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Grasslands Reserve Program is fundamentally flawed

Agri-News
February 16, 2001
President's Corner

by Carol W. LaGrasse
President
Property Rights Foundation of America, Inc.

The proposed Grassland Reserve Program (GRP) jointly announced by the National Cattlemen's Beef Association (NCBA) and The Nature Conservancy (TNC) in the February 2 issue of Agri-News seems at first glance an enticing way to bring together conservation interests and ranchers. But a closer look reveals that the proposed program is fundamentally flawed. It provides a flagrant example of some of the reasons why perpetual or long-term conservation easements threaten a rancher's future legal and economic security, while destabilizing the inherent worth of his equity. These conservation easements pose a threat to private property.

The system that the program would authorize to enforce the conservation easements would be a gold mine to the land trusts and other environmental non-profits. This is how the gold would be mined:

The proposal authorizes qualified private conservation agencies and land trusts to hold and enforce the easements. In addition, the Uniform Conservation Easement Act, in effect in many states, allows non-party not-for-profit organizations to enforce conservation easements. Either through the new federal program or other state law already in existence, non profit organizations would track conservation easements protecting habitat on native grasslands. It would be easy for them to do this at virtually no cost for two reasons.

First, the program would require the Secretary of Agriculture to conduct periodic inspections of easement lands. (The land trust would be exempt from the expense of inspecting the land on which it holds an easement!) Records would be on file for each of these inspections.

In addition, the program requires that before the conservation easement is executed, the Secretary would in most conservation easements have to determine that the land has the potential to serve as habitat for animal or plant populations of significant ecological value if the land is restored to native grassland. All of this information would be on easily accessible records.

The rancher would be a sitting duck. According to the program, if the rancher violates the easement terms he may be required to repay the funds he receives under the program, plus interest. At an interest rate of just six percent per annum, the amount of this obligation doubles in a little under twelve years. In twenty-four years, it doubles again, and doubles again after thirty-six years elapses from the date the easement is executed. The rancher's obligation to repay has multiplied geometrically!

Later on, a land trust or non-profit conservation group that hates ranching, whether or not a party to the easement, realizes that its time for action has arrived. It studies the Secretary of Agriculture's records to uncover a violation, real or imagined, to the requirement that haying or seed production not disturb the nesting of birds in the local area, or some other restriction that can be inferred from the easement language. With the data at hand from the evaluation at purchase, in addition to the Secretary's regular inspection reports, he has an easy job finding documentation for his accusations.

What follows was enacted for the first time under the 1972 Clean Water Act and has been honed to razor-like efficiency by thirty years of environmental litigation. Under the Clean Water Act, a new power to bring citizen enforcement suits was enacted for the first time. Experts have concluded that this new privilege of having "standing" to sue was established with the express purpose in mind of enriching environmental groups and land trusts. At the same time, permit records for discharges of pollutants are kept by state and federal agencies. There is always some detail or small amount of pollution that might not meet the law's requirement. Environmental groups go through the permit records and decide which businesses to sue. (They do not sue the big polluting government agencies.) Once the environmental group is in court, it engineers a "settlement" whereby the "polluter," rather than experiencing the astronomical cost of litigation, pays a price agreed to by all parties. Here's the kicker: The settlement is paid to another environmental group! The gold has been mined.

In New York, one of the biggest land trusts in the country, the Open Space Institute, was originally set up for the purpose of being a repository of settlements won by the Natural Resources Defense Council under the Clean Water Act.

Back to conservation easements: Years after the conservation easement has been executed, the rancher who now owns the land is still vulnerable for the full price received for the easement, plus interest, which has geometrically multiplied the sum for which he is liable. He is wide open to litigation by any two-bit, cattle-hating land trust or radical environmental group that is properly incorporated. When sued, he will naturally settle by shelling out a donation to some not-for-profit environmental group or land trust that is working in tandem with the plaintiff. He will have been reduced to a gold mine for the environmental organizations.

The proposed Grasslands Reserve Program is a potential gravy train for the land trusts in other ways, as well. The wording of the legislation provides that the Secretary of Agriculture can hold easements if desired by participating landowners. But what protection is there for the landowner who doesn't select to have the government hold the easement if the land trust decides to flip the conservation easement to government at a later date? The land trusts ordinarily avoid the cost of holding these easements. Even though they are setting up this program so that the Secretary does the inspections on the land trust's easement at the taxpayer's expense (a typical insider arrangement of the nature that they often make with government), they endure some other costs, plus the liability of owning the land, that may influence them to flip the land to government.

In addition, in many states land trusts are ordinarily exempt from real estate taxes. The portion, if any, of taxes that might be attributable to the conservation easement is determined varies from state to state. But, in some states, the land trusts will be able to free-load on rural taxpayers for the real estate taxes that would have been paid on the part of the land value that could be attributed to the conservation easement. Other taxpayers will pick up the difference. Some of the taxpayers who receive the brunt of the tax shift will be ranchers who use no more tax-funded services than the combined demand of the rancher who sold the conservation easement plus the conservation easement holder.

It can be assumed that these protected grasslands will be the focus of much study, for which the land trusts will find themselves well positioned to extract grants from government. Whether the conservation easements are held by them or government, the program will provide further gravy for the land trusts such as The Nature Conservancy, who will receive monopoly contracts for the study of rare and endangered species and the like on the conservation easement lands.

While all these financial benefits accrue to the land trusts, the rancher will be discovering that when he wants to obtain a mortgage to make a capital improvement on his land, his equity will have been greatly reduced.

When a person reads about the program announcement, the focus is all on the romance of protecting the grasslands and the harmony to be developed among the land trusts, government and the rancher. But, out of this program will come different outcomes for the three entities: The rancher will have short-term positive cash flow, loss of equity, and the perpetual threat of litigation. The government will spend more taxpayer's money and will have greatly increased its control over ranch land. And the land trusts and environmental groups will have perpetual control over private land, whether they or another group owns an interest in the title, while enjoying a perpetual gravy train.

 

Editor's note: Questions? Carol LaGrasse may be reached at PO Box 75, Stony Creek, NY 12878; phone 518-696-5748.

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