5. Wetlands and Swampbuster developments. Section 404 of the Clean Water Act makes illegal the discharging of dredge or fill material into the “navigable waters of the United States” without obtaining a permit from the Secretary of the Army acting through the Corps of Engineers (COE). Over the years, EPA has issued “compliance orders” to landowners and other parties when EPA believed that the land in issue contained wetlands subject to EPA’s jurisdictional control. The issuance of a compliance order has the effect of freezing the affected party in place until a Section 404 permit is obtained. EPA has also taken the position that such orders do not give the affected party the right to a hearing or the ability to obtain judicial review because (in EPA’s view) such orders are not “final agency action” that carries appeal rights with it. However, in 2012 a unanimous U.S. Supreme Court held that the CWA does not preclude pre-enforcement judicial review of EPA administrative compliance orders. Preclusion, the Court held, would violate constitutional due process requirements. Under the facts of the case, the plaintiffs had filled in approximately one-half acre of their property with dirt and rock in preparation to build a house. The EPA issued a compliance order alleging that the parcel contained a wetland subject to the CWA permit requirements. The plaintiffs sought a hearing with the EPA to challenge the finding, but EPA did not grant a hearing. The EPA continued to assert jurisdiction and the plaintiffs sued in federal district court, seeking injunctive and declaratory relief. The trial court granted the EPA’s motion to dismiss for lack of subject matter jurisdiction because, according to the court, the CWA precludes judicial review of compliance orders before EPA starts enforcement action. The case was affirmed on appeal, but the U.S. Supreme Court reversed, noting that a compliance order constitutes “final agency action” under the Administrative Procedures Act, and the landowners did not have an adequate remedy at law. Sackett v. United States Environmental Protection Agency, 132 S. Ct. 1367 (2012), rev’g., 622 F.3d 1139 (9th Cir. 2010).

In another case, the Swampbuster rules included in the 1985 Farm Bill were at issue. Those rules completely protect three types of wetlands — natural wetlands, abandoned wetlands, and wetlands converted to crop production after December 23, 1985. Agricultural production on these types of wetlands triggers ineligibility for farm program benefits. Likewise, the cultivation of farmed wetlands triggers ineligibility for federal farm programs, but prior converted cropland is not protected and can be farmed. In 1990, the Congress tightened the Swampbuster rules by adding a new provision which provided that “any person who in any crop year subsequent to November 28, 1990, converts a wetland by draining, dredging, filling, leveling, or any other means for the purpose, or to have the effect, of making the production of an agricultural commodity possible on such converted wetland shall be ineligible for” USDA farm benefits.*10 Thus, after the 1990 Swampbuster amendments, a person could become ineligible for USDA farm 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.*11 The rules were changed to also add a stronger penalty for wetland conversions. While converting a wetland 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 or the loss is mitigated.*12 After the 1990 Swampbuster rule change, the USDA took the position that activities that made ag production “possible” on converted wetland meant that any activity that made such land more farmable was prohibited.*13 The USDA’s regulatory position was upheld by the U.S. Circuit Court of Appeals for the Eighth Circuit in 2008,*14 but in 2012, it was rejected by the Federal District Court for the Eastern District of California. Koshman v. Vilsack, 865 F. Supp. 2d 1083 (E.D. Cal. 2012).

Later, the 1996 Farm Bill rules specified that a farmed wetland located in a cropped field could be drained without sacrificing farm program benefit eligibility if another wetland is created elsewhere. Thus, through “mitigation,” a farmed wetland can be moved to an out-of-the-way location. In addition, the 1996 legislation provides a good faith exemption to producers who inadvertently drain a wetland. If the wetland is restored within one year of drainage, no penalty applies. The legislation also revises the concept of “abandonment.” Cropland with a certified wetland delineation, such as “prior converted” or “farmed wetland” is to maintain that status as long as the land is used for agricultural production. In accordance with an approved plan, a landowner may allow an area to revert to wetland status and then convert it back to its previous status without violating Swampbuster provisions. Also, while there is an exception from the Swampbuster restrictions for prior converted wetland that returns to wetland status after December 23, 1985, as a result of specified events,*15 the exception does not apply if the land had returned to wetland status before or as of December 23, 1985.*16 That point was reaffirmed by a federal district court in Michigan in 2012. The case involved a 2.24-acre tract on the plaintiff’s farm that the defendant claimed was a wetland. The tract at issue was initially drained and tiled in 1964, and crops were grown on the tract through at least 1982. In the early 1980s, drainage on the tract deteriorated. After enactment of the Swampbuster provisions in the 1985 Farm Bill, the NRCS made wetland determinations on the tract in 1988 and 1993 from which the plaintiff did not appeal. The plaintiff later executed Form AD-1026 in 2008, indicating he was intending to plant crops on the land for which a highly erodible determination had not been made and conduct land drainage or associated activities that had not been evaluated by NRCS. The form that the plaintiff executed also authorized the NRCS to conduct a wetland determination on the plaintiff’s property. In 2008, a wetland determination was made, and the plaintiff appealed by requesting reconsideration and mediation. A mediation agreement was entered into in early 2009 under which NRCS agreed to make a wetland delineation and allow the planting of crops in the spring of 2009. The NRCS conducted its delineation after spring crops had been planted, resulting in a Final Technical Determination that the tract was converted wetland and that the plaintiff was ineligible for farm program benefits. The plaintiff appealed to the NAD which suspended further appeal while mediation continued. The mediation ultimately failed and the appeal proceeded. The NAD Hearing Officer upheld the NRCS determination and noted that the tract could not be determined to be prior converted wetland because it had wetland conditions as of December 23, 1985. The Hearing Officer also noted that the plaintiff did not request a minimal effect determination before converting the wetland. The Deputy Director upheld the NAD Hearing Officer decision on appeal. Ultimately, the court upheld the NRCS interpretation of 16 U.S.C. §3822(b)(2)(D) that the status of the land as of December 23, 1985, was determinative of the issue irrespective of whether land had been drained and cropped before that date and merely reverted to wetland status as a result of deterioration to drainage work. Maple Drive Farms Family Limited Partnership v. Vilsack, No. 1:11-CV-692, 2012 U.S. Dist. LEXIS 176539 (W.D. Mich. Dec. 13, 2012).