Conservation Easements: Now More Than Ever - Overcoming Obstacles to Protect Private Lands

Draper, Adam E., Environmental Law

I.  INTRODUCTION
II. BACKGROUND
    A. Land Losing Ground
    B. Why Conservation Easements?
III. STATUTORY AUTHORITY FOR CONSERVATION EASEMENTS
    A. Federal Legislation
    B. State Legislation and the Uniform Conservation Easement Act
    C. A Sampling of State Conservation Easement Enabling Legislation
       1. Maryland
       2. New York
       3. Oregon
       4. Alabama
    D. Federal and State Legislation Gives Life to Land Trusts

IV. LEGAL AND POLICY CONCERNS
    A. Termination Methods
       1. Eminent Domain
       2. Abandonment
       3. Doctrine of Changed Conditions
       4. Marketable Title Acts
    B. Complications for Landowners
       1. Valuation Conflicts
       2. Concerns Over Local Government Commitment
       3. Incentive Limitations
    C. Conservation Easement Holder Liability Under CERCLA
V. ADDRESSING CONCERNS
    A. Ensuring an Effective Conservation Easement
    B. Taxes: Allaying Concerns and Enhancing incentives
VI. CONCLUSION

I. INTRODUCTION

Conservation easements are one of the most important and fastest growing instruments used to protect private land in the United States. (1) Even so, conservation easements must assume an even larger role in private land conservation due to increasing land turnover and urban sprawl. (2) To this end, increasing their appeal and effectiveness is essential. (3) Further population growth is inevitable, (4) and with the nation as a whole growing older, aging private landowners must decide what is to become of their land. (5) One expert anticipates that "between 2005 and 2020 many millions of acres of farmland, forestland, ranchland, wildlife habitat, of important family land will change hands and potentially change use." (6) More than any other land management tool, a conservation easement is best suited to protect these private lands. (7)

A dramatic example of the capacity of conservation easements to protect valuable private lands is evidenced by the American Land Conservancy's pursuit of a section of 18 miles of California coastline owned by the William Randolph Hearst empire. (8) The goal is to establish a conservation easement on the land while allowing the Hearst Corporation to retain ownership of the property. (9) Acquisition of the development rights to this land would preserve in perpetuity a "vast, unspoiled tract" of ecologically rare and vital coastline. (10) This is a perfect example of how a conservation easement can protect valuable private land under increasing development pressure. (11)

A conservation easement is a legal agreement in which a landowner agrees to permanently restrict the development and possible uses of the land in furtherance of conservation values. (12) A landowner creates an easement by conveying a deed (13) to a qualified easement holder, such as a government agency or a qualified tax exempt land trust. (14) While changing landowners leads to changes in land protection and land use in some instances, general land-use trends also provide the impetus for the use of conservation easements.

Urban sprawl is the spread of population and associated infrastructure away from metropolitan areas and into surrounding lands. (15) Many communities are wrestling with preserving natural resources, wildlife, farmland, and open space while housing developments and new roads push farther from urban centers to accommodate people seeking a suburban lifestyle. (16) Instead of metropolitan city centers, suburban fringe areas bore the brunt of growth in the United States during the twentieth century. (17) As a result, natural resources, open space, and traditional land uses faced much pressure. (18) In the quest to preserve open space and existing land uses in the face of continued growth and changing landowners, conservation easements must maintain a leading role. (19)

Ultimately, the private landowner decides whether an easement is placed on the land; therefore, incentives encouraging use of conservation easements are vital. (20) Various forms of federal, state, and local legislation facilitate the use of conservation easements. (21) Essentially, federal laws provide that a permanent conservation easement qualifies landowners for certain tax benefits. (22) However, it was left to state law to provide solutions to common law problems posed by conservation easements. (23) Although almost every state now has a statute enabling conservation easements, (24) landowners and easement holders alike must familiarize themselves with potential limitations on the effectiveness and popularity of conservation easements. Unfortunately, readily available resources are in short supply for private owners wishing to ensure their land is protected long after they are gone. (25)

Conservation easements can fail to meet landowner expectations or lose their appeal in the face of various adverse scenarios and shortcomings. (26) While not addressing every potential problem conservation easements may entail, this Comment attempts to apprise easement donors and holders of several potentially threatening situations and flaws in tax incentives. Conservation easements can lose effectiveness in the face of eminent domain, abandonment, and other scenarios. (27) Another concern is the prospect of liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). (28) Potential conflicts can arise over easement appraisals. (29) Tax incentives are a contradiction in terms for low to moderate income landowners wishing to donate highly valuable conservation easements. (30) This Comment discusses available and prospective solutions to these problems to encourage private landowners, in the face of possible roadblocks, to focus on what is needed to ensure a successful, long-term easement. (31)

Section II provides background on conservation easements, briefly describes the threat to open space and existing land uses created by increasing population and development, and explains why conservation easements are well suited to alleviate this threat. Section III discusses the statutory basis for conservation easements, including state enabling statutes intended to assuage the wary landowner, and briefly touches on the importance of land trusts in making the system work. Section IV alerts landowners and easement holders to several legal and policy concerns creating barriers to the effectiveness and appeal of conservation easements. Section V investigates available and potential resolutions to these concerns. Section VI concludes by encouraging increased use and understanding of conservation easements, and advocating for enhanced incentives in coming years as private land is subjected to increased turnover and further development pressure.

II. BACKGROUND

Although not known by the term at the time, the first American conservation easement was implemented in the 1880s in the Boston area with the goal of permanently protecting parkways. (32) Conservation easements were formally developed over the last 45 years with the specific goal of preserving open space and scenic and historic areas. (33) Beginning in the 1980s, conservation easements rapidly gained popularity as land trusts began to gain a foothold in the conservation easement movement. (34)

Initially, the legal community viewed conservation easements with skepticism because they were not typical easements. (35) They are primarily negative easements, run in perpetuity, are transferable, and are usually "in gross" (benefit the public at large as opposed to adjacent property owners). (36) A negative easement gives the easement owner the right to prevent the landowner from doing something on the servient land, and conservation easements prevent uses incompatible with conservation values. (37)

Restrictions on land titles are not generally favored by common law. (38) Traditionally, English or common law courts only recognized four types of negative easements. (39) The right to prevent development in order to conserve land was not one of these four types. However, in the United States, conservation easements were recognized as a legitimate form of negative easement, (40) and have grown into the most vital tool for protecting private land in the nation. (41) To create a conservation easement, a landowner protects a particular area of land by transferring a portion of his property rights to a third party via a written deed, and the third party becomes responsible for meeting the conditions of the easement. (42)

A. Land Losing Ground

Protecting and conserving private land has become increasingly important as a rural lifestyle supported by an urban income has become the new American dream. (43) Many communities across the United States seek ways to maintain open space and existing land uses in the face of spreading houses and highways that accommodate the desire of residents to live a suburban life with the amenities of an urban center. More than any other factor, urban sprawl is responsible for the disappearance of open space and farmlands. (44) Urban sprawl is "'low-density development on the edges of cities and towns that is poorly planned, land-consumptive, automobile-dependent[, and] designed without regard to its surroundings.'" (45) The consequences of urban sprawl include increased air and water pollution, loss of wildlife habitat, loss of farmland and timberland, and inflated transportation and infrastructure spending. (46) Sprawl impacts environmentally sensitive areas that provide invaluable functions such as flood control, groundwater recharge, and wildlife breeding grounds. (47) Often unpublicized and unnoticed despite their vital roles, these functions are gaining appreciation on a large scale. (48) At the same time, many suburban communities have benefited from sprawl and remain interested in continued growth. (49) Nonetheless, sprawl creates serious problems when it competes with open space and existing land uses. (50)

More than eight square miles of natural lands are lost in the United States each day. (51) While "core city" growth remains stagnant or even declines, the overall populations of metropolitan regions continue to grow. (52) This trend is especially disturbing considering the low-density settlement patterns evident in outlying ("fringe") areas of metro regions. (53) Low-density development means that "the land area covered by the fringe increases dramatically and the amount of open space declines in tandem." (54) The amount of land per person for new housing has almost doubled in the last twenty years. (55) Developed land increased by almost thirty million acres between 1982 and 2001. (56) Several factors influence this trend away from urban centers, including an abundance of land, technology allowing people to live and work anywhere they want, a new post-industrial era favoring horizontal buildings or linear designs, and the ever-increasing use of automobiles. (57) The political power of development interests, legislation facilitating the building of single-family homes, and rampant consumerism only pour gasoline on the fire. (58)

Conservation easements ease the burden on landowners. Landowners are under constant pressure to yield to increasing demand for more housing, transportation, and business space as the population continues to spread out from urban centers. (59) The lure of deep-pocketed developers is hard for landowners to resist as population increases around them. (60) Landowners are also confronted with rising property taxes to pay for increasing public service demands such as schools and roads. (61)

Meanwhile, the American public expresses an overwhelming desire to maintain existing land uses such as farming and forestry, and to preserve what natural resources and open space remain in and around metropolitan areas. (62) In 2001, 137 of 196 local and state ballot measures promoting open space were approved by voters, resulting in almost $1.7 billion of funding for open space conservation and parks. (63)

Growth trends and the various idiosyncrasies of the American lifestyle point towards the continued proliferation of sprawl. (64) Preserving open space has proven difficult, with many approaches, ideas, and regulations falling by the wayside. (65) Anticipating and planning for sprawl are essential. Conservation easements can be one of the most effective tools to limit the effect of sprawl on open space and traditional land uses. (66)

B. Why Conservation Easements?

Conservation easements provide an attractive option for landowners, government, and conservationists in the search for an effective, long-term method of protecting land. (67) Among other benefits, the landowner retains ownership of the land, the easement holder avoids the cost of purchasing the land outright, and the land itself is guaranteed to retain its conservation values. (68) Perhaps most appealing to all involved are the flexibility and diversity of conservation easements. (69) Easements are generally more acceptable to private citizens than zoning or outright purchase because an easement allows the individual landowner to retain a majority of the "sticks" in the property rights bundle. (70) Essentially, the "private, voluntary aspect of an easement" is what makes it different from other resource protection tools less favored by private landowners. (71)

Land-use restrictions are particular to each easement and are designed with the specific property and interests of the landowner in mind. (72) For instance, an easement designed to protect an unspoiled natural area will be more restrictive than one designed to maintain existing farm land. (73) Regardless, continuation of traditional uses of the land usually is allowed by even the strictest easements. (74) However, no matter how much government or conservationists encourage the use of conservation easements, ultimately the private landowner decides whether an easement is placed on the land. (75) Easements are purely discretionary; they cannot be imposed on landowners by anyone--including government. (76) This creates the need for incentives to donate or sell a conservation easement.

Numerous incentives encourage private landowners to donate or sell conservation easements on their land. The main reason people grant an easement is that it protects their property forever, regardless of what happens to the grantor. (77) Additionally, the underlying property remains in private ownership. (78) Easements are tailored to the particular situation of the individual property and landowner. (79) Another incentive is that easements can result in monetary gain, via either outright sale of the easement or tax benefits associated with donation of an easement. (80) Potential benefits can be found in possible savings on some or all of the following: estate, property, gift, and federal and state income taxes. (81) In some instances, granting an easement and staying on the land can be far more lucrative than simply selling to the highest bidder. (82) Conservationists and government alike hope the combination of these incentives are enough to overcome the influence of money-wielding developers eager to turn farms and fields into housing developments and strip malls.

Governments encourage the use of conservation easements for many of the same reasons landowners are receptive to donating or selling them. The government reaps financial benefits because it gets the land protection the public seeks without paying to purchase the land outright, while the property remains on local tax dockets. (83) When purchasing land outright, the government loses a source of property taxes since the land is no longer privately owned. Additionally, the government is not forced to wield a heavy hand over private interests as it is when utilizing eminent domain or zoning restrictions. (84)

Conservation easements are a much less threatening land-use control tool, and their "private, voluntary aspect" separates easements from other land-use tools. (85) In slicing a segment of interest from the whole, land-use control is maintained by limitation. (86) Citizen concerns over government impinging on private property rights are significantly dampened when the action is voluntary and the landowner retains a majority of the sticks in the property bundle. In an effort to defuse a situation potentially fraught with tension between the government and a public vigilant in its protection of private property, the government should be more than willing to promote the use of conservation easements to protect open space and existing land uses.

III. STATUTORY AUTHORITY FOR CONSERVATION EASEMENTS

Several states enacted legislation regarding conservation easements prior to any federal action. (87) In 1976, federal legislation established conservation easements as a tax-deductible land conservation instrument. (88) Federal legislation provided monetary incentives while state legislation established conservation easements as valid property interests. (89)

A. Federal Legislation

Congress enacted the first …

Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: Conservation Easements: Now More Than Ever - Overcoming Obstacles to Protect Private Lands. Contributors: Draper, Adam E. - Author. Journal title: Environmental Law. Volume: 34. Issue: 1 Publication date: Winter 2004. Page number: 247+. © 1999 Lewis & Clark Northwestern School of Law. COPYRIGHT 2004 Gale Group.

This material is protected by copyright and, with the exception of fair use, may not be further copied, distributed or transmitted in any form or by any means.