Monday, July 11, 2016

Can the Forest Service change its Mind about a Conservation Easement Agreement?

You can tell it is summertime in law professor land because I am slowly going through my stack of reading, including several cases that I had earmarked for further exploration. One of these is the ongoing dispute regarding a conservation easement held by the U.S. Forest Service pursuant to the Columbia River Gorge National Scenic Area Act. The case is entitled GLW Ventures v. USDA, 2016 WL 3364896 (W.D. Wash 2016)

The Columbia River Gorge National Scenic Area Act included a mechanism whereby the federal government could purchase conservation easements with the goal of preventing development and maintaining current land uses in the area (generally residential and agricultural). It is not clear when the CE in this case was created, but we do know that Sharleen Jones sold a conservation easement of 110 acres to the Forest Service, in exchange for approximately 60% of the fair market value of the land. At the time of this transaction, Jones’ land was classified as being 4 parcels. In the CE, Jones and the Forest Service agreed that the 110 acre parcel could be divided into two acres subject to zoning regulations. At the time of the agreement, both the Act and local zoning laws set the minimum lot size at 40-acres. Some of the background isn’t exactly clear from the court documents, but it appears that several years later Jones tried to get the Forest Service to buy full fee simple title to the lots, but it wasn’t interested. (The latest order from the federal court says that “she offered to sell her remaining interests to the Forest Service, which it declines.” The district court then states that this “declination converted the property’s permissible lot size from 40 acres to 80 acres.” I admit, I don’t understand that process or conclusion and would love to hear an explanation.)

Apparently no longer interested in being a landowner and not being able to sell to the Forest Service, Jones found another buyer in the form of GLW associates. GLW bought the property and then sought county permission to modify the tracts, making one 52-acre lot and one 56-acre lot. Skamania County initially approved this lot line modification, but the Forest Service objected arguing that such a division would violate the conservation easement. Specifically, it appears that the two parcels were not exactly the same two parcels described in the CE (same number of lots, same number of overall acres, but the landowners wanted the line drawn in a different place). The CE states:

The right is reserved to break the ownership into two tracts, Tract I being 62 acres in farm and woodlot and 5 acres in homesite, and Tract 2 being 38 acres in farm and woodlot and 5 in homesite. At the time of this easement, the right is acknowledged that construction of two dwellings for use in conjunction with the management of the two tracts if the proposed homesite is within the constraints of the [Columbia River Gorge National Scenic] Act[.]

It is not clear why the Forest Service objects (not saying it didn’t have a good reason to prefer the other lot division, just that the various court filings offer no explanation for it). It may be simply that in the intervening years the minimum developable lot size changed to 80-acres and the Forest Service doesn’t want GLW’s lot to be grandfathered in? Maybe the Forest Service is just having buyer’s remorse and trying to get a better deal?

The federal district court expresses dismay and disappointment with the Forest Service’s action in both orders it had issues (earlier order staying the case and current order granting summary judgment for the Forest Service). Indeed, it describes the Forest Service’s activity as “teetering on the edge” of its duty to deal fairly and in good faith.

Unfortunately, we don’t actually have a federal court’s interpretation of this conservation easement or of the duties of the Forest Service because the federal case was stayed during the pendency of state proceeds and then dismissed as moot afterwards (state court held for the Forest Service).

Lots of food for thought as always

  • In the state proceeding, the court held that as a conservation easement holder the Forest Service was a property owner and therefore had to be part of any land-use application. Would they say the same thing for holder of a utility easement? A Profit? What about the presence of a deed restriction? I am not saying this was a bad thing; if someone’s property rights might be infringed upon they should be at the table, but labeling a conservation easement holder as a property owner who needs to be party to all applications is something else. 
  • Can CE holders be jerks? Forest Service agreed that the property could be two buildable lots, but didn’t like it when the property owner tried to change the exact dividing line between the lots. Was it appropriate for the Service to intervene in the County process to challenge this? Well it wasn’t very nice but it seems to me that if the Forest Service wants GLW to stick to the details of the CE, the landowner must do so. The cases suggest however that perhaps there was some reason the current configuration was unworkable.
  • Could a federal court draw upon its equitable powers to rescind a conservation easement? The court held that this case was barred by collateral estoppel and moot. It said its hands were tied because it couldn’t go back in time and prevent the Forest Service from challenging the land use application. But left mostly unanswered is whether the court otherwise could have just considered the CE and the underlying federal law and have said that equity required rescission of the CE. The court here looked at the Gorge Act and said the statute would not permit terminating the CE because it only allowed remedies that would further the goals of the act (just not the type of dispute contemplated by citizen suit provision of the Act). I wonder if they characterize it as a government contract if they can get some relief under the Tucker Act?

I assume the landowners will appeal but not sure how far it will go.

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