ENVIRONMENTAL LAW COMMITTEECOMMENT ON A04231 Part 1

NEW YORK COUNTY LAWYERS’ ASSOCIATION

14 VESEY STREET

NEW YORK, NY 10007

 

ENVIRONMENTAL LAW COMMITTEE

COMMENT ON A04231

 

 

Prepared by

Craig T. Donovan, Co-Chair

Ronald E. Steinvurzel, Co-Chair

Erik B. Bluemel, Vice-Chair

 

 

Intro A04231

 

An act to amend the environmental conservation law, in relation to conservation easements.

 

 

EXECUTIVE SUMMARY

The Committee on Environmental Law (CEL) of the New York County Lawyers’ Association urges the disapproval of New York State Assembly Bill A04231, a bill in relation to conservation easements. A04231, establishing a State Uniform Wetlands Compensation and Tax Abatement Board, should not be passed or proposed again in its current form. The bill lacks clarity, is unnecessary, creates an incentive structure that thwarts the purposes of the Conservation Easement Law and the Environmental Conservation Law, is inconsistent with existing law, and does not consider the implications of the public trust doctrine on wetlands designation.

 

The bill lacks clarity because it fails to identify essential information with respect to the operation of, assignment to, and tenure of Board positions. Furthermore, the bill fails to clarify to which wetlands it applies, what designations are encompassed within its rubric, to account for buffer zone changes, or to indicate when such conservation easements must be created in relation to a wetlands designation in order to require just compensation. Furthermore, the bill lacks clarity with respect to parcels under 12.4 acres, a current minimum acreage for designation as state wetlands.

 

The bill is unnecessary and confusing in its compensation scheme, given the current jurisprudence and regulatory scheme governing compensation for establishing conservation easements under “just compensation” and “fair market value” schema, and the methods by which such values are determined. These methods are not consistent with existing practice. The bill further creates an incentive structure that thwarts the purpose of the Conservation Easement Law. The bill modifies the Conservation Easement Law by allowing landowners to reap windfalls by establishing conservation easements in order to receive just compensation even when landowners have no intention of developing the property or are restricted from doing so from pre-existing wetlands designations.

 

Given the current jurisprudential structure of compensation, the bill is unnecessary as landowners are free to reject entering into a voluntary conservation easement if the compensation is deemed insufficient. However, by mandating a particular level of compensation for establishing conservation easements, landowners may be doubly and triply compensated under other legislative schema, including income tax, estate tax and property tax deductions designed around the current compensation scheme. Furthermore, the mandating of compensation at “fair market value” precludes an often-utilized “bargain sale” of conservation easements, which allows for compensation at below market value in exchange for a reduced tax burden based on the charitable contribution of the “bargain.”

 

Finally, the bill may not only effect an unjustified expansion of the compensation requirement of the Takings Clause, but it also denies the right of New York State to invoke the public trust doctrine as a means of protecting wetlands for public enjoyment and use.

 

For these reasons, the Committee on Environmental Law of the New York County’s Lawyers’ Association stands in opposition to A04231.

 

 

RECOMMENDATION: THIS BILL IS DISAPPROVED

 

The Committee on Environmental Law (CEL) of the New York County Lawyers’ Association urges the disapproval of New York State Assembly Bill A04231, a bill in relation to conservation easements. A04231, establishing a State Uniform Wetlands Compensation and Tax Abatement Board, should not be passed or proposed again in its current form because the bill lacks clarity, is unnecessary, creates an incentive structure that thwarts the purposes of the Conservation Easement Law and the Environmental Conservation Law, is inconsistent with existing law, and does not consider the implications of the public trust doctrine on wetlands designation.

 

This legislative Comment begins with Part I, which generally describes the bill and its relevant aspects. Part II discusses the importance of wetlands conservation. The Comment continues in Part III to discuss the technical reasons for CEL’s disapproval of the bill. Part IV reviews the substantive reasons for CEL’s disapproval of the bill, while Part V discusses the relation of the public trust doctrine to the bill as another reason for rejection of the bill as currently written.

 

I Overview of A04231


  • Purpose

 

A04231 proposes to modify Section 24-0905 and Subdivision 7 of Section 49-0305 of, and add Section 49-0306 to, the Environmental Conservation Law to provide for the creation of a wetlands compensation/tax abatement board that shall “justly compensate landowners for wetlands designations of such land at fair market value” and assess the value of properties containing freshwater wetlands subjected to land use regulations based upon the value of the remaining uses of the property according to the real property tax law. The board is also authorized by A04231 to “issue rules and regulations necessary” to carry out such a mandate.

 

The “Board shall consist of seven members: two shall be legislators of different political affiliations; one attorney; one New York State certified real estate appraiser; one member of a school board; and two real property owners within the medium-priced real estate market.”

 

  • Political Influence

This piece of legislation is one of a number of wetlands-related bills before the Assembly sponsored by Assemblyperson Robert Prentiss (R-Albany, Saratoga) and cosponsored by Assemblyperson James Tedisco (R-Saratoga, Schenectady). A04231, like the other bills, appears to be a response to the Department of Environmental Conservation’s attempted remapping efforts in Saratoga County. The original wetlands map was filed on May 6, 1987. The proposed amendments to the freshwater wetlands map of Saratoga County outside the boundaries of Adirondack Park was initiated because DEC “‘found inaccuracies on the wetland maps first filed in 1987 that [DEC] now want[s] to correct,’ Commissioner Cahill said. ‘[DEC] want[s] the boundaries of mapped wetlands to reflect actual “on-the-ground” conditions.’” Commissioner Cahill continued: “‘[f]reshwater wetlands improve water quality, prevent floods, and provide open space and fish and wildlife habitat . . . . This amendment will ensure that important wetlands resources will be protected in Saratoga County.’”

 

The proposed wetlands map resulted in a “significant acreage of wetlands added to the [wetland] maps” for the towns of Charlton and Northumberland in Saratoga County. This added acreage had the effect of “doubling the jurisdictional wetlands to more than 50,000 acres and thereby brining 4,200 additional private parcels into its domain” in the county, according to Carol W. Lagrasse, President of the Property Rights Foundation of America, Inc., a local nonprofit property owners’ association that established the “Wetlands Justice Project” to push for property owner protection against wetlands designations.

 

The proposed amendments were brought to public hearing and a number of information sessions where local property owners became apprised of DEC’s desire to amend the wetlands map. Nearly every one of 42 oral statements and 95 written public comments received “expressed a concern with a map amendment, the map amendment process, or the Department’s implementation of the freshwater wetlands permit program.” Many of the criticisms of the mapping process seem to be traceable to DEC’s alleged errant designations and method of wetlands designations, which is alleged to have “invented a tricky new way of measuring wetlands area that brings many very small wetlands artificially up to the 12.4-acre minimum” (termed the “string of beads” method), and that “[w]hereas soil type, vegetation species and water saturation are required to make a true wetland, DEC often bases its classification on just one characteristic, such as vegetation like purple loosestripe, which also can grow on dry land.” Lagrasse claims that the “string of beads” method, whereby “[t]he DEC connects small (2-, 4-, 7-, etc. acre) wetlands along a tiny brook until the 12.4-acre minimum has been achieved,” “is the main reason the wetlands area is being doubled without any changes in the law.”

 

In response to these comments, DEC “suspend[ed] the current map amendment effort in Saratoga County . . . .” DEC commented: “[w]hile the Department recognizes the value of accurate wetland maps, it also recognizes the compelling importance of maintaining the public’s confidence in the mapping program.” This comment was made despite the fact that 688 property owners (of the 4,264 to which notices were sent) requested that DEC “verify and delineate the actual wetland boundary located on their property” in light of DEC’s current view towards wetland mapping. A04231 was introduced which provides compensation only to wetlands designated conservation easements. Conservation easements sold by landowners in other critical or vulnerable ecologically important areas are not similarly compensated by this legislation. This therefore seems to be a direct response to DEC’s wetlands remapping efforts and is an attempt to circumvent New York takings jurisprudence.

 

  • Mapping Issues and Compensation Policies

 

CEL has not studied the methods by which DEC mapped Saratoga County wetlands for its proposed amendments to the original designations and therefore refrains from comment on that issue. CEL, however, does believe that the methods used by DEC to map the Saratoga wetlands are irrelevant to the purposes of A04231 to provide just compensation and tax abatements for wetlands designations. While the threat of increased designations may have prompted the proposed bill, A04231 should not be regarded as a solution to claims of “overzealous” designations. Because compensation for wetlands designations would not come out of DEC’s budget, there is little accountability for DEC designations provided under A04231. Therefore, A04231 must be scrutinized even more carefully if the allegations are correct—if the re designation process would yield a doubling of the designations, and those designations were required to be compensated, the New York State budget could be very significantly impacted by the designation of Saratoga County conservation easements as wetlands. That, however, does not, in and of itself, justify disapproval of the bill, as considerations of clarity, fairness, regulatory consistency, notice and public trust must also be considered. These issues are discussed more fully below.

 

II Importance of Wetlands


  • Social and Ecological Benefit of Wetlands

It has become almost axiomatic that wetlands provide important benefits to aquatic ecosystems.

 

  1. Wildlife

 

One of these recognized benefits is the ability to provide “critical food sources, spawning grounds and nurseries for coastal fish and shellfish . . . .” These important benefits extend beyond coastal aquatic life to freshwater species as well, many of which depend upon the proper functioning of wetlands for survival. Besides aquatic species, “[w]etlands also provide nesting, feeding, and resting sites for waterfowl and migratory birds.” As a result, “[m]any endangered or threatened species are heavily dependent on wetlands for continued survival.”

 

2. Water Quality

 

Also of critical importance is the ability of wetlands to “purify storm water by filtering out nutrients, sediments and pollutants, thereby protecting both surface and ground water.” Wetlands contribute to water quality by capturing upland runoff as nutrients are taken up by plants or absorbed and stored in the soil. This purification process reduces contaminants from the drinking water supply and from waters used for irrigation of farmlands.

 

3. Flood Control

 

Wetlands also serve to protect lowlands from flooding, as wetlands store and release storm waters. Even where wetlands are unable to absorb the additional storm water, they still serve a valuable function of slowing the velocity of such waters, thereby reducing damages caused by flood waters. The ability to insulate development and protect against storm damage is not limited strictly to river systems, as coastal wetlands provide coastal development an invaluable buffer zone against the brunt of oceanic storms.

 

4. Recreational and Other Benefits

 

Wetlands also provide numerous other, more intangible social benefits including providing open space for unique recreational enjoyment, fertile grounds for scientific experimentation and aesthetic beauty. Of course, wetlands also provide valuable natural resources that can be extracted or harvested for consumption purposes including timber, agricultural products, peat and other such highly marketable products.

 

B. New York State View on the Importance of Wetlands

 

As a result of a number of studies conducted regarding the value and function of wetlands, DEC and the legislature have both recognized the need to protect wetlands because of the important functions they serve.

 

DEC noted that wetlands provide a number of important functions, some of which are recited above:

 

Flood and Storm Water Control: Wetlands are important in how water moves in a watershed. They absorb, store, and slow down the movement of rain and melt water, minimizing flooding and stabilizing water flow.

 

Surface and Groundwater Protection: Wetlands often serve as groundwater discharge sites, maintaining base flow in streams and rivers and supporting ponds and lakes. In some places, wetlands are very important in recharging groundwater supplies.

 

Erosion Control: Wetlands slow water velocity and filter sediments, protecting reservoirs and navigational channels. They also buffer shorelines and agricultural soils from water erosion.

 

Pollution Treatment and Nutrient Cycling: Wetlands cleanse water by filtering out natural and many man-made pollutants, which are then broken down or immobilized. In wetlands, organic materials are also broken down and recycled back into the environment, where they support the food chain.

 

Fish and Wildlife Habitat: Wetlands are one of the most productive habitats for feeding, nesting, spawning, resting and cover for fish and wildlife, including many rare and endangered species.

 

Public Enjoyment: Wetlands provide areas for recreation, education and research. They also provide valuable open space, especially in developing areas where they may be the only green space remaining.

 

The Freshwater Wetlands Act, as passed by the New York State legislature, states:

 

It is declared to be the public policy of the state to preserve, protect and conserve freshwater wetlands and the benefits derived there from, to prevent the despoliation and destruction of freshwater wetlands, and to regulate use and development of such wetlands to secure the natural benefits of freshwater wetland, consistent with the general welfare and beneficial economic, social and agricultural development of the state.”

 

Finally, the Conservation Easement Law under the Environmental Conservation Law states:

 

The legislature hereby finds and declares that in order to implement the state policy of conserving, preserving and protecting its environmental assets and natural and man-made resources, the preservation of open spaces, the preservation, development and improvement of agricultural and forest lands, the preservation of areas which are significant because of their scenic or natural beauty or wetland, shoreline, geological or ecological character, and the preservation of areas which are significant because of their historical, archaeological, architectural or cultural amenities, is fundamental to the maintenance, enhancement and improvement of recreational opportunities, tourism, community attractiveness, balanced economic growth and the quality of life in all areas of the state.

 

The policy of the State of New York, then, is to protect wetlands from overconsumption and despoliation. This recognition has come about, however, only after more than half of the state’s wetlands have been destroyed.

 

C. Destruction of Wetlands

Since the Department of Interior report, New York has seen something of a revival of its wetlands. Since the mid-1980s, New York has seen a net gain of nearly 15,500 acres of wetlands. Unfortunately, this revival is more illusory than anything else: 99% of the gains came from reversion to wetlands (from abandoned agricultural lands) and modified hydrology resulting in increased runoff; 99% of the losses came from increased urbanization and its associated impacts. Furthermore, “[n]et gains posted for some States may be due to underestimates of original wetlands, or represent real gains through incidental or intentional wetland creation or restoration associated with water impoundments and other projects.” Given DEC’s recent remapping efforts, it seems the former is a very plausible explanation. In sum, the gains in wetlands claimed by New York are attributable primarily to abandoned lands and increased designations after incorrect initial designations which, although representing short term gains in nominal wetlands, does little “to substantiate a change in the long-term continuing decline” of wetlands.

 

This general trend toward declining wetlands acreage is made evident by the fact that over 300,000 acres of wetlands are lost each year. These losses to development are generally irreversible. The resultant loss of valuable social and ecological functions include not only the reduced value of wetlands noted above but also the reduced economic value of products derived from, or related to, the wetlands. In total, between 1992 and 1997, over eleven million acres were developed for the first time—this rate far surpasses the development growth rate for any previous five years.

 

III Technical Deficiencies of A04231

 

Because wetlands are recognized as possessing important social and ecological functions and their preservation at existing levels are an explicit goal of New York statutory law, it should be clear that any amendments to existing environmental legislation should comport with that purpose and effect such conservationist and preservationist goals. Unfortunately, A04231 fails to do just this for varied technical reasons. Were such technical deficiencies corrected, the bill still should be rejected as unjustified, unnecessary, confusing and contrary to existing law.

 

A. Structure of State Uniform Wetlands Just Compensation/Tax Abatement Board

 

A04231 establishes a wetlands compensation/tax abatement board that shall “justly compensate landowners for wetlands designations of such land at fair market value” and assess the value of properties containing freshwater wetlands subjected to land use regulations based upon the value of the remaining uses of the property according to the real property tax law. The board is also authorized by A04231 to “issue rules and regulations necessary” to carry out such a mandate. Unfortunately, there exist very clear gaps in the construction of the Board. No guidance is provided as to how an individual within an identified class of eligible members becomes a member of the Board. It is unclear whether or not these positions are appointed, and if so, by which agency or office. Furthermore, there is no indication of the length of term that individuals serve. While the Board may constitute an agency for purposes of judicial review, there is no indication what office or department supervises the actions of the Board, how a member of the Board may lose such membership, or what happens when the Board is not comprised of the identified seven members. Given that wetlands designations and valuations are extremely controversial, it seems unwise to leave such crucial determinants of the value of the property in limbo.

 

While these shortcomings can be remedied through more precise language, CEL believes that there is insufficient justification to establish the Board as currently proposed and that the resultant transaction costs would be significantly raised for each valuation. The Internal Revenue Service (IRS) requires that any conservation easement donation over $5,000 be valued by a qualified appraiser in order for such a donation to be eligible for a tax benefit. Furthermore, the “fair market value” of conservation easements is generally “established by the opinions of qualified real estate appraisers.”

 

As a result, there is no justification why the particular classes of individuals that are eligible for participation on the Board have knowledge in the valuation of wetlands properties, could replace a qualified appraiser or are even necessary given the need for a qualified appraiser. Additionally, the Board, as currently proposed, seems very likely to succumb to “agency capture” by interested parties because they are not technocratic specialists in land valuation but include interested community persons and other generalists. Because the Board will be comprised of individuals not otherwise qualified to appraise or calculate the value of a conservation easement and because the Board members with the power over the valuation process include laypersons, the Board is susceptible to greater politicization of the valuation process than currently exists, personal bias, improper favoritism or even corruption. Moreover, as the Board does not have any definite standards regulating its actions, there are no assurances that the Board will act fairly or appropriately, despite the requirement of a “fair market value” standard.

 

B. Definitional Uncertainty

 

  1. Which Wetlands (tidal, freshwater, all)

 

It is not clear from the statute, which deals only with lands containing conservation easements, whether compensation is required for designations of all wetlands, or whether or not compensation is limited only to freshwater wetlands, regulated under Articles 15 and 24 of the Environmental Conservation Law, tidal wetlands, regulated under Article 25 of the Environmental Conservation Law, or both.

 

The United States Fish and Wildlife Service (FWS) has divided wetlands and deepwater habitats into five distinct types: (1) marine systems consisting of open ocean and coastline; (2) estuarine systems consisting of tidal marshes, mangrove swamps and intertidal flats; (3) riverine systems consisting of freshwater river and stream channels; (4) lacustrine systems consisting of lakes, reservoirs and deep ponds; and (5) palustrine systems encompassing most inland marshes, bogs and swamps.

 

The proposed bill amends § 24-0905 of the ECL which deals with the assessment of properties designated as freshwater wetlands for tax purposes. The bill does not include such an amendment to the language of § 25-0302(2) of the ECL, which uses nearly identical language to note that

 

[t]he placing of any tidal wetlands under a land-use regulation which restricts its use shall be deemed a limitation on the use of such wetlands for the purposes of property tax valuation, in the same manner as if an easement or right had been acquired under the general municipal law. Assessment shall be based on present use under the restricting regulation.

 

A04231, however, only deals with the means by which the tax valuation would be assessed. It does not affect the level or availability of compensation, distinguished by wetland type, and therefore may provide unequal compensation to sellers of freshwater and tidal wetlands conservation easements.

 

2. What Designations

 

  1. Classes

 

Of particular concern is the lack of clarity the bill provides with respect to the different classes of wetland designations that may be issued. DEC specifically states that “not all wetlands are equal” and that “[d]ifferent wetlands provide different functions and benefits to different degrees.” As a result, it classifies Freshwater Wetlands into four classes of wetlands, with different protections provided each class. Similarly, DEC has established a number of categories of tidal wetlands and has classified them in classes of one to four, in order of level of protection provided. DEC has further provided a list of activities that are presumptively compatible with different types of tidal wetlands. Given the clear efforts which DEC has taken to distinguish wetlands based upon their differing values and functions, the proposed bill seems at odds with the intent of DEC to regulate and value wetlands according to function.

 

A04231, as proposed, seeks to provide compensation for conservation easements based upon the diminished property value to the landowner, not based upon the value of the particular wetlands. This is inconsistent with the current efforts of DEC, described above, and would skew incentives for the actors involved in conservation easements. Because different wetlands classes result in different approval rates for proposed development schemes, wetlands labeled Class I wetlands are very heavily protected, while Class IV wetlands are less so. Conservation easements established under each different class of wetlands may improperly overcompensate landowners for their easements. If a landowner established a conservation easement, and that land was designated a wetlands, then the owner must be compensated based upon the “fair market value” of the designation. The difficulties with the standard of valuation are discussed in depth below. What results, however, is that all conservation easements will be valued based upon the same formula, applying a one-size-fits-all approach to wetlands valuation to which DEC clearly stands opposed. The danger of this legislation with respect to the valuation of the conservation easements, therefore, lies in its inability to provide different valuation schematics for each conservation easement that includes wetlands.

 

In sum, wetlands differ in functional importance, and therefore conservation easements in different locations will be valued differently. As always, “[t]he expenditure of public funds should be commensurate with the public benefit derived from the easement.” An “assessment of the overall public benefit versus the expenditure of public funds, considering both the project itself and alternative uses of the funds” is required to ensure that public funds are not being improperly spent. Appraisals based on a functional utility adjustment of easements have been approved by the New York courts, thus opening the door to public-value based pricing of easement acquisitions. Nevertheless, this proposed legislation seeks to value the easement based upon the speculative value of the property to some unknown developer, rather than to the public that would pay for the easement, and provides no guidance as to how to value different classes of wetlands differently.

 

ii Buffer Zones and Uplands

 

Another distinction in the proposed legislation that needs more clarity is the recognition that not only landowners, but also neighboring properties are affected by wetlands designations. Properties located within the “buffer zone” of wetlands, or within 100 feet of a wetlands designation, are also affected by wetlands designations. Lands located in such buffer zones have limitations placed upon their development in a manner similar to that placed upon lands containing the wetlands. Permits and approval are required for certain development projects located within such buffer zones.

 

The proposed legislation does not contemplate the effects of wetlands designations upon holders of land within buffer zones, and how such designations impact conservation easements located in the buffer zones. The legislation specifies that compensation will be provided to conservation easement lands that are designated as wetlands. This means that such buffer zones are not included within the rubric of this legislation, which is not only unfortunate but also improper given that the same interests are at play in conserving wetlands and wetland buffer zones, though perhaps at different levels.

 

These same concerns apply to uplands territories as well, which, although not designated wetlands, are important to wetlands conservation. The United States Fish and Wildlife Service has recognized as much and used its monies available from its Partners for Wildlife Program to purchase conservation easements in such important uplands. This proposed legislation does not recognize the crucial importance of buffer zones and uplands to wetlands ecological health, and does not provide equity between landholders near wetlands and those within wetlands.

 

iii 12.4 Acre Minimum

 

This proposed bill also creates more questions than answers with respect to the minimum acreage of wetlands impacted by the legislation. While DEC-regulated wetlands are only those wetlands that encompass a minimum of 12.4 acres, wetlands smaller than 12.4 acres may nevertheless be regulated. The question that arises, then, is what constitutes a “designation” for purposes of the Conservation Easement Law.

 

As discussed below in Part IV.A.2, over-compensation was noted as a concern because regulated wetlands are regulated without compensation and the added value of a conservation easement (given that development occurring without an easement can only occur if it does not negatively affect the regulated wetlands). This same concern does not exist for unregulated parcels under 12.4 acres as no development restrictions exist. Therefore, compensating landowners for affirmatively entering into conservation easements for wetlands parcels smaller than 12.4 acres is neither likely to skew incentives nor compensate landowners where no compensation is warranted.

 

However, if such parcels are not of “unusual local importance” thus bringing them under the umbrella of DEC regulation, then such parcels may not be worth preserving in perpetuity and therefore it may not be desirable to create a compensation scheme to encourage their preservation. In either case, decisions about entering into a conservation easement and whether or not compensation for an easement should be provided is a decision that should be made on a case-by-case basis, depending upon the functional importance of the wetland, and the incentive structure surrounding the individual parcel.

 

C. Compensation Amount

 

The language used by the proposed amendment in the valuation of wetlands designation is confusing and inappropriate. The proposed bill states that the “Board shall justly compensate landowners for wetlands designations of such land at fair market value . . . .” Why such language is necessary in the context of conservation easements is unclear. The purpose of the New York State Eminent Domain Procedure Law is to

 

provide the exclusive procedure by which property shall be acquired by exercise of the power of eminent domain in New York state; to assure that just compensation shall be paid to those persons whose property rights are acquired by the exercise of the power of eminent domain; . . . to give due regard to the need to acquire property for public use as well as the legitimate interests of private property owners, local communities and the quality of the environment; . . . to encourage settlement of claims for just compensation and expedite payments to property owners; to establish rules to reduce litigation, and to ensure equal treatment to all property owners.

 

The state land acquisition policy, which requires the pursuit of less-than-full-fee purchases such as conservation easements from willing sellers before invoking eminent domain procedures, nevertheless requires that acquisition offers be provided to landowners. These offers must be in accordance with Section 303 of the New York State Eminent Domain Procedure Law, which reads:

 

The condemnor shall establish an amount which it believes to represent just compensation for the real property to be acquired. The condemnor shall make a written offer to acquire the property for one hundred per centum of the valuation so established. In no event shall such amount be less than the condemnor’s highest approved appraisal. Wherever practicable, the condemnor shall make the offer prior to acquiring the property and shall also wherever practicable, include within the offer an itemization of the total direct, the total severance or consequential damages and benefits as each may apply to the property.

 

Furthermore, the state land acquisition policy establishes a seven-member State Land Acquisition Advisory Council that helps set acquisition goals and priorities and makes recommendations regarding specific sites considered for acquisition. While this standard does not apply to sellers actively seeking to sell conservation easements on their property, it applies to all sellers who choose to sell the property rather than fight the eminent domain procedure.

 

Standard doctrines invoking the phrase “just compensation” unanimously provide that just compensation is compensation at “fair market value.” Before just compensation can be awarded, however, the compensation amount must be determined which requires fixing the date of valuation. New York has not statutorily fixed the date of valuation, and therefore must rely upon common law standards for determining the date of valuation. Fixing the date of valuation is not easy and relies upon a number of policy considerations that are in tension. Fixing the date of compensation is of importance especially if a conservation easement has already been established. The remaining value to the property owner is limited as is the added value caused by designating the property is limited. Nevertheless, a designation may occur.

 

Given the canon of statutory construction to construe all terms to avoid superfluity, the phrase used by the proposed legislation is confusing and misleading. Does the term “justly compensate” impose restrictions or limitations upon the phrase “fair market value?” If so, what limitations would these be and how would they be applied?

 

  1. Just Compensation

 

The analysis of the compensation language used by the proposed amendment must begin with a look at the doctrine of providing just compensation, with its origins in the takings context. While the federal constitutional standard is controlling, New York State has similarly codified the right to just compensation when private property is taken. Although it is clear that a taking requires just compensation, it is less clear what just compensation means. In fact, just compensation has taken many different forms, as have determinations of fair market value.

 

Just compensation, in the takings context, means that the landowner should be restored to the position she would be in had the taking not occurred. The term just compensation, while claimed by some to be superfluous in and of itself, has generally been taken to mean that the compensation should be fair to both parties. Therefore, “compensation should be just to the public as well as to the condemnee.”

 

It has been noted that there is more than one standard of compensation that could be provided—the fair market value need not be the only standard. Indeed, either a benefit to the taker or a loss to the owner standard could be selected, either of which may result in higher awards than a fair market value standard. Just compensation, it has been noted, relates to general damages, which means the fair market value of the property, and ignores other consequential damages, such as an increase in value realized by the taker that might be recoverable under theories of restitution or indemnification. Therefore, just compensation does not necessarily mean fair market value. This legislation seeks to impose the fair market value standard in the regulatory takings context to conservation easements established under a voluntary arrangement.

 

2. Fair Market Value

 

Fair market value is “what a willing buyer would pay in cash to a willing seller.” It includes not only the value that the taker is willing to pay for its desired use of the property, but also includes the speculative value of all those uses for which other users might wish the property. As a result, the fair market value means that “[u]nder established rules for determining just compensation . . . compensation is based on the highest and best use of the property other than the use contemplated by the taker.”

 

There exist different appraisal methods for determining market value of a property. These include the “market data method,” which compares the property sales price to other similar properties nearby and the “income valuation approach,” which looks at the capitalized income derived from the property and compares that to income derived from comparable investments elsewhere.

 

While the compensation scheme proposed by the legislation is not exactly the fair market value standard typically used by the courts in the takings context, it is important to look at the justifications for that fair market value standard of compensation to understand its applicability and appropriateness in the conservation easement context.

 

Three reasons justifying the fair market value standard that incompletely compensates owners used in American takings jurisprudence have been identified: loss spreading, maintaining efficient incentives and subsidizing public goods.

 

The argument in favor of loss spreading is that decreasing the cost of administration of a standard of compensation is desirable because such a simplified standard allows more access to compensation and “owners would prefer a broad but incomplete promise of compensation to a promise of full compensation that applies more selectively.” Obviously such a simplified administrative system is desirable from a statist perspective as well.

 

The efficiency argument maintains that incomplete compensation provides the necessary incentive to government to regulate socially undesirable activity. In the case of wetlands, the proposed amendment provides a possible incentive to voluntarily enter into conservation easement agreements (though this is questionable given the timing issue discussed below). If, however, the government has to compensate all easements located in wetlands, it may be less inclined to designate such properties as wetlands even if such designation results in heightened protection under the easement agreement. How much of an impact this proposed regulation would have in discouraging mapping of wetlands is uncertain, however, since not all designations of wetlands will require compensation, but only those on easement properties, which may very well be so small a class of properties that no real disincentive is created. Nevertheless, there is little incentive created by this legislation to promote designations or for public bodies to enter into conservation easement agreements. Disincentives, on the other hand, abound. Therefore, it seems likely that this bill will result in a greater privatization of conservation easements which means more strained resources of not-for-profit organizations in the management and enforcement of such easements. It also means that the bill contradicts existing law by promoting the conservation of open spaces and wetlands through all available means.

 

The subsidization argument, however, also seems appropriate here. In the case of wetlands, where lands are condemned because they provide large social and ecological value to the public, such condemnations are properly considered actions in furtherance of the public good, or “public use” of the property. If designation of wetlands is done for the public benefit, and positive externalities in the form of those described in Part II.A result from such a designation, then those designations should be encouraged to the point where the externality enjoyed by society is reduced from the cost of procuring the designation (i.e., the amount of required compensation). Land is never valued in such a manner for takings purposes because of the inherent value we hold in the ability to own real property without unnecessary government interference. As a result, higher (and more inefficient) costs are deemed beneficial in the takings context to discourage such unnecessary takings. While such concerns are important, it is also important to properly establish incentives for public benefit-related government takings— forcing the government to pay the full cost of the loss to the owner of the taking is an improper method of valuing a conservation easement taken for the public benefit. A better method under this theory would be compensating the landowner based upon the public benefit received which does not calculate all possible speculative uses.

 

3. Valuing Conservation Easements

 

The right to condemn lands for environmental protection is broad and without limitation. Even though a conservation easement may be attached to lands, such easements may similarly be condemned. However, “it means little to call a conservation easement ‘perpetual’ if it can be readily extinguished through condemnation.” Such a condemnation, if held by a private landowner, would require compensation. “Public property generally enjoys greater protection from condemnation than does private property.” This means that publicly held conservation easements are generally more desirable than privately held conservation easements if the goal is to protect wetlands from development. Of course, the ability of the government to purchase conservation easements is severely restricted by funding limitations and therefore the government has generally sought means other than purchase to obtain such easements.

 

The rules of compensation discussed previously deal with complete takings. Partial takings, on the other hand, bring different compensation standards. Conservation easements, because they don’t impact the landowner’s right to use the property in manners not inconsistent with the easement, are best considered partial takings, and therefore the standard of compensation of partial takings is most appropriate. Methods by which these figures are determined vary widely. The Land Trust Alliance has put together a book on some of the various methods of appraising conservation easements.

 

The standard generally used is the fair market value of the taking plus the loss suffered through diminished value in the remaining property. Therefore, “[i]n the partial takings case, not only is the part taken valued, but an award is also usually made for damages to the property that is left after the taking.”

 

The usual rule is for a court to fix damages by including the value of the part taken . . . and adding to this severance damages, i.e., the damages to the property that is left The part taken is assessed by measuring its value as part of the whole property as it was before the ‘taking’….

 

Severance damages, in turn, include either the “[l]oss or impairment of use to the remainder by reason of the partial taking,” or “[d]amages to the residue caused by construction of a project.”

 

This standard, or a fair market value of what was taken from the owner (not what was acquired by the taker, the usual rule) constitutes a shift “toward an indemnification standard.” One prominent author notes that “[t]he rationale for shifting part way toward an indemnification standard in partial takings cases has never been clearly spelled out.” The author then points out a few possible explanations, including the inherent preference for indemnification, the fact that partial takings do not make inquiries into residuum damages administratively cost- prohibitive, the concern that partial takings are “especially prone to unfair outcomes under the fair market value standard,” and the cost of interference “with the scale of the owner’s unit of property.”

 

Another option for valuing partial takings is called the “before and after” rule, which “evaluates the entire property before the taking and then values the remainder in the after taking situation. The difference is the loss of value for which compensation is payable.” This is the method used by the United States Internal Revenue Service (IRS). The Internal Revenue Code requires that any conservation easement donation over $5,000 be valued by a qualified appraiser, who “estimates the value of the property before and after the easement restrictions are applied. The difference between the two values is the amount of the charitable gift for tax purposes.”

 

The New York Court of Appeals has adopted something of this modified fair market value standard in regulatory takings cases, awarding the difference (including interest on that difference) between the fair market values of the property before and after the taking. Compensating landowners for conservation easements has proceeded similarly. The amount of damages awardable as compensation for an easement must be valued based on what rights the State appropriated under the terms of the easement. The end valuation is based on how those rights taken impact the value of the land to the landowner. This “fair market value” to the owner is “established by the opinions of qualified real estate appraisers.”

 

These fair market value-based standards of appraisal work well when there exists a functioning market. However, there exists no such market for conservation easements. While conservation easements are not forced exchanges, they do nevertheless occur in thin markets with a monopoly seller competing for the highest bidder of the government or generally non- competitive (and perhaps collusive) land trusts for the easement. Purchasers of wetlands in the private market are either developers who believe they can develop the property consistent with the requirements under the Environmental Conservation Law and other laws or are land trusts and other similar conservation-minded organizations that desire the easement to protect the land from development. The latter have fewer resources, do not necessarily intend to exploit the resource for economic gain and therefore may not value the easement as highly as may a profit- minded developer who values the property based on its speculative value. A developer’s willingness and ability to pursue the development, therefore, is not equivalent to the conservation movement’s willingness and ability to pay to prevent the development from occurring. Therefore, although there is some limited competition for the property and easement, the competition is really occurring at different levels and by individuals of very different abilities to pay. As a result, the market for conservation easements is not a smooth-functioning market. In fact, conservation easements under the Conservation Easement Law can only be held by public bodies and not-for-profit conservation organizations. Therefore, the market for conservation easements is limited as it consists entirely of non-profit bodies.

 

In practice, however, government condemnations occur almost exclusively in thin markets, where there is only one seller who has a monopoly over some resource needed for a public project. Takings are forced exchanges of unique property rights, typically rights in land, that occur in circumstances where voluntary exchange has failed and there are no good substitutes for the land in question insofar as the condemning authority is concerned.

 

Because there is no truly viable market for conservation easements, the concept of fair market value is purely theoretical and is based on an opinion or educated guess about what the negotiated price of the property would have been if, contrary to fact, the owner had sought to sell it and a willing buyer had sought to buy it on the day of the taking.” While a conservation easement may be voluntarily entered into by the landowner, and therefore analogously “sold” to the government or owner of the easement, there is still the tricky issue of valuing the easement when the easement was not offered on a public market.

 

The proposed method of valuing the easement, based on the fair market value, means that the value of the easement will be determined based upon the value of the property prior to the easement as compared with the value of the property without the easement. This, however, bases the value of the easement solely in reference to the landowner, and does not seek to create a value that is fair to both parties. This is especially evident given that purchasers of conservation easements typically are land trusts and they purchase such easements from landowners at very low prices for the right to conserve the property in perpetuity. The private market system exists because landowners suffering from economic downturn or low farm incomes, and unable to exploit the “normal exemptions” practices at a reasonable rate of return, sell the easements to earn some income and a tax deduction from land that would otherwise be near valueless because developers would likely be unable to pursue further development.

 

When the market value cannot be applied to a property the value of the property is determined by the “reproduction-cost method.” Simply, this method combines the value of the land and improvements made thereon, less depreciation. This is also known as the “sound- value method” of appraisal. This alternate form of valuing property is used because the courts have “refused to make a fetish even of market value, since it may not be the best measure of value in some cases.” This is an alternate model of compensation that may be more appropriate in the wetlands conservation easement context.

 

In the end, the fair market value approach does not work when there is no market. Alternate methods of valuation are needed, and the approach that is ultimately chosen must be just for both the seller of the conservation easement and the public that purchases it. Overvaluing the conservation easement in the takings context makes sense as a means to protect the sanctity and inviolability of private property. In the voluntary context of the sale of a conservation easement, however, a requirement that the easement be sold at fair market value, which references the foregone speculative development opportunities (which may or may not be approved with a federal or state wetlands development permit), is inappropriate and unjust. Appropriate consideration must be given to the voluntary nature of the transaction and an appropriate level of subsidization to enhance the public welfare is appropriate. Therefore, while CEL does not endorse any mandated valuation standard because CEL believes that such a standard inhibits such conservation easement agreements by limiting the compensation options of landowners, CEL does believe that a benefit-to-the-taker standard of valuation to be a more appropriate standard of compensation for voluntary conservation easements.

 

4. Valuing Wetlands Development

 

The valuation of the easement must consider existing restrictions. Thus it seems that the easements will be near valueless especially because “[e]ven the most restrictive easements typically permit landowners to continue traditional uses of the land.” In the valuation process for wetlands condemnations a court must determine whether or not DEC would have granted a development permit under the particular circumstances and what that development would have entailed. If the “highest and best use” of the property is the same both before and after the easement as a result of the wetlands development restrictions, then no consequential damages are justified. If the “highest and best use” has been altered by the taking of an easement, then consequential damages are awardable.

 

Wetlands regulations typically allow the same traditional uses through their exemption clauses and other regulatory allowances as are allowed under conservation easements. Thus there seems to be little difference between the easement and the existing wetlands regulation except for the inflated value of speculation that the wetlands designation will change in the future. If such a designation changes, however, the conservation easement may be extinguished because there would likely no longer be any reason to maintain its existence. Moreover, most easements have such a provision for extinguishment when the resource to be conserved is no longer extant. New York allows for the termination of a conservation easement under two situations: (1) when the easement agreement itself provides for destruction, or (2) when the easement is of “no actual and substantial benefit” because of changed conditions. Therefore, under the fair market value standard, the difference in value between the conservation easement and a status quo with wetlands regulations is almost wholly attributable to the speculation that the area will be redesignated as non-wetlands. If that situation arose, however, the easement could be extinguished and the full development value of the property restored.

 

IV Substantive Concerns Regarding A04231

 

Not only does the proposed legislation create a vast amount of uncertainty with respect to its application, scope and effect, but it is also objectionable for more substantive reasons. The proposed legislation is unnecessary–it is inconsistent with existing law and creates an incentive structure that fails to promote the creation of conservation easements, instead threatening to undermine existing incentives to create such easements by promoting game-playing and over- compensation of landowners. Furthermore, this bill seeks to wreak havoc with New York takings jurisprudence by either expanding the compensation formula to allow increased compensation of landowners or by wholly circumventing New York takings law. These substantive concerns demand that the proposed bill be rejected in its current form and in any future form, even where its application, scope and effect are clearly delineated.

 

A. Skewing Incentives

 

The proposed bill, as has been alluded to earlier in this Comment, creates unintended incentives for conservation easements that run contrary to the purposes of the Conservation Easement Law. A04231 seeks to establish incentives for the formation of voluntary conservation easements. The bill, however, discourages such conservation agreements and encourages game- playing to the detriment of wetlands and the state budget.

 

The proposed legislation provides compensation not for conservation easements generally, but only for those conservation easements that are designated as wetlands. Therefore, there are two scenarios under which the proposed bill may operate: (1) landowners establish conservation easements and are then compensated when such easements are designated as wetlands, or (2) landowners possessing designated wetlands establish conservation easements to protect such wetlands. Under either scenario, the proposed bill operates to create unintended consequences that undermine the purposes of the bill.

 

  1. Scenario One

 

Under scenario one, the improper incentive structure is easily discernable. If landowners are required to have a conservation easement prior to obtaining compensation and that compensation is contingent on an unrelated event, namely the designation of the lands on which the easement operates, then there exists no real incentive for establishing such conservation agreements (unless landowners operate on the speculation that such lands will be designated as wetlands sometime in the future). Landowners may have the ability to speculate quite effectively on the remapping of their properties given that such remapping requires public notice and comment and often a public hearing. Once a landowner becomes apprised of a possible remapping the landowner could, under the proposed bill, follow one of three options: (1) sell the property (the land may be sold to an unsophisticated purchaser unaware of the proposed remapping, thus providing the seller a windfall); (2) wait until the property is redesignated then attempt to develop the property and, if that proposal is rejected, seek compensation under the Due Process Clause; or (3) prior to the redesignation as wetlands the property owner can seek to establish a conservation agreement and upon the redesignation seek compensation under the proposed legislation.

 

Obviously, each of these situations is fraught with game-playing and is difficult to control through legislative decree and judicial rule-making. An added danger under this scenario is that the government could capitalize on the landowners’ speculation by proposing redesignations, awaiting the speculating landowners’ entrance into conservation agreements, then deciding not to redesignate the properties. This would result in a windfall for the government because no compensation would necessarily be required in this situation.

 

In reality, under this first scenario, the only landowners that would seek compensation would be those landowners that have no true desire (or economic capability) to develop the properties in the first instance. These property owners, therefore, would seek either the first (sale) or second option (conservation easement). If unable to sell the property and minimize losses, the property owner that has no reasonable investment-backed expectations whose subjective value of the property is not so great as to justify continued ownership of the property despite the decreased value, would seek to obtain whatever income possible. In the end, then, this first scenario serves, at best, to subsidize landowners for unproductive use of the land. Farmlands no longer profitable will capitalize on the conservation easement compensation requirement to earn income where such income would not otherwise be forthcoming because (1) the normal agricultural practices exemption to wetlands restrictions will not sustain the property value because such practices are no longer profitable, and (2) other activities would be precluded from operation on the wetland. Thus, for such unprofitable farmlands, this legislation provides a windfall for otherwise poor investments.

 

This is a plausible scenario because New York farmers bear the brunt of the highest per acre tax of any agricultural state. This tax is so burdensome that in ten counties property taxes have doubled the net farm income for the area. The high taxes are largely a result of increasing development pressures from surrounding suburban sprawl, which drive up the land values and thus the property tax base. Of course, rising land values are a large reason why county and state acquisition programs are lagging behind targeted conservation goals. As a result, such government bodies have sought to develop alternate strategies to promote conservation including the enactment of zoning and clustering provisions. Forcing the state then to bear the brunt of these rising property values based on speculation of future development will inevitably be quite expensive for the New York treasury.

 

Some farmers oppose conservation easements generally because they fear a loss of equity, that may reduce the amount for which the farmer can mortgage the property. LaGrasse and others believe that the result of a conservation easement may be the loss of the remainder of the property, which may result in one of two situations: (1) the reduced mortgage value is insufficient to help farmers through tough times, thus requiring them to sell their property, or (2) uses prohibited by the easement become feasible, whereas allowed uses become undesirable or are no longer economically viable. Because conservation easements are difficult to maintain and protect, she and other farmers believe “the only buyer for the land may be the government” in such circumstances and thus “the conservation easement is in essence a step along the way from 100 percent private to 100 percent government ownership.”

 

This view, however, is misguided, because selling the easement allows for the realization of equity without having to sell the land. “The proceeds can be invested for future equity, used to purchase more land, or otherwise invested in the farm. Plus, if the farmer has neighboring land that is not under easement, the value of that land will increase, providing equity.” Furthermore, “funds received by the landowner are placed back into the local economy as an investment in the efficiency of the farm and through retail activity.” The increasing value of remaining and surrounding properties as a result of the granting of an easement, as well as the increased equity in the remaining lands through increased efficiency result in stabilized farmland prices.

 

In general, conservation easements are desirable from both the farmer’s perspective and the state’s perspective as an effective per dollar tool to preserve wetlands. However, under this scenario, there is no incentive to enter into conservation easements except to capitalize on a technicality in the law on the hope that the lands will be designated as wetlands, a situation which, under most circumstances, would not be compensable as a taking under existing law.

 

2. Scenario Two

 

In the second scenario, wetlands are designated and then landowners are provided compensation for establishing a conservation easement. This would create a scenario of over- conservation. Landowners, already precluded from developing in a manner inconsistent with the continued viability of wetlands and required to mitigate the damages caused by such development, are now provided compensation for not developing the land and protecting it from such development in the future. This conservation, however, is unnecessary given the current legislative structure because such lands are already protected under current law. If landowners actually wanted to develop the property (as opposed to purchasing the property for conservation purposes), and such desired development is expected to net more profit than the income derived from a conservation agreement, then the landowners will nevertheless attempt such development. When frustrated, the landowners have the possible greater compensation of a takings to satisfy their economic interests in the property.

 

This overpaying for conservation is clear in the case of the private market. Not-for-profit conservation organizations are empowered under the current statute to purchase conservation easements in perpetuity. Should these conservation organizations purchase such easements, they may be able to seek complete subsidization from the government, thereby creating a cycle of conservation easements that overlimit development because, presumably, the conservation agreements will contain restrictions on development more stringent than existing wetlands regulations. Otherwise there is no value in promoting such agreements for conservation purposes.

 

As in the previous scenario, landowners, in attempting to seek fair market value of the designation, will attempt to show that they intended to develop the lands but the designation (and not the conservation easement) precluded them from doing so. This game-playing inevitably will increase the transactional cost of determining the value of compensation. Valuing compensation on some other measure, such as the benefit of the wetlands designation (likely to be zero if provided after the easement agreement), or conservation easement will serve to reduce the cost of administering A04231 should the legislature decide to make it law. The fair market value, as discussed above in Part III.C.2, is incomprehensible where no attempt was made to develop the property, alternative development schemes were not explored and there exists a thin market for such conservation easements/designations.

 

B. Unnecessary

Providing for compensation under the Conservation Easement Law should be rejected as well because it is clearly unnecessary given current law, and risks doubly and triply compensating landowners such that they may receive a massive windfall.

 

This bill is unnecessary for a very simple reason: landowners must enter into conservation easement agreements voluntarily so they can always reject low bids and seek land trusts willing to pay more. Landowners are not forced into selling conservation easements under the existing law so this bill is clearly unnecessary, as the negotiation process would value the easement at a just price amenable to both parties. Furthermore, this bill is unnecessary because current law provides for compensation and appropriate tax benefits for conservation easements and because land trusts are already protecting important lands, making the expenditure of state funds unnecessary—therefore, no additional incentives are necessary.

 

  1. Land Trusts

 

Over 1,200 land trusts exist in the United States, with most of them located in the Northeast, and more forming at a rapid rate. These land trusts have conserved over 6.2 million acres with 2.6 million of those acres conserved through conservation easements. As an example, The Nature Conservancy has protected over twelve million acres since it was formed more than fifty years ago. It owns or holds conservation easements in nearly 1.2 million acres in its private preserve system.

 

In New York, conservation organizations have been a leader in the conservation easement movement. In 2003, twenty-four land trusts received funds from the newly established New York Conservation Partnership Program, “the nation’s first program in which a state has dedicated a portion of its environmental budget to strengthening nonprofit conservation partners.” The program, funded at $250,000, is paid from the New York Environmental Protection Fund. While the program itself only provided for the conservation of approximately 644 acres, it did provide seed money to a number of conservation organizations that help “lay the foundation to conserve much more,” according to Ezra Milchman, LTA Northeast Program Director. As a result, “a tool that is increasingly used [to protect special resource areas] is the conservation easement.”

 

2. New York Law and the Environmental Conservation Law

 

Under New York law, the right to just compensation for takings is very clear. While the right to condemn property is legislative, the right to determine compensation due condemnees is granted to the courts. Adding an additional layer of valuation, or a mini- tribunal which still can be reviewed in a court determination for fairness and legality creates an unnecessary layer of bureaucracy and adds little to the process.

 

The New York Environmental Conservation Law (ECL) actively seeks out wetlands conservation easements for acquisition and provides for the adequate compensation of landowners under existing law.

 

Conservation types of easements have existed for many years and were established or granted under the general easement laws and rules. However, under those laws and rules several weaknesses existed. Under those general laws, it was necessary to have the easement ‘appurtenant’ to other land and this is not always possible, practical or desirable.

 

Under the New York Conservation Easement Law, which ended such anachronistic requirements, “[m]any public-spirited land owners are granting conservation easements in their lands, while others are being paid to do so. At the same time, under proper conditions, conservation easements can be obtained by the eminent domain laws.” Conservation easements are becoming a favored method of conservationists because conservation easements “can stretch the per-dollar value of land conservation.”

 

Conservation easements constitute a Type II action under NYCRR Part 617.5(c)(20) and (27); they are also set forth in ECL 49-0303(1). The ability to establish local conservation easements is established under Section 119-o of the New York General Municipal Law. Using the ECL and Conservation Easement Law, DEC already holds most of the several thousand acres of conservation easements in Tug Hill. Clearly, there exist ample incentives for landowners to enter into conservation easement agreements.

 

Aside from the general authority provided for conservation easements under the Environmental Conservation Law, the State Finance Law also provides money out of the Conservation Fund for preservation of tidal and freshwater wetlands through the purchase or acquisition of lands or rights therein for the protection of marine and shellfish resources and habitats. The State Finance Law empowers DEC to obtain land rights or lands by gift, eminent domain or acquisition. Furthermore, DEC has the authority to acquire any real property by purchase or appropriation that is necessary for the purposes or functions of the department.

 

In fact, funds raised from licenses under the Conservation Easement Law are specifically authorized for use in acquiring “public rights or opportunities to utilize suitable lands for hunting and fishing, habitat management and improvement, and species propagation of game, game birds and game fish.” Acquisition of wetlands is allowed under all of these funds as well as money derived from the sale of voluntary migratory bird stamps and art prints. Under existing law, funds are authorized for purchasing wetlands conservation easements and such acquisitions, if done through eminent domain procedures, must be done on terms that provide just compensation. If the property is sold to a willing buyer, however, there is no such requirement, thus allowing for possibilities such as the bargain sale. Of course, if the seller is not willing to sell at a reduced price and the State is not willing to purchase a conservation easement at the full price under existing law, the use of eminent domain will likely not be invoked as not cost- effective. While some have called for pre-agreement for periodic renegotiation in conservation easements, this would negate the purpose with which perpetual conservation easements are created and would violate the perpetuity requirement of the IRS, making unavailable important income tax deductions.

 

3. Open Space Plan

 

The public is also becoming more willing to allocate bond money to open space conservation measures. The New York State Open Space Conservation Plan specifically authorizes the purchase of conservation easements for the protection of open space. Under this authority, DEC has preserved “more than 400,000 acres in the past eight years.” There seems to be little need to provide additional incentives for the creation of conservation easements as conservation is occurring in the status quo. Furthermore, given Governor Pataki’s goal of conserving one million acres of open space lands, it seems likely that few additional incentives are needed to create conservation easements.

 

The New York State Open Space Conservation Plan establishes a system to:

  • identify specific places with exceptional natural resource or recreational values which may be threatened by land use change or which could serve critical recreational needs;

  • determine the most appropriate strategy for conserving the resource values of those places including what action should be taken by DEC or [Office of Parks, Recreation, and Historic Preservation (OPRHP)];

  • evaluate the costs and benefits of individual land conservation actions;

  • establish priorities for land conservation actions given limited public resources;

  • when State acquisition of land is the most appropriate strategy, ensure that land is worthy of public investment and clearly meets the goals of this Plan;

  • provide for statutory and reasonable outside input into the project evaluation process.

 

The purpose of the Open Space Plan is to ensure that “decisions on land conservation action by [DEC and OPRHP] are being made in a rational way which directs the expenditure of state funds to the most important and worthy land conservation projects.” In fact, the Open Space Plan goes so far as to state that consideration of an acquiring fee or conservation easements for conservation include “the cost of the project in relation to its resource value.”

 

The process for acquisition under the Open Space Plan proceeds on multiple layers. First, a suggested conservation area is screened as “one of the three types of primary resource areas of interest” covered by the Plan. Each subcategory has minimum eligibility qualification requirements. Once the area passes the initial screening, it passes through a

 

 

 

View Original PDF

ENVIRONMENTAL LAW COMMITTEECOMMENT ON A04231 Part 1

ENVIRONMENTAL LAW COMMITTEECOMMENT ON A04231 Part 2