Recent litigation caused the Pennsylvania Land Trust Association to re-evaluate the process set forth in the Model Grant of Conservation Easement and Declaration of Covenants regarding the easement holder’s review of landowner proposals that are subject to review. This led PALTA to explore various possibilities for adjusting the review process. PALTA now seeks comments on a proposed change (presented below) to subsection 6.04(c). The change seeks to balance various concerns: (1) safeguarding against inadvertent holder process errors; (2) achieving optimal conservation outcomes; (3) holder being reasonable and avoiding potential negative consequences of failing at that; and (4) arriving at a provision that landowners and their counsels (and holders) should find acceptable. Importantly (and the initial motivation for exploring the issue), the change also eliminates a potential pathway for the IRS to challenge the tax-deductibility of an easement donation.
The entirety of section 6.04 is presented below to provide the broader context in which the change would be made:
The following provisions are incorporated into any provision of this Grant that is subject to Review:
(a) Notice to Holder. At least 30 days before Owners intend to begin or allow an Improvement, activity, or use that is subject to Review, Owners must notify Holder of the proposed change including with the notice such information as is reasonably sufficient to comply with Review Requirements and otherwise describe the proposal and its potential impact on the Conservation Objectives.
(b) Notice to Owners. Within 30 days after receipt of Owners’ notice, Holder must notify Owners of Holder’s determination to (1) accept Owners’ proposal in whole or in part; (2) reject Owners’ proposal in whole or in part; (3) accept Owners’ proposal conditioned upon compliance with conditions imposed by Holder; or (4) reject Owners’ proposal for insufficiency of information on which to base a determination. If Holder gives conditional acceptance under clause (3), commencement of the proposed Improvement, activity, or use constitutes acceptance by Owners of all conditions set forth in Holder’s notice.
(c) Delay. Holder’s determination is not to be unreasonably delayed past the initial Review period. A delay is reasonable if the delay is not within Holder’s reasonable control or, subsequent to the initial Review period, Owners give notice demanding completion of Review and Holder provides its determination within 30 days following this notice. Failure to Notify. If Holder fails to notify Owners as required in the preceding subsection, the proposal set forth in Owners’ notice is deemed approved.
(d) Standard of Review
(1) The phrase “without any obligation to do so,” in relation to an approval or determination by Holder, means that, in that particular case, Holder’s approval is wholly discretionary and may be given or withheld for any reason or no reason.
(2) In all other cases, Holder’s approval is not to be unreasonably withheld. It is not unreasonable for Holder to disapprove a proposal that may adversely affect resources described in the Conservation Objectives or that is otherwise inconsistent with maintenance or attainment of Conservation Objectives.
Depending on public feedback on this proposed change, this or an alternative modification will be made in 2019. In any case, this present proposal is suitable for use in the model now.
Please send comments to Andy Loza at firstname.lastname@example.org as soon as possible but no later than January 11, 2019.