Minnesota Swampbuster Case Goes Against Landowner

Overview

The conservation-compliance provisions of the 1985 Farm Bill introduced the concept of “Swampbuster.”  The Swampbuster rules deny federal farm program benefits to persons planting agricultural commodities for harvest on wetlands that have been converted to agricultural production after the effective date of the 1985 Farm Bill – December 23, 1985.  A “wetland” has (1) the presence of hydric soil; (2) wetland hydrology (soil inundation for at least seven days or saturated for at least 14 days during the growing season); and (3) the prevalence of hydrophytic plants under undisturbed conditions.  In other words, to be a wetland, a tract must have hydric soils, hydrophytic vegetation and wetland hydrology. 

A “prior converted” wetland is a wetland that was totally drained before December 23, 1985.  They can be farmed, but they revert to protected status once they are abandoned.  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 to its “original scope and effect.”

Note:  While USDA has interpreted the “scope and effect” regulation such that  the depth or scope of drainage ditches, culverts or other drainage devices be preserved at their December 23, 1985, level regardless of the effect any post-December 23, 1985, drainage work actually had on the land involved, that interpretation has been rejected by the U.S. Circuit Court of Appeals for the Eighth Circuit.  See Barthel v. United States Department of Agriculture, 181 F.3d 934 (8th Cir. 1999).  In Barthel, the court ruled that the regulation at issue is properly interpreted to allow landowners to make whatever change is necessary to the drainage device (or system) so that the scope and effect of the drainage on the land remains unchanged.

Otherwise, under USDA rules, a “converted wetland” is a wetland that has been drained, dredged, filled, leveled, or otherwise manipulated … 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 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.”  The Congress tweaked the rules in 1990 with the result that a person could become ineligible for farm program benefits either by (1) converting wetland and growing crops on the land if the conversion was accomplished after December 23, 1985, or (2) merely converting wetland after November 28, 1990, so that crops could be grown on the land.  Also, while converting a wetland to crop production before November 28, 1990, resulted in only a proportional loss of benefits, conversion after that date results in the loss of all USDA benefits on all land the farmer controls until the wetland is restored of the loss is mitigated.

Fact of the Case and Administrative Appeals

In this case, a Minnesota farming operation disputed a final Natural Resources Conservation Service (NRCS) ruling that it violated the Swampbuster provisions by filling-in a 2-acre wetland in 2007. The land in question was located in a corner of an 80-acre tract that had been designated as “prior converted” wetland in 1988 by NRCS.  But, it contained numerous wetland plants including cattails and bulrushes.  In 2007, the Natural Resources Conservation Service (NRCS) received a “whistleblower” complaint that accused the farming operation of converting a portion of the wetland.  The farming operation did not contest that the area in question was a wetland, nor that it had been filled.  Instead, the farming operation maintained that the drainage and filling had occurred before the effective date of the 1985 farm bill.  After an investigation of the site, the NRCS issued a “preliminary technical determination” that the farming operation had converted the wetland in 2007 by “filling” the area.  That decision became final on October 22, 2008.

The farming operation appealed NRCS’ determination to USDA’s National Appeals Division (NAD) where it bore the burden of proving by a preponderance of the evidence that the NRCS’s determination was wrong.  The farming operation and some of its employees testified that they had installed a 10-inch tile to drain the wetland in October of 1985. At that time, an open ditch was created on the eastern boundary of the wetland, and the soil from the ditch was used to fill the wetland to make it “more suitable for farming.” The farming operation insisted that it had not filled the property since 1985, and that only “maintenance” work on a drainage ditch around the wetland had occurred.  The NRCS presented expert testimony from an environmental scientist and “wetland delineator,” as well as testimony from a soils scientist.  They presented soil samples from the wetland which indicated a clearly delineated fill line.  They produced evidence that there were corn stalks mixed throughout the fill at a non-uniform depth. NRCS also presented aerial photographs from 1981-2008 of changes to the size and characteristics of the wetland over the years.

In February of 2009 NAD issued a final determination which upheld the NRCS final determination.  NAD concluded that the un-decomposed corn stalks in the fill were not result of deep tilling- a farming practice that deepens the soil profile and disperses crop residue deeper into the soil- as the farming operation argued.  The NAD hearing officer found that if the vegetation in the soil was the result of deep tilling, the corn stalks would have been distributed uniformly throughout the soil. The evidence indicated that there was no uniform distribution.

The NAD also addressed the farming operation’s arguments that NRCS could not identify the source of the fill. The theory behind this argument was that the fill would have had to have been brought in from an outside source and NRCS could not identify that source. The farming operation argued that the cost of bringing in the amount of the additional fill at issue would not have made economic sense. The hearing officer concluded that NRCS was not required by their rules to determine the source of the fill. The presence of corn stalks in the topsoil and the shallow depth of the vegetation indicated that the soil was newly placed and that was enough evidence for the hearing officer to affirm the NRCS findings.

Federal District Court Opinion

Upon judicial review, the court noted that a federal agency determination will be upheld if it is supported by some substantial level of evidence - even if it is not supported by a preponderance of the evidence.  With that in mind, the court first examined the presence of un-decomposed corn stalks in the top soil and the farming operation’s claims of deep tilling practices resulting in the presence of the stalks.  But, the court believed that the corn stalks would have been evenly dispersed if deep tilling had occurred.   The court next addressed the aerial photographs presented by NRCS. Despite testimony from the wetland delineator of the farming operation pointing out that the wetland was not smaller in 2008 than it was in 1989, the court found that the evidence did not “substantially undermine” NAD’s conclusion that the wetland decreased in size over the years.   The court noted that the photographs of the NRCS and the farming operation depicted the wetland at different scales and at different exposures, resolution, coloration and level of detail.  As such, the court could not identify the size and shape of the wetland area.

Finally, the court looked to the farmer’s “source” argument. Even though no “borrow site” was evident on the 2007 aerial photographs, NRCS’ job was to determine when fill was placed, not where it had come from. The court did scold NRCS and NAD to a certain extent with regard to the farmer’s argument. The court would have “preferred” that the NAD officer would have responded to the farmer’s argument on the merits, instead of making assumptions that his argument was implausible.  However, the court deferred to “substantial agency expertise” and relied on NRCS’ opinion that the evidence clearly indicated filling in 2007.  Thus, the court upheld all of NRCS’ and NAD’s determinations. 

Observations

It apparently was not argued that the installation of the 10” tile in 1985 (which was actually installed in the wetland) and the nearby ditch in good repair would have legally converted the wetland.  Indeed, at the very least, the 1985 drainage work would have discredited the use of photographs from prior years in the delineation that NRCS performed.  It would have also compromised the use by the NRCS of many wetland indicators which would have required a more comprehensive analysis to prove the presence of wetland hydrology.  The farming operation would have benefitted from employing expert assistance at the NAD level, and without experts to back-up their arguments, the farming operation had little chance to overcome the deference given to the government’s position by the court.  By its own statements, the court appeared to be open to evidence that was strong enough to overcome that deferential standard.    

In addition, the court misstated the law applicable to the case.  The court stated that “[I]f, however, a farmed wetland is manipulated to increase its drainage capacity beyond that which existed before December 23, 1985, the wetland loses its farmed-wetland status, and becomes a converted wetland – that is, a Swampbuster violation.”  That is not correct given the Eighth Circuit’s Barthel opinion which is binding precedent which is to be followed by the federal courts in the Circuit – which includes Minnesota.  Under Barthel, drainage capacity is not the issue, the impact of the drainage on the land is what matters.  So, placing fill on prior converted or farmed wetland is immaterial if the wetland and farming regime remains unchanged.  The court never referenced the Barthel opinion.  While it is not known whether the Barthel opinion was briefed, based on the focus of the court on the immaterial issue of when the wetland fill occurred (as opposed to the real issue of the impact of the fill on the wetland and farming regime) it is likely that it wasn’t.  If that was, indeed, the case, it was a huge mistake.  David Stock Farm Services v. Natural Resources Conservation Service and USDA, Case No. 09-CV-0902, 2010 U.S. Dist. LEXIS 101174 (U.S. Dist. Ct. D. Minn., Sept. 27, 2010).