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Frustrated Conservationists Seeking New Strategy

February 18, 1986

WASHINGTON (AP) _ With federal land-preservation efforts slowed by budgetary red ink, conservationists are urging changes in tax laws to discourage development in environmentally sensitive areas.

Environmental-protection groups are pressing for legislation that would end a variety of corporate and personal income tax writeoffs now available to developers.

A bill introduced by Sen. John Chafee, R-R.I., would deny the tax breaks for development in proposed sensitive zones - critical endangered species areas, coastal barrier lands and acreage under consideration for national wildlife refuges, parks, forests and wild and scenic rivers.

Under the plan, an entrepreneur still could develop in these zones, but he would lose such tax breaks as the investment credit, accelerated depreciation, percentage depletion allowance, immediate writeoffs of intangible petroleum drilling costs, land-clearing expenses and tax-exempt bond financing.

There is no official federal estimate of the cost to the Treasury of granting these tax breaks. But Bruce Manheim, a scientist for the Environmental Defense Fund, a private conservation-oriented group, said that denying the writeoffs for environmental zones could save ″millions of dollars″ a year.

Chafee said that promoting conservation through tax laws is important because ″budgetary restraints and a philosophy that says ‘don’t acquire until we can maintain what we have got’ have brought federal land preservation efforts almost to a standstill.″

″It’s time we looked at our environmental policies and tax policies together and tried more carefully to reconcile and coordinate the goals of each,″ Chafee said.

The pros and cons of his approach were aired recently at a hearing by the Senate Finance Committee’s taxation subcommittee, with the Reagan administration and the timber and petroleum industries weighing in against it.

Manheim testified that current tax writeoffs are encouraging development and destruction each year of millions of acres of forests, wetlands and other natural areas.

In a joint statement, the National Resources Defense Council and the National Wildlife Federation, two other conservationist groups, said the legislation ″will promote conservation without spending federal money. ... If development proceeds regardless, the Treasury will receive larger tax payments than it would have otherwise.″

Hope Babcock of the National Audubon Society said that denying tax breaks for development in sensitive areas ″will allow natural market forces to work, which we believe, in most instances, will favor conservation of the resource. ... The tax code is a potent tool for environmental destruction or conservation.″

H. William Sellers, vice chairman of the Land Trust Exchange, a conservationist group, said that in an era of huge budget deficits, ″it makes ... neither economic sense nor environmental sense for our government to subsidize through tax expenditures development in areas where other federal policies say development should not occur.″

Dennis Ross, acting tax legislative counsel at Treasury, said that although the administration sympathizes with the intent of the legislation, it prefers to control development of sensitive areas ″through direct regulation″ and enforcement of environmental protection laws.

″Use of the tax laws for such purposes could involve substantial administrative complexity,″ Ross said. ″Our current efforts to reform and simplify the tax system argue that we not burden the code with additional provisions designed to achieve non-tax policy objectives.″

David Stahl, president of the National Forest Products Association, said the Chafee proposal would be a major departure in environmental protection.

Rather than judging the impact of development on a case-by-case basis, Stahl said, the bill ″starts with an assumption that certain activities are ‘unwanted and harmful’ in certain areas″ and that ″timber harvesting is always bad in areas identified as environmental zones.″

Speaking for the American Petroleum Institute, Bradley G. Penn of Marathon Oil Co. said his industry believes ″the tax code should not be used as a land withdrawal mechanism.″

The legislation would ″discourage exploration and production″ of gas and oil in sensitive areas that already are covered by environmental protection laws, Penn said.

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