By Congressman Norman “Norm” Dicks
and Lynn Scarlett
Each year, an estimated 2 million acres of America’s farms, ranches, forests, wildlife habitat, and other open spaces are fragmented into smaller parcels or lost to development, according to the President’s Annual Economic Report to Congress. Continued losses of this open space can adversely affect rural economies. These losses reduce opportunities for huntingfishing, and other outdoor recreation and impact wildlife, water and other resources.
The good news is there are ways for both landowners and Congress to slow down this troubling trend.
Donating a permanent conservation easement (development restriction) to a qualified organization, such as a land trust, enables farmers and ranchers to maintain their current operations and conserve the natural assets of rural America. In return, landowners may deduct the value of the easement from their income taxes.
This tax incentive is a major reason why there now are 1,700 nonprofit land trusts nationwide that protect 47 million acres of farms, ranches, forests, wildlife habitat, and other open spaces – twice as many acres as a decade ago and a larger land area than the state of Wisconsin, according to the 2010 National Land Trust Census.
Despite this remarkable success, land trusts increasingly face frivolous six- and seven-figure lawsuits from developers seeking to undermine these development restrictions on land that they directly own or manage. Half of the land trusts in a 2010 national survey reported a legal challenge, and one-quarter of those land trusts were hindered by ﬁnancial barriers in pursuing a legal challenge. There is no commercial or nonprofit insurance available to cover this liability, which far exceeds most land trusts’ legal reserve funds. The IRS has said a land trust could lose its tax status or ability to accept further donations if it does not have sufficient resources to monitor or defend conservation easements.
To protect their investments in conservation, over 420 land trusts that protect more than 6 million acres joined with the Land Trust Alliance to launch their own insurance risk pool last month with $4 million in capital funding from eight major foundations. Thanks to this insurance pool, Terrafirma Risk Retention Group LLC, which covers 75 percent of the over 8 million acres conserved by land trusts that can’t afford to self-insure, the trusts can now assure their communities, donors, the IRS, other regulators and legislators that they have the ability to sustain their conserved lands in perpetuity.
But if we want to slow down the fragmentation or development of farms, ranches, forests, wildlife habitat and other open spaces, Congress must make permanent a temporary 2006 law that increased tax incentives to conserve land.
Since its passage, this temporary law has encouraged additional conservation easements by raising the maximum annual deduction a landowner can take for the donation of a conservation easement and extends the period to claim the deduction after the time of the donation from 5 to 15 years.
The enhanced tax incentive expired in 2009, but Congress temporarily renewed it through the end of this year when it passed the American Taxpayer Relief Act of 2012.
In the last Congress, 28 senators from both parties co-sponsored a bill to make this tax incentive permanent, including the Chairman of the Senate committee with jurisdiction over the legislation: Max Baucus (D-Mont.). More than 310 members of the House co-sponsored a similar bill, including majorities of both parties and the leaders of the House committee with jurisdiction over the legislation: Ways & Means Committee Chairman Dave Camp (R-Mich.) and Ranking Member Sander Levin (D-Mich.).
However, Congress recessed for the election before taking action, so the billsexpired. In March, Baucus was joined by Finance Committee ranking Republican Orrin Hatch (R-Utah) in reintroducing the tax incentive bill, The Rural Heritage Conservation Extension Act of 2013. Congressmen Jim Gerlach (R-Pa.) and Mike Thompson (D-Calif.) are seeking cosponsors to introduce similar legislation in the House.
Passage of a tax incentive bill would help save open spaces that otherwise could disappear.
Making this expanded tax incentive permanent would further bolster land conservation and sustain working lands, helping to keep landowners on their property and achieve a broad range of conservation outcomes, including improving water quality and reducing soil erosion.