A federal district court in California has ruled that a farmer did not “convert” wetlands under the Food Security Act when he releveled rice fields and, accordingly, did not render himself ineligible for farm program benefits.  In Koshman v. Vilsack, the court set aside a contrary determination of the U.S. Department of Agriculture (“USDA”), finding that the USDA’s interpretation of its “farmed wetlands” regulations conflicts with the statute.  The decision undercuts the validity of the USDA’s regulations prescribing limits on how farmers use “farmed wetlands.”

In the Food Security Act, Congress established various programs for agricultural commodity price and income supports and for conservation, including one known as “Swampbuster” designed to discourage the conversion of wetlands to cropland.  The statute provides that any person who after 1985 “produces an agricultural commodity on converted wetland” or after 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 various farm program benefits.

In its regulations, the USDA echoed these statutory provisions rendering ineligible those who convert wetlands and added restrictions about another category of wetland unknown to the Act, “farmed wetland,” defined as a wetland that before 1985 “was manipulated and used to produce an agricultural commodity.”  The USDA provided that farmers may continue to farm such wetlands as they did before 1985, with two limitations:  (1) No action can be taken “to increase effects on the water regime beyond that which existed” before 1985 and (2), in order to maintain eligibility, a person must receive approval from the USDA before “making any changes that will have the effect of increasing the capacity of the existing drainage systems.”

In 2002 and 2003, Robert Koshman releveled rice fields that had first been leveled in the 1950s and had since been used, at least some years, to grow rice.  In 2004, the USDA (through the Natural Resources Conservation Service and Farm Service Agency) determined that Koshman had “converted” wetlands in the fields he releveled thus rendering him ineligible for farm program benefits.  The USDA did not find that releveling the fields made production of rice possible where it previously was not and, indeed, admitted that rice could be and was produced on the fields before they were releveled.  Rather, the USDA found that releveling the fields made them “more farmable” and concluded that sufficed to “convert” the wetlands.

Koshman, represented by Briscoe Ivester & Bazel, challenged the USDA’s determination, arguing that it was contrary to the Food Security Act, which provides that a wetland is “converted” only when a manipulation of the land makes production of an agricultural commodity possible where previously it was not.  The USDA relied on Clark v. U.S. Dept. of Agriculture, 537 F.3d 934 (8th Cir. 2008), upholding a similar USDA wetland conversion determination on the ground that the farmer’s alteration of farmed wetlands made them more farmable.

The U.S. district court agreed with Koshman and vacated the USDA’s determination.  Interpreting the statute in keeping with principles established by the Supreme Court in Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837 (1984), the court said it first looks to “the plain language of the statute,” which makes ineligible for farm benefits those who “convert” a wetland by manipulating it to make production of an agricultural commodity possible.  The court observed that both the statute and the USDA’s regulations define “converted wetland” to mean a wetland that has been manipulated “for the purpose of or to have the effect of making the production of an agricultural commodity possible if [¶] such production would not have been possible but for such action.”  The court was mindful as well that the USDA’s regulations provide that a “farmed wetland” can continue to be farmed as it was before 1985, but “no action may be taken to increase effects on the water regime beyond that which existed” before 1985.  Indeed, the USDA defended its wetland conversion determination largely by pointing to those regulations.

Since Congress defined “converted wetland” with respect to making production of an agricultural commodity “possible” but did not define that term in the statute, the court decided to construe it in accordance with its “ordinary or natural meaning” as set forth in Webster’s dictionary to mean “falling within the bounds of what may be done.”  The court considered and rejected the 8th Circuit’s contrary opinion in Clark, which found the word “possible” to be ambiguous in that the possibility of producing an agricultural commodity might be measured in terms of “technical growth” or “commercial feasibility.”  Pointing out that the 8th Circuit did not further “explain why the word ‘possible’ became ambiguous when combined with the notion of agricultural production, but rather simply stated this as obvious,” the Koshman court rejoined:  “It is not so obvious to this court.”  Noting that “commodity” refers to “an economic good,” the court concluded that mere “technical growth” is not covered by this term and “[b]y interpreting all parts of the phrase to mean that the manipulation must make the production of an object of trade or an economic good possible, there is no ambiguity.”  According to the court, land that occasionally produced one stunted ear of corn would be converted if it could sustain production of a commercially feasible crop after manipulation, but land that produced a commodity before the manipulation would not be.  Under the statute, said the court, “a conversion occurs only if the production [of a commodity] ‘would not have been possible but for’ the manipulation.”

“Because the statute is not ambiguous” and Congress thus has directly answered the question at hand, the court said it need “not proceed to step two of the Chevron analysis,” which would entail considering whether the agency had reasonably interpreted the statute in its regulations, “but turn[ed] instead to a determination of whether the agency’s interpretation conflicts with the plain language of the statute . . . .”  Pointing to the USDA’s determination that Koshman “had converted wetlands by ‘making the land more farmable,’ which in turn was accomplished ‘through better water management,’ which allowed [Koshman] to increase productivity and assist in his rice production,” the court concluded that “[t]his interpretation conflicts with the plain statutory definition of a converted wetland . . . and is therefore ‘not in accordance with the law’” and accordingly vacated the USDA’s determination.

The USDA appealed, but later dismissed its appeal, so the district court’s decision is now final.

Koshman calls into question the validity of the USDA’s regulations limiting the use of “farmed wetlands.”  According to the court, Congress plainly provided that someone “converts” a wetland and thereby becomes ineligible for farm program benefits only by manipulating land so as to make production of an agricultural commodity possible where previously it was not.  Under the court’s reasoning, the USDA’s “farmed wetland” regulations conflict with this provision by rendering ineligible those who manipulate such wetlands to improve drainage and the like, thereby making them “more farmable,” but do not “convert” wetlands as Congress prescribed.  The district court’s ruling is not binding on other courts, but to the extent that other courts find Koshman persuasive, it could lead them to similar conclusions and, perhaps, to invalidate the USDA’s regulatory limitations on the use of “farmed wetlands.”

 

David Ivester

Briscoe Ivester & Bazel LLP
155 Sansome Street, 7th Floor
San Francisco, CA 94104
Telephone: (415) 402-2700
Fax: (415) 398-5630

Disclaimer: In our Newsletters and Bulletins, Briscoe Ivester & Bazel LLP intends to present general information to the public and does not intend to provide legal advice pertaining to a particular situation.

 

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