Interesting happenings lately with the national and California legislatures, for those of us working with conservation easements.


The Federal Update: More on Abusive Syndicated Easements

The chair of the U.S. Senate Finance Committee, Senator Chuck Grassley (R-Iowa) and ranking member, Senator Ron Wyden (D-Oregon), announced Tuesday that the committee has issued subpoenas to six people to produce documents relating to abusive syndicated conservation easements, an insidious tax shelter that the IRS estimates some taxpayers have abused to the tune of $20 billion in tax deductions between 2010 and 2016.

The Senate Finance Committee started an investigation into this issue in March and requested information by letter, but it seems the request was ignored by some, so the committee has had to resort to subpoenas. From Senator Grassley’s announcement:

“As we’ve both said all along, conservation easements have very legitimate purposes. We need to protect those purposes and protect the American taxpayer. If a handful of folks can game the system for profit, then we’re all left holding the bag. We expect fulsome cooperation with our investigation, and it’s unfortunate we’ve had to resort to compulsory process. Ultimately, when Congress makes an inquiry, it needs to be answered. It’s not optional.”

Hear, hear!

Hopefully, this investigation will help put a nail into the coffin of the abusive syndication tax shelter. Perhaps it also will motivate Congress to pass The Charitable Conservation Easement Program Integrity Act of 2019 (H.R. 1992 / S. 170), which would usher in the funeral.


The State Update: Policy Questions for Conservation Easements in California

California’s legislative session closed last week, with good news and bad news for conservation easement advocates.

First, the good news: Senate Bill 633 died in the Senate without going to the Assembly.

Proposed eight days before the legislative session closed, with minimal time for stakeholder involvement, a revised SB 633 would have exempted the Department of Toxic Substances Control from considering any legally binding recorded documents, such as conservation easements, on contaminated property for which the department is preparing cleanup standards. This could have resulted in the destruction of protected conservation values in favor of scorched earth cleanup standards that may not be necessary in all circumstances.

In addition, although SB 633 ostensibly applied only to hazardous waste sites, the changes would have impacted conservation easement policy throughout the state, by opening the door to state and local departments carving exceptions for themselves to ignore or limit the restrictions that conservation easements place on property, notwithstanding the intent of Civil Code 815 to make conservation easements binding and enforceable restrictions throughout the state.

Fortunately, the California Council of Land Trusts and the Land Trust Alliance sent letters requesting that the bill not be rushed through the end of session without full stakeholder participation. This bill may come back next session, but at least now land trusts and other conservation advocates will have time to work through its policy implications with the legislators and the bill’s proponents.

Now, the bad news: A bill to address serious issues in Civil Code section 815.11 was held until next session.

On September 7, 2018, Governor Brown signed into law SB 901, a massive wildfire bill that tucked in new language to be added California Civil Code section 815, California’s conservation easement enabling act. The new language, which was codified as Civil Code section 815.11, imposed a bevy of vague requirements on conservation easements funded by State agencies.

Unfortunately, the land trust community was not given the opportunity to comment on SB 901 before it passed last year. Despite the importance of reducing wildfire risk, the broad scope and nebulous wording of section 815.11 caused significant concern to conservation practitioners. Does this new statute apply to farmland-protection easements on properties with only scattered oak woodlands? Who pays for the requisite management plan and the broad affirmative obligations described in the statute? What constitutes a “more natural tree density” and who decides? These concerns and more were addressed in detail in our prior article here.

These questions and concerns prompted members and professional affiliates of the California Council of Land Trusts to collaborate on a proposed amendment to Civil Code section 815.11. The amendment would move the new fire-protection language from the CE enabling statute to a more appropriate place in the California Public Resources Code and also would clarify that the new language applies only to properties with forestland comprising more than 40 acres, among making other improvements to elucidate the statute’s vague requirements.

CCLT’s amendment was added to SB 182 this session, which addressed other fire issues. SB 182 passed the California Assembly with a bipartisan 66-10 vote, but was blocked in the Senate by Senator Scott Wiener based on unrelated aspects of the bill that changed housing targets in Very High fire risk areas.

The conservation easement statute amendment will be revisited during the 2020 legislative session and may be appended to a bill unrelated to housing, which is a more divisive issue than conservation easements.