Washington Watch 09/28/05

Interior and Environment Appropriations Bill Signed into Law

Commerce Department Appropriations Update

288 Charities Oppose Changes to Deductions of Noncash Contributions

Interior and Environment Appropriations Bill Signed into Law

On August 10th, President Bush signed the FY 2006 Interior and Environment Appropriations bill into law, following approval of the conference report in the House of Representatives and the U.S. Senate in late July. The bill (H.R. 2361) http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_reports&docid=f:hr188.109.pdf as passed by Congress proposes the following spending levels* for conservation programs under the jurisdiction of this bill.

Land & Water Conservation Fund (LWCF): In FY06, federal-side LWCF drops to $114.6 million, fully 30 percent below the enacted FY05 level of $164.4 million. The state grants LWCF program is funded at $30 million, a significant cut from the FY05 level of $92.5 million.

USDA Forest Legacy Program: This program continues apace, with $57.4 million appropriated in FY06, essentially the same as was provided in FY05.

Cooperative Endangered Species Fund: The bill includes $82.2 million for this program, which provides competitive grant funding under the Endangered Species Act for Habitat Conservation Program (HCP) Land Acquisition ($47.9 million) and Recovery Land Acquisition ($14.2 million) -- all at levels similar to those in the previous fiscal year.

North American Wetlands Conservation Fund: Funded in FY06 at $40 million, a modest increase over FY05 appropriations of $37.5 million.

State and Tribal Wildlife Grants: Funded at $68.5 million, essentially the same as in FY05 with $6 million included for tribal grant funding under this program.

Landowner Incentive Program: Funded at $24 million, a slight increase over the FY05 level of $21.7 million.

Urban Park and Recreation Recovery Act: As was the case last year, this program remains unfunded.

*There is also a 1.5% across-the-board reduction applied to all accounts under this bill.

Congress Passes Transportation Bill

Congress reached agreement on the massive transportation reauthorization bill before recessing for the month of August. The bill, known as the Safe, Accountable, Flexible, and Efficient Transportation Equity Act—A Legacy for Users (SAFETEA-LU), authorizes $286.4 billion over the period of 2004-2009. This is about $90 billion more than the amount authorized in the expired Transportation Equity Act for the 21st Century (TEA-21).

Thousands of earmarked projects are included in the legislation, including projects such as bike paths and the acquisition of scenic areas. Among the projects supported by TPL are Santa Fe (NM) Bikeways and Walkways, a pedestrian/bicycle trail in Little Rock AR, Regional Trails in the Portland (OR) area, and the Miami River (FL) Greenway.

The Transportation Enhancements program is maintained as a 10% set-aside of the Surface Transportation Program, and other programs such as Recreational Trails and Safe Routes to School program will provide additional funding for bike and pedestrian trails. The Scenic Byways program will see some increases over TEA-21 levels as well.

One disappointment was the elimination of the Stormwater Mitigation set-aside, which was included in the Senate version of the bill. This would have provided about $900 million for projects, including land acquisition in some cases, to mitigate the damaging environmental effects of stormwater drainage from highways.

The legislation made some changes to section 4(F), which restricts the building of roads through parks and recreation areas. Highway departments will continue to need permission for road construction from the affected park and recreation departments, but the regulations make it easier for such permission to be granted.

As long-range transportation plans are developed, SAFETEA-LU requires state and local planning agencies to consult with appropriate federal, state, and local agencies to compare transportation plans with conservation plans or maps and with inventories of natural or historic resources. Plans will have to include a discussion of environmental mitigation activities. This should help ensure that effects on wildlife and habitat are taken into account early in the life of a highway project and avoid lawsuits and delays that result from inadequate planning.

SAFETEA-LU will expire September 30, 2009.

Commerce Department Appropriations Update

On September 15, the Senate passed S. Report 109-88, its FY06 Commerce, Justice, Science appropriations committee report that provides funding for NOAA's Coastal and Estuarine Land Conservation Program (CELCP). The version that passed the Senate floor did not change the funding amounts provided during the appropriations committee mark-up in June.

Since the House Representatives passed their version of FY06 Science-State-Justice-Commerce (SSJC) Appropriations bill (formerly known as CJS) on June 16, this bill is now ready for conference.

As expected, funding for NOAA in general and CELCP in particular has thus far resembled the process from the previous three years. For FY06, the House bill includes $3 million with no specific earmarks, while the Senate provides a funding level of $60 million, with specific project funding recommendations. Overall, the House bill provides $3.43 billion for NOAA, $526 million less than the enacted FY05 level, and $200 million below the President's budget request. The Senate bill allocates $4.5 billion for NOAA, $550.8 million above the FY05 level and $894.8 million above the President's budget. You can see from this that the two bills are $1 billion apart; negotiations on this bill will be closely fought.

In the past three funding cycles, CELCP funding followed a pattern of lower House-recommended numbers, substantially higher Senate numbers, and a final House-Senate conference agreement that leaned towards the higher funding level. It may be that this pattern is repeated this year.

Agriculture Appropriations Update

The House and Senate have both completed consideration of their respective versions of the FY 2006 Agriculture Appropriations bill (H.R. 2744), so the bill now heads to a House-Senate conference committee which will iron out the differences.

Included in this legislation are proposed funding or acreage enrollment levels for several agricultural conservation programs. Herewith is a summary of the House and Senate proposals:

For the Farm and Ranchland Protection Program (FRPP), which since 2002 has used $215 million in federal funds to leverage more than $550 million in state and local funding to keep productive farmland in operation, the House recommends $74.5 million in FY 2006 while the Senate recommends the fully authorized level - $100 million. TPL has joined with other conservation groups to express its support for the Senate proposal for FRPP in the final bill. In the previous fiscal year, Congress had approved a funding level for FRPP of $112 million, a reduction from the authorized level for FY 2005 of $125 million but still a significant amount for this popular program. The program is authorized through FY 2007 and is likely to be extended beyond that through the upcoming Farm Bill.

For the Wetlands Reserve Program (WRP), which protects and restores agricultural wetlands, both the House and Senate propose a reduction in the number of acres that can be enrolled in the program annually (thus controlling expenditures). The House recommended an enrollment limit of 154,500 acres and the Senate recommended 150,000 acres. Last year's acreage enrollment limit was 154,500 acres, but the White House had proposed an increase to 200,000 acres this year.

Update on Tax Incentives and Reform

While the conservation community, and the nonprofit sector as a whole, has anticipated congressional action this fall on charitable tax incentives and reforms, the devastation caused by Hurricane Katrina has forced Congress to focus on relief and reconstruction efforts along the Gulf Coast. In addition to providing billions of dollars in emergency appropriations, Congress has passed the "Katrina Emergency Tax Relief Act of 2005." This legislation provides tax relief for the victims of Katrina as well as short-term tax incentives for charitable giving. These incentives include a temporary lifting of the limits on cash contributions and measures to encourage food and book donations.

Recognizing the important work performed by the nonprofit sector, not only in responding to immediate disasters such as Hurricane Katrina, but in meeting the longer-term needs of the public, Senator Rick Santorum of Pennsylvania and Senator Joe Lieberman of Connecticut have introduced a new version of the CARE Act. Included in this legislation are the conservation tax incentives that passed the Senate in 2003, but have languished as attention has shifted to reforms related to conservation easements and property donations. The CARE Act proposes increasing the annual deduction ceiling for donations of land or easements for conservation purposes to 50% of a taxpayer's adjusted gross income, and the unused contribution could be carried forward for 15 years. The bill also provides that capital gains on the sale of land and easements to land trusts or agencies for conservation purposes would enjoy a 25% exclusion from income.

While Senators Santorum and Lieberman are anxious for Congress to pass the CARE Act, it is not yet clear what steps the Senate Finance Committee and the House Ways and Means Committee will take in the coming weeks regarding changes affecting land conservation. Many in the conservation community expect the Senate Finance Committee to propose reforms dealing with conservation easements. It is less clear whether there will be proposals affecting donations of real property. No specific language related to land conservation has yet been made public, but such reform proposals should be considerably more modest than the suggestions put forth earlier this year by the Joint Committee on Taxation. Such proposals could be added to the CARE Act or to other legislation the Finance Committee must consider before the end of the year. The chairman of the committee, Senator Charles Grassley of Iowa, hopes to have a charities bill ready in October. In preparation, his committee is holding a hearing on September 28 on Katrina-related tax issues. Meanwhile, the House Ways and Means Committee is also working on a bill to provide further assistance for relief and reconstruction on the Gulf Coast.

The legislative calendar for the rest of the year will be very full as Congress scrambles to deal with critical tax and appropriations measures in the aftermath of Hurricane Katrina. Updates will be provided when tax legislation affecting conservation moves through the legislative process in the next few weeks.

288 Charities Oppose Changes to Deductions of Noncash Contributions

Two hundred eighty-eight organizations, including the Trust for Public Land, signed a letter to the Senate Finance Committee in opposition to proposals that would replace the current fair market value deduction for noncash contributions with a deduction for the lesser of the donor's cost basis or fair market value. The organizations endorsed the recommendations of the Panel on the Nonprofit Sector, which address concerns about the valuation of donations of property while ensuring the right of donors to deduct fair market value. Changes in this area are of concern to TPL, which frequently receives donations of land value.

The Senate Finance Committee has not yet proposed specific legislation relating to land conservation, but it is possible that proposals will be forthcoming when Congress returns from the August recess on September 6.

A copy of the noncash contribution letter is attached at the bottom of the page.

For more information about the federal programs, visit TPL's Federal Program page.

FILE ATTACHMENTS:

Letter to Senate Finance Committee

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