NRCS Highly Erodible Land and Wetlands Conservation Final Rule – Clearer Guidance for Farmers or Loss of Property Rights? – Part Two

Overview

In Part One earlier last week, I went through part of the preamble to the recently issued USDA/NRCS Final Rule involving highly erodible land and wetland.  The rule is found at 85 FR 53137 and became effective August 28, 2020.  In today’s article I continue to work through the nuances of the various sections of the preamble to the Final Rule.  Does the Final Rule bring clarity to the NRCS delineation process?  Will it help farmers in avoiding a violation of the rules?

Picking up where I left off last time in Part One, I continue the discussion of the preamble of the NRCS Final Rule concerning the conservation provisions of the 1985 Farm Bill – it’s Part Two of a (now) Three-Part Series and is the topic of today’s post.

Certification Status of Pre-1996 Wetland Determinations Section 

In this section, the NRCS quotes the Conference Committee Report for the 1990 Farm Bill.  In that Report, the “Managers agree that the certification process is to provide farmers with certainty as to which of their lands are to be considered wetlands for purposed of Swampbuster.”  If the NRCS statement that the Final Rule is designed to bring clarity to wetland delineation is to be believed, it means one of two things.  Either this Final Rule isn’t necessary because the certification process of 30 years ago “solved” the problem, or the Final Rule is an NRCS admission that it has failed to provide clarity for 30 years.     

Since 1990, many landowners have been told that their wetland determinations made before 1996 were invalid and they requested new ones.  The new determinations resulted in more acres being determined as wetland than were designated in the original determinations.  This resulted in the loss of land use rights and the payment of penalties.  In one instance, an Iowa farmer was forced through a myriad of appeals as a result of wetland conversions done by his drainage district in the 1990s.  Following administrative appeals and court challenges (see Gunn v. United States, 118 F.3d 1233 (8th Cir. 1997), cert. den., 522 U.S. 1111 (1998)),  and after the farmer and the drainage district were forced to mitigate, an old determination surfaced showing that there actually was no wetland on his farm.  The initial determination of no wetland should have been considered certified. Will compensation be paid for the farmer’s loss of property rights?  Hardly. 

Also in this section, the NRCS responded to a comment about changing determinations based on new technology by stating that the limited circumstances where certified wetland determinations are subject to revision are:  “if the land in question has been removed from agricultural use, upon request of the USDA program participant, or when a violation of the wetland conservation provisions has occurred.”  In actual practice, this statement is incorrect.  NRCS states in its policy manual, The Food Security Act Manual, 5th Edition, that it will not make a review upon request unless it determines that there was an error.  Will the policy manual be amended to account for this statement in the Final Rule? 

Offsite Analysis of Wetland Minimal Effect Section 

In this section the NRCS notes that a comment was received claiming that the 2018 interim rule did not address the 2017 Office of the Inspector General (OIG) Audit Report entitled, “USDA Wetland Conservation Provisions in the Prairie Pothole Region.”  In this section of the preamble, the NRCS notes its disagreement with the audit and seeks to justify its conduct in the four-state prairie pothole region concerning wetland determinations from 1990-1996.  However, the NRCS response is only part of the story.  What primarily is at issue involves the concept of “minimal effect determination.”  In 1993, the Clinton administration made a policy announcement specifying that the Soil Conservation Service (SCS) was to be designated as the lead agency for determining whether agricultural land is wetland for both CWA and Swampbuster program purposes. Procedures were to be developed jointly by the SCS, U.S. Army Corps of Engineers (COE), Environmental Protection Agency (EPA) and the Fish and Wildlife Service (FWS). In addition, SCS appeal procedures were to be utilized to contest wetland determinations, and the COE, in coordination with EPA, SCS and FWS was to develop a nationwide general permit for CWA purposes for discharges associated with “minimal effects” (see 7 C.F.R. §12.31(e)(1)) and “frequently cropped with mitigation” conversions determined by SCS and FWS to qualify agricultural wetlands for exemption from Swampbuster sanctions.  The landowner is responsible for requesting such a determination and bears the burden to prove eligibility for a “minimal effects” determination. See Clark v. United States Department of Agriculture, 537 F.3d 934 (8th Cir. 2008).

In this section, the NRCS also fails to disclose that it has lost numerous court cases involving minimal effect determinations.  Without an administrative change of position, NRCS will likely lose more.  Congressional intent expressed in Conference Committee Reports dating back nearly 30 years illustrates that the Congress intended “minimal effect” determinations to be simple and widely used.  However, that has not happened.  As noted above, NRCS makes a landowner request a minimal effect determination.  That was a regulatory position staked-out by the agency in a September 17, 1987 Final Rule associated with “farmed wetland.”  If a landowner doesn’t make a request, a minimal effect determination is not made.  But, this landowner burden is not required by statute.  While the position of the NRCS in the regulation has been upheld (see the Clark case cited above), both logic and Congressional intent would seem to indicate that the NRCS should, as a matter of routine, conduct a minimal effect determination for every request for review of hydrologic manipulations.  The consequences of a landowner not requesting a minimal effect determination can be harsh – the loss of past and future farm program benefits.

PC Any Land With Pre-1985 Drainage Section 

Here, the USDA/NRCS states that “farmed wetlands” have been subject to the wetland conservation provisions since 1987 and were formally defined in regulation in 1996.  The NRCS also asserts that the Congress has not altered NRCS administration of farmed wetlands since first described in regulation. However, the NRCS comment is misleading.  A bit of history is in order.

Under the March 1986 interim rules for the wetland conservation provisions of the 1985 Farm Bill, wetland was assumed to be truly wet ground that had never been farmed. In addition, “obligation of funds” such as assessments paid to drainage districts, qualified as commenced conversions, and the FWS had no involvement in Agricultural Stabilization and Conservation Service (now Farm Service Agency (FSA)) or SCS decisions. In September of 1986, a proposal to exempt from Swampbuster all lands within drainage districts was approved by the chiefs of the ASCS, SCS, Farmers’ Home Administration, Federal Crop Insurance Corporation and the Secretary of Agriculture. However, the USDA proposal failed in the face of strong opposition from the FWS and the EPA.

The final Swampbuster rules were issued in 1987 without being subjected to the notice and comment procedures of the APA 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). If the drainage work was not completed by December 23, 1985, a request could be made of the ASCS on or before September 19, 1988, to make a commencement determination. Drainage districts must satisfy several requirements under the “commenced conversion” rules. A project drainage plan setting forth planned drainage must be officially adopted. In addition, the district must have begun installation of drainage measures or legally committed substantial funds toward the conversion by contracting for installation or supplies.

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. § 12.2.  Prior converted wetlands can be farmed, but they revert to protected status once abandoned.  A prior converted wetland is a wetland that was totally drained before December 23, 1985. Under 16 U.S.C. §3801(a)(7), a “converted wetland” is defined as a wetland that is manipulated for the purpose or with the effect of making the production of an agricultural commodity possible if such production would not have been possible but for such action.  If a wetland was drained before December 23, 1985, but wetland characteristics remain, it is a “farmed wetland” and only the original drainage can be maintained.

The problem with the NRCS creation and definition of “farmed wetland” is that the law defines “converted wetland” as wetland that is dredged, drained or otherwise manipulated so as to make the production of an agricultural commodity possible where such production was not possible prior to the manipulation.  How then can farmed wetland be subject to conversion when it is, by definition, already converted?  In this section of the preamble, the NRCS claims that farmed wetland was formally defined in regulation in the September 1996 interim final rule.  However, in 1996, comments were filed with NRCS challenging the legality of subjecting farmed wetland to the wetland conservation provisions of the Farm Bill.  Under the APA the USDA was to timely respond to those comments and make appropriate revisions to the rule.  That never happened.  24 years later, the rule has not been finalized.  Now NRCS claims that the Congress has endorsed the concept.

Conclusion

What I thought would be a two-part series when I started out, will now turn into a three-part series.  In the next installment, I will continue the commentary on the preamble to the Final Rule.