A federal judge has dismissed a three-year-old lawsuit against four Colorado state officials by landowners who claim they were deprived of clear title to their land through the state’s conservation easement program.

But the suit was dismissed “without prejudice,” meaning it can be refiled at any time.

At the same time, a bipartisan group of lawmakers are proposing what they see as part of a fix for what those landowners claim are abuses within the system, including a process for restoring tax credits to those who claim they’ve been unfairly denied.

The conservation easements program is intended to preserve agricultural and natural landscapes across Colorado through the transfer of development rights to the land to nonprofits or local governments. Landowners typically retain title to the land and often are offered large tax credits in exchange for donating easements.

The lawsuit in U.S. District Court in Colorado — described in a recent Colorado Politics Cover Story on the easements program — was filed in 2016 by a group called Landowners United Advocacy Foundation.

It alleged that a number of landowners signed over easements limiting development of their land in exchange for tax credits – only to have those credits, in many cases, yanked away years later, with some landowners billed for credits they had already received.

But U.S. District Judge Philip Brimmer ruled in favor of the defendants, including awarding of courts costs to them.

The defendants are Marcia Waters, director of the division of real estate within the state’s Department of Regulatory Agencies; Michael Hartman, head of the Department of Revenue; Peter Ericson, formerly chair of the Colorado Conservation Easement Oversight Commission; and Mark Weston, director of the conservation easement program, also in DORA.

Brimmer dismisssed the suit March 13 after ruling that a 2018 bill, House Bill 1291, rendered the defendants’ involvement moot. The bill “repealed the Division of Real Estate’s statutory authority to oversee the conservation easement tax credit program and vests that authority in a new Division of Conservation Easement,” Brimmer wrote.

Given that the lawsuit was filed against defendants and state agencies that are no longer involved, the case is no longer valid, the judge said. Weston is now the director of a new conservation easement program, appointed last year.

However, Brimmer’s dismissal without prejudice does not leave the plaintiffs without a course of action. He wrote that the plaintiffs do have the right to seek action in state court, all the way to the Colorado Supreme Court, over the denial of tax credits, stating “[p]laintiff makes no argument why this process does not provide taxpayers with a full hearing and judicial determination at which they can raise constitutional objections to the denial of a tax credit.”

That’s not the only place where action on conservation easements is ongoing.

The chairs of the state House and Senate agriculture committees, along with several other lawmakers, are sponsoring a new bill to remedy some of the issues raised by landowners over the years, largely around the program’s lack of transparency.

Rep. Dylan Roberts of Eagle, who chairs the Rural Affairs and Agriculture Committee, and Sen. Kerry Donovan of Vail, who chairs the Senate Agriculture and Natural Resources Committee, are among the prime co-sponsors of House Bill 1264. Prime co-sponsors also include Democratic Rep. Bri Buentello of Pueblo and Republican Rep. Jim Wilson of Salida. Sen. Faith Winter of Westminster is also a prime co-sponsor; she was one of the sponsors of the 2018 legislation.

Roberts told Colorado Politics that parts of a bill killed earlier in the session, sponsored by Republican Rep. Kimmi Lewis of Kim, have been incorporated into the latest measure. 

The bill would:

• Set up a mapping system, already underway at Colorado State University, that would locate all conservation easements and make that information available to the public. The intent is that this will be publicly available to everyone, not just easement holders, Roberts said.
• Require landowners who are planning to enter into a conservation easement sign off on a disclosure form that acknowledging that the easement is in perpetuity, a disclosure form to be developed by the division of conservation easement. The disclosure outlined in the bill lacks the “warning label” that Lewis had in her bill. That would have warned landowners that as much as 18 percent of conservation easement tax credits can be denied and the landowner forced to repay them; that a conservation easement may make it more difficult for the landowner to get a loan; that the property value of the easement is almost always less than is promised by appraisers; and that easement holders can transfer the land to other easement holders.
• It requires the division of conservation easement to convene a working group that would examine the denied tax credits issued between 2000 and 2013, and come up with a process to provide retroactive tax credits and the criteria for applying for those retroactive tax credits.

Roberts said he and his colleagues are willing to work on a process for helping those landowners, but believes it is a limited number of people, some who may be reluctant to divulge the financial information that could be required.

The division was required under House Bill 1291 to set up a working group, but many of the landowners who have been denied tax credits claimed they were never notified of the group, nor were they provided with a survey that Weston sent to about 300 people on the program.

A 974-page report was issued, recommending the status quo for the program, although an earlier draft, according to one landowner, recommended sweeping changes in the program, including a way to extinguish tax credits or recoup denied tax credits. Sen. Jerry Sonnenberg of Sterling was so outraged by the report and what he believed was the lack of a true working group that he sought to reject the report, but lacked a quorum to do so.

Wilson said he was interested in being a prime co-sponsor as a way to work with the Colorado Cattlemen’s Association, which manages the Colorado Cattlemen’s Agricultural Land Trust. According to its website, 260 families have worked with the land trust on easements, conserving more than 550,000 acres. 

House Bill 1264 is scheduled for its first hearing in the House Rural Affairs and Agriculture Committee on April 1.