Politics & Policy

Financing the Government Land Grab

Beware the farm bill's conservation tax breaks.

Most landowners don’t know it, but a largely unnoticed section in the $300 billion farm bill — just completed by Congressional negotiators and headed for a vote in the House and Senate this week — would make it easier for the federal government to regulate private lands, absent public knowledge or scrutiny.

At first glance, the provision appears innocuous. Farmers who donate part of their property to a land trust for conservation purposes — through what is called a “conservation easement” — would earn a charitable tax deduction of 100 percent of adjusted gross income, while non-farmer donors would earn a deduction of 50 percent. They would continue to own the land but agree never to convert, develop, or use the land for any purpose other than farming or ranching.

#ad#But in what is becoming a growing trend with conservation easements, land trusts — conservation organizations that own one or more easements — can turn around and sell the easement to a federal agency, enabling government unobtrusively to restrict an increasing amount of private lands.

Conservation easements are nothing new. Over 37 million acres throughout the nation are encumbered from land-use activity in perpetuity through conservation easement arrangements. That’s more than 16 times the size of Yellowstone National Park. Landowners — particularly those who are land-rich, cash-poor — have been increasingly drawn to the agreements because they receive tax breaks, yet still are able to hang on to property they might otherwise have to portion off or sell altogether.

Traditionally, government has played a minor role in the arrangements, mainly providing tax relief to the property owner who donates the easement. The voluntary agreement is made solely between property owner and land trust.

But as conservation easements have become the rage in land conservation — rising in number from 740 in 1995 to, astoundingly, more than 6,500 today — so has the role of government and government’s influence over land trusts. These nonprofit organizations, particularly the large, national groups, receive millions of tax dollars a year from government. The Nature Conservancy, the largest land trust, receives over a hundred million dollars a year in government grants.

As funding has risen, so has land trusts’ role changed from protecting open lands through private stewardship — the original intent of conservation easements — to helping government agencies acquire easements on private lands. In a now frequent practice called “prearranged flips,” land trusts obtain easements from property owners, then, without requiring the owner’s approval, sell it to the federal government, often for a profit.

In one example, the Nature Conservancy bought an easement for $1.26 million, then directly sold it to the federal Bureau of Land Management for $1.4 million.

How common is this practice? Roughly one-fifth of the Nature Conservancy’s annual revenue comes from sales of easements to government, according to the group’s annual report.

Government agencies like the arrangements because they enable government to restrict activity on private property absent public approval, which distinguishes them from land purchases, zoning laws, and other land-use regulations that can draw heated opposition and great angst. As a report on easements by the Department of Agriculture notes, conservation easements provide “opportunities for public agencies to influence resource use without incurring the political costs of regulation or the full financial costs of outright land acquisition.”

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The Maine Coast Heritage Trust, one of the state’s largest land trusts, has sold more than 700 of its 850 easements to state and federal government. As reported by a local newspaper, “The trust works with the owners of these areas to determine if there is an opportunity to protect habitat. If there is, the trust takes a lead role in acquiring the land on behalf of either the U.S. Fish and Wildlife Service or the Maine Department of Inland Fisheries and Wildlife.”

In some cases, the federal government uses partnerships with conservation groups to skirt state laws that limit the terms of an easement. A report released last September by the Government Accountability Office describes how the U.S. Fish and Wildlife Service has partnered with Ducks Unlimited to obtain thousands of acres of easements from private landowners in North Dakota.

#ad#The state forbids the term of an easement acquired by a conservation group to exceed 99 years. But according to officials from the Service, they are “not bound by state law regarding the easement terms.” If the agency “receives a monetary donation from Ducks Unlimited to purchase easements, the eased land is protected in perpetuity,” a direct violation of the state’s intent.

Conservation easements have always been about trying to motivate property owners through generous tax deductions to hold onto their land rather than sell to a developer. In 2006, President Bush signed into law legislation raising the charitable tax deduction for easement donations from a maximum of 30 percent of adjusted growth income to 100 percent for farmers, and 50 percent for non-farmers. The tax subsidy expired last December; the pending farm bill would reinstate it.

But rather than shower landowners with complicated tax deductions, a far more effective way to deter land sales to developers would be to do away with burdensome estate taxes, which tend to push owners to sell their land to developers in the first place.

Conservation easements use taxpayer dollars to lure farmers and other landowners into giving up property rights. If the farm bill becomes law, conservation easements could evolve into the prevailing method for government to shift lands quietly from private to public control under the pretense of private stewardship. Furthermore, because the land is transferred in perpetuity — a condition of the tax breaks – the federal government’s control over formerly private property within the states is not likely to be reversed.

Forever is a long time. And since they aren’t making any more real estate, do we really want increasingly more of it in government hands? Certainly our lawmakers owe present and future property owners a better American Dream than that.

Dana Joel Gattuso is a senior fellow with the National Center for Public Policy Research.

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