WHY IT IS WRONG TO PROMOTE AMENDMENT AND

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 1 1-APR-13 11:14

PERPETUITY IS FOREVER, ALMOST ALWAYS:

WHY IT IS WRONG TO PROMOTE AMENDMENT

AND TERMINATION OF PERPETUAL

CONSERVATION EASEMENTS

Ann Taylor Schwing*

When a landowner makes a charitable gift of a conservation easement to a non-

profit organization or government entity and elects to seek a federal tax deduction, both

landowner and easement holder are subject to federal tax laws and regulations gov-

erning the creation, monitoring, amendment, and extinguishment of the easement. A

nonprofit easement holder is subject to federal laws governing nonprofit operations.

The nonprofit and government holders are also subject to state laws governing the oper-

ations of nonprofit organizations and the administration of charitable and other public

assets on behalf of the public. All of these laws affect and restrict the ability of non-

profit and government holders to amend and terminate perpetual conservation ease-

ments. Contrary to representations made in When Perpetual Is Not Forever: The

Challenge of Changing Conditions, Amendment, and Termination of Conservation Ease-

ments, 36 Harv. Envtl. L. Rev. 1 (2012), none of these laws can be ignored.

Introduction ....................................................... 217

I. Federal Law Governs All Land Trusts as 501(c)(3) Charities .... 219

II. Federal Law Governs Key Aspects of Most Conservation

Easements .................................................... 220

III. The Challenge Fails to Account Fully for Governing Federal

Law ......................................................... 225

IV. Federal Law Mandates Perpetuity for Donated Easements ....... 233

V. Perpetuity Is a Sacred Promise to Donors, Taxpayers, and the

Public ....................................................... 237

VI. Good Drafting Solves Many Issues of Changing Conditions ...... 242

VII. Changed Circumstances Rarely Support Amendment or

Termination .................................................. 242

VIII. Conservation Easements Are Not Taxicabs ...................... 244

Conclusion ........................................................ 246

NTRODUCTION

Although it gathers wide ranging information and citations, Jessica Jay’s

article, When Perpetual Is Not Forever: The Challenge of Changing Condi-

* Ann Taylor Schwing is of counsel at Best Best & Krieger LLP (www.bbklaw.com), Com-

missioner and Secretary of the Land Trust Accreditation Commission, an independent program of

the Land Trust Alliance (www.landtrustaccreditation.org), and a member of the governing boards

of Scribes, The American Society of Legal Writers, and the Anthony M. Kennedy American Inn

of Court. She wrote the final drafts of Land Trust Alliance, Amending Conservation Easements:

Evolving Practices and Legal Principles (Aug. 2007). She is a former president of The Land Trust

of Napa County (www.napalandtrust.org) and author of Open Meeting Laws 3d (2011) (www.

openmeetinglaws.com), California Affirmative Defenses (published annually by West), and other

books. She writes this Article as an individual and does not speak for any organization. Thanks

go to Jeff Pidot, Steve Small, Steve Swartz, William Weeks, and others for their careful review

and suggested edits.

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 2 1-APR-13 11:14

218 Harvard Environmental Law Review [Vol. 37

tions, Amendment, and Termination of Perpetual Conservation Ease-

ments,

ignores governing law and facts and makes mistakes in analysis leading

to flawed conclusions. Most notably, The Challenge ignores the primacy of

federal law and federal requirements applicable to those who take federal tax

deductions and relies on case law that does not support its thesis. The Chal-

lenge implies that conservation easement donors and government entities and

land trusts accepting easement donations are free to ignore both federal tax

requirements and the rules that govern administration of charities and charitable

gifts.

The Challenge states that it is based on the assumed “unsettled nature of

the law surrounding perpetual conservation easement amendment and termina-

tion.”

But the United States Internal Revenue Services (“IRS”) and the public

face of the land trust community give little indication that the law of federally

deductible easements is unsettled. Instead, the law is clear: Easements are

solicited and granted in perpetuity, to be amended or terminated only in ex-

traordinary circumstances and to be terminated only with court approval or

through condemnation.

Visit 100 or 500 land trust websites; the message on

easement amendment and termination is virtually uniform: Both are described

as extremely difficult or impossible. The websites are equally uniform in

weaving promises out of the words “protect your land” and “forever.”

The

36 H

ARV

. E

NVTL

. L. R

. 1 (2012) [hereinafter The Challenge].

The Challenge, supra note 1, at 4.

For example, a report from the Land Trust Alliance explains:

If the conservation easement was the subject of a federal income tax deduction, then

Internal Revenue Code Section 170(h) and the Treasury Regulations Section 1.170A-14

apply. Such an easement must be “granted in perpetuity” and “the conservation pur-

pose [of the contribution must be] protected in perpetuity.” The easement must be

transferable only to another government entity or qualified charitable organization that

agrees to continue to enforce the easement. The easement can only be extinguished by

the holder through a judicial proceeding, upon a finding that continued use of the en-

cumbered land for conservation purposes has become “impossible or impractical,” and

with the payment to the holder of a share of proceeds from a subsequent sale or develop-

ment of the land to be used for similar conservation purposes. To the extent an amend-

ment amounts to an extinguishment, the land trust must satisfy these requirements.

AND

RUST

LLIANCE

, A

MENDING

ONSERVATION

ASEMENTS

: E

VOLVING

RACTICES AND

E-

GAL

RINCIPLES

24 (2007).

See, e.g., Land Conservation, G

ALLATIN

ALLEY

AND

RUST

, http://www.gvlt.org/land-

conservation (last visited Jan. 24, 2013) (on file with the Harvard Law School Library) (“Each

conservation easement is tailored for the property’s unique resources and for the landowner’s vi-

sion. The agreements run with title to the land and last in perpetuity. The Gallatin Valley Land

Trust is responsible for making sure the easement’s terms are upheld through our stewardship

program.”); Frequently Asked Questions, M

ONTANA

’

NOF

AND

RUSTS

, http://www.

montanalandtrusts.org/faqs/ (last visited Jan. 24, 2013) (on file with the Harvard Law School Li-

brary) (“[C]urrent landowners who grant or otherwise convey a conservation easement want as-

surances their property will be protected not just through their lifetime, but permanently . . . .”);

Frequently Asked Questions About Conserving Your Land, V

ERMONT

AND

RUST

, http://www.vlt.

org/land-protection/frequently-asked-questions (last visited Jan. 24, 2013) (on file with the

Harvard Law School Library) (“When you conserve your land, you . . . dedicate your property,

forever, to being a part of Vermont’s rural, productive, and natural landscape. . . . As the holder of

the conservation easement, our role is to ensure the terms of the conservation easement are

honored by all future owners of your property.”); Protect Your Special Place, W

EST

IRGINIA

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 3 1-APR-13 11:14

2013] Schwing, Perpetuity Is Forever, Almost Always 219

challenge arises only for organizations that do not wish to abide by the require-

ment of perpetuity.

I. F

EDERAL

OVERNS

AND

RUSTS AS

501(

)(3) C

HARITIES

A land trust is a 501(c)(3) nonprofit corporation formed and subject to

oversight under state law but also qualified and supervised as a charity under

federal law.

A conservation easement donor intending to seek a federal tax

deduction must find an “eligible donee” to accept the donation, and the ease-

ment must prohibit transfer except to another eligible donee that agrees to con-

tinue to fulfill the conservation purposes of the easement.

An “eligible donee”

is any government unit in the United States and any 501(c)(3) charity that

meets the public support test (a “qualified organization”), commits to protect

the conservation purposes of the donation, and has the resources to enforce the

conservation restrictions.

Land trusts are formed under the law of a particular state and operate

under that law and the law of other states in which they do business. State law

controls such corporate matters as the minimum number of directors, annual

meeting and filing requirements, and so on.

To accept conservation easements

entitled to enjoy federal tax deductions, however, a land trust must satisfy all

applicable federal laws.

Federal law is paramount when made applicable by

Congress and pertinent facts. The Supremacy Clause so mandates.

“The

Supremacy Clause unambiguously provides that if there is any conflict between

federal and state law, federal law shall prevail.”

AND

RUST

, at 3, available at http://www.wvlandtrust.org/pdfs/Land_Trust_Folder_Brochure

_WEB.pdf (“It is the responsibility of the Land Trust to monitor easement compliance forever.”).

For many more examples, put “perpetuity,” “forever,” and “land trust” or “conservation ease-

ment” into any search engine.

26 U.S.C. § 501(c)(3) (2006). See generally M

ARION

REMONT

-S

MITH

, G

OVERNING

ON-

PROFIT

RGANIZATIONS

(2004).

Treas. Reg. § 1.170A-14(c) (2009).

26 U.S.C. § 170(h)(1)(B), (3); Treas. Reg. § 1.170A-14(c). The IRS can and will strip a

land trust of its nonprofit status for violation of federal perpetuity requirements. See, e.g., IRS

Priv. Ltr. Rul. 201110020 (Mar. 11, 2011).

E.g., Dana Brakman Reiser, Charity Law’s Essentials, 86 N

OTRE

AME

L. R

. 1, 6–13

(2011).

See 26 U.S.C. § 170(h). See generally James J. Fishman, Commentary: The Federalization

of Nonprofit Regulation and Its Discontents, 99 K

. L.J. 799 (2010) [hereinafter Fishman,

Discontents].

“This Constitution, and the Laws of the United States which shall be made in Pursuance

thereof; and all Treaties made, or which shall be made, under the Authority of the United States,

shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any

Thing in the Constitution or Laws of any State to the Contrary notwithstanding.” U.S. C

ONST

. art.

VI, cl. 2.

Gonzales v. Raich, 545 U.S. 1, 29 (2005); see also Gage v. Nat’l Solid Wastes Mgmt.

Ass’n, 505 U.S. 88, 108 (1992). See generally Viet D. Dihn, Reassessing the Law of Preemption,

88 G

. L.J. 2085 (2000); Stephen Gardbaum, Congress’s Power to Preempt the States, 33 P

EPP

L. R

. 39 (2005); Garrick B. Pursley, The Structure of Preemption Decisions, 85 N

. L. R

912 (2007).

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 4 1-APR-13 11:14

220 Harvard Environmental Law Review [Vol. 37

As the Supreme Court explains, the Supremacy Clause operates in various

circumstances to prevent or resolve potential or actual conflict between differ-

ent laws:

1. when Congress, in enacting a federal statute, expresses a clear

intent to pre-empt state law,

2. when there is outright or actual conflict between federal and state

law,

3. where compliance with both federal and state law is in effect

physically impossible,

4. where there is implicit in federal law a barrier to state regulation,

5. where Congress has legislated comprehensively, thus occupying

an entire field of regulation and leaving no room for the states to

supplement federal law, or

6. where the state law stands as an obstacle to the accomplishment

and execution of the full objectives of Congress.

To be tax exempt themselves and qualified to accept donated easements giving

rise to federal income tax deductions for donors, land trusts must satisfy all

federal requirements governing 501(c)(3) charities, including prohibitions on

private benefit and private inurement and specific eligible donee requirements

under section 170(h) and Treasury Regulation § 1.170A-14(c) (§ 1.170A-14

collectively as “Treasury Regulations”).

A state cannot lawfully legislate to

diminish requirements of sections 170(h), 501(c)(3), or 1.170A-14 for federally

deductible donations. Federal tax requirements would be meaningless if states

could eliminate federal tests for status as a 501(c)(3) charity or diminish Trea-

sury Regulations requirements for receipt of federal tax deductions.

II. F

EDERAL

OVERNS

SPECTS OF

OST

ONSERVATION

ASEMENTS

A conservation easement is “a restriction granted in perpetuity on the use

which may be made of real property

—

including, an easement or other interest

in real property that under state law has attributes similar to an easement

. . . .”

Whether a donor or transferor qualifies for federal charitable income

tax deductions under section 170(h) is a matter of federal concern, and Con-

gress has prescribed multiple requirements before an easement donation re-

ceives a federal tax deduction.

To qualify for federal income tax deductions

for the donor, an easement must (1) be perpetual, (2) be conveyed to and held

Louisiana Public Service Comm’n v. FCC, 476 U.S. 355, 368–69 (1986) (adding numerals

and paragraphing) (omitting multiple citations).

See generally James J. Fishman, Stealth Preemption: The IRS’s Nonprofit Corporate Gov-

ernance Initiative, 29 V

. T

. 545 (2010); Fishman, Discontents, supra note 9.

Treas. Reg. § 1.170A-14(b)(2) (2009).

Gillespie v. Comm’r, 75 T.C. 374, 378–79 (1980) (stating that whether transfer qualifies for

federal estate tax charitable deduction is a matter of federal concern, and that Congress may

prescribe requirements for tax-deductible gifts to charity).

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 5 1-APR-13 11:14

2013] Schwing, Perpetuity Is Forever, Almost Always 221

by a “qualified conservation organization,” and (3) be “exclusively for conser-

vation purposes.”

Valid “conservation purposes” include (a) protection of a

relatively natural habitat for wildlife and plants, (b) preservation of open space

(including farmland or forest land when following a government conservation

policy), (c) preservation of land for outdoor recreation by, or education of, the

general public, and/or (d) preservation of historically important land or a certi-

fied historic structure.

An easement is treated as conveyed “exclusively for

conservation purposes” only if its conservation purpose is “protected in

perpetuity.”

Section 170(h) requires perpetuity twice: The easement must be

granted in perpetuity (170(h)(2)) and the conservation purpose must be pro-

tected in perpetuity (170(h)(5)).

The Treasury Regulations, based largely on the legislative history of sec-

tion 170(h),

contain numerous additional requirements to ensure that the con-

servation purposes will be “protected in perpetuity.”

The opening of the

Treasury Regulations explains that, although an income tax deduction is gener-

ally not allowed for donation of partial interests, an exception is made for con-

servation easements “if the requirements of this section are met.”

To qualify

for federal tax deductions, an easement must contain at least these express and

true recitals:

• Grantee is a qualified organization under section 170(h) and Trea-

sury Regulations § 1.170A-14(c), effectively, a § 501(c)(3) non-

profit land trust or a government entity;

• The easement is granted in perpetuity (26 U.S.C. § 170(h)(2)(c),

(h)(5)(A); Treas. Reg. § 1.170A-14(g)(1));

• The conveyance gives rise to an immediately vested property right

(Treas. Reg. § 1.170A-14(g)(6)(ii));

• The easement runs with the land and binds successors and assigns

(Treas. Reg. § 1.170A-14(g)(1));

Treas. Reg. § 1.170A-14.

See generally 26 U.S.C. § 170(h) (2006).

26 U.S.C. § 170(h)(5)(A).

S. Rep. No. 96-1007 (1980).

Requirements include:

(i) “restriction on transfer by donee,” Treas. Reg. § 1.170A-14(c)(2);

(ii) “no inconsistent use,” Treas. Reg. § 1.170A-14(e)(2);

(iii) “generally enforceable in perpetuity,” Treas. Reg. § 1.170A-14(g)(1);

(iv) “mortgage subordination,” Treas. Reg. § 1.170A-14(g)(2);

(v) “mining restrictions,” Treas. Reg. § 1.170A-14(g)(4);

(vi) “baseline documentation,” Treas. Reg. § 1.170A-14(g)(5)(i); and

(vii) “donee notice,” “donee access,” and “donee enforcement.” Treas. Reg. § 1.170A-

14(g)(5)(ii).

“Federal regulations have no less pre-emptive effect than federal statutes.” Fidelity Federal Sav-

ings & Loan Ass’n v. De la Cuesta, 458 U.S. 141, 153 (1982).

Treas. Reg. § 1.170A-14(a) (2009) (emphasis added).

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 6 1-APR-13 11:14

222 Harvard Environmental Law Review [Vol. 37

• Grantee has a right with reasonable notice to enter the property to

determine compliance with easement terms (Treas. Reg. § 1.170A-

14(g)(5)(ii));

• Grantee has a right to enforce the easement (Treas. Reg. § 1.170A-

14(g)(5)(ii));

• Grantee has the right to require restoration of the property to its

condition at the time of donation (Treas. Reg. § 1.170A-

14(g)(5)(ii));

• The easement must be recorded in real property records of the

county or counties where the property is located (Treas. Reg.

§ 1.170A-14(g)(1));

• Any mortgage or deed of trust must be subordinated to the ease-

ment (Treas. Reg. § 1.170A-14(g)(2));

• The easement must prohibit transfer except to another qualified do-

nee that, as a condition of transfer, is required to carry out the

conservation purposes (Treas. Reg. § 1.170A-14(c)(2));

• The easement must provide that, in the event of extinguishment of

the easement or any sale, exchange, or involuntary conversion of

the property (such as condemnation), the grantee must be entitled

to a portion of the proceeds in a proportion based on the value of

the easement to the value of the property as a whole at the time of

the gift (Treas. Reg. § 1.170A-14(c)(2), (g)(6)(ii));

• The easement must prohibit surface extraction of minerals includ-

ing sand and gravel (Treas. Reg. § 1.170A-14(g)(4));

• The easement must provide that owners will notify the grantee in

writing before any exercise of a reserved right (Treas. Reg.

§ 1.170A-14(g)(5)(ii));

• The easement must identify the date and the preparer of baseline

documentation that must be completed before the donation is made

(Treas. Reg. § 1.170A-14(g)(5)(i));

• Baseline documentation must be accompanied by a signed state-

ment by grantor and grantee that the baseline “is an accurate repre-

sentation of the property at the time of the transfer” (Treas. Reg.

§ 1.170A-14(g)(5)(i)(D)); and

• The easement exclusively serves one or more conservation pur-

poses set forth in section 170(h) and Treas. Reg. § 1.170A-14.

See Kaufman v. Comm’r, 136 T.C. 294, 310–11 (2011) [hereinafter Kaufman II], vacated

in part sub nom. Kaufman v. Shulman, 687 F.3d 21 (1st Cir. 2012). This requirement also applies

to rights of first refusal, life estates, long-term ground leases, or other real property interests that

could affect permanent land protection.

See also Carpenter v. Comm’r, T.C. Memo 2012-1, at 7–11 (2012), available at http://

www.ustaxcourt.gov/InOpHistoric/carpenter.TCM.WPD.pdf. See generally Nancy A. McLaugh-

lin, Protecting the Federal Investment After Carpenter, Simmons, and Kaufman, 13 F

. T

. 217 (2012) [hereinafter McLaughlin, Protecting the Federal Investment].

See Great Northern Nekoosa Corp. v. United States, 38 Fed. Cl. 645, 660–61 (1997).

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 7 1-APR-13 11:14

2013] Schwing, Perpetuity Is Forever, Almost Always 223

These requirements are vital to accomplishing the federal purposes in granting

tax deductions for qualifying conservation easements.

Commissioner v. Sim-

mons specifically held that a tax exempt organization would fail to enforce

easement provisions “at its peril” and that the easements at issue were deducti-

ble because they would prevent in perpetuity any changes to the properties

inconsistent with the conservation purposes.

In so holding, the court implic-

itly rejected the amici’s argument that swaps are permitted.

The deduction amount is determined by a “qualified appraisal,” pre-

scribed in significant detail by federal law, typically comparing the value of the

specific parcel before and after the easement.

Lack of a qualified appraisal

mandated by federal law defeats the federal income tax deduction.

It would

be impossible to appraise perpetual easements to determine deduction amounts

if the easements could, as The Challenge argues, be modified, terminated, or

swapped under changing state laws.

Congress imposed very strict requirements that must be met for easement

donations to create federal charitable income tax deductions and other federal

tax benefits. Had Congress wished, it could have authorized tax benefits for

easements that satisfied requirements established by the states.

Instead, Con-

gress imposed specific and strict federal requirements, ensuring that federal tax

deductions are available only for designated federal conservation purposes and

only if those purposes are protected in perpetuity.

These requirements are not a tasty buffet from which donors and land

trusts may select some items and leave others untouched. A land trust and

donor that wish to transfer a conservation easement that qualifies for federal tax

deductions must satisfy federal law.

The legislative history of 26 U.S.C. § 170(h) reflects the intent to limit the deduction to

easements preserving “unique or otherwise significant land areas or structures” and to “those

cases where the conservation purposes will in practice be carried out.” See S. Rep. No. 96-1007,

at 9, 14 (1980). Congress intended to limit deductible contributions “to those transfers which

require that the donee (or successor in interest) hold the conservation easement . . . exclusively for

conservation purposes (i.e., that they not be transferable by the donee except to other qualified

organizations that also will hold the perpetual restriction . . . exclusively for conservation pur-

poses.)” Id. at 14; see Glass v. Comm’r, 471 F.3d 698, 706–07 (6th Cir. 2006); see also Roger

Colinvaux, The Conservation Easement Tax Expenditure: In Search of Conservation Value, 37

OLUM

. J. E

NVTL

. L. 1, 9-10 (2012) (estimating total revenue loss of $3.6 billion from federal

charitable income tax deductions provided to individual easement donors between 2003 and

2008).

Comm’r v. Simmons, 646 F.3d 6, 10 (D.C. Cir. 2011).

See Brief for National Trust for Historic Preservation et al. as Amici Curiae Supporting

Appellee, Comm’r v. Simmons, 646 F.3d 6 (D.C. Cir. 2011) (No. 10-1063), 2010 WL 6511476, at

*17.

See IRS, C

ONSERVATION

ASEMENT

UDIT

ECHNIQUES

UIDE

(2012), available at http://

www.irs.gov/pub/irs-utl/conservation_easement.pdf.

Whitehouse Hotel L.P. v. Comm’r, 615 F.3d 321, 326 (5th Cir. 2010).

McLaughlin, Protecting the Federal Investment, supra note 23, at 247–48 (noting that there

is no mention in section 170(h), its legislative history, or Treasury Regulations regarding defer-

ence to state and local extinguishment procedures, even though some procedures existed at enact-

ment of section 170(h) and drafting of the Treasury Regulations).

See 26 U.S.C. § 170(h)(2), (h)(5)(A) (2006).

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 8 1-APR-13 11:14

224 Harvard Environmental Law Review [Vol. 37

There may be state income tax deductions in addition to or instead of

federal deductions, and some states provide state tax credits for donated ease-

ments. Laws governing state deductions and credits may or may not incorpo-

rate a requirement for satisfaction of federal tax requirements for deductible

easements.

A state could elect to grant tax benefits to easement donations that

do not satisfy federal requirements for conservation easements.

Moreover,

states may authorize creation and transfer of mitigation easements and pur-

chased easements that do not satisfy federal requirements.

These may have

perpetuity requirements of their own, however, often coextensive with federal

requirements.

States may develop laws governing conservation easements for

which state tax benefits are available. States cannot alter the requirements for

federal tax deductions.

Despite these variations, almost all donated easements are drafted to com-

ply with federal requirements because donors want federal deductions when

they are available. The land trust community norm is to draft easements in

conformity with federal tax requirements absent a powerful reason to vary from

those requirements.

E.g., C

OLO

. R

. S

TAT

. § 39-22-522(2) (2011) (state tax “credit[s] shall only be allowed

for a donation that is eligible to qualify as a qualified conservation contribution pursuant to section

170(h) of the internal revenue code, as amended, and any federal regulations promulgated in

connection with such section”).

States, like landowners, need not accept federal restrictions and receive federal financial

benefits. See, e.g., Quern v. Mandley, 436 U.S. 725, 735–36 (1978) (noting that states need not

participate in federal welfare programs); Massachusetts v. Mellon, 262 U.S. 447, 480 (1923)

(“[T]he powers of the state are not invaded, since the statute imposes no obligation but simply

extends an option which the state is free to accept or reject.”); see also George D. Brown, Federal

Funds and National Supremacy: The Role of State Legislatures in Federal Grant Programs, 28

. U. L. R

. 279, 279–80 (1979).

For a discussion of state statutes authorizing creation or acquisition of conservation ease-

ments and the requirements of federal tax law, see Nancy A. McLaughlin, Internal Revenue Code

Section 170(h): National Perpetuity Standards for Federally Subsidized Conservation Easements,

Part 2: Comparison to State Law, 46 R

EAL

ROP

. T. & E

. L.J. 1, 19–62 (2011) [hereinafter

National Perpetuity Standards, Part 2].

In County of Colusa v. California Wildlife Conservation Board, the County of Colusa suc-

cessfully challenged a state-acquired conservation easement purporting to convert agricultural

land into wildlife habitat based on statutory and contractual requirements for land to remain in

agriculture. 52 Cal. Rptr. 3d 1, 3–7, 145 Cal. App. 4th 637 (Cal. Ct. App. 2006). In Stonegate

Family Holdings, Inc. v. Revolutionary Trails, Inc., the Boy Scouts sold a perpetual conservation

easement to the state, providing for certain public access rights. 900 N.Y.S.2d 494, 500 (2010),

appeal denied, 939 N.E.2d 809 (N.Y. 2010); see also Federal Guidance for the Establishment, Use

and Operation of Mitigation Banks, 60 Fed. Reg. 58,605, 58,612 (Nov. 28, 1995), available at

http://water.epa.gov/lawsregs/guidance/wetlands/mitbankn.cfm (“The wetlands and/or other

aquatic resources in a mitigation bank should be protected in perpetuity with appropriate real

estate arrangements (e.g., conservation easements, transfer of title to Federal or State resource

agency or non-profit conservation organization).”).

The power to tax is the power to destroy. See Flint v. Stone Tracy Co., 220 U.S. 107, 167

(1911); McCulloch v. Maryland, 17 U.S. 316, 327 (1819). State power to determine what deduc-

tions are permitted to reduce federal taxes would similarly be the power to destroy. See generally

McCray v. United States, 195 U.S. 27 (1904).

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 9 1-APR-13 11:14

2013] Schwing, Perpetuity Is Forever, Almost Always 225

III.

HALLENGE

AILS TO

CCOUNT

ULLY FOR

OVERNING

EDERAL

A fundamental problem in The Challenge is its failure to take into account

the primacy of federal law as it relates to tax-deductible conservation ease-

ments. The Challenge addresses several “different legal regimes [that] guide

their creation, implementation, enforcement, modification, and termination,”

as though the legal regimes were all of equal force and relevance. In doing so,

The Challenge confuses the issues significantly.

Property owners donating and land trusts accepting easements for which

federal tax deductions will be sought cannot elect whether to follow state law,

the Uniform Conservation Easement Act, the Restatement (Third) of Property:

Servitudes, the Land Trust Standards and Practices, or procedures voluntarily

adopted by land trusts instead of applicable federal law. All of these sources

must be consistent with federal law, must be deemed inapplicable, or must

otherwise fall aside if an easement is entitled to a federal deduction.

If there

is governing federal law, then no other law or secondary source can control the

availability of federal tax deductions conflicting with that federal law. To be

eligible for a federal tax deduction, an easement must comply with section

170(h) and the Treasury Regulations, and easement provisions satisfying such

requirements must be enforceable under state law. For example, to enjoy a

federal income tax deduction, the easement must prohibit transfer except to

another eligible donee that agrees to enforce the easement.

The fact that the

state enabling statute is silent on that requirement does not mean that the fed-

eral restriction-on-transfer provision included in the easement deed to satisfy

federal tax law requirements can be ignored.

Federally deductible conserva-

tion easements are restricted charitable gifts

—

“contributions conditioned on

the use of a gift in accordance with the donor’s precise directions and

limitations.”

In many respects, state law, the Restatement (Third) of Property: Servi-

tudes, and the Uniform Conservation Easement Act (“UCEA” or “the Uniform

Act”) are fully consistent with federal law. The UCEA is most readily recog-

The Challenge, supra note 1, at 3.

The term “sources” is used because the Restatement, Uniform Laws, and Standards and

Practices are not law at all unless adopted as law by Congress or state legislatures or courts. The

first two are highly respected and worthy of deference because they reflect combined efforts of

judges, scholars, and practicing attorneys. But they are not law.

See, e.g., Josh Eagle, Notional Generosity: Explaining Charitable Donors’ High Willing-

ness to Part with Conservation Easements, 35 H

ARV

. E

NVTL

. L. R

. 47, 56 (2011).

Treas. Reg. § 1.170A-14(c)(2) (2009).

But see The Challenge, supra note 1, at 26–31.

Carpenter, T.C. Memo 2012-1, at 6 (restricted gift and charitable trust are used synony-

mously and are subject to the same rules) (citing Kaufman II, 136 T.C. at 306–07); see also

National Perpetuity Standards, Part 2, supra note 34, at 70 (“Absent enforceability under state

law, the provisions included in a conservation easement deed to satisfy the various federal tax law

requirements would constitute mere window dressing, and the conservation purposes of the contri-

butions would not be ‘protected in perpetuity’ as mandated by Congress.”).

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 10 1-APR-13 11:14

226 Harvard Environmental Law Review [Vol. 37

nizable as consistent with federal law when its language is properly understood.

The UCEA provides, for example, that “a conservation easement may be cre-

ated, conveyed, recorded, assigned, released, modified, terminated, or other-

wise altered or affected in the same manner as other easements.”

This

language was clearly never intended to impose substantive law in conflict with

federal law but rather to address procedural mechanics.

Thus, conservation

easements must be in writing, notarized, recorded, and otherwise processed in

the same manner as other easements in the state when they are created, con-

veyed, assigned, modified, and so on. There is no hint in the UCEA that the

Uniform Act was intended to do more.

Any intent to do more with respect to

federally deducted easements is barred by federal law.

In fact, to prevent any confusion on this point, the UCEA commentary

expressly states that the UCEA “leaves intact the existing case and statute law

of adopting states as it relates to the modification and termination of easements

and the enforcement of charitable trusts,” and restricted charitable gifts such as

conservation easements are enforced in the same manner as charitable trusts.

When those seeking greater freedom to amend and terminate conservation ease-

ments began to cite the UCEA as evidence that charitable principles do not

apply,

the drafters revised the comments to clarify their intent and defeat that

NIFORM

ONSERVATION

ASEMENT

§ 2(a) (2007), available at http://www.uniform

laws.org/shared/docs/conservation_easement/ucea_final_81%20with%2007amends.pdf.

The UCEA was designed to address “historical legal impediments to the acquisition of

lesser interests, such as easements, restrictions and covenants, and equitable servitudes. These

restrictions appear artificial and archaic in light of current policies, and the Uniform Conservation

Easement Act provides the means to eliminate them in a simple, straightforward fashion.” UCEA

Summary, available at http://www.uniformlaws.org/ActSummary.aspx?title=Conservation Ease-

ment Act.

See Eagle, supra note 39, at 60 (“Although the Uniform Conservation Easement Act sug-

gests that conservation easements of lesser duration would constitute recognized property interests

as a matter of state property law, the donation of such easements will not give rise to a federal tax

deduction.”).

UCEA § 3 cmt. The Comment to section 2 explains, with emphasis added:

The Act enables parties to create a conservation easement of unlimited duration subject

to the power of a court to modify or terminate the easement in accordance with the

principles of law and equity. See Section 3(b). The latitude given the parties is consis-

tent with the philosophical premise of the Act. However, there are additional safe-

guards; for example, easements may be created only for certain purposes intended to

serve the public interest and may be held only by certain “holders.” These limitations

find their place comfortably within similar limitations applicable to charitable trusts,

which may be created to last in perpetuity, subject to the power of a court to modify or

terminate the trust pursuant to the doctrine of cy pres. See comment to Section 3. Al-

lowing the parties to create such easements also enables them to fit within federal tax

law requirements that the interest be “in perpetuity” if certain tax benefits are to be

derived.

See, e.g., R

OBERT

H. L

EVIN

, A G

UIDED

OUR OF THE

ONSERVATION

ASEMENT

NABLING

TATUTES

18–20 (2010), available at http://www.landtrustalliance.org/policy/cestatutesre-

portnoappendices.pdf; C. Timothy Lindstrom, Hicks v. Dowd: The End of Perpetuity?, 8 W

. L.

. 25, 39–41 (2008); see also National Perpetuity Standards, Part 2, supra note 34, at 41

(recounting how in Salzburg v. Dowd, Civ. No. CV-2008-0079 (Wyo. Jud. Dist. Feb. 17, 2010),

the Wyoming Attorney General sued, objecting to the county’s termination of a perpetual ease-

ment, landowners argued at trial that there was “nothing special” about a conservation easement

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 11 1-APR-13 11:14

2013] Schwing, Perpetuity Is Forever, Almost Always 227

argument.

The Challenge questions the wording of the UCEA comments, misunder-

standing the intent of the Uniform Act and the purpose of its comments.

For

example, The Challenge criticizes the UCEA’s placement of information on cy

pres and charitable trust principles in the comments instead of in the UCEA

text.

The UCEA had a very limited and focused purpose, and its drafters

intentionally did “not address a number of issues which, though of conceded

importance, are considered extraneous to its primary objective of enabling pri-

vate parties to enter into consensual arrangements with charitable organizations

or governmental bodies to protect land and buildings without the encumbrance

of certain potential common law impediments . . . .”

The comments to UCEA

section three explain:

The Act does not directly address the application of charitable trust

principles to conservation easements because: (i) the Act has the rela-

tively narrow purpose of sweeping away certain common law imped-

iments that might otherwise undermine a conservation easement’s

validity, and researching the law relating to charitable trusts and how

such law would apply to conservation easements in each state was

beyond the scope of the drafting committee’s charge, and (ii) the Act

is intended to be placed in the real property law of adopting states

and states generally would not permit charitable trust law to be ad-

dressed in the real property provisions of their state codes.

This explanation directly answers The Challenge’s objection to placement of the

charitable trust discussion in the comments.

when it comes to modification or termination and cited Wyoming’s UCEA for the proposition that

conservation easements can be modified or terminated “in the same manner as other easements”).

UCEA Commissioners’ Prefatory Note § 3 cmt. (“[B]ecause conservation easements are

conveyed to governmental bodies and charitable organizations to be held and enforced for a spe-

cific public or charitable purpose

—

i.e., the protection of the land encumbered by the easement

for one or more conservation or preservation purposes

—

the existing case and statute law of

adopting states as it relates to the enforcement of charitable trusts should apply to conservation

easements.”). The UCEA is intended to be applied and construed to make the law uniform among

all states that have adopted it. Accordingly, courts are especially likely to rely upon UCEA com-

ments to guide their interpretation. “Only if the intent of the drafters of a uniform act becomes the

intent of the legislature in adopting it can uniformity be achieved . . . . Otherwise, there would be

as many variations of a uniform act as there are legislatures that adopt it. Such a situation would

completely thwart the purpose of uniform laws.” Yale Univ. v. Blumenthal, 621 A.2d 1304, 1307

(Conn. 1993). See generally Nancy A. McLaughlin & W. William Weeks, Hicks v. Dowd, Con-

servation Easements and the Charitable Trust Doctrine: Setting the Record Straight, 10 W

. L.

. 73 (2010) [hereinafter Setting the Record Straight].

The Challenge, supra note 1, at 26–31.

Id.

UCEA Commissioners’ Prefatory Note. The UCEA validates easements created in many

contexts (e.g., donation, purchase, exaction), containing various terms (term of years, terminable

upon satisfaction of certain conditions, and perpetual) and, thus, laws governing administration of

charities and charitable gifts will apply with different force to different types of conservation

easements.

UCEA § 3 cmt.; see Setting the Record Straight, supra note 48, at 83–84.

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 12 1-APR-13 11:14

228 Harvard Environmental Law Review [Vol. 37

The UCEA is fundamentally designed to fulfill a procedural goal. “The

UCEA does not itself impose restrictions or affirmative duties. It merely al-

lows the parties to do so within a consensual arrangement freed from common

law impediments, if the conditions of the Act are complied with.”

Thus, the

UCEA itself was never intended to impose or restrict applicability of substan-

tive charitable trust principles. The comment to section four declaring that the

UCEA “leaves intact the existing case and statute law of adopting states as it

relates to the modification and termination of easements and the enforcement of

charitable trusts,”

specifically negates the argument that the UCEA’s silence

may be interpreted to defeat application of charitable trust principles.

The Challenge’s representation that restricted gift principles do not apply

to conservation easements is a serious error, particularly given the UCEA draft-

ers’ clear intent that those principles do apply and the Tax Court’s holding in

Carpenter v. Commissioner that tax-deductible easements constitute restricted

gifts. Land trusts accept donated easements subject to donor restrictions and

prohibitions applicable to the specific acres under easement. There can be no

lawful transfer of that easement away from the specific donated acres without

violation of donor intent and federal law. If a land trust is forthright and states

its intent to retain the right to transfer a conservation easement in whole or part,

that very statement defeats federal tax deductions even if the donor might have

agreed to grant discretion to the land trust.

The Restatement (Third) of Property: Servitudes reflects that modification

and termination of perpetual conservation easements held by government enti-

ties and charitable organizations are governed by special rules based on charita-

ble trust principles. Those rules apply regardless of how easements are

acquired. The drafters explain: “Because of the public interests involved, these

servitudes are afforded more stringent protection than privately held conserva-

tion servitudes.”

Despite recognizing the Restatement as a relevant “legal

regime,” The Challenge criticizes the Restatement as inconsistent with The

Challenge’s own erroneous interpretation of the Treasury Regulations as per-

mitting termination of an easement if its purpose is protected elsewhere (i.e., a

swap).

That interpretation is expressly rejected by the IRS,

implicitly re-

jected by the D.C. Circuit in Simmons,

and inconsistent with section 170(h)

and the Treasury Regulations as explained below. The Restatement does not

support The Challenge’s interpretation, which is inconsistent with the concept

UCEA § 3 cmt.

Id. § 4 cmt; see also id. § 3 cmt.

Carpenter, T.C. Memo 2012-1, at 18–19 (easements extinguishable by parties’ mutual

agreement, even if subject to a standard such as impossibility, fail as a matter of law to comply

with perpetuity requirements of section 170(h)); see Simmons, 646 F.3d at 11 (noting that ease-

ments found deductible “will prevent in perpetuity any changes to the properties inconsistent with

conservation purposes”).

ESTATEMENT

HIRD

)

ROPERTY

: S

ERVITUDES

§ 7.11 cmt. a (2000).

The Challenge, supra note 1, at 4, 17–25; see infra Part VIII.

E.g., IRS, supra note 28, at 16; IRS Form 990 Schedule D Instructions, available at http://

www.irs.gov/pub/irs-pdf/i990sd.pdf; IRS General Information Letter (Mar. 5, 2012), 2012 TNT

66–25 (swaps are forbidden unless they comply with extinguishment regulation).

Simmons, 646 F.3d at 9.

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 13 1-APR-13 11:14

2013] Schwing, Perpetuity Is Forever, Almost Always 229

of a perpetual conservation easement. The Challenge also fails to address rele-

vant provisions in the Restatement (Third) of Trusts

and Uniform Trust

Code,

both of which affirmatively endorse application of charitable trust prin-

ciples to conservation easements.

The Challenge’s efforts to treat the Land Trust Alliance Standards and

Practices as a legal regime also fail.

The Standards and Practices were not

drafted by or for attorneys. They are designed, as stated in their Introduction,

to be “ethical and technical guidelines” or “guiding principles” to be volunta-

rily adopted in whole or part.

Accordingly, the Standards and Practices are

not a legal regime and cannot constitute or supersede laws. The Standards and

Practices expressly mandate compliance with law,

specifically with federal

tax law as it relates to deductible easements

and with applicable charitable

trust laws.

The Alliance’s Amending Conservation Easements report recognizes that

some amendments occur and adopts conservative principles to guide decisions

relating to amendment.

This secondary analysis also cannot be considered

law and cannot contravene federal law. The report is instructive, however, as it

recognizes the following significant limitations on easement amendment or ter-

mination, which are ignored in The Challenge:

See R

ESTATEMENT

HIRD

)

RUSTS

§ 28 cmt. a (2003).

See U

NIFORM

RUST

ODE

§ 414(d) (2010), available at http://www.uniformlaws.org/

shared/docs/trust_code/utc_final_rev2010.pdf (provisions allowing for modification or termina-

tion of certain “uneconomic” trusts do not apply to conservation easements); id. § 414 cmt.

(“[C]reation and transfer of an easement for conservation or preservation will frequently create a

charitable trust. The organization to whom the easement was conveyed will be deemed to be

acting as trustee of what will ostensibly appear to be a contractual or property arrangement. Be-

cause of the fiduciary obligation imposed, the termination or substantial modification of the ease-

ment by the ‘trustee’ could constitute a breach of trust.”); see also Nancy McLaughlin & Mark

Machlis, Protecting the Public Interest and Investment in Conservation: A Response to Professor

Korngold’s Critique of Conservation Easements, 4 U

TAH

L. R

. 1561, 1593–94 (2008).

See The Challenge, supra note 1, at 4–5 (treating Practices as one of “four different legal

regimes”); id. at 31–33 (citing Standard 11 as authorizing amendment or termination of easements

without third-party approval or judicial proceedings).

As stated in the Introduction, “there are many ways for a land trust to implement the

practices, depending on the size and scope of the organization.” L

AND

RUST

LLIANCE

, L

AND

RUST

TANDARDS AND

RACTICES

i (2004), available at http://www.landtrustalliance.org/train-

ing/sp/lt-standards-practices07.pdf. “The Land Trust Alliance encourages all land trusts to imple-

ment Land Trust Standards and Practices at a pace appropriate for the size of the organization and

scope of its conservation activities.” Id.

Id. at 2 (“The land trust complies with all applicable federal, state and local laws.”).

Id. at 8 (“For land and easement projects that may involve federal or state tax incentives,

the land trust determines that the project meets the applicable federal or state requirements, espe-

cially the conservation purposes test of I.R.C. §170(h).”).

Id. (“All projects conform to applicable federal and state charitable trust laws. If the trans-

action involves public purchase or tax incentive programs, the land trust satisfies any federal, state

or local requirements for public benefit.”).

See generally L

AND

RUST

LLIANCE

, A

MENDING

ONSERVATION

ASEMENTS

: E

VOLVING

RACTICES AND

EGAL

RINCIPLES

(2007), available at http://learningcenter.lta.org/attached-files/

0/65/6534/Amendment_Report_Final_web.pdf [hereinafter A

MENDING

ONSERVATION

ASE-

MENTS

]. The following bulleted list of limitations on easement amendment can be found on pages

16 and 23 of this report.

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 14 1-APR-13 11:14

230 Harvard Environmental Law Review [Vol. 37

• Land trust governance documents, including articles of incorpora-

tion, bylaws and IRS tax-exemption approval documents[;]

• Internal Revenue Code [(“Code”)] and Treasury Regulations re-

quirements for perpetuity and prohibitions on private inurement

and private benefit[;]

• State and federal laws governing nonprofit management and the

administration of restricted charitable gifts and charitable trusts[;]

• State laws on fraudulent solicitation,[

] misrepresentation to do-

nors,[

] consumer protection and the like[;]

• State laws regulating the conduct of fiduciaries depending on the

circumstances of easement creation, relationships with donors and

obligations undertaken by the land trust[;

]

• State and local laws governing land use, conveyances and the

like[; and ]

• Contractual and other obligations to easement donors, grantors,

funders and others[.

]

Finally, The Challenge devotes considerable space to discussing provi-

sions based on state law, a proposed Vermont law, and a Montana procedure

voluntarily adopted by land trusts that is not proposed as law.

This entire

analysis starts from the faulty premise that state law or voluntary procedures

offer a co-equal legal regime to federal law, and that a donor and land trust

need only satisfy state requirements, as opposed to federal tax law require-

ments, when seeking and holding a federal tax deduction.

Federal law mandates that there shall be no deductions for non-perpetual

easements and that land trusts shall ensure the perpetual existence of donated

conservation easements. There is frankly nothing a state can enact that could

lawfully diminish the perpetuity required for easements receiving a federal tax

deduction. Likewise, no state can lawfully authorize a 501(c)(3) land trust to

terminate or amend federally deducted easements more freely than permitted by

See, e.g., L

ESLIE

ATLEY

-B

EACH

, M

ANAGING

ONSERVATION

ASEMENTS IN

ERPETUITY

205 (2009); C

ONSERVATION

LINIC

, L

EGAL

ONSIDERATIONS

EGARDING

MENDMENT TO

ONSERVATION

ASEMENTS

7 (2007).

See, e.g., Maryland Envt’l Trust v. Gaynor, 780 A.2d 1193 (Md. 2001), rev’d, 803 A.2d 512

(Md. 2002).

E.g., C

. B

. & P

ROF

. C

ODE

§ 17510.8 (“[T]here exists a fiduciary relationship between

a charity or any person soliciting on behalf of a charity, and the person from whom a charitable

contribution is being solicited. The acceptance of charitable contributions by a charity or any

person soliciting on behalf of a charity establishes a charitable trust and a duty on the part of the

charity and the person soliciting on behalf of the charity to use those charitable contributions for

the declared charitable purposes for which they are sought. This section is declarative of existing

trust law principles.”).

See A

MENDING

ONSERVATION

ASEMENTS

, supra note 67, at 16, 23.

The Challenge, supra note 1, at 43–61.

This faulty premise is embodied in the fabric of The Challenge, including its treatment of

“four different legal regimes” each with “different treatment of amending and terminating perpet-

ual conservation easements.” The Challenge, supra note 1, at 5. Once donors elect to take federal

tax deductions, the donors must comply with federal tax law requirements as well as any addi-

tional requirements imposed by state law. Donors are not free to ignore federal law and look only

to another “legal regime” unless expressly adopted into federal law.

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 15 1-APR-13 11:14

2013] Schwing, Perpetuity Is Forever, Almost Always 231

the Code and Treasury Regulations. There are a few limited and specific in-

stances in which the Treasury Regulations defer in part to state law, such as

payment of compensation upon condemnation.

These instances are the excep-

tions that prove the rule that compliance with federal law is prerequisite to

federal tax deductions and to continuing recognition as a 501(c)(3) charity.

The Challenge also simply ignores the constitutional and other barriers to

the retroactive application of new state legislation, policies, or regulations to

alter the terms of existing perpetual conservation easements.

Although per-

haps understandable that this critical issue might not be fully discussed, it

should not have been ignored in an article that urges states to “consider crafting

new or modifying existing legislation, policies, or regulations to address ease-

ment termination and amendment.”

The Challenge next discusses a few court decisions as reflecting a com-

mon law governing conservation easements.

The first, Bjork v. Draper, is

identified as an amendment case although it significantly involved an extin-

guishment

—

removal of a portion of land encumbered by an easement in ex-

change for substitution of an equally sized parcel of new land

—

for which

“judicial proceedings in a court of competent jurisdiction” were expressly re-

quired by the easement itself.

The amendments and extinguishment were held

“invalid because they conflicted with the express provisions of the ease-

ment.”

Bjork does not support a new common law under which conservation

easements may be amended or terminated. Just the opposite is true.

The second cases discussed by The Challenge, Hicks v. Dowd, and its

successor, Salzburg v. Dowd, uphold federal tax law, charitable trust principles,

and perpetuity. In Hicks, the Wyoming Supreme Court dismissed the case,

holding that Hicks, who resided in a county that held a conservation easement

and who objected to its termination by the county without a court proceeding,

Treas. Reg. § 1.170A-14(c)(2) (2009) (referring to qualified organizations); id. § 1.170A-

14(g)(6)(ii); see Nancy A. McLaughlin, Condemning Conservation Easements: Protecting the

Public Interest and Investment in Conservation, 41 U.C. D

AVIS

L. R

. 1897, 1950 (2008).

See, e.g., Kapiolani Park Preserv. Soc’y v. City and Cnty. of Honolulu, 751 P.2d 1022,

1027 (Haw. 1988) (“Gifts to trustees or to eleemosynary corporations, accepted by them to be

held upon trusts expressed in writing or necessarily implied from the nature of the transaction,

constitute obligations which ought to be enforced and held sacred under the Constitution. It is not

within the power of the Legislature to terminate a charitable trust, to change its administration on

grounds of expediency, or to seek to control its disposition under the doctrine of cy pres.”) (quot-

ing In re Opinion of the Justices, 131 N.E. 31, 32 (1921)); Whirlpool Corp. v. Ritter, 929 F.2d

1318, 1324 (8th Cir. 1991) (“Okla. Stat. tit. 15, § 178 is an unconstitutional impairment of con-

tracts insofar as it is applied to insurance contracts entered before the statute became effective.”).

Although Kapiolani refers to charitable trusts, “the law governing enforcement of charitable gifts

is derived from the law of charitable trusts.” Carl J. Herzog Found. v. Univ. of Bridgeport, 699

A.2d 995, 997 n.2 (Conn. 1997); see also Carpenter, T.C. Memo. 2012-1, at 12.

The Challenge, supra note 1, at 43.

For a different interpretation of these cases and a discussion of other cases and controver-

sies involving modification and termination of easements, see National Perpetuity Standards, Part

2, supra note 34, at Part III.

Bjork v. Draper, 886 N.E.2d 563, 567 (Ill. App. Ct. 2008) [hereinafter Bjork I], appeal

denied, 897 N.E.2d 249 (Ill. 2008), appeal after remand, 936 N.E.2d 763 (Ill. App. Ct. 2010)

[hereinafter Bjork II], appeal denied, 943 N.E.2d 1099 (Ill. 2011).

Bjork II, 936 N.E.2d at 768 (citing Bjork I, 886 N.E.2d at 574).

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 16 1-APR-13 11:14

232 Harvard Environmental Law Review [Vol. 37

lacked standing to enforce a charitable trust. The court invited the Wyoming

Attorney General, as supervisor of charitable trusts, “to reassess his position.”

The Wyoming Attorney General then asserted in Salzburg that the easement,

for which the donors had received a sizable federal tax deduction, constituted a

restricted charitable gift or charitable trust that could not be terminated without

court approval in a cy pres proceeding as provided in the easement deed.

The

case settled, reinstating the easement in full force, subject to court-sanctioned

amendments acknowledging that the Dowds lacked control over or liability for

mineral extraction and permitting transfer of the easement to another qualified

holder if the Scenic Preserve Trust became unable to continue.

These amend-

ments acknowledged points that were undeniably true without amendment and

were approved by the court in any event.

Nothing in the resolution of this

dispute supports diminution of federal perpetuity requirements.

Most troubling, The Challenge inaccurately identifies two recent cases as

rejecting application of principles governing restricted charitable gifts or chari-

table trusts to perpetual conservation easements.

Neither case reached that

result. In the first, Carpenter v. Commissioner, the Tax Court held that, while

the easements at issue were not formal charitable trusts under Colorado law,

they were “restricted gifts,” namely, “contributions conditioned on the use of a

gift in accordance with the donor’s precise directions and limitations.”

Chari-

table gifts made for specific purposes are charitable trusts in some states, and in

others restricted gifts. The substantive rules governing these gifts (including

requirements that the recipient administer the gift following the donor’s precise

directions and limitations) apply equally to all such gifts.

Accordingly, use of

different terminology in different jurisdictions is a distinction without a differ-

Hicks v. Dowd, 157 P.3d 914, 921 (Wyo. 2007).

Salzburg v. Dowd, Civ. No. CV-2008-0079 (Wyo. Jud. Dist. Feb. 17, 2010), available at

http://www.docstoc.com/docs/47716227/Download-Stipulated-Judgment-Salzurg-v-Dowd

—

-IN-

THE-DISTRICT.

The Challenge, supra note 1, at 39 (describing settlement).

See Salzburg, Civ. No. CV-2008-0079.

The Challenge, supra note 1, at 10 n.50, 22 n.120 (citing Carpenter, T.C. Memo 2012-1, at

12); Long Green Valley Ass’n v. Bellevale Farms, No. 0228, 2011 WL 5975081 (Md. Ct. Spec.

App. Nov. 30, 2011), reconsidered & remanded, 2012 WL 468245 (Md. Ct. Spec. App. Feb. 14,

2012), reconsidered & remanded, 46 A.3d 473 (Md. Ct. Spec. App. 2012), cert. granted, 52 A.3d

978 (2012).

Carpenter, T.C. Memo 2012-1, at 12. A 2012 Tax Court opinion by Judge Haines who

wrote Carpenter refers to extinguishment by judicial proceeding as a “specific requirement” of

the Treasury Regulations. Mitchell v. Comm’r, 138 T.C. No. 16, 2012 WL 1109342 , at *9 (Apr.

3, 2012).

Compare Chattowah Open Land Trust, Inc. v. Jones, 636 S.E.2d 523, 524–27 (Ga. 2006)

(devise of testator’s residence and surrounding acreage to a land trust to maintain property in

perpetuity exclusively for conservation purposes within Internal Revenue Code § 170(h) unam-

biguously created a charitable trust, and testator’s failure to use words “trust” or “trustee” did not

alter the outcome, “as the strict use of these terms is not required to establish a trust.”), with Carl

J. Herzog Found., Inc. v. Univ. of Bridgeport, 699 A.2d 995, 997–98 (Conn. 1997) (although gift

may not create a formal trust, “equity will afford protection to a donor to a charitable corporation

in that the attorney general may maintain a suit to compel the property to be held for the charitable

purpose for which it was given to the corporation” (quoting Lefkowitz v. Lebensfeld, 68

App.Div.2d 488, 494–95, 417 N.Y.S.2d 715 (1979))) (alteration and internal quotation marks

omitted).

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 17 1-APR-13 11:14

2013] Schwing, Perpetuity Is Forever, Almost Always 233

ence.

Moreover, in Kaufman v. Commissioner, a regular opinion binding on

all Tax Court judges, the Tax Court recognized that the extinguishment regula-

tion “appears to be a regulatory version of the doctrine of cy pres.”

The

Challenge’s failure to acknowledge that Carpenter held that the tax-deductible

easements constituted restricted charitable gifts is a misleading omission.

The second case that The Challenge misinterprets is Long Green Valley

Ass’n v. Bellevale Farms. Representing that Long Green Valley reflects that

charitable principles do not apply to perpetual conservation easements is inap-

propriate as that case involved a purchased, expressly non-perpetual easement.

Moreover, The Challenge cites the first, withdrawn opinion of the Maryland

court.

That court expressly reconsidered its opinion, first at the request of the

Maryland Attorney General and then at the request of plaintiffs. Its revised

opinions affirmatively preclude applying its holding to perpetual easements.

The court held:

In sum, this case involves a conservation easement purchased for

what we understand to be the grantor’s asking price, and which ex-

pressly provides that it may be terminated after twenty-five years

upon satisfaction of certain conditions. We think it unnecessary to

our result, and express no opinion as to how the principles generally

applicable to charitable trusts would apply to expressly perpetual

conservation easements conveyed in whole or in part as charitable

gifts, or purchased under other statutes or provisions.

All these sources may provide guidance to the extent they are consistent

with federal tax law and the required perpetuity of conservation easements.

None supports the notion that states or holders may adopt their own processes

and procedures to govern transfer and extinguishment of federal tax-deductible

perpetual conservation easements in a manner inconsistent with federal law.

IV. F

EDERAL

ANDATES

ERPETUITY FOR

ONATED

ASEMENTS

A conservation easement transaction is voluntary. Owner and land trust

each decide whether the benefit of the transaction is worth the burden, and they

negotiate terms not prescribed by law. Owners give up some rights of owner-

ship in the land, such as the right to subdivide, and land trusts accept a perpet-

McLaughlin, Protecting the Federal Investment, supra note 23, at 230–34.

Kaufman II, 136 T.C. at 306–07. As a Tax Court opinion (unlike a memorandum opinion),

Kaufman II is binding upon all Tax Court judges. Tax Court Rule 152; see also McLaughlin,

Protecting the Federal Investment, supra note 23, at 272 n.174.

The Challenge, supra note 1, at 23 n.120, 62 n.376, 63 n.381.

Long Green Valley Ass’n v. Bellevale Farms, 46 A.3d 473, 494 (Md. Ct. Spec. App. 2012),

cert. granted, 52 A.3d 978 (2012) (“[A]ssuming, without deciding, that an agricultural preserva-

tion easement purchased by MALPF or the State for the benefit of MALPF qualifies as a ‘conser-

vation easement,’ we are not persuaded that the charitable trust doctrine must be applied to

purchased, non-perpetual agricultural preservation easements, nor even that it should be.”) (em-

phasis in original).

Long Green Valley Ass’n, 46 A.3d at 502.

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 18 1-APR-13 11:14

234 Harvard Environmental Law Review [Vol. 37

ual obligation to monitor and enforce the restrictions. By doing so, land trusts

further their charitable mission to protect land from development and harm. In

addition to any state property tax benefit, and state tax deductions or credits,

owners typically receive potential estate and gift tax benefits,

and either pub-

licly subsidized funds

or income tax benefits.

Finally, owners gain the se-

curity of knowing that their land is protected. For owners who love their land,

the last benefit is frequently the most significant.

Conservation easement restrictions imposed by land trusts are routinely

intended and normally required to be perpetual. The Challenge specifically

states its intent to address perpetual easements in particular.

The Challenge

acknowledges: “The defining characteristic of all qualifying easement gifts is

that they are perpetual, ostensibly to provide public benefit forever.”

Al-

though lesser restrictions are legally possible in many states, the effort to nego-

tiate term easements is substantially the same as that for perpetual easements,

and funding sources are limited. Very few land trusts expend effort on restric-

tions that are not perpetual.

Donated easements enjoying federal tax deductions are required by federal

law to be perpetual,

and the IRS has been increasingly vigilant in enforcing

these requirements.

100

Purchased easements generally follow the same tem-

Potential estate tax benefits are triggered because the land value is diminished by easement

restrictions. See 26 U.S.C. §§ 2031(c), 2055 (2006).

Mitigation conservation easements are often purchased, as are some agricultural easements,

and federal or state funds are frequently used. See, e.g., C

. F

ISH

& G

AME

§§ 2098-2100 (West

2010); Conservation and Mitigation Banking, C

. D

EPT

ISH

& G

AME

, available at http://

www.dfg.ca.gov/habcon/conplan/mitbank/ (last visited Jan. 24, 2013) (on file with the Harvard

Law School Library); SERVICES

—

Purchase Conservation Easements, W

YOMING

AND

RUST

http://wyominglandtrust.org/services-purchase-CE.shtml (last visited Jan. 24, 2013) (on file with

the Harvard Law School Library).

26 U.S.C. § 170(h) (2006); Treas. Reg. § 1.170A-14 (2009). Deductions may be substan-

tial, exceeding $10 million in some instances.

Stephen J. Small, the attorney who helped draft the Internal Revenue Service regulation

allowing for tax benefits for qualified easement donations, is repeatedly quoted for the statement:

“Most people who donate conservation easements do so for three reasons: they love their land;

they love their land; they love their land.” E.g., Fundraising, A

TTLEBORO

AND

RUST

, http://

www.attleborolandtrust.org/work_fundraising/fundraising.htm (last visited Jan. 24, 2013) (on file

with the Harvard Law School Library); Christopher West Davis, Pushing the Sprawl Back: Land-

owners Turn to Trusts, N.Y. T

IMES

, Oct. 12, 2003, http://www.nytimes.com/2003/10/12/nyregion/

pushing-the-sprawl-back-landowners-turn-to-trusts.html.

The Challenge, supra note 1, at 4.

The Challenge, supra note 1, at 6 (footnote omitted).

See Land Conservation: The Case for Perpetual Easements, V

ERMONT

AND

RUST

(Jul.

2007), available at http://www.vlt.org/news-publications/other-publications/201; Paul Mitchell,

Protecting the Future Forever: Why Perpetual Conservation Easements Outperform Term Ease-

ments, U

NIV

. L

AND

LINIC

(Oct. 1, 2006), available at http://digitalcommons.law.uga.

edu/cgi/viewcontent.cgi?article=1002&context=landuse.

26 U.S.C. § 170(h)(2)(C), (5)(A); Treas. Reg. § 1.170A-14(b)(2); IRS Conservation Ease-

ment Audit Techniques Guide, supra note 28 (“Conservation easements are not in perpetuity if

they can be abandoned or terminated.”).

100

See, e.g., Carpenter, T.C. Memo 2012-1, at 18–19 (easements extinguishable by mutual

agreement of the parties, even if subject to a standard such as impossibility, fail as a matter of law

to comply with perpetuity requirements of section 170(h)); IRS C

ONSERVATION

ASEMENT

UDIT

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 19 1-APR-13 11:14

2013] Schwing, Perpetuity Is Forever, Almost Always 235

plates as donated easements, also affirmatively requiring perpetuity in accor-

dance with funders’ requirements. There may be legal requirements for

perpetuity in purchased easements, such as mitigation easements and easements

funded by entities that insist on perpetuity for a public purpose.

101

In all these instances, the fact that a state law or some secondary source

may indicate that a conservation easement might be less than perpetual is irrele-

vant when a federal tax deduction is taken. Federal law mandates perpetuity

for donated easements, and the easements themselves, funding requirements,

and other documents usually require perpetuity in other circumstances.

102

Federal tax law mandates that recipients of federal tax-deductible conser-

vation easements must have a commitment to protect the conservation purpose

of the donation and the resources to enforce the conservation restrictions.

103

The IRS Audit Guide suggests using a range of information to assess land trust

commitment, including the land trust’s website, tax returns, property monitor-

ing reports, interviews with donors and staff, and observation of the land.

104

The Guide states: “Monitoring reports are a good source to verify whether the

taxpayer is in compliance with, and the donee organization is enforcing, the

terms of the easement. In some cases, donee organizations have allowed

changes after the donations that were in violation of the terms of the

easement.”

105

The importance of continuing commitment to perpetuity is emphasized in

Instructions for Schedule D (Form 990): “For purposes of maintaining its tax

exemption, the recipient tax exempt organization must protect the perpetuity

ECHNIQUES

UIDE

, supra note 28; IRS Form 990 Schedule D Instructions, supra note 58; IRS

General Information Letter, supra note 58.

101

See generally Paul Doscher, Terry M. Knowles & Nancy A. McLaughlin, Amending or

Terminating Conservation Easements: Conforming to State Charitable Trust Requirements:

Guidelines for New Hampshire Easement Holders, S

’

Y FOR THE

ROTECTION OF

AMP-

SHIRE

ORESTS

(2010), available at http://doj.nh.gov/charitable-trusts/documents/conservation-

easements-guidelines.pdf; FAQ, Agricultural Land Conservation Program, Y

ORK

NTY

. P

ENN-

SYLVANIA

, http://yorkcountypa.gov/property-taxes/agricultural-preservation-board/application-in-

formation/faq.html (last visited Jan. 24, 2013) (on file with the Harvard Law School Library).

102

Multiple federal requirements in section 170(h) and the Treasury Regulations establishing

that federal law preempts and applies uniformly to tax-deductible easements to mandate perpetuity

regardless of state law are detailed exhaustively in Nancy A. McLaughlin, Internal Revenue Code

Section 170(h): National Perpetuity Standards for Federally Subsidized Conservation Easements

Part 1: The Standards, 45 R

EAL

ROP

. T

. & E

. L.J. 473 (2010) [hereinafter National

Perpetuity Standards, Part 1]. See also National Perpetuity Standards, Part 2, supra note 34

(comparing state provisions addressing transfer, release, and termination of easements to federal

requirements: in order to be eligible for federal charitable income tax deductions for easement

donations, donors must satisfy both federal tax law requirements and any additional requirements

imposed by state law).

103

26 U.S.C. § 170(h)(3); Treas. Reg. § 1.170A-14(c)(1); see C. T

IMOTHY

INDSTROM

, A

UIDE TO THE

SPECTS OF

ONSERVATION

ASEMENT

ONTRIBUTIONS

19 (2007), available

at http://www.conservationtaxcenter.org/plnpro/taxguide2007.pdf (“An organization that allows

easement terminations or amendments in a manner that is inconsistent with the conservation pur-

poses of the easement fails to qualify as an ‘eligible donee’ because it demonstrably lacks ‘the

commitment to protect the conservation purposes of the donation’ as required by the Regs.”).

104

IRS C

ONSERVATION

ASEMENT

UDIT

ECHNIQUES

UIDE

, supra note 28.

105

Id.

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 20 1-APR-13 11:14

236 Harvard Environmental Law Review [Vol. 37

requirement of the conservation easements it holds.”

106

Apparently because

semantic games were used to avoid earlier reporting obligations, the Instruc-

tions now declare that:

[A]n easement is modified when its terms are amended or altered in

any manner. . . . An easement is transferred if, for example, the

organization assigns, sells, releases, quitclaims, or otherwise disposes

of the easement whether with or without consideration. An easement

is released, extinguished, or terminated when it is condemned, extin-

guished by court order, transferred to the land owner, or in any way

rendered void and unenforceable, in each case whether in whole or in

part. . . .

The[se] categories . . . are not to be considered legally binding

or mutually exclusive. For example, a modification may also involve

a transfer and an extinguishment, depending on the circumstances.

Use of a synonym for any of these terms does not avoid the applica-

tion of the reporting requirement. For example, calling an action a

“swap” or a “boundary line adjustment” does not mean the action is

not also a modification, transfer, or extinguishment.

107

The IRS thus makes it clearly incorrect to argue, as The Challenge does, that an

easement is not extinguished when its restrictions are transferred from one par-

cel to another. Schedule D’s instructions expressly provide: “An easement is

also released, extinguished, or terminated when all or part of the property sub-

ject to the easement is removed from the protection of the easement in ex-

change for the protection of some other property or cash to be used to protect

some other property.”

108

An IRS general information letter ends the issue. Asked “whether a con-

tribution of an easement is deductible under section 170(h) of the Code if it is

made subject to the condition that the easement can be swapped,” the IRS

answered, “except in the very limited situations of a swap that meets the extin-

guishment requirements of section 1.170A-14(g)(6) of the Regulations, the

contribution of an easement made subject to a swap is not deductible under

section 170(h) of the Code.”

109

The term “swap” was defined

as an agreement to remove some or all of the originally protected

property from the terms of the original deed of conservation easement

in exchange for either the protection of some other property or the

payment of cash. . . . [T]he goal of a swap is generally to free all or

a portion of the originally protected property from the easement’s re-

strictions so that such property can be put to previously prohibited

106

IRS Form 990 Schedule D Instructions, supra note 58.

107

Id.

108

Id. Many might think the IRS had been adequately clear, but at least one land trust (which

wishes to be anonymous) now refers to “reconfigurations” in lieu of the other terms, as though a

thesaurus could excuse violation of federal law.

109

IRS General Information Letter, supra note 58.

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 21 1-APR-13 11:14

2013] Schwing, Perpetuity Is Forever, Almost Always 237

uses. . . . [T]he transaction may be characterized by the parties as an

amendment, modification, adjustment, or migration.

110

Swaps condemned by the IRS are effectively identical to transfers proposed in

The Challenge.

111

Finally, one commentator has explained the fundamental

flaw in the argument that swaps are or should be permissible under section

170(h):

If swaps were permissible, the owner of the land and the holder of the

easement could, on the day following the donation or any time there-

after, agree to remove ten, fifty, or even one hundred percent of the

original land from the protection of the easement in exchange for the

protection of some other land, and the new land and the provisions

governing its protection would not have to meet the threshold conser-

vation purposes tests or any of the other requirements in section

170(h) and the Treasury Regulations.

112

Swaps by any name defeat the conservation purposes tests and other federal

requirements in section 170(h) and the Treasury Regulations so that the conser-

vation purposes of tax-deductible easements would not be perpetual as Con-

gress intended.

V. P

ERPETUITY

ACRED

ROMISE TO

ONORS

AXPAYERS

AND THE

UBLIC

Conservation easement donors are principally motivated by a desire to

protect the specific land they love.

113

Land trusts promise protection forever;

114

the Treasury Regulations contemplate protection until “continued use of the

property for conservation purposes” has become “impossible or impractical”

due to changed conditions. Easement donors believe they have achieved the

most permanent protection of their land possible.

115

There is overwhelming

110

Id. (internal quotes omitted); see also The Challenge, supra note 1, at 45, 64–68, 72–76.

111

The apparent difference is that the swap discussed by the IRS could possibly be disclosed

in the original easement, whereas there is no apparent transparency about transfers proposed in

The Challenge. See The Challenge, supra note 1, at 7 n.28, 25 n.128.

112

National Perpetuity Standards, Part 1, supra note 102, at 520–21.

113

E.g., News & Publications, Retired Judge Makes Case for Conservation, W. R

ESERVE

AND

ONSERVANCY

(Mar. 8, 2010), http://www.wrlandconservancy.org/news-2010-03-08.htm

(on file with the Harvard Law School library) (quoting donor: “I love the land, the beauty of the

woods and the wildlife. I am determined to preserve it in its natural state for posterity. This

easement with Western Reserve Land Conservancy has made that possible.”); Jessica Jay, Land

Trust Risk Management of Legal Defense and Enforcement of Conservation Easements: Potential

Solutions, 6 E

NVTL

. L

. 441, 455 (2000) (“Landowners genuinely may be motivated to protect

their environmentally unique property and devoted to the promise of preserving their land in its

present state for perpetuity.”).

114

E.g., Ruth Ansell, A Conservation Easement Is Forever (unpublished manuscript), http://

www.bedfordlandtrust.org/Articles/article.conservation.easement%20(1).pdf (last visited Jan. 24,

2013) (on file with the Harvard Law School Library).

115

This consistent belief is manifest in donor statements on hundreds of land trust websites.

The Land Trust Alliance offers a letter for landowners to send to their congressional representa-

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 22 1-APR-13 11:14

238 Harvard Environmental Law Review [Vol. 37

evidence that easement donors donate expressly to protect their specific land as

close to forever as possible.

116

There is no evidence that easement donors donate to protect abstract “con-

servation purposes,” that they contemplate that their easement is like a taxicab

that can replace passengers (conservation land),

117

or that swaps or exchanges

were contemplated by Congress, Treasury, or taxpayers as posited by The Chal-

lenge.

118

To the contrary, donors are motivated to protect their own specific

land.

119

Section 170(h) and the Treasury Regulations also contemplate perpet-

ual protection of the specific parcel of land encumbered by the tax-deductible

conservation, unless continued use of that specific property for conservation

purposes becomes impossible or impractical due to changed conditions.

120

Having acquired an easement based on promises of perpetuity, land trusts are

tives to support tax incentives stating, in part: “Recently, I decided to protect my land from devel-

opment for my children and generations to come by donating a conservation easement to [name of

land trust].” Land Trust Alliance, Template Landowner Thank You Letter to Co-sponsors, http://

www.landtrustalliance.org/policy/tax-matters/documents/12-ty-donors-to-reps.doc (last visited

Jan. 24, 2013) (on file with the Harvard Law School Library).

116

E.g., 20 Years, 20 Voices; Two Decades of Conversation About Conservation, I

NLAND

AND

RUST

, http://www.inlandnwlandtrust.org/finds.php?find_id=553 (last visited Jan. 24,

2013) (on file with the Harvard Law School Library) (“While development of the land would

have been financially rewarding, it was not the right thing to do.”

—

John Magnuson, conserva-

tion easement landowner, Dec. 2005; “Not one house on the lake. Developers and realtors have

called us for years, wanting to put houses around the Owens Lakes, but we just didn’t want to see

anything happen to the lakes.”

—

Vickie Hershey, Dec. 2000); see also Nancy McLaughlin,

Increasing the Tax Incentives for Conservation Easement Donations

—

A Responsible Approach,

31 E

COLOGY

L.Q. 1, 41–50 (2004) (summarizing multiple surveys).

117

See The Challenge, supra note 1, at 7 n.28 (taxicab metaphor); see also, e.g., Conserved

Lands, Earle Family Farm Conservation Easement, U

PPER

ACO

ALLEY

AND

RUST

, http://

www.usvlt.org/categories/conserved/easements/earle_farm_easement.html (last visited Jan. 24,

2013) (on file with the Harvard Law School Library) (quoting Nancy Earle: “We have owned the

land for over half a century and are really attached to it. We love the land and don’t ever want to

see it cut up and developed.”).

118

The Challenge, supra note 1, at 45, 64–68, 72–76.

119

E.g., In Their Own Words, Landowners’ Stories of Protecting Their Land, G

ATHERING

ATERS

ONSERVANCY

, at 11, available at http://www.gatheringwaters.org/assets/documents/spe-

cial-publications/ITOW.pdf (“Though I am as ever powerless to know what lies ahead except for

one thing

—

this farm will remain as we love it.”); id. at 13 (“Prior to the easement, I had

nightmares of houses in my ‘front yard’ after I died! At least we’ve been able to insure that this

will not happen as long as civilization exists.”); id. at 33 (“Our land can never be further devel-

oped

—

ever; it gives us comfort.”).

120

See, e.g., Treas. Reg. § 1.170A-14(g)(5)(i) (2009) (baseline documentation that must be

provided to donees “is designed to protect the conservation interests associated with the property,

which although protected in perpetuity by the easement, could be adversely affected by the exer-

cise of the reserved rights”). This regulation contemplates perpetual protection of conservation

interests associated with the particular property encumbered by the easement, not conservation

interests in general. The extinguishment regulation provides an exception to the general rule that

conservation interests associated with the particular property identified in the easement must be

“protected in perpetuity,” and that exception applies in very limited circumstances (i.e., when it

can be established to the satisfaction of a judge that continuing to protect the conservation values

of that property has become “impossible or impractical” due to changed conditions). Treas. Reg.

§ 1.170A-14(g)(6)(i) (extinguishment regulation); see also Treas. Reg. § 1.170A-14(c)(2) (prohib-

iting donee from selling, trading, or otherwise transferring the easement, whether or not for con-

sideration, except to another eligible donee who agrees to continue to enforce the easement or in

the context of an extinguishment that complies with extinguishment and proceeds regulations).

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 23 1-APR-13 11:14

2013] Schwing, Perpetuity Is Forever, Almost Always 239

obligated to fulfill those promises by federal tax law, by charitable trust princi-

ples, by fiduciary duty to donors, by the terms of the conservation easement,

and by practical reality that future donations will dry up if promises are known

to be breached.

121

Taxpayers also have a strong interest in the perpetuity of conservation

easements that they have subsidized through income tax deductions enjoyed by

donors. Easements represent a significant segment of charitable gifts in total

dollars even though donated by comparatively few taxpayers, so all taxpayers

bear a financial burden in the creation of easements. Congress and taxpayers

would never have supported multi-billion dollar investments in tax deduc-

tions

122

for easements that lasted only three or ten or even fifty years.

123

Tax

deductions and corresponding losses to the federal Treasury can be justified

only if deductions “buy” permanent land protection through perpetual ease-

ments.

124

Indeed, federal tax law expressly forbids income tax deductions for

donation of anything except perpetual easements.

125

Laws governing charitable solicitation are significant in that a charity’s

request for donation and the actual donation combine to restrict use of the gift.

A land trust cannot ask for stewardship donations and spend them on the annual

holiday party any more than the land trust can invite donation of land for its

new headquarters and then subdivide the land to sell lots. No different rules

apply to conservation easements that the land trust has solicited by promising

protection of the land in perpetuity and then memorialized that promise in the

easement deed.

Everyone recognizes that there are rare circumstances in which an ease-

ment or a portion of an easement may terminate. In one example, easement

land abuts a two-lane road that is later widened, requiring taking of a strip of

easement land for the road. The Treasury Regulations anticipate these circum-

stances and allow termination subject to the requirement that the land trust

121

See, e.g., Rob Atkinson, Reforming Cy Pres Reform, 44 H

ASTINGS

L.J. 1111, 1121 (1993)

(“disregarding donor intent will have an adverse effect on charitable giving”). See generally Rob

Atkinson, Obedience as the Foundation of Fiduciary Duty, 34 J. C

ORP

. L. 43 (2008); Susan N.

Gary, The Problems with Donor Intent: Interpretation, Enforcement, and Doing the Right Thing,

85 C

-K

ENT

L. R

. 977 (2010) (collecting many authorities).

122

See generally Roger Colinvaux, Charity in the 21st Century: Trending Towards Decay, 11

. T

. R

. 1 (2011).

123

See generally McLaughlin, supra note 116 (describing federal tax incentives); D

EBRA

ENTZ

, T

ONSERVATION

ESOURCE

., S

TATE

ONSERVATION

REDITS

: I

MPACT AND

NALYSIS

(2007), available at http://conservationtools.org/libraries/1/library_items/182-State-

Conservation-Tax-Credits-Impact-and-Analysis (describing state tax incentives). See also Jeff

Pidot, Conservation Easement Reform: As Maine Goes Should the Nation Follow?, 74 L

ONTEMP

. P

ROB

. 1, 4–5 (2011).

124

See generally Daniel Halperin, Incentives for Conservation Easements: The Charitable

Deduction or a Better Way, 74 L

& C

ONTEMP

. P

ROBS

. 29, 31–32, 43–47 (2011) (citing many

authorities); Janet E. Milne, Watersheds: Runoff from the Tax Code, 34 V

. L. R

. 883, 888–90

(2010); Stephanie Stern, Encouraging Conservation on Private Lands: A Behavioral Analysis of

Financial Incentives, 48 A

RIZ

. L. R

. 541, 554–67 (2006); Douglas M. Humphrey, The “Inte-

rior” Revenue Service: The Tax Code as a Vehicle for Third-Party Enforcement of Conservation

Easements, 37 B.C. E

NVTL

. A

. L. R

. 425, 435–52 (2010).

125

26 U.S.C. § 170(h)(2)(C), (5)(A) (2006).

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 24 1-APR-13 11:14

240 Harvard Environmental Law Review [Vol. 37

recovers and uses the proceeds in a manner consistent with the purposes of the

original contribution, the original easement.

126

The land could be condemned

without the easement, and eminent domain law provides substantial protection

to donors and land trusts against a misuse of the condemnation process through

public hearings, required findings of necessity, court proceedings, and jury

trial. The Challenge takes this rare circumstance and expands its use to a host

of vaguely identified situations in which land trusts would have flexibility to

discard one easement to protect some other land.

127

Although Treasury Regulations limit termination to a “judicial proceed-

ing,”

128

The Challenge suggests that a judicial proceeding is merely a safe har-

bor or just one option.

129

Judge Haines in Carpenter did not state that the

extinguishment regulation is merely a safe harbor. Rather, he stated, “the ex-

tinguishment regulation provides taxpayers with a guide, a safe harbor, by

which to create the necessary restrictions to guarantee protection of the conser-

vation purpose in perpetuity.”

130

In context, “the necessary restrictions” are

those in the extinguishment regulation: (1) a judicial proceeding, (2) a finding

that continued use of the land for conservation purposes has become impossible

or impractical, and (3) the holder’s use of its share of the proceeds “in a manner

consistent with the conservation purposes of the original contribution.”

131

In a

subsequent regular Tax Court opinion binding on the Tax Court,

132

Judge Haines

refers to “the judicial proceeding requirement of section 1.170A–14(g)(6)(i)”

as a “specific requirement.”

133

126

Treas. Reg. § 1.170A-14(g)(6); see, e.g., Johnston v. Sonoma Cnty. Agric. Pres. & Open

Space Dist., 123 Cal. Rptr. 2d 226, 237–39, 100 Cal. App. 4th 973 (Cal. Ct. App. 2002) (finding

that the district’s conveyance of utility easement over easement land was proper without voter or

legislative approval, as the conveyance was under threat of condemnation).

127

The Challenge, supra note 1, at 7–16, 73–76.

128

Treas. Reg. § 1.170A-14(g)(6)(i); see Lindstrom, supra note 103, at 31 (“[T]he Regs do

not contemplate that an easement may be terminated other than by judicial action in a manner

more or less consistent with the charitable trust doctrine.”).

129

The Challenge, supra note 1, at 11.

130

Carpenter, T.C. Memo 2012-1, at 18 (emphasis added).

131

Id. at 3 (quoting Treas. Reg. § 1.170A-14(g)(6)). In Carpenter, Judge Haines expressly

referred to footnote 7 in Kaufman II. Carpenter, T.C. Memo 2012-1, at 12 (citing Kaufman II,

136 T.C. at 307 n.7). In that footnote, the Tax Court declined to rule on “whether the language

establishing the restriction [in the conservation easement deed] must incorporate provisions re-

quiring judicial extinguishment (and compensation) in all cases.” Kaufman II, 136 T.C. at 307

n.7. Presumably an easement that is silent regarding extinguishment but is extinguishable under

state law only in a judicial proceeding, upon a finding of impossibility or impracticality, and with

payment of proceeds to the holder to be used for similar conservation purposes, would be deducti-

ble. The Tax Court noted in footnote 7 that a rule mandating that the easement deed incorporate

provisions requiring judicial extinguishment is suggested by the “restriction on transfer” regula-

tion, Treas. Reg. § 1.170A-14(c)(2), which provides that a donee may not transfer a conservation

easement except (i) to another eligible donee who agrees to enforce the easement or (ii) in the

context of an extinguishment that complies with Treas. Reg. § 1.170A-14(g)(6) (extinguishment

and proceeds regulations). See McLaughlin, Protecting the Federal Investment, supra note 23, at

248–54.

132

Tax Court Rule 152; see also Mary Ann Cohen, How to Read Tax Court Opinions, 1

OUS

. B

. & T

. L.J. 1, 5 (2001).

133

Mitchell v. Comm’r, 138 T.C. No. 16 at 9 (2012).

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 25 1-APR-13 11:14

2013] Schwing, Perpetuity Is Forever, Almost Always 241

The further one deviates from a true judicial proceeding to extinguish a

tax-deductible easement, the less protection there is for donors, the public, and

federal taxpayers. Multiple significant reasons support requiring court approval

of easement termination and of amendments detrimental to easement purposes,

including

(1) the significant public investment in conservation easements and

the conservation and historic values they protect; (2) the enormous

economic value inherent in the development and use rights restricted

by conservation easements; (3) the political, financial, and other pres-

sures that may be brought to bear on both governmental and non-

profit holders to release or terminate conservation easements; (4) the

increasing scarcity of undeveloped land; (5) the high stakes involved

in the termination of a conservation easement; and (6) the necessity

of according a certain amount of deference to the intent of conserva-

tion easement donors so as not to chill future conservation easement

donations.

134

Many easements expressly provide, as in Bjork, that court approval is required

for extinguishment.

135

Donors are often informed by land trusts that easements

cannot be extinguished without court action.

136

Equity is also a significant con-

cern. As one commentator explains,

[a]n efficient, effective, and equitable federal tax incentive program

for the acquisition of conservation easements intended to perma-

nently protect unique or otherwise significant properties requires uni-

form national standards that dictate not only the type of easements

that are donated, but also the manner and circumstances under which

such easements can be subsequently transferred or extinguished.

This was recognized by Congress and the Treasury, and is reflected in

the restriction on transfer, extinguishment, division of proceeds, and

other perpetuity provisions of section 170(h) and the Treasury Regu-

lations. Indeed, it would make no sense to impose elaborate conser-

vation purposes, baseline documentation, and other threshold

134

McLaughlin & Machlis, supra note 61, at 1580; see McLaughlin, Protecting the Federal

Investment, supra note 23, at 258–62 (explaining reasons underlying extinguishment and proceeds

requirements in the Treasury Regulations); see also Clemens Muller-Landau, Legislating Against

Perpetuity: The Limits of the Legislative Branch’s Powers To Modify or Terminate Conservation

Easements, 29 J. L

AND

. & E

NVTL

. L. 281, 291–309 (2009).

135

See, e.g., Michigan Model Conservation Easement, § 13, available at http://landtrust.org/

ProtectingLand/MichModelEasementTextVersion.htm; Conservation Easement Paragraph

Databank, B

EST

& K

RIEGER

, 85–87 (“Paragraph Ten”) (Oct. 27, 2009), available at http://

www.bbklaw.com/?t=40&an=3775&format=xml.

136

Conservation Easements FAQ, G

ATHERING

ATERS

ONSERVANCY

, http://www.gathering

waters.org/about-land-trusts/conservation-options-for-landowners/conservation-easements/conser-

vation-easements-faq/ (last visited Jan. 24, 2013) (on file with the Harvard Law School Library)

(“It is very difficult to extinguish a conservation easement. Conservation easements are designed

to protect natural resources in perpetuity. They can be extinguished only by a judge and only in

very specialized circumstances.”).

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 26 1-APR-13 11:14

242 Harvard Environmental Law Review [Vol. 37

requirements at the time of the donation of tax-deductible conserva-

tion easements, but leave the subsequent transfer and extinguishment

of such easements to the vagaries of the state enabling statutes.

137

VI. G

OOD

RAFTING

OLVES

ANY

SSUES OF

HANGING

ONDITIONS

Change is the one true constant. All easements must be drafted recogniz-

ing possible future changes in every aspect of land and people. Careful drafters

address not only current land and conditions but also foreseeable future

changes that may occur. Thus, expanding urban uses on nearby properties must

be considered in how easement land may be affected. Lands in a flood plain

need an easement that addresses floods and droughts. Climate change should

be considered in drafting all or substantially all easements. In areas subject to

tornados or earthquakes, easements should address resolution of land manage-

ment disputes after such events. Agricultural easements must address changes

in farming techniques, crops, water availability, and the like. Potential changes

over time need to be addressed in any well-drafted easement, and the land trust

community has long understood the importance of doing so.

138

Good drafting takes time and knowledge of the land. A conservation ease-

ment is not a commercial lease on a strip mall unit. Instead, a well-drafted

easement may require several visits to the land and meetings with donors, cou-

pled with thoughtful consideration of future uses and impacts on the land.

There is, as the saying goes, “a lot of bad paper out there”

—

easements that

were poorly drafted for many reasons. The land trust community must address

the bad paper while remaining true to promises made to donors and taxpayers

and to the obligations of charitable organizations.

VII. C

HANGED

IRCUMSTANCES

ARELY

UPPORT

MENDMENT

ERMINATION

The IRS explains: “Conservation easements should not be amended ex-

cept in limited circumstances such as to correct a typographical error in the

original easement document . . . . However, if a remote future event, like an

earthquake, can extinguish the easement, the donation would nevertheless be

treated as in perpetuity.”

139

The only other IRS example of a possible proper

137

National Perpetuity Standards, Part 2, supra note 34, at 68; see also id. at 69 (“Federally

subsidized perpetual conservation easements should be no more easily transferable or terminable

in Montana or Michigan than in Maine or Minnesota.”).

138

See J

ESSICA

, D

RAFTING

ONSERVATION

ASEMENTS

7 (2010), available at http://www.

conservationlaw.org/publications/13-DraftingGuidance.pdf (stating that easement drafters should

“continue to emphasize that changed conditions surrounding the property are not justification for

the easement’s termination, only the total loss of all conservation values may justify termination,

and even then, allow for substitution of new purposes for the public’s benefit instead”).

139

IRS, supra note 28, at 16 (citing Treas. Reg. § 1.170A-14(g)(3) (2009)).

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 27 1-APR-13 11:14

2013] Schwing, Perpetuity Is Forever, Almost Always 243

case for extinguishment of part or all of an easement is condemnation.

140

Con-

servation easements are perpetual transfers of property rights from an owner to

an eligible donee, which are advertised as perpetual by land trusts, required by

the IRS to be perpetual, and intended by the donor to be perpetual.

Many changed circumstances are foreseeable events or alterations that

could and should have been foreseen. The whole purpose of a conservation

easement is to remain binding despite changes in circumstances, such as en-

hanced profitability of land for development. Land may become more or less

valuable with or without particular permitted uses. An easement’s bar against a

valuable use is not a basis for amendment but a reason for the easement’s exis-

tence. Tax deductions or credits may not be available as parties had expected

with no effect on easement permanence.

141

Parties to transactions routinely

take the risk that tax consequences may differ from what was anticipated, but

that event does not justify undoing even ordinary transactions, much less per-

petual ones. These are risks in any transfer of property rights. Discovery of

valuable mineral rights does not support revocation of other types of deeds

transferring a parcel in fee, so there is no reason that discovery of mineral

rights on easement land that cannot be mined because of the easement should

warrant termination of the easement. Development opportunities may arise af-

ter the easement is recorded that were not contemplated before. Perpetuity

means that it does not matter how valuable the land would be or may become

without the easement’s restrictions. The Restatement (Third) of Property: Ser-

vitudes explains: “If no conservation or preservation purpose can be served by

continuance of the servitude, the public interest requires that courts have the

140

Treas. Reg. § 1.170A-14(i)(6). See generally A

MENDING

ASEMENTS

THE

UESTION OF

CCOMMODATING

HANGE IN

ONSERVATION

ASEMENT

ANDBOOK

: M

ANAGING

ONSERVA-

TION AND

ISTORIC

RESERVATION

ASEMENT

ROGRAMS

(Janet Diehl & Thomas S. Barrett eds.,

1988).

141

As a result, Walter & Otero Cnty. Land Trust, Order, No. 05-CV-96 (Colo. Jud. Dist. Ct.

June 21, 2005), a case described in The Challenge, see The Challenge, supra note 1, at 40–42, is

wrongly decided. See, e.g., Remarks of Steven T. Miller, Commissioner, Tax Exempt and Gov-

ernment Entities, IRS (Mar. 28, 2006), available at http://www.irs.gov/pub/irs-tege/

miller_speech_3_28_06.pdf (“[U]pon learning that the tax credit was not marketable, as ex-

pected, the donors petitioned for the return of the easement. This situation gives us grave concern,

because it too violates the requirement that easements be granted in perpetuity.”); Lindstrom,

supra note 103, at 18 (“Many people wonder if they can provide in their easement that the ease-

ment terminates if the tax benefits are denied for some reason, or if the tax benefits turn out to be

less than anticipated. Of course the answer is that they cannot make such a provision because it

violates the requirement that the easement be granted in perpetuity.”). Perpetuity of easements

cannot be contingent on any event occurring after donation, such as whether donors receive de-

sired tax benefits. “If the contribution is a conditional gift, the taxpayer cannot take a deduction.”

IRS, supra note 28, at 12. Land trusts may not make assurances relating to tax deductions. L

AND

RUST

LLIANCE

, L

AND

RUST

TANDARDS AND

RACTICES

Practice 10(C) (2004), available at

http://www.landtrustalliance.org/training/sp/lt-standards-practices07.pdf (“The land trust does not

make assurances as to whether a particular land or easement donation will be deductible, what

monetary value of the gift the Internal Revenue Service (IRS) and/or state will accept, what the

resulting tax benefits of the deduction will be, or whether the donor’s appraisal is accurate.”). For

extended discussion of Walter & Otero County Land Trust, see National Perpetuity Standards,

Part 2, supra note 34, at 32–35.

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 28 1-APR-13 11:14

244 Harvard Environmental Law Review [Vol. 37

power to terminate the servitude so that some other productive use may be

made of the land.”

142

Casual or common use of changed circumstances to justify amendment or

termination of conservation easements is a repudiation of the very concept of

perpetuity. Of course there will be greater development pressure on many

easement lands in the future

—

the easements are intended to preserve those

lands as natural oases in the midst of development.

VIII. C

ONSERVATION

ASEMENTS

AXICABS

In proposing expansion of land trusts’ ability to amend and terminate ease-

ments, The Challenge uses an analogy in which the easement is a taxicab carry-

ing its conservation purposes through time so that perpetuity is satisfied if

conservation purposes endure even if the taxicab is taken to a junkyard and

destroyed.

143

This analogy is unsupported in law and deeply offensive to ease-

ment donors. Donors who made personal and financial sacrifices relying on

promises of perpetuity cannot hear the taxicab analogy without powerful nega-

tive reactions.

144

The analogy is based on misreading Treasury Regulations that are not in

the Code. The analogy fails because the Code mandates perpetuity, and Trea-

sury Regulations cannot diminish or alter the Code.

145

In fact, the two can and

must be construed consistently by applying the same perpetuity requirements.

The Challenge claims that, because the Treasury Regulations allow an easement

to be terminated under specific circumstances, “the Regulations emphasize per-

petuating an easement’s purposes over time, as opposed to perpetuating the

deed of the easement itself.”

146

But the Treasury Regulations authorize extin-

guishment only in very limited circumstances, namely, if a “subsequent unex-

pected change in the conditions surrounding the property . . . make[s] [it]

impossible or impractical”

147

to continue to use the property for conservation

purposes and only with judicial oversight and a payment of a designated mini-

142

ESTATEMENT

HIRD

)

ROPERTY

: S

ERVITUDES

§ 7.11 cmt. a (2000).

143

The Challenge, supra note 1, at 7 n.28.

144

The author is such a donor and has observed intense negative reactions by other donors.

145

A regulation may not amend a statute, Koshland v. Helvering, 298 U.S. 441, 447 (1936),

or add to the statute “something which is not there,” United States v. Calamaro, 354 U.S. 351,

359 (1957). See also Iglesias v. United States, 848 F.2d 362, 367 (2d Cir. 1988) (citing many

authorities).

146

The Challenge, supra note 1, at 7.

147

Treas. Reg. § 1.170A-14(g)(6)(i) (2009). “Impractical” means much more than “inconve-

nient.” See R

ESTATEMENT

ECOND

)

ONTRACTS

§ 261 cmt. d (“Performance may be imprac-

ticable because extreme and unreasonable difficulty, expense, injury, or loss to one of the parties

will be involved.”). See generally Robert L. Birmingham, Why Is There Taylor v. Caldwell?

Three Propositions About Impracticability, 23 U.S.F. L. R

. 379 (1989); Sheldon W. Halpern,

Application of the Doctrine of Commercial Impracticability: Searching for the Wisdom of Solo-

mon, 135 U. P

. L. R

. 1123 (1987). Circumstances and events that were foreseeable when

entering into the easement, such as climate change, expanding development pressure, and rising

land values, are insufficient. See, e.g., Note, The Doctrine of Impossibility of Performance and the

Foreseeability Test, 6 L

. U. C

. L.J. 575 (1975).

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 29 1-APR-13 11:14

2013] Schwing, Perpetuity Is Forever, Almost Always 245

mum proportionate share of proceeds to the holder to be used to accomplish

similar conservation purposes.

148

The Treasury Regulations also expressly man-

date that holders be prohibited from transfers except (1) to another eligible

donee that agrees to enforce the easement or (2) in an extinguishment compli-

ant with federal extinguishment and proceeds regulations.

149

No Regulation

supports the interpretation that perpetuation of easement purposes on entirely

different land is an acceptable alternative to perpetuity of the easement. The

requirement for perpetuity, repeated in the Code and Treasury Regulations, ar-

gues powerfully to the contrary.

The taxicab analogy undermines the purpose of perpetual easements and

jeopardizes use of easements as a land protection tool. Easement donors (and

restricted use fee land donors) typically grant their property interests to land

trusts because the donors love and wish to protect their land forever.

150

Tax

deductions are an incentive and a benefit, but they do not begin to compensate

for lost land value.

151

Instead, the true easement value is the knowledge that the

land will be protected long after the current owner/donor is dead. The taxicab

analogy posits that the land trust can freely renege on promises to protect Aunt

Sally’s farm if the board of directors in a future year finds another property

more appealing. If Aunt Sally is typical of donors and knew about the taxicab

analogy, she very likely would not have donated.

152

Donors who learn of this

and similar arguments for flexibility by a minority of the land trust community

are outraged and feel betrayed.

153

Mere existence of the taxicab analogy places

future easement donations at risk because prospective donors who realize that

an easement donated to protect their specific land could be swapped at the

148

Treas. Reg. § 1.170A-14(g)(6)(i).

149

See supra note 131 and accompanying text.

150

Representations land trusts make to donors regarding permanent protection of their land

support this conclusion. Land trusts do not solicit easement donations on their websites or in

promotional materials by stating that land trusts will be free to swap or trade a landowner’s ease-

ment when some ostensibly “better” conservation opportunity comes along. Land trusts represent

that they are undertaking the obligation to protect each donor’s specific land “in perpetuity” or

“forever.” Many such land trust representations are collected in footnotes in this Article.

151

McLaughlin, supra note 116, at 45–46 (“[F]ederal tax incentives compensate the typical

easement donor for only a modest percentage of the reduction in the value of his or her land

resulting from an easement donation. Any charitable donation that requires a significant financial

sacrifice must be motivated by factors other than, or in addition to, the anticipated tax savings.”).

152

See, e.g., id. at 45 (“[T]he surveys indicate that for most easement donors, a strong per-

sonal attachment to and concern about the long-term stewardship of their land is the primary

factor motivating their donations, while tax incentives generally play a subsidiary or supplemental

role.”); Land Conservation: The Case for Perpetual Easements, V

ERMONT

AND

RUST

(2007),

http://www.vlt.org/news-publications/other-publications/201 (last visited Jan. 24, 2013) (on file

with the Harvard Law School Library) (noting with regard to Vermont Land Trust easements,

“[a]lthough the tax and financial benefits were usually important considerations, the owner’s

primary motivation for conserving the property was to ensure that the land would be protected and

cared for, even after their own ownership ends”).

153

Nancy A. McLaughlin, Amending Perpetual Conservation Easements: A Case Study of the

Myrtle Grove Controversy, 40 U. R

ICH

. L. R

. 1031, 1050–51 (2006) (describing how donor

gave up an easier life for herself for promise of permanent protection of her land and deceased

donor’s daughter expressed her “‘sense of outrage and betrayal’ ” at a proposed subdivision on

easement land (quoting daughter’s letter)).

\\jciprod01\productn\H\HLE\37-1\HLE105.txt unknown Seq: 30 1-APR-13 11:14

246 Harvard Environmental Law Review [Vol. 37

whim of a future land trust board would not donate.

154

Moreover, substantial

federal investment would not be protected as Congress intended because the

requirements of 170(h) and the Treasury Regulations would not have to be sat-

isfied as to the new protected parcel or easement burdening that parcel.

If a land trust discovers other lands that should be protected, the solution is

not to terminate existing perpetual easements but to raise funds to protect the

additional land. Release of existing perpetual easements or an easement’s re-

strictions to leverage protection of other land is a breach of faith to the donor,

to federal taxpayers, to future donors, and to the entire land trust community.

ONCLUSION

Conservation easements are challenging to draft and to hold. Each one

provides lessons to the land trust and drafters in how to do the next one better.

States are, of course, free to establish easement purchase and tax incentive pro-

grams that allow easements to be terminated pursuant to state-created processes

and procedures, and some have done so. Land trusts are also free to raise funds

to purchase easements that expressly grant the land trusts the right to amend or

terminate the easements as land trusts see fit or upon satisfaction of conditions

of their choice, subject to whatever requirements are imposed by state law, and

assuming land trusts negotiate with the grantor for this discretion and memori-

alize discretion in the easement deed (instead of representing that the easement

is perpetual).

States and land trusts that wish to enjoy federal tax incentives for ease-

ment donations must satisfy federal tax law requirements. Congress has man-

dated that federally deductible conservation easements be “granted in

perpetuity,” their conservation purposes “protected in perpetuity,” and the

holders not have the right to sell, release, or otherwise transfer such easements

except as provided in the extinguishment regulation. Conservation easements

protect beloved farms and forests, vineyards and vernal pools across America

because donors believe the promise of perpetuity. If that promise is dishon-

ored, donors’ trust will have been betrayed, the public’s subsidy forfeited, and

our great-grandchildren will all lose.

154

According to a 2005 nationwide survey conducted by Zogby International, Charitable

Donating Survey, American Adults, Z

OGBY

’

(Nov. 22, 2005), available at http://www.cehe.

org/resources/ZogbyResults.pdf, (i) 97% of the respondents said they consider it a “very” or

“somewhat” serious matter “if charities are spending money donated to them on unauthorized

projects,” id. at 27, while 78.7% said they would “definitely” or “probably” stop giving to any

nonprofit organization that accepted contributions for one purpose and used the money for an-

other, id. at 12, (ii) 72.4% said that, when a nonprofit uses money “for a purpose other than the

one for which it was given,” the nonprofit’s managers “should be held legally or criminally liable

for acting in a fraudulent manner,” id. at 18, and (iii) 97.4% said that respecting a donor’s wishes

was “very” or “somewhat” important to the “ethical governance of nonprofit charitable organiza-

tions,” id. at 21.