Wetland Issues

Order Code IB97014

CRS Issue Brief for Congress

Received through the CRS Web

Wetland Issues

Updated May 22, 2006

Jeffrey A. Zinn and Claudia Copeland

Resources, Science, and Industry Division

Congressional Research Service ˜ The Library of Congress

CONTENTS

SUMMARY

MOST RECENT DEVELOPMENTS

BACKGROUND AND ANALYSIS

What Is a Wetland?

How Fast Are Wetlands Disappearing, and How Many Acres Are Left?

The Clean Water Act Section 404 Program

The Permitting Process

Nationwide Permits

Judicial Proceedings Involving §404: SWANCC

Treat All Wetlands Equally

Agriculture and Wetlands

Swampbuster

Other Agricultural Wetlands Programs

Agricultural Wetlands and the §404 Program

Private Property Rights and Landowner Compensation

Wetland Restoration and Mitigation

Wetland Activities in the 109th Congress

FOR ADDITIONAL READING

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Wetland Issues

SUMMARY

The 109th Congress, like earlier ones,

may consider various wetland policy topics,

but the precise direction of legislative activity

is uncertain. Of interest are statements by the

Bush Administration shortly after the 2004

election that restoration of 3 million wetland

acres would be a priority. It had first announced this goal on Earth Day in 2004; and

this remains the most recent iteration of overall administration policies to protect wetlands.

These policies continue to attract congressional interest, while, in recent months, congressional interest has become focused on the role

restored wetlands could play in protecting

New Orleans, and coastal Louisiana more

generally, from hurricanes.

SWANCC ruling has been introduced (H.R.

1356, the Clean Water Authority Restoration

Act), as has a bill to narrow the government’s

regulatory jurisdiction (H.R. 2658, the Federal

Wetlands Jurisdiction Act).

Wetland protection efforts engender

intense controversy over issues of science and

policy. Controversial topics include the rate

and pattern of loss, whether all wetlands

should be protected in a single fashion, the

ways in which federal laws currently protect

them, and the fact that 75% of remaining U.S.

wetlands are located on private lands.

One reason for these controversies is that

wetlands occur in a wide variety of physical

forms, and the numerous values they provide,

such as wildlife habitat and water purification,

also vary widely. A second reason is that the

total wetland acreage in the lower 48 states is

estimated to have declined from more than

220 million acres three centuries ago to 107.7

million acres in 2004. The national policy

goal of no-net-loss has been reached, according to the Fish and Wildlife Service, as the

rate of loss has slowed, and has been more

than offset by net gains through expanded

restoration efforts. A third reason is that

wetlands are protected in different ways by

multiple laws, including the permit program in

§404 of the Clean Water Act; programs for

agricultural wetlands; laws that protect specific sites; and laws that protect wetlands

which perform certain functions.

The 108th Congress was less active in

wetlands issues than recent Congresses, and

no major bills were enacted. Earlier Congresses had reauthorized and amended many

wetland programs and examined controversies

over such topics as applying federal regulations on private lands; documenting rates of

wetlands loss; implementing farm bill provisions; and examining proposed changes to the

federal permit program.

Congress has also been involved at the

program level, responding to legal decisions

and administrative actions by examining

aspects of wetland protection efforts. Examples include implementation of Corps of

Engineers changes to the nationwide permit

program (changes generally opposed by developers); redefining key wetlands permit

regulatory terms in revised rules issued in

2002; and a 2001 Supreme Court ruling

(called the SWANCC case) that narrowed

federal regulatory jurisdiction over certain

isolated wetlands. Hearings on many of these

topics were held, and some legislation was

introduced.

Legislation to reverse the

Congressional Research Service

Many protection advocates view these

laws as inadequate or uncoordinated. Others,

who advocate the rights of property owners

and development interests, characterize them,

especially the §404 program, as too intrusive.

Numerous state and local wetland programs

add to the complexity of the protection effort.

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MOST RECENT DEVELOPMENTS

The U.S. Fish and Wildlife Service released its most recent periodic survey of changes

in wetland acreage in March. Covering 1998 to 2004, it concluded that during this time

period there was a small net gain in overall wetland acres for the first time in this survey.

Others caution, however, that much of the gain was in ponds, rather than natural wetlands.

Hurricanes Katrina and Rita caused widespread alteration and destruction of wetlands

along the central Gulf Coast. The net effect will likely be major permanent losses, especially

along the coast. These losses will be partially offset as destruction will be temporary and

some new wetlands are created. The extent of change and loss is being documented by

federal agencies and others. (For additional information, see CRS Report RS22276, Coastal

Louisiana Ecosystem Restoration After Hurricanes Katrina and Rita, by Jeffrey Zinn.)

Congress is considering numerous alternative legislative proposals that would fund wetland

restoration projects and activities to help mute the impact of future hurricanes. The 109th

Congress had been considering a set of proposals to restore coastal wetlands in Louisiana

before these hurricanes struck, and both the proposals and the funding level have been

expanded as a result of these hurricanes.

In the 109th Congress, about five dozen bills with wetland provisions have been

introduced; about two dozen of these address wetland loss and restoration along the central

Gulf Coast. The remainder address topics that attracted attention in earlier Congresses, but

were not acted on, including legislation to reverse a controversial 2001 Supreme Court ruling

concerning isolated wetlands, the SWANCC case (H.R. 1356, the Clean Water Authority

Restoration Act); legislation to narrow the government’s regulatory jurisdiction (H.R. 2658,

the Federal Wetlands Jurisdiction Act); other large-scale restoration efforts involving

wetlands (the Everglades, for example); and appropriations for wetland programs. Critics

say that guidance issued by EPA in 2003 interpreting the SWANCC case for field staff goes

beyond what the Supreme Court’s decision required and has allowed many streams and

wetlands to be unprotected from development. On May 18, the House adopted an

amendment to H.R. 5386 to prohibit EPA from spending funds to implement the

controversial guidance.

Federal courts have had a key role in interpreting and clarifying the limits of federal

jurisdiction to regulate activities that affect wetlands, especially since the SWANCC decision.

On February 21, the Supreme Court heard arguments in two cases brought by landowners

(Rapanos v. United States; Carabell v. U.S. Army Corps of Engineers) seeking to narrow the

scope of the Clean Water Act permit program as it applies to development of wetlands. A

decision in these cases is expected by the end of June.

BACKGROUND AND ANALYSIS

Wetlands, with a variety of physical characteristics, are found throughout the country.

They are known in different regions as swamps, marshes, fens, potholes, playa lakes, or bogs.

Although these places can differ greatly, they all have distinctive plant and animal

assemblages because of the wetness of the soil. Some wetland areas may be continuously

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inundated by water, while other areas may not be flooded at all. In coastal areas, flooding

may occur on a daily basis as tides rise and fall.

Functional values, both ecological and economic, at each wetland depend on its

location, size, and relationship to adjacent land and water areas. Many of these values have

been recognized only recently. Historically, many federal programs encouraged wetlands to

be drained or altered because they were seen as having little value as wetlands. Wetland

values can include:

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habitat for aquatic birds and other animals and plants, including numerous

threatened and endangered species; production of fish and shellfish;

water storage, including mitigating the effects of floods and droughts;

water purification;

recreation;

timber production;

food production;

education and research;

and open space and aesthetic values.

Usually wetlands provide some composite of these values; no single wetland in most

instances provides all these values. The composite value typically declines when wetlands

are altered. In addition, the effects of alteration often extend well beyond the immediate area

because wetlands are usually part of a larger water system. For example, conversion of

wetlands to urban uses has increased flood damages; this value is receiving considerable

attention as natural disaster costs have mounted through the 1990s.

Federal laws that affect wetlands have changed since the mid-1980s as the values of

wetlands have been recognized in different ways in numerous national policies. Previously,

some laws encouraged destruction of wetland areas, such as selected provisions in the federal

tax code, public works legislation, and farm programs. Federal laws now either encourage

wetland protection, or prohibit or do not support their destruction. These laws, however, do

not add up to a fully consistent or comprehensive national approach. The central federal

regulatory program, §404 of the Clean Water Act, requires permits for the discharge of

dredged or fill materials into many but not all wetland areas; however, other activities that

may adversely affect wetlands do not require permits. An agricultural program,

swampbuster, is a disincentive program that indirectly protects wetlands by making farmers

who drain wetlands ineligible for federal farm program benefits; those who do not receive

these benefits have no reason to participate. Several acquisition and incentive programs

complete the current federal protection effort.

Although numerous wetland protection bills have been introduced in recent Congresses,

the only major new wetlands legislation to be enacted has been in the two most recent farm

bills, in 1996 and 2002. During this period, Congress also reauthorized several wetlands

programs, mostly setting higher appropriations ceilings, without making significant shifts in

policy. President Bush endorsed wetland protection in signing the farm bill and the North

American Wetlands Conservation Act reauthorization in 2002. The Bush Administration has

issued guidance on mitigation policies and regulatory program jurisdiction; the latter has

raised controversy with some groups (see discussion below).

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In 2002 the Bush Administration endorsed the concept of “no-net-loss” of wetlands —

a goal declared by President George H.W. Bush in 1988 and also embraced by President

Clinton to balance wetlands losses and gains in the short term and achieve net gains in the

long term. On Earth Day 2004, the President announced a new national goal, moving beyond

no-net-loss, of achieving an overall increase of wetlands (see [http://www.whitehouse.gov/

news/releases/2004/04/20040422-1.html].) The goal is to create, improve, and protect at

least 3 million wetland acres over the next five years in order to increase overall wetland

acres and quality. (By comparison, the Clinton Administration in 1998 announced policies

intended to achieve overall wetland increases of 200,000 acres per year by 2005.) To meet

the new goal, President Bush urged Congress to pass his FY2005 budget request for

conservation programs, and he focused on the FY2005 request for two wetlands programs,

the Wetlands Reserve Program (WRP) and the North American Wetlands Conservation Act

Grants Program (NAWCP). The FY2005 budget request, $349 million, was 10% more than

FY2004 levels for those two programs. (However, Congress disagreed, providing level

funding for the NAWCP and an 18% reduction for the WRP.) The President’s strategy also

calls for better tracking of wetland programs and enhanced local and private sector

collaboration.

In April 2005 the Administration issued a report (Conserving America’s Wetlands:

Implementing the President’s Goal) saying that about 832,000 acres of wetlands have been

created, protected, or improved in the past year as part of the President’s program. Another

1.6 million acres is expected to be added by the end of FY2006, the report said.

Environmental groups criticized the report as presenting an incomplete picture, because it

fails to mention wetlands lost to agriculture and development.

Congress has provided a forum in numerous hearings where conflicting interests in

wetland issues have been debated. The conflicts are between:

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Environmental interests and wetland protection advocates who have been

pressing for greater wetlands protection as multiple values have been more

widely recognized, by improving coordination and consistency among

agencies and levels of governments, and strengthened programs; and

Others, including landowners, farmers, and small businessmen, who counter

that protection efforts have gone too far, and that privately owned wet areas

that provide few wetland values have been aggressively protected. They

have been especially critical of the U.S. Army Corps of Engineers (Corps)

and the U.S. Environmental Protection Agency (EPA) for administering the

§404 program in an overzealous and inflexible manner.

Wetland issues revolve around disparate scientific and programmatic questions, and

conflicting views of the role of government where private property is involved. Scientific

questions include how to define wetlands, the current rate and pattern of wetland declines

and losses, and the importance of these physical changes. Federal program issues include

the administration of programs to protect, restore, or mitigate wetland resources (especially

the §404 program); relationships between agriculture and wetlands; whether all wetlands

should be treated the same in federal programs and which wetlands should be subject to

regulation; federal funding of wetland programs; and is protecting wetland by acres a good

proxy for protecting wetlands based on the functions they perform and the values they

provide. In addition, private property questions are raised because almost three-quarters of

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the remaining wetlands are located on private lands, and some property owners believe they

should be compensated when federal programs limit how they can use their land, and thereby

diminish its value.

What Is a Wetland?

There is general agreement that scientists can determine the presence of a wetland by

a combination of soils, plants, and hydrology. The only definition of wetlands in law, in the

swampbuster provisions of farm legislation (P.L. 99-198) and reproduced in the Emergency

Wetlands Resources Act of 1986 (P.L. 99-645), lists those three components but does not

include more specific criteria, such as what conditions must be present and for how long.

Controversies are exacerbated when many sites that have those three components, including

sites that have wetland characteristics only some portion of the time, do not look like what

many people visualize as wetlands.

Wetlands subject to federal regulation are a large subset of all places that the scientific

community would call a wetland. These regulated wetlands, under the §404 program

discussed below, are currently identified using technical criteria in a wetland delineation

manual issued by the Corps in 1987. It was prepared jointly and is used by all federal

agencies to carry out their responsibilities under this program (the Corps, EPA, FWS, and

the National Marine Fisheries Service (NMFS)). The manual provides guidance and

field-level consistency among the agencies that have roles in wetland regulatory protection.

(A second and slightly different manual, agreed to by the Corps and the Natural Resources

Conservation Service, is used for delineating agricultural lands.) While the agencies try to

improve the objectivity and consistency of wetland identification and delineation, judgement

continues to play a role and can lead to site-specific controversies. Cases discussed below

(see “Judicial Proceedings Involving §404”) are efforts to exclude wetlands in certain

physical settings or certain activities affecting them from the regulatory program.

How Fast Are Wetlands Disappearing, and

How Many Acres Are Left?

The U.S. Fish and Wildlife Service periodically surveys national net trends in wetland

acreage using the National Wetlands Inventory (NWI). It has estimated that when European

settlers first arrived, wetland acreage in the area that would become the 48 states was more

than 220 million acres, or about 5% of the total land area. By 2004, total wetland acreage

was estimated to be 107.7 million acres, according to data it presented in its most recent

survey published in March 2006, Status and Trends of Wetlands in the Coterminous United

States 1998 to 2004. Data compiled by the NRCS and the FWS in separate surveys and

using different methodologies have identified similar trends. Both show that the annual net

loss rate dropped from almost 500,000 acres annually nearly three decades ago to slight net

annual gains in recent years. The FWS survey estimated the average annual gain between

1998 and 2004 was 32,000 acres, primarily associated with the expansion of shallow ponds,

while NRCS (using its Natural Resources Inventory (NRI) of privately-owned lands)

estimated that there was an average annual gain of 26,000 acres between 1997 and 2002.

NRCS cautioned against making precise claims of net increases because of statistical

uncertainties. Some environmentalists caution that the increases identified in the latest FWS

data are tied to a proliferation of small ponds rather than natural wetlands.

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Numerous shifts in federal policies since 1985 (and changes in economic conditions as

well) strongly influence wetland loss patterns, but the composite effects remain unmeasured

beyond these raw numbers. There is a large time lag from the announcement and

implementation of changes in policy to collection and release of data that measure how these

changes affect loss rates. Also, it is often very difficult to distinguish the role that policy

changes play from other factors, such as agricultural markets and development pressures.

Further, these data only measure acres, and do not provide any insights into changes in

the quality of remaining wetlands as measured by the values they provide. Nevertheless, in

his Earth Day 2004 wetlands announcement (discussed above), President Bush said that as

the nation is nearing the goal of no-net-loss, it is appropriate to move towards policies to

increase wetlands acres and quality.

The Clean Water Act Section 404 Program

The principal federal program that provides regulatory protection for wetlands is found

in §404 of the Clean Water Act (CWA). Its intent is to protect water and adjacent wetland

areas from adverse environmental effects due to discharges of dredged or fill material.

Established in 1972, §404 requires landowners or developers to obtain permits from the

Corps of Engineers to carry out activities involving disposal of dredged or fill materials into

waters of the United States, including wetlands.

The Corps has long had regulatory jurisdiction over dredging and filling, starting with

the River and Harbor Act of 1899. The Corps and EPA share responsibility for

administering the §404 program. Other federal agencies, including NRCS, FWS, and NMFS,

also have roles in this process. In the 1970s, legal decisions in key cases led the Corps to

revise this program to incorporate broad jurisdictional definitions in terms of both regulated

waters and adjacent wetlands. Section 404 was last amended in 1977.

This judicial/regulatory/administrative evolution of the §404 program has generally

pleased those who view it as a critical tool in wetland protection, but dismayed others who

would prefer more limited Corps jurisdiction or who see the expanded regulatory program

as intruding on private land-use decisions and treating wetlands of widely varying value

similarly. Underlying this debate is the more general question of whether §404 is the best

approach to federal wetland protection.

Some wetland protection advocates have proposed that it be replaced or greatly altered.

First, they point out that it governs only the discharge of dredged or fill material, while not

regulating other acts that drain, flood, or otherwise reduce functional values. Second, because

of exemptions provided in 1977 amendments to §404, major categories of activities are not

required to obtain permits. These include normal, ongoing farming, ranching, and

silvicultural (forestry) activities. Further, permits generally are not required for activities

which drain wetlands (only for those that fill wetlands), which excludes a large number of

actions with potential to alter wetlands. Third, in the view of protection advocates, the

multiple values that wetlands can provide (e.g., fish and wildlife habitat, flood control) are

not effectively recognized through a statutory approach based principally on water quality,

despite the broad objectives of the Clean Water Act.

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The Permitting Process. The Corps’ regulatory process involves both general

permits for actions by private landowners that are similar in nature and will likely have a

minor effect on wetlands and individual permits for more significant actions. According to

the Corps, it evaluates more than 85,000 permit requests annually. Of those, more than 90%

are authorized under a general permit, which can apply regionally or nationwide, and is

essentially a permit by rule for activities with minor impact. Most do not require

pre-notification or prior approval. About 9% are required to go through the more detailed

evaluation for a standard individual permit, which may involve complex proposals or

sensitive environmental issues and can take 180 days or longer for a decision. Less than 0.3%

of permits are denied; most other individual permits are modified or conditioned before

issuance. About 5% of applications are withdrawn prior to a permit decision. In FY2003

(the most recent year for which data are available), Corps-issued permits authorized activities

having a total of 21,330 acres of wetland impact, while those permits required that 43,379

acres of wetlands be restored, created, or enhanced as mitigation for the authorized losses.

Regulatory procedures on individual permits allow for interagency review and

comment, a coordination process that can generate delays and an uncertain outcome,

especially for environmentally controversial projects. EPA is the only federal agency having

veto power over a proposed Corps permit; EPA has used its veto authority 11 times in the

30-plus years since the program began. Critics have charged that implied threats of delay by

the FWS and others practically amount to the same thing. Reforms during the Reagan,

earlier Bush, and Clinton Administrations streamlined certain of these procedures, with the

intent of speeding up and clarifying the Corps’ full regulatory program, but concerns

continue over both process and program goals.

Controversy also surrounded revised regulations issued by EPA and the Corps in May

2002, which redefine two key terms in the 404 program, “fill material” and “discharge of fill

material.” The agencies said that the revisions were intended to clarify certain confusion in

their joint administration of the program due to previous differences in how the two agencies

defined those terms, but environmental groups contended that the changes allow for less

restrictive and inadequate regulation of certain disposal activities, including disposal of coal

mining waste, which could be harmful to aquatic life in streams. The Senate Environment

and Public Works Committee held a hearing in June 2002 to review these issues, and

legislation to reverse the agencies’ action was introduced, but no further action occurred.

(For additional information, see CRS Report RL31411, Controversies over Redefining “Fill

Material” Under the Clean Water Act, by Claudia Copeland.) That legislation was reintroduced in the 108th Congress, and again in the 109th Congress (H.R. 2719).

Nationwide Permits. Nationwide permits are a key means by which the Corps

minimizes the burden of its regulatory program. A nationwide permit is a form of general

permit which authorizes a category of activities throughout the nation and is valid only if the

conditions applicable to the permit are met. These general permits authorize activities that

are similar in nature and are judged to cause only minimal adverse effect on the environment.

General permits minimize the burden of the Corps’ regulatory program by authorizing

landowners to proceed without having to obtain individual permits in advance.

The current program has few strong supporters, for differing reasons. Developers say

that it is too complex and burdened with arbitrary restrictions. Environmentalists say that

it does not adequately protect aquatic resources. At issue is whether the program has become

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so complex and expansive that it cannot either protect aquatic resources or provide for a fair

regulatory system, which are its dual objectives.

Nationwide permits are issued for periods of no longer than five years and thereafter

must be reissued by the Corps. The most recent reissuance, in January 2002, included some

changes, including relaxation of certain permit conditions, intended by the Corps to add

flexibility. Reactions to the permits were mixed: environmental advocates contend that the

re-issued permits are not adequately protective of water quality and will result in a net loss

of wetland acres, while developer groups argue that the overall program continues to focus

on arbitrary regulatory thresholds that result in undue burden on developers and the Corps.

(For more information, see CRS Report 97-223, Nationwide Permits for Wetlands Projects:

Issues and Regulatory Developments, by Claudia Copeland.) In July 2005, a federal court

of appeals panel held that the Corps’ issuance of the 2000 and 2002 nationwide permits

constitutes final agency action, thus permitting a challenge to the permits that had been

brought by developers to proceed.

Citizen groups have filed lawsuits seeking to halt the Corps’ use of one of its

nationwide permits, NWP 21, to authorize a type of coal mining practice called mountaintop

mining. In 2004, a federal district court in West Virginia ruled that NWP 21 violates the

CWA by authorizing activities that have more than minimal adverse environmental effects.

The district court’s ruling was overturned on appeal, but a request for rehearing is pending.

Another lawsuit challenging the applicability of nationwide permits to mountaintop mining

in Kentucky also has been filed. (For background, see CRS Report RS21421, Mountaintop

Mining: Background on Current Controversies, by Claudia Copeland.)

Section 404 authorizes states to assume many of the permitting responsibilities. Two

states, Michigan (in 1984) and New Jersey (in 1992), have done this. Others have cited the

complex process of assumption, the anticipated cost of running a program, and the continued

involvement of federal agencies because of statutory limits on waters that states could

regulate as reasons for not joining these two states. Efforts continue towards encouraging

more states to assume program responsibility.

Judicial Proceedings Involving §404: SWANCC. The §404 program has been

the focus of numerous lawsuits, most of which have sought to narrow the geographic scope

of the regulatory program. In that context, an issue of long-standing controversy is whether

isolated waters are properly within the jurisdiction of §404. Isolated waters (those that lack

a permanent surface outlet to downstream waters) which are not physically adjacent to

navigable surface waters often appear to provide few of the values for which wetlands are

protected, even if they meet the technical definition of a wetland. In January 2001, the

Supreme Court ruled on the question of whether the CWA provides the Corps and EPA with

authority over isolated waters and wetlands. The Court’s 5-4 ruling in Solid Waste Agency

of Northern Cook County (SWANCC) v. U.S. Army Corps of Engineers (531 U.S. 159) held

that the denial of a §404 permit for disposal on isolated wetlands solely on the basis that

migratory birds use the site exceeds the authority provided in the act. The full extent of

retraction of the regulatory program resulting from this decision remains unclear, even four

years after the ruling. Environmentalists believe that the Court misinterpreted congressional

intent on the matter, while industry and landowner groups welcomed the ruling. (For

additional information, see CRS Report RL30849, The Supreme Court Addresses Corps of

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Engineers Jurisdiction Over ‘Isolated Waters’: The SWANCC Decision, by Robert Meltz and

Claudia Copeland.)

Policy implications of how much the decision restricts federal regulation depend on how

broadly or narrowly the opinion is applied, and since the 2001 Court decision, other federal

courts have issued a number of rulings that have reached varying conclusions. Some federal

courts have interpreted SWANCC narrowly, thus limiting its effect on current permit rules,

while a few read the decision more broadly. However, in April 2004, the Court declined to

review three cases that support a narrow interpretation of SWANCC. Environmentalists were

pleased that the Court rejected the petitions, but attorneys for industry and developers say

that the courts will remain the primary battleground for CWA jurisdiction questions, so long

as neither the Administration nor Congress takes steps to define jurisdiction.

The government’s current view on the key question of the scope of CWA jurisdiction

in light of SWANCC and other court rulings came in a legal memorandum issued jointly by

EPA and the Corps on January 15, 2003 (see [http://www.epa.gov/owow/wetlands/guidance

/SWANCC/index.html]). It provides a legal interpretation essentially based on a narrow

reading of the Court’s decision, thus allowing federal regulation of some isolated waters to

continue (in cases where factors other than the presence of migratory birds may exist, thus

allowing for assertion of federal jurisdiction), but it calls for more Headquarters review in

such cases. Administration press releases say that the guidance demonstrates the

government’s commitment to “no-net-loss” wetlands policy. However, it was apparent that

the issues remained under discussion, because at the same time, the Administration issued

an advance notice of proposed rulemaking (ANPRM) seeking comment on how to define

waters that are under jurisdiction of the regulatory program. The ANPRM did not actually

propose rule changes, but it indicated possible ways that Clean Water Act rules might be

modified to further limit federal jurisdiction, building on SWANCC and some subsequent

legal decisions. The government received more than 133,000 comments on the ANPRM,

most of them negative, according to EPA and the Corps. Environmentalists and many states

opposed changing any rules, saying that the law and previous court rulings call for the

broadest possible interpretation of the Clean Water Act (and narrow interpretation of

SWANCC), but developers sought changes to clarify interpretation of the SWANCC ruling.

In December 2003, EPA and the Corps announced that the Administration will not

pursue rule changes concerning federal regulatory jurisdiction over isolated wetlands. The

EPA Administrator said that the Administration wanted to avoid a contentious and lengthy

rulemaking debate over the issue. Environmentalists and state representatives expressed

relief at the announcement. Interest groups on all sides have been critical of confusion in

implementing the 2003 guidance, which constitutes the main tool for interpreting the reach

of the SWANCC decision. Environmentalists remain concerned about diminished protection

resulting from the guidance, while developers said that without a new rule, confusing and

contradictory interpretations of wetland rules likely will continue. In that vein, a GAO report

concludes that Corps districts differ in how they interpret and apply federal rules when

determining which waters and wetlands are subject to federal jurisdiction, documenting

enough differences that the Corps has begun a comprehensive survey of its district office

practices to help promote greater consistency (GAO, Corps of Engineers Needs to Evaluate

Its District Office Practices in Determining Jurisdiction, GAO-04-297, February 2004). In

response to continuing controversies about the 2003 guidance, on May 18 the House adopted

an amendment to a bill providing FY2007 appropriations for EPA (H.R. 5386). The

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amendment (passed by a 222-198 vote) would bar EPA from spending funds to implement

the 2003 policy guidance. Supporters of the amendment said that the guidance goes beyond

what the Supreme Court required in SWANCC, has allowed many streams and wetlands to

be unprotected from development, and has been more confusing than helpful. Opponents

of the amendment predicted that it would make EPA’s and the Corps’ regulatory job more

difficult than it already is.

While the issue of how regulatory protection of wetlands is affected by the SWANCC

decision and subsequent developments continues to evolve, the remaining responsibility to

protect affected wetlands falls on states and localities. Whether states will act to fill in the

gap left by removal of some federal jurisdiction is likely to be constrained by budgetary and

political pressures, but a few states (Wisconsin and Ohio, for example) have passed new laws

or amended regulations to do so. In comments on the ANPRM, many states said that they

do not have authority or financial resources to protect their wetlands, in the absence of

federal involvement. Federal courts continue to have a key role in interpreting and clarifying

the SWANCC decision. On February 21, the Supreme Court heard arguments in two cases

brought by landowners (Rapanos v. United States; Carabell v. U.S. Army Corps of

Engineers) seeking to narrow the scope of the CWA permit program as it applies to

development of wetlands. A decision in these cases is expected by the end of June. (For

additional information, see CRS Report RL33263, The Wetlands Coverage of the Clean

Water Act is Revisited by the Supreme Court: Rapanos and Carabell, by Robert Meltz and

Claudia Copeland.)

Legislation to reverse the SWANCC decision has been introduced in the 109th Congress

(H.R. 1356, the Clean Water Authority Restoration Act of 2005); identical legislation was

introduced in the 108th Congress (H.R. 962, S. 473). It would provide a broad statutory

definition of “waters of the United States;” clarify that the CWA is intended to protect U.S.

waters from pollution, not just maintain their navigability; and include a set of findings to

assert constitutional authority over waters and wetlands. Other legislation to restrict

regulatory jurisdiction also has been introduced in the 109th Congress (H.R. 2658, the Federal

Wetlands Jurisdiction Act of 2005). It would narrow the statutory definition of “navigable

waters” and define certain isolated wetlands and other areas as not being subject to federal

regulatory jurisdiction. It also would give the Corps sole authority to determine §404

jurisdiction, for permitting purposes. Similar legislation also was introduced in the 108th

Congress (H.R. 4843).

Treat All Wetlands Equally. Under the §404 program, there is a perception that all

jurisdictional wetlands are treated equally, regardless of size, functions, or values. This has

led critics to focus on situations where a wetland has little apparent value, but the

landowner’s proposal is not approved or the landowner is penalized for altering a wetland

without a federal permit. Critics believe that one possible solution may be to have a tiered

approach for regulating wetlands. Several legislative proposals introduced in recent

Congresses would establish three tiers — from highly valuable wetlands that should receive

the greatest protection to the least valuable wetlands where alterations might usually be

allowed. Some states (New York, for example) use such an approach for state-regulated

wetlands. The Corps and EPA issued guidance to field staff emphasizing the flexibility that

currently exists in the §404 program to apply less vigorous permit review to small projects

with minor environmental impacts.

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Three questions arise: (1)What are the implications of implementing a classification

program, (2) How clearly can a line separating each wetland category be defined, and (3) Are

there regions where wetlands should be treated differently? Regarding classification, even

most wetland protection advocates acknowledge that there are some situations where a

wetland designation with total protection is not appropriate. But they fear that classification

for different degrees of protection could be a first step toward a major erosion in overall

wetland protection. Also, these advocates would probably like to see almost all wetlands

presumed to be in the highest protection category unless experts can prove an area should

receive a lesser level of protection, while critics who view protection efforts as excessive,

would seek the reverse.

Locating the boundary line can be controversial when the line encompasses areas that

do not meet the image held by many. Controversy would likely grow if a tiered approach

required that lines segment wetland areas. On the other hand, a consistent application of an

agreed-on definition may lead to fewer disputes and result in more timely decisions.

Some states have far more wetlands than others. Different treatment has been proposed

for Alaska because about one-third of the state is designated as wetlands, yet a very small

portion has been converted. Legislative proposals have been made to exempt it from the

§404 program until 1% of its wetlands have been lost. Some types of wetlands are already

treated differently. For example, playas and prairie potholes have somewhat different

definitions under swampbuster (discussed below), and the effect is to increase the number

of acres that are considered as wetlands. This differential treatment contributes to questions

about federal regulatory consistency on private property.

Agriculture and Wetlands

National surveys almost two decades ago indicated that agricultural activities had been

responsible for about 80% of wetland loss in the preceding decades, making this topic a

focus for policymakers. Congress responded by creating programs in farm legislation

starting in 1985 that use disincentives and incentives to encourage landowners to protect and

restore wetlands. Swampbuster and the Wetlands Reserve Program are the two largest

efforts, but others such as the Conservation Reserve’s Farmed Wetlands Option and

Conservation Reserve Enhancement Program are also being used to protect wetlands. The

most recent wetland loss survey conducted by NRCS (comparing data from 1997 and 2002)

indicates that there is a small annual increase, for the first time since these data have been

collected, of 26,000 acres. However, the agency warns that statistical uncertainties preclude

concluding with certainty that gain is actually occurring.

Swampbuster. Swampbuster, enacted in 1985, uses disincentives rather than

regulations to protect wetlands on agricultural lands. It remains controversial with farmers

concerned about redefining an appropriate federal role in wetland protection on agricultural

lands, and with wetland protection advocates concerned about inadequate enforcement.

Since 1995, the NRCS has made wetland determinations only in response to requests because

of uncertainty over whether changes in regulation or law would modify boundaries that have

already been delineated. NRCS estimates that more than 2.6 million wetland determinations

have been made and that more than 4 million may eventually be required.

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Swampbuster was amended in the 1996 farm bill (P.L. 104-127) and the 2002 farm bill

(P.L. 107-171). Amendments in 1996 granted producers greater flexibility by making

changes such as: exempting swampbuster penalties when wetlands are voluntarily restored;

providing that prior converted wetlands are not be considered “abandoned” if they remain

in agricultural use; and granting good-faith exemptions. They also encourage mitigation,

establish a mitigation banking pilot program, and repeal required consultation with the U.S.

Fish and Wildlife Service. The 2002 farm bill made a single amendment that should not

affect either the acres that are protected or the characteristics of the protection effort.

Other Agricultural Wetlands Programs. Under the Wetland Reserve Program

(WRP), enacted in 1990, landowners receive payments for placing easements on farmed

wetlands. All easements were permanent until provisions in the 1996 farm bill, requiring

temporary easements and multi-year agreements as well, were implemented. The 2002 farm

bill reauthorized the program through FY2007 and raised the enrollment cap to 2,275,000

acres, with 250,000 acres to be enrolled annually. In addition, in June 2004, it announced

a new enhancement program on the lower Missouri River in Nebraska to enroll almost

19,000 acres at a cost of $26 million, working with several public and private partners.

Through FY2004, 8,391 projects had enrolled 1.627 million acres. Almost 35% of the

enrollment is in three states: Louisiana, Mississippi, and Arkansas. Most of the land is

enrolled under permanent easements, while only about 5% is enrolled under 10-year

restoration agreements. Prior to the 2002 farm bill, farmer interest had exceeded available

funding, which may explain why Congress raised the enrollment ceiling in that legislation.

The 2002 farm bill also expanded the 500,000-acre Farmable Wetlands Pilot Program

within the Conservation Reserve Program to a 1 million acres program available nationwide.

Only wetland areas that are smaller than 10 acres that are not adjacent to larger streams and

rivers are eligible. This program may become more important to overall protection efforts

in the wake of the SWANCC decision, discussed above, which limited the reach of the §404

permit program so that it does not apply to many small wetlands that are isolated from

navigable waterways. Through January, 2005, more than 122,800 acres had been enrolled.

On August 4, 2004, the Administration announced a new Wetland Restoration Initiative

to allow enrollment of up to 250,000 acres of large wetland complexes and playa lakes

located outside the 100-year floodplain in the CRP after October 1, 2004. The estimated cost

of this initiative is $200 million. Participants will receive incentive payments to help pay for

restoring the hydrology of the site, as well as rental payments and cost sharing assistance to

install eligible conservation practices.

Several other large conservation programs, including the Environmental Quality

Incentives Program, the Farmland Protection Program, and the Wildlife Habitat Incentive

Program, were also amended in the 2002 farm bill in ways that may have incidental

protection benefits for wetlands, both because of much higher funding levels and because of

program changes. Finally, some new programs could less directly help protect wetlands,

including the Conservation Security Program, which would provide payments to install and

maintain practices on working agricultural lands, a Surface and Groundwater Conservation

Program (funded through the Environmental Quality Incentive Program), a new program to

retire wetlands that are part of a cranberry operation; and several programs to better manage

water resources. (For more information on these provisions, see CRS Report RL31486,

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Resource Conservation Title of the 2002 Farm Bill: A Comparison of New Law with Bills

Passed by the House and Senate, and Prior Law; and for the status of implementation, see

the 2002 farm bill implementation subsection of CRS Issue Brief IB96030, Soil and Water

Conservation Issues, both by Jeffrey A. Zinn.)

Agricultural Wetlands and the §404 Program. The §404 program applies to

qualified wetlands in all locations, including agricultural lands. But the Corps and EPA

exempt “prior converted lands” (wetlands modified for agricultural purposes before 1985)

from §404 permit requirements under a memorandum of agreement (MOA), and since 1977

the Clean Water Act has exempted “normal farming activities.” The January 2001 Supreme

Court SWANCC decision, discussed above, apparently will exempt certain isolated wetlands

from Corps jurisdiction; NRCS has estimated that about 8 million acres in agricultural

locations might be exempted by this decision. In December 2002, the Supreme Court

affirmed a lower court decision, without comment, that deep ripping to prepare wetland soils

for planting was more than a “normal farming activity” and therefore subject to §404

requirements.

While these exemptions and the MOA have displeased some protection advocates, they

have probably dampened some of the criticism from farming interests over federal regulation

of private lands. On the other hand, how NRCS responds to the SWANCC decision on

isolated wetlands could cause that criticism to rise. The Corps and NRCS have been

unsuccessful in revising the MOA since 1996, although they signed a very general

partnership agreement on July 7, 2005. There has been no official comment on how

additional changes in the 2002 farm bill will affect interagency cooperation. Some of the

wetlands that fall outside §404 requirements as a result of the SWANCC decision can now

be protected if landowners decide to enroll them into the revised farmable wetlands program

or under the new initiatives.

Private Property Rights and Landowner Compensation

An estimated 74% of all remaining wetlands in the coterminous states are on private

lands. Questions of federal regulation of private property stem from the belief that land

owners should be compensated when a “taking” occurs and alternative uses are prohibited

or restrictions on use are imposed to protect wetland values. The U.S. Constitution provides

that property owners shall be compensated if private property is “taken” by government

action. The courts generally have found that compensation is not required unless all

reasonable uses are precluded. Many individuals or companies purchase land with the

expectation that they can alter it. If that ability is denied, they contend, then the land is

greatly reduced in value. Many argue that a taking should be recognized when a site is

designated as a wetland. In 2002, the Supreme Court held that a Rhode Island man who had

acquired property after the state enacted wetlands regulation affecting the parcel is not

automatically prevented from bringing an action to recover compensation from the state, but

ruled that the state’s action had not taken all economic value of the property into account

(Palazzolo v. Rhode Island, 533 U.S. 606).

Congress has explored these issues; an example is the October 2001 hearing by the

House Transportation and Infrastructure Committee, Subcommittee on Water Resources and

the Environment. The record of this hearing is titled The Wetland Permitting Process: Is It

Working Fairly? (Hearing 107-50). Recent Congresses have considered, but did not enact,

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property rights protection proposals, and the Bush Administration has not stated an official

position on these types of proposals. (For more information, see CRS Report RL30423,

Wetlands Regulation and the Law of Property Rights “Takings”, by Robert Meltz.)

Wetland Restoration and Mitigation

Federal wetland policies during the past decade have increasingly emphasized

restoration of wetland areas. Much of this restoration occurs as part of efforts to mitigate the

loss of wetlands at other sites. The mitigation concept has broad appeal, but implementation

has left a conflicting record. Examination of this record, presented in a June 2001 report

from the National Research Council, found it to be wanting. The NRC report said that

mitigation projects called for in permits affecting wetlands were not meeting the federal

government’s “no net loss” policy goal for wetlands function (Compensating for Wetland

Losses under the Clean Water Act). Likewise, a 2001 GAO report criticized the ability of

the Corps to track the impact of projects under its current mitigation program that allows inlieu-fee mitigation projects in exchange for issuing permits allowing wetlands development

(Wetlands Protection: Assessments Needed to Determine the Effectiveness of In-Lieu-Fee

Mitigation, GAO-01-325). Both scientists and policymakers debate whether it is possible

to restore or create wetlands with ecological and other functions equivalent to or better than

those of natural wetlands that have been lost over time. Results so far seem to vary,

depending on the type of wetland and the level of commitment to monitoring and

maintenance. Congress has repeatedly endorsed mitigation in recent years.

Much of the attention to wetland restoration has focused on Louisiana, where an

estimated 80% of the total loss of U.S. coastal wetlands has occurred (coastal wetlands are

about 5% of all U.S. wetlands). In response to these losses, Congress authorized a task force,

led by the Corps, to prepare a list of coastal wetland restoration projects in the state, and

provided funding to plan and carry out restoration projects in this and other coastal states

under the Coastal Wetlands Planning, Protection and Restoration Act of 1990, also known

as the Breaux Act. According to the FWS, more than $139 million had been spent in 25

states and one territory by the end of FY2004 to restore or protect more than 167,000 acres,

and according to the Corps, almost $220 million had been spent by the Corps in coastal

Louisiana through July 2003, mostly under the Breaux Act. In the wake of hurricanes

Katrina and Rita, multiple legislative proposals have been introduced to fund many

restoration projects that have already been planned by the U.S. Army Corps of Engineers and

to explore other opportunities that would restore and stabilize additional wetlands.

Many federal agencies have been active in wetland improvement efforts in recent years.

In particular, the FWS has been promoting the success of its Partners for Wildlife program.

According to the program website, visited on July 14, 2005, the program had entered into

almost 29,000 agreements with landowners to protect or restore about 640,000 acres of

wetlands and more than 4,700 miles of riparian and in-stream habitat (and more than 1

million acres of upland habitat also) through FY2002.

Other programs also restore and protect domestic and international wetlands. One of

these derives from the North American Wetlands Conservation Act, reauthorized through

FY2007 in P.L. 107-304 with an appropriations ceiling that will increase from $55 million

in FY2003 to $75 million in FY2007. The act provides grants for wetland conservation

projects in Canada, Mexico, and the United States. According to the FWS FY2005 budget

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notes, the United States. and its partners have protected almost 7.5 million acres and restored,

created, or enhanced an additional 5.4 million acres of wetlands. The FWS has combined

funding for this program with several other laws into what it calls the North American

Wetlands Conservation Fund.

Under the Convention on Wetlands of International Importance, more commonly known

as the Ramsar Convention, the United States is one of 134 nations that have agreed to slow

the rate of wetlands loss by designating important sites. These nations have designated

1,229 sites since the convention was adopted in 1971. The United States has designated 19

wetlands, encompassing 3 million acres.

Mitigation has also become an important cornerstone of the §404 program in recent

years. A 1990 MOA signed by the agencies with regulatory responsibilities outlines a

sequence of three steps leading to mitigation: first, activities in wetlands should be avoided

when possible; second, when they can not be avoided, impacts should be minimized; and

third, where minimum impacts are still unacceptable, mitigation is appropriate. It directs that

mitigated wetland acreage be replaced on a one-for-one functional basis. Therefore,

mitigation may be required as a condition of a §404 permit.

Some wetland protection advocates are critical of mitigation, which they view as

justifying destruction of wetlands. They believe that the §404 permit program should be an

inducement to avoid damaging wetland areas. These critics also contend that adverse

impacts on wetland values are often not fully mitigated and that mitigation measures, even

if well-designed, are not adequately monitored or maintained. Supporters of current efforts

counter that they generally work as envisioned, but little data exist to support this view.

Questions about implementation of the 1990 MOA and controversies over the feasibility of

compensating for wetland losses further complicate the wetland protection debate. In

response to criticism in the NRC and GAO reports (discussed above), in November 2001,

the Corps issued new guidance to strengthen the standards on compensating for wetlands lost

to development, but the guidance has been criticized by environmental groups and some

Members of Congress for weakening rather than strengthening mitigation requirements and

for the Corps’ failure to consult with other federal agencies. In December 2002, the Corps

and EPA released an action plan including 17 items that both agencies believe will improve

the effectiveness of wetlands restoration efforts (see [http://www.epa.gov/owow/wetlands/

guidance/index.html#mitigation]). The Corps is developing a wetlands mitigation rule,

expected to be released later in 2005, that would replace the 1990 MOA with clearer

requirements on what will be considered a successful project to compensate for wetlands lost

to development or agriculture. The rule is being developed in response to a provision in the

2003 defense authorization bill (P.L. 107-314) that directed the Corps to establish mitigation

project performance standards by 2005. Environmental activists fear that the rule will be

even less protective than current policy.

The concept of “mitigation banks,” in which wetlands are created, restored, or enhanced

in advance to serve as “credits” that may be used or acquired by permit applicants when they

are required to mitigate impacts of their activities, is widely endorsed. Numerous public and

private banks have been established, but many believe that it is too early to assess their

success. The U.S. Army Corps of Engineers estimated that about 230 banks had been

established by January1, 2000 through some form of agreement (although construction had

not started at all those sites), and if state -approved banks are included, the total grew to 370

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to 400 banks. Provisions in several laws, such as the 1996 farm bill and the 1998

Transportation Equity Act (TEA-21), endorse the mitigation banking concept. (For more

information on the early history of banking, see CRS Report 97-849, Wetland Mitigation

Banking: Status and Prospects, by Jeffrey A. Zinn.) In November 2003, Congress enacted

wetlands mitigation provisions as part of the FY2004 Department of Defense authorization

act, P.L. 108-136, discussed below.

Wetland Activities in the 109th Congress

While almost five dozen legislative proposals with wetland provisions have been

introduced, none, other than appropriations legislation, has been enacted as yet.

FOR ADDITIONAL READING

Kusler, Jon and Teresa Opheim. Our National Wetland Heritage: A Protection Guide.

Environmental Law Institute. [Washington] 1996. 149 p.

National Academy of Sciences, National Research Council. Compensating for Wetland

Losses Under the Clean Water Act. [Washington] 2001.

Strand, Margaret N. Wetlands Deskbook. Environmental Law Institute. [Washington]

1993. 883 p.

U.S. Department of Agriculture, Economic Research Service. Wetlands and Agriculture:

Private Interests and Public Benefits, by Ralph Heimlich, et al. [Washington] 2001,

123p. Agricultural Economic Report No. 765.

U.S. Department of the Interior. U.S. Fish and Wildlife Service. Status and Trends of

Wetlands in the Coterminous United States 1986 to 1997. [Washington] 2000. 82p.

U.S. General Accountability Office. Wetlands Protection: Assessments Needed to Determine

the Effectiveness of In-Lieu-Fee Mitigation. (GAO-01-325) [Washington] May 2001.

75 p.

—— Waters and Wetlands: Corps of Engineers Needs to Evaluate District Office Practices

in Determining Jurisdiction. (GAO-04-297) [Washington] February 2004. 45 p.

CRS Reports

CRS Report 97-223. Nationwide Permits for Wetlands Projects: Regulatory Developments

and Current Issues, by Claudia Copeland.

CRS Report RL31486. Resource Conservation Title of the 2002 Farm Bill: A Comparison

of New Law with Bills Passed by the House and Senate, and Prior Law, by Jeffrey Zinn.

CRS Report 97-849. Wetland Mitigation Banking: Status and Prospects, by Jeffrey Zinn.

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CRS Report RL30423. Wetlands Regulation and the Law of Property Rights “Takings”, by

Robert Meltz.

CRS Report RL30849. The Supreme Court Addresses Corps of Engineers Jurisdiction over

“Isolated Waters”: The SWANCC Decision, by Robert Meltz and Claudia Copeland.

CRS Report RL33263. The Wetlands Coverage of the Clean Water Act is Revisited by the

Supreme Court: Rapanos and Carabell, by Robert Meltz and Claudia Copeland.

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