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Agricultural Wetlands: Current Programs and Legislative ProposalsJeffrey Zinn
and Claudia Copeland 96-35 ENR CONTENTS SUMMARYAmending Federal laws to protect wetlands, especially agricultural wetlands, is a contentious issue for the 104th Congress. Critics contend that current programs are excessive in their reach and unfairly restrict private landowners. Supporters counter that these programs are critical if the Nation is to achieve the stated goal of no-net-loss of wetlands. The two major statutes under which agricultural wetlands are protected are swampbuster, enacted in the Agriculture, Food, Trade, and Conservation Act of 1985, and section 404, enacted in the 1972 Clean Water Act. This debate has been contentious, in part because of a lack of information and understanding about these programs and how they work, and different perceptions of what might happen to the wetland protection effort if one or both of these laws is amended. This report describes both programs, emphasizing how they relate to each other. It explains how each program works, especially on agricultural wetlands, and the likely effect of proposed revisions to swampbuster. Also, it briefly considers other legislative proposals that would amend the section 404 program, which, if enacted, would further affect how agricultural wetlands are protected. INTRODUCTIONMembers and staff are raising many questions about the two major Federal wetland protection programs, swampbuster provisions in the 1985 farm bill and section 404 of the Clean Water Act. These questions often arise from uncertainty about how one or both of these programs work, or how they are intertwined in law and regulation. Proposals to amend swampbuster have been introduced (S. 1373, and H.R. 2542 as amended by the House Agriculture Committee's Subcommittee on Resource Conservation). (1) Conflicting views have been put forth over how these amendments would affect agricultural areas identified as wetlands. This report describes aspects of both programs, emphasizing how they relate to each other. It explains what each program addresses, how they work on agricultural wetlands, and the likely effects of proposed revisions to swampbuster. It briefly considers other legislative proposals that would amend the section 404 program, which, if enacted, would further affect how agricultural wetlands are protected. Further action on these proposals in the 104th Congress is uncertain. RATE AND PATTERN OF WETLAND LOSSA national policy goal of reaching a no-net-loss, first articulated by President Bush in 1989, has guided much of the national wetlands protection debate for the last several years. Analysts agree that the high rate of wetlands losses reported before the 1970s has slowed considerably, but disagree over the current rate. Protection advocates cite a mid-1970s to mid-1980s loss rate of 290,000 acres per year calculated by the U.S. Fish and Wildlife Service. They use these data to support their call for a strong protection effort. The Natural Resource Conservation Service (NRCS), citing data it gathers in the Natural Resources Inventory every 5 years, calculates that the gross rate of loss averaged about 135,000 acres on non-Federal lands annually between 1982 and 1992, with a net loss is 70,000 to 90,000 acres after all restoration and mitigation activities are also considered. By 1992, the gross rate of conversions to agricultural use had declined to 31,000 acres, while the net loss was about 20,000 acres. At least one analyst has suggested that now, with all the new Federal programs protecting and restoring wetlands, and the greatly slowed pace of wetlands loss, the country actually may be gaining wetlands. (2) One reason for this discrepancy is the considerable lag in published data. The most recent national data published by the Fish and Wildlife Service, which extends through the mid 1980s and is still often cited, precedes implementation of swampbuster, as well as other Federal wetland protection programs under Partners for Wildlife, the Wetland Reserve, and the North American Wetlands Conservation Act. The older the data, the less likely it is to accurately capture the current situation; the older data in this instance probably overstate current wetland loss rates. Department of Agriculture (USDA) economists have summarized the incentives and disincentives for wetland conversions. Relevant factors include not only disincentives of direct regulation (e.g., the 404 program) and intentional indirect disincentives (swampbuster), but also unintentional disincentives (the elimination of preferential capital gains tax rates on sale of converted wetlands), marketplace economics, and implementation of wetland restoration programs, as well as greater public support for wetland protection. Because there is no single cause, it is virtually impossible to assess precisely how changes in one policy area, such as swampbuster, might affect wetland conversion trends. Still, analysts state that while net wetland losses have been reduced from earlier decades, it would "be incorrect to assume that conversion rates would remain low if Section 404 regulation and Swampbuster provisions were weakened." (3) THE SWAMPBUSTER PROGRAMUnder swampbuster, a producer who converts a wetland so that agricultural production is possible loses access to specified farm program benefits until the wetland is restored. Swampbuster is not a regulatory program--no one is prohibited from modifying wetlands. However, some landowners who believe that they are forced to rely on farm programs may view it as a form of regulation. Farm program benefits which may be denied include any type of price support or payment, crop insurance, agricultural disaster payments, a farm storage facility loan, and certain agricultural insured or guaranteed loans. Swampbuster legislation was enacted in the 1985 farm bill and amended in the 1990 farm bill (16 USC 3821). Swampbuster provisions are the only places that wetlands are defined in Federal law (the 1990 amendments retained the 1985 definition). The definition states that three physical features that can distinguish wetlands from surrounding areas must be present or indicated: wetland-type soils, wetland plants, and water. Swampbuster applies to all agricultural places that meet the definition of a wetland. Field staff of the NRCS determine whether an agricultural site is a wetland. How this designation affects the use and modification of the site depends on other factors because this law distinguishes several types of wetlands and provides several exemptions, discussed below. Swampbuster enforcement is a two-step process. First, NRCS determines whether swampbusting has occurred. It makes that determination based on an examination of modifications that alter soils, vegetation, or hydrology and on a comparison of current and prior conditions. If it determines that swampbusting has occurred, the landowner is referred to the agencies administering the farm benefit programs. These agencies decide whether to deny benefits, based on the circumstances of the case. They have some flexibility both about whether to deny benefits and about how much to deny. An appeals process is available for producers. The Geographic Scope or Jurisdiction of Swampbuster Swampbuster applies to all places that meet its definition of wetlands. It identifies four basic types of wetlands: "wetlands," "converted wetlands," "farmed wetlands," and "prior converted cropland." (By contrast, the 404 program is structured around regulated activities, as explained below.) Each type of wetland is accompanied by different definitions of how it might be used for agriculture without risking violation, whether prior modifications (such as drainage structures) can be maintained, and what alterations are allowed. The variety of wetland types causes producers to have two questions: is a site a wetland, and if so, what type of wetland is it. More specifically: (4) Wetlands are areas of predominately hydric soils that under natural conditions do support a prevalence of water-loving plants. No additional drainage is allowed, but existing drainage for adjacent farmed wetland pastures, farmed wetlands, or prior converted cropland may be maintained. Converted wetlands were drained or altered after December 23, 1985 (the date swampbuster was enacted) to enhance agricultural production. No additional drainage and no drainage maintenance are allowed. Farmed wetlands were partially drained or altered to produce an agricultural crop prior to December 23, 1986, but still exhibit some wetland values. While no additional drainage is allowed, existing drainage may be maintained (but not improved), and the area may be farmed as it was prior to that date. Prior converted cropland (also referred to as prior converted wetland) was converted to cropland use before December 23, 1985, and no longer meets wetland criteria. Additional drainage is allowed without restriction, and drainage maintenance is allowed without restriction. According to data about resource conditions collected periodically by the NRCS through the National Resources Inventory of non-Federal lands, about 91.1 million acres of land were classified as wetlands in 1992. Only a small portion of the total are on cropland, including 3.5 million acres of wetlands and 2.5 million acres of farmed wetlands. (5) One reason for the lack of wetlands on cropland today is that an additional 45.9 million acres are classified as prior converted cropland. Swampbuster does not affect any conversions for non-agricultural uses. In addition, it currently exempts a number of activities related to agriculture. Exemption means that benefits cannot be denied to the producer, and exempted activities allow a landowner to produce an agricultural commodity (including ones that depend on inundation such as rice and cranberries) on:
THE SECTION 404 PROGRAMThe Clean Water Act (CWA) section 404 permit program (33 USC 1344) regulates the discharge of dredged or fill material into "navigable waters of the United States," including wetlands. Wetlands are defined in regulation, but not in the law. The program is jointly administered and enforced by the U.S. Army Corps of Engineers (COE), which has the primary responsibility for evaluating permit applications, and the Environmental Protection Agency (EPA), which is responsible for environmental criteria that govern permit issuance. The CWA regulates discharges resulting from activities that may impact the Nation's waters. A party wishing to discharge dredged materials into any of the Nation's waters can do so only by obtaining a section 404 permit, unless otherwise exempted. In essence, the 404 program begins with the question of whether there is a discharge of dredged material that could destroy or degrade the Nation's waters, and then evaluates how the discharge will be addressed in permitting. The Geographic Scope or Jurisdiction of the 404 Program The CWA defines "navigable waters" as "the waters of the United States, including the territorial seas." Over time, and in part as a result of court rulings, the term as defined in COE regulations has come to include a broad range of waters, including traditionally navigable waters as well as nonnavigable streams and tributaries, adjacent wetlands, and isolated waters. The COE's jurisdiction is far-reaching and includes virtually all water bodies in the United States. (6) Because of its broad jurisdictional scope, the 404 regulatory program covers more places than does swampbuster, and includes "other waters" (lakes and rivers) that are not recognized under swampbuster. The section 404 program has two types of permits; standard permits and general permits, and in addition, some agricultural activities are exempt under section 404(f) (see following discussion). Many agricultural activities are subject to less onerous general permit requirements. Activities covered by one of 37 nationwide general permits under section 404(e) are, in effect, allowed through a permit by rule and do not require the landowner to obtain a standard permit authorizing the activity. Nationwide permits (NWPs) reflect a judgment that the activity in question imposes minimal impact on navigation and aquatic life individually and cumulatively, wherever it may occur, and can go forward without the need for advance COE review. However, predischarge notification is required for several of the nationwide permits, and COE district engineers have the discretion to subject specific activities to the more substantial standard permit review. COE field offices also have the authority to issue regional general and programmatic general permits, and they have issued approximately 450 of these in total. Agricultural activities covered by nationwide permits include: bank stabilization activities necessary for erosion prevention; minor discharges not exceeding 25 cubic yards; fill for road crossings; wetland and riparian restoration and creation activities under an agreement between the landowner and a Federal agency (such as USDA); cranberry production; emergency watershed protection and rehabilitation done by or funded by USDA; and discharges for foundations or building pads for an individual farm building or structure. In addition, NWP number 26 authorizes discharges into headwaters and isolated waters that would cause the loss of no more than 10 surface acres of waters of the United States. Discharges under this NWP affecting from 1 to 10 acres require predischarge notification to the COE; discharges affecting less than 1 acre require no advance notification. The CWA embodies the principle that all discharges are prohibited, unless authorized by a lawful permit. (7) For the most part, placing any material into a wetland is considered a discharge subject to 404 regulation. However, section 404(f) of the Act exempts from regulation a number of routine activities that have relatively minor impact on water quality. Several are related to agricultural practices, including: normal farming, silviculture, or ranching activities, such as plowing, seeding, minor drainage, and harvesting; construction or maintenance of farm ponds or irrigation or drainage ditches; and farm or forest roads construction and maintenance. These exemptions do not apply if a discharge would change the use of any water, impair water flows or circulation, or reduce the reach of the water. The exemptions have traditionally been construed narrowly, (8) and the COE regulations provide that if an activity would convert a wetland to an upland or to a new use, it is not exempt from regulation. In the past, certain discharges associated with drainage were not regulated consistently. Section 404 is concerned with discharge or disposal of dredged and fill material. It does not expressly prohibit or regulate drainage, although it is widely believed that drainage is responsible for much of the wetlands loss via conversion to other productive uses, including agriculture. As noted above, section 404(f) exempts "minor drainage" associated with normal farming and ranching from regulation. Until recently, the COE and EPA held that drainage which did not result in a discharge to waters of the United States was beyond the scope of section 404. However, by regulation issued in 1993, the COE and EPA do regulate drainage to the extent that it is associated with mechanized land clearing, ditching, channelization, and other excavation which results in more than de minimis environmental effect from the discharge of dredged or fill material to the Nation's waters. Normal farming practices which fall within the 404(f) exemption refer to established activities, including conventional rotation of fields (e.g., planting different crops each year in an established rotation), changing cultivation techniques (e.g., discing between crop rows rather than using herbicides), and changing from one wetland crop to another (from crawfish production to rice, for example). Activities which introduce farming to property not previously farmed on a regular basis is not exempt, nor is drainage which results in immediate or gradual conversion of a wetland to non-wetland. The COE has provided definitions and examples of exempt activities in its regulations and also has issued guidance and field memoranda intended to clarify the relation of certain agricultural practices to the 404(f) exemptions, but some confusion persists. Courts also have addressed several aspects of the 404(f) exemptions and have, for the most part, construed the exemptions narrowly. (9) Finally, activities undertaken on prior converted cropland are not subject to 404 regulation, under an interagency agreement in effect since 1990. These are areas which once were wetlands but were altered before December 23, 1985, to allow agricultural production. The most common forms of alteration include draining, dredging, filling, and leveling. This exemption covers an estimated 45.9 million acres nationwide, according to the most recent USDA statistics. In summary, the 404 regulatory program covers discharges of dredged or fill material to wetlands on agricultural lands and requires authorization by the COE (either an individual permit or NWP) unless the activity has a CWA statutory exemption or the area is prior converted cropland. HOW ARE THESE TWO PROGRAMS CURRENTLY COORDINATED FOR MANAGING AGRICULTURAL WETLANDS?Section 404 and swampbuster are currently coordinated through a Memorandum of Agreement (MOA) between NRCS and the COE signed January 6, 1994. The MOA makes NRCS responsible for all wetland delineations and certifications on agricultural lands (cropland and pasture land) and proximate sites. It does not include forestland or rangeland. It requires that NRCS use its own field manual for agricultural lands, and the 1987 COE manual for the section 404 determinations. NRCS is also responsible for delineating "other waters" associated with agricultural lands, which are subject to section 404, but not subject to swampbuster. Certifications are good for 5 years. After a decision has been made about classification, the two programs operate separately on agricultural lands. The COE administers the section 404 permit process, and NRCS determines whether modifications related to agricultural activities have resulted in swampbusting. Because the MOA does not supersede the requirements of section 404 or swampbuster, there can be cases where an approved action under section 404 could result in a swampbuster violation and vice-versa. These differences can cause confusion, and may require extensive interagency coordination and agency consultation with landowners. Another potential source of confusion is that differences in interpretations can and do occur in the field as experts may reach different conclusions about a wetland delineation, based on different training and skills, or because of different interpretations of observations. No data on the frequency of these differences is available. Where disputes of this type occur, landowners can use NRCS's appeals process to obtain further review. Further comments on these differences are beyond the scope of this discussion. HOW EFFECTIVE ARE THESE PROGRAMS IN DISCOURAGING AGRICULTURAL WETLAND CONVERSIONS?The 404 and swampbuster programs discourage agricultural wetlands conversion, but neither is an outright or a blanket prohibition. The 404 program exempts certain activities, while swampbuster provides economic disincentives. As noted above, normal farming activities are generally exempt from 404 regulation and thus are allowed. Even if an activity is not exempt, it still is possible that a landowner can obtain the necessary 404 permit. If the COE determines that the environmental effects would be minor, a permit is granted, allowing the activity to proceed. According to one analysis of wetlands permitting in California from 1988 to 1994, the vast majority of all applications for wetlands permits were granted, while those that were denied had been submitted by corporations or public entities, not private individuals. (10) Data compiled by the COE indicate that approximately 7 percent of its workload is related to agricultural activities. Of that amount, about 87 percent are covered by general permits, 12 percent receive standard permits, and less than 1 percent are denied. (11) Swampbuster, which gives farmers an economic incentive to not convert wetlands (by withholding agricultural benefits), is likely to be effective only to the extent that overall economic considerations do, in fact, favor not using the land for producing agricultural commodities. Additionally, it has no effect on conversion of agricultural wetlands that would not be used to produce commodity crops or on producers who do not participate in any farm programs. (12) HOW WOULD LEGISLATIVE PROPOSALS TO MODIFY SWAMPBUSTER AFFECT AGRICULTURAL WETLANDS?The list of possible amendments to expand the exemptions to swampbuster is extensive. The two that would likely have the largest effect are: (1) exempting wetlands that are smaller than 1 acre; and (2) exempting wetlands that have been cropped in 6 of the past 10 years. The first is included in H.R. 2542 (as amended) and both are in S. 1373. Anecdotal evidence and more substantive analysis have been offered about the impact of each. For example, a large portion of the prairie potholes, highly valued for duck breeding, are less than 1 acre. Based on field surveys, the U.S. Fish and Wildlife Service estimates 79 percent of the wetland sites in North Dakota, where potholes are concentrated, are smaller than 1 acre, and these sites amount to 13 percent of all wetland acres in the State. Nationally, there are widely varying estimates of how many discrete places, breeding pairs, or total acres would be affected. NRCS considers wetlands cropped 6 of the past 10 years to be synonymous with farmed wetlands. Staff at NRCS, using the National Resources Inventory, estimate that 2.5 million acres of wetlands that are on cropland, 1.3 million acres on pastureland, and 2.1 million acres of wetlands farmed under natural conditions--or a total of 5.9 million acres--would be exempt from swampbuster under these provisions. A widely circulated analysis prepared by the U.S. Fish and Wildlife Service indicates that the duck hunting season along the central flyway might be significantly curtailed by a decline in breeding populations if these proposals are enacted. (13) When considering these and other forecasts of possible change, it is also important to be aware that reduced protection based on numbers of acres or sites does not tell the entire story. Wetlands, especially the smaller ephemeral ones, fluctuate from year to year. Such annual changes from wet years to dry years may have a large effect on wetland acreage and water fowl populations. Also, many of the impacts will depend on the location of each affected wetland within larger hydrologic systems--loss of some of these sites will have a substantial effect, while the impact of losing others will be limited. In a possible analogy, Florida recently amended its laws to reduce the protection of mangroves under some circumstances. Prior to the change, mangroves could not be altered under most circumstances. The revised law allows certain modifications, especially around homes. The effect of allowing these modifications has been far greater than predicted, probably because of a pent-up demand among landowners to make improvements to their property that affect or alter mangroves, combined with a concern that the State may reverse itself in the future and prohibit further modifications. (14) It is possible that a similar pattern might play out if swampbuster is amended as proposed, with an unexpectedly high rate of alterations soon after enactment in response to both the new opportunity and a worry that the opportunity may be short-lived. IF SWAMPBUSTER WERE REPEALED, HOW WOULD AGRICULTURAL WETLANDS BE PROTECTED UNDER SECTION 404?Both laws affect virtually identical places, but in very different ways. (15) The programs complement each other more than they duplicate, although there is a widespread perception within the agricultural community that they are duplicative. (16) Wetland protection advocates have stated that neither is a complete wetlands protection law in the sense that neither protects all identifiable wetlands from all possible modifications, and even combined, they do not provide total protection. If swampbuster were repealed, almost all areas would still be regulated under section 404, but activities altering agricultural wetlands that are not considered to be disposal of dredge or fill material could occur without penalty (e.g., some drainage activity). Further, the section 404 exemption for normal farming practices has a very different effect on agriculture than the exemptions for types of places under swampbuster. The major differences come in how the laws are applied. The section 404 program applies to one activity, the disposal of dredge and fill material, whereever it occurs in wetlands (and waters of the United States). The swampbuster program applies to all activities that alter hydrology in agricultural wetlands, all activities that alter drainage and make the production of agricultural commodities possible in converted cropland (no drainage maintenance is allowed), and all activities that go beyond maintenance of existing drainage in farmed wetlands. Prior converted wetlands are currently exempt from swampbuster by regulation. Both laws also exempt certain activities (in the case of section 404) or certain situations (in the case of swampbuster). In terms of direct protection of wetlands, repealing swampbuster would not result in loss of protection, since swampbuster provides protection for wetlands indirectly, through disincentives that deny benefits. To the extent that changes in swampbuster eliminate economic disincentives to alter agricultural wetlands, and farmers then chose to alter existing wetlands, they still would be subject to 404. Whatever wetland protection is provided by the 404 program (or not provided, as a result of exemptions or nationwide permits) would remain unchanged. The 404 regulatory program covers more agricultural wetlands than does swampbuster because 404 applies to agricultural wetlands whether or not they are eligible for agricultural benefits. If swampbuster were repealed or modified, it does not appear that any agricultural land would not be covered by regulation for dredge and fill material, so long as no substantive changes were made to the 404 program. (However, see the following discussion about pending CWA legislation.) IF SECTION 404 WERE AMENDED, HOW WOULD AGRICULTURAL WETLANDS BE AFFECTED?On May 16, 1995, the House passed H.R. 961 which includes provisions to revise the CWA section 404 program, and similar legislation (S. 851) is pending in the Senate. (17) Both bills include sections that would affect administration of the 404 regulatory program on agricultural lands. First, both bills provide that the Secretary of Agriculture is to delineate wetlands on agricultural and associated nonagricultural lands. These legislative provisions endorse the current Administration policy under the 1994 MOA but would extend it by including rangelands and land used for livestock production, as well. Second, both bills would specifically exclude from 404 regulation any agricultural lands which are exempted from swampbuster by a USDA determination that activities will have a minimal effect, individually and cumulatively, on the functional hydrologic and biologic integrity of wetlands. Third, both bills add to the statutory list of routine activities which are exempt from 404 regulation. Both would add "haying and grazing" to the list of exempt normal farming and ranching activities and add that "burning of vegetation in connection with" routine farming and ranching is exempt. Other agricultural activities that would be exempt, under both bills, include those undertaken on farmed wetlands or on incidentally created wetlands; and construction or maintenance of a farm, stock, or aquaculture pond or an irrigation ditch, and maintenance of a drainage ditch. The House bill also exempts construction or maintenance of wastewater management facilities that are used by concentrated animal feeding operations. Fourth, both bills provide for the classification of wetlands according to ecological significance and function, ranging from Type A (the most ecologically valuable) to Type C (the least valuable), and then regulate them differentially. To the extent agricultural wetlands were classified as Type B. they would still be subject to permitting but under less strenuous public interest review than Type A wetlands. To the extent agricultural wetlands were classified as Type C (defined as those which serve limited or marginal wetlands functions), Federal permits would not be required. Fifth, both bills would amend the definition of wetlands to include only those sites that exhibit clear evidence of wetland soils and plants, and the presence of water at the surface for 21 consecutive days during the growing season. This definition is far more restrictive than the current regulatory definition; the COE estimates that 65 to 75 million acres would no longer be regulated, while the NRCS estimates that 71 million acres of private land (of a total of more than 91 million acres) would no longer be regulated. Sixth, the Senate bill adds to the definitions section of the CWA a number of areas which would not be termed "waters of the United States" and hence, would not be subject to 404 regulation. These would include: nontidal irrigation or drainage ditches located in an upland; artificially irrigated areas that would revert to upland if irrigation ceased; artificial lakes or ponds for purposes of stock watering, irrigation, wildlife, fire control, cranberry growing, or rice growing; and prior converted croplands. Finally, both bills have provisions to broaden the current authority of the COE to issue nationwide permits. The Senate bill would specifically authorize a nationwide permit for wetland conversions that are exempt under swampbuster; the COE currently is developing such a nationwide permit, to be proposed in the future. (This provision of S. 851 overlaps another, described above, that would exclude lands exempt under swampbuster from the 404 program.)
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