An ongoing fight over tax breaks for conserving privately owned land — and accusations that some people are using them as a tax shelter — is spurring an expensive lobbying battle involving landowners and conservationists.

The Partnership for Conservation, a group that represents private landowners and their allies, spent more than $1 million last year on lobbying and is on track to exceed that this year, having spent $730,000 in the first half of 2019. On the other side, the Land Trust Alliance spent just under $140,000, disclosure records show.

The advocacy efforts are focused largely on bipartisan scrutiny toward the tax deductions that landowners can get for conservation easements, in which owners pledge to never develop on their land and, in return, get tax breaks based on the value of that land.

Critics say that while the vast majority of such easements are aboveboard, a small handful of people they call syndicators have found a way to game the system.

The syndicators bring together investors into pass-through partnerships that buy land, get inflated appraisals and then get conservation easements that investors can use to dramatically reduce their tax bills — essentially selling the deductions.

Recent reports by the Brookings Institution and ProPublica found that the practice is rampant and growing, giving investors billions of dollars of tax breaks.

Citing those reports, Sens. Steve Daines (R-Mont.) and Debbie Stabenow (D-Mich.) earlier this year introduced S. 170, the "Charitable Conservation Easement Program Integrity Act," which would put new restrictions on the ability of partnerships of unrelated people to claim the conservation easement tax break. It's similar to previous legislation on the topic.

Senate Finance Chairman Chuck Grassley (R-Iowa) and ranking member Ron Wyden (D-Ore.) are in the midst of an investigation into the practice that they launched earlier this year, while the Internal Revenue Service and the Department of Justice are taking their own actions to crack down on it.

Grassley and Wyden have sent letters to numerous people suspected of organizing the investments, demanding certain information about the land and their involvement.

"They're forming these partnerships solely to profit off of a charitable deduction. That's the only reason the partnerships exist," Lori Faeth, government relations director at the Land Trust Alliance and a supporter of the legislation from Daines and Stabenow, told E&E News.

"So the bill would prevent those types of partnerships formed only to profit from the abuse of conservation donations from taking the charitable deduction."

'Tax shelter'

The Land Trust Alliance represents land trusts. Those are organizations that hold the easements and agree to monitor the land in perpetuity to ensure it stays undeveloped.

On the other side of the battle is the Partnership for Conservation, whose members are landowners, syndicators and their allies.

Robert Ramsay, the Partnership for Conservation's president, acknowledges that people abuse the conservation easement deduction. But he says the Daines and Stabenow bill, by targeting land owned by partnerships of unrelated people, is the wrong way to crack down.

"S. 170 and its predecessor really focus on a single class of landownership. And our perspective is that you're missing the mark, that the issues tend to revolve around the valuation of those property rights," he told E&E News.

"Business partnership structures allow for sharing of all sorts of profits and losses. That's a structure that was created to do certain things, doing what it was intended to do."

His group supports certain measures to crack down on abuse, like increasing qualifications for appraisers who determine easements' values and subjecting their valuations to peer review.

Congress first allowed a deduction for conservation easements in 1976, and it has led to billions of acres of land being conserved.

The idea was to encourage nongovernmental entities like farmers, forest owners and developers to keep some areas undeveloped, by offsetting some of the costs of doing so.

It is a way to get many of the benefits of conserving space — such as wildlife habitat, clean water and carbon sequestration — without the government buying and maintaining land.

The easement provision is now codified as Section 170(h) of the Internal Revenue Code, and it enjoys bipartisan support. Those who want to reform the easement rules say doing so would preserve Congress' original intent.

"The conservation easement tax incentive is meant to help conserve land and protect family farms, not be used as a tax shelter," Daines said in introducing the legislation in January.

"This bill makes several important changes to the tax incentive that will help curb abuses and make sure that the program remains an important conservation tool."

Opponents say the bill threatens to slow down conservation.

"At the end of the day, are we going to eliminate an entire class of landownership to stop people who come together, who are unrelated from one another, from having the same opportunity for incentive that other classes of landowners should have?" Ramsay said. "I don't think that is what was intended."

The bill's restrictions would be retroactive to December 2016, when the IRS published a guidance document aimed at fighting abuse of the deduction. That has invited the scorn of the conservative group Americans for Tax Reform.

'Enormous profits'

The Joint Committee on Taxation, the congressional authority for estimating the impact of tax legislation, found in July that the Daines and Stabenow bill would generate $6.6 billion in federal revenue over 10 years.

The Partnership for Conservation's lobbying spending stands out as some of the highest federally disclosed spending in the conservation community, beating out groups like the Natural Resources Defense Council and the Sierra Club in total 2018 costs.

The group has retained high-profile lobbying firms like Van Ness Feldman and Holland & Knight to advocate on its behalf.

Adam Looney, an economic policy fellow at the Brookings Institution who led that organization's report on conservation easements and follows the issue closely, said those involved in easement investments have a lot to lose from policies that would restrict them.

"The investors in these partnerships are earning billions of dollars a year in tax savings from participating in them. And the promoters of these syndicated easements are charging those taxpayers millions of dollars to facilitate those investments," Looney said.

The syndicators who organize the investments, Looney said, build "complex" mechanisms that require real estate investment, development, tax law expertise and more.

"They're clearly earning enormous profits by structuring these," he said.