Many landowners might have read the headlines about the Supreme Court’s wetland decision this year – Sackett v Environmental Protection Agency – and breathed a sigh of relief: “Finally, we can fill a little puddle on our own property without the government intruding on our private property!” But despite this decision, grain farmers and other landowners, particularly in Minnesota, need to pause. The web of wetland regulation is complicated, overlapping, and confusing, and the penalties for even accidental violations can be severe.
This confusion is understandable, and stems from the duplicative nature of wetland regulation and the lack of communication between multiple regulators, often resulting in violations even by landowners who try to follow the rules. The most familiar wetland regulations are the so-called Swampbuster rules enforced by NRCS and USDA. However, federal Clean Water Act rules also apply to some wetlands, though less now following the Sackett decision. At the state level, Minnesota’s Wetland Conservation Act severely limits activity in protected areas. Finally, there may be wetland conservation easements granted in favor of state or federal governments which protect wetlands on particular pieces of property as a matter of contract. While these various regulations all have a similar goal of protecting wetland areas, which areas are protected and what activities are limited can vary from program to program, making it a difficult job to comply with all of them.
Federal Regulation: the Clean Water Act
Since 1972, the Clean Water Act (“CWA”) has regulated the discharge of pollutants into “Waters of the United States.” While the CWA applies to the industrial discharge of chemicals, it also applies to the placement of dredged material or other fill into waters. Thus, if a water is under the jurisdiction of the CWA, it cannot be filled without meeting certain regulations and obtaining a permit from the Environmental Protection Agency (“EPA”) and/or Army Corps of Engineers (“ACOE”).
These rules have been particularly contentious when applied to wetlands and small ponds that are not obviously connected to larger, navigable waters. The EPA and ACOE have historically applied an expansive scope of the CWA, seeking to regulate activities in even small wetlands so long as there was a “significant nexus” to a navigable water, meaning the wetland had a significant effect on the chemical, physical, and biological integrity of a navigable water. This was applied to many wetlands and ponds on the theory that groundwater or similar connections caused an effect on nearby regulated waters. Thus, filling a small pond or slough in your backyard could require a costly and time consuming permit application.
In the Sackett decision earlier this year, the Supreme Court limited the reach of the CWA, holding that it does not apply to wetlands, temporary streams and similar water features unless there is a continuous surface water connection between the wetland or other water feature and a traditionally navigable waterway. This severely limited the number and types of wetlands that ultimately may be regulated by the EPA.
While the Sackett decision does allow landowners to breathe some relief that filling and modifying their wetlands may be allowed without federal oversight, as will be seen below, there are a number of other regulations to contend with yet. Further, if the wetland or pond in question does have a surface water connection to a larger waterbody, a permit under the CWA may still be required.
Regulation by the USDA: Swampbuster Rules
Since the 1980s, farmers have had to comply with the so-called Swampbuster rules, first introduced in the 1985 Farm Bill. In general, the Swampbuster provisions prohibit a farmer from converting a wetland to make farming possible or from planting a crop on a wetland that was converted after 1985. A farmer who violates these provisions will be ineligible for farm program benefits until they comply, which includes federal crop insurance, other crop disaster programs, and FSA loan programs, including guaranteed loans and commodity loans. These financial consequences can be severe.
However, most farmers are familiar with how to comply with these rules. A landowner planning on adding new drainage to farmland can visit their local FSA office and request a certified wetland determination for their property by submitting a form AD-1026. The Natural Resource Conservation Services (“NRCS”), a group under the USDA, will evaluate the property and make several different classifications of land including wetland, farmed wetland, and non-wetland/prior converted.
Wetland areas cannot be farmed and cannot be drained and converted to non-wetland areas under the Swampbuster rules. Farmable wetlands are areas that have wetland characteristics including soil types, presence of water near the ground surface, and wetland plants, but have been partially drained or altered to allow crop production; these areas can generally be cropped, and existing drainage infrastructure can be repaired but not improved. Prior converted areas include areas that were wetlands but converted prior to 1985 and are treated the same as non-wetland areas; these lands are not subject to any restrictions and can be cropped, drained, and improved without any problem with Swampbuster rules.
Regulation by the State of Minnesota: the Wetland Conservation Act.
Separate from federal protections, the State of Minnesota has its own Wetland Conservation Act (“WCA”) which generally prohibits draining, filling, or otherwise impacting wetlands in Minnesota. The WCA is often enforced by county soil and water conservation districts, but may also be enforced by other county staff, cities, or watershed districts, depending on the location of the project.
In general, landowners seeking to complete a drainage project or other work that may impact wetlands can apply to the local government unit responsible for WCA enforcement (the “LGU”) to determine the existence of a wetland (a wetland boundary and type application) or to determine whether the proposed activity will impact the wetland or fall under an exemption (as no-loss application). In a wetland boundary and type application, the LGU applies guidance from the US Army Corps of Engineers on delineating wetlands to determine their scope and boundary. Like wetland determinations under the Swampbuster Act, the focus is on the existence of saturated soils and the presence of water-loving vegetation during normal conditions. And while the focus is on similar criteria, because the actual guidance documents relied on in applying the Swampbuster Act are different from the guidance applied under the WCA, so there are some wetlands that might be protected under the WCA even if not protected under the Swampbuster Act, or vice versa.
For a no-loss or exemption application, the LGU will determine whether the proposed activity will not cause a loss or impact to a protected wetland and is therefore permissible, or whether the activity may fall within one of several exemptions allowed under the rules. One such exemption relates to the repair or maintenance of an existing drainage system, so long as the maintenance does not drain wetlands that have existed 25 years before the activity. Therefore, landowners can generally repair and maintain existing drainage systems; but if those systems have been neglected for so long that new wetlands have formed or re-formed more than 25 years ago, repair work that ends up draining those wetlands may be prohibited.
It is important to note that some drainage work outside of the physical boundary of a wetland can still be prohibited by the WCA, if it nonetheless impacts and drains a wetland. The most common example is the installation of perforated drainage tile, which will have a “lateral effect,” draining land on either side of it, sometimes from a surprising distance, depending on soil types and the depth of the tile. Landowners should carefully plan tile installation near wetlands or consult with the LGU to avoid inadvertent violations.
Regulation by Contract: Conservation Easements
There is finally the possibility that the land may be encumbered by voluntary conservation easements which protect wetlands or other habitat. One of the most common types of conservation easements across the upper Midwest are wetland easements granted by landowners to the US Fish and Wildlife Service (USFWL) for “prairie potholes.” These easements were conceived as a way to protect small intermittent ponds which serve as important habitat for migratory waterfowl. Beginning in the 1960s, USFWL obtained easements over millions of acres of wetlands throughout the upper Midwest. Under these easements, landowners are contractually barred from taking activity that would fill or drain these protected easements.
Similar easements may be granted under various other programs. For example, Minnesota Reinvest in Minnesota easement program allows landowners to sell conservation easements in favor of the state of Minnesota, which could cover wetlands as well. Some local governments, tribes, or conservation groups may similarly be willing to purchase easements to protect wetlands or other important habitat. If violated, these easements can be enforced by a court, or may subject the landowner to criminal penalties.
The maze of regulation that applies to wetlands particularly in Minnesota is extensive. Even if a landowner thinks they have complied with one set of rules, they might be in violation of another. With drainage, erosion, and water quality increasingly becoming a focus of environmental groups and regulators, the emphasis on protecting wetlands is expected to increase. Landowners should be careful before undertaking drainage or other projects that have the potential to impact areas that may qualify as wetlands.