As the use of perpetual conservation easements as a land protection tool has grown, so have concerns regarding whether, when, and how such easements may be modified or terminated to respond to changed conditions. This Article argues that the charitable trust doctrine of cy pres should apply to donated conservation easements and, if interpreted as suggested, can provide a principled means of modifying or extinguishing easements that have ceased to provide public benefits sufficient to justify their continued enforcement (or have even arguably become detrimental to the public). The Article argues that a landowner should be viewed as striking the following “cy pres bargain” with the public upon the donation of an easement—the landowner should be permitted to exercise dead hand control over the use of the property encumbered by the easement, but only so long as the easement continues to provide benefits to the public sufficient to justify its enforcement. If, due to changed conditions, the continued protection of the encumbered land for the conservation purposes specified in the easement deed becomes “impossible or impracticable,” a court shouldapply the doctrine of cy pres to restore the appropriate balance between the landowner’s desire to exercise dead hand control, and society’s interest in ensuring that charitable assets continue to provide benefits to the public. In cases where the donor evidenced a particularly strong personal attachment to the encumbered land and the continued protection of that land for a different conservation purpose is feasible, a court could apply the doctrine of cy pres to modify the easement to change its conservation purpose while continuing to protect the underlying land. Alternatively, in cases where the donor did not evidence a particularly strong personal attachment to the encumbered land, or where the continued protection of that land for a different conservation purpose is not feasible, a court could apply the doctrine of cy pres to extinguish the easement, authorize the sale of the unencumbered land, and direct that the proceeds attributable to the easement be used to accomplish the donor’s specified conservation purposes in another location.
No reasonable man, who gave . . . when living, for the benefit of the community, would have desired that his mode of benefiting the community should be adhered to when a better could be found.
—John Stuart Mill[1]
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The number of acres encumbered by conservation easements[2] held by local, state, and regional land trusts[3] in the United States increased dramatically over the past two decades, from 128,001 acres in 1980 to more than five million acres in 2003, protected by more than 17,847 conservation easements.[4] The use of conservation easements as a land protection tool shows no signs of slowing, and, indeed, the average number of acres being encumbered by conservation easements on an annual basis has increased significantly, particularly since the late 1990s: while an average of approximately 165,000 acres were encumbered by conservation easements acquired by local, state, and regional land trusts in each of 1995, 1996, 1997, and 1998, an average of approximately 600,000 acres were encumbered by such easements in each of 1999 and 2000, and an average of approximately 825,000 acres were encumbered by such easements in each of 2001, 2002, and 2003.[5]
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As the cache of conservation easements in this country continues to grow, and those easements, the vast majority of which are perpetual,[6] begin to age, it will become increasingly important to determine whether, when, and how easements that no longer accomplish their intended conservation purposes can be modified or terminated. Despite the best intentions of most members of the land trust community, mistakes are being made, and land trusts are acquiring easements that, with the passage of time, may provide very little public benefit, or even become detrimental to the public. For example, some conservation easements reserve to the owner of the encumbered land development rights that, if fully exercised, would signifi-cantly reduce or eliminate the conservation benefits that flow to the public from the continued “protection” of the land.[7] Other conservation easements encumber tracts that are destined to become islands of open space in an otherwise intensely developed landscape, and it is not unreasonable to assume that at least some of those “island” easements will cease to provide a level of public benefit sufficient to justify their continued enforcement,[8] or perhaps even become detrimental to the public because they prevent appropriate infill development and thereby increase the pressure to develop other, more environmentally significant lands.
Moreover, as the number of acres subject to easement restrictions continues to grow, the impact and influence that easements will have on land
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use planning is likely to become pervasive, and the need to make modifica-tions and adjustments to account for changed conditions and societal needs may become acute. At some point in time, society simply may not have the luxury of continuing to enforce easements that provide only marginal levels of public benefit. If the pace of development in this country continues unabated,[9] undeveloped lands and the ecosystem services they provide[10] will become an increasingly scarce resource, and the continued enforcement of easements that provide only marginal levels of public benefit may come at the expense of failing to protect land with far greater conservation value. In other words, we may find ourselves in need of engaging in a form of “conservation triage,” where easements that no longer provide sufficient levels of public benefit as measured under contemporary standards are extinguished, and the value attributable to such easements is used to protect increasingly scarce land with far greater conservation value.
There is considerable confusion and uncertainty regarding whether, when, and how ostensibly “perpetual” conservation easements may be modified or terminated to respond to changed conditions. The confusion and uncertainty appear to stem, at least in part, from the fact that conservation easements constitute a novel form of property interest that does not fit neatly within any of the traditional categories of servitude law.[11] Traditional servitudes doctrines raised potential difficulties for both the creation and long-term validity of conservation easements primarily because conservation easements are generally held “in gross,” meaning that the holder of the easement does not own a parcel of land that is appurtenant to and benefited by the land encumbered by the easement.[12]
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To facilitate the use of easements for conservation purposes, forty-nine states and the District of Columbia have enacted legislation (“easement enabling statutes”) that removes the common law impediments to the creation and validity of conservation easements, provided, in general, that such easements are conveyed to a government agency or charitable organization for one or more of the conservation purposes specified in the legislation.[13] The easement enabling statutes, however, do not clearly address whether, when, and how an ostensibly “perpetual” conservation easement can be modified or terminated to respond to changed conditions. Indeed, the drafters of the Uniform Conservation Easement Act (“UCEA”), which was promulgated in 1981 and has been adopted in whole or in substantial part by twenty-four states and the District of Columbia, specifically declined to take a firm position on the proper approach to the modification or termination of easements, noting instead that a variety of doctrines, including the doctrine of changed conditions applicable to common law servitudes and the doctrine of cy pres applicable to charitable trusts[14] have been judicially developed and, in many states, legislatively sanctioned as a basis for responding to such circumstances.[15]
The confusion and uncertainty regarding whether, when, and how ostensibly “perpetual” conservation easements may be modified or terminated
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has caused some commentators to express alarm over the potentially harmful consequences to society when, as is inevitable, some perpetual easements—due to changed conditions, evolving cultural values, or advances in ecological science—cease to provide the public benefit for which they were acquired, or actually become detrimental to the public good. Such commentators argue that society may find itself saddled with obsolete but nevertheless perpetual easement restrictions, or, at best, will have to expend considerable resources to extinguish such restrictions.[16]
Other commentators have expressed concern that conservation easements might be too easily extinguished under common law doctrines applicable to real property servitudes that look to measurable economic factors and fail to give appropriate weight to the difficult-to-value public benefits that flow from conservation easements.[17] There also is a concern that unless appropriate compensation is paid to the government agencies and land trusts holding easements upon extinguishment, the public’s considerable interest and investment in such easements would be lost, and the resulting economic windfall to the owners of the underlying land would create an incentive for similarly situated landowners (as well as speculators) to challenge the continued validity of easements.[18]
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Finally, there is a danger that holders of conservation easements may consider themselves free to simply agree with the owners of the encumbered land to substantially modify or extinguish conservation easements in exchange for cash or other compensation, despite the continuing flow of public benefits from an easement or the grantor’s intent that the easement be enforced in perpetuity.[19] Given the considerable value attributable to conservation easements (in the form of the development and other use rights restricted thereby), the temptation to holders to look to their inventory of easements as ready sources of cash in the event of financial exigency could be overwhelming.[20]
The current state of confusion and uncertainty regarding whether, when, and how ostensibly perpetual conservation easements may be modified or terminated will not last forever. As conservation easements continue to proliferate and age nationwide, the confusion and uncertainty will be resolved one way or another, and the manner in which it is resolved will determine the extent to which conservation easements are able to deliver the long-term public benefit they promise.
This Article proposes the following solution: conservation easements donated to counties, cities, and other agencies of state government (hereinafter, “government agencies”)[21] or charitable organizations should be treated as restricted charitable gifts or charitable trusts, and the holders of such easements should be subject to the equitable rules governing a donee’s use and disposition of charitable assets—including the well-settled rule that, except to the extent granted the power in the gift or trust instrument, the donee of a restricted charitable gift or charitable trust may not deviate from the administrative terms or charitable purpose thereof without receiving court approval therefor under the doctrine of administrative deviation or cy pres (sometimes referred to hereinafter as the “charitable trust rules”).
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Charitable trust rules are recommended as the framework within which to modify or terminate conservation easements because such rules were developed and refined over the centuries to deal precisely with the issue presented by conservation easements—how to appropriately balance: (i) the charitable donor’s desire to exercise dead hand control over the use of his or her property and (ii) society’s interest in ensuring that assets perpetually devoted to charitable purposes continue to provide benefits to the public.
Part II of this Article makes the case for applying charitable trust rules to donated conservation easements. Part II argues that when a landowner donates a conservation easement to a government agency or land trust, the landowner should be viewed as making a gift of the real property interest embodied in the easement to the agency or organization for a specified charitable purpose—the protection of encumbered land for the conservation purposes specified in the deed of conveyance. Just as the individual who donates fee title to land to a government agency or charitable organization for a specified charitable purpose (such as for use as a public park or as the site of a home for aged women) can feel confident that the agency or organization cannot simply sell the land or use it for other purposes,[22] so should the donor of a conservation easement be able to feel confident that the agency or organization accepting the easement cannot later simply sell or exchange some or all of the restrictions in the easement for cash or other compensation, or continue to enforce the easement for purposes not specified by the donor. Part II also explains that the easement enabling statutes should not be viewed as trumping the application of charitable trust rules to donated easements.
Part II notes that many conservation easement deeds grant the holder, either directly or indirectly, the discretion to interpret and amend the easement in manners that are consistent with the charitable purpose of the easement. Such provisions give the holder of the easement substantial flexibility—without seeking judicial approval—to agree with the owner of the encumbered land to, for example, amend the easement to clarify vague language; correct a drafting error; delete restrictions that advances in ecological science have shown to be detrimental to the conservation purpose of the easement; or permit activities that have no adverse impact on the conservation purposes of the easement. Such provisions should not, however, be interpreted to grant the holder the discretion to amend the easement in manners not consistent with the charitable purpose of the easement or to terminate the easement. The extent of a holder’s discretion to amend a conservation easement in manners consistent with its charitable purpose is the subject of a separate, future article. This Article focuses on the appli-
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cation of the doctrine of cy pres to terminate a conservation easement or modify its charitable purpose when the donor’s specified charitable purpose has become “impossible or impracticable” due to changed conditions.
Part III.A argues that a landowner should be viewed as striking the following “cy pres bargain” with the public upon the donation of a conservation easement: the landowner should be permitted to exercise dead hand control over the use of the property encumbered by the easement, but only so long as the easement continues to provide benefits to the public sufficient to justify its enforcement. If, due to changed conditions, the continued protection of the encumbered land for the conservation purposes specified in the easement deed becomes “impossible or impracticable,” a court should apply the doctrine of cy pres to restore the appropriate balance between the landowner’s desire to exercise dead hand control and society’s interest in ensuring that assets perpetually devoted to charitable purposes continue to provide benefits to the public.
Part III.B then explains how the courts work through the cy pres process in other contexts, and offers suggestions as to how the courts could work through that process in the conservation easement context.
Using a hypothetical case study (the facts of which are loosely based on a potential challenge to an easement reported in the media), Part III.C then walks the reader through the application of the doctrine of cy pres to modify or terminate a conservation easement, the charitable purpose of which has arguably become “impossible or impracticable” because the encumbered land, while once situated in a largely rural, agricultural landscape, is now surrounded by intense, multi-use development.
Part IV concludes by noting that applying the doctrine of cy pres to conservation easements as recommended in this Article would accord considerable deference to the right of easement donors to control the use and disposition of their property, but at the same time allow society to modify or terminate easements that cease to provide a level of public benefit suffi-cient to justify their continued enforcement (or even become detrimental to the public) as measured under contemporary standards. Part IV argues that concerns that extinguishment of easements under the doctrine of cy pres would chill future easement donations are misplaced, and that a rational framework for making extinguishment decisions could increase the quality of donations by forcing donors to think more realistically about the long-term future of their easements. Part IV also notes that if charitable trust rules are accepted as the framework within which modification and termination decisions will be made, the parties to easement donation transactions—the donors, the holders, and the public—will be able to rely on a set of rational and at least somewhat predictable rules, and structure their transactions accordingly so as to best accomplish their mutual conservation goals.
Finally, although this Article focuses solely on donated conservation easements, which appear to constitute the majority of easements conveyed to
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date,[23] many of the same principles arguably should apply to perpetual conservation easements that are purchased by government agencies and land trusts. The restricted nature of such conveyances, the significant public investment in such easements, and the fact that even purchased easements are held by government agencies or charitable organizations for the benefit of the public and, thus in a trust or quasi-trust relationship, all support the application of charitable trust rules to purchased as well as donated easements.[24]
When a gift is made to a government agency or charitable organization without restrictions on its use or disposition, the agency or organization may use the gift in whatever manner it sees fit, subject only to the general federal and state law requirements applicable to such agency or organization (such as the requirement that the agency or organization use its assets in accordance with its public or charitable mission and, in the case of a charitable organization, the prohibitions on private inurement and private benefit).[25] Alternatively, when a gift is made to a government agency or charitable organization for a specified charitable purpose, the weight of authority indicates that, unless granted the power in the instrument of conveyance, the agency or organization may not deviate from the administrative terms or charitable purpose of the gift without receiv-
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ing judicial approval therefor under the doctrine of administrative deviation or cy pres—and this principle holds true whether the donor is treated as having created a charitable trust or merely as having made a restricted charitable gift (sometimes referred to as a “quasi-trust”) under state law.[26]
For example, in the leading case in this area, St. Joseph’s Hospital v. Bennett, a testator bequeathed a share of the residue of his estate to a charitable corporation operating St. Joseph’s Hospital “to be held as an endowment fund and the income used for the ordinary expenses of maintenance” of the hospital.[27] The corporation brought an action seeking authorization to use the fund for purposes other than “ordinary expenses of maintenance,” and the New York attorney general opposed the action on the ground that the bequest was a gift in trust.[28] The New York Court of Appeals held that, while “no trust arises . . . in a technical sense” and “the charitable corporation is not bound by all the limitations and rules which apply to a technical trustee,” a charitable corporation “may not, however, receive a gift made for one purpose and use it for another, unless the court applying the cy pres doctrine so commands.”[29] In fact, gifts of all types of property to government agencies and charitable organizations for specified charitable purposes are classified as either restricted charitable gifts or charitable trusts, and unless granted discretionary powers in the instrument of conveyance, the donees are obligated to seek court approval to deviate from the administrative terms or charitable purposes of such gifts or trusts under the doctrine of administrative deviation or cy pres.[30]
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Under the doctrine of administrative deviation, a court may permit the donee of a restricted charitable gift or the trustee of a charitable trust to deviate from the administrative terms (as opposed to the charitable purpose) of the gift or trust if, owing to circumstances not known to the donor and not anticipated by him, compliance with such terms would “defeat or substantially impair” the accomplishment of the purpose of the gift or trust.[31] Under the doctrine of cy pres, if the purpose of a restricted charitable gift or charitable trust becomes “impossible or impracticable” due to changed conditions, and the donor of the gift or settlor of the trust manifested a general charitable intent in making the gift or creating the trust, a court may formulate a substitute plan for the use of the gift or trust assets for a charitable purpose “as near as possible” to the original charitable purpose of the donor or settlor.[32]
The government agency or charitable organization holding a restricted charitable gift or serving as trustee of a charitable trust holds legal title to the assets on behalf of the public, which is the beneficiary of the gift or trust.[33] While such agency or organization is obligated to honor and enforce the terms of the gift or trust, such agency or organization also has a duty to seek the application of administrative deviation if it believes that continued compliance with one or more terms of the gift or trust would “defeat or substantially impair” the accomplishment of the charitable purpose of the gift or trust, or the applica[36] The attorney general, as the representative of the public, is also generally a necessary party and entitled to be heard in a proceeding involving the application of the doctrine of administrative deviation or cy pres.[37]
This Part argues that a landowner who donates a conservation easement to a government agency or land trust should be viewed as making a gift of the real property interest embodied in the easement[38] to the agency or organization for a specified charitable purpose[39]—that is, the protec-
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tion of encumbered land for the conservation purposes specified in the deed of conveyance. As with any gift of property that is conveyed to and accepted by a government agency or charitable organization pursuant to a written instrument stating that the property is to be used for a specified charitable purpose, the holder of a conservation easement should be bound by the deed of conveyance and, except to the extent granted the power in the deed, should not be permitted to deviate from the administrative terms or stated purpose thereof without receiving court approval therefor under the doctrine of administrative deviation or cy pres. In other words, except to the extent granted the power in the deed of conveyance, the holder of a donated easement should not be permitted to agree with the owner of the encumbered land to modify or terminate the easement unless and until: (i) compliance with one or more of the administrative terms of the easement threatens to defeat or substantially impair the charitable purpose of the easement, and a court applies the doctrine of administrative deviation to authorize the modification or deletion of such term or terms, or (ii) the charitable purpose of the easement has become impossible or impractica-
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ble due to changed conditions, and a court applies the doctrine of cy pres to authorize either a change in the conservation purpose for which the encumbered land is protected, or the extinguishment of the easement, the sale of the land, and the use of the proceeds attributable to the easement to accomplish the donor’s specified conservation purpose or purposes in some other manner or location.[40] In addition, in either case the state attorney general, as the representative of the easement beneficiary (the public), should be given the opportunity to intervene in the proceeding.[41]
As discussed in Part II.A.2 below, many conservation easement deeds grant the holder, either directly or indirectly, the discretion to amend the easement in manners consistent with (or neutral with respect to) the charitable purpose of the easement, thereby eliminating the need to seek judicial approval under the doctrine of administrative deviation for such amendments.[42] In addition, as a practical matter, even in the absence of such a grant of discretion in the easement deed, the holder of an easement can make uncontroversial amendments without seeking judicial approval because no person with standing is likely to object.[43] However, modifying an easement in a manner that would adversely affect the continued protection of the encumbered land for the conservation purposes specified in the easement (such as by deleting the restrictions on subdivision and development in the easement) or extinguishing an easement would constitute a change in the charitable purpose of the easement and would require the application of the doctrine of cy pres (where it would have to be established in the context of a judicial proceeding that the donor’s specified charitable purpose had become “impossible or impracticable”).[44]
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The following Sections support the application of charitable trust rules to donated conservation easements. Section A explains why a conservation easement donated to a government agency or charitable organization should be treated as a restricted charitable gift or charitable trust subject to charitable trust rules. Section B explains that the easement enabling statutes should not be viewed as trumping the application of charitable trust rules to donated easements. Section C describes a case in which a probate court determined that a façade easement encumbering an historic structure constituted a “charitable interest” under state law and authorized extinguishment of the easement pursuant to the doctrine of cy pres. Section D describes the abortive attempt of the National Trust for Historic Preservation of the United States to simply agree with the owner of easement-encumbered land to substantially modify the easement, and the position of the attorney general for the state of Maryland that the easement constituted a charitable trust and could not be modified in the absence of court approval in the context of an administrative deviation or cy pres proceeding. Section E briefly concludes by noting that the application of charitable trust rules to donated easements would not place undue burdens on the holders of such easements.
If there is no written instrument evidencing the gift of property to a government agency or charitable organization, or if the written instrument does not contain any restrictions on the donee’s use or disposition of the property, the gift is unlikely to be treated as restricted.[45] In addition, if there is a written instrument evidencing the gift of property to a government agency or charitable organization, and the donor expressly grants the agency or organization the discretion to retain, sell, or otherwise use the property as it sees fit in furtherance of its public or charitable mission, the gift clearly is not restricted. Thus, for example, a person may donate valuable artwork to a museum and expressly state in the instrument of conveyance
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that the museum may retain the artwork as part of its collection, or sell or exchange the artwork for cash or some other form of compensation that can be used by the museum in furtherance of its charitable mission.[46]
A gift of property to a government agency or charitable organization will also be deemed to be unrestricted if the instrument of conveyance contains language concerning the donee’s use of the property, but such language is couched in terms of a request, suggestion, or entreaty (rather than a command), and an examination of the instrument of conveyance in its entirety and the circumstances surrounding its execution indicate that the donor intended such language to be merely precatory in nature.[47] Thus, for example, in In re James’ Estate, the testator bequeathed the residue of his estate (consisting of approximately $25 million) to a foundation established in his name and provided in his will that it was his “wish and desire” that the foundation pay specified shares of its income to seventeen charitable organizations named in the will on an annual basis.[48] The will also provided that “the expression of [the testator’s] wishes and desires . . . shall not be taken to control or limit the absolute discretion of the trustees . . . of the foundation.”[49] After an examination of the will and the circumstances surrounding its execution, the court held that the language regarding the payment of shares of income to the seventeen named charitable organizations was intended to be merely precatory in nature and was not intended to control or limit the absolute discretion granted to the trustees of the foundation with regard to the use of the funds.[50]
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Alternatively, where the instrument of conveyance states that the gift is made for a specified charitable purpose and no words of “request, suggestion, or entreaty” appear in the instrument, the courts routinely hold that, except to the extent the donee is granted discretion in the instrument, the donee is bound by the instrument and may not deviate from the express terms or stated purpose thereof without receiving court approval therefor under the doctrine of administrative deviation or cy pres.[51] The charitable gifts of land involved in Nickols v. Commissioners of Middlesex County are somewhat analogous to the donation of a conservation easement and illustrate how a statement of purpose in a deed of conveyance can impose an enforceable obligation on the donee to both: (i) use the property that is the subject of the gift for the stated purpose; and (ii) refrain from taking any action that is contrary to that stated purpose.[52] Nickols involved a gift of the shore and woodlands surrounding Walden Pond to the Commonwealth of Massachusetts.[53] Executed in 1922, the deeds conveying the property provided, in part, as follows:
[The] parcels are . . . subject to the restriction and condition that no part of the premises shall be used for games, athletic contests, racing, baseball, football, motion pictures, dancing, camping, hunting, trapping, shooting, making fires in the open, shows or other amusements such as are often maintained at or near Revere Beach and other similar resorts, it being the sole and exclusive purpose of this conveyance to aid the Commonwealth in preserving the Walden of Emerson and Thoreau, its shores and nearby woodlands for the public who wish to enjoy the [p]ond, the woods and nature, including bathing, boating, fishing and picnicking.[54]
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In the late 1950s, the Commissioners of Middlesex County, who were charged with overseeing the use and management of the shore and woodlands (the “Commissioners”): (i) substantially increased the size of the beach area by removing more than one hundred large trees and nearby undergrowth,[55] (ii) widened the beach from a width of eight to ten feet to fifty feet by cutting down the embankment on the pond shore and using the excavated material to fill in the pond, (iii) built additional parking spaces, which involved substantial cutting of trees, (iv) provided access to the pond by a road for fishermen, and (v) planned to build a paved concrete ramp or ramps from an existing parking area to the beach and a concrete bath house about one hundred feet long at the bottom of the slope close to the new beach.[56] Four citizens and residents of Concord filed a petition with the court seeking to force the Commissioners to observe the terms of the deeds of conveyance and to refrain from conduct in violation of the deeds.[57] The Commissioners argued that the statement of purpose in the deeds did not impose a restriction, condition, trust, obligation, or burden with respect to their use of the shore and woodlands, and that the purpose of the gifts was not to preserve Walden Pond and the nearby woodlands in their natural state.[58]
The Supreme Judicial Court of Massachusetts first noted that property conveyed to a governmental body, corporation, or trustee for particular public purposes may be subject to an enforceable obligation or trust to use the property for those purposes.[59] The court then noted that whether a gift subject to a “condition” or stating a “purpose” imposes a trust or obligation on the donee is a matter of interpretation of the particular instrument and determination of the donor’s intent, and that the donor’s intent is to be ascertained from a study of the instrument as a whole in light of the circumstances attending its execution.[60]
After examining the deeds of conveyance and the circumstances surrounding their execution, the court held that the language in the deeds stating that the “sole and exclusive purpose” of the gifts “to aid the Commonwealth in preserving the Walden of Emerson and Thoreau” was not merely precatory in nature and, instead, defined the terms of the trust or obligation imposed upon the Commonwealth when it accepted the gifts.[61] The court also determined that the dominant purpose of the gifts was to preserve the pond area “as closely as practicable in its state of natural beauty,” and that the subsidiary purpose of the gifts—to provide the pub-
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lic with a venue for bathing, boating, fishing, and picnicking—could be facilitated only to the extent it was not inconsistent with the dominant purpose.[62] The court noted a number of factors that influenced its decision, including the following: at least one of the donors was a member of the Emerson family; the “Walden of Emerson and Thoreau” was a “forest lake” in a simple rural area and in the year of the gift remained as close to its natural state as a great pond less than twenty miles from the State House could remain at the beginning of the automobile age; the donors were “doubtless displeased” by the use of the area for commercial purposes prior to 1910 and concerned about the problems associated with the growing use of the pond area by the public in 1922; and the deeds contained a contrasting reference to Revere Beach, a notoriously commercialized portion of the Massachusetts coast.[63]
While the court acknowledged that the specific restrictions and conditions contained in the deeds of conveyance prohibiting certain sports, amusements, and other activities were appropriate methods of preserving the pond in its natural state, such conditions and restrictions were not exhaustive, and the Commonwealth was prohibited from engaging in any activity that was contrary to the overarching, dominant purpose of the gifts—preserving the “Walden of Emerson and Thoreau” in its state of natural beauty.[64] The court entered a judgment commanding the Commissioners to refrain from further violations of the provisions of the deeds, and to take action (by replanting, landscaping, and erosion prevention) to reduce the damage already caused to the pond area and adjacent woodlands.[65]
Conservation easements are conveyed to government agencies and charitable organizations by written instrument, usually in the form of a deed.[66] The typical deed conveying a conservation easement contains a statement of purpose similar to the statement of purpose contained in the deeds involved in Nickols. The following, excerpted from the revised Model Conservation Easement in the Conservation Easement Handbook,[67] is illustrative of the statement of purpose contained in a typical deed conveying a conservation easement:
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It is the purpose of this Easement to assure that the Property will be retained forever . . . in its [e.g., natural, scenic, historical, agricultural, forested, and/or open space] condition and to prevent any use of the Property that will . . . impair or interfere with the conservation values of the Property. Grantors intend that this Easement will confine the use of the Property to such activities . . . as are not inconsistent with the purpose of this Easement.[68]
The American Heritage Dictionary defines the word “assure” to mean “to remove doubt” or “to make certain of” and the word “forever” to mean “for everlasting time; eternally.”[69] Giving the words in the first sentence their ordinary and usual meaning, the purpose of the typical conservation easement is to “remove doubt” or “make certain” that the particular property encumbered by the easement will be retained for “everlasting time” or “eternally” in its natural, scenic, historical, agricultural, forested, and/or open space condition, and to prevent any use of such property that would impair or interfere with its conservation values. The second sentence then expressly states that the grantor’s intent in conveying the easement is to confine the use of the encumbered property to activities not inconsistent with that stated purpose. As in Nickols, no precatory words (such as “wish or desire”) are used in the statement of purpose in the typical deed conveying an easement, and such statement should be construed as intending to impose an obligation on the donee to use the easement to accomplish the stated charitable purpose—that is, to protect the specified conservation values of the encumbered land for “everlasting time” or “eternally.”[70]
The circumstances attending the execution of the typical deed conveying an easement further support the conclusion that the grantor intends to impose an obligation on the donee to use the easement to protect the specified conservation values of the encumbered land “for everlasting time” or “eternally” (and does not intend to make an unrestricted gift of the easement—or the value attributable thereto—to the donee that the
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donee may use as it sees fit to accomplish its charitable mission). The few surveys of easement donor motivations that have been conducted indicate that easement donors are primarily motivated to donate their easements by a strong personal attachment to and concern about the long-term stewardship of their land.[71] Moreover, there is no indication that the agencies and organizations accepting easements suggest to donors that the donation of an easement constitutes a gift of a fungible asset that the donee is free to later sell or exchange (in whole or in part) for cash or other compensation. To the contrary, easement donees typically represent to potential donors that the terms of their easements will be permanent, and that by accepting an easement, the donee is agreeing to honor and enforce those terms “in perpetuity” or “forever.”[72]
Although the donation of a conservation easement represents a unique form of a restricted charitable gift, in that it essentially represents a restricted gift of the right to restrict certain land uses, it is analogous to the restricted gifts of land in Nickols and arguably should be interpreted in a similar manner. Just as the statement of purpose in the deeds involved in Nickols defines the terms of the obligation imposed upon the Commonwealth of Massachusetts and prohibits the Commonwealth from engaging in any activity that is contrary to such purpose, so should the statement of purpose in a deed conveying a conservation easement define the terms of the obligation imposed upon the donee and prohibit the donee from engaging in any activity contrary to such purpose (including modification of the easement in manners inconsistent with such purpose or termination of the easement). Thus, while the deed conveying a conservation easement may not expressly state that the donee cannot modify the easement in manners inconsistent with its stated purpose or extinguish the easement, such
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restrictions on the donee’s use and disposition of the easement should be viewed as implicit in the overarching charitable purpose of the gift.[73]
Moreover, since 1986 any donor of a conservation easement interested in claiming a federal charitable income tax deduction has generally been required to include a provision in the deed of conveyance stating, in effect, that the restrictions in the easement may be extinguished only if and when changed conditions have made the continued use of the property for the conservation purposes specified in the easement “impossible or impractical,” and only then in the context of a judicial proceeding.[74] Since 1986 any donor of an easement interested in claiming a federal charitable income tax deduction also has been required to include a provision in the deed of conveyance prohibiting the donee from transferring the easement, whether or not for consideration, except to another government agency or publicly supported charity that agrees to continue to carry out the conservation purposes of the easement.[75] Those provisions, which are likely to have been included in many if not most easement deeds since 1986,[76] reinforce the conclusion that the donor of an easement does not intend to grant the donee the discretion to terminate the easement (or effectively terminate the easement by agreeing to modify the easement to remove the substantive restrictions on the development and use of the encumbered land).
Without running afoul of the requirements for the charitable income tax deduction, an easement donor may include a provision in the deed of conveyance expressly granting the holder the discretion to agree to amendments that are consistent with (or neutral with respect to) the stated purpose of the easement, thereby eliminating the need for the holder to seek judicial approval for such amendments under the doctrine of administrative deviation.[77] In addition, even in the absence of such an express “amendment provision,” many easement deeds contain provisions that could be interpreted to grant the holder such discretion.[78] Such provisions give the
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holder of an easement the flexibility to simply agree with the owner of the encumbered land to, for example, amend the easement to clarify vague language; correct a drafting error; delete restrictions that advances in ecological science have shown to be detrimental to the conservation purpose of the easement (such as a “no burn” restriction relating to forested areas); or permit activities that the owner of the land wishes to engage in that were not contemplated by the easement donor and have no adverse impact on the continued protection of the land for the conservation purposes specified in the easement.[79] Moreover, as a practical matter, even in the absence of such amendment or discretionary provisions, the holder of a conservation easement can simply agree with the owner of the encumbered land to make uncontroversial amendments to the easement because no person with standing is likely to object.[80]
The amendment or discretionary provisions described above should not, however, remove the obligation of the holder to seek judicial approval of proposed amendments that are not consistent with the conservation purposes of the easement, or a proposed extinguishment of an easement. Modifying an easement in a manner that would adversely affect the continued protection of the encumbered land for the conservation purposes specified in the easement (such as by deleting the restrictions on subdivision and development in the easement) or extinguishing an easement would constitute a change in the charitable purpose of the easement and would require the application of the doctrine of cy pres (where it would have to be established in the context of a judicial proceeding that the donor’s specified charitable purpose had become “impossible or impracticable”).
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As with any gift of property that is conveyed to and accepted by a government agency or charitable organization pursuant to a written instrument stating that the property is to be used for a specified charitable purpose, the donee of a conservation easement should be bound by the deed of conveyance and, except to the extent granted discretion in the deed, should not be permitted to deviate from the terms or stated purpose thereof without receiving court approval therefor under the doctrines of administrative deviation or cy pres. To paraphrase the New York Court of Appeals in St. Joseph’s Hospital, nothing in authority, statute, or public policy prevents a donor from leaving his property to a charitable corporation for a specified charitable purpose and having his clearly expressed intention enforced.[81]
The easement enabling statutes do not appear to trump the application of the equitable rules governing a charitable donee’s use and disposition of charitable assets in the conservation easement context. To the contrary, many of the easement enabling statutes expressly provide that equitable rules—which include the charitable trust rules—may apply to conservation easements. For example, twenty-five states and the District of Columbia have adopted the provision in the UCEA that provides that the act “does not affect the power of a court to modify or terminate a conservation easement in accordance with the principles of law and equity.”[82] In explaining that provision, the drafters of the UCEA noted that “[t]he Act 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.”[83] In addition, twenty-two states and the District of
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Columbia have adopted the UCEA provision expressly granting standing to bring an action affecting a conservation easement to any “person authorized by other law.”[84] In explaining that provision, the drafters of the UCEA noted that, in addition to the owner of the encumbered land, the holder of the easement, and any party expressly granted a third party right of enforcement in the easement deed, “the Act also recognizes that the state’s other applicable law may create standing in other persons” and offered as an example the state attorney general, who, independently of the easement enabling statute, “could have standing in his capacity as supervisor of charitable trusts.”[85] Accordingly, the UCEA and the easement enabling statutes in the states (and the District of Columbia) that adopted the provisions noted above leave the door open for the application of charitable trust rules to conservation easements if appropriate under a state’s other applicable law.
The statutes in the remaining states adopt a variety of approaches with regard to the modification or termination of conservation easements. Some are silent with regard to modification or termination,[86] others provide only that a conservation easement may be modified or terminated in the same manner as other easements,[87] and still others provide that a conservation easement may be modified or terminated only after the satisfaction of certain conditions, such as the holding of a public hearing and
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approval by a public official.[88] None of the statutes, however, expressly precludes the application of charitable trust rules to conservation easements,[89] and it is not clear why the donation of the property interest embodied in a conservation easement to a charitable organization or government agency for a specified charitable purpose should be exempt from the equitable rules that govern the use and disposition of all other types of property interests donated to charitable organizations or government agencies for specified charitable purposes.
The status of the conservation easement as an interest in real property should not set it apart from the universe of all other charitable gifts, particularly when one considers that charitable trust rules are routinely applied to fee simple interests in land that have been donated to government agencies or charitable organizations for specified charitable purposes.[90] In addition, the fact that there are lingering questions regarding the precise nature of the property interest embodied in a conservation efined over the centuries to deal precisely with the issue presented by conservation easements—how to appropriately balance: (i) a charitable donor’s desire to exercise dead hand control over the use of his or her property and (ii) society’s interest in ensuring that assets perpetually devoted to charitable purposes continue to provide benefits to the public.[92]
cy pres proceeding (where it would have to be established that the donor’s specified charitable purpose had become “impossible or impracticable”). If the donee of a conservation easement wishes to be free to terminate the easement or modify its charitable purpose in accordance with only those conditions imposed under the applicable state easement enabling statute, it should negotiate for the inclusion of a provision to that effect in the deed of conveyance, and the import of such provision should be explained to the prospective donor. In other words, the prospective donor should be put on notice that the donee will be free to simply agree with a subsequent owner of the encumbered land to modify the easement in any manner it sees fit or extinguish the easement, subject only to whatever conditions might be imposed under the easement enabling statute, such as the holding of a public hearing and approval of a public official, and the general federal and state laws applicable to the donee, such as the prohibitions on private inurement and private benefit. However, granting such broad discretion to the donee to agree to modify or terminate a conservation easement could render the easement ineligible for the federal charitable income tax deduction (a requirement of which is that the conservation purpose of the easement be “protected in perpetuity”).[93] In addition, in light of the fact that landowners appear to be pri-
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marily motivated to donate their easements by a strong personal attachment to and concern about the long-term stewardship of their land,[94] even those not interested in claiming federal tax benefits may be unwilling to grant such broad discretion to the donee.
Accordingly, in the case of a conservation easement donated to a government agency or charitable organization, the stated purpose of which is the protection of certain conservation attributes of the encumbered land forever or in perpetuity, and that grants the donee the discretion to amend the easement only in manners consistent with its stated purpose, the equitable rules governing a donee’s use and disposition of charitable assets should apply in addition or as an overlay to the provisions in the easement enabling statute addressing modification or termination. Thus, for example, in a state that provides that a conservation easement may be modified or terminated in the same manner as other easements (that is, by agreement of the parties thereto), the holder of the easement should be required to obtain judicial approval of a proposed modification that is inconsistent with the stated purpose of the easement, or a proposed extinguishment of the easement in a cy pres proceeding before agreeing with the owner of the encumbered land to so modify or terminate the easement. Similarly, in a state that provides that a conservation easement may be modified or terminated only after the satisfaction of certain conditions, such as the holding of a public hearing and approval by a public official, the holder of an easement should be required to obtain judicial approval of a proposed modification that is inconsistent with the stated purpose of the easement or a proposed extinguishment of the easement in a cy pres proceeding and satisfy the public hearing and public official approval requirements.
In at least one case a court assumed without discussion that a donated façade easement constituted a charitable interest and applied the doctrine of cy pres to authorize the extinguishment of the easement.[95] In re
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Preservation Alliance for Greater Philadelphia involved a façade easement encumbering an historic building located in Philadelphia’s Germantown neighborhood (known as “Mayfair House”). The easement had been donated to the Preservation Alliance for Greater Philadelphia (the “Preservation Alliance”) in 1981. At the time of the donation of the easement Mayfair House was occupied and in good condition, but over the course of time the building became dilapidated and eventually was determined to have no economic use. In 1999, the Preservation Alliance petitioned the court requesting that the court apply the doctrine of cy pres to authorize: (i) ex-tinguishment of the façade easement and demolition of Mayfair House, and (ii) replacement of the easement with a Declaration of Continuing and Additional Covenants designed to permanently preserve the site of the house as park land and prevent construction on the site of any buildings incompatible with the historic architectural character of Germantown.[96] Both the attorney general for Pennsylvania and the attorney for the City of Philadelphia were notified of and consented to the Preservation Alliance’s petition; as did at least one neighborhood civic group.[97] The court determined that due to changed circumstances there was no reasonable contemplation of restoring Mayfair House to any proper use; the purpose of the façade easement, insofar as it attempted to preserve Mayfair House, had been frustrated; the charitable intent of the donor had been to preserve the historic fabric of the Germantown neighborhood in addition to the specific historic structure; and the donor’s intent would be best served by authorizing the extinguishment and replacement of the façade easement as requested by the Preservation Alliance.[98]
To date no decision has been reported in which a court has applied the doctrines of administrative deviation or cy pres to modify or terminate a conservation easement.[99] The history of the conservation easement
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encumbering Myrtle Grove, an historic 160-acre former tobacco plantation located on Maryland’s eastern shore, however, illustrates both: (i) the intent of the donor of a perpetual easement to impose an enforceable obligation on the donee to enforce the terms of the easement “in perpetuity” or “forever”; and (ii) the Maryland attorney general’s opinion that a donated, perpetual conservation easement constitutes a restricted charitable gift or a charitable trust that may not be modified in manners inconsistent with its purpose or terminated in the absence of court approval in the context of an administrative deviation or cy pres proceeding.
In 1975, Margaret Donoho donated a perpetual conservation easement encumbering Myrtle Grove to the National Trust for Historic Preservation in the United States (the “National Trust”). Myrtle Grove had been in Donoho’s family for eight generations, and Donoho had inherited Myrtle Grove at the death of her father, when she and her brother divided the original Myrtle Grove property along an existing road. At her father’s death Donoho received approximately 165 acres of the property, along with an early eighteenth-century farmhouse located thereon, and her brother received the remaining 425 acres. The brother later sold his share of the property for development into five-acre residential lots, now known as the “Bantry subdivision.” Donoho deeply resented the Bantry subdivision because she felt it destroyed that land’s open space character, and she was determined to protect her portion of the original Myrtle Grove property from similar development. After meeting with a consultant from the National Trust, who informed her in a letter that “[a] landowner who gives an easement can enjoy the feeling of knowing that his land will be forever protected from the pressure of destructive change . . . . This easement is perpetual and applies to future owners as well,” Donoho decided that she could best protect Myrtle Grove from undesirable development by donating a perpetual conservation easement to the National Trust.[100]
The deed of easement encumbering Myrtle Grove states that the Grantor (Donoho) desires to preserve Myrtle Grove in “substantially its present condition,” and that the purpose of the easement is “preserving [the land and improvements thereon] and protecting and maintaining the historic, architectural, cultural and scenic values of [the] land and the improvements thereon for the continuing benefit of the people of the State of Maryland and the United States of America.”[101] The deed also provides that it restricts the use of the Myrtle Grove property “in perpetuity,” and “constitute[s] a binding servitude” on the land.[102] The restrictions on de-
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velopment and use in the deed include: (i) a prohibition on subdivision of the land, except for one tract of not less than five acres that may be selected by a descendant of Donoho for the erection and maintenance of a single private dwelling (referred to hereinafter as the “Heirs’ Lot”), and (ii) a prohibition on the construction or maintenance of buildings or structures on the land other than: the main dwelling (the early eighteenth-century farmhouse) and outbuildings adjacent thereto; the historic law office that was located on the property at the time of the donation of the easement; and outbuildings commonly or appropriately incidental to a farming operation, including a caretaker’s house.[103]
Donoho died in 1988. In 1989, Donoho’s heirs, unable to afford the inheritance taxes on Myrtle Grove, sold the property subject to the easement for $3 million to a trust established by a prominent Washington, D.C., developer, Herbert Miller, for the benefit of his wife (the “Miller Trust”). The sale was made only after the heirs received confirmation from the National Trust that the restrictions on the development and use of the property in the easement would be binding on all future owners of the land.[104]
In October of 1993, after the Millers had renovated the eighteenth-century farmhouse, built a caretaker’s house, barn, guest cottage, pond, pool house, pool, dock, tennis court, and garage apartment, and attempted unsuccessfully to sell the property for $6.5 million, the attorney for the Miller Trust asked the National Trust to amend the conservation easement to permit the land to be subdivided into eight parcels.
In February of the following year, after discussions and exchange of correspondence between the Miller Trust and the National Trust, the president of the National Trust signed and sent to the Millers a “Concept Approval” letter that confirmed and documented the terms and conditions on which the National Trust consented to the amendment of Donoho’s easement. The letter provided that: (i) the easement would be amended to confine its terms to a forty-seven acre “Historic Core” on Myrtle Grove, (ii) the Heirs’ Lot could be subdivided into three residential lots, and (iii) the remaining acreage could be subdivided into five residential lots. The subdivided lots were to be subject to easements of their own that, among other things, would restrict tree cutting and brush clearing and require the National Trust’s approval of the design, site, and screening of the single-family
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residence and ancillary structures (such as pools, pool houses, tennis courts, and the like) permitted on each of the lots. In exchange for agreeing to the subdivision plan, the National Trust was to receive a buffer zone easement over a twenty-five acre lot adjacent to Myrtle Grove and up to $68,700 in funding to enforce the new easements on the subdivided lots.[105] The Concept Approval letter had been prepared by an attorney for the National Trust, who apparently thought that modifying Donoho’s easement was merely a contractual matter between the National Trust and the subsequent owner of the land, and did not consider that the donated easement may constitute a restricted charitable gift or a charitable trust.[106]
The decision by the National Trust to amend the easement and permit the subdivision of Myrtle Grove touched off a storm of protest from conservation groups and Donoho’s family.[107] In addition, the local county planning commission questioned whether the National Trust had the legal ability to alter the easement and tabled the Myrtle Grove subdivision request until that question could be answered. Although the National Trust initially defended its decision to amend the easement,[108] pressure from conservation groups and Donoho’s family eventually prompted it to retract its decision and acknowledge that “it had made ‘a serious mistake’ in allowing development of the lush, waterfront Myrtle Grove . . . .”[109]
Almost three years later, in February of 1997, the Miller Trust sued the National Trust for breach of contract.[110] In July of 1998, the attorney general for the state of Maryland filed a separate, collateral suit asserting that Donoho’s donation of the easement created a charitable trust for the
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benefit of the people of Maryland and asking the court to enforce the terms of the trust.[111]
Both cases were settled in December of 1998, with the National Trust agreeing to pay the Miller trust $225,000, and the parties agreeing that no action would be taken to amend, release (in whole or in part), or extinguish the Myrtle Grove easement without the express written consent of the attorney general, except consent of the attorney general is not required for approvals carried out pursuant to the ordinary administration of the easement in accordance with its terms.[112] The Washington Post reported that the settlement ended an “embarrassing episode” for the National Trust.[113]
The Myrtle Grove controversy provides a compelling example of the intent of the donor of an expressly perpetual easement to impose an enforceable obligation on the donee to enforce the terms of the easement “in perpetuity” or “forever.” When Donoho donated her easement prohibiting the subdivision and development of Myrtle Grove (except for the Heir’s Lot) in perpetuity, she clearly did not intend that the National Trust could simply agree with a subsequent owner of the land to modify or extinguish some or all of those prohibitions in exchange for cash or some other form of compensation. Donoho’s intent that the National Trust would honor and enforce the terms of her easement, and thereby preserve, protect, and maintain the historic, architectural, cultural, and scenic values of Myrtle Grove in perpetuity, is clear from both the terms of the deed of conveyance and the circumstances surrounding its execution.
The Myrtle Grove easement, like virtually all conservation easements, expressly provides that its purpose is to protect certain attributes of the particular land encumbered by the easement in perpetuity, and that statement of purpose is not couched in the form of a “request, suggestion, or entreaty.” In addition, the Myrtle Grove property had been in Donoho’s
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family for eight generations; she had a deep, personal attachment to the land. She donated the easement precisely because she abhorred the subdivision and development of the portion of the original Myrtle Grove property inherited by her brother and wished to permanently prevent the same thing from happening to her portion of the land. Moreover, her decision to donate the easement was influenced, in large part, by the National Trust’s representation to her that the easement would be binding on all future owners of the land and, thus, would “forever protect” Myrtle Grove from destructive change.
Accordingly, just as the statement of purpose in the deeds in Nickols—the preservation of the “Walden of Emerson and Thoreau”—defined the terms of the obligation or trust imposed upon the Commonwealth of Massachusetts and prohibited the Commonwealth from engaging in any activity that was contrary to such purpose,[114] so should the statement of purpose in the Myrtle Grove easement—to preserve, protect, and maintain the historical, architectural, cultural, and scenic values of Myrtle Grove in perpetuity—be deemed to define the terms of the obligation or trust imposed upon the National Trust and prohibit the National Trust from engaging in any activity that is contrary to such purpose.
Modifying the Myrtle Grove easement to narrow its application to a forty-seven acre “historic core,” and permit an eight-lot subdivision on the remaining acreage, complete with a single-family residence and ancillary structures (such as a pool, pool house, and tennis courts) on each of the eight lots, obviously would be contrary to the stated purpose of the easement, just as enlarging the beach area, cutting down old-growth trees, and building a road, concrete ramps, and a concrete bathhouse at Walden Pond was contrary to the stated purpose of the gifts in Nickols. Thus, although the deed conveying the Myrtle Grove easement did not expressly state that the donee could not modify the easement in manners inconsistent with its stated purpose or extinguish the easement, such a restriction on the donee’s use and disposition of the easement is implicit in the overarching purpose of the gift.
This was the position asserted by the attorney general for the State of Maryland. In the Memorandum of Law in Support of Attorney General’s Motion for Summary Judgment, the attorney general argued that while, in general, an easement is an agreement that may be modified with the consent of the holder of the easement and the owner of the land, “Myrtle Grove is not a mere conservation agreement but a gift in perpetuity to a charitable corporation for the benefit of the people of Maryland” and “[a]s such, it is subject to a charitable trust.”[115] The attorney general acknowl-
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edged that the Maryland easement enabling legislation provides that a conservation easement may be “extinguished or released, in whole or in part, in the same manner as other easements,” but noted that “[n]othing in [the] statute or its legislative history . . . indicates the legislature’s intent to abrogate the application of well-settled charitable principles when a conservation easement is gifted to a charitable corporation.”[116]
The attorney general further asserted that the proposed eight lot subdivision of the property, which would permit the construction of a single- family residence, as well as ancillary structures such as a swimming pool, pool house, and tennis courts, on each of the eight lots would “frustrate the purposes of the . . . charitable trust.”[117] The attorney general noted that “[i]n situations where compliance with the Myrtle Grove charitable trust is impossible or impracticable or would defeat or substantially impair its purposes, the doctrines of cy pres and [administrative] deviation provide avenues of change . . . under the jurisdiction of this court of equity.”[118] There was, however, no indication that the charitable purpose of the Myrtle Grove easement had become “impossible or impracticable,” or that any of the terms of the easement were “defeat[ing] or substantially impair[ing]” that purpose.[119]
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Land trusts have generally resisted the characterization of a conservation easement donation as a restricted charitable gift or a charitable trust on the grounds that judicial as well as attorney general involvement in the easement modification or termination process would be unduly burdensome.[120] It is not clear, however, why land trusts should be considered a breed apart from other charitable organizations and allowed to pursue their charitable goals free from the type of oversight exercised by the courts and state attorneys general over other charitable organizations.[121] In addition, exempting land trusts and conservation easements from the longstanding rules governing a charitable donee’s use and disposition of its charitable assets seems particularly unwise given the lack of a formal accreditation program for the nation’s land trusts, the growing number of reports of incompetent and even “rogue” land trusts, and the importance of land use decisions to society.[122]
Treating donated conservation easements as restricted charitable gifts or charitable trusts also would not appear to impose undue burdens on the holders of such easements. The government agencies and charitable organizations acquiring conservation easements have the ability to minimize the need for easement modifications and terminations through: (i) strategic
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planning for conservation easement acquisitions (which would, for example, reduce the likelihood of “island easements” that may lose their conservation value over time as they are surrounded by developed lands), and (ii) careful drafting of easement deeds (which would, for example, reduce the need for amendments to correct drafting errors or clarify vague language). In addition, such agencies and organizations can build into easement deeds (with the donors’ acquiescence) provisions granting them the flexibility to simply agree with the owners of the encumbered land to amend the easements in manners consistent with the conservation purposes of such easements.[123] If a conservation easement contains such a grant of discretion, the donee would be required to seek court approval only for proposed amendments that are not consistent with the conservation purposes of the easement (such as those contemplated in the Myrtle Grove controversy) and for the wholesale extinguishment of the easement and the use of the proceeds attributable thereto to accomplish similar conservation purposes in another location. Once it is understood that significant flexibility can be built into easement deeds, and that court approval of amendments or extinguishments that are not permitted pursuant to the terms of an easement deed could legitimize such actions (and shield the holder from potential legal liability), there may be less resistance on the part of land trusts to the idea of treating easements as restricted charitable gifts or charitable trusts.
The following Part discusses how the doctrine of cy pres could be applied to modify or terminate a conservation easement, the charitable purpose of which has become impossible or impracticable due to changed conditions.[124]
Before discussing the application of the doctrine of cy pres in the conservation easement context, it is important to describe the nature of the bargain that an individual strikes with the public upon the making of a restricted charitable gift or the creation of a charitable trust.[125]While the
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laws of this country accord significant deference to the right of individuals to dispose of their property as they see fit, such laws also place limits on that right. In the private trust context, the states limit the exercise of dead hand control over trust assets through the Rule Against Perpetuities, which generally permits a settlor to exercise control over trust property for a period of time equal to the lives of persons known to the settlor plus twenty-one years.[126] The Rule Against Perpetuities strikes a balance between respect for an individual’s right to control the disposition of his property and society’s interest in having the use of resources determined by the living.[127]
In the case of a restricted charitable gift or a charitable trust, “the state strikes a more generous bargain with the donor”—the donor is allowed to exercise dead hand control over the use of his property indefinitely, provided such property is devoted to charitable purposes and is therefore beneficial to the public.[128] An implicit condition of allowing donors to exercise dead hand control over the use of charitable assets indefinitely is that such use must continue to provide benefits to the public.[129] If at some point in time the donor’s prescribed use of the property ceases to be charitable because it no longer provides the requisite level of benefit to the public, a court can apply the doctrine of cy pres to restore the appropriate balance between the donor’s desire to exercise dead hand control and society’s interest in ensuring that assets perpetually devoted to charitable purposes continue to provide benefits to the public.[130]
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Accordingly, when a landowner donates a conservation easement to a government agency or land trust, the landowner should be viewed as striking the following “cy pres bargain” with the public: the landowner should be permitted to exercise dead hand control over the use of the property encumbered by the easement, but only so long as the easement continues to provide benefits to the public sufficient to justify its enforcement. If, due to changed conditions, the charitable purpose of the easement becomes “impossible or impracticable,” the doctrine of cy pres should be applied to restore the appropriate balance between the landowner’s desire to exercise dead hand control over the use of the property and society’s interest in ensuring that assets perpetually devoted to charitable purposes continue to provide benefits to the public.[131]
To date, there have been no reported cases in which a court has applied the doctrine of cy pres to modify or terminate a conservation easement.[132] It is inevitable, however, that the charitable purpose of some conservation easements will become “impossible or impracticable” due to changed conditions. Accordingly, the following Sections of this Part describe the operation of the doctrine of cy pres in the conservation easement context.
Section 1 first explains how a cy pres proceeding involving a conservation easement could be initiated. Section 2 then discusses how the courts work through each of the three steps in the cy pres process, and offers suggestions as to how the courts might work through each of those steps in the conservation easement context.
The owner of the land encumbered by the easement, the holder of the easement, and the state attorney general (as representative of the public) should each be granted standing as a matter of right to initiate or intervene in any cy pres proceeding involving a conservation easement.[133]
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Accordingly, a cy pres proceeding involving a conservation easement could be initiated in myriad ways. First, and perhaps most obviously, the owner of the encumbered land could initiate the proceeding seeking to free the land from the easement restrictions.[134]
Second, and perhaps less obviously, the holder of the easement could initiate the proceeding, arguing that the charitable purpose of the easement has become “impossible or impractic in some other manner or location.[135] While holders of easements are obliged to honor and enforce the terms of the easements they accept, they also arguably have a duty to seek the application of cy pres if they believe it has become impossible or impracticable to carry out the charitable purpose of an easement.[136] Of course, given the financial benefits the holder of a conservation easement can expect to receive if an easement is extinguished,[137] the courts and the public are likely to view holders seeking to extinguish easements with great skepticism unless the holders have clearly articulated written policies and procedures regarding when they will seek extinguishment, and assiduously follow those policies and procedures.[139]
In addition, if the holder of an easement failed to comprehend its status as trustee or quasi-trustee and simply agreed to a proposal by the owner of the encumbered land to substantially modify (as in the Myrtle Grove controversy) or extinguish the easement, the attorney general could file suit as the enforcer of charitable trusts, arguing that the easement can be modified or extinguished only in the context of a judicially supervised cy pres proceeding. Even if the attorney general failed to file suit in such circumstance (due to lack of notice, lack of resources, or simple lack of interest), the cy pres issue could nonetheless arise if the holder of the easement and the owner of the land attempted to sell the unencumbered land and the purchaser refused to comply with the purchase contract on the grounds that the parties do not have the authority to extinguish the easement and sell the land in the absence of court approval.[140]
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Whether additional parties (such as the donor of the easement, the donor’s heirs, neighboring landowners, other members or representatives of the general public, and other conservation organizations) would be granted standing as a matter of right to intervene in any such proceeding would depend, inter alia, on the terms of the easement, the terms of the applicable easement enabling statute, and state law interpretation of the rule that parties with a “special interest” are granted standing as a matter of right in a cy pres action.[141] If such parties are not granted standing to intervene as a matter of right, it is within the discretion of the court to permit such intervention.[142]
Applying the doctrine of cy pres to a conservation easement would involve a three-step process. First the court would determine whether the charitable purpose of the easement (that is, the protection of the encumbered land for the conservation purpose or purposes specified by the donor) had become “impossible or impracticable” due to changed conditions. If “impossibility or impracticability” were established, the court would then determine whether the donor had a general charitable intent in donating the easement. If the court determined that the donor had a general charitable intent, the court would then proceed to the third and final step in the cy pres process—formulating a substitute plan for the use of the easement (or the value attributable thereto[143]) for a charitable purpose “as near as possible” to that specified by the donor.[144]
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Determining that the charitable purpose of an easement has become “impossible or impracticable” due to changed conditions and that the donor had a general charitable intent would not necessarily mean that the easement would be extinguished. In the third step of the cy pres process—formu-lating a substitute plan—the court should endeavor to ascertain from the terms of the easement and the circumstances attending its donation whether the donor, if presented with the “impossibility or impracticability” of the continued protection of the encumbered land for the conservation purpose or purposes specified by the donor (for example, to provide grizzly bear habitat or preserve part of a rural, agricultural landscape), would have preferred: (i) that the easement be modified and the encumbered land continue to be protected for a different conservation purpose (such as for use as a public park), or (ii) that the easement be extinguished and the value attributable thereto be used to accomplish the donor’s specified conservation purpose or purposes in some other manner or location.[145]
In the first step of the cy pres process, the court determines whether the charitable purpose of the gift or trust has become “impossible or impracticable” due to changed conditions. In other words, the court determines whether the donor’s prescribed use of the property has ceased to be “charitable” because it no longer provides the requisite level of benefit to the public.[146] In their famous treatise on trusts, Professors Scott and Fratcher note that “[i]t is difficult, of course, to draw any exact line between the situations where it would be impracticable to carry out the specific directions of the testator and situations where it would merely be undesirable to do so. The distinction is one of degree rather than one of kind.”[147]
Decisions regarding whether the charitable purpose of a gift or trust has become “impossible or impracticable” are based on the particular facts of each case, and no precise definition of the standard exists.[148] In a 1973
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American Bar Association report on the doctrine of cy pres, the authors noted that there is a “significant variance in the degree of impossibility or impracticability required” by courts to trigger the application of cy pres,[149] and this state of affairs does not appear to have changed in the ensuing years. A quick perusal of the more recent cases involving the doctrine reveals some in which the courts have declined to give an expansive reading to the concept of “impossibility or impracticability,”[150] and others in
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which the courts have been willing to do so.[151] Although some commentators have noted a “prevailing conservative mood” in the approach of the courts to this first step in the cy pres process,[152] others have noted that the trend in the case law has been to broaden the circumstances in which cy pres can be applied.[153]
Articulating the standard in the easement context. In the first step of a cy pres process involving a conservation easement, the court would determine whether the charitable purpose of the easement (that is, the protection of the encumbered land for the conservation purpose or purposes specified in the easement) had become “impossible or impracticable” due to changed conditions. In other words, the court would determine whether the protection of the encumbered land for the conservation purpose or purposes specified in the easement had ceased to be charitable because it no longer provides the requisite level of benefit to the public.[154]
Landowners donate conservation easements to protect their land for a variety of difficult to define “conservation purposes,” including, for exam-
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ple, the protection of wildlife habitat, a scenic vista, open space, or rural, agricultural land (or some combination thereof). The inherently subjective nature of the conservation purposes for which land is protected, coupled with the lack of any precise definition of the “impossibility or impracticability” standard under the doctrine of cy pres could lead to unfortunate results in the conservation easement context.
The dangers of a vague standard. Too liberal an interpretation of the “impossibility or impracticability” standard might lead to the extinguishment of easements on the grounds of mere economic or conservation ineffi-ciency. If a standard based on economic inefficiency were applied, easements might be extinguished simply because the easy-to-quantify economic benefits to the public from the development of the encumbered land might appear to far outweigh the more difficult-to-quantify intangible benefits to the public that flow from the land in its undeveloped state, thus rendering the accomplishment of the charitable purpose of the easement—such as the protection of the land as open space—“impracticable” from a purely economic standpoint.[155] If such a standard were applied, one might expect the local courts applying cy pres to give greater weight to state and local economic interests than to the interests of the nation as a whole in protecting certain land from development and other intensive uses,[156]
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which would be particularly inappropriate where the nation as a whole had invested in the easement through the provision of federal tax benefits to the easement donor and the organization holding the easement. In addition, given that easement donors appear to be primarily concerned about the long-term protection of the particular land encumbered by their easements, extinguishment of easements on the grounds of mere economic inefficiency could be expected to have a significant chilling effect on future easement donations.[157]
If a standard based on conservation inefficiency were applied, easements might be extinguished simply because the value attributable thereto could, in the opinion of some (such as the holder of the easement or the state attorney general), be put to more desirable or efficient conservation uses in other locations.[158] Extinguishment of a conservation easement on the grounds of mere conservation inefficiency would do violence to the intent of the typical easement donor (who does not intend to make a gift of a fungible asset to the donee), and could also be expected to have a signifi-cant chilling effect on future easement donations.
On the other hand, too conservative an interpretation of the “impossibility or impracticability” standard could result in the perpetuation of easements that have ceased to provide significant benefits to the public or have even arguably become detrimental to the public. If “impracticable” is interpreted to mean that the charitable purpose of an easement must become virtually impossible before cy pres will be applied, it will be difficult to modify or extinguish any conservation easements under the doctrine of cy pres. Most conservation easements are donated, at least in part, to protect the encumbered land as “open space,” and it would be very difficult to argue that an easement encumbering even the most environmentally degraded parcel of undeveloped land (such as a vacant lot in an industrial area) no longer protects “open space.”[159]
An inability to modify or extinguish conservation easements could have severe consequences. As noted in the introduction, the number of acres being encumbered by conservation easements on an annual basis has been increasing dramatically, particularly since the late 1990s. If that number continues to grow, the impact and influence easements will have on land use
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planning is likely to become pervasive, and the need to make modifications and adjustments to account for changed conditions and societal needs may become acute. Moreover, despite the best intentions of most members of the land trust community, mistakes are being made, and easements are being acquired that with the passage of time may provide very little public benefit, or even become detrimental to the public.[160] At some point in time, society simply may not have the luxury of continuing to enforce easements that provide only marginal levels of public benefit. Rather, we may find ourselves in need of engaging in a form of “conservation triage,” where easements that no longer provide sufficient levels of public benefit as measured under contemporary standards are extinguished, and the value attributable to such easements is used to protect increasingly scarce land with far greater conservation value.
Accordingly, too conservative an interpretation of the “impossibility or impracticability” standard might severely compromise the ability of society to modify land use patterns to respond to changed circumstances and societal needs, and an enormous amount of conservation capital (in the form of the value attributable to subpar easements) could be wasted. It is also possible that the continued enforcement of conservation easements that have ceased to provide significant benefits to the public or have even become detrimental to the public would give pause to prospective easement donors.[161] Given the strong public interest in the appropriate use of land, highly publicized instances of the failure to extinguish easements that are no longer accomplishing the purposes for which they were donated would likely erode public support for the use of perpetual easements as a land protection tool.
The foregoing suggests that, in the absence of a principled standard of “impossibility or impracticability” in the easement context, some easements that are providing significant levels of public benefit may be extinguished on the grounds of mere economic or conservation inefficiency; others that are providing little, no, or negative public benefit may continue to be enforced; and the courts, legislators, and the public may begin to take a dim view of the use of conservation easements as a land protection tool.[162]
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In determining whether the charitable purpose of a conservation easement has become “impossible or impracticable”—or, in other words, in determining whether the protection of the encumbered land for the conservation purpose or purposes specified in the easement has ceased to be charitable because it no longer provides the requisite level of benefit to the public—it would be useful for the courts to be able to refer to some test of “public benefit” in the easement context that is widely accepted, at least somewhat objective, takes into account local, state, and national conservation interests, and evolves as society’s conservation priorities evolve.[163] A test of public benefit with those characteristics would help ensure that easements that are providing significant levels of public benefit are not extinguished on the grounds of mere economic or conservation inefficiency, and at the same time allow society the flexibility to modify or extinguish easements that are providing little, no, or negative public benefit as measured under contemporary standards. An additional measure of the public benefit being derived from a conservation easement should, of course, be the extent to which there is public support for continuing to enforce the easement.
To date, there has existed only one test of “public benefit” in the easement context that could be described as widely accepted and at least somewhat objective, and that takes into account local, state, and national conservation interests and evolves as society’s conservation priorities evolve. That test is the “conservation purposes test” under § 170(h) of the Internal Revenue Code, which has been used since 1980 to determine whether
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the donor of a conservation easement is eligible for a federal charitable income tax deduction.
Under § 170(h), the donor of a conservation easement will be eligible for a federal charitable income tax deduction only if, inter alia, the easement is donated for one or more of the following “conservation purposes”:
(i) the preservation of land areas for outdoor recreation by, or the education of, the general public [the “public recreation or education” conservation purposes test],
(ii) the protection of a relatively natural habitat of fish, wildlife, or plants, or similar ecosystem [the “wildlife habitat” conservation purposes test],
(iii) the preservation of an historically important land area or a certified historic structure [the “historic preservation” conservation purposes test], or
(iv) the preservation of “open space” (including farmland and forest land) where such preservation is: (I) for the scenic enjoyment of the general public and will yield a significant public bene-fit or (II) pursuant to a clearly delineated Federal, State, or local governmental conservation policy and will yield a significant public benefit [the “open space” conservation purposes test].[164]
The conservation purposes tests under § 170(h) were carefully crafted by Congress to ensure that only easements that can be expected to provide a certain threshold level of benefit to the public would be eligible for the federal charitable income tax deduction. Those tests have been the gold standard by which the public benefit to be derived from a conservation easement has been measured for twenty-five years and can therefore be described as widely accepted.[165] In addition, the Treasury Regulations inter-
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preting § 170(h) provide substantial, detailed guidance regarding the types of easements that satisfy each of the four conservation purposes tests.[166] Accordingly, while those tests necessarily contain subjective elements,[167] they provide a more objective standard for assessing the public benefit to be derived from an easement than do the state easement enabling statutes, which generally describe the conservation purposes for which an easement may be created in very broad terms.[168] The § 170(h) conservation purposes tests also give weight to local, state, and national conservation interests, and are designed to evolve as conservation priorities evolve.[169] Accordingly, unless and until equally or more suitable tests of the public benefit to be derived from a conservation easement are developed, it is recommended that, in determining whether the charitable purpose of any easement (even one for which a charitable income tax deduction was not claimed) has become “impossible or impracticable,” a court should give
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considerable weight to whether the easement would satisfy the applicable conservation purposes test or tests under § 170(h) if offered for donation at the time of the cy pres proceeding.[170]
To illustrate how the § 170(h) conservation purposes tests could be used to determine whether a conservation easement has ceased to provide the requisite level of benefit to the public, assume that the court is evaluating an easement donated for the stated purpose of protecting the historic, agricultural, and wildlife habitat characteristics of the encumbered land.[171] The court would consider whether, if donated at the time of the cy pres proceeding, the easement would satisfy any of the “historic preservation,” “wildlife habitat,” or “open space” conservation purposes tests of § 170(h). The “public recreation or education” conservation purposes test would not be relevant to the court’s determination because the landowner did not donate the easement to preserve the land for use by the general public for outdoor recreation or education purposes. Continuing to enforce the easement for that conservation purpose would constitute a change in the charitable purpose of the easement, and should be permissible only through the application of the full, three-step cy pres process.[172]
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If the easement would not satisfy any of the “historic preservation,” “wildlife habitat,” or “open space” conservation purposes tests at the time of the cy pres proceeding, that would be a factor indicating that the easement perhaps does not continue to provide a level of public benefit sufficient to justify its enforcement. Alternatively, if the easement would satisfy one or more of the “historic preservation,” “wildlife habitat,” or “open space” conservation purposes tests at the time of the cy pres proceeding, that would be a factor indicating that the easement does continue to provide a level of public benefit sufficient to justify its enforcement and, thus, that the doctrine of cy pres should not apply.
An additional factor that a court should consider in assessing whether an easement continues to provide a level of public benefit sufficient to justify its enforcement is the extent to which there is public support for continuing to enforce the easement.[173] The willingness of a government agency or charitable organization to invest its limited resources in the ongoing monitoring and enforcement of the easement would be evidence of such public support.[174] Evidence of such public support could also come from the state attorney general, other representatives of the public (such as com-
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munity groups, citizen committees, and planning commissions), as well as individual members of the general public, such as residents of the community in which the encumbered land is located.[175] If, however, there is public support for continuing to enforce the easement for a conservation purpose that was not specified by the donor (such as to use the encumbered land as a public park), as discussed above, the court should work through the full, three-step cy pres process to ensure that appropriate deference is accorded to the intent of the donor.
The economic and conservation benefits to be gained by the public from extinguishment of the easement, development of the land, and use of the value attributable to the easement to protect land for similar conservation purposes in another location should be irrelevant to the determination of whether the charitable purpose of the easement has become “impossible or impracticable.” Cy pres entails a balancing of the donor’s intent and society’s interest in ensuring that assets devoted to charitable purposes continue to provide benefits to the public, but considerable deference is accorded to the donor’s intent under the doctrine because we have a deeply rooted tradition in our culture of respecting an individual’s right to control the use and disposition of his or her property, and there is significant concern that failing to honor the wishes of charitable donors would chill future charitable donations. Accordingly, conservation easement donors should be permitted to exercise dead hand control over the use of the encumbered land for as long as their specified use continues to provide some generally agreed-upon threshold level of benefit to the public, and not just until the encumbered land and the value attributable to the easement could, in the opinion of some (such as the holder of the easement or the state attorney general, who by definition will be more concerned with local and state versus national interests), be devoted to more desirable or efficient economic and conservation uses. Donors of restricted charitable gifts are not required to devote their property to the most desirable or efficient charitable purpose, but simply one that is beneficial to the community.[176]
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At the same time, society needs some means of either modifying the conservation purposes of or extinguishing easements that have ceased to provide a level of public benefit sufficient to justify their continued enforcement (or have even become detrimental to the public). The two factors suggested above provide a relatively low threshold test of public benefit that should protect most conservation easements from modification or extinguishment under the doctrine of cy pres. The rare easement that fails to satisfy any of the applicable conservation purposes tests under § 170(h), and for which there is no evidence of public support for continuing to enforce the easement (either from a government agency, a land trust, the state attorney general, or other representatives or individual members of the general public), should be suspect. Those two factors should not be the only evidence a court examines when assessing whether a conservation easement continues to provide public benefit. However, if the court is presented with no other compelling evidence that the continued protection of the land for the conservation purpose or purposes specified in the easement is providing some respectable level of benefit to the public (or, indeed, if the court finds that the easement is arguably detrimental to the public, because, for example, it prevents appropriate infill development and thereby increases the pressure to develop more environmentally significant land), the court should determine that the charitable purpose of the easement has become impossible or impracticable and proceed to the second step in the cy pres process.
Determining whether the charitable purpose of a conservation easement has become “impossible or impracticable” based on the factors suggested above would also yield more predictable results in cy pres proceedings involving easements. Changing the charitable purposes of or extinguishing easements under a standard that yields predictable results, coupled with greater candor to easement donors about the cy pres bargain they strike with the public upon the donation of their easements, might actually inspire easement donors to take measures to ensure that their easements will continue to provide sufficient levels of public benefit. For example, easement donors might retain fewer development and use rights in their easements, or participate in efforts to encourage the preservation of the landscapes of which their encumbered lands are a part.[177] Greater candor about the cy pres bargain would also eliminate the justifiable surprise and indignation of some easement donors (or their heirs) when government agencies and land trusts, in fulfillment of their fiduciary duties to the public, seek or consent to the extinguishment of easements that no longer provide the requisite level of public benefit, and the application of the proceeds attributable thereto to similar conservation purposes in other locations.[178]
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In the second step of the cy pres process, the court determines whether the donor had a general intent to devote the gift or trust assets to charitable purposes.[179] If the court determines that the donor had a general charitable intent, the court will proceed to the third step in the cy pres process—formulating a substitute plan for the use of the gift or trust assets for a charitable purpose “as near as possible” to the donor’s original charitable purpose. Alternatively, if the court determines that the donor intended to devote the gift or trust assets only to the charitable p">[180]
When faced with the question of whether the donor had a general, as opposed to specific, charitable intent, courts look to the language of the gift or trust instrument, as well as the situation of the donor at the time of the gift or creation of the trust, including the donor’s family, finances, background, and particular interests.[181] Notably, the mere fact that the gift or trust instrument provides that the property should be devoted “forever” to a particular charitable purpose does not preclude a finding of general charitable intent.[182] Such a statement may be construed as merely emphasizing the donor’s intention that the property be applied to the particular charitable purpose for as long as it is possible and practicable do so.[183]
General charitable intent may be evidenced by a statement to that effect in the gift or trust instrument, or a provision for the use of the cy pres power in the gift or trust instrument.[184] Courts also have noted the following as evidence that a donor had a general charitable intent: (i) absence in the gift
Most importantly, however, courts almost invariably find that the donor had a general charitable intent if the gift or trust fails after it has been in existence for some period of time. As Professors Scott and Fratcher note:
[W]here at the time of the creation of the trust it is possible and practicable to carry out the specific directions of the testator, but in the course of time conditions change so that it becomes impossible or impracticable to carry out these directions, the cy pres doctrine is almost invariably applied, and it is rare indeed that the trust is held to fail altogether.[189]
The inclination of courts to favor cy pres once a restricted charitable gift or charitable trust has been in effect for some period of time has two theoretical underpinnings.[190] The first is the dictate of practicality, in that
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after the passage of time identifying and locating remote heirs generally will entail considerable difficulty and expense.[191] The second is that, in the absence of a gift over or reverter, applying cy pres and authorizing the use of the charitable assets for a charitable purpose “as near as possible” to that specified by the donor is more likely to fulfill the donor’s intent than to have the gift or trust fail altogether and the assets pass to the donor’s residuary beneficiaries or intestate heirs.[192]
Both the Restatement (Third) of Trusts and the Uniform Trust Code have modified the doctrine of cy pres by presuming that the donor had a general charitable intent when his or her specified charitable purpose becomes “impossible or impracticable.”[193] The drafters of the Restatement noted that “trust law . . . favors an interpretation that would sustain a charitable trust and avoid the return of the trust property to the settlor or successors in interest,”[194] and the drafters of the Uniform Trust Code noted that “[i]n the great majority of cases the settlor would prefer that the property be used for other charitable purposes rather than have the trust fail.”[195]
At least seven states now apply a presumption of general charitable intent in cy pres proceedings,[196] and two—Delaware and Pennsylvania—have eliminated the requirement entirely.[197]
In states other than Delaware and Pennsylvania, it is very likely that a court would find that an easement donor had a general charitable intent because: (i) the charitable purpose of an easement is likely to become “impossible or impracticable” only after some (often considerable) passage of time, and courts are loath to allow ongoing charitable gifts or trusts to fail altogether, and (ii) easements do not typically contain a provision for a
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gift over or reverter in the event their purpose becomes impossible or impracticable. In addition, in many cases the evidence is likely to indicate that the easement donor had a general interest in conservation and preservation issues, and in seven states a presumption of general charitable intent is applied.
The fact that easement donors often have a particularly strong personal attachment to the encumbered land and a desire to see it preserved[198] should not preclude the finding of general charitable intent. Gifts made by donors of their beloved homesteads to be used as the site of a particular charitable activity (such as the construction and operation of a church, hospital, or home for indigent individuals) are instructive in this regard.[199] In some “gift of homestead” cases, when the use of the homestead for the charitable purpose specified by the donor proved “impossible or impracticable,” the courts refused to apply the doctrine of cy pres, the gift failed, and the homestead (or the proceeds from the sale thereof) passed by resulting trust to the donor’s residuary beneficiaries or intestate heirs. Those cases, however, are rare and typically involve a charitable gift or trust that fails at the outset rather than after some passage of time.[200] It is far more common in the “gift of homestead” cases for the courts to find that the donor had a general charitable intent and apply the doctrine of cy pres.[201] Indeed, cy pres is typically applied in such cases even if the evidence indicates that the donor had a particularly strong personal attachment to the homestead and a desire to see it preserved, and application of the doctrine will necessitate a sale of the homestead and the use of the proceeds therefrom to accomplish the donor’s specified charitable purpose in another location.[202]
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In the case of some easements for which a federal charitable income tax deduction was claimed, the donor may be found to have had a general charitable intent only with respect to a percentage of the value attributable to the easement. Since 1986, the Treasury Regulations interpreting § 170(h) have generally required the donor of a tax-deductible easement to include a provision in the deed conveying the easement stating that: (i) the donation of the easement gives rise to a property right immediately vested in the donee, (ii) in the event a subsequent unexpected change in conditions makes the continued use of the property for conservation purposes impossible or impractical and the easement is extinguished, the donee must be entitled to a percentage of the proceeds from a subsequent sale or exchange of the unencumbered land at least equal to the percentage that the easement represented of the value of the unencumbered land at the time of the easement’s donation (referred to hereinafter as the “Donation Percentage”), and (iii) the donee must use its percentage of the proceeds in a manner consistent with the conservation purposes of the original contribution.[203] In other words, since 1986 the Treasury Regulations have generally required the donor of a tax-deductible easement to state in the deed of conveyance that, in the event the easement is extinguished, the value attributable to the easement will continue to be used by the donee for charitable conservation purposes (and, by implication, the donor does not intend that such value will revert to the donor or the donor’s residuary beneficiaries under his will or intestate heirs). The Treasury presumably included this requirement in the regulations interpreting § 170(h) to ensure that the full value of the property right conveyed to the public in an easement donation transaction would remain in public hands upon extinguishment of the easement (rather than pass as a windfall to the owner of the land).
It has, however, been the practice of some easement drafters to fix the percentage of proceeds from the sale of the unencumbered land to which
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the donee is entitled upon extinguishment at the Donation Percentage (rather than providing that the donee is entitled to at least that percentage as set forth in the Regulations).[204] Such a limiting provision, although technically permissible under the Treasury Regulations, is inconsistent with the characterization of the donation of an easement as the conveyance of a property right to the donee because it may not allocate the full appreciation in the value of that right to the donee if and when the easement is extinguished.[205] Such a provision also leaves open the question of who should be entitled to the remaining value attributable to the easement upon its extinguishment. In such a circumstance, because the donor made a charitable gift of the easement to the donee, but provided that the donee is entitled to only a fixed percentage of the value of the unencumbered land if and when the easement is extinguished, the remaining value attributable to the easement arguably should pass by resulting trust to the donor, if alive, or, if the donor is not alive, to the donor’s residuary beneficiaries or intestate heirs. In other words, the donor should be deemed to have had a general charitable intent with regard to the fixed percentage of the value of the unencumbered land that the donor directed be paid to the donee, and a specific charitable intent with regard to the remaining value attributable to the easement.[206]
Of course, some easement donors might prefer that the full value attributable to their easements continue to be used by the holder for conservation purposes in the event their easements are extinguished, particularly given that having some percentage of that value pass to their residuary bene-ficiaries or intestate heirs could create powerful perverse incentives for such beneficiaries and heirs to act in ways contrary to the public interest.[207] Moreover, despite technical compliance with the Treasury Regulations, the drafting practice of fixing the value of the donee’s property right at the Donation Percentage of the value of the unencumbered land is arguably inconsistent with the intent of the Regulations, which expressly characterize the donation of an easement as the conveyance of a “property right,” and
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require that, upon extinguishment, the donee must be entitled to at least the Donation Percentage of the proceeds from the sale of the unencumbered land (rather than only the Donation Percentage of such proceeds).[208]
To appropriately protect the public’s interest and investment in the property interest embodied in a conservation easement, upon extinguishment of an easement, the donee should be entitled to a percentage of the proceeds from the sale of the unencumbered land equal to the greater of: (i) the Donation Percentage, and (ii) the percentage that the easement represents of the value of the unencumbered land at the time of the cy pres proceeding (in other words, the Extinguishment Percentage)—and the Treasury Regulations should be amended to require that a statement to that effect be included in the deed conveying any tax-deductible easement.[209] If such a statement were included in an easement deed, it would provide conclusive evidence that the donor had a general charitable intent with respect to the entire value attributable to the easement.[210]
Once a court has determined that the charitable purpose of a gift or trust has become “impossible or impracticable” due to changed conditions, and that the donor had a general charitable intent, the third and final step in the cy pres process is the formulation of a substitute plan for the use of the gift or trust assets for a charitable purpose “as near as possible” to that specified by the donor.[211] Professor Bogert notes that it is impossible to give general rules regarding the framing of substitute plans under the doctrine of cy pres because each case presents different facts as to the wording of the gift or trust instrument, the tastes and interests of the donor, the occasion for the use of cy pres, and the opportunities open by way of
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substitution.[212] Accordingly, all that can be done is to indicate some trends and examine court decisions in various types of situations.[213]
In formulating a substitute plan, courts consider evidence suggesting what the donor would have wished had the donor anticipated that changed conditions would render his or her original charitable purpose “impossible or impracticable.”[214] The courts examine the language of the gift or trust instrument, the circumstances surrounding the making of the gift or creation of the trust, and the donor’s tastes, interests, social and religious affilia-tions, personal background, and charitable giving history—in other words, the same type of evidence the courts examine in determining whether the donor had a general, as opposed to specific, charitable intent.[215]
Courts increasingly have recognized that the substitute charitable purpose need not be the one that is “as near as possible” to the donor’s original purpose, but simply one that is “reasonably similar or close to” the donor’s original purpose, or falls within the donor’s general charitable purpose.[216] Courts also are inclined to be more liberal in formulating a substitute plan when the donor’s original purpose has become impossible or impracticable after some considerable passage of time, or if one substitute purpose appears to have “distinctly greater usefulness than the others that have been identified.”[217] The Restatement (Third) of Trusts notes that the more liberal approach to the formulation of a substitute plan “is appropriate both because the donors’ probable preferences are almost inevitably a matter of speculation,” and “because it is reasonable to suppose that among relatively similar charitable purposes charitably inclined [donors] would tend to prefer those most beneficial to their communities.”[218]
Notice of the pendency of a cy pres proceeding is customarily given to the general public, and the suggestions of the trustee, the state attorney general, and other interested parties are generally received and considered by the court.[219] The final decision regarding the substitute plan, however, is the court’s alone.[220] If the donor’s intent is clear, and the formulation of
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a substitute plan is relatively easy, the court generally will formulate a substitute plan itself or adopt the plan proposed by the trustees.[221] Where it is necessary to review a large amount of evidence and consider various proposed plans, the court may refer the matter to a master, referee, or auditor, who will examine the evidence and recommend a substitute plan to the court, which the court may then accept, reject, or modify.[222]
In the third and final step of the cy pres process involving a conservation easement, the court would formulate a substitute plan for the use of the easement (or the value attributable thereto) for a charitable purpose “as near as possible” to that specified by the donor.
The “gift of homestead” cases offer some guidance as to how a court should approach the formulation of a substitute plan in the conservation easement context.[223] In “gift of homestead” cases where the continued use of the homestead for a charitable purpose related to the donor’s original charitable purpose is feasible (because there are sufficient funds to underwrite the conversion of the homestead to a related charitable use, or the donee desires to use the homestead for a related charitable purpose), the courts have mandated or permitted the continued use of the homestead for such related charitable purpose.[224] In such cases the courts have determined
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that the donor’s “central” or “paramount” intention was the use of the homestead for charitable purposes, and that the precise nature of the charitable activity conducted on the site was of secondary importance.[225]
Alternatively, in “gift of homestead” cases where the continued use of the homestead for a related charitable purpose is either impossible (because the homestead was taken by eminent domain) or not feasible (because the homestead has fallen into disrepair and the funds needed to renovate it are not available, or the use of the homestead for the original or a related charitable purpose is inconsistent with local land use plans), the courts have authorized the sale of the homestead and the use of the proceeds therefrom to accomplish the donor’s specified charitable purpose in some other location.[226] In these cases, even if the evidence indicates that the donor had a particularly strong personal attachment to the homestead and a desire to see it preserved, the courts have determined that the specified charitable activity (for example, the establishment of a family memorial church or home for aged women) was the donor’s “paramount” purpose, and the precise location of the charitable activity was of secondary importance.[227] In these cases the courts assume, either expressly or implicitly, that the donor would have wished that his or her specified charitable activity be conducted somewhere else rather than not at all (the alternative in these cases being, of course, a finding of specific rather than general charitable intent, failure of the gift or trust, and distribution of the gift or trust assets to the donor’s residuary beneficiaries or intestate heirs).[228] If, however, the evidence indicates that the donor intended to confer charitable benefits on the residents of a particular city, town, or other district, the court will usually direct that the proceeds from the sale of the homestead be applied to charitable purposes somewhere in that district.[229]
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In cy pres cases involving gifts of land to be used as the site of a speci-fied charitable activity where the land was not the donor’s homestead, and the donor did not otherwise appear to have any personal attachment to the land, the courts are even more readily inclined to authorize the sale of the land and the use of the proceeds therefrom to engage in the specified charitable activity elsewhere. In such cases, if the land is or becomes impossible or simply “unsuitable” as the site of the specified charitable activity, the courts will apply the doctrine of cy pres and authorize the sale of the land.[230]
The “gift of homestead” and other gift of land cases suggest the following approach to the formulation of a substitute plan for the use of a conservation easement in the event the charitable purpose of the easement—that is, the protection of the encumbered land for the conservation purposes specified in the easement—is determined to have become “impossible or impracticable”:
(i) If protection of the encumbered land for a new conservation purpose is feasible,[231] the court should endeavor to ascertain from the terms of the easement and the circumstances surrounding its donation whether the donor would have preferred that: (a) the easement be modified and the encumbered land continue to be protected for such new conservation purpose, or (b) the easement be extinguished, the unencumbered land sold, and the proceeds attributable to the easement used to accomplish the conservation purposes specified in the easement in another location. If the donor is determined to have had a particularly strong personal attachment to the encumbered land, the court should be inclined toward the continued enforcement of the easement to accomplish the new conservation purpose.[232]
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Alternatively, if the donor is determined not to have had a particularly strong personal attachment to the encumbered land (because, for example, the land was not the homestead of the donor and was encumbered as part of a “conservation buyer” deal), the court might find that extinguishment of the easement, sale of the unencumbered land, and use of the proceeds attributable to the easement to accomplish the conservation purposes specified in the easement in another location is more consistent with the donor’s charitable intent.[233]
(ii) If the protection of the land for a new conservation purpose is not feasible (because, for example, the land has been taken by eminent domain, or there is no public support for the continued enforcement of the easement for the new conservation purpose), the court should formulate a substitute plan involving the extinguishment of the easement, the sale of the unencumbered land, and the use of the proceeds attributable to the easement to accomplish the donor’s specified conservation purposes in another location.[234]
In determining which of the foregoing options is most appropriate, the court should consider the suggestions of the holder of the easement, the state attorney general, and other interested parties (such as members and representatives of the general public, other conservation organizations, the donor of the easement or the donor’s heirs, and the owner of the land). If it is necessary to review a large amount of evidence and consider various proposed plans, the court should consider referring the matter to a master, referee, or auditor who would examine the evidence and recommend a substitute plan that the court could either accept, reject, or modify.[235]
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In implementing a substitute plan involving the “extinguishment” of a conservation easement, the court would be forced to address the following issues, each of which is discussed in turn below: (1) the nature of the property interest that is held by the government agency or charitable organization on behalf of the public both before and during the cy pres proceeding, (2) the appropriate value to be attributed to that property interest for purposes of dividing the proceeds from the sale of the unencumbered land between the holder of the easement and the owner of the land (or establishing a price at which the holder of the easement could sell such interest to the owner of the land or a third party), and (3) the appropriate use by the holder of the easement of the proceeds it receives as a result of the extinguishment of the easement.
(1) The Nature of the Property Interest Held by an Easement Donee. When a donor conveys a conservation easement to a government agency or charitable organization, the donor should be treated as having made a charitable gift of a partial interest in the encumbered land to the agency or organization for the benefit of the public. In other words, the agency or organization should be treated as holding legal title to that partial interest on behalf of the beneficial owner of the interest—the public.
The donation of a perpetual conservation easement could be conceptualized in at least two useful ways. The donor could be viewed as having made a charitable gift to the donee of the right to restrict the development and use of the land as specified in the easement, coupled with an obligation to enforce the restrictions in perpetuity on behalf of the public.[236] Alternatively, the donor could be viewed as having made a charitable gift to the donee of the actual development and use rights restricted by the easement, coupled with an obligation to hold those rights in abeyance (and take such action as may be necessary to defend those rights) in perpetuity, again on behalf of the public.[237]
Thus, to “extinguish” a perpetual conservation easement in the context of a cy pres proceeding, the court would both: (i) release the holder
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from its obligation—but not its right—to enforce the restrictions on the development and use of the land specified in the easement in perpetuity (or release the holder from its obligation—but not its right—to hold the development and use rights conveyed in the easement in abeyance in perpetuity); and (ii) supervise the reunification of that “right to restrict” (or those development and use rights) with the fee title to the land.
The existence of a perpetual conservation easement suppresses the development and use value of the encumbered land, and that value lies dormant and inaccessible until the easement is extinguished in a cy pres proceeding. One of the many difficult questions facing a court in a cy pres extinguishment proceeding will be how much of that suppressed value should be allocated to the holder of the easement (on behalf of the public), and how much of that suppressed value should be allocated to the owner of the encumbered land. No court has yet addressed this issue, and the allocation (or valuation) rule adopted by the courts in cy pres extinguishment proceedings will help to define the nature of the property interest embodied in a perpetual conservation easement and determine the extent to which perpetual conservation easements actually suppress the value of the encumbered land.[238]
(2) Valuing the Easement Holder’s Property Interest. No real market exists in which perpetual conservation easements are bought and sold.[239] Accordingly, on the front end of easement conveyance transactions, a special valuation method, referred to as the “before and after” method, is generally used to value the property interest embodied in an easement for purposes of determining the donor’s federal charitable income tax deduction (and other federal tax benefits) or the purchase price paid for the easement in an easement purchase or bargain purchase program.[240] Under the “before and after” method, the value of a conservation easement is equal to the difference between: (i) the fair market value of the land immediately before it is encumbered by the easement, and (ii) the fair market value of the land immediately after it is encumbered by the easement, assuming
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the easement will be enforced in perpetuity.[241] The “before and after” method values an easement as a proportion of the fair market value of the unencumbered land, and such value is often referred to in percentage terms (for examplnB244" href="#fn244">[243] In easement purchase programs, bargain purchase programs, and easement donation programs, the price paid or the tax benefits provided are based on the amount of the landowner’s economic sacrifice.
A similar valuation method—the “after and before” method—could be used to estimate the value of the property interest embodied in an easement on the back end of an easement conveyance transaction, when the court “extinguishes” the easement in a cy pres proceeding. Under the “after and before” method, the value of the easement holder’s property interest would be equal to the difference between: (i) the fair market value of the land immediately after the restrictions on the holder’s use and disposition of the property interest embodied in the easement have been released, assuming such property interest is reunited (or merged) with the fee title to the land, and (ii) the fair market value of the land immediately before the restrictions on the holder’s use and disposition of the property interest embodied in the easement are released, assuming such restrictions will not be released and the easement will continue to be enforced in perpetuity. The “after and before” method would value the interest of the holder
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of the easement as a proportion of the fair market value of the land unencumbered by the easement at the time of the cy pres proceeding.
The “after and before” method estimates the price the landowner would have to pay to have the property interest embodied in the easement conveyed to him in a cy pres
Alternatively, the court could choose to value the easement in the middle of the extinguishment process: after the removal of the restrictions on the holder’s use and disposition of the property interest embodied in the easement, but before the actual extinguishment of the easement through reunification (or merger) of that interest with the encumbered fee. The price at which a government agency or land trust could sell its newly unrestricted “rights to restrict” the development and use of the encumbered land (or the actual development and use rights relating to such land) on the open market inevitably would be much lower than the value of those rights as established under the “after and before” method because of the difficulties associated with negotiating with the owner of the encumbered land to reunite those rights with the fee title to the land.
The following policy and other arguments support: (i) the use of the “after and before” method to determine the value of the respective interests of the holder of a conservation easement and the owner of the encumbered land in a cy pres extinguishment proceeding, and (ii) the division of the proceeds from the sale of the unencumbered land between the parties based on those values (or the use of those values to establish the price at which the holder of the easement can sell its property interest to the owner of the encumbered land or a third party). The following arguments also caution against deviating significantly from those values although, as discussed below, there may be countervailing equitable considerations that warrant such deviation.
Avoidance of windfall benefits. It would be difficult for the owner of land encumbered by a perpetual easement to make a convincing fairness claim to any more than the fair market value of the land subject to the per-
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petual easement. Any owner of land encumbered by a perpetual easement (other than the easement donor) will have purchased or otherwise acquired such land with at least constructive notice of the easement, and, in the case of a purchaser, will have paid a price that reflects the diminution in the value of the land resulting from the existence of the easement.[244] Up until the moment the court authorizes the extinguishment of the easement in the context of the cy pres proceeding, the landowner owns land subject to a perpetual easement, and should be entitled to receive only the value of that interest upon extinguishment of the easement.[245] Allocating any of the development and use value that is suppressed and inaccessible until the cy pres proceeding to the owner of the easement-encumbered land would confer an undue windfall benefit on such owner at the expense of the public.[246]
Avoidance of perverse incentives. Allocating any of the development and use value that is suppressed and inaccessible until a cy pres proceeding to the owner of the easement-encumbered land would give the owners of such land a significant incentive to challenge the continued existence of the easements encumbering their land, and to engage in activities designed to make the continued use of their land for conservation purposes “impossible or impracticable.”[247] Easements valued in the hundreds of thousands and even multiple millions of dollars are increasingly common,[248] and
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the prospect of realizing even a modest percentage of that value upon extinguishment would likely induce landowners and speculators alike to try their hand at “breaking” easements.[249] A landowner’s trigger point for initiating a cy pres extinguishment action could be expected to be quite low, resulting in a rash of easement extinguishment actions and the expenditure of considerable public resources by holders in defending the easements.
Avoidance of chilling easement donations. Allocating any of the development and use value that is suppressed and inaccessible until a cy pres proceeding to the owner of the easement-encumbered land would be contrary to the intent of the typical easement donor. The donor of a perpetual easement presumably intends to remove the suppressed development and use value from the real estate market in perpetuity. Such a donor presumably does not intend that such value will ever pass as a windfall to a subsequent owner of the land, particularly one who purchased the land (often from the donor’s heirs) for a reduced price that reflected the diminution in the value of the land resulting from the easement. [250] Accordingly, allocating any of the development and use value that is suppressed and inaccessible until a cy pres proceeding to the owner of the easement-encum-bered land could be expected to have a chilling effect on easement donations.
Analogy to tenancies in common. The “rights to restrict” the development and use of the encumbered land (or the actual development and use rights relating to such land) that would be held by a government agency
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or land trust after the court has released the restrictions on the use and disposition of those rights in a cy pres proceeding are not affirmative rights, and their value could be realized only if they are reunited with the fee title to the underlying land. The owner of the underlying land thus wields disproportionate bargaining power in any unsupervised negotiation to reunite those rights with the fee. The bargaining power of the owner of the underlying land vis-à-vis the government agency or land trust holding such rights is similar to the power of a co-tenant over a fellow co-tenant who wants to liquidate his interest in the property: one co-tenant can hold up the other either by demanding to be paid a price in excess of the proportional value of his interest in the property, or by offering to pay only a fraction of the proportional value of the other co-tenant’s interest in the property. The prospect of such a bargaining impasse between co-tenants and consequent underutilization of property led courts to offer the equitable remedy of the “suit to partition” as an escape valve for unhappy cotenants.[251]
Notable for purposes of this Article is that in a suit to partition, a court divides either the property itself (in a partition in kind) or the proceeds from the sale of the property (in a partition by sale) according to the co-tenants’ respective proportional interests in the property.[252] Adjustments are made in equity for such items as costs incurred by one co-tenant on behalf of all the co-tenants and improvements one co-tenant might have made to the property, and a court might effect a disproportionate division of the property and require the “winning” co-tenant to pay the difference (“owelty”) to the “losing” co-tenant,[253] but the fundamental yardstick for the division of the value of the property is the co-tenants’ respective proportional
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interests in the property. The court does not base its award in a suit to partition on the price the petitioning co-tenant would receive on the open market for his fractional interest in the property, which necessarily would be discounted to reflect the difficulties associated with bargaining with the other co-tenants and the costs associated with a suit to partition. In a suit to partition, the court bases its award on the co-tenants’ respective proportional interests because “[t]he fundamental objective in a partition action is to divide the property so as to be fair and equitable and confer no unfair advantage on any cotenant.”[254]
Cy pres proceedings are also equitable proceedings, and in a cy pres proceeding involving the extinguishment of a conservation easement the court should be similarly interested in determining the value of the parties’ respective interests so as to be “fair and equitable” and “confer no unfair advantage” on any party. For the reasons discussed above, determining the value of the interest held by a government agency or land trust (on behalf of the public) in a cy pres extinguishment proceeding based on the price at which such agency or organization could sell the interest on the open market would be neither fair nor equitable, and would confer a significant unfair advantage on the owner of the easement-encumbered land. Alternatively, employment of the “after and before” method to determine the proportional value of the parties’ respective partial interests in the land would be fair and equitable and would confer no unfair advantage on any party, provided such valuation rule is consistently applied by the courts and, thus, purchasers of easement-encumbered land are not paying premiums based on the expected proceeds to be reaped in an extinguishment proceeding.
Prevention of bargaining breakdown. Finally, providing an institutional framework for the division of proceeds upon the sale of the unencumbered land in a cy pres easement extinguishment proceeding would prevent a bargaining breakdown, in which the parties to the easement adopt irreconcilable entrenched positions and perpetuate the now-defunct easement indefinitely. In particular, such a framework would avoid the “holdout” problem, in which one party decides it is in its best interest to hold out for more of the proceeds than the other party is willing to agree to. In the easement context, the owner of the encumbered land might “hold out” for a much greater percentage of the proceeds from the sale of the unencumbered land than would be dictated under the “after and before” method, while the holder of the easement might refuse to comply for fear that it would be violating its fiduciary duty to the public.[255] Direct court supervision of the extinguishment of the easement, the sale of the unen-
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cumbered land, and the division of proceeds between the owner of the encumbered land and the holder of the easement based, in large part, on the value of their respective interests as established under the “after and before” method would effectively restrict bargaining and act as a salutary non-contractual, externally imposed commitment device that would prevent the parties from engaging in inefficient holdout behavior.[256] Once the court has mandated the division of proceeds between the parties in a cy pres proceeding, it would be irrational for the owner of the encumbered land to hold out for a greater percentage of the proceeds because the holder of the easement would have no power to deviate from the court-mandated division.[257]
Equitable and other considerations. Cy pres proceedings are equity proceedings, and in dividing the proceeds from the sale of the unencumbered land when an easement is extinguished (or in establishing the price at which the holder of the easement can sell its newly unrestricted property interest to the owner of the land or a third party), the court would consider all relevant facts. While it is recommended that the baseline values for the respective interests of the holder of the easement and the owner of the land be established under the “after and before” method, a variety of factors may warrant some degree of deviation from that value.[258]
Of course, it is possible that the owner of the land encumbered by the easement will not agree to the sale of the land in the context of the cy pres proceeding (perhaps because the owner resides on the land and is content to live with the easement restrictions). In such a case, completion of the
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cy pres proceeding presumably would have to be put on hold until the current or a subsequent owner of the land agreed to a court-supervised extinguishment of the easement, sale of the unencumbered land, and division of the proceeds. In some limited circumstances, the public interest in developing the easement-encumbered land might be compelling enough to allow a court to force a sale of the land pursuant to the law of eminent domain.[259]
(3) Appropriate Use of Proceeds. Once a court determines that the appropriate substitute plan involves extinguishment of the easement, sale of the unencumbered land, and use of the proceeds attributable to the easement to accomplish the donor’s specified conservation purposes in another location, the question of precisely how those proceeds should be used would necessarily arise. In answering that question the court again should consider the suggestions of the holder of the easement, the state attorney general, and other interested parties.[260]
Use of the proceeds attributable to the extinguished easement to protect land in another location that has the same conservation characteristics the donor sought to protect with the easement (such as wildlife habitat or agricultural land) should be fairly uncontroversial. If, however, the evidence indicates that the donor intended to confer charitable benefits on the residents of a particular city, town, or other district, the court should consider directing that the proceeds attributable to the easement be used to protect appropriate land in that district.[261]
Given that the proceeds attributable to an extinguished conservation easement are likely to be substantial,[262] the court should require that the recipient government agency or land trust[263] use the proceeds in accordance with a detailed strategic plan.[264] It is recommended that such a plan place particular emphasis on achieving long-term protection of land with the same
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conservation characteristics the donor sought to protect with the easement. For example, if the intent of the donor of the extinguished easement was to protect the encumbered land as a part of a rural, agricultural landscape, the strategic plan might involve the protection of multiple, contiguous parcels of agricultural land, thereby helping to ensure that the infrastructure necessary to support agricultural practices will remain in place, and the rural, agricultural lifestyle the donor presumably sought to protect will be perpetuated. Similarly, if the intent of the donor of the extinguished easement was to protect the encumbered land to provide habitat for one or more species (such as the grizzly bear or migratory songbirds), the strategic plan might involve not only the protection of land that harbors such species, but also land that buffers and connects such lands.[265] The court might also require that the land protected with the proceeds from the sale of the extinguished easement be posted with signs indicating that it was protected, in whole or in part, due to the donor’s generosity.[266]
The question of whether any of the proceeds attributable to an extinguished easement should be added to the stewardship or operating funds of the recipient government agency or land trust raises a number of interesting and potentially controversial issues. Setting aside sufficient funds with which to steward land or easements that are acquired, in whole or in part, with such proceeds arguably would be consistent with the donor’s intent, because without proper stewardship, the long-term preservation of the conservation characteristics of the targeted lands would be seriously jeopardized.[267] Accordingly, the court should authorize the use of a portion of the
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proceeds attributable to an extinguished easement to endow a stewardship fund for any land or easements acquired with such proceeds.[268]
Authorizing the use of the proceeds attributable to an extinguished easement to steward other land or easements held by the recipient government agency or land trust, or to fund the day-to-day operations of such agency or organization (such as the purchase of paper clips) is likely to be far more controversial. Such use of the proceeds would not appear to be consistent with the donor’s intent and would run the risk of discouraging future easement donors, who could lose all confidence in the bargain that is struck with the public upon the donation of an easement.[269] Authorizing such use of the proceeds might also cause the government agencies and land trusts acquiring land and easements for conservation purposes to neglect their responsibility to raise general stewardship and operating funds.[270]
Alternatively, given the difficulties associated with raising general stewardship and operating funds, and that proper stewardship of the land and easements already held by government agencies and land trusts may provide as much public benefit as newly acquired land and easements, a court should consider allocating at least some portion of the proceeds attributable to an extinguished easement to general stewardship and operating funds.[271] Allocating some portion of the proceeds attributable to an extinguished easement to operating funds may be particularly appropriate where
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the proceeds are significant, and the government agency or land trust receiving such proceeds will need to develop the institutional capacity to appropriately select, monitor, and enforce the additional land and easements to be acquired.[272]
This Section uses a hypothetical case study to walk the reader through the application of the doctrine of cy pres to modify or extinguish a conservation easement, the charitable purpose of which has arguably become “impossible or impracticable” because the encumbered land, while once situated in a largely rural, agricultural landscape, is now surrounded by intense, multi-use development. The facts of the case study are loosely based on a potential challenge to an easement reported in the media.[273]
Subsection 1 describes the facts of the case study. Subsection 2 discusses how the cy pres proceeding might be initiated and the positions that might be asserted by each of the interested parties. Subsection 3 explains how a court might address each of the three steps in the cy pres process in the context of this hypothetical situation.
Hazel Aubry Weston (“Weston”) was a wealthy philanthropist who inherited substantial assets upon the death of her father in 1954, including a number of family real estate holdings in both a western state and an eastern state. One such real estate holding was an eighty-one-acre farm
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located in County X of the eastern state (“Aubry Farm”), which was the original home site of Weston’s paternal ancestors (the Aubrys). There is a family graveyard on Aubry Farm where among the dead lies Weston’s grandfather, a Confederate officer who became a wealthy banking and cotton tycoon in the western state after the Civil War. When Weston inherited the farm, it was located in a largely agricultural, sparsely populated area approximately 100 miles from a burgeoning metropolitan area.
By the mid-1970s, although the area surrounding Aubry Farm was still largely agricultural and sparsely populated, the metropolitan area had begun to expand rapidly, and Weston became concerned that the farm might be developed after her death. She began searching for some means of permanently protecting the farm from development, and after consulting with a number of local conservation groups and her attorney, in 1976 Weston donated a conservation easement encumbering Aubry Farm to a private, nonprofit land trust that accepts easements encumbering land located in County X and surrounding counties (the “Land Trust”). The stated purpose of the easement is “to conserve and forever maintain the rural, agricultural, historic, open space, and wildlife habitat character of the eighty-one-acre farm for the benefit of the citizens of County X and the eastern state.” The easement prohibits the subdivision and development of the farm in perpetuity, but permits the owner of the land to maintain or replace the early nineteenth-century farmhouse that was located on the land at the time of the donation, and to construct and maintain barns and other outbuildings necessary and appropriate to farming operations on the land, provided, in each case, that such structures are not inconsistent with the conservation purposes of the easement.
Weston claimed a charitable income tax deduction for the donation of the easement equal to 20% of the value of the unencumbered land. Because the pressure to develop the land was not acute in 1976, the restrictions on the development and use of the land in the easement reduced the value of the land by only 20% at the time the easement was donated.
Soon after Weston’s donation of the easement, the early nineteenth-century farmhouse was destroyed by fire, and Weston, who resided in the western state, never replaced it. After the fire Weston leased the farm to a series of local farmers who paid her a nominal annual rent. At the present time, there are no structures on the farm.
Weston died in 1986 a childless widow and, after making several small bequests in her will, she left the residue of her sizable estate, including Aubry Farm (subject to the perpetual easement), to a private foundation she had created in 1964 to support education, environmental protection, and historic preservation in both the eastern state and the western state (the “Foundation”). As part of her bequest of the residue of her estate to the Foundation, Weston stipulated that the Foundation trustees restore the Aubry family home in the western state for use as an historical house museum. The seven-year, $10 million restoration resulted in the Aubry Mansion and
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Museum, which contains the original furnishings and memorabilia of the Aubry family.
It is now the year 2005, and in the almost three decades since the donation of the easement, the metropolitan area has continued to grow and has engulfed much of County X. The farm today is an eighty-one-acre island of green amid a suburban sea of homes, strip malls, and gas stations. The Foundation has been unable to lease the farm to a farmer since the mid-1990s, when the last of the infrastructure necessary to support farming operations disappeared from the area. The land sits empty, has become a collection point for trash, and is increasingly subject to trespass. Both the Foundation and the Land Trust have been called upon to respond to vandalism of the headstones in the family graveyard, and to violations of the easement by adjacent landowners, who have repeatedly encroached upon the easement-encumbered land with their yards and fences. The Foundation explored the possibility of selling the land subject to the easement, but few offers were made, and those that were made were for a price that the Foundation considered too low. According to realtors in the area, buyers of large “estate” lots such as Aubry Farm prefer to purchase in more upscale areas of the state, where their land will be surrounded by other large estate lots.
In 2000, the Foundation began exploring the possibility of extinguishing the easement and selling Aubry Farm for development. According to an appraisal obtained by the Foundation, the value of the land subject to the easement restrictions is only $700,000, but if the easement restrictions were extinguished and the land could be sold for residential and commercial development, the value of the land would jump to $7 million. After receiving the appraisal and engaging in preliminary discussions with developers, the Foundation made the following proposal to the Land Trust: if the Land Trust agrees to extinguish the easement and permit the sale of the unencumbered land, the Foundation will give the Land Trust 20% of the proceeds from the sale (or $1.4 million), which is the percentage that the easement represented of the value of unencumbered land at the time of its donation.
The Foundation also pointed out that the Land Trust’s promotional materials expressly tout the benefits of “landscape preservation” (as opposed to the protection of isolated parcels), and that the Land Trust has targeted County X’s remaining rural, agricultural, and historic area for protection in its strategic plan. The targeted area consists of approximately 3000 acres of privately owned farmland. A large river that provides habitat for several rare and threatened species of waterfowl bisects the area. The area also surrounds a forty-four-acre historic plantation on which an eighteenth-century two-story plantation home sits (the “Plantation”). The Plantation, which once stretched across more than 4000 acres, was owned by Thomas Jefferson’s brother-in-law and is the most significant historic landmark in County X.
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The Plantation and surrounding farmlands are identified as the “Rural Historic District” in County X’s Comprehensive Plan, and as such are subject to relatively restrictive subdivision and zoning regulations designed to protect the rural, agricultural, and historic character of the area. The Plantation and surrounding farmlands are also registered as an historic district at both the state and Federal levels, and the eighteenth-century plantation home is listed in the National Register of Historic Places. The Foundation asserted that the Land Trust could use the $1.4 million from the sale of Aubry Farm to purchase easements protecting multiple, contiguous parcels of farmland surrounding the Plantation, and that such easements would be far more valuable to the public from an agricultural, historic, open-space, and wildlife habitat perspective than the easement encumbering isolated Aubry Farm.
The Foundation’s proposal to the Land Trust received a fair amount of attention from the media as well as local and state politicians. The County X Planning Commission spoke out in favor of extinguishment of the easement, citing the fact that land use in the Aubry Farm area had changed dramatically since the year the easement was donated, and that Aubry Farm now lies within a designated growth area of County X. The Planning Commission noted that the inability to develop the eighty-one-acron the Aubry Farm property.[274] Hunting on the farm is prohibited under state law because of the proximity of nearby residences, a grade school, and commercial establishments, and the Foundation’s campaign to poison some of the herd a few years ago met with loud public protest and was abandoned. The deer herd has also altered the growth of the forest on the property by overbrowsing on young trees and shrubs. The overbrowsing has inhibited the growth of the understory, making the forested areas of the farm park-like, but ecologically unstable.
Relatives of Weston have criticized the proposed extinguishment of the Aubry Farm easement, arguing that Weston donated the easement precisely to ward off the type of development now being contemplated by
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the Foundation. They note that Weston would “roll over in her grave” if she knew that her Foundation was trying to extinguish the easement and sell the land for development.
The Foundation, which has been exploring ways to extinguish the easement, initiates the cy pres proceeding. In its petition to the court, the Foundation makes the following alternative arguments. It first argues that the charitable purpose of the easement has become impossible or impracticable, that Weston had only a specific rather than a general charitable intent in donating the easement, that the charitable gift of the easement has failed altogether, and that the value attributable to the easement should pass by resulting trust to the Foundation as Weston’s residuary beneficiary under her will.[275] In the alternative, the Foundation argues that the charitable purpose of the easement has become impossible or impracticable, that Weston had a general charitable intent, and that the appropriate substitute plan should involve an extinguishment of the easement, the sale of the encumbered land, and the Land Trust’s use of the proceeds att8217;s donation.[276]
The Land Trust, as holder of the easement, is named as a party to the cy pres proceeding. Weary of expending its limited resources to monitor and enforce the Aubry Farm easement and believing that the easement no longer provides much benefit to the public, the Land Trust also argues for the application of cy pres. The Land Trust agrees with the Foundation’s second argument—that the charitable purpose of the easement has become impossible or impracticable, that Weston had a general charitable intent, and that the appropriate substitute plan should involve an extinguishment of the easement, the sale of the encumbered land, and the Land Trust’s use of the proceeds attributable to the easement to protect land in the Rural Historic Area of County X. The Land Trust, however, argues that it should be entitled to proceeds from the sale of the unencumbered land equal to the value of the easement at the time of the cy pres proceeding as es-
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tablished under the “after and before” method (or $6.3 million).[277] The Land Trust also requests permission to allocate some portion of such proceeds to its general stewardship and operating funds.
The attorney general for the eastern state, as representative of the public, is also named as a party to the cy pres proceeding. The attorney general agrees with the Land Trust, but argues that the Land Trust should be required to use the proceeds attributable to the easement in accordance with a detailed strategic plan designed to ensure the long-term protection of the Rural Historic District.
Weston’s intestate heirs intervene in the action, arguing that the charitable purpose of the easement has become impossible or impracticable due to changed conditions, that Weston had only a specific rather than a general charitable intent in donating the easement, that the charitable gift of the easement has failed altogether, and that the value attributable to the easement should pass by resulting trust to them.[278]
Several conservation organizations that solicit and accept easement donations in County X and the surrounding area were granted permission to file an amicus curiae brief with the court.[279] In the brief, the organizations object to the application of the doctrine of cy pres, arguing that the continued use of Aubry Farm for conservation purposes has not become impossible or impracticable. They point out that the farm harbors big oaks, pines, and hollies, as well as deer, squirrels, and songbirds, and provides clean air, a refuge for animals, and a pleasant view for neighbors. They argue that the deer herd could be reduced and maintained at a size that would drastically reduce the incidence of Lyme disease through the implementation of a birth control dart program.[280] They recommend that the Foundation make a gift of the land subject to the easement to County X or the eastern state for use as a public park, arguing that such use of the land would be consistent with Weston’s intent to protect Aubry Farm from development in perpetuity as a memorial to her paternal ancestors. The organizations also caution that failure to respect Weston’s wishes that Aubry Farm
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be permanently protected from development will have a significant adverse effect on the ability of conservation organizations nationwide to solicit contributions of cash and conservation easements and, more generally, on the use of conservation easements as a land protection tool.
A few residents who own homes adjacent to or near Aubry Farm object to both the proposed development of the land and the proposed use of the land as a public park. They maintain that they purchased their properties precisely because they were adjacent to or near permanently protected, privately owned open space, and that they paid a premium for their properties as a result of the existence of that open space. They assert that whether the land is developed or used as a public park, it would adversely and unfairly affect the value of their properties.[281]
In the first step of the cy pres process the court would determine whether the charitable purpose of the Aubry Farm easement—the preservation of the rural, agricultural, historic, open space, and wildlife habitat character of the eighty-one-acre farm for the benefit of the citizens of County X and the eastern state—had become “impossible or impracticable.” In making this determination, the court should consider, and give primary weight to, whether the easement would satisfy the applicable “conservation purposes” test or tests under § 170(h) if offered for donation at the time of the cy pres proceeding.
Of the four conservation purposes tests under § 170(h), only three would be relevant: (i) the “historic preservation” conservation purposes test, (ii) ”open space” conservation purposes test, and (iii) the “wildlife habitat” conservation purposes test. The remaining conservation purposes test under § 170(h)—the “public recreation or education” conservation purposes test—would not be relevant because Weston did not donate the Aubry Farm easement to preserve the land for use by the general public for outdoor recreation or educational purposes. Continuing to enforce the easement to accomplish that purpose would constitute a change in the charitable
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purpose of the easement, and should be permissible only through the application of the full, three-step cy pres process.[282]
With regard to the three conservation purposes tests under § 170(h) that are relevant, we begin with the “historic preservation” conservation purposes test. Despite the family graveyard, the Aubry Farm easement would not satisfy that conservation purposes test because the farm is not listed in (or adjacent to land listed in) the National Register of Historic Places, the farm is not located within a registered historic district, and the family graveyard does not have independent national historic significance.[283]
The Aubry Farm easement also would not satisfy the “open space” conservation purposes test because the farm is not particularly scenic,[284] and the continued preservation of the farm would not be “pursuant to a clearly delineated Federal, State, or local governmental conservation policy.”[285] The preservation of land is considered to be “pursuant to a clearly delineated governmental conservation policy” only if the land has been
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identified as worthy of preservation by the Federal or a state or local government.[286] For example, an easement that preserves land located within a state or local landmark district that is locally recognized as being significant to the district (such as the Rural Historic District in County X), or an easement that preserves farmland pursuant to a state program for flood prevention and control, would be considered to preserve land “pursuant to a clearly delineated governmental conservation policy.”[287]
Aubry Farm, which now sits within an area designated as a growth area in County X’s Comprehensive Plan, has not been identified as worthy of preservation by the Federal or a state or local government, and, thus, its preservation is not “pursuant to a clearly delineated governmental conservation policy.” In fact, the continued preservation of Aubry Farm is arguably inconsistent with Federal, state, and local “clearly delineated governmental conservation policies” because it prevents infill development in a designated growth area, and thereby increases the pressure to relax subdivision and zoning restrictions in an area that has been identified as worthy of preservation by the Federal government and the state and local governments—the Rural Historic District.[288]
The Aubry Farm easement also would not satisfy the “wildlife habitat” conservation purposes test because the easement does not protect: (i) habitat for a rare, endangered, or threatened species; (ii) an undeveloped or not intensely developed island where the coastal ecosystem is relatively intact; or (iii) a natural area that is included in, or adjoins and provides a natural buffer to an existing conservation area, such as a local, state, or national park, a wilderness area, or a nature preserve.[289] Protection of the
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charismatic meso- and minifauna that typically is found in suburban areas, such as deer, common songbirds, and squirrels, arguably should not be viewed as satisfying the “habitat or ecosystems” conservation purpose under § 170(h).[290]
Having determined that the Aubry Farm easement does not satisfy the applicable conservation purposes tests under § 170(h), the court should assess whether there is continuing public support for the enforcement of the easement for its specified conservation purposes.[291] Both the Land Trust and the state attorney general have recommended that the easement be extinguished and the proceeds from the sale of the unencumbered land be used to protect land in the Rural Historic District. Whether some other land trust or a government agency would be willing to accept and enforce the easement for its stated conservation purposes is a question of fact. For a number of reasons, however, it appears unlikely that government agencies or land trusts committed to protecting land with rural, agricultural, historic, open space, and wildlife habitat characteristics in County X would be willing to accept the easement. First, the farm is no longer located in a rural, agricultural area of the county and, instead, is located in a designated growth area.[292] Second, the easement encumbers an isolated parcel of undeveloped land, and many agencies and organizations accepting easements are focusing their limited resources on protecting entire landscapes or ecosystems.[293] Third, because the farm is surrounded by developed land, it is increasingly subject to trespass and vandalism, and the easement has become burdensome to monitor and enforce. Fourth, the public benefits flow-ing from the easement appear to be minimal, and continuing to enforce
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the easement may actually result in a net detriment to the public by jeopardizing the protection of the remaining rural, agricultural, and historically important area of County X and contributing to (or perhaps causing) the Lyme disease epidemic in the county.
The assumption that no government agency or land trust would accept the Aubry Farm easement for the conservation purposes stated therein at the time of the cy pres proceeding is also tacitly supported by the position taken by the conservation organizations who signed the amicus brief. Those organizations are not offering to assume the obligation of monitoring and enforcing the easement for the conservation purposes stated therein. Instead, they are recommending that the Foundation convey the farm subject to the easement to County X or the eastern state for use as a public park, and, presumably, that the Land Trust continue to monitor and enforce the easement.[294]
Finally, with the exception of a few self-interested residents who own homes adjacent to or near Aubry Farm, there does not appear to be any public support for the continued enforcement of the easement for the conservation purposes specified therein.
Given that (i) the Aubry Farm easement would not satisfy the applicable conservation purposes test or tests under § 170(h) if offered for donation for the conservation purposes specified therein at the time of the cy pres proceeding, (ii) there is minimal public support for the continued enforcement of the easement for the conservation purposes specified therein (and that minimal support comes from a few self-interested adjacent landowners), and (iii) the court is presented with no other evidence that continued enforcement of the easement for the conservation purposes specified therein would provide benefits to the public (and, indeed, the evidence indicates that continuing to enforce the easement may actually result in a net detriment to the public by jeopardizing the protection of the remaining rural, agricultural, and historically important area of County X and contributing to, or perhaps causing, the Lyme disease epidemic in the county), a court might well deem the charitable purpose of the easement to have become “impossible or impracticable” and proceed to the next step in the cy pres process—determining whether Weston had a general charitable intent in donating the easement.
For the following reasons it is very likely that a court would find that Weston had a general charitable intent in donating the Aubry Farm ease-
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ment: (i) the charitable purpose of the easement became “impossible or impracticable” after the passage of time (twenty-nine years), and courts are loath to allow ongoing charitable gifts or trusts to fail altogether, (ii) the easement does not contain a provision for a gift over or reverter in the event its purpose becomes impossible or impracticable, (iii) the stated mission of Weston’s Foundation indicates that she had a general interest in historic and environmental preservation in the eastern state, and (iv) Weston was a well-known philanthropist and left the bulk of her assets at her death to the Foundation.
If the court determines that the charitable purpose of the Aubry Farm easement has become “impossible or impracticable,” and that Weston had a general charitable intent, the court would proceed to the third and final step in the cy pres process—formulating a substitute plan for the use of the easement (or the value attributable thereto) for a charitable purpose “as near as possible” to that specified by Weston.
The fact that Aubry Farm is the original homesite of Weston’s paternal ancestors, the location of the family graveyard on the farm, and Weston’s desire to protect the farm from encroaching development through the donation of the easement all indicate that Weston had a strong personal attachment to the farm and a desire to see that particular property preserved. On the other hand, the terms of the easement state that Weston donated the easement to conserve and forever maintain the rural, agricultural, historic, open space, and wildlife habitat character of the eighty-one-acre farm for the benefit of the citizens of County X and the eastern state, and her charitable giving history indicates that she had a more general interest in environmental and historic preservation in the eastern state. Accordingly Weston also apparently intended to benefit the citizens of County X and the eastern state by contributing to the preservation of land in that county and state with rural, agricultural, historic, open space and wildlife habitat characteristics, and, presumably, the rural, agricultural lifestyle that such land supports.
Mindful that courts are increasingly choosing substitute charitable purposes that are not necessarily “as near as possible” to the donor’s original purpose, but are reasonably similar or close thereto or fall within the donors’ general charitable purpose (particularly if one substitute charitable purpose has distinctly greater usefulness than others that have been identified), and that the court’s choice of a substitute purpose will be largely dictated by what is feasible, the court would turn to an assessment of the possible substitute plans for the use of the Aubry Farm easement: (i) the continued enforcement of the easement, but for a conservation purpose different from those specified by Weston—namely, the preservation of the farm for use as a public park or some other public recreational or educational area, or (ii) the
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extinguishment of the easement, the sale of the unencumbered land, and the Land Trust’s use of the proceeds attributable to the easement to accomplish Weston’s specified conservation purposes in another location.[295]
The court would likely first explore the option of continuing to enforce the easement for the purpose of preserving the land as a public park or some other public recreational or educational area because of: (i) Weston’s strong personal attachment to Aubry Farm and desire to see that particular property preserved, and (ii) a concern that a lack of deference to Weston’s attachment to the farm and desire to see it preserved might well chill future easement donations. The court could very reasonably determine that Weston’s “central” or “paramount” intention in donating the easement was to preserve the Aubry Farm property from development for the benefit of the citizens of County X and the eastern state, and that the precise nature of the charitable activity conducted on the site was of secondary importance. Weston’s obvious interest in memorializing the Aubry family and its history (as evidenced by her direction that the Aubry family home in the western state be transformed into an historical house museum at her death) lends credence to the idea that, had she anticipated that the specific conservation purposes of the Aubry Farm easement would become “impossible or impracticable,” she would have preferred the continued preservation of the land as a public park memorializing the Aubry family’s presence in the eastern state to extinguishment of the easement, sale of the unencumbered land, and the Land Trust’s use of the proceeds attributable to the easement to accomplish her specified conservation purposes in another location. Accordingly, the court could authorize the modification of the easement to accommodate the use of the land as a public park, to provide for the permanent protection of the family graveyard, and to provide for the placement of an appropriate tablet or monument memorializing the Aubry family within the bounds of the park.[296]
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The “Aubry Park” plan is not, however, without its potential problems. The Foundation is unlikely to be willing to assume responsibility for the ongoing management of a public park, its board of trustees may not deem a gift of the land subject to the easement to County X or the eastern state to be consistent with its charitable mission, and County X and the eastern state may not have the funds with which to purchase the land subject to the easement from the Foundation for its fair market value ($700,000). Moreover, the county and the state may be reluctant to assume responsibility for the ongoing management of the public park for a number of reasons, including: the existence of an adequate number of public parks in other, perhaps more suitable areas of the county or state; limited county or state funding for public park maintenance purposes; security and liability concerns; the pressing need, expressed by the County Planning Commission, for infill development; and the potentially high costs associated with the protection and maintenance of the family graveyard and the management of the deer herd.[297] Courts have, however, been very creative in crafting substitute plans for the use of charitable assets, and it is possible that the court would modify the easement to permit the sale of a portion of the land for residential or commercial development to create an endowment for the operation and maintenance of “Aubry Park.”[298]
If it were determined that the use of Aubry Farm as a public park would not be feasible (because, for example, no entity is willing to undertake the financial and other responsibilities associated with the operation and management of the land as a public park), the court could determine that Weston’s “paramount” purpose in donating the easement was to benefit the citizens of County X and the eastern state by contributing to the preservation of land within the county that has rural, agricultural, historic, open space,
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and wildlife habitat characteristics, and that the precise location of that charitable activity was of secondary importance. In this situation, the court could reasonably infer that Weston would have wanted her specified charitable activity to be conducted somewhere in the county rather than not at all (the alternative being a finding of specific rather than general charitable intent, failure of the easement, and distribution of the easement or the value attributable thereto to Weston’s residuary beneficiary or intestate heirs).[299] To carry out Weston’s “paramount” charitable purpose, the court could authorize the extinguishment of the easement, the sale of the unencumbered land, and the Land Trust’s use of the proceeds attributable to the easement to protect other land in County X that has rural, agricultural, historic, open space, and wildlife habitat characteristics—namely land located in the Rural Historic District.[300]
(1) Appropriate Division of Proceeds. For the reasons discussed in Part III.B.2.c.ii(2), supra, the court should employ the “after and before” method to establish the baseline values for the interests of the Land Trust and the Foundation in the land. Pursuant to the “after and before” method, the baseline value for the Land Trust’s interest would be $6.3 million, and the baseline value for the Foundation’s interest would be $700,000. For the policy reasons discussed in Part III.B.2.c.ii(2), supra, in the absence of countervailing equitable considerations, it would be appropriate for the court to mandate a division of proceeds according to those baseline values. In this situation, however, a number of factors weigh in favor of allocating to the Foundation a greater portion of the proceeds from the sale of the unencumbered land than is dictated under the “after and before” method. Those factors are: the owner of the land encumbered by the easement is a charitable foundation established by the donor of the easement (rather than a subsequent purchaser of the land who paid a price that reflected the diminution in the value of the land as a result of the existence of the easement); allocating a portion of the proceeds attributable to the easement to the Foundation would not confer an undue windfall benefit on a private individual at the expense of the public because the Foundation is a charitable organization and is obligated to use its assets
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for charitable purposes; and, given that Weston left the bulk of her large estate to the Foundation, it would not be unreasonable to assume that had she foreseen the extinguishment of the easement and the sale of the unencumbered land, she would have wished that some of the $6.3 million of value attributable to the easement be allocated to the Foundation.[301]
Direct court supervision of the extinguishment of the easement, the sale of the unencumbered land, and the division of the proceeds between the Land Trust and the Foundation would prevent inefficient holdout behavior. Once the court has mandated the division of proceeds between the parties in the cy pres proceeding, it would be irrational for the Foundation to “hold out” for a greater portion of the proceeds because the Land Trust would have no power to deviate from the court-mandated division. Faced with the choice of receiving a certain amount on the sale of the unencumbered land ($700,000), or retaining ownership of the land subject to the easement, the Foundation is likely to agree to the sale. The Foundation, as a charitable organization, has an obligation to administer its assets for the benefit of the public. Continuing to hold property that has produced a net loss for many years (because the Foundation is required to pay property taxes and maintenance expenses with respect to the unproductive land), and is becoming increasingly expensive to maintain, would arguably be inconsistent with the Foundation’s fiduciary duties to the public, particularly given the futility of holding out for a greater portion of the proceeds.
(2) Appropriate Use of Proceeds. Rural historic district acquisitions. Having determined that Weston’s “paramount” purpose in donating the easement was to benefit the citizens of County X and the eastern state by contributing to the preservation of land within County X that has rural, agricultural, historic, open space, and wildlife habitat characteristics, the court would likely agree to a detailed strategic plan that requires the Land Trust to use its portion of the proceeds from the sale of the unencumbered land to protect land in the Rural Historic District. Such a plan should entail the protection of multiple, contiguous parcels of land so as to ensure that the infrastructure necessary to support agricultural practices will remain in place in the district, and the rural, agricultural lifestyle Weston presumably sought to protect will be perpetuated. The court might also mandate that land protected with proceeds attributable to the easement be posted with a sign indicating that it was protected, in whole or in part, through Weston’s generosity and in memory of the Aubry Family.
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The evidence indicates that, as the area surrounding Aubry Farm has been developed for commercial and residential use, the family graveyard has been subject to repeated vandalism. The sale of the unencumbered land in the context of the cy pres proceeding and its consequent development would likely increase the incidence of such desecrations. Accordingly, the court might consider authorizing the Land Trust to use some of the proceeds attributable to the easement to purchase fee title to land in the Rural Historic District to which the family graveyard can be relocated.
Authorizing the relocation of a graveyar could mandate that the graveyard be suitably landscaped, that a suitable monument be erected in the graveyard in memory of the Aubry family, and that the Land Trust set aside a portion of the proceeds attributable to the easement as an endowment fund for the perpetual care and maintenance of the graveyard.[304]
Stewardship and operating funds. Setting aside sufficient funds with which to steward land or easements acquired by the Land Trust with the proceeds attributable to the Aubry Farm easement would appear to be consistent with Weston’s “paramount” purpose—to benefit the citizens of County X and the eastern state by contributing to the preservation of land within County X that has rural, agricultural, historic, open space, and wildlife habitat characteristics—because, without proper stewardship, the long-term preservation of the conservation characteristics of the targeted lands would be seriously jeopardized. Accordingly, the court should authorize the Land Trust to use a portion of the proceeds attributable to the easement to endow a stewardship fund for any land or easements acquired with such proceeds.
Authorizing the use of some of the proceeds attributable to the easement to steward land or easements encumbering land in other areas of
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County X[305] or in different counties, or to fund the day-to-day operations of the Land Trust is likely to be far more controversial. Such use of the proceeds would not appear to be consistent with Weston’s paramount purpose in donating the easement and, thus, might discourage future easement donors. Such use of the proceeds might also cause the Land Trust to neglect its responsibility to raise general stewardship and operating funds.
Nevertheless, because of the difficulties nonprofits face in raising stewardship and operating funds, and the fact that proper stewardship of land and easements already held by the Land Trust may provide as much public benefit as newly acquired land and easements, the court should consider allocating at least some portion of the proceeds attributable to the easement to the Land Trust’s general stewardship and operating funds. Given that the proceeds allocated to the Land Trust are likely to be significant, the court should also consider that the Land Trust may need increased operating funds to develop the institutional capacity to appropriately select, monitor, anons as restricted charitable gifts or charitable trusts, and subjecting the holders of such easements to the equitable rules governing a donee’s use and disposition of charitable assets. Those equitable rules are recommended as the framework within which to make conservation easement modification and termination decisions because such rules were developed and refined over the centuries to deal precisely with the issue presented by conservation easements—how to appropriately balance: (i) a charitable donor’s desire to exercise dead hand control over the use of his or her property, and (ii) society’s interest in ensuring that assets perpetually devoted to charitable purposes continue to provide benefits to the public.
If the doctrine of cy pres is applied to conservation easements as recommended in this Article, considerable deference would be accorded to the right of easement donors to control the use and disposition of their property. Under the proposed standard of “impossibility or impracticability,” the donor of a conservation easement would be permitted to exercise dead hand control over the use of the encumbered land as long as such prescribed use continues to provide some generally agreed-upon, threshold level of benefit to the public—and not just until the encumbered land and the value
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attributable to the easement could, in the opinion of some (such as the holder of the easement or the state attorney general), be devoted to more desirable or efficient economic and conservation uses. In the rare circumstance where the charitable purpose of a conservation easement is deemed to have become “impossible or impracticable,” considerable deference would again be accorded to the donor’s intent in formulating a substitute plan for the use of the easement or the value attributable thereto.
Applying the doctrine of cy pres to conservation easements as recommended in this Article would also take into account society’s interest in ensuring that assets perpetually devoted to charitable purposes continue to provide benefits to the public. Interpreting “impossibility or impracticability” to allow the modification or termination of easements that fail to satisfy a generally agreed-upon, threshold test of public benefit, where that test is designed to evolve as society’s conservation priorities evolve, would give society the flexibility to modify or terminate easements that cease to provide a level of public benefit sufficient to justify their continued enforcement (or even become detrimental to the public) as measured under contemporary standards. In addition, in the rare circumstance where an easement is extinguished and the unencumbered land sold, the division of proceeds between the owner of the land and the holder of the easement as recommended herein would ensure that the public is appropriately compensated for the value of the property interest embodied in the easement. Such division of proceeds would also ensure that the owner of the land does not receive an undue windfall benefit upon the extinguishment of the easement, which could have the unfortunate effect of inducing owners of easement-encumbered land (as well as speculators) to try their hand at “breaking” easements.
Although there is likely to be considerable concern that the extinguishment of conservation easements pursuant to the doctrine of cy pres will discourage future easement donations, that concern is arguably misplaced for a number of reasons. First, the extinguishment of easements pursuant to the doctrine of cy pres as suggested in this Article should be relatively rare—occurring only when an easement fails to meet a generally agreed-upon, threshold test of public benefit.
Second, greater candor to easement donors regarding the cy pres bargain they strike with the public upon the donation of their easements, coupled with the application of the doctrine of cy pres in a manner that yields predictable results, might actually inspire easement donors to take measures to ensure that their easements will continue to provide benefits to the public over the long term. Greater candor to easement donors regarding the cy pres bargain would also eliminate the justifiable surprise and indignation of easement donors (or their heirs) when government agencies and land trusts, in fulfillment of their fiduciary obligations to the public, seek or consent to the modification or extinguishment of easements that no longer provide sufficient levels of benefit to the public.
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Finally, the extinguishment of at least some perpetual easements is inevitable, and in the absence of a rational framework for decision-making that appropriately balances the interests of the donor and those of the public, some easements that are providing significant levels of public benefit may be extinguished; others that are providing little, no, or even negative public benefit may continue to be enforced; and prospective easement donors (as well as the courts, legislators, and the public) may begin to take a dim view of the use of the conservation easement as a land protection tool. If charitable trust rules are accepted as the framework within which modifica-tion and termination decisions will be made, the parties to easement donation transactions—the donors, the holders, and the public—will be able to rely on a set of rational and at least somewhat predictable rules, and structure their transactions accordingly so as to best accomplish their mutual conservation goals.
[*] Professor of Law, University
of Utah S.J. Quinney College of Law; J.D., University of Virginia. The author
would like to thank the following individuals for their helpful comments and
suggestions: James McLaughlin, Manuel Utset, Jeff Pidot, Jym St. Pierre,
Federico Cheever, Darby Bradley, John Bernstein, Andrew Dana, Paul Edmondson,
William Hutton, Stephen Small, and Gerald Korngold. While the foregoing
individuals were extremely helpful and generous with their time, some disagree
with the conclusions reached herein, and the views expressed herein are the
author’s alone.
[1] John Stuart Mill, Dissertations and
Discussions: Political, Philosophical, and Historical 36 (Boston, William V.
Spencer 1864) (1859).
[2] The terms “conservation easement”
and “easement” as used in this Article refer to an agreement between
the owner of the land encumbered by the easement and the holder of the easement
that restricts the development and use of the land to achieve certain
conservation goals, such as the preservation of wildlife habitat, agricultural
land, or an historic site. Easements encumbering historic structures are
referred to herein as “preservation” or “façade”
easements.
[3] The term “land trust” as used in
this Article refers to private, nonprofit charitable organizations that operate
to protect land for conservation purposes through a variety of means, including
the acquisition of conservation easements, and certain governmental agencies
that operate in a manner similar to private land trusts, such as the Maryland
Environmental Trust and the Virginia Outdoors Foundation. See Nancy A.
McLaughlin, Increasing the Tax Incentives for Conservation Easement
Donations—A Responsible Approach, 31 Ecology L.Q. 1, 61 (2004)
(“Virtually all land trusts function as publicly supported charitable
organizations. They are organized and operated specifically to provide benefits
to the public, and their activities are subject to oversight by state regulators
(generally the state attorney general), the IRS, and the public.”).
[4] See Land Trust Alliance, National
Land Trust Census, at http://www.lta.org/aboutlta/census.shtml (last visited Apr. 11, 2005) (on file with the Harvard Environmental Law
Review). The Land Trust Alliance, which is the umbrella organization for the
nation’s local, state, and regional land trusts, periodically collects
census data with respect to the local, state, and regional land trusts operating
in the United States, but does not collect data with respect to land trusts that
operate on a national scale, such as The Nature Conservancy, or government
agencies that do not operate in a manner similar to private land trusts, such as
the United States Fish and Wildlife Service or state and local governments.
Telephone Interview with Martha Nudel, Director of Communications for the Land
Trust Alliance(Feb. 12, 2002). National land trusts and government
agencies that do not operate in a manner similar to private land trusts also
have been acquiring conservation easements. See, e.g., Conservancy Update,53 Nature Conservancy 19, 20 (Fall 2003) (noting
that as of the fall of 2003, The Nature Conservancy had protected 1.8 million
acres by means of 1682 conservation easements).
[5] See Special Report: The 1994
National Land Trust Survey, Exchange: J. Land Trust Alliance, Fall 1994, at
2, 2 (737,000 acres protected by conservation easements as of 1994); Martha
Nudel, Conservation Easements Emerge as the Decade’s Top Land
Protection Tool, Exchange: J. Land Trust Alliance, Winter 1999, at 5, 5
(approximately 1.4 million acres protected by conservation easements as of
1998); Martha Nudel, Conserved Acreage, Number of Land Trusts Soared in the
1990s, Exchange: J. Land Trust Alliance, Fall 2001, at 5, 5 (2,589,619 acres
protected by conservation easements as of 2000); Rob Aldrich, Land Trusts
Double the Number of Acres Protected, Exchange: J. Land Trust Alliance,
Winter 2005, at 10, 10 (5,067,821 acres protected by conservation easements as
of 2003).
[6] While some conservation easements terminate
after a specified number of years (and are referred to as “term
easements”), the vast majority of conservation easements are granted in
perpetuity because most recipient conservation organizations accept only
perpetual easements and landowners donating easements are eligible for the
various federal and state tax incentives only if their easements are perpetual. See The Conservation Easement Handbook: Managing Land Conservation and
Historic Preservation Easement Programs 7 (Janet Diehl & Thomas S. Barrett
eds., 1988) [hereinafter Conservation Easement Handbook].
[7] See, e.g., Stephen J. Small, Conservation Easements Today: The Good and the Not-So-Good,Exchange: J. Land Trust Alliance, Spring 2003, at 32, 33–34 (noting
that there are easements being donated and accepted by land trusts that allow
far too much construction on the land they protect, and that, until about 2000,
“90-plus percent of the inquiries about conservation easements” the
author received were from landowners who “really wanted to protect the
land,” but that, “[i]n the last two or three years, at least
one-third of the inquiries about conservation easements [had] come from
landowners who think they can get away with something by donating a
conservation easement . . .”).
[8] See McLaughlin, supra note 3, at 110 n.429 (noting, for example,
that the value of a parcel of land as habitat, or as an integral part of a
functioning ecosystem, or as part of a rural, agricultural, scenic, or historic
landscape, may be substantial at the time an easement is donated, but will
decline as the surrounding area is converted to residential, commercial, and
industrial development).
[9] See, e.g., USDA, 1997 National
Resources Inventory: Highlights, Revised December 2000, available at http://www.nrcs.usda.gov/technical/land/pubs/97highlights.html (last visited Feb. 23, 2005) (noting that in the ten-year period from 1982 to
1992, 1.4 million acres of non-federal land were converted to development each
year, while during the following five-year period that figure jumped to 2.2
million, and, thus, the pace of development during the five-year period from
1992 to 1997 was more than one and one-half times that of the previous ten-year
period). See also U.S. Gen. Acct. Off. Rep. GAO/RCED-00-178, Community
Development: Local Growth Issues—Federal Opportunities and Challenges
11–12 (2000) (noting that the nation will face a growing demand for
residential, commercial, and industrial development in the years ahead because
the population of the United States is expected to increase by almost fifty
percent in the next fifty years and, historically, land consumption has
increased faster than population growth).
[10] See infra note 155 (describing the public benefits in
the form of ecosystem services that flow from land in its undeveloped
state).
[11] See, e.g., Andrew Dana &
Michael Ramsey, Conservation Easements and the Common Law, 8 Stan. Envtl.
L.J. 2, 22 (1989) (noting that “[c]onservation easements are a new type of
property interest, clearly not contemplated by common law”); Gerald
Korngold, Privately Held Conservation Servitudes: A Policy Analysis in the
Context of in Gross Real Covenants and Easements, 63 Tex. L. Rev. 433, 436
(1984) (discussing the question of which body of property law should govern
conservation easements).
[12] Restatement (Third) of Property:
Servitudes 36, § 1.6 cmt. a (2000) [hereinafter Restatement of Servitudes]
(noting that the primary problem was caused by the rule prohibiting equitable
enforcement of restrictive-covenant benefits held in gross).
[13] See Richard R. Powell, Powell on
Real Property § 34A.01 n.1 (Michael Allan Wolf ed., 2003) (noting that only
Wyoming lacks a special statute on the subject). Wyoming enacted an easement
enabling statute in February of 2005, to take effect on July 1, 2005. See Act of Feb. 25, 2005, 2005 Wyo. Sess. Laws 127 (providing for conservation
easements largely in accordance with the Uniform Conservation Easement Act) (to
be codified at Wyo. Stat. §§ 34-1-201 to 34-1-207 (2005)). North
Dakota’s easement enabling statute applies only to term easements
encumbering “historic sites.” See N.D. Cent. Code §
55-10-08 (2003). North Dakota also has an unusual statute that limits the
duration of any easement, servitude, or nonappurtenant restriction on the use of
real property to ninety-nine years, thus making it seemingly impossible to
create a perpetual conservation easement in North Dakota. See N.D. Cent.
Code § 47-05-02.1.2 (2003).
[14] Under the doctrine of cy pres, if
the purpose of a restricted charitable gift or charitable trust becomes
“impossible or impracticable” due to changed conditions, and the
donor of the gift or settlor of the trust manifested a general charitable
intent, a court may formulate a substitute plan for the use of the gift or trust
assets for a charitable purpose “as near as possible” to the
charitable purpose specified by the donor or settlor. See infra note 32 and accompanying text (discussing the
doctrine of cy pres).
[15] See Uniform Conservation Easement
Act (1981) § 3 cmt. [hereinafter UCEA]; Uniform Law Commissioners, A Few
Facts About the Uniform Conservation Easement Act, at http://www.nccusl.org/update/uniformact_factsheets/uniformacts-fs-ucea.asp (last visited Mar. 25, 2005) (listing twenty-one states and the District of
Columbia as having adopted the UCEA). Georgia, Oklahoma, and Wyoming also have
adopted the UCEA in whole or in substantial part. See Ga. Code Ann.
§§ 44-10-1 to 44-10-5 (Harrison 2002); 60 Okl. Stat. Ann. tit. 60,
§ 49.1 (West 2005); Act of Feb. 25, 2005, 2005 Wyo. Sess. Laws 127
(providing for conservation easements largely in accordance with the UCEA) (to
take effect on July 1, 2005, and to be codified at Wyo. Stat. §§
34-1-201 to 34-1-207 (2005)). See also Alexander R. Arpad, Private
Transactions, Public Benefits, and Perpetual Control Over the Use of Real
Property: Interpreting Conservation Easements As Charitable Trusts, 37 Real
Prop. Prob. & Tr. J. 91, 121 (2002) (noting that the drafters of the UCEA
apparently believed that “attempting to dictate a consistent legal
framework for the modification or termination of easements would interfere too
much with other substantive state law”).
[16] See, e.g., Korngold, supra note 11, at 441–42 (“It is
not entirely clear, for example, that preservation of land is and always will be
preferable to its use as a hospital or church providing services to the
community, a lower income housing project, a condominium containing recreational
facilities and natural settings for its residents, a public recreation area for
picnicking, swimming and sports, or a commercial or industrial area providing
jobs for an economically depressed region. The choice of the best current use of
a parcel of land is difficult enough; more difficult still is the decision today
regarding future use, because future needs are more speculative. Rigid choices
today may defeat the right of future generations to make critical decisions
affecting their lives.”) (internal citations omitted); Julia D. Mahoney, Perpetual Restrictions on Land and the Problem of the Future, 88 Va. L.
Rev. 739, 753 (2002) (“[T]he assumption that the present generation is
competent to engage in perpetual land use planning reflects an unduly bounded
conception of the changes that are likely to occur in nature itself, in
scientific knowledge, and, last but certainly not least, in cultural attitudes.
Conservation servitudes are ill-suited to adapt to such changes.”).
[17] See, e.g.,Dana &
Ramsey, supra note 11, at 38
(noting that, because of the difficulty in determining the flow of benefits to
the public associated with conservation easements and the relative ease in
determining the burden imposed by an easement on a property owner, courts could
be expected to invoke the property law doctrine of relative hardship for the
benefit of the landowner in virtually every case). See also infra notes 92 (noting that, in their current
form, the property law doctrines of changed conditions, frustration of purpose,
or relative hardship would not adequately protect the public’s interest or
investment in conservation easements) and 155 (describing the public benefits in
the form of ecosystem services that can flow from a conservation
easement).
[18] See, e.g.,Dana &
Ramsey, supra note 11, at
38–39; infra note 248 and accompanying text (noting that easements valued in the hundreds of thousands
and even multiple millions of dollars are increasingly common, and the prospect
of realizing even a modest percentage of that value upon extinguishment would
likely induce landowners and speculators alike to try their hand at
“breaking” easements). The public’s investment in donated
easements comes in a variety of forms, including foregone revenue from the
various federal, state, and local tax incentives offered to easement donors; the
enactment of easement enabling legislation; attorney general and judicial
oversight of the enforcement of easements; federal, state, and local tax
benefits provided to easement donees; and public funds expended to staff and
operate government agencies that accept easement donations.
[19] See infra Part II.D (discussing how
the National Trust for Historic Preservation in the United States believed it
was free to simply agree with a subsequent owner of easement-encumbered land to
significantly modify the terms of the easement). See also Dana &
Ramsey, supra note 11, at 35
(noting that a land trust might simply decide that the conservation value of an
easement is no longer justified given the costs associated with its enforcement,
and this could lead to termination of the easement either directly, by release,
or indirectly, by abandonment).
[20] See, e.g., Jeffrey M. Tapick, Threats to the Continued Existence of Conservation Easements, 27 Colum.
J. Envtl. L. 257, 285–86 (2002) (noting that “state legislators
probably hoped that by limiting the eligible holders to government entities and
charitable organizations, the easement holder would not be inclined to release a
conservation easement without good cause . . . [because they] are obligated to
base their actions and decisions primarily out of concerns for the public
interest and the interest of land preservation. However, it is not inconceivable
that [such a holder] could ignore this mandate, and base its decision to release
a viable easement on the best interests of the landowner, [and that] opponents
seeking to destroy the easement could approach the easement holder and try and
convince them to release the easement, perhaps using political pressure if the
holder is a government entity, or through financial inducements if the holder is
a private organization.”).
[21] The laws that might govern the
modification or termination of conservation easements conveyed to or held by
agencies of the federal government are not addressed in this Article.
[22] See, e.g., City of Salem v.
Attorney Gen., 183 N.E.2d 859 (Mass. 1962); Lewis v. Bd. of County
Comm’rs, 128 N.E.2d 818 (Ohio Ct. App. 1954), discussed in note 30, infra; see also infra note 201 and cases cited
therein.
[23] See McLaughlin, supra note 3, at 19–20 n.74 (2004)
(explaining that a significant percentage of the easements conveyed to the
nation’s local, state, and regional land trusts were conveyed after the
issuance of the Treasury Regulations interpreting § 170(h) in 1986, and
that the available evidence indicates that most of those easements were donated
rather than sold to such land trusts).
[24] There is very little case law involving
the application of the equitable rules governing a donee’s use and
disposition of charitable assets (including the doctrines of administrative
deviation and cy pres) to property that was sold, rather than donated, to
a government agency or charitable organization for a specified charitable
purpose—perhaps because it is rare for an agency or organization that is
paying for property to agree to include potentially cumbersome restrictions in
the deed of conveyance. However, in at least one case involving a partial sale
of land to a government agency for a specified charitable purpose, the court
held that such equitable rules applied. See Cohen v. City of Lynn, 598
N.E.2d 682 (Mass. App. Ct. 1992) (holding that the conveyance of land to a city
by deeds stating that the land was to be used “forever for park
purposes” created a public charitable trust; acceptance of the deeds by
the city constituted a contract between the grantors and the city that must be
observed and enforced; there was “no authority . . . to the effect that
the receipt of substantial consideration prevents a grantor from conveying
property to a municipality in such manner as to establish a public charitable
trust”; and that the application of the doctrine of cy pres was
inappropriate because it had not become impossible or impracticable to carry out
the original charitable purpose of the conveyance).
[25] See Austin Wakeman Scott &
William Franklin Fratcher, The Law of Trusts, § 348.1, at 8–9 (4th
ed. 1989). The private inurement and private benefit doctrines generally require
that, to maintain tax-exempt status, none of the income or assets of a
charitable organization may be permitted to directly or indirectly unduly
benefit any person, whether related to the organization or not. See Bruce
R. Hopkins, The Law of Tax-Exempt Organizations 484, 522 (8th ed. 2003).
[26] See Scott & Fratcher, supra note 25, § 348.1, at
9, 16. See also Marion R. Fremont-Smith, Governing Nonprofit
Organizations 51 (2002) (explaining the development of the law with regard to
restricted charitable gifts and charitable trusts).
[27] St. Joseph’s Hospital v. Bennett, 22
N.E.2d 305, 306 (N.Y. 1939).
[28] See id.
[29] See id. at 308. See
also Blumenthal v. White, 683 A.2d 410 (Conn. 1996) (holding that, while a
gift of land to a city with instructions that the land be used as a public park
and never transferred did not create a trust “in strict sense, it may be
so regarded,” that the city held the land as a
“quasi-trustee,” and that the doctrine of administrative deviation
should be applied to permit the city to deviate from the terms of the trust to
carry out the testator’s intent). A few of the rules applicable to
charitable trusts are not applicable to restricted charitable gifts or
“quasi-trusts.” See Scott & Fratcher, supra note 25, § 348.1, at 10–11
(“The circumstances under which and the proceedings by which creditors can
reach the property are different . . .”).
[30] See, e.g., Lewis v. Bd. of
County Comm’rs, 128 N.E.2d 818 (Ohio Ct. App. 1954) (holding that devise
of testator’s residence and residue of estate to county “for the
purpose of being kept, maintained and operated as a home for old ladies”
created a charitable trust); Town of Cody v. Buffalo Bill Memorial Ass’n,
196 P.2d 369 (Wyo. 1948) (holding that charitable trust rules applied to a gift
of land to a charitable association to be used to memorialize the memory of
William F. Cody, commonly known as Buffalo Bill, and an attempted transfer of
the land to the Town of Cody without authorization of a court of equity was
void); City of Salem v. Attorney Gen., 183 N.E.2d 859 (Mass. 1962) (holding that
a gift of land to city to be used “forever as public grounds”
established a trust restricting the use of the land to public park purposes, and
the city could not use three acres of thtricted to the purposes
set forth in the testatrix’s will); Newhall v. Second Church &
Soc’y of Boston, 209 N.E.2d 296 (Mass. 1965) (holding that church
receiving a gift of silver vessels dedicated to baptismal purposes was subject
to a duty to use the vessels for such purposes and could not sell them without
court authorization). See also Marie C. Malaro, Museum Governance 79
(1994) [hereinafter Malaro, Museum Governance] (noting that “when a museum
accepts an object for its collection, for example, with a condition requiring
permanent display or permanent retention, the museum bows to the ‘dead
hand’; it agrees that utilization of the object will be controlled forever
by the donor”); infra note 121 (describing a museum’s
obligation to seek court approval under the doctrine of administrative deviation
or cy pres to deviate from the terms of a restricted gift of
artwork).
[31] See Scott & Fratcher, supra note 25, § 399, at
479.
[32] See, e.g., id., §
399.2, at 489–90; G. B. Bogert & G. T. Bogert, The Law of Trusts and
Trustees § 431, at 95 (rev. 2d ed. 1991). See also Fremont-Smith, supra note 26, at 49 (“By
the end of the twentieth century the cy pres doctrine and its companion
doctrine of deviation had been adopted by statute, case law, or dictum in
forty-nine states.”).
[33] See, e.g.,Restatement
(Second) of Trusts § 348 (1959) (“A charitable trust is a fiduciary
relationship with respect to property arising as a result of a manifestation of
an intention to create it, and subjecting the person by whom the property is
held to equitable duties to deal with the property for a charitable
purpose.”); Scott & Fratcher, supra note 25, § 348, at 8 (“The trustees
of a charitable trust are under a duty ‘to deal with the property for a
charitable purpose.’ In the case of a private trust it is the duty of the
trustees to deal with the property for the benefit of the designated beneficiary
or beneficiaries . . . . In the case of a charitable trust, property is devoted
to the accomplishment of purposes that are beneficial or may be supposed to be
beneficial to the community.”).
[34] See Bogert & Bogert, supra note 32, § 435, at
130 (noting that if the trustees of a charitable trust believe that it has
become impossible or impracticable to carry out the trust as originally planned,
they have a “duty to bring a suit in equity to secure a decree applying cy pres”); Fremont-Smith,ere it
becomes impossible, impracticable, or wasteful to continue to fulfill the
original purposes, the trustee cannot fulfill his duty to the public
beneficiaries unless he seeks modification under the cy pres doctrine;
that interpretation of the traditional duty of loyalty to make explicit that it
includes the duty to seek revision of purposes when they can no longer be
carried out would assure that charitable funds will be used for purposes
beneficial to the public on a contemporaneous basis; and that while the attorney
general can bring a cy pres petition on his own motion, it would be
preferable for trustees to understand this as one of their duties rather than
let it pass to the state by default).
[35] Elias Clark, Charitable Trusts, The
Fourteenth Amendment and the Will of Stephen Girard, 66 Yale L.J. 979, at
979 (1957) (“A charitable trust serves two masters—the property
owner who created it and society which is its beneficiary.”).
[36] See Scott & Fratcher, supra note 25, § 348.1, at
9 (noting that the “Attorney General can maintain a suit to prevent a
diversion of the property to purposes other than those for which it was
given” in the case of both charitable trusts and gifts to charitable
corporations).
[37] See id. § 391, at
360–61.
[38] It is assumed that a conservation easement
constitutes a property interest sufficiently substantial to be the subject of a
charitable gift or a charitable trust. See Jesse Dukeminier & Stanley
M. Johanson, Wills, Trusts, and Estates 581 (6th ed. 2000) (noting that trust
property may be any interest in property that can be transferred,
including contingent remainders, leasehold interests, choses in action,
royalties, and life insurance policies); UCEA, supra note 15, § 1(1) (defining a conservation
easement as a “nonpossessory interest in property”); id. §§ 1, 2(a) (providing that a conservation easement may be conveyed in
the same manner as other easements, subject to the requirement that the holder
thereof be a government agency or charitable organization); Arpad, supra note 15, at 130 (concluding that most
modern conservation easements can constitute the res of a trust). See
also infra notes 236 and 237 and accompanying text (discussing
the ways in which the nature of the property interest embodied in a conservation
easement could be conceptualized).
[39] It is also assumed that a conservation
easement donated to a government agency or charitable organization for one or
more of the conservation purposes specified in the applicable state easement
enabling statute is donated for a “charitable” purpose as that term
is defined under state law and, thus, would be subject to the equitable rules
governing a charitable donee’s use and disposition of charitable assets,
including the doctrines of administrative deviation and cy pres. See Scott & Fratcher, supra note 25, § 399, at 479 (“The cy
pres doctrine is applicable only to dispositions for charitable purposes . .
.”); Fremont-Smith, supra note 26, at 48, 173 (noting that while some
commentators have questioned the importance of the state law definition of a
“charitable” purpose in light of the overriding consideration of tax
exemption and consequent deference to the definition of charitable purposes in
the Internal Revenue Code, the state law definition of a charitable purpose is
probably of greatest continuing importance in connection with the application of
the doctrines of administrative deviation and cy pres). State courts and
legislators have specifically declined to frame a precise definition of the term
“charitable” because ideas regarding social benefit and public good
change from time to time, and the concept of charity must be able to adjust and
expand to take into account the changing needs of society, new discoveries, and
the varying conditions, characters, and needs of different communities. See Scott & Fratcher, supra note 25, § 368, at 133–34. See
also, e.g., Bogert & Bogert, supra note 32, § 369, at 82, 83 (noting that
it is inadvisable to bind courts to any set formula, as they need latitude to
include new purposes as society develops and public opinion changes). Thus,
while the courts have held that certain purposes are clearly
charitable—namely the relief of poverty, the advancement of knowledge or
education, the advancement of religion, the promotion of health, and
governmental or municipal purposes (such as the erection of public buildings,
bridges, and the like)—there also exists a very expansive general or
“catchall” category of charitable purposes, into which falls a vast
number of miscellaneous purposes that have been deemed beneficial to the
community. See Scott & Fratcher, supra note 25, § 368, at 130; Restatement
(Third) of Trusts § 28(f) (2001) [hereinafter Restatement of Trusts]. The
donation of conservation easements, which is facilitated in forty-nine states
and the District of Columbia through the enactment of easement enabling
legislation and heavily subsidized through federal, state, and local tax
incentives, is precisely the type of new and unanticipated
“charitable” activity that should be deemed to fall within the broad
reach of that term. In addition, the fact that an easement donor may be
primarily or solely motivated by selfish factors (such as the desire to create a
permanent monument to himself or the desire to convert some of the equity in his
land to cash in the form of tax savings) should be immaterial to the question of
whether the donation is considered to be charitable. All the courts should (and
generally do) ask is whether the net result of the gift is to advance the public
interest in some substantial way. See Bogert & Bogert, supra note 32, § 366, at 61. See
also Scott & Fratcher, supra note 25, § 348, at 6 (“It is the
purpose to which the property is to be devoted that determines whether the trust
is charitable, not the motives of the testator in giving it.”).
[40] The doctrines of administrative deviation
and cy pres are distinct in that the former applies to a modification of
the administrative terms of a charitable gift or trust, and the latter
applies to a modification of the charitable purpose of a charitable gift
or trust. See, e.g., Report of Committee on Charitable Trusts and
Foundations, Cy Pres and Deviation: Current Trends In Application, 8 Real
Prop. Prob. & Tr. J. 391, at 398–400 (1973) [hereinafter Report of
Committee on Charitable Trusts and Foundations] (noting, however, that in
practice the line between the two doctrines is less than precise). To illustrate
the application of the doctrine of administrative deviation to modify an
administrative term (as opposed to the charitable purpose) of an easement,
assume that thirty years ago a landowner donated an easement to a land trust for
the purpose of preserving wildlife habitat and forestland, and included a
“no burn” provision in the easement that prohibits the owner of the
land and the holder of the easement from engaging in controlled burns on the
property or permitting naturally caused fires to run their course. While the
“no burn” provision might have been considered prudent at the time
of the donation of the easement, due to changed conditions and advances in
ecological science such a provision might now be deemed to defeat or
substantially impair the charitable purpose of the easement (that is, the
protection of the encumbered land for the purpose of preserving wildlife habitat
and forestland). Modifying the easement to delete the no burn provision would
serve to enhance, rather than alter, the charitable purpose of the easement and
could be accomplished through the application of the doctrine of administrative
deviation.
[41] See supra note 37 and accompanying text.
[42] See infra notes 77–78 and accompanying text.
[43] See infra note 80 and accompanying text.
[44] See infra Part II.A.2.
[45] See Marie C. Malaro, A Legal Primer
on Managing Museum Collections 106–07 (1985) [hereinafter Malaro, Legal
Primer] (describing a case in which a Maryland court determined that a nonprofit
historical society had the right to dispose of a valuable desk it had received
years earlier as a gift from a patron, despite the insistence of the
donor’s heirs that there was an implicit understanding between the donor
and the society that the desk would always be retained for display by the
society, because there was no deed of gift evidencing the conveyance. The court
stated that “[g]ifts cannot be presumed to be conditional. Their
conditions must be clearly set forth, as the memories of men do fade with
time.”); Persan v. Life Concepts, Inc., 738 So. 2d 1008, 1010 (Fla. Dist.
Ct. App. 1999) (holding that a charitable organization had the right to sell
land given to it pursuant to a deed containing no restrictions, despite
testimony of the donor that the land was intended to be used for the
construction and operation of living facilities for disabled adults).
[46] See, e.g., Stephen E. Weil,
Rethinking the Museum 113 (1990) (noting that in 1979, the Corcoran Gallery of
Art sold one hundred nineteenth-century European paintings from its collection
through public auction, and excerpting the preface to the auction catalogue,
which states that “[i]n the case of the European paintings owned by
William Wilson Corcoran, the donor himself (in what is an extraordinary example
of farsighted museum philanthropy) stipulated in his deed of gift that their
disposition was at the discretion of the Trustees.”).
[47] See, e.g., Bogert & Bogert, supra note 32, § 324, at
376–77; id. § 48, 74 (“The primary question in every
case [involving precatory language] is the intention of the testator, and
whether in the use of precatory words he meant merely to advise or influence the
discretion of the devisee, or himself to control or direct the disposition
intended.”); Scott & Fratcher, supra note 25, § 351, at 49–50
(“Where the settlor uses language expressive of a desire rather than of a
command, precatory rather than mandatory language, it is a question of
interpretation whether his intention is to leave the donee or legatee free to
decline to carry out the designated charitable purpose, or to impose a binding
obligation on him to devote the property to the designated
purpose.”).
[48] In re James’ Estate, 130
N.Y.S.2d 693 (N.Y. Sup. Ct. 1954).
[49] Id. at 697–98.
[50] See id. See also Scott &
Fratcher, supra note 25, §
348.1, at 18 n.11 (“If the donor uses precatory language and does not
manifest an intention to impose a binding restriction on the use of the
property, the corporation is not bound thereby.”). In re Hamilton’s Estate, 186 P. 587 (Cal. 1919), involved language included
in a will that, while precatory in nature, was nonetheless found to impose
legally binding restrictions on the legatee’s use and disposition of the
property. In In re Hamilton’s Estate, the testator devised the
residue of his estate (consisting of approximately $60,000) to the Right
Reverend William J. Walsh, Archbishop of Dublin, with the “request”
that masses be offered for the repose of his soul and the souls of his relatives
in certain designated churches in Dublin. After examining the testator’s
will in its entirety and the circumstances surrounding its execution, the
Supreme Court of California held that the testator intended to impose a duty on
the Archbishop to use the funds to procure the saying of masses in the
designated churches, and that a valid charitable trust had been created. In
support of its decision, the court noted, inter alia, that, while the word
“request” is one of petition or favor, “very frequently . . .
a . . . command or positive direction is, as a matter of polite or deferential
expression, cast in the form of a request,” and that there was no relation
or bond between the testator and the archbishop which would make the latter a
natural object of the testator’s bounty. See id. at 588,
590.
[51] See, e.g., supra notes 26–30, accompanying text, and cases cited
therein. See also Estate of Heil, 259 Cal. Rptr. 28 (Cal. Ct. App. 1989)
(holding that a provision in the testator’s will directing that the
residue of his estate be “given to the State of Nevada for the
preservation of the wild horses in Nevada” was not precatory in nature, as
it “contain[ed] no words of entreaty, request, wish or recommendation,
which constitute the essence of a precatory statement,” and, instead
created a charitable trust and imposed an “imperative obligation” on
the state).
[52] Nickols v. Commissioners of Middlesex
County, 166 N.E.2d 911 (Mass. 1960).
[53] Id. at 914.
[54] Id.
[55] The opinion states that the trees that
were cut were “for the most part, things of great beauty . . . that might
have endured as beautiful trees for many years.” See id. at
914–15.
[56] See id. at 915.
[57] See id. Under Massachusetts law,
the citizens had standing to sue “as citizens by mandamus to
‘enforce a public duty of interest to citizens generally.’” Id. at 916.
[58] See id.
[59] See id.
[60] See id. at 917.
[61] See id. at 918–19.
[62] See id. at 919.
[63] See id. at 917–19.
[64] See id.
[65] See id. at 921.
[66] See Thomas S. Barrett & Stefan
Nagel, Model Conservation Easement and Historic Preservation Easement, 1996:
Revised Easements and Commentary from “The Conservation Easement
Handbook” 12 (1996) [hereinafter Model Conservation Easement].
[67] Id.
[68] Id. at 13. The term
“Property” used in the statement of purpose refers to the specific
land encumbered by the easement as described in a legal description attached to
the easement as an exhibit. See id. at 12, 26.
[69] American Heritage Dictionary of the
English Language 113, 712 (3d ed. 1992).
[70] The typical deed conveying a conservation
easement also contains a formal grant clause similar to the following:
“Grantors hereby voluntarily grant and convey to Grantee a conservation
easement in perpetuity over the Property of the nature and character and
to the extent hereinafter set forth.” See Model Conservation
Easement, supra note 66,
at 13 (emphasis added). The idiom “in perpetuity” is defined to mean
“for an indefinite period of time; forever.” See American
Heritage Dictionary of the English Language 1350 (3d ed. 1992). Accordingly, the
formal grant clause in the typical deed conveying a conservation easement
reinforces the conclusion that the donor intends to obligate the donee to use
the easement to protect the specified conservation values of the encumbered
property “forever.”
[71] See McLaughlin, supra note 3, at 41–47 (discussing three
surveys of easement donor motivation).
[72] See, e.g., Jackson Hole Land Trust, Frequently Asked Questions, “What is a conservation
easement?,” at http://www.jhlandtrust.org/our_work/faq.php#3 (last visited Feb. 23, 2005) (“A conservation easement is a voluntary
contract between a landowner and a land trust, government agency, or another
qualified organization in which the owner places permanent restrictions on the
future uses of some or all of his or her property to protect scenic, wildlife,
or agricultural resources . . . . The easement is donated by the owner to the
land trust, which then has the authority and obligation to enforce the terms
of the easement in perpetuity. The landowner still owns the property and can
use it, sell it, or leave it to heirs, but the restrictions of the easement
stay with the land forever.”) (emphasis added) (on file with the
Harvard Environmental Law Review); infra Part II.D (describing how the
National Trust for Historic Preservation in the United States made such
representations to the donor of an easement). See also Karen F.
Marchetti, Planning and Managing Conservation Easements: The Legal Perspective,
Land Trust Alliance Rally 2002 37 (Oct. 2002) (on file with the Harvard
Environmental Law Review) (“[I]t is unlikely that a conservation easement
was granted with the expectation that the land trust might at its pleasure
dispose of the easement and apply the proceeds to its general conservation
purposes, as with trade lands. It is implicit in a perpetual easement
that the purposes of the gift, the preservation of that particular parcel of
land, will be honored barring unforeseeable or extremely improbable
circumstances.”).
[73] See infra Part II.D (discussing
proposed amendments to the Myrtle Grove easement that were inconsistent with the
charitable purpose of the easement).
[74] See Treas. Reg. § 1.170A-14
(as amended by T.D. 8069, 51 Fed. Reg. 1496 (Jan. 14, 1986)); Treas. Reg. §
1.170A-14(g)(6). See also Model Conservation Easement, supra note 66, at 17, 71. An
astute reader will note that this “extinguishment” provision bears a
remarkable resemblance to the doctrine of cy pres. See infra notes 203–209 and accompanying text for a more
detailed discussion of the extinguishment provision.
[75] See Treas. Reg. §
1.170A-14(c)(2) (2004). The restriction on transfer provision is intended to
prevent the holder of an easement from circumventing the requirements with
regard to extinguishment by transferring the easement (through a sale or
exchange) to the owner of the encumbered land, in whose hands the easement is
likely to be extinguished under the doctrine of merger.
[76] See supra note 23.
[77] See, e.g., Model
Conservation Easement, supra note 66, at 22, 82.
[78] For example, the Model Conservation
Easement expressly grants to the holder of the easement the right
“[t]o preserve and protect the conservation values of the Property.” See Model Conservation Easement, supra note 66, at 13. To avoid any question
regarding the scope of the discretion granted to an easement holder, however, it
is recommended that a provision be included in the easement deed expressly
granting the holder the right to amend the easement deed in any manner
consistent with (or neutral with respect to) the stated purpose of the easement. See Scott & Fratcher, supra note 25, § 186, at 10 (“Because of
the reluctance of many courts to find that the trustee has powers that are not
clearly expressed in the trust instrument, and because of the resulting doubts
that arise as to the existence of certain powers, it is customary in well-drawn
trust instruments to make provisions in express words conferring upon the
trustee powers that are or may become necessary or appropriate for the efficient
administration of the trust. The administration of the trust may be seriously
impeded not only by the lack of such powers but also by doubts, even though the
doubts are not well founded, as to the existence of the powers.”).
[79] There will, of course, be situations in
which it is not clear whether a proposed amendment is “consistent
with” the conservation purposes of the easement and, thus, falls within
the discretion granted to the holder of the easement in the easement deed. For
example, the holder of an easement may determine that relocation of a designated
house site on the encumbered land is “consistent with” the
conservation purposes of the easement, but reasonable people might disagree with
that determination. To avoid damaging negative publicity and potential liability
for breach of fiduciary duties, the holder of an easement should interpret its
discretionary authority to make amendments conservatively, and consider
petitioning the court for instructions when there is a question as to whether a
proposed amendment falls within such authority.
[80] See infra Part III.B.1
(discussing who might have standing to bring or intervene in an action involving
a conservation easement). From the holder’s perspective, it would be far
preferable to be granted express authority to agree to amendments that are
consistent with (or neutral with respect to) the charitable purpose in the
easement deed, thereby reducing the potential for lawsuits alleging a breach of
the holder’s fiduciary duties.
[81] St. Joseph’s Hospital v. Bennett, 22
N.E.2d 305, 307 (N.Y. 1939).
[82] See UCEA, supra note 15, § 3(b) (emphasis added). See
also Ala. Code § 35-18-3(b) (2004); Alaska Stat. § 34.17.020(b)
(Michie 2004); Ariz. Rev. Stat. Ann. § 33-273.B (West 2004); Ark. Code Ann.
§ 15-20-409(b) (Michie 2003); Del. Code. Ann. tit. 7 § 6903(b) (2003);
D.C. Code Ann. § 42-203(b) (2004); Ga. Code Ann. § 44-10-4(c)
(Harrison 2002); Idaho Code § 55-2103(2) (Michie 2004); Ind. Code Ann.
§ 32-23-5-6(b) (West 2004); Kan. Stat. Ann. § 58-3812(b) (2004); Ky.
Rev. Stat. Ann. § 382.820(2) (Banks-Baldwin 2004); Me. Rev. Stat. Ann. tit.
33 § 478.3 (West 2004); Minn. Stat. § 84C.03(b) (2004); Miss. Code
Ann. § 89-19-7(2) (2004); Nev. Rev. Stat. § 111.430.2 (Michie 2004);
N.M. Stat. Ann. § 47-12-4.B (Michie 2003); Okla. Stat. Ann. tit. 60, §
49.4.B (West 2005); Or. Rev. Stat. § 271.755(2) (2003); 32 Pa. Stat. Ann.
tit. 32, § 5055(c)(1) (West 2004); S.C. Code Ann. § 27-8-40(B) (Law.
Co-op. 2004); S.D. Codified Laws § 1-19B-58 (Michie 2003); Tex. Nat. Res.
Code Ann. § 183.003(b) (Vernon 2003); Va. Code Ann. § 10.1-1010.F
(Michie 2004); W.Va. Code Ann. § 20-12-5(b) (Michie 2002); Wis. Stat. Ann.
§ 700.40(3)(b) (West 2004); Act of Feb. 25, 2005, 2005 Wyo. Sess. Laws 127
(to take effect on July 1, 2005, and to be codified at Wyo. Stat. §§
34-1-201 to 34-1-207 (2005)).
[83] UCEA, supra note 15, § 3, cmt. (emphasis added). The
drafters of the UCEA declined to specify the proper approach to the modification
or termination of easements in the event of changed conditions, noting instead
that a variety of doctrines, including the doctrine of changed conditions
applicable to common law servitudes and the doctrine of cy pres applicable to charitable trusts, have been judicially developed and, in many
states, legislatively sanctioned as a basis for responding to such
circumstances. See id. See also Arpad, supra note 15, at 121 (noting that the drafters of
the UCEA apparently believed that “attempting to dictate a consistent
legal framework for the modification or termination of easements would interfere
too much with other substantive state law”).
[84] See UCEA, supra note 15, § 3(a)(4). See also Alaska Stat. § 34.17.020(a)(4) (Michie 2004); Ariz. Rev. Stat. Ann. §
33-273.A.4 (West 2003); Ark. Code Ann. § 15-20-409(a)(4) (Michie 2003);
Del. Code. Ann. tit. 7, § 6903(a)(4) (2004); D.C. Code Ann. §
42-203(a)(4) (2004); Fla. Stat. Ann. § 704.06(9)(d) (West 2005); Ga. Code
Ann. § 44-10-4(a)(4) (Harrison 2002); Idaho Code § 55-2103(1)(d)
(Michie 2004); Ind. Code Ann. § 32-23-5-6(a)(4) (West 2004); Kan. Stat.
Ann. § 58-3812(a)(4) (2004); Ky. Rev. Stat. Ann. § 382.820(1)(d)
(Banks-Baldwin 2004); La. Rev. Stat. Ann. § 9:1274(4) (West 2005); Minn.
Stat. § 84C.03(a)(4) (2004); Miss. Code Ann. § 89-19-7(1)(f) (2004); id. § 89-19-7(1)(d) (expressly granting standing to the Mississippi
attorney general); Nev. Rev. Stat. § 111.430.1(d) eVirginia
attorney general); W.Va. Code Ann. § 20-12-5(a)(4) (Michie 2003); Wis.
Stat. Ann. § 700.40(3)(a)(4) (West 2004). See also Tenn. Code Ann.
§ 66-9-307 (2004) (providing that conservation easements may be enforced by
the beneficiaries of the easement or their bona fide representatives).
[85] UCEA, supra note 15, § 3, cmt.
[86] See, e.g., Cal. Civ. Code
§§ 815–815.10 (West 2005); Haw. Rev. Stat. Ann. §§
198-1 to 198-5 (Michie 2004).
[87] See, e.g., La. Rev. Stat. Ann.
§ 9:1273.A (West 2005); Utah Code Ann. § 57-18-5 (2004).
[88] See, e.g., Mass. Gen. Laws
ch. 184, § 32 (Law. Co-op. 2005); N.J. Stat. Ann. § 13:8B-5 (West
2005). See also Va. Code Ann. § 10.1-1704 (Michie 2004) (providing
that land encumbered by certain “open space” conservation easements
held by public bodies may not be “converted or diverted” from open
space land use unless, inter alia, the conversion or diversion is determined by
the public body to be “essential to the orderly development and growth of
the locality.”).
[89] Some obliquely provide that a conservation
easement may be enforced by “proceedings in equity” or
“equitable proceedings” or “appropriate equitable
relief.” See, e.g., Mich. Comp. Laws § 324.2144(1)
(2004); Mont. Code Ann. § 76-6-210(1) (2004); N.C. Gen. Stat. §
121-39(a) (2003).
[90] See, e.g., supra note 30 and cases cited therein; infra note 201 and cases cited
therein. See also Kevin A. Bowman, The Short Term Versus the Dead
Hand: Litigating Our Dedicated Public Parks, 65 U. Cin. L. Rev. 595, 608
(1997) (noting that “[m]any courts, following a modern trend, have viewed
a dedication of land to a municipality for park purposes as an expression of
intent to create a [charitable] trust [where] the municipality act[s] as trustee
. . . and the general public as beneficiary,” and that other courts have
applied charitable trust principles to accomplish the same ends without directly
finding that a charitable trust existed because trust principles provide the
best means of enforcing the intent of the grantor).
[91] See infra notes 236 and 237 and accompanying text (discussing
the ways in which the property interest embodied in a conservation easement
could be conceptualized).
[92] See infra Part III.A (discussing
the “cy pres bargain”). See also generally Fremont-Smith, supra note 26 (describing the history of the
development of the equitable rules governing a donee’s use and disposition
of charitable assets, including the need, evident from almost the first
emergence of charities as legal entities, for the supervision of those entrusted
with charitable assets to help prevent negligence, maladministration, and
diversion of charitable funds to purposes contrary to those specified by the
donor). Applying the property law doctrines of changed conditions, frustration
of purpose, or relative hardship in their current form to modify or terminate
conservation easements conveyed to government agencies and charitable
organizations would be inappropriate because those doctrines were developed in
the context of private transactions entered into by private parties for private
benefit and, thus, would not adequately protect the public’s interest or
investment in conservation easements. See, e.g., Korngold, supra note 11, at 484–89
(arguing that the doctrine of changed conditions might not allow courts to
terminate conservation easements even if it were in the public interest, and
that the doctrine of relative hardship, which focuses on the conflict between
individual landowners, is too narrow to encompass the public interest). See Restatement of Servitudes, supra note 12, § 7.11, cmts. a, b (recommending
that the modification or termination of conservation easements conveyed to
government agencies and charitable organizations be governed by a special set of
rules based, in part, on the doctrine of cy pres, and noting that these
servitudes should be afforded more stringent protection than privately held
conservation servitudes because of the public interest involved). Accordingly,
if the property law doctrines of changed conditions, frustration of purpose, or
relative hardship are invoked to modify or terminate conservation easements
conveyed to government agencies and charitable organizations, they should be
applied in a manner consistent with the equitable rules governing a
donee’s use and disposition of charitable assets.
[93] See I.R.C. § 170(h)(5)(A)
(2004); Treas. Reg. § 1.170A-14(g)(6) (2004). See also supra note 74 and accompanying text (noting
that, since 1986, any donor of a conservation easement interested in claiming a
federal charitable income tax deduction has generally been required to include a
provision in the deed of conveyance stating, in effect, that the restrictions in
the easement may be extinguished only if and when changed conditions have made
the continued use of the property for the conservation purposes specified in the
easement “impossible or impractical,” and only then in the context
of a judicial proceeding).
[94] See supra note 71 and accompanying text.
[95] In re Preservation Alliance for
Greater Philadelphia, O.C. No. 759 (Ct. Com. Pl. of Philadelphia June 28, 1999)
(decree granting extinguishment of façade easement) (on file with the
Harvard Environmental Law Review) [hereinafter Decree]. See also Transcript of Hearing on Emergency Petition for Extinguishment of Façade
Easement, In re Preservation Alliance for Greater Philadelphia, O.C. No.
759 (Ct. Com. Pl. of Philadelphia June 28, 1999) [hereinafter Transcript] (on
file with the Harvard Environmental Law Review). Although the court did not
expressly state that it was applying the doctrine of cy pres to
extinguish the easement, the application of that doctrine can be assumed from:
(i) the court’s holding, see Decree at 1, that the façade
easement constituted a “charitable interest” subject to
Pennsylvania’s Decedent’s, Estates and Fiduciaries Code, 20 Pa.
Stat. Ann. §§ 101–8815 (West 2004), which includes the statutory
formulation of the doctrine of cy pres, see id. §
6110, and (ii) the fact that the holder of the easement represented to the court
that it held the façade easement in or as a charitable trust, and
requested that the court extinguish the easement and replace it with other
covenants pursuant to the doctrine of cy pres. See Transcript at
7–8.
[96] See Transcript, supra note 95, at 5–8.
[97] See id. at 26,
4–5.
[98] See Decree, supra note 95. The easement enabling statute in
Pennsylvania mirrors the UCEA in stating that the statute does “not affect
the power of a court to modify or terminate a conservation or preservation
easement in accordance with the principles of law and equity . . . .” See 32 Pa. Stat. Ann. § 5055(c)(1) (West 2004); supra notes 15, 82, and 83 (discussing the UCEA).
[99] See supra note 2 (defining the term “conservation
easement” for purposes of this Article to mean easements encumbering land
(as opposed to historic structures)).
[100] See Peter S. Goodman, In
Maryland, Fighting to Save a “Way of Life”; Family in Court to
Protect Land, Fulfill Matriarch’s Wishes, Wash. Post, Mar. 20, 1998,
at C1.
[101] Deed of Easement by Margaret Henry
Donoho, Grantor, and the National Trust for Historic Preservation In the United
States, Grantee 1 (Dec. 13, 1975) (on file with the Harvard Environmental Law
Review).
[102] Id. at 2.
[103] Id. at 3.
[104] Before the sale of Myrtle Grove, the
attorney for Donoho’s estate, who was assisting the heirs with the sale,
asked a representative from the National Trust how confident the heirs could be
that the easement could “not be broken legally and that its restrictions
will not dissolve over time . . . making possible previously prohibited
activities or outright subdivision by a later purchaser,” to which the
representative responded that easement restrictions “never dissolve over
time” and that the National Trust “has the authority to enjoin and
reverse unauthorized subdivision.” See Memorandum of Law in Support
of Attorney General’s Motion for Summary Judgment at 9, State v. Miller,
No. 98-003486 (Md. Cir. Ct. Apr. 21, 1999) [hereinafter Attorney General’s
Memorandum] (on file with the Harvard Environmental Law Review).
[105] See Letter from Richard Moe,
President, National Trust for Historic Preservation in the United States, to Mr.
and Mrs. Herbert S. Miller (Feb. 7, 1994) (on file with the Harvard
Environmental Law Review).
[106] The attorney for the National Trust
sent the Concept Approval letter to the president of the National Trust for his
signature without discussion, and the president apparently signed the letter
without reading it. See Attorney General’s Memorandum, supra note 104, at 13.
[107] See, e.g., Goodman, supra note 100 (“[W]hen
Donoho’s relatives found out about the deal, they were outraged. They
rallied a group of environmental organizations that saw matters
similarly.”).
[108] See id. (noting that in
correspondence subsequent to the Consent Approval letter, the staff of the
National Trust touted the purported benefits of the agreement with the
Millers—“new land under easement, more vegetation and more money
flowing to the trust to pursue its mission”).
[109] Melody Simmons, Maryland Sues on
Plan for Farm on Shore; Group had Decided to Allow Development of Protected
Land, Balt. Sun, July 10, 1998, at 1B. See also Attorney
General’s Memorandum, supra note 104, at 14 (noting that the President of
the National Trust requested that the Vice President and General Counsel
investigate the matter; the Vice President concluded that the National Trust had
not considered its “fiduciary responsibility with respect to the
easement” or “the intent of the donor” in approving the Myrtle
Grove subdivision; and that, in June of 1994, the Vice President wrote a letter
to the attorney for the Miller Trust stating that the National Trust’s
approval of the easement amendment and proposed subdivision had been
“improvidently granted, and must now be withdrawn”) (internal
quotations omitted).
[110] See Attorney General’s
Memorandum, supra note 104, at
14.
[111] See id. at 28; State v.
Miller, No. 98-003486 (Md. Cir. Ct. Apr. 21, 1999) (Consent Judgment), at
1–2 [hereinafter Consent Judgment] (on file with the Harvard Environmental
Law Review). In November of 1998, the Eastern Shore Land Conservancy, The Nature
Conservancy, and five landowners who owned land either adjoining or in close
proximity to Myrtle Grove filed a Motion to Intervene asserting, inter alia,
that there were significant clusters of preserved lands adjacent to and in the
immediate area of Myrtle Grove (including a 500-acre parcel owned by The Nature
Conservancy that is directly opposite the entrance to Myrtle Grove, supports an
unusually old hardwood forest, and provides habitat for a small population of
the endangered Delmarva Fox Squirrel); that amending the Myrtle Grove easement
to permit the proposed subdivision would have an adverse effect on the natural
attributes of the area and on the use, value, and enjoyment of properties
adjacent to or near Myrtle Grove; that many of the adjacent or nearby landowners
had acquired their properties and encumbered them with conservation easements in
part because of the existence of the Myrtle Grove easement; and that the
proposed subdivision would severely compromise the ability of conservation
organizations to both solicit easement donations and raise the funds necessary
to continue their operations. See Motion to Intervene, State v. Miller,
No. 98-003486 (Md. Cir. Ct. Apr. 21, 1999) (on file with the Harvard
Environmental Law Review).
[112] See Consent Judgment, supra note 111.
[113] See Peter S. Goodman, Agreement Saves Estate on Maryland’s Eastern Shore; Trust had Wrongly
Approved Subdivision, Wash. Post, Dec. 11, 1998, at G7.
[114] See Nickols v. Commissioners of
Middlesex County, 166 N.E.2d 911, 914 (Mass. 1960). See also supra notes 52–65 and accompanying text.
[115] Attorney General’s Memorandum, supra note 104, at 30. See
also id. at 2–3:
Under Maryland law, a trust is created when property is held by one party, a trustee, for the benefit of another. A trust is charitable if its purpose and intent is charitable. Here, Mrs. Donoho gave property, a preservation easement on Myrtle Grove, to the National Trust, for the benefit of Maryland’s people, for charitable purposes: to preserve the property in perpetuity for future generations. By her gift, she created a charitable trust. The Miller Trust’s efforts to transmogrify Myrtle Grove into a multiple-lot subdivision violates the express terms and purposes of the trust.
[116] Id. at 29. See also Md. Code Ann., Real Prop. § 2-118(d) (2004).
[117] Attorney General’s Memorandum, supra note 104, at 28 (emphasis
added).
[118] Id. at 31.
[119] See id. See also supra note 111 (noting that
Myrtle Grove was adjacent to and in the immediate area of significant amounts of
similarly protected lands). Not all state attorneys general can be expected to
be as proactive as the Maryland attorney general in protecting the
public’s interest in conservation easements. For example, in 1993, the
owners of a 1043 acre ranch located in Johnson County, Wyoming, conveyed a
conservation easement to the Board of Johnson County Commissioners (the
“Board”) “to preserve and protect in perpetuity the natural
elements and ecological and aesthetic values of the Ranch.” See Memorandum in Opposition to Defendants’ Motion for Summary Judgment and in
Support of Plaintiffs’ Motion for Summary Judgment at 1–2, Hicks v.
Dowd, No. 2003-0057 (Wyo. Dist. Ct. Oct. 27, 2003) [hereinafter
Plaintiffs’ Memorandum] (on file with the Harvard Environmental Law
Review); Conservation Easement Litigation Heads to Court, Casper Star
Trib., Dec. 15, 2003. In accordance with the agreement of the parties, the Board
later conveyed the easement to a tax-exempt organization created by the Board.
Plaintiffs’ Memorandum at 2, 4. In 1999, the easement donors sold the
ranch subject to the easement, and in 2002 the Board adopted a resolution that
would extinguish the easement and allow the value attributable thereto to inure
to the benefit of the new owners of the ranch. Id. at 4–5, 23. A
resident of Johnson County and a Wyoming corporation that publishes a newspaper
of general circulation in that county filed suit alleging, inter alia,
that the easement is held in a charitable trust, and that the tax-exempt
organization may not extinguish the easement without receiving court approval
therefor in the context of a cy pres proceeding. Id. at
1–16. The Wyoming attorney general was given notice of the proceeding, but
declined to intervene, noting that “the interests of the public, as
beneficiaries of the conservation easement . . . are being represented by
arguments of counsel on all sides.” See Letter from Patrick J.
Crank, Wyoming Attorney General, to Judge John C. Brackley (May 3, 2004) (on
file with the Harvard Environmental Law Review). The case is scheduled to go to
trial in October of 2005. See E-mail from Dennis Kervin, counsel for the
plaintiffs, to Nancy A. McLaughlin (Apr. 13, 2005) (on file with the Harvard
Environmental Law Review). The Hicks case illustrates that state
attorneys general cannot necessarily be relied upon to protect the
public’s interest in conservation easements. See also Scott &
Fratcher, supra note 25, §
391, at 361, 363 (noting that the attorney general is charged with many duties
that have nothing to do with the enforcement of charitable trusts and the result
has been more or less sporadic enforcement of charitable trusts). This suggests
that measures should be taken to expand the class of persons who have standing
to enforce a conservation easement, such as granting third-party rights of
enforcement in the easement deed. See infra notes 141–142 and accompanying text (discussing
standing issues).
[120] See Arpad, supra note 15, at 144–45 (noting that land
trusts generally have avoided using trust language in conservation easements
because: (i) as evidenced in the Myrtle Grove controversy, “involvement of
the attorney general can be a mixed blessing to conservation easement holders,
although it should be a substantial safeguard for the public as
beneficiaries,” and (ii) “the potential for increased administrative
costs in order to meet the fiduciary standards of a trustee,” including
the potential cost of court proceedings for cy pres or administrative
deviation that would be necessary to approve any substantial easement
modification).
[121] Museums, for example, have long
accepted their obligation to seek court approval to deviate from restrictions
placed on their use or disposition of charitable gifts of artwork. See Malaro, Legal Primer, supra note 45, at 109 (“As a general rule, a
legal restriction imposed by a donor (as distinct from a moral restriction
founded on precatory language) and accepted by the museum subsequently cannot be
waived by the museum of its own accord. If the museum wishes relief, it must
seek court approval either in a cy pres action or in an action based on
the doctrine of equitable deviation.”).
[122] See McLaughlin, supra note 3, at 64–68 (discussing the
lack of accreditation of land trusts and increasing reports of incompetent and
even “rogue” land trusts); Korngold, supra note 11, at 455–63 (discussing the
importance of land use decisions to society).
[123] See supra notes 77–78 and accompanying text. See
also supra note 80 and
accompanying text (noting that, even in the absence of such a grant of
discretion, the holder of a conservation easement could simply agree with the
owner of the underlying land to make uncontroversial amendments to the easement
(such as to correct a drafting error or clarify vague language) because no
person with standing is likely to object, but that from the holder’s
perspective, it would be far preferable to be granted express authority to agree
to such amendments in the easement deed, thereby reducing the potential for
lawsuits alleging a breach of the holder’s fiduciary duties).
[124] A detailed discussion of how the
administrative terms of a conservation easement, the charitable purpose of which
has not become impossible or impracticable, could be amended in manners
consistent with (or neutral with respect to) such purpose is the subject of a
separate, future article.
[125] See Rob Atkinson, Reforming
Cy Pres Reform, 44 Hastings L.J. 1112 (1993) (describing the bargain).
[126] See Uniform Law Commissioners, A Few Facts About the Rule Against Perpetuities, at http://www.nccusl.org/Update/uniformact_factsheets/uniformacts-fs-usrap.asp (last visited Feb. 17, 2005) (on file with the Harvard Environmental Law Review)
(noting that The Uniform Statutory Rule Against Perpetuities, which has been
adopted in twenty-eight states, modifies the Rule Against Perpetuities by
adopting a “wait and see” approach and invalidating future interests
only if they do not vest within ninety years after their creation); Dukeminier
& Johanson, supra note 38,
at 854 (noting that a few states have abolished the Rule Against Perpetuities
and allow a trust to endure forever if the trustee has the power to sell the
trust assets, while others have abolished the Rule’s application to trusts
of personal (as opposed to real) property).
[127] See Atkinson, supra note 125, at 1114.
[128] See id.
[129] See id. at 1114–15
(“The reason for this relative generosity in the case of charitable gifts
is an implicit quid pro quo: In exchange for perpetual donor control, society
gets wealth devoted to recognizably ‘public’ purposes. Wealth that
donors would otherwise pass to individuals for ‘private’ purposes is
in a sense devoted to the public domain. Thus the restraints the law allows to
endure are not wholly idiosyncratic; they must advance purposes that the courts,
as custodians of the commonweal, certify as publicly beneficial.”). See
also supra note 39 (discussing the purposes that are considered to be “charitable”
under state law).
[130] See Atkinson, supra note 125, at 1114–15. See also Scott & Fratcher, supra note 25, § 399.4, at 535–36
(“Some vain and obstinate donors indeed might prefer to have their own way
forever, whether that way should ultimately prove beneficial or not. But why
should effect be given to such an unreasonable desire? A man is not allowed to
control the disposition of property for private purposes beyond the period of
perpetuities. He is permitted to devote his property in perpetuity to charitable
purposes only because the public interest is supposed to be promoted by the
creation of charities. The public interest is not promoted by the creation of a
charity that by the lapse of time ceases to be useful.”); Restatement of
Trusts, supra note 39, §
67, cmt. a (noting that the modern rationale for the doctrine of cy pres is based primarily on the perpetual duration of charitable trusts and the
resulting risk that the charitable purposes designated by the donor may become
obsolete as the needs and circumstances of society evolve over time).
[131] See infra Part III.B.2.a
(discussing the cy pres standard of “impossibility or
impracticability”).
[132] See supra note 2 (defining the term “conservation
easement” for purposes of this Article to mean easements encumbering land
(as opposed to historic structures)).
[133] See, e.g., UCEA, supra note 15, § 3(a)(1)
and (2) (providing that any action affecting a conservation easement may be
brought by the owner of the land and the holder of the easement). Most
conservation easement enabling statutes contain similar provisions. See
also supra note 84 and
accompanying text (noting that twenty-two states and the District of Columbia
have adopted the UCEA provision granting standing to bring an action affecting a
conservation easement to any “person authorized by other law”); supra notes 36–37 and accompanying text (noting that
the state attorney general, as the representative of the public is given the
power to bring a proceeding to enforce the terms of a charitable gift or trust
and is also a necessary party and entitled to be heard in any proceeding
involving the application of the cy pres doctrine).
[134] The rule proposed in Part
III.B.2.c.ii(2), infra, regarding the division of proceeds upon the
extinguishment of an easement and sale of the unencumbered land would eliminate
the ability of owners of easement-encumbered land to realize a windfall upon the
extinguishment of their easements and likely reduce the incentive for such
owners to seek extinguishment.
[135] See Scott & Fratcher, supra note 25, § 379, at
316–18 (discussing the duties of the trustee of a charitable trust,
including the duty to exercise due diligence in the administration of the trust
and the duty of loyalty, which requires the trustee to administer the trust
solely with a view to the accomplishment of the purposes of the trust).
[136] See supra notes 34–35 and accompanying text (noting that
the holder of a restricted charitable gift or trustee of a charitable trust
serves two masters—the donor of the gift or trust assets and the public
(as the beneficiary of the gift or trust)—and has the obligation to seek
the application of administrative deviation or cy pres if circumstances
justify such action).
[137] See infra Part III.B.2.c.ii(2)
(discussing the division of proceeds upon the extinguishment of an easement and
the value that should be attributable to the property interest embodied in the
easement).
[138] Such policies and procedures should
address, inter alia, the standard the holder will apply in determining
when the charitable purpose of a conservation easement has become
“impossible or impracticable.” In developing such policies and
procedures, holders of conservation easements could learn a great deal from the
experience of museums with the controversial practice of deaccessioning, which
involves the sale of artwork that was once accessioned into a museum’s
collection. See, e.g., Malaro, Museum Governance, supra note 30, at 57 (noting that in the museum
context, a museum with carefully conceived written policies and procedures
regarding deaccessioning is likely to make sound decisions and maintain public
confidence); Weil, supra note 46, at 116–17 (recommending tightly
written deaccessioning procedures that are intended to assure that
deaccessioning decisions will be subject to scrupulous review and consultation,
and noting that a deaccessioning process that is “murky, secretive, and
seemingly arbitrary” may appear to the public as “at least
questionable and quite possibly unethical”). It also is advisable for the
holder of a conservation easement to seek the approval of the state attorney
general and other interested parties (such as other conservation organizations
operating in the area and the donor or the donor’s heirs) before
initiating a cy pres proceeding. Cf. Dukeminier & Johanson, supra note 38, itioned the court for the application of the doctrine of cy pres to
expand the geographic scope of the trust to include other counties in the San
Francisco Bay area. The court refused to apply the doctrine of cy pres,
and the attorney general of California, as supervisor of charitable trusts,
intervened in the proceeding arguing against the application of the doctrine and
asking whether the trustee was in violation of its fiduciary duties for bringing
such a suit and ought to be removed as trustee.). See also infra note 249 (discussing why easement donees are
unlikely to acquire and administer easements with the intent to extinguish such
easements and obtain the cash value attributable thereto).
[139] See, e.g., Crow v. Clay County,
95 S.W. 369 (Mo. 1906) (considering but ultimately rejecting the attorney
general’s argument that a trust fund’s limitations should be
modified pursuant to the doctrine of cy pres because the charitable
purpose of the fund had failed due to changed conditions and the trustee was
committing continuous breaches of trust in its use of the fund for purposes
contrary to the intent of the testator).
[140] See Bogert & Bogert, supra note 32, § 441, at
200.
[141] See, e.g., UCEA, supra note 15, §§ 1(3),
3(a)(3) (providing that an action affecting a conservation easement may be
brought by any government agency or charitable organization eligible to be a
holder of the easement that is expressly granted a third-party right of
enforcement in the easement deed); Tenn. Envtl. Council v. Bright Par Assoc.,
2004 Tenn. App. LEXIS 155 (Tenn. App. Ct. Mar. 8, 2004) (holding that under the
Tennessee easement enabling statute, which provides that a conservation easement
may be enforced by the “beneficiaries of the easement,” any resident
of Tennessee has standing to enforce a conservation easement); Burgess v.
Breakell, 1995 Conn. Super. LEXIS 2290 (Conn. Super. Ct. Aug. 7, 1995) (holding
that the owner of land adjoining land encumbered by a conservation easement did
not have standing to bring an action to enforce the terms of the easement
prohibiting commercial logging on the grounds that the state easement enabling
statute limited standing to enforce an easement to the holder or owner of the
easement); Scott & Fratcher, supra note 25, § 391, at 366 (noting that
“a person who has a special interest in the performance of a charitable
trust can maintain a suit for its enforcement,” but he “must show
that he is entitled to receive a benefit under the trust that is not merely the
benefit to which members of the public in general are entitled”).
[142] See Scott & Fratcher, supra note 25, § 391, at
379.
[143] See infra Parts
III.B.2.c.ii(1)–(2) (arguing that the donation of a conservation easement
involves the conveyance of a property right to the donee, and discussing the way
in which the donee’s property right could be valued upon extinguishment of
the easement).
[144] See supra note 32 and accompanying text (describing the
doctrine of cy pres). See also In re Estate of Du Pont, 663
A.2d 470, 478 (Del. Ch. 1994) (describing the three step cy pres process). If in the second step of the cy pres process the court
determined that the donor had a specific (rather than general) charitable intent
in donating the easement, the doctrine of cy pres would not apply, the
charitable gift of the easement would “fail,” and the easement (or
the value attributable thereto) would revert to the donor, if the donor is
alive, or, if the donor is not alive, pass by resulting trust to either the
residuary beneficiaries under the donor’s will or the donor’s heirs
under the law of intestate succession. See infra note 180 and accompanying text. As discussed
in Part III.B.2.b.ii, infra, however, for a variety of reasons courts are
very likely to find that an easement donor had a general charitable intent and,
thus, to proceed to the third and final step in the cy pres process.
[145] If the doctrine of cy pres is
applied to modify or extinguish a conservation easement as described in this
Part, either the easement or the value attributable thereto would remain in
public hands and continue to be devoted to charitable conservation purposes.
Accordingly, there should be no adverse tax consequences to the donor of an
easement as a result of the application of the doctrine of cy pres.
[146] See supra Part III.A
(discussing the cy pres bargain).
[147] Scott & Fratcher, supra note 25, § 399.4, at 530.
[148] See, e.g., In re Thorne, 102 N.Y.S.2d 386, 387, 389 (N.Y. Sur. Ct. 1951) (involving devises in
1916 and 1919 of an eighteen acre parcel of land to a city for use as a public
park, subject to the restriction that “said park not . . . be used as a
recreational park . . . for picnics or bathing, but simply for driving [in
horse-drawn vehicles] and walking” (emphasis omitted); in refusing to
apply the doctrine of cy pres to permit the park to be used for
“picnicking, fishing, and general park purposes,” the court noted
that, although it was presently “impracticable” to use the property
for driving in the sense employed in the wills, such a change of circumstances
did not justify disregard for the plain mandate in the wills prohibiting the use
of the land for picnicking and bathing, particularly given that the testatrices
had stated in each of their wills that it was their intention that the park
“beautify” the area and “not in any way be conducted or
managed so as to create a nuisance and be objectionable to the property
owners” in the area, which was largely residential); St. James Church v.
Wilson, 89 A. 519, 520 (N.J. Ch. 1913) (involving a 1908 bequest of a remainder
interest in $14,000 to St. James Church for the purpose of erecting an Episcopal
church on a certain tract of land conveyed to St. James Church by the testator
during his lifetime; the court applied the doctrine of cy pres to allow
St. James Church to use the fund for the general benefit of the Episcopal church
in the neighborhood in which the tract of land was located, noting that changed
circumstances had caused the population of the area to stagnate if not decline,
no new parish could be created in such a location under the canons and laws of
the Episcopal church for lack of assurance that sufficient money could be raised
to pay the annual salary of a priest and lack of a sufficient number of male
communicants to compose a lawful vestry and, that “the general charitable
intent of a testator may be carried out [if] it should be undesirable,
impracticable or against public policy, although not impossible under altered
circumstances to carry out the [testator’s] special intent”);
Village of Hinsdale v. Chicago City Missionary Society, 30 N.E.2d 657, 665 (Ill.
1940) (involving a gift of six lots to a village in which the donor resided with
instructions that one lot be used as the site of a public library and the
proceeds from the sale of the other lots be used for the construction and
maintenance of the library; after the village attempted unsuccessfully to raise
sufficient funds for the construction of a library on the designated lot, and
another building (which contained adequate and appropriate space for present
needs and the means for appropriate expansion) was leased and used as the
library, the court determined that the doctrine of cy pres could be
applied to permanently abandon the use of the designated lot as a site for the
library, noting that, while continued use of the lot as a site for the library
was not impossible, conditions had arisen that may render “inexpedient and
wasteful” the erection of a library on the lot); Towne Estate, 75 Pa. D.
& C 215, 217 (Pa. Orphans’ Ct. 1950) (involving a 1912 bequest of
funds to a private trust company to be used for the purpose of maintaining and
providing an ample supply of water to a drinking fountain for horses and dogs
erected by the testator; the court applied the doctrine of cy pres and
authorized the payment of the funds remaining in the trust account to a local
branch of the Society for the Prevention of Cruelty to Animals based on the fact
that the income from the fund was insufficient to maintain the fountain and
“the fountain . . . actually serves no one, because there are no horses
using the highways . . . and dogs are prohibited from wandering at
large”).
[149] Report of Committee on Charitable
Trusts and Foundations, supra note 40, at 391–92 (1973).
[150] See, e.g., In re Estate
of Buck, No. 23259 (Cal. Super. Ct. Aug. 15, 1986) (unreported but reprinted in
21 U.S.F. L. Rev. 691 (1987)) (refusing to apply the doctrine of cy pres as described in note 138, supra, the court noted that “[t]he cy pres doctrine should
not be so distorted by the adoption of subjective, relative, and nebulous
standards such as ‘inefficiency’ or ‘ineffective
philanthropy’ to the extent that it becomes a facile vehicle for
charitable trustees to vary the terms of the trust simply because they believe
that they can spend the trust income better or more wisely elsewhere”); In re Estes Estate, 523 N.W.2d 863 (Mich. Ct. App. 1994) (refusing to
remove a restriction when a testator left a bequest to a church to be used
“solely for the purpose of helping to build a new church and shall not be
used for repair or additions to present church or for any other purposes,”
and the church, which had no plans for or interest in a new building, petitioned
for release from the restriction under the Uniform Management of Institutional
Funds Act (“UMIFA”), which authorizes release from “obsolete,
inappropriate, or impracticable” restrictions; reversing the trial court,
the appellate court held that (i) building a new church was not “obsolete,
inappropriate, or impracticable” and, therefore, the church could not be
released from the restriction, and (ii) contrary to the commentary to the UMIFA,
the UMIFA standards for release from restrictions were not significantly
distinguishable from those governing cy pres).
[151] See, e.g., In re Rothrock, 452 N.W.2d 403 (Iowa 1990) (applying the doctrine of cy pres to
permit a church to use funds bequeathed to it “solely for building new
church” to defray the expenses of remodeling the existing church and
parsonage, stating that the doctrine of cy pres is “a liberal rule
of construction used to carry out, not defeat, the testator’s
intent”); In re Estate of Vallery, 883 P.2d 24 (Colo. Ct. App.
1993) (affirming the trial court’s application of the doctrine of cy
pres to permit a foundation to use income from a fund that the testator
directed be used for the “hospitalization costs” of needy Knights
Templar to defray the costs of other health care services provided to such
Knights Templar, concluding that changes in the methods of financing health care
since the time of the testator’s death had rendered the restriction on the
use of the fund an “impracticable” limitation).
[152] See Roger G. Sisson, Relaxing
the Dead Hand’s Grip: Charitable Efficiency and the Doctrine of Cy
Pres, 74 Va. L. Rev. 635, 644 (1988); Alex M. Johnson, Jr., Limiting Dead
Hand Control of Charitable Trusts: Expanding the Use of the Cy Pres
Doctrine, 21 Hawaii L. Rev. 353, 371 (1999) (noting that while “a few
courts have shown increased willingness to apply cy pres by construing
its requirements liberally, the majority continue to construe the doctrine
narrowly”).
[153] See Fremont-Smith, supra note 26, at 49; Scott & Fratcher, supra note 25, § 399.4, at
537 (noting that “it is believed that there is a tendency in more recent
cases to permit a cy pres application even though it is difficult to say
that it is impracticable to carry out the specific purpose, but where it would
be so unwise to do so that the donor presumably would not have desired to insist
on it”).
[154] See supra Part III.A
(discussing the cy pres bargain).
[155] The difficult-to-value benefits to the
public that flow from land in its undeveloped state include the purification of
air and water, the mitigation of floods and droughts, the detoxification and
decomposition of wastes, the generation and renewal of soil and soil fertility,
the pollination of crops and natural vegetation, and the dispersal of seeds and
translocation of nutrients. See Gretchen C. Daily, Introduction: What
Are Ecosystem Services?, in Nature’s Services, Societal
Dependence on Natural Ecosystems 3–4 (Gretchen C. Daily ed., 1997)
(defining such “ecosystem services” as the conditions and processes
through which natural ecosystems, and the species that make them up, sustain and
fulfill human life). See also John Harte, Land Use, Biodiversity, and
Ecosystem Integrity: The Challenge of Preserving Earth’s Life Support
System, 27 Ecology L.Q. 929, 961–63 (2001):
As a result of our increasing numbers and affluence, huge areas of once ecologically healthy private land in the United States, far more land than is now or ever could be in public protected status, are gradually being converted to land with little ecological value . . . . The most obvious examples of this stem from the trends across the nation toward increasing suburbanization and exurbanization (extremely low density residential development in rural areas). . . . This trend is creating patchworks of ecologically incoherent micro-landscapes that, as a whole, cannot support the diversity of species and the ecological functions of the habitats that previously existed on the land . . . [s]uccess or failure in reversing this trend is critical to the future of ecosystem integrity in the United States.
Id. at 961–63.
[156] One has only to read
about the controversies surrounding the designation of National Monuments to
understand that state and local economic interests are often at odds with
national conservation interests, particularly in western states. See Robert B. Keiter, Keeping Faith with Nature 184 (2003) (noting that President
Clinton’s use of his executive power under the Antiquities Act to
establish the 1.7 million-acre Grand Staircase–Escalante National Monument
in southern Utah predictably provoked angry responses from the state’s
Republican political leaders, as well as its rural communities where both the
president and his secretary of the interior were hung in effigy on the day of
the announcement).
[157] See supra note 71 and accompanying text.
[158] See infra Part
III.B.2.c.ii (arguing that a conservation easement held by a government agency
or charitable organization is an asset that is owned by the public, and upon the
extinguishment of the easement in the context of a cy pres proceeding,
the value attributable thereto should remain an asset owned by the public that
should be devoted to charitable purposes “as near as possible” to
those specified by the donor).
[159] “Open space” is an
inherently nebulous concept, the meaning of which will vary depending upon the
location and characteristics of the encumbered land and the subjective judgment
of the person called upon to define it. Indeed, as illustrated by the case study
discussed in Part III.C, infra, one person’s “open
space” can be another’s collection point for trash and Lyme
disease.
[160] See supra notes 7–8 and accompanying text.
[161] See, e.g., Scott & Fratcher, supra note 25, § 399.4, at
536–37 (“It would seem rather that the charitable-minded would be
discouraged by the sight of charitable institutions gradually ceasing to
accomplish the high purposes for which they were created.”).
[162] Cf. Andrew C. Dana, The
Silent Partner in Conservation Easements: Drafting for the Courts, The Back
Forty, Jan./Feb. 1999, at 1, 3–5 (discussing different outcomes in
conservation easement enforcement cases based on the different judicial
philosophies of judges).
[163] The “charitable purposes”
for which most conservation easements are donated—for example, the
protection of privately owned land for the purpose of preserving wildlife
habitat, agricultural land, or open space—are unique. See supra note 39 (discussing why
conservation easements should be deemed to be conveyed for “charitable
purposes”). Accordingly, existing case law applying the doctrine of cy
pres is of little help in articulating a standard of “impossibility or
impracticability” in the easement context. With regard to the rare
conservation easement, the charitable purpose of which is the protection of
privately owned land for use as a public park, existing case law may provide
some guidance as to the appropriate standard of “impossibility or
impracticability.” See, e.g., Cohen v. City of Lynn, 598
N.E.2d 682, 686 (Mass. Ct. App. 1992) (determining that the charitable purpose
of a gift of land to be used for “forever for park purposes” had not
become impossible or impracticable, the court noted that while it could find no
precise and widely accepted definition of “park” or “park
purposes,” an expansive interpretation of those terms was in accord with
the general definition found in judicial opinions, including Shoemaker v. U.S.,
147 U.S. 282, 297 (1893), in which the Supreme Court stated that virtually every
city and town is planning parks “as a pleasure ground for rest and
exercise in the open air”). Conservation easements protecting privately
owned land for use as a public park are rare because most private landowners are
not willing to provide access to their land to the general public. See William T. Hutton, Tax Strategies in Land Conservation Transactions 3–10
(2002) (on file with author) (noting that a prospective donor’s agreement
to public access is rarely to be expected).
[164] I.R.C. § 170(h)(4)(A)
(2004).
[165] See Land Trust Alliance, The
Standards and Practices Guidebook: An Operating Manual for Land Trusts 8-16 to
8-17 (on file with the Harvard Environmental Law Review):
The IRS’s . . . criteria for determining the deductibility of conservation easements can be used by land trusts as a guide to test the public benefit of easements . . . tax-deductible or not. In effect, these rules define conservation values that are considered to be in the national interest (and thus their protection is worthy of federal tax benefits) . . . . If a property does not meet the criteria . . . it should be a warning signal to the land trust—the land trust needs to scrutinize the transaction to be sure it has sufficient public benefit to proceed.
See also Conservation Easement Handbook, supra note 6, at 12 (noting that the
requirements for a charitable income tax deduction under § 170(h) and the
Treasury Regulations interpreting that section provide a useful and logical
starting point for the development of an agency’s or organization’s
easement selection criteria, even where a tax deduction is not a factor, because
both the IRS and easement program administrators invested many months of effort
to develop such requirements, and those who have worked with such requirements
generally consider them workable); Land Trust Alliance, Background to the 2004
Revisions of Land Trust Standard and Practices 14 (2005) (“All land
conservation transactions must provide some public benefit . . . . In order to
ensure that projects have a public benefit, land trusts may want to start by
incorporating the IRC’s conservation purposes tests into their criteria to
help ensure that any transactions involving a federal or state income tax
deduction (or credit) meet these tests.”).
[166] See Treas. Reg.
§ 1.170A-14 (2004) (providing numerous examples of the types of
conservation easements that would satisfy each of the four conservation purposes
tests). For a detailed description of the four “conservation purposes
tests” and the types of easements that would satisfy such tests, see
generally Stephen J. Small, Federal Tax Law of Conservation Easements
(1997).
[167] See McLaughlin, supra note 3, at 52–55 (noting that,
because of the breadth of the land protection objectives of § 170(h), the
tremendous diversity of land in the United States, and the inherently subjective
nature of the concept of “public benefit,” a significant number of
the standards are unavoidably subjective, particularly those that permit the
donor of an easement to retain rights to subdivide and develop the encumbered
land).
[168] See, e.g., UCEA, supra note 15, § 1(1)
(providing that a conservation easement may be created for the purpose of
retaining or protecting natural, scenic, or open-space values of real property,
assuring its availability for agricultural, forest, recreational, or open-space
use, protecting natural resources, maintaining or enhancing air or water
quality, or preserving the historical, architectural, archaeological, or
cultural aspects of real property—but providing no further guidance with
regard to the meaning of any of those terms).
[169] For example, conservation easements
encumbering land “pursuant to a clearly delineated Federal, state, or
local governmental conservation policy”—which means that the land
has been identified as worthy of preservation by representatives of the general
public at the national, state, or local level—will generally satisfy the
“open space” conservation purposes test. See Treas. Reg.
§ 1.170A-14(d)(4)(iii)(A). Examples of conservation easements that would
satisfy the “open space” conservation purposes test include those
that protect land located within a state or local landmark district or farmland
pursuant to a state program for flood prevention and control. See Treas.
Reg. § 1.170A-14(d)(4)(iii)(A), 14(d)(4)(iv)(B). In addition, conservation
easements encumbering lands that provide habitat for rare, threatened, or
endangered species (classifications which clearly change over time), or that are
included within or buffer land that is protected for conservation purposes at
the local, state, or national level (such as local, state, or national parks,
nature preserves, wildlife refuges, or wilderness areas) will satisfy the
“wildlife habitat” conservation purposes test. See Treas.
Reg. § 1.170A-14(d)(3)(ii).
[170] Because of reports of abuses in the
conservation easement donation area, the Joint Committee on Taxation recommended
that § 170(h) be revised to severely limit the types of conservation
easements that would qualify for the federal charitable income tax deduction. See Staff of the Joint Committee on Taxation, Options to Improve Tax
Compliance and Reform Tax Expenditures, JCS-2-05 296 (2005), available at http://www.house.gov/jct/s-2-05.pdf. If changes are made to the conservation purposes tests under § 170(h),
the courts would have to consider whether it is appropriate to apply the new,
more stringent tests in determining whether an easement provides public benefit
sufficient to justify its continued enforcement for purposes of the cy
pres analysis. Given the difficulty associated with accurately measuring the
public benefit being produced by a conservation easement, and the fact that the
extinguishment of an easement generally will result in the development and more
intensive use of the underlying land (and, thus, the substantially irreversible
destruction of its remaining conservation values), it is recommended that the
courts evaluate any changes made to the conservation purposes tests under §
170(h) with a bias against extinguishment. In other words, the courts should
adopt legislative changes making the tests more stringent for purposes of the cy pres analysis only if such changes are supported by compelling
evidence that they reflect real shifts in society’s understanding and
priorities with respect to private land conservation (as opposed to, for
example, political reaction to perceived abuses of the federal tax incentives
offered to easement donors).
[171] Donors of conservation easements often
state in their easement deeds that the land encumbered by the easement is being
protected for a variety of conservation purposes. See Model
Conservation Easement, supra note 66, at 34–36 (discussing the
issues associated with multipurpose easements). In such cases, the donor is
signaling that he or she intends that the easement will continue to be enforced
for as long as the protection of the encumbered land for any of the specified
conservation purposes is possible or practicable.
[172] If the court determined that the
easement would not satisfy any of the “historic preservation,”
“wildlife habitat,” or “open space” conservation
purposes tests of § 170(h) at the time of the cy pres proceeding,
and that the donor had a general charitable intent, the court should then
proceed to the third and final step in the cy pres process—formulating a substitute plan. It is in the third and final step
of the cy pres process that the court should endeavor to ascertain from
the terms of the easement and the circumstances attending its donation whether
the donor of the easement, if presented with the “impossibility or
impracticability” of the continued protection of the encumbered land for
the conservation purposes specified in the easement deed, would have preferred:
(i) that the easement be modified and the land continue to be protected for a
different conservation purpose—such as for use as a public park, or (ii)
that the easement be extinguished, the unencumbered land sold, and the proceeds
attributable to the easement be used to protect land with historic, agricultural
and/or wildlife habitat characteristics in another location. Absent a clear
indication in the easement deed that the donor intended that the land would
continue to be protected for public recreation or educational purposes, simply
assuming that all easement donors would prefer the first option would give
inappropriate deference to right of easement donors to control the disposition
of their property. In some cases the evidence may indicate that the donor would
have preferred the second option. See infra note 233 and accompanying text.
[173] In some circumstances, an easement that
does not satisfy the applicable conservation purposes test or tests under §
170(h) may nonetheless provide significant benefits to the public. For example,
one can imagine a circumstance where a rural, agricultural area has been
targeted for landscape protection by a land trust, but the county or state in
which the area is located has failed to develop a comprehensive land use plan
and, thus, easements encumbering land in such area would not satisfy the
“open space” conservation purposes test under § 170(h) because
protection of the land would not be “pursuant to a clearly delineated
governmental conservation policy.” See supra note 169 (discussing the “open
space” conservation purposes test as it relates to land protected pursuant
to a “clearly delineated governmental conservation policy”); Ralph
E. Heimlich & William D. Anderson, Development at the Urban Fringe and
Beyond: Impacts on Agricultural and Rural Land, USDA Agricultural Economic
Report No. AE803 55 (2001), available at http://www.ers.usda.gov/publications/aer803/ (noting the difficulties facing states and localities in developing and
implementing appropriate land use plans and that local land-use planning efforts
are in desperate need of updating because “in some localities land-use
plans have not been updated since the 1920’s; 67; 170(h).
[174] See McLaughlin, supra note 3, at 60–63 (describing the
public accountability and financial incentives that motivate government agencies
and land trusts to accept easements that best advance their land protection
goals, including the fact that every easement represents a liability to the
accepting agency or organization in the form of ongoing monitoring and
enforcement costs).
[175] See, e.g., In re Village of Mount Prospect, 167 Ill. App. 3d 1031 (1988) (in which a court
refused to apply the doctrine of cy pres to permit the sale of part of a
parcel of land that had been dedicated to the city “for public
purposes” in part because the court had before it a petition signed by
fifty-six nearby residents objecting to the sale of the land).
[176] See supra note 39 (discussing the expansive
“catchall” category of valid charitable purposes under state law); supra note 150 (discussing In re Estate of Buck, No. 23259 (Cal. Super. Ct. Aug. 15, 1986)
(unreported but reprinted in 21 U.S.F. L. Rev. 691 (1987)), in which the
California Superior Court argued that the cy pres doctrine should not be
distorted by subjective, relative, and nebulous standards such as
“inefficiency” or “ineffective philanthropy”); First
National Bank & Trust Co. of Wyoming v. Brimmer, 504 P.2d 1367,
1370–71 (Wyo. 1973) (refusing to apply the doctrine of cy pres to
create a new class of beneficiaries of a charitable trust, and noting that
“a settlor must have assurance that his . . . instructions will not be
subject to the whim or suggested expediency of others after his
death”).
[177] Landowners who understand that the
long-term preservation of the conservation values of their land depends, in
large part, on what happens to the land surrounding their land are more likely
to become actively involved in landscape preservation efforts by contacting and
educating their neighbors.
[178] The surprise and indignation would be
justifiable in cases where the government agency or land trust represented to
the donor that the easement restrictions would be enforced “in
perpetuity” or “forever,” regardless of changed conditions. See, e.g., supra note 72.
[179] See, e.g., Bogert & Bogert, supra note 32, § 436, at
132.
[180] See Scott & Fratcher, supra note 25, § 399.3, at
520–21, 526–29 (noting that when the failure of a charitable gift or
trust occurs at some time subsequent to the death of the donor, it is not clear
whether the property should revert to the residuary beneficiaries under the
donor’s will or the donor’s heirs under the laws of intestate
succession); id., § 399.3, at 529 (“These questions would
never arise if it were held that the doctrine of cy pres should always be
applied where the trust fails at some time subsequent to [the testator’s]
death.”).
[181] See Rogers v. Attorney General,
196 N.E.2d 855, 860–62 (Mass. 1964); Bogert & Bogert, supra note 32, § 437, at 142. If the
donor is dead, oral evidence as to what he said was his objective is
inadmissible. Id. § 437, at 137.
[182] Scott & Fratcher, supra note 25, § 399.2, at 499; Restatement
of Trusts, supra note 39,
§ 67 cmt. b, at 513.
[183] Restatement of Trusts, supra note 39, § 67 cmt. b, at
513.
[184] See Bogert & Bogert, supra note 32, § 437, at
137.
[185] See id. and cases cited
therein.
[186] See, e.g., Village of Hinsdale
v. Chicago City Missionary Society, 30 N.E.2d 657, 664–65 (Ill. 1940) (in
applying cy pres to a gift of land to a village to be used as the site
for a library, the court noted that the donor’s general charitable intent
to provide the inhabitants of the village with library facilities was evidenced
not only by his gift of the land, but also by his previously demonstrated
interest in and contributions to educational and charitable activities and his
participation in the library association of the village from its inception);
Estate of Zahn, 93 Cal. Rptr. 810, 813–14 (Cal. Dist. Ct. App. 1971) (in
applying cy pres to bequests of land that had been made for specified
charitable purposes, the court noted that the “record is replete”
with evidence that the donor had a general charitable intent to provide the
Salvation Army with a music home for deserving Christian students and a rest
home for Christian women, including the substantial time the testatrix devoted
to charitable and community work and, in particular, projects of the Salvation
Army for which the testatrix had supreme respect; the testatrix’s love for
music, her membership in the church choir, and her support for the training of
young opera stars; and the testatrix’s concern about the situation of
young girls who came alone to Los Angeles and needed a safe place to live while
working or attending school).
[187] See Bogert & Bogert, supra note 32, § 437, at
137–40 and cases cited therein.
[188] See, e.g., State v. Rand, 366
A.2d 183 (Me. 1976).
[189] Scott & Fratcher, supra note 25, § 399.3, at 518. See
also Restatement of Trusts, supra note 39, § 67 Reporter’s Notes,
cmt. b (noting that much criticism of the doctrine of cy pres has focused
on the artificial and speculative inquiry into whether a settlor had a
“general” charitable intent and on the reality that, with the
passage of time, courts are and rightly have been increasingly likely to find
such an intent).
[190] See Rand, 366 A.2d at 197.
[191] See id.; Scott & Fratcher, supra note 25, § 399.3, at
518 (noting that “[i]f many years and perhaps centuries have elapsed since
the creation of the trust, it is frequently impossible and always expensive to
ascertain the persons who would be entitled to the property” and that,
thus, “there is a stronger reason . . . to apply the cy pres doctrine where the particular purpose of the testator fails at a subsequent time
than there is where the purpose fails at the outset”).
[192] See Rand, 366 A.2d at 197; Scott
& Fratcher, supra note 25,
§ 399, at 476 (noting that where property is given in trust for a
particular charitable purpose, the trust will not ordinarily fail even though it
is impossible to carry out the charitable purpose, and the court will ordinarily
direct that the property be applied to a similar charitable purpose, the theory
being that the settlor presumably would have desired that the property be
applied to purposes as near as possible to his stated purposes rather than that
the trust should fail altogether).
[193] See Restatement of Trusts, supra note 39, § 67 cmt.
b; Uniform Trust Code § 414, cmt. (2000) [hereinafter Uniform Trust
Code].
[194] Restatement of Trusts, supra note 39, § 67 cmt. b.
[195] Uniform Trust Code, supra note 193, § 413 cmt.
[196] See Fremont-Smith, supra note 26, at 177 (stating that Georgia,
Massachusetts, Virginia, Arizona, Nebraska, New Mexico, and Wyoming apply the
presumption).
[197] See id.
[198] See McLaughlin, supra note 3, at 41–47 (discussing
three surveys of easement donor motivation).
[199] A gift of the donor’s homestead
is analogous to the gift of a conservation easement encumbering the
donor’s homestead or other beloved land because in each case the donor is
making a gift of an interest in the property for the purpose of ensuring that
the property will be used as the site of a specified charitable activity (with
the “charitable activity” in the case of an easement donation being,
for example, the protection of wildlife habitat, open space, or agricultural
land).
[200] See Scott & Fratcher, supra note 25, § 399.2, at
511; Bogert & Bogert, supra note 32, § 437, at 143 (noting that
“[w]here a charity is to be located on real estate which had constituted
the home of the testator and so he had a personal and sentimental interest on
that account, some courts have held that his intent was particular and special,
but in other cases a finding of general intent has been made,” and citing
to cases in which the court found the intent of the testator was particular and
special, but the trusts were impossible or impractical of fulfillment at the
outset rather than after some passage of time).
[201] See, e.g., Wilkey’s
Estate, 10 A.2d 425 (Pa. 1940); Rogers v. Attorney General, 196 N.E.2d 855
(Mass. 1964); Estate of Zahn, 93 Cal. Rptr. 810 (Cal. Dist. Ct. App. 1971); In re St. John’s Church, 261 N.Y.S. 428 (N.Y. App. Div. 1933); In re Neher, 18 N.E.2d 625 (N.Y. 1939); In re Du Pont, 663 A.2d
470 (1994).
[202] See, e.g., Wilkey’s
Estate, 10 A.2d at 425 (involving a testatrix who devised her family
homestead, which had been owned by her family since the days of William Penn, to
the Presbyterian Church to be used as the site for the construction of a new
church as a memorial to her family and shortly before the testatrix’s
death the homestead was taken by eminent domain; rather than allowing the gift
to fail, in which case the condemnation proceeds would pass to the
testatrix’s residuary beneficiaries or intestate heirs, the court found
that the testatrix had a general charitable intent and authorized the sale of
the homestead and the use of the proceeds therefrom to construct the church in a
nearby location, despite acknowledging that the testatrix wanted the church to
be built on the homestead “which to her was hallowed because it had been
in the possession of her forefathers for upwards of two and a half
centuries”); Rogers, 196 N.E.2d at 855 (involving a testatrix who
left a sum of money and her family homestead to certain trustees to establish a
home for aged women as a memorial to her family; the trustees never established
the home, and forty-four years after the testatrix’s death the homestead
was found to be in nearly total disrepair and it was conceded to be
“impossible or impracticable” to use it as a home for aged women due
to insufficient funds; rather than allowing the trust to fail, in which case the
trust assets would pass to the testatrix’s residuary beneficiaries or
intestate heirs, the court determined that the testatrix had a general
charitable intent and authorized the sale of the homestead and the use of the
proceeds for similar charitable purposes at another location, despite the
court’s express recognition that the testatrix “had a strong
attachment to the family homestead and . . . desired its preservation”).
[203] See Treas. Reg. § 1.170A-24
(as amended by T.D. 8069, 51 Fed. Reg. 1496 (Jan. 14, 1986)); Treas. Reg. §
1.170A-14(g)(6) (2004).
[204] See Model Conservation
Easement, supra note 66,
at 18, 74–75.
[205] Such a limiting provision technically
satisfies the Treasury Regulations because the regulations require that the
donor “agree that the donation of the [easement] gives rise to a property
right, immediately vested in the donee organization, with a fair market value
that is at least equal to the proportionate value that the [easement] at
the time of the gift bears to the value of the property as a whole at that
time,” and that the donee be entitled to “at least” that value in the event the easement is extinguished. See Treas. Reg.
§ 1.170A-14(g)(6)(ii) (2004) (emphasis added).
[206] For the reasons discussed in Part
III.B.2.c.ii(2), infra, absent countervailing equitable considerations,
the owner of the easement-encumbered land should be entitled only to the fair
market value of his or her interest that land—that is, the fair market
value of the land subject to the perpetual easement.
[207] See infra Part
III.B.2.c.ii(2) (discussing the perverse incentives that would be created if the
value attributable to a conservation easement could be captured by parties other
than the government agency or charitable organization holding the easement on
behalf of the public).
[208] Although the regulations provide that
the Donation Percentage “shall remain constant,” for the reasons
noted in the text, that provision should be interpreted to mean that the
regulations require the setting of a minimum (or floor) percentage value
for the donee’s property right—not that the percentage value of such
right must be fixed. See Treas. Reg. § 1.170A-14(g)(6)(ii)
(2004).
[209] This would be consistent with the rule
proposed for the valuation of the donee’s interest upon the extinguishment
of an easement in Part III.B.2.c.ii(2), infra. There is no explanation in
the Treasury Regulations for the requirement that the donor set a minimum (or
floor) percentage value for the donee’s property right upon
extinguishment. See supra note 208 and accompanying text. That
requirement was presumably included in the Treasury Regulations to protect the
public from the downside risk of a decline in the value of the property interest
embodied in the easement.
[210] See supra note 184 and accompanying text (noting that
general charitable intent may be evidenced by a statement to that effect in the
gift or trust instrument).
[211] See, e.g., Bogert & Bogert, supra note 32, § 442, at
208; id. § 431, at 95 (noting that the words “cy
pres” are Norman French for “as near,” and the phrase,
when expanded to its full implication, was “cy pres comme
possible,” which meant “as near as possible”).
[212] See id. § 442, at
206.
[213] See id.
[214] Restatement of Trusts, supra note 39, § 67 cmt. d.
[215] See Bogert & Bogert, supra note 32, § 442, at
206–07 (noting that if the settlor is alive at the time of the cy
pres proceeding “he should be consulted and his wishes should be given
consideration by the court, although they are not binding upon it”);
Restatement of Trusts, supra note 39, § 67 cmt. d.
[216] See Restatement of Trusts, supra note 39, § 67 cmt.
d; Fremont-Smith, supra note 26, at 49 (noting that the trend in the
case law has been to move away from strict adherence to the original intent of
the donor in the framing of schemes).
[217] See Restatement of Trusts, supra note 39, § 67 cmt.
d.
[218] Id.
[219] See Bogert & Bogert, supra note 32, § 441, at
201 and 207.
[220] Id. § 441, at 200 (noting
that the courts of equity have sole power to frame substitute plans themselves,
or to approve of new plans drawn up by others); Scott & Fratcher, supra note 25, § 399, at
481 (noting that, while the attorney general is generally a necessary party in a
proceeding for the application of cy pres, “[t]he determination of
the proper scheme is for the court, . . . and the Attorney General has no power
to control the disposition” of the trust assets).
[221] See Scott & Fratcher, supra note 25, § 399, at
480; Bogert & Bogert, supra note 32, § 441, at 200–01.
[222] See Bogert & Bogert, supra note 32, § 441, at
200; Scott & Fratcher, supra note 25, § 399, at 480. See also Ashbridge’s Estate, 61 Pa. D. & C. 279 (Pa. Orphans’ Ct. 1948)
(describing the activities of a court appointed master in developing a
substitute plan for proposal to the court).
[223] See supra note 199 and accompanying text (discussing
the analogy between the gift of a homestead and the gift of a conservation
easement).
[224] See In re Du Pont, 663
A.2d 470 (1994) (involving a donor who gave the site of his “ancestral
home” and considerable funds to a hospital association to be used for the
construction of a convalescent care hospital as a monument to his family;
forty-two years after the hospital was constructed and operated on the site,
advances in medicine made the convalescent care hospital obsolete, and the
association moved its convalescent care facility to a more modern facility in a
different location; in applying the doctrine of cy pres the court
insisted that the remaining endowment funds—which were
considerable—be used to underwrite related alternative charitable uses of
the “monumental” facility on the site of the donor’s ancestral
home); In re Neher, 18 N.E.2d 625 (N.Y. 1939) (involving a testatrix who
devised her homestead to the village in which it was located as a memorial to
her husband and with the direction that the property be used as a hospital;
seven years after accepting the gift the village petitioned the court for the
application of cy pres, asserting that it did not have the resources
necessary to establish and maintain a hospital on the property and that a modern
hospital adequate to serve the needs of the village had recently been
established nearby, and requesting permission to erect a building on the
property to be used by the village for administrative purposes; the Court of
Appeals of New York reversed the appellate court and the trial court, which had
denied the application of cy pres, and remitted the matter to the trial
court with instructions to frame a scheme for carrying out the testatrix’s
intent, which was to give the homestead to the village for general charitable
purposes in memory of her husband).
[225] See In re Du Pont, 663
A.2d at 479 (determining that the donor’s “central intention”
was to create a living charitable monument to his family on the site of his
ancestral home, and that the rendering of convalescent care on the site was not
the core motivation for the gift); In re Neher, 18 N.E.2d at 626
(determining that the testatrix’s “paramount intention” was to
give her homestead to the village in memory of her husband for general
charitable purposes, and the direction that the homestead be used as a hospital
could be ignored when compliance became altogether impracticable).
[226] See, e.g.,Wilkey’s
Estate, 10 A.2d 425 (Pa. 1940) (homestead was taken by eminent domain); Rogers
v. Attorney General, 196 N.E.2d 855 (Mass. 1964) (homestead could not be
renovated due to insufficient funds); In re St. John’s Church, 261
N.Y.S. 428 (N.Y. App. Div. 1933) (same); Estate of Zahn, 93 Cal. Rptr. 810 (Cal.
Dist. Ct. App. 1971) (use of homestead for the specified charitable purpose was
inconsistent with local land use plans).
[227] See, e.g., Wilkey’s
Estate, 10 A.2d at 428 (determining that building and endowing a family
memorial church was the testatrix’s “paramount” purpose); In re St. John’s Church, 261 N.Y.S. at 434
(determining that “the supreme and paramount idea” in the mind of
the decedent was to establish a home for aged women in memory of his mother, and
the location of the home was a “secondary matter”).
[228] See, e.g., Wilkey’s
Estate, 10 A.2d at 428 (“[I]t is reasonable to believe that [the
testatrix] would have desired, in all events, that a [memorial church] should be
erected and maintained, and if, for any reason, it could not be built on the
site of her ancestral home, that it should be erected somewhere in the vicinity
rather than not at all.”).
[229] See Bogert & Bogert, supra note 32, § 442, at
211–12; Wilkey’s Estate, 10 A.2d at 425 (applying cy
pres, the court authorized the sale of the testatrix’s homestead and
the use of the proceeds to construct the memorial church seven city blocks from
the original site). See also State v. Rand, 366 A.2d 183 (Me. 1976)
(applying cy pres, the court allowed the use of condemnation proceeds to
create a new family memorial park one mile away from the original site but
within the same neighborhood).
[230] See Scott & Fratcher, supra note 25, § 399.2, at
509; Village of Hinsdale v. Chicago City Missionary Society, 30 N.E.2d 657 (Ill.
1940) (applying the doctrine of cy pres when the donor gave a parcel of
land to the village in which he resided to be used as the site for a library;
conditions arose that rendered erection of the library on the parcel
“inexpedient and wasteful,” and the court allowed the village to
permanently abandon the use of the parcel as the site for the
library).
[231] Protection of the encumbered land for a
new conservation purpose would obviously have to provide sufficient public
benefit to be considered a valid charitable purpose.
[232] See, e.g., supra Part III.C.3.c.i (discussing the continued enforcement of the easement in the
case study to protect the land for use as a public park). Given that the stakes
involved in an easement extinguishment are quite high, the court should err on
the side of continuing to enforce the easement for a different conservation
purpose. Unlike, for example, the deaccessioning of an object of art, such as a
Monet, from a museum’s collection, which would, at worst, result in the
removal of the object from the public domain if it is sold to a private
collector, extinguishment of an easement generally will result in the
development and more intensive use of the underlying land and, thus, the
destruction of its remaining conservation values. Thus, extinguishment of an
easement would be more akin to burning the Monet or, more accurately, selling
the Monet to a deranged private collector known for destroying artwork.
Accordingly, easement extinguishment decisions should be approached with the
utmost caution and with a set of clearly defined standards that will
appropriately and consistently balance the interests of the donors with the
changing needs of the public.
[233] In a “conservation buyer”
deal, a conservation buyer may: (i) purchase land identified by a land trust as
having particularly high conservation value (such as land that provides habitat
for rare, threatened, or endangered migratory songbirds), (ii) donate a
conservation easement to the land trust encumbering such land for the purpose of
protecting the habitat of such songbirds (the conservation buyer would generally
receive tax savings for such donation), and (iii) sell the easement-encumbered
land. In such a case, the conservation buyer might have no strong personal
attachment to the encumbered land beyond the desire to see that the land is
protected for the purpose of providing habitat to the migratory songbirds. If,
due to changed conditions, the land ceased to serve as habitat for the migratory
songbirds, the court should ascertain from the terms of the easement and the
circumstances surrounding its donation whether the conservation buyer would have
preferred that: (i) the easement be modified and the land continue to be
protected for some other conservation purpose, such as the preservation of
“open space,” or (ii) the easement be extinguished, the unencumbered
land sold, and the proceeds attributable to the easement used to protect
migratory songbird habitat in another location. In such a case, the evidence
might indicate that the donor’s paramount intent was to provide habitat
for migratory songbirds and, thus, that the second option would be more
consistent with the donor’s intent.
[234] See infra Part III.C.3.c.ii
(discussing the extinguishment of the easement in the case study in the event
that no entity is willing to undertake the financial and other responsibilities
associated with the operation and management of the encumbered land as a public
park).
[235] See supra note 222 and accompanying text.
[236] Conceptualizing the donation of a
conservation easement as the gift of a “right to restrict” the
development and use of land is consistent with the common law understanding of a
servitude, which is defined, in part, as a legal device that creates a right
(referred to as a “benefit”) that runs with the adjacent land
(referred to as the “benefited” or “dominant” estate). See Restatement of Servitudes, supra note 12, § 1.1, at 8. While conservation
easements typically are held in gross (in that they do not “benefit”
an appurtenant parcel), and benefits held in gross were of questionable validity
under the common law, the easement enabling statutes expressly validate such
benefits in gross. See id.; UCEA, supra note 15, § 4 cmt.
[237] See Arpad, supra note 15, at 114, 116 (noting that, while some
may view a conservation easement as “extinguishing” the development
and use rights restricted therein, the notion of a property right being
completely extinguished has no basis in the common law, and to say that a
property right, such as the right to cut timber, is simply extinguished offers
no reliable guidance to the courts in determining the difficult questions about
who may have a claim to those rights if conditions change).
[238] If the courts adopt a rule that
allocates a significant portion of the previously suppressed development and use
value to owners of easement-encumbered land in cy pres proceedings, the
real estate market can be expected to respond, and the value of
easement-encumbered land can be expected to rise as extinguishment of the
easement in a cy pres proceeding becomes more likely.
[239] See McLaughlin, supra note 3, at 70 (“[B]ecause there
is little excludable private benefit inherent in [a perpetual conservation]
easement that might make it attractive to any buyer except a representative of
the public, easements are not susceptible to direct valuation in real
markets.”).
[240] See id. at 70–71 (noting
that most if not all donated easements are valued using the “before 241] See, e.g., Treas. Reg. §
1.170A-14(h)(3)(i) (2004). See also id. § 1.170A-7(c)
(defining “fair market value” for these purposes as the price at
which the land would change hands between a willing buyer and a willing seller,
neither being under any compulsion to buy or sell and both having a reasonable
knowledge of relevant facts). For purposes of the “before and after”
method, the easement is deemed to be truly perpetual, and the fair market value
of the land immediately after it is encumbered by the easement is estimated
without considering the possibility of extinguishment of the easement or the
nature of the valuation rule that might be implemented in a cy pres extinguishment proceeding.
[242] See McLaughlin, supra note 3, at 25 (noting that the
easement valuation cases “reveal that easements have reduced the value of
the land they encumber by as little as 2 percent and as much as 91 percent, with
an average diminution of approximately 43 percent”).
[243] The “before and after”
method estimates the price that the landowner would accept for the easement and
be indifferent as between: (i) selling the easement and then selling the
encumbered land for its fair market value, and (ii) selling the unencumbered
land for its fair market value. The “before and after” method does
not purport to measure the “public interest” value of an easement,
which can be described as the guaranteed future stream of public benefits
flowing from the undeveloped land. See supra note 155 (discussing ecosystem services). The
“public interest” value of an easement is conceptually unrelated to
the extent by which the easement diminishes the fair market value of the land it
encumbers. In the context of a cy pres proceeding, the “public
interest” value of an easement is assessed in the first step of the cy
pres process, when the court determines whether the charitable purpose of
the easement has become “impossible or impracticable.”
[244] Recordation of a conservation easement
is required by many state easement enabling statutes and, for all practical
purposes, by the Treasury Regulations interpreting § 170(h). See Conservation Easement Handbook, supra note 6, at 202; Satullo v. Commissioner, 66
T.C.M. (CCH) 1697 (1993), aff’d, 67 F.3d 314 (11th Cir.
1995).
[245] Given that no court has yet applied the
doctrine of cy pres to a conservation easement, any prediction regarding
the valuation rule a court will adopt in such an equitable proceeding would be
purely speculative. Accordingly, any purchaser of easement-encumbered land who
pays a premium due to speculation on the outcome of a cy pres proceeding
would have no fairness claim to an outcome rewarding his speculation. In
addition, if the donor of the easement is still the owner of land when the
easement is extinguished, the donor also would have no fairness claim to any
more than the fair market value of the land subject to the perpetual easement,
having voluntarily made a gift of the perpetual easement to the public and, in
many cases, having been rewarded by the public for his generosity with
significant tax savings that were based on the proportional value of the
easement as established under the “before and after” method.
[246] In the Hicks v. Dowd litigation,
discussed in note 119, supra,
the Plaintiffs’ Memorandum indicates that the new owners of the
easement-encumbered land purchased the land for a price that “no doubt
reflected the easement’s burden on the property value,” and that, if
the easement is extinguished as proposed (with no payment to the holder of the
easement), such owners would own much more valuable property than they
originally purchased and receive a “huge windfall.” See Plaintiffs’ Memorandum, supra note 119, at 23.
[247] To provide an extreme example, one can
imagine the owner of land subject to an easement, the conservation purpose of
which is the protection of habitat for some rare species of plant or animal,
“paving the way” for the extinguishment of the easement by
extirpating such species from the land or making alterations to the land
intended to make it uninhabitable by such species. Many such activities would
either not be expressly prohibited by the terms of the easement or impossible
for the holder of the easement to detect.
[248] See McLaughlin, supra note 3, at 25–26 n.90 (noting
that case law reveals court-approved easement values with a low of $20,800 and a
high of $4,970,000, and that there is anecdotal evidence that easements valued
in the millions of dollars are becoming more common).
[249] One could argue that a division of
proceeds according to the values determined under the “after and
before” method might give easement holders an incentive to solicit and
accept easements they believe will fail the “impossibility or
impracticability” standard in the near term (or purposefully allow the
conservation values of certain encumbered lands to decline to a point where the
easements would likely fail such standard) so that they can obtain the cash
value attributable to the easements. That concern is somewhat far-fetched for at
least two important reasons. First, an easement holder—as a charitable
organization or government agency—is necessarily a repeat player in its
world, and has little incentive to engage in activities that are likely to
impair its ability to continue to pursue its mission. Compare the easement
holder’s imperative with the speculator’s ability to get in, make a
killing, and move on (by buying encumbered land, breaking the easement through
anti-social but not strictly illegal behavior and aggressive litigation, and
never returning to that particular location). An easement holder would likely
get away with the schemes mentioned above only once before public outcry would
shut down the holder’s institutional ability to obtain easements. Second,
the court in the cy pres proceeding presumably would recognize what the
easement holder has done, and appoint a new trustee to administer the
public’s share of the proceeds from the sale of the unencumbered land. See Scott & Fratcher, supra note 25, § 387 (discussing the removal of
a charitable trustee for serious breaches of trust, unfitness, and where the
trustee’s views are hostile to the purposes of the trust).
[250] As discussed in notes 204–206, supra, and accompanying
text, in situations where the donor of an easement fixed the percentage of the
proceeds from the sale of the unencumbered land to which the donee is entitled
upon extinguishment, the donor could be viewed as having had a general
charitable intent with regard to that fixed percentage, and a specific
charitable intent with regard to the remaining value attributable to the
easement (which would pass by resulting trust to the donor, or, if the donor is
not alive, to the donor’s residuary beneficiaries or intestate heirs).
[251] See 59A Am. Jur. 2d Partition § 6 (2004) (“The original purpose of partition was
to permit cotenants to avoid the inconvenience and dissension arising from
sharing joint possession of land. An additional reason to favor partition is the
policy of facilitating transmission of title, thereby avoiding unreasonable
restraints on the use and enjoyment of property.”); Thomas J. Miceli &
C. F. Sirmans, Partition of Real Estate; or, Breaking Up is (Not) Hard to
Do, 29 J. Legal Stud. 783, 783 (2000) (“[W]hat was once a productive
union may become an inharmonious association, thus creating a threat of
inefficient land use due to the ‘anticommons’ problem . . . [and]
[i]n this case, the law offers each owner an escape route in the form of the
right to partition.”); Miller v. Miller, 564 P.2d 524, 527 (Kan. 1977)
(“‘The right of partition . . . is based on the equitable doctrine
that it is better to have the control [of property] in one person than in
several who may entertain divergent views with respect to its proper control and
management.’”) (citation omitted).
[252] See 59A Am. Jur. 2d Partition § 148 (2004). See also id. § 115
(“If each tenant has an undivided half interest, the court should only
assign the half interest in the property to each tenant and should not grant a
greater share to either.”); Powell, supra note 13, § 50.07 (“[P]artition
means the division of the land held in co-tenancy into the co-tenants’
respective fractional shares.”); Jonathan I. Charney, Note, Partition
in the Modern Context, 1967 Wis. L. Rev. 988, 992 n.13 (1967) (in a
partition by sale, the proceeds are “brought into court and . . . divided
by order of the court among the parties in proportion to their respective
rights”); J. D. Eaton, Real Estate Valuation in Litigation 514–16
(2d ed. 1995) (discussing the appraiser’s assignment in connection with
partition litigation as consisting of a valuation of the entire property and
then—in a partition in kind—dividing the property into parcels that
correspond in value to the co-tenants’ respective proportional
interests).
[253] See 59A Am. Jur. 2d Partition § 3 (2004).
[254] Blonquist v. Frandsen, 694 P.2d 595,
596 (Utah 1984). See also 59A Am. Jur. 2d Partition § 6
(2004) (same).
[255] A charitable organization holding a
conservation easement must also be careful to not run afoul of the private
inurement and private benefit doctrines, which would jeopardize its tax exempt
status. See supra note 25 (discussing those doctrines).
[256] See, e.g., Paul Milgrom &
John Roberts, Economics, Organization & Management 136–39 (1992)
(discussing commitment in the context of contracting parties seeking to avoid
“hold-up” of one by another and noting that “[i]t is too risky
to rely on others to act consistently contrary to their own selfish interests
unless there is something that commits them to that behavior”).
[257] Another potential cause of bargaining
breakdown is the “retaliation” problem. If the owner of the
easement-encumbered land views a proposed division of proceeds as unfair, she
may refuse to cooperate in the extinguishment of the easement and sale of the
unencumbered land to punish or retaliate against the holder of the easement. The
potential for retaliation, however, would be greatly reduced by the fact that
the court, rather than the holder of the easement, would determine how the
proceeds from the sale of the unencumbered land would be divided, and the holder
of the easement would have no power to change that decision. A party to the
division of proceeds is less likely to retaliate against the other party if the
other party has no control over the division. Moreover, a division of proceeds
based, in large part, on the values determined under the “after and
before” method would not be arbitrary, and it would be difficult for the
owner of the encumbered land to argue that such division is unfair. See,
e.g., Manuel A. Utset, Reciprocal Fairness, Strategic Behavior &
Venture Survival: A Theory of Venture Capital-Financed Firms, 2002 Wis. L.
Rev. 45, 119–28.
[258] See, e.g.,Part
III.C.3.c.ii(1), infra (discussing the possible deviation from the values
established under the “after and before” method where the owner of
the land encumbered by the easement is a charitable foundation established by
the easement donor). See also supra notes 204–206 and accompanying text (discussing
the possible consequence if the donor of the easement fixed the percentage of
the proceeds from the sale of the unencumbered land payable to the holder in the
deed of conveyance). In any case, the amounts allocated to the parties should be
reduced proportionately by transaction costs.
[259] See generally Powell, supra note 13, § 79F. In
some limited circumstances the public interest in developing the encumbered land
might be considered compelling enough to convince a court to interpret state law
to permit the holder of the easement to sue for partition. Such a suit could
result in either an actual partition of the land based on the values of the
parties’ respective interests as established by the court, or the sale of
the unencumbered land and a division of the proceeds according to such values.
Under current law, however, it appears that a party seeking to partition
property must have a possessory interest in the property. See generally id. § 21.05.
[260] See supra note 219 and accompanying text.
[261] See supra note 229 and accompanying text.
[262] See supra Part
III.B.2.c.ii(2) (discussing the division of proceeds upon the extinguishment of
an easement and the value that could be attributable to the property interest
embodied in the easement).
[263] The government agency or land trust
that was the holder of the extinguished easement normally would be the recipient
of the proceeds attributable thereto (on behalf of the public). If, however, the
court determines that the holder breached its fiduciary duties (perhaps by
failing to monitor or enforce the easement) or is otherwise unfit, the court
could appoint a new trustee to administer the proceeds. See supra note 249.
[264] Such a plan might be developed by the
recipient government agency or land trust. See supra note 221 and accompanying text. Such a plan
might also be developed by a master, referee, or auditor appointed by the court. See supra note 222 and
accompanying text.
[265] See generally Reed F. Noss &
Allen Y. Cooperrider, Defenders of Wildlife, Saving Nature’s Legacy:
Restoring and Protecting Biodiversity 129–77 (1994) (discussing buffers
and linkages to core reserve areas).
[266] See, e.g., Rogers v. Attorney
General, 196 N.E.2d 855, 862 (Mass. 1964) (in authorizing the sale of the family
homestead and the use of the proceeds to accomplish the donor’s charitable
purpose elsewhere, the court mandated that “some formal recognition be
given to the [donor’s] family”).
[267] See, e.g., Conservation
Easement Handbook, supra note 6, at 87–107 (stressing the
importance of proper monitoring and enforcement of conservation easements);
Darla Guenzler & The Bay Area Open Space Council, Creating Collective
Easement Defense Resources: Options and Recommendations v (2002) [hereinafter
Collective Easement Defense], available at http://www.openspacecouncil.org/Easements/defense.html (“[T]he conservation community anticipates a wave of litigation as
successor landowners assume control of easement-protected properties.”). See also Reed v. Eagleton, 384 S.W.2d 578 (Mo. 1964). In that case, the
testator bequeathed the residue of his estate in trust to the City of St.
Joseph, Missouri, to be used to acquire park and other recreational lands within
the city that would then be transferred to and improved and maintained by the
city; when the trust funds far exceeded the amount needed to purchase land to
serve the recreational needs of the citizens of the city, and the city presented
compelling evidence that it did not have sufficient funds with which to improve
or maintain the recreational lands to be transferred to it by the trust, the
Supreme Court of Missouri authorized the use of some of the trust funds for the
improvement and maintenance of such lands, noting that the limitation that the
trust funds be used only for the purchase of land should be subordinated to the
accomplishment of the testator’s primary object—to benefit the
citizens of St. Joseph.
[268] See, e.g., Lesley Ratley-Beach
et al., Easement Stewardship: Building Relationships for the Long Run,
Exchange: J. Land Trust Alliance, Spring 2002, at 6, 6–10 (describing the
sophisticated system used by the Vermont Land Trust to evaluate stewardship
funding needs for its easements).
[269] See supra Part III.A (describing
the “cy pres bargain”).
[270] See, e.g., Collective Easement
Defense, supra note 267, at v
(“[T]raditionally, the land conservation community has focused on
acquisition, not on securing funds for stewardship or defense costs.”). Cf. Land Trust Alliance, Land Trust Standards and Practices, Standard
11.A (Revised 2004) (requiring land trusts to secure the dedicated or operating
funds to cover current and future stewardship expenses associated with each of
their easement transactions). The same concern is evident in the museum context,
where current codes of ethics promulgated by various museum professional
organizations require that the proceeds obtained from the sale of even
unrestricted gifts of artwork be used solely to acquire other works of art. See, e.g., Malaro, Legal Primer, supra note 45, at 151 (noting that “[s]uch a
practice usually serves the best interests of the public because it lessens the
temptation to drain collections in order to meet support expenses”); Weil, supra note 46, at 115 (noting
that “many regard such a restriction as essential to preventing governing
boards or other ruling authorities from looking to a museum’s collections
as a potential source of operating funds”).
[271] Commentators have argued for a
relaxation of the restriction on the use of deaccessioning proceeds in the
museum context for the same reasons. See, e.g., Jennifer L. White, Note, When It’s OK to Sell the Monet: A Trustee-Fiduciary-Duty Framework for
Analyzing the Deaccessioning of Art to Meet Museum Operating Expenses, 94
Mich. L. Rev. 1041 (1996) (arguing that the courts should approve a museum
director’s use of proceeds from the sale of deaccessioned art to meet
operating expenses if the director’s conduct comports with the strict
duties imposed upon a trustee under the law of trusts); Jason R. Goldstein, Deaccession: Not Such a Dirty Word, 15 Cardozo Arts & Ent. L.J. 213,
230 n.82 (1997) (recommending a more liberal use of museum deaccessioning as a
means of raising the funds necessary for the care and maintenance of the
museum’s collection, programs, and physical plant).
[272] Many land trusts are all-volunteer
operations and would not have the existing staff or resources to deal
responsibly or efficiently with a large infusion of cash from the extinguishment
of a conservation easement. See, e.g., Martha Nudel, Land Trusts Grow
Stronger With More Staff, Larger Budgets, Exchange: J. Land Trust Alliance,
Winter 2002, at 5, 5 (noting that the 2000 Census found that approximately half
of the nation’s local, state, and regional land trusts were run entirely
by volunteers).
[273] The facts of the case study are loosely
based on the conservation easement discussed in the following reports. To
facilitate the discussion of the doctrine of cy pres, many of the facts
have been altered. See Rex Springston & Meredith Fischer, Old
Moody Farm; Protected Property?/ Group Wants to Sell Land for Development,
Richmond Times Dispatch, Jan. 24, 2003, at A1; Meredith Fischer & Rex
Springston, “No Reason” To Develop Property, Some Say; Opposition
Surfaces to Plans for Old Moody Family Farm, Richmond Times Dispatch, Feb.
8, 2003, at B1; Rex Springston & Meredith Fischer, Trade Land Here for
Some There?/ Shifting Protections From Moody Property Would Permit Growth,
Richmond Times Dispatch, Nov. 29, 2003, at A1; Rex Springston, Shift State
Protections on Land?/ Agency Suggests Opening the Chesterfield Property to the
Public as a Park Instead, Richmond Times Dispatch, Dec. 4, 2003, at A1. Some
facts about the donor were also drawn from Texas State Historical Ass’n, Mary Moody Northen, Incorporated, in The Handbook of Texas Online, at http://www.tsha.utexas.edu/handbook/online/articles/view/MM/vrmmn.html (last visited Apr. 23, 2005) (on file with the Harvard Environmental Law
Review). The Myrtle Grove easement is not used as the case study in this Section
because the charitable purpose of the Myrtle Grove easement has not become
“impossible or impracticable” under any reasonable interpretation of
that standard. See supra note 119 and accompanying text.
[274] See Field Trial Magazine, Lyme Disease, at http://www.fielddog.com/ftm/lyme.htm (last visited Feb. 17, 2005) (noting that the national rate for Lyme disease is
3.9 cases per 100,000 people, but there are hot spots where the chance of
contracting the disease is extremely high, and providing two examples of such
“hot spots”: (i) Ipswich, Massachusetts, near the Crane Beach
Reservation, which has a severe overpopulation of white-tailed deer and three
out of four households have at least one family member who has contracted Lyme
disease, and (ii) the island of Nantucket, off Massachusetts, where the deer
herd has been allowed to proliferate and the incidence of Lyme disease is 449.1
per 100,000 people) (on file with the Harvard Environmental Law Review).
[275] Whether the Foundation, as residuary
devisee, or Weston’s intestate heirs would be entitled to the proceeds
attributable to the easement in such circumstances is unclear. See supra note 180 and accompanying text. The
Foundation would, however, receive the remaining proceeds from the sale, as the
owner of the underlying land.
[276] It is assumed for purposes of this
Article that the appraisal obtained by the Foundation accurately reflects the
price at which the land encumbered by the easement and the land unencumbered by
the easement could be sold at the time of the cy pres proceeding.
[277] See supra note 276. See also supra Part
III.B.2.c.ii(2) (discussing the “after and before” method and the
recommended division of proceeds in a cy pres extinguishment
proceeding).
[278] See Scott & Fratcher, supra note 25, § 391, at
376–77 (“Where on the termination or failure of a charitable trust
the settlor or his heirs . . . are entitled to receive the property, they can
maintain a suit to recover the property. In such a case they are enforcing
rights adverse to the trust and are not attempting to enforce it.”)
Whether the Foundation, as residuary devisee, or Weston’s intestate heirs
would be entitled to the proceeds attributable to the easement in such
circumstance is unclear. See supra note 180 and accompanying text.
[279] See supra note 142 and accompanying text(noting
that it is within the court’s discretion to permit such intervention). See also supra note 141 and
accompanying text (discussing the extent to which parties other than the owner
of the encumbered land, the holder of the easement, and the state attorney
general might have standing as a matter of right to intervene in a cy
pres proceeding involving a conservation easement).
[280] See Matthew Schuerman, Birth
Control for Deer?, Audubon Mag. (2002), at http://magazine.audubon.org/webstories/deer_birth_control.html (describing such a vaccination program) (last visited Sept. 26, 2004) (on file
with the Harvard Environmental Law Review).
[281] It does not appear that the residents
would have any formal legal claim with regard to the diminution in the value of
their property as a result of a modification or extinguishment of the easement. See generally Abraham Bell & Gideon Parchomovsky, Of Property and
Antiproperty, 102 Mich. L. Rev. 1 (2003) (noting that owners of property
adjacent to land preserved as a public park, such as Central Park in Manhattan,
possess de facto quasi-property interests of considerable value, but absent
legislation formally recognizing such interests, the property owners have no
formal legal claim to the continued preservation of the land as a park, and
their quasi-property interests can be enforced only through extrajudicial
enforcement mechanisms such as politics).
[282] The full three-step cy pres process would require: (i) a determination that Weston’s specified
charitable purpose (as set forth in the deed of conveyance) had become
“impossible or impracticable,” (ii) a determination that Weston had
a general charitable intent when she donated the easement, and (iii) the
formulation of a substitute plan for the use of the easement (or the value
attributable thereto) for a charitable purpose “as near as possible”
to Weston’s original charitable purpose. It is in the third and final step
of the cy pres process that the court would endeavor to ascertain from
the terms of the easement and the circumstances attending its donation whether
Weston, if presented with the “impossibility or impracticability” of
the continued protection of the farm for the conservation purposes specified in
the easement, would have preferred: (i) that the easement be modified and the
land continue to be protected for a different charitable purpose—such as
for use as a public park, or (ii) that the easement be extinguished, the
unencumbered land sold, and the proceeds attributable to the easement used to
protect land with rural, agricultural, historic, open space, and wildlife
habitat characteristics in another location.
[283] See Treas. Reg. §
1.170A-14(d)(5) (2004). The “historic preservation” conservation
purposes test under § 170(h) applies to land areas that are of national
historic interest, such as Civil War battlefields or land located within a
registered historic district. The donation of an easement that protects land
areas of local or state (rather than national) historic interest can satisfy the
“open space” conservation purposes test of § 170(h) if the
state or locality has identified such land as worthy of preservation pursuant to
a “clearly delineated governmental conservation policy.” See
infra notes 285–287. Despite the existence of the family
graveyard, however, neither the eastern state nor County X has identified
Aubry Farm as worthy of preservation pursuant to a clearly delineated
governmental conservation policy.
[284] See William T. Hutton, supra note 163 at 3-11 and
3-12, noting that “there are probably few situations where an easement
should be presumed to satisfy the ‘scenic’ requirement,” and
those situations will involve, for example, national park in-holdings, riparian
properties in scenic river corridors, and properties abutting and entirely
viewable from well-traveled mountain valley roads in the vast expanses of the
northern Rockies).
[285] Section 170(h)(4)(A)(iii) of the
Internal Revenue Code provides that an easement will satisfy the “open
space” conservation purposes test if the preservation of the land
encumbered by the easement is: (i) for the scenic enjoyment of the general
public, or (ii) pursuant to a clearly delineated governmental conservation
policy and, in each case, will yield a significant public benefit. Thus, even if
Aubry Farm was particularly scenic, or its preservation was “pursuant to a
clearly delineated governmental conservation policy,” to satisfy the
“open space” con name="fn287" href="#fnB287">[286] See Treas. Reg. §
1.170A-14(d)(4)(iii)(A) (2004).
[287] See id. To qualify as preserving
property pursuant to a “clearly delineated governmental conservation
policy,” an easement must further a specific, identified conservation
project. See id.
[288] As noted in Part III.C.1, supra,
the Plantation and surrounding farmlands have been identified as worthy of
preservation as a Rural Historic District in County X’s
Comprehensive Plan, and as worthy of preservation as a registered historic
district at both the state and Federal levels. Open space easements donated
before the enactment of § 170(h), or to land trusts with lenient (or
nonexistent) easement selection criteria, may not satisfy the “open
space” conservation purposes test under § 170(h). In addition, as
local comprehensive plans are revised to reflect changing land use patterns and
demographics, some open space easements that once qualified for a deduction
under § 170(h) as preserving property “pursuant to a clearly
delineated governmental policy” may no longer qualify. The charitable
purpose of such an easement should nonetheless be found to be “possible or
practicable,” if the easement satisfies one of the other conservation
purposes tests under § 170(h) or there is continuing public support for the
enforcement of the easement. In assessing the “impossibility or
impracticability” of the charitable purpose of such easements, the court
should be mindful of the fact that some localities might rezone an area as a
growth area in an effort to extinguish easements encumbering land in the area
and permit development, even though the easements continue to provide
significant benefits to the public.
[289] See Treas. Reg. §
1.170A-14(d)(3) (2004). See also id. § 1.170A-14(f), Example
(2) (providing that the donation of an easement prohibiting further development
on a farm that is contiguous with, and will provide a compatible buffer to, a
nature preserve qualifies for a deduction under § 170(h)).
[290] See S. Rep. No. 96-1007, at
9–11 (1980), reprinted in 1980 U.S.C.C.A.N. 6736, 6744–46
(stating that “provisions allowing deductions for conservation easements
should be directed at the preservation of unique or otherwise significant land
areas” and that the committee intended that contributions for the
“preservation of habitat” conservation purpose protect and preserve
“significant” natural habitats and ecosystems). If Aubry Farm
provided habitat for a rare, threatened, or endangered species, or acted as a
buffer for an adjoining natural area, the easement would satisfy the
“wildlife habitat” conservation purposes test of § 170(h), and
should continue to be enforced for that purpose.
[291] See supra note 282 and accompanying text (explaining
that continuing to enforce the easement for a new conservation purpose, such as
for use as a public park, would constitute a change in the charitable purpose of
the easement, and should be permissible only through the application of the full
three-step cy pres process).
[292] At least one state easement enabling
statute requires that the grant of a conservation easement be consistent with
local land use plans. See Va. Code Ann. § 10.1–1010.E (1998)
(“No conservation easement shall be valid and enforceable unless the
limitations or obligations created thereby conform in all respects to the
comprehensive plan at the time the easement is granted for the area in which the
real property is located.”). See also Mont. Code Ann.
§76-6-206 (2004) (providing that “[i]n order to minimize conflict
with local comprehensive planning, all conservation easements shall be subject
to review prior to recording by the appropriate local planning authority . .
.” although the planning authority’s comments are not binding on the
grantor or grantee and are merely “advisory in nature”). In
Massachusetts, a designated public official must approve conservation easements. See Mass. Gen. Laws ch. 184, § 32 (Law. Co-op. 2005).
[293] See McLaughlin, supra note 3, at 109 (discussing the
increasing focus of land trusts on protecting entire landscapes).
[294] See supra note 282 and accompanying text (explaining
that continuing to enforce the easement for a new conservation purpose, such as
for use as a public park, would constitute a change in the charitable purpose of
the easement and should be permissible only through the application of the full
three-step cy pres process).
[295] In formulating a substitute plan, the
court likely would consider the suggestions of all interested parties, including
the Land Trust, the state attorney general, the Foundation, members and
representatives of the general public, other conservation organizations, and the
Weston heirs. See supra note 219 and accompanying text. Given the
complexity involved in formulating a substitute plan for the use of a failed
easement (or the value attributable thereto), the court might refer the matter
to a master, referee, or auditor. See supra note 222 and accompanying text.
[296] In determining the modifications that
would be made to the easement to permit the use of the land as a public park,
the court would likely consider the original conservation purposes for which
Weston donated the easement—to conserve and forever maintain the rural,
agricultural, historic, open space, and wildlife habitat character of the land. See, e.g., In re Thorne, 102 N.Y.S.2d 386 (N.Y. Sur. Ct. 1951)
(refusing to apply the doctrine of cy pres to permit a public park to be
used for “picnicking, fishing, and general park purposes” when the
will devising the land to the city for use as a public park stated that it was
“not to be used as a recreational park . . . for picnics or bathing, but simply for driving [in horse-drawn
vehicles] and walking” (internal quotations omitted)).
[297] For similar reasons the Land Trust and
other conservation groups operating in the area also may be unwilling to
purchase or accept title to the land and thereby assume responsibility for the
ongoing operation and maintenance of the land as a public park. Moreover, even
if the land subject to the easement is conveyed to County X or the
eastern state for use as a public park, the Land Trust and the other
conservation organizations operating in the area may be disinclined to accept
responsibility for monitoring and enforcing the easement as modified because of
the liability issues associated with easements that encumber land to which the
public is granted access. See Bill Silberstein & Ellis Rosenzweig, Minimizing Liability for Public Access on Private Lands, Exchange: J.
Land Trust Alliance, Spring 2002, at 24 (describing the added risks and
responsibilities associated with conservation easements encumbering land to
which the public is granted access).
[298] See Report of Committee on
Charitable Trusts and Foundations, supra note 40, at 393–94 (“[T]he courts
have shown considerable ingenuity in the approaches they have taken to framing
appropriate schemes, and this comment applies to the methodology applied in
reaching solutions as well as to the solutions themselves.”). The court
should, of course, choose a location for the lot or lots to be sold that would
have a minimal adverse impact on the use of the remaining land as a public park.
[299] See supra notes 226–228 and accompanying text (noting that,
in cy pres “gift of homestead” cases where the continued use
of the homestead for a related charitable purpose is either impossible or not
feasible, the courts authorize the sale of the homestead and the use of the
proceeds therefrom to accomplish the donor’s specified charitable purpose
in some other location—even if the evidence indicates that the donor had a
particularly strong personal attachment to the homestead and a desire to see it
preserved—to avoid the failure of the charitable gift or trust).
[300] See supra note 229 and accompanying text (noting that,
in “gift of homestead” cases, if the evidence indicates that the
donor intended to confer charitable benefits on the residents of a particular
city, town, or other district, the court will usually direct that the proceeds
from the sale of the homestead be applied to charitable purposes somewhere in
that district).
[301] The amounts allocated to the Land Trust
and the Foundation by the court should be reduced proportionately by transaction
costs. Also, the Aubry Farm easement was donated in 1976—ten years before
the Treasury Regulations interpreting § 170(h) were promulgated.
Accordingly, the easement does not contain the provisions addressing
extinguishment and the division of proceeds required by those regulations. See supra note 203 and
accompanying text (discussing those provisions).
[302] See Slade v. Gammill, 289 S.W.2d
176 (Ark. 1956) (involving trustees of a charitable trust, established to
maintain a small cemetery, who conveyed a portion of the cemetery to a church in
exchange for the church’s agreement to, inter alia, move all bodies
interred in the conveyed portion of the cemetery to the other portion of the
cemetery, erect a suitable monument in the cemetery in memory of the settlor,
and provide for the continuous care of the cemetery; the court approved the sale
by the trustees in a cy pres proceeding, noting that the trustee’s
solution to the lack of funds for the maintenance of the cemetery was
“very fine and sensible” and carried out the purpose of the
settlor—the permanent maintenance of the burial places of those whose
bodies are interred in the cemetery).
[303] See Marianna Macri, Associated
Press, Church relocating to avoid sprawl; takes deceased along,
Pittsburgh Post-Gazette, July 26, 2004, at B4 (describing the relocation of a
cemetery by a small church in Montgomeryville, Pennsylvania, due to sprawl
development, and noting that “[c]emetery moves are relatively commonplace,
especially in areas undergoing rapid development”).
[304] See Slade, 289 S.W.2d at
176.
[305] Recall that the Rural Historic District
is the only remaining area of the county that contains land with characteristics
similar to those Weston sought to protect with her easement.