COVID-19 Relief: Conservation Policy Recommendations
The COVID-19 Pandemic is causing significant economic pain across the World. Congress has acted quickly to provide relief to the unemployed, businesses, and others. Congress is anticipated to continue to look for ways to provide relief to those impacted and to provide opportunities to spur recovery. Conservation can play a key role in helping with these efforts particularly in rural America and within production agriculture. With additional funding and minor policy adjustments, existing conservation programs administered by the United States Department of Agriculture are uniquely well equipped to aid in these efforts. Using existing well-established programs like the Agricultural Conservation Easement Program (ACEP) as part of future recovery/stimulus packages has added benefits of helping advance conservation objectives and doing so within an established governance framework. Using existing programs with established governance frameworks will help reduce waste and fraud. The Partnership of Rangeland Trusts (PORT) respectfully brings forward the following policy recommendations for consideration and inclusion in a future recovery/stimulus package. If enacted, these recommendations will (1) reduce the number of farms and ranches that go out of business due to COVID-19; (2) enable farmers and ranchers to access much needed capital without taking on additional debt; and (3) advance important conservation goals.
Recommendations:
1. Increase funding to the Agricultural Conservation Easement Program (ACEP). ACEP is a well-established program administered by the Natural Resources Conservation Service (NRCS) that provides funding to purchase voluntary conservation easements from farmers and ranchers. Current funding for the program is $450M per year. PORT recommends increasing funding to $1.3B for 2020 and 2021. NRCS has indicated that current funding levels allow it to meet 1/3 of existing demand for the program. Conservation easements provide farmers and ranchers with a way to gain liquidity from their land without selling the land or selling portions of the land. A 2017 economic analysis completed by the Dept. of Agricultural and Resource Economics at Colorado State University found that beyond assisting our nation’s farmers and ranchers, federal investments through ACEP have generated additional economic stimulus and created additional jobs. The study also found that these economic benefits have mostly been benefited rural economies.
2. Increase the ceiling on the eligible federal share for ACEP conservation easements to 80% of the easement value. Currently, NRCS can typically only contribute 50% of the easement value. In some cases this can increase to 75% on properties that are designated as “Grasslands of Special Significance”. Increasing the federal share at this time will enable farmers and ranchers to gain additional liquidity from the easement which could be significant in helping them weather the current economic challenges.
3. Eliminate Adjusted Gross Income (AGI) eligibility requirements for ACEP. Farmers and ranchers need options to get them through this period of time. ACEP can provide a critical lifeline. AGI requirements are not appropriate factors for determining eligibility in light of the current crises. Additionally, AGI checks administered through the Farm Services Agency and the Internal Revenue Service are slow and cumbersome and will be a barrier to putting money on the ground quickly.
4. Require continual sign-up periods. Require that state NRCS offices run continual sign-up periods for ACEP. Continual sign-up periods are already allowed under the current statutory and regulatory frameworks of ACEP but most states administer their programs through defined “batch” sign-up periods. Continual sign-ups will enable projects to come online throughout the year and allow more dollars to flow to the farmers and ranchers that need them.
5. Adjust valuation rules under ACEP. The appraisal process is one of the significant bottlenecks in completing conservation projects. However, the appraisal process is also a critical safeguard to prevent fraud, waste, and land speculation. Currently the statute allows for alternative appraisal methods such as Geographic Area Rate Caps (GARCs) or other area wide market analysis. PORT recommends providing state NRCS offices with further flexibility to consider alternative valuation methodologies that can appropriately substantiate values for conservation easements being purchase through ACEP. Economists at Colorado State University are currently working on a number of alternative methodologies that can appropriately substantiate value while safeguarding against fraud, waste, and land speculation. Additionally, many other federal conservation programs use alternative value substantiation methodologies like Adjusted Assessed Land Valuation (AALV). PORT specifically recommends allowing the following methodology to be employed: Negotiated Valuation: Value ceiling established by an appraisal of the property as unencumbered. Eligible entity negotiates with landowner on the value of the conservation easement based on the conservation values of the specific property. Value cannot exceed 80% of the unencumbered value of the land as established by the appraisal. If the property was purchased in the past 24-months, value ceiling is limited to the purchase price.
6. Transaction Costs. Allow for ACEP/ALE funds to be used to cover transaction costs incurred by landowners including administrative costs borne by the eligible entity facilitating the transaction. Additionally a portion of funds should be advanced to enable projects to get off the ground.
7. Eliminate FSA’s involvement in ACEP-ALE. Eliminate need for the administrative involvement of the Farm Services Agency (FSA). Allow ACEP/ALE to function directly between NRCS, eligible entities, and landowners. The FSA process is burdensome, complicated, and leads to significant challenges during the application stage for producers and eligible entities.
8. Allow ACEP to be administered through a Hub-type system. Capacity is a growing issue for NRCS and it negatively impacts the agency’s ability to efficiently administer its programs. NRCS frequently develops agreements with third parties to help deliver technical assistance and other agency functions. PORT recommends using established state and regional entities like State Coalitions of Land Trusts and the Partnership of Rangeland Trusts to provide Technical Assistance in the administration of ACEP.
9. Block grants to Accredited Land Trusts who have completed more than five (5) ACEP/ALE or predecessor program-funded projects. Grant awards would be based on project demand demonstrated by the entity. Entities would be eligible to establish ranking criteria based on program requirements. All closings would be subject to the audit requirements for certified entities as outlined under the ACEP statute. PORT further recommends that performance metrics be established to ensure funding was distributed in specified time periods (6 – 18 months from award). Allow eligible entities to use funds for transaction costs – similar to agency allowances – to ensure projects can get off the ground.
Other policy recommendations
1. Eliminate the caps on State and Local Tax (SALT) deductions that were established under the 2017 tax cuts. These caps have harmed farmers and ranchers who have conveyed conservation easements and received state tax credits. Additionally, Americans will need further tax relief to recover from COVID-19.