeanie McIntyre, of the Upper Valley Land Trust, summed up the current state of affairs: “It’s a little bit unsettling to think of another five to seven years going by without knowing how this issue is going to be resolved.”

Discussion *

Apr 01, 2015

Dear Chuck,

This issue has been an interest of mine for over 30 years and I was a founding board member of a land trust in Maryland in the early 80"s.

Historically,  courts have not recognized the public interest in upholding wills and land restrictions prior to easements and many of the most important gifts of will were undone by the courts.

Belts Woods in DC was a 500 acre virgin forest given with the sole purpose of preservation and then destroyed by the Episcopal Church with judicial help that did not recognize public benefit. So the record is not good.

As for experts, they are easy to buy - thus the invention of land trusts was a huge step forward.

Maryland was a leader in land trusts and has written easements with some flexibility in mind as to exemptions for agricultural operations, like grading.
Some house sites are not designated but subject to future siting with general guidelines. (Of course the number of allowed house sites can always change as long as it is fewer.  This would not be an amendment as it could be considered an additional easement as in your cabin case.)

As far as I am aware there are almost always federal gift tax incentives in a donated easement.

We are working on easement wording for conservation burial grounds here in Maryland.  Although best sites are already under easement, we are never proposing to change existing wording - only to find unprotected property and write a new easement allowing this almost zero impact use.

The Vermont effort last year on changing conservation easements was extremely ill-conceived and rightly abandoned.  It would have been a devastating blow to other states and a bad precedent for public trust in conservation easements.
I hope the next effort is a bit more careful.

Sincerely,  Doug Carroll

douglas g carroll
Mar 19, 2015

MJ Grace: Your point about tax benefits is an important one. Some easements are purchased using public funds, some are partially underwritten through income tax deductions, and some involve no public money at all. None that I know of include property tax reductions.

Everyone I spoke with would agree with you that public money necessitates public review. But what about the easements that don’t involve public money? Should these also follow the same review process for simplicity’s sake, or would they benefit from being treated as a different type of easement with different amendment procedures? To date, the conservation community has preferred to treat both types similarly, though that could change depending on how the IRS decides to handle the amendment question.

-Chuck Wooster

Chuck Wooster
Mar 12, 2015

The way I look at it, if either or both parties have asked for and received tax benefits due to the easement (e.g. exemption from property taxes granted to qualified organizations for the rights they own) it is unfair for the parties to then amend the easement without public input as the public has given up those taxes for a period of time. 

MJ Grace

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