Conservation Easements,

Read the Fine Print!

Conservation easements are an extremely popular way to preserve land today while creating tax incentives for landowners, but if you haven’t heard about “Big Meadows”, you need to read this.

For several years we at the American Land Foundation have warned about the use of conservation easements. They are not for everybody. Yes, certain landowners do realize substantial tax benefits, but for the most part they create serious limitations on the use, reduce the value, and place tremendous restrictions on the future use of private property.

A conservation easement is forever and is a legally binding contract that has more serious consequences on the landowner than the holder of the easement. It creates significant legal stipulations and obligations that, if not followed, can be enforced by the holder of the easement or a third party, like the Environmental Defense fund or instance.

One major aspect of a conservation easement is the drafting and adherence to a conservation plan. Normal conservation plans determine management practices, enumerate landowner obligations, stipulate easement holder’s enforcement authority, and allow the transfer of all obligations, restrictions and enforcement to a third party.

All these requirements are in perpetuity and transfer to any future holder of the title to the land, regardless if it is a spouse, a child, an heir, a devise, or a purchaser. It’s always attached.

And now, there is one more twist to add into the mix. The Ninth Circuit Court of Appeals affirmed a lower court’s decision in Big Meadows Grazing Association v. United States, that the government need not get approval from a landowner if it decides to change the terms of the easement.

In fact, the Court said; “Specifically, Big Meadows relinquished all rights not expressly reserved in Part II of the easement.” Part II states; “The Grantors, hereby grants and conveys with general warranty of title to the United States of America and its assigns…forever, all rights, title and interest in the lands comprising the easement area.”

The Court said Part II “expressly reserved in Big Meadows only record title, the right of quiet enjoyment, the right to prevent trespass and control public access,” but “it nowhere grants Big Meadows the power to veto a conservation plan of which it disapproves.”

Big Meadows granted a conservation easement on 1,812 acres of land for which they received $1.9 million from the government. The original agreement stipulated that Big Meadows would be required to implement the conservation plan on the land at a cost of $80,000. However, before the ink dried, the government informed Big Meadows that it would now cost them $486,000, more than six times the original amount and that instead of restoring a streambed to help the wetlands, a dam would be constructed to impound water on the acreage. Needless to say, Big Meadows was not happy with either and they objected by filing a lawsuit.

Unfortunately, both the federal district court and the Ninth Circuit agreed with the federal government and ruled against Big Meadows.

That means that under the easement as it currently is written, the government has the “right to enter unto the easement area to undertake…any activities to restore, protect, manage, maintain, enhance, and monitor the wetland…”

Another aspect of this discussion must be noted. Big Meadows conservation easement was granted as part of the Natural Resource Conservation Service of the Department of Agriculture Wetlands Reserve Program (WRP). Other federal programs such as the Conservation Reserve Program provided in our nation’s Farm Bill legislation carry with them similar provisions.

Many landowners who sign up under federal conservation programs are now required to provide the government with a conservation plan. Obviously, it’s these plans that most landowners have no idea what rights they are giving up.

And the worst part now is there is federal court precedence allowing the government to alter their agreements after they have been executed and agreed to. All these programs are now suspect and should be viewed with suspicion and concern not only from a landowner’s perspective, but from the banking, real estate and legal professions.

Conservation easements are a powerful tool, not only in federal programs like WRP and CRP, but are being used by unscrupulous land trusts to persuade landowners they should preserve their land from being developed by placing it into a conservation easement.

These easements are different beasts and should be viewed with alarm by banks and real estate brokers. Conservation easements aren’t normally filed of record in county court houses like right-of-way agreements or other lease agreements affecting real estate. Brokers must be required to notify potential buyers if there are any of these types of agreements attached with restrictions of any kind. Bankers should not be required to subordinate their loans when land values plummet and land use restrictions are applied.

Big Meadows proves why they say to “read the fine print.” It will come back to haunt you if you don’t protect yourself.