Monday, September 25, 2017
The federal government’s jurisdiction over “wetlands” continues to be a contentious issue. In 2015, the U.S. Environmental Protection Agency (EPA) and the United States Army Corps of Engineers (Corps) jointly published a regulation (known as the “Clean Water Rule”) in an attempt to “clarify” the scope of federal jurisdiction over “waters of the United States.” 80 Fed. Reg. 37053 (Jun. 29, 2015). The rule was immediately contested in court, its implementation stayed, and the U.S. Circuit Court of Appeals determined that it had jurisdiction to hear the challenge to the rule. Murray Energy Corp. v. United States Department of Defense, 817 F.3d 261 (6th Cir. 2016). In early, 2017, the Trump Administration indicated its intent to review, revise or rescind the rule. 82 Fed. Reg. 12532 (Mar. 6, 2017).
Various exemptions can potentially apply to exclude “wetlands” from the federal government’s jurisdiction under the Clean Water Act (CWA). One of those is for “prior converted cropland.” That exemption stems from the “Swampbuster” provisions of the 1985 Farm Bill that were later adopted by the EPA and the Corps.
How does the exception apply? When does it not apply? What’s the history behind the exception? What have the courts had to say about it? Is there a better way for the federal government to regulate prior converted cropland than the present manner? A recent Illinois federal court decision involved the prior converted cropland exemption from CWA jurisdiction. It didn’t turn out well for the landowner, however.
The prior converted cropland exemption from CWA, that’s today’s topic.
The conservation-compliance provisions of the 1985 Farm Bill introduced the concept of “swampbuster.” Swampbuster was introduced into the Congress in January of 1985. Later, in 1985, the Swampbuster provisions were introduced into the House Agriculture Committee as an amendment to Title XII resource conservation, to deny federal farm program benefits to persons planting agricultural commodities for harvest on converted wetlands. 16 U.S.C. § 3821(a)-(b) (2008). The USDA defines “converted wetland” as a wetland that has been drained, dredged, filled, leveled, or otherwise manipulated (including…the removal of woody vegetation or any activity that results in impairing or reducing the flow and circulation of water) for the purpose of or to have the effect of making possible the production of an agricultural commodity without further application of the manipulations described herein if: (i) such production would not have been possible but for such action, and (ii) before such action such land was wetland, farmed wetland, or farmed-wetland pasture and was neither highly erodible land nor highly erodible cropland. 7 C.F.R. § 12.2(a) (2008).
The report of the conference committee a week before the 1985 Farm Bill was signed into law stated that wetland conversion was considered to be “commenced” when a person had obligated funds or begun actual modification of a wetland.
The final Swampbuster rules were issued in 1987 and greatly differed from the interim rules. The final Swampbuster rules eliminated the right to claim prior investment as a commenced conversion. Added were farmed wetlands, abandoned cropland, active pursuit requirements, FWS concurrence, a complicated “commenced determination” application procedure, and special treatment for prairie potholes. Under the “commenced conversion” rules, an individual producer or a drainage district is exempt from Swampbuster restrictions if drainage work began before December 23, 1985 (the effective date of the 1985 Farm Bill). This is the genesis of the “prior converted cropland” exemption.
The final rules defined “farmed wetlands” as playa, potholes, and other seasonally flooded wetlands that were manipulated before December 23, 1985, but still exhibited wetland characteristics. Drains affecting these areas can be maintained, but the scope and effect of the original drainage system cannot be exceeded. 7 C.F.R. § 12.33(b). Prior converted wetlands can be farmed, but they revert to protected status once abandoned. Abandonment occurs after five years of inactivity and can happen in one year if there is intent to abandon. A prior converted wetland is a wetland that was totally drained before December 23, 1985. If a wetland was drained before December 23, 1985, but wetland characteristics remain, it is a “farmed wetland” and only the original scope and effect of the drainage of the affected land can be maintained.
Clean Water Act
In 1993, the COE and EPA adopted new regulations clarifying the application of the permit requirement of §404 of the CWA to land designated as wetland. Section 404 of the CWA makes illegal the discharging of dredge or fill material into the “navigable waters of the United States” without obtaining a permit from the Secretary of the Army acting through the Corps. The regulations specifically exempt prior converted wetlands from the definition of “navigable waters” for CWA purposes. 58 Fed. Reg. 45,008-48,083 (1993); 33 C.F.R. §328.3(a)(8). Thus, prior converted cropland is not subject to the permit requirements of § 404 of the CWA. Indeed, the Corps stated clearly that the only method for prior converted cropland to return to the Corps’ jurisdiction under the regulation was for the cropland to be “abandoned” – cropland production ceases with the land reverting to a wetland.
In early 2009, the Corps prepared an Issue Paper announcing for the first time that prior converted cropland that is shifted to non-agricultural use becomes subject to regulation by the Corps. See Issue Paper Regarding "Normal Circumstances" (ECF No. 18-22). The paper was the Corps’ response to five pending applications for jurisdictional determinations involving the transformation of prior converted cropland to limestone quarries. The paper concluded that the transformation would be considered an "atypical situation" within the meaning of the Corps’ Wetlands Manual and, thus, subject to regulation. The paper further found that active management, such as continuous pumping to keep out wetland conditions, was not a "normal condition" within the meaning of 33 C.F.R. § 328.3(b). However, no APA notice-and-comment period occurred (as required by the Administrative Procedure Act (APA) – Pub. L. 79-404, 69 Stat. 237, enacted Jun. 11, 1946)) before the Corps issued the memorandum. Even so, the Corps implemented and enforced the rules nationwide. The rules were challenged and in New Hope Power Company, et al. v. United States Army Corps of Engineers, 746 F. Supp.2d 1272 (S.D. Fla. Sept. 2010), the court held that the Corps had improperly extended its jurisdiction over the prior converted croplands that were converted to non-agricultural use and where dry lands were maintained using continuous pumping. Under the Corp’s new rule, wetland determinations were being made based on what a property’s characteristic would be if pumping ceased. The court noted that the rules effectively changed the regulatory definition of prior converted cropland without the new definition being subjected to notice and comment requirements. Accordingly, the court invalidated the Corp’s new rule.
Facts. In Orchard Hill Building Co. v. United States Army Corps of Engineers, No. 15-cv-06344, 2017 U.S. Dist. LEXIS 151673 (N.D. Ill. Sept. 19, 2017), the plaintiff was a developer that obtained title to a 100-acre tract on the southeast side of Chicago metro area in 1995. The local town then passed a zoning ordinance allowing development of the property. The tract was divided into three sections - 25 acres were to be developed into 168 townhomes; 61 acres to be developed into 169 single-family homes; and 14 acres in between the other acreages to function as a stormwater detention area. The townhomes and water detention area was to be developed first and then the single-family housing. Construction of the townhomes began in 1996, and the single-family housing development was about to begin when the defendant designated about 13 acres of the undeveloped property as “wetlands” and asserted regulatory jurisdiction under the CWA.
Administrative process. The defendant claimed jurisdiction on the basis that the “wetland” drained via a storm sewer pipe to a creek that was a tributary to a river that was a navigable water of the U.S. The plaintiff administratively appealed the defendant’s jurisdictional determination to the Division Engineer who agreed that the District Engineer failed to properly interpret and apply applicable the U.S. Supreme Court decision in Rapanos v. United States, 547 U.S. 715 (2006). On reconsideration, the District Engineer issued a second approved jurisdictional determination in 2010 concluding that the tract had a significant nexus to the navigable river. The plaintiff appealed, but the Division Engineer dismissed the appeal as being without merit. In 2011, the plaintiff sought reconsideration of the defendant’s appeal decision because of a 1993 prior converted cropland designation that excluded a part of the 100-acres from CWA jurisdiction. Upon reconsideration, the District Engineer issued a third jurisdictional determination in 2012 affirming its prior determination noting that farming activities had ceased by the fall of 1996 and wetland conditions had returned. The plaintiff appealed on the basis that the “significant nexus” determination was not supported by evidence. The Division Engineer agreed and remanded the matter to the District Engineer for supportive documentation and to follow the defendant’s 2008 administrative guidance. The District Engineer issued a new jurisdictional determination with supportive evidence, including an 11-page document that had previously not been in the administrative record. This determination, issued in 2013, constituted a final agency determination, from which the plaintiff sought judicial review.
Court opinion. In court, the plaintiff claimed that the defendant didn’t follow its own regulations, disregarded the instructions of the Division Engineer, and violated the Administrative Procedures Act (APA) by supplementing the record with the 11-page document. However, the court noted that existing regulations allowed the Division Engineer, on remand, to instruct the District Engineer to supplement the administrative record on remand and that the limitation on supplementing the administrative record only applied to the Division Engineer. The court also determined that the supplemental information did not violate the Division Engineer’s remand order, and that the supplemental information had been properly included in the administrative record and was part of the basis for the 2013 reviewable final agency determination. The court also upheld the defendant’s nexus determination because it sufficiently documented a physical, chemical and biological impact of the navigable river.
The court also determined that the prior converted cropland exemption did not apply because farming activities had been abandoned for at least five years and wetland characteristics returned. The court noted that the defendant and the EPA had jointly adopted a rule in 1993 adopting the Natural Resources Conservation Service (NRCS) exemption for prior converted cropland. While the joint regulation did not refer to the abandonment exception, the defendant and EPA did explain in the Federal Register that they would use the NRCS abandonment provisions such that prior converted cropland that is abandoned and exhibits wetland characteristics are jurisdictional wetlands under the CWA. The court noted that prior caselaw had held that the CWA’s exemption of “prior converted croplands” included the abandonment provision (see, e.g., Huntress v. United States Department of Justice, No. 12-CV-1146S, 2013 U.S. Dist. LEXIS 73805 (W.D. N.Y. May 24, 2013); United States v. Righter, No. 1:08-CV-0670, 2010 U.S. Dist. LEXIS 64686 (M.D. Pa. Jun. 30, 2010)), and that it would apply the same rationale in this case. The court noted that the specific 13-acre parcel at issue in the case had not been farmed since 1996, and that conversion to a non-ag use did not remove the abandonment provision. The plaintiff also claimed that the wetlands at issue were “artificial” wetlands (created by adjacent development) under 7 C.F.R. §12.2(a) that were not subject to the defendant’s jurisdiction. However, the court noted that the defendant never adopted the “artificial wetland” exemption of the NRCS and, therefore, such a classification was inapplicable. The court granted the defendant’s cross motion for summary judgment.
A good case can be made that agricultural wetlands should be removed from Corps jurisdiction. The Corps appears to lack the experience and the local staff needed to ably administer the regulation of continuously cropped, partially drained farmed wetlands. The Corps regulates all wetlands in the same way irrespective of whether the wetland is agricultural, previously manipulated or something else. In addition, the Corps will not allow drainage with compensatory mitigation without the applicant sequentially proving that drainage cannot be avoided or minimized. Also, while the USDA and the Corps use the same wetland definition, the Corps refuses to rely upon USDA wetland determinations. This needlessly confounds agricultural property owners in the management, use and marketing of properties containing NRCS-certified farmed wetland and prior converted crop land. Conversely, an NRCS-certified prior converted cropland determination increases the value of a property.
In situations where a property owner has installed drainage features, and is responsible for a share of the maintenance costs of common drains built by a drainage district, a clear vested right has been established. A change in land use does not erase that vested right. Viewed in that light, the Corps’ refusal to accept a USDA prior converted cropland determination could constitute a regulatory taking.
Perhaps a better approach would be to vest sole regulatory authority over prior converted cropland with the USDA. With 30 years of experience and an office in practically every rural county, it would seem to make more sense that regulatory authority of prior converted wetlands rest solely with the USDA.
With a change in Administration in the White House and new direction at the top of the EPA and the Corps, perhaps there will be a change in the way the federal government views wetlands, and the prior converted cropland exception. These issues are very important to agriculture producers and rural landowners that own the estimated 53 million acres of prior converted cropland scattered across the U.S.