Huge Victory for 21st Century ConservationBy: Amos S. Eno
Posted on:01/08/2016 Updated:01/09/2018
Congress makes permanent enhanced tax incentives for conservation easement donations.
Last month, Congress signed into law an incentive supporting one of the most important means of private lands conservation. Through the America Gives More Act, Congress made permanent the enhanced tax incentive for conservation easements, which protect important natural, scenic, and historic private lands from development. The process of creating this permanent incentive for the donation of conservation easements has taken a decade and a half, and I’m proud to say that I have been involved since the beginning.
In the summer of 1999, after giving a lead grant to support the brand new Colorado Cattleman's Agricultural Land Trust (CCALT) while working for the National Fish and Wildlife Foundation (NFWF), they invited me to their summer board meeting in Crested Butte, Colorado. Their Executive Director at the time, Lynn Sherrod asked me to come a day early to meet a lawyer named Elizabeth Paris, who at the time was with a Denver firm and was helping CCALT with rancher easements. I came out, met Elizabeth, who I came to like and admire instantly, and became a big fan of CCALT, which I remain today.
Over a year later, having left the NFWF, and set up LandCAN, I was in the Dirksen Senate Office Building when a woman gave me a holler and ran down the hall toward me – something I had never experienced before or since! It was Elizabeth. After exchanging the “what are ya doing here’s,” I learned she was now clerk of the Senate Finance Committee, chaired by Senator Grassley (R-IA). She asked if I had time for lunch, which I did, so off we went. Over lunch she asked for my help to organize a hearing to expand tax deductions for conservation easements.
During my last five years at NFWF, I became increasingly interested in working with the western ranching community and with forest landowners. I gave grants to the Malpais Group in Arizona and New Mexico, the California Rangeland Trust and to the CCALT. These involvements led me to conclude that we needed more robust financial incentives for easements, which for the past two decades had mostly been practiced by the super-rich for land protection and not for preserving working landscapes.
So when Elizabeth asked, I immediately rolled up my sleeves and made time to help. Several of her committee members – Senator Olympia Snowe (R-ME), Senator John Breaux (D-LA), and Senator Max Baucus (D_MT) – I knew well and we lined up testimonies from witnesses of their respective home states such as Steve Schley, then President of 7 Islands, which manages the Pingree forest lands in Maine, The Montana Land Reliance for Baucus, and Ducks Unlimited for Breaux. I ended up working (pro bono) for almost a decade with the Committee, especially Elizabeth Paris, who is now one of three U.S. Tax Court Judges, and the Committee’s top investigator Dean Zerbe.
I continued to work on increasing tax incentives for the donation of conservation easements for the better part of the next decade. Over the next five years, many bills were introduced and committee hearings held, but it wasn’t until 2006 that the tax deduction for qualified conservation easement donations was increased with passage of the Pension Protection Act, signed by President George W. Bush.
An expanded tax incentive for conservation easements may have been passed earlier, but an article published by the Washington Post in May of 2003 critical of the Nature Conservancy and its finances, followed by an article in December of the same year on the abuse of conservation easement deductions generally, generated scandal that led to investigations by the Senate Finance Committee, House Ways and Means Committee, and the Internal Revenue Service into the use of conservation easement deductions.
The scandal slowed the process of enacting an enhanced conservation easement incentive, but it also strengthened abuse protections in the final product, which increased the tax deduction for qualified conservation easement donations from 30 percent to 50 percent of the taxpayer’s adjusted gross income for the years 2006 and 2007. Most importantly, it also raised the deduction for qualified farmers, ranchers, and woodland owners to 100 percent of adjusted gross income.
Many of people making a living off of the land are often land rich but cash poor, meaning they make much less from farming, ranching, or forestry than the land on which they do it is actually worth. This wealth discrepancy can pressure landowners to sell to developers, a pressure which the enhanced deduction is designed to alleviate.
After the initial passage of the enhanced incentive, Congress extended the incentive three times, each for two years. However, due to congressional gridlock there was no extension in 2014, illustrating a problem with short term extensions: They rely on consistent congressional approval at a time when Congress is plagued by inaction.
By making the incentive permanent with the passage of the America Gives More Act last month, retroactive to January 1st, 2015, Congress preserved one of the most important tools in the conservation of private lands.
As Senator Stabenow (MI), a lead sponsor of the conservation provision, said, “Our farmers and ranchers are some of the best stewards of our land…That’s why I led a successful bipartisan effort to make this important deduction permanent, so more landowners can take part in conserving our land, water and wildlife habitats. This is a win for taxpayers, a win for farmers, and it’s a win for our environment.”
I think this will be the most important propellant for conservation in the United States for the next several decades of the 21st century.