Wetlands and Agriculture:
Policy Issues in the 1995 Farm Bill

Jeffrey Zinn
Senior Analyst in Natural Resources Policy
Environment and Natural Resources Policy Division

December 19, 1994

95-7 ENR

SUMMARY

Wetlands protection efforts have been a major concern for agricultural interests since Congress enacted so-called swampbuster provisions in the 1985 Food Security Act. Under these provisions, all producers who alter wetlands risk losing certain farm program benefits. Determining which sites are wetlands and enforcement of penalties remain contentious issues. Controversy has been heightened by confusion over how this program is related to the principal Federal regulatory program to protect wetlands, section 404 of the Clean Water Act, and how wetland determinations affect land values and private property rights. Because the 103rd Congress did not reauthorize the Clean Water Act, some of the wetland issues raised in that debate might be raised in the farm bill.

Another wetland protection program, the Wetland Reserve (WRP), was enacted in the 1990 farm bill. This program, which pays farmers to place wetlands under long-term or permanent easements, has been far less controversial. This paper reviews the swampbuster and WRP, as well as controversies surrounding delineation of wetlands and relationships between private property rights and wetland protection efforts.

SWAMPBUSTER

The Concept

Swampbuster is one of three compliance programs enacted in the 1985 farm bill. Compliance means that the availability of Federal farm program benefits is tied to meeting certain societal goals. Swampbuster--along with sodbuster and conservation compliance--set the first standards to provide environmental benefits in farm legislation.

Before these compliance programs were enacted, all soil and water conservation programs offered through the agencies of the U.S. Department of Agriculture (USDA) had been based on two criteria: voluntary participation and incentives. The programs offer complementary incentives, including technical assistance (conservation planning and engineering) through the Soil Conservation Service, cost sharing payments through the Agricultural Stabilization and Conservation Service, education through the Extension Service, and loans through the Farmers Home Administration. Also, agriculture was viewed as unique, and was generally exempted from requirements in environmental laws that applied to other business and industrial sectors.

However, in the early 1980s, as farm program costs soared and severe erosion problems were widely reported, a growing portion of the general public, and even the farm community, responded in opinion surveys that farmers receiving Federal assistance should be required to meet environmental standards. Debate over sodbuster proposals during the preceding years had exposed the compliance concept to congressional consideration, and probably helped prepare the way for enactment of swampbuster. Congress surprised almost everyone by enacting swampbuster with little debate--it was one of USDA's first conservation programs to operate fully apart from the traditional conservation goal of enhancing farm productivity.

Opponents and supporters alike have expressed reservations about the swampbuster concept. Some opponents maintain that it has changed SCS (now, the Natural Resources Conservation Service (NRCS)) into a regulatory agency. Swampbuster supporters respond that farm program participants have always had to meet requirements; swampbuster merely adds another one. Each producer still decides whether to be in compliance and be eligible for these benefits. Further, producers who choose to be out of compliance still have full market access. But many wetland protection advocates also believe that swampbuster is ineffective precisely because it is not a regulatory program. This debate, which has both philosophic and practical dimensions, continues, especially in regions where wetlands are concentrated.

Swampbuster Provisions

Swampbuster was enacted in 1985 and amended in 1990. Under the 1985 Food Security Act (P.L.99-198), farmers who drain and then plant a crop on a wetland could lose specified farm program benefits. Swampbuster defines wetlands to include three elements: hydric soils, hydrophytic plants, and hydrology (the presence of water). Certain wetlands are exempt, including wetlands converted to agriculture before the date of enactment, accidentally or artificially created wetlands, wetlands where agricultural production is possible without altering drainage or destroying wetland characteristics or where production has a minimal effect, and areas where the producer follows an approved wetlands replacement plan.

The program was amended in several significant ways in the 1990 farm bill (P.L. 101-624). This legislation requires USDA to map all agricultural wetlands, and to establish a certification and appeals process. The program was strengthened by changing the initiation of swampbusting from the time that a crop is planted to the time when conversion makes possible the planting of a crop, and by adding six Federal farm programs to the list of benefits that could be denied. The program was also made more flexible . Under some circumstances, producers could lose a limited amount of benefits (ranging from $750 to $10,000), rather than all benefits. This graduated sanction, which a producer can use only once every 10 years, was made available retroactively. Also, the list of exempted wetlands was expanded, and "minimal effects" of farming activities was clarified. Restoring a prior converted wetland to offset losses in wetland values, acreage, or functions, known as mitigation, is allowed in some situations.

Implementation

Responsibility for implementation is shared by several agencies. NRCS is the lead agency; it works with producers to identify wetlands. It also visits a portion of all designated wetlands each year to determine if producers are violating swampbuster. NRCS transmits the names of violators to the agencies administering the programs to determine whether farm program benefits will be denied. Producers can appeal a swampbusting determination.

Implementing swampbuster has placed pressure on NRCS. The agency had limited wetlands expertise on staff in 1985. Extensive training programs have reduced those limitations. The program continues to require a large amount of staff time to carry out the various responsibilities. NRCS estimates that wetland work will cost about $108 million annually over the next 5 years, and that it will require about 25 percent of all field staff time devoted to conservation technical assistance.

Initial implementation was so controversial that Congress held several oversight hearings in 1987 and 1988. Defining what is a wetland and delineating sites that meet the definition, remains contentious. NRCS has interpreted the law's general wetland definition into operational definitions that distinguish six types of wetlands. These definitions are based on factors such as whether or when the wetland was altered, the degree to which it still exhibits or has the potential to exhibit wetland characteristics, and cropping history. When the definition is applied on the ground, many sites are delineated that do not fit the public's image of a wetland because either no water is visible or typical wetland vegetation is lacking. Adding further complexity, some wetlands that are isolated from larger water systems, such as prairie potholes and playas, are also treated differently from wetlands that are part of river systems.

Swampbuster responsibilities have made NRCS a major player in Federal wetland programs. The major Federal wetland regulatory program, the section 404 program under the Clean Water Act, is administered by the Army Corps of Engineers. Under the 404 program, permits are issued for the discharge of dredged or fill material. The assumption by many in the farm community that swampbuster is related to the section 404 program has caused considerable confusion. But basically the two programs are distinct from each other. Further, section 404 includes a provision that explicitly excludes "normal farming activities" from permit requirements.

Policy Issues

Major issues now revolve around determinations, delineations, and enforcement. NRCS suspended making new determinations (deciding whether a site is a wetland) and delineations (locating the boundaries of wetlands) for general inventories of wetlands in 1991, in response to a concern that national legislation might force the field staff to revise earlier determinations, adding to the agency workload and creating further confusion for farmers. Now, determinations and delineations are made as requested or needed. NRCS anticipates resuming the more encompassing determination effort in the very near future, and funding was provided for that effort in FY 1995 appropriations.

This effort will be resumed because the Administration has made the NRCS responsible for making all determinations on agricultural lands, even in support of the section 404 regulatory program. In an August 1993 policy announcement, the Clinton Administration endorsed NRCS as the lead Federal agency for making all wetland determinations on agricultural lands. On January 6, 1994, USDA, the Corps of Engineers, the Department of the Interior, and the Environmental Protection Agency signed a Memorandum of Agreement designating NRCS as the lead agency. This agreement is strongly endorsed by the agriculture community. Several environmental groups, however, believe that the NRCS will not adequately protect agricultural wetlands.

Resolution of a current controversy over delineating wetlands on the ground will affect the section 404 program and could affect swampbuster. Congress is awaiting a National Academy of Science report on delineating wetlands, expected in early 1995, before addressing this issue. It is important to note that the swampbuster program operates under its own regulations, promulgated in 1987, and will not necessarily be affected by congressional action in response to the National Academy report.

Since enactment, supporters and opponents of program implementation have debated the sufficiency and consistency of enforcement. According to USDA statistics compiled by the Agricultural Stabilization and Conservation Service (ASCS), the agency responsible for paying commodity program benefits, a total of 686 farms have lost benefits because of non-compliance through 1992. In 1992, 156 farms lost $1.66 million in benefits. This amount is an extremely small percentage of the total paid in 1992, $8.2 billion. Critics believe that this small percentage (.02 percent) reflects lax enforcement. Supporters of agriculture point out that the program is not yet fully implemented, and that wetland losses has generally slowed because of swampbuster (and other Federal wetland protection initiatives). USDA data also show that the number of penalized violators has tended upward; no data for 1993 is available.

Consistent enforcement was a serious problem during the first few years of the program. Most swampbuster violations in the early years were concentrated within a few States, and within those States, most were concentrated within a few counties. While wetlands do not occur uniformly across the landscape, where wetlands are concentrated does not appear to reflect patterns of violations. For example, Minnesota has 165 farms where ASCS benefits were denied, while neighboring North Dakota has only 29. NRCS has stated that it is addressing this problem, and Congress has chosen not to intervene thus far.

WETLAND RESERVE PROGRAM

The Wetland Reserve Program (WRP) was enacted in the 1990 farm bill. This program allows farmers to bid to enroll farmed wetlands and buffer areas into a long term or permanent easement. The program goal is to enroll 1 million acres by 1996. Participants also receive 75-percent cost-share payments to assist in restoring the wetland and reimbursement for overhead costs associated with registering the easement with the land title. So far, USDA has sought only permanent easements.

Both the Bush and Clinton Administrations have sought substantial funding for this program, but Congress has moved more slowly. In FY 1992, the Bush Administration sought funding to enroll 150,000 acres. Congress responded by providing funds to enroll up to 50,000 in acres in 9 specified States. Producer interest greatly exceeded 50,000 acres. Almost 50,000 acres were accepted; the largest number of acres were in Mississippi and Louisiana.

In FY 1993, the Administration sought full funding for WRP, but this was eliminated in the appropriations conference committee. In FY 1994, the Administration proposed funding of $370 million; Congress instead provided more than $65 million to enroll up to 75,000 acres in 20 States. In other FY 1993 legislation, a portion of the $60 million appropriated for USDA's Small Watershed Program in response to the 1993 Midwest floods is being used to enroll inundated land. An initial signup returned an estimated 25,000 acres to wetlands, and a second signup is being held through December of 1994.

For FY 1995, the Clinton Administration proposed $283 million to enroll up to 300,000 acres in the WRP, but Congress authorized less than $100 million. Also, during the second session of the 103rd Congress, legislation was enacted (P.L. 103-393) that is designed to expand interest in the WRP by making wetlands already covered under another agricultural wetland protection effort, the Water Bank Program, eligible for the WRP as Water Bank contracts expire.

Like any new program, the WRP has suffered a variety of start-up and growing pains. For example, there is some disagreement over what has actually been accomplished by this program. While ASCS offered bids on 50,000 acres in 1992, easements on only about 33,000 acres had actually been registered in local land records by May, 1994. This included an additional 17,000 acres added after the Federal Government extended its bid offers beyond the original January 31, 1994 deadline for filing. The 33,000 acres represents about half the acres on which offers had been made. Producers whose bids were accepted in 1994 have until March of 1995 to have their bids registered, or the Federal offer will be withdrawn. Other questions have to do with aspects of program administration, with the costs to the Federal Government of implementing the program, and with how to deal with regional wetland differences. The American Farmland Trust and the Soil and Water Conservation Society, two organizations interested in aspects of agriculture, have made suggestions to improve the program based on reviews of its implementation.

OTHER WETLAND ISSUES

The wetland protection issue has been caught up in a broader debate over protection of private property rights. Grass roots citizen efforts to oppose Federal regulations that allegedly reduce or eliminate property values have expanded. If this view gets a favorable response in the courts, then the overall Federal wetland protection effort could be reduced or redirected. Because swampbuster is a compliance program rather than a regulatory program, property rights challenges to it are unlikely to be considered directly by the courts. Nevertheless, it could be affected by any broader wetland program changes responding to property rights concerns.

The future of swampbuster also will be viewed within the context of general trends in both farm policy and wetland protection policy. If farm policy continues to evolve toward more limited commodity programs with greater reliance on the market place (and less on production controls), then swampbuster (and the other compliance programs) could become irrelevant to a growing portion of producers. Compliance supporters likely will seek some new supplemental approaches to protect wetlands. The fruits of this search might show up not only in a 1995 farm bill, but also in reauthorization of the Clean Water Act and other legislation. These revisions could include some changes to Federal wetland toward agriculture.

Swampbuster's future also is related to the agricultural community's ability to influence adjustments to environmental policy, including wetlands. Legislation introduced in the 102nd and 103rd Congresses, and generally supported by the agricultural community, would have made NRCS the lead agency for all wetland matters that relate to agriculture, and would have codified the Corps' current regulatory exemption for permits under section 404 for prior converted cropland. The first of these proposals has now been accomplished through administrative action. Wetland protection advocates are likely to oppose any efforts that give USDA agencies a stronger role in wetland protection efforts, citing agriculture as the biggest cause of wetland losses in recent decades.

Currently, the national wetland policy situation is complicated by the shared but distinct responsibility for wetlands protection among Federal agencies, and other unresolved debates, such as whether all wetlands should be protected equally and whether activities other than dredging and filling should be regulated by the Federal government. The center of today's bipartisan debate is between protection of wetlands and protection of property rights, with the focus on how to delineate wetland areas. Data on changing rates of conversion for various uses, and on the effectiveness of Federal wetland protection policies will be key contributions that will help to define the outcome of this debate.