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Boucher v. United States Department of Agriculture

United States Court of Appeals, Seventh Circuit

August 8, 2019

Rita Boucher, Plaintiff-Appellant,
United States Department of Agriculture, et al., Defendants-Appellees.

          Argued September 21, 2018

          Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. l:13-cv-01585 - Tanya Walton Pratt, Judge.

          Before Wood, Chief Judge, and Flaum and Hamilton, Circuit Judges.


         In the mid- to late-1990s, the late David Boucher cut down nine trees on his family farm in Indiana. For almost two decades, the United States Department of Agriculture (USDA) has disagreed, first with Mr. Boucher and now his widow, plaintiff Rita Boucher, about whether that modest tree removal converted several acres of wetlands into croplands, rendering the Bouchers' entire farm ineligible for USDA benefits that would otherwise be available.

         Since at least 1985, federal law and regulatory policy have tried to remove financial incentives for destruction of environmentally important wetlands. In this case, however, the record shows arbitrary and capricious action by the agency. The USDA repeatedly failed to follow applicable law and agency standards. It disregarded compelling evidence showing that the acreage in question never qualified as wetlands that could have been converted illegally into croplands. And the agency has kept shifting its explanations for treating the acreage as converted wetlands. The USDA's treatment of the Bouchers' acreage as converted wetlands easily qualifies as arbitrary, capricious, and an abuse of discretion. See 5 U.S.C. § 7O6(2)(A). We reverse the district court's affirmance of the USDA's final determination and remand the case to the district court to enter judgment granting appropriate relief to plaintiff Rita Boucher.

         In Part I, we summarize the statutes, regulations, and agency guidance that govern the USDA's wetland conservation enforcement efforts. In Part II, we set forth the facts and history of this dispute. We explain in Part III the legal standards for judicial review and explain in Part IV why this agency action was arbitrary, capricious, and an abuse of discretion. Along the way, we explain why the agency's litigation position has strayed far from the applicable law and science.

         I. The USDA and Wetland Conservation

         A. The Statute, its Regulations, and the Agency

         Wetlands serve vital ecological and economic functions. They provide habitats for birds, fish, and unique species of wild plants; enhance drinking water supply and quality; protect against loss of life and property from flooding; and offer significant recreational and commercial benefits from fishing, hunting, birdwatching, and other wetland-related activities that generate billions of dollars annually. 16 U.S.C. § 3901. Yet the continental United States has lost over half of its natural wetland habitats since the nation's founding, with that loss having accelerated sharply from the 1950s through the 1970s. See 16 U.S.C. § 3901(7); Natural Resources Conservation Service, Introduction to Wetland Conservation Provisions.[1] Those losses have been felt acutely in the Midwest as large proportions of wetlands have been converted to agriculture and other uses. Regional Supplement to the Corps of Engineers Wetland Delineation Manual: Midwest Region at 8 (Aug. 2010) (noting historic wetland loss in Indiana (87%), Illinois (85%), Iowa (89%), Minnesota (80%), Missouri (87%), and Ohio (90%)).

         Concerned about this precipitous loss of wetlands, Congress included wetland conservation provisions (known colloquially as the "Swampbuster" provisions) in the Food Security Act of 1985.16 U.S.C. §§ 3801, 3821-24. These laws condition the availability of important USDA farm program benefits on farmers' willingness to protect wetlands on their property. Farmers who convert (i.e., destroy) wetlands for agricultural purposes are denied those benefits. 16 U.S.C. § 3821(a); 7 C.F.R. § 12.4; see also Horn Farms, Inc. v. Johanns, 397 F.3d 472, 474 (7th Cir. 2005) (noting that initial "Swampbuster" provisions made loss of farm subsidies "proportional to the amount of wetland converted," but 1990 amendment "provided that converting any wetland would cause the farmer to lose all agricultural payments").

         Two USDA agencies implement this regulatory scheme. The Natural Resources Conservation Service (NRCS) is the USDA's scientific arm charged with making technical determinations about whether wetlands exist or have been converted, as well as investigating failures to comply with the Swampbuster provisions. 7 C.F.R. §§ 12.2, 12.6(a)(2) & (c), 12.30(a). And the USDA's Farm Service Agency (FSA) relies on NRCS's wetland determinations to make decisions regarding any violations and eligibility for benefits. 7 C.F.R. §§ 12.2, 12.6(a) & (b).

         B. Soil, Plants, and Water

         Farmers' access to important financial benefits can thus turn on NRCS's identification of "wetlands." The statutory definition is somewhat technical, but it lies at the heart of our decision:

         The term 'wetland' ... means land that -

(A) has a predominance of hydric soils;
(B) is inundated or saturated by surface or groundwater at a frequency and duration sufficient to support a prevalence of hydrophytic vegetation typically adapted for life in saturated soil conditions; and
(C) under normal circumstances does support a prevalence of such vegetation.

16 U.S.C. § 3801(27) (emphasizing key terms discussed below); see also 7 C.F.R. § 12.2.

         Under this definition, in making wetland determinations, the NRCS must assess whether "the area of interest supports a prevalence of [1] hydrophytic vegetation, [2] a predominance of hydric soils, and [3] wetland hydrology under normal circumstances." 7 C.F.R. § 12.30(c)(7). All three characteristics must be present for an area to be considered wetlands. B&D Land and Livestock Co. v. Schafer, 584 F.Supp.2d 1182, 1194-95 (N.D. Iowa 2008) ("the statute plainly and unambiguously defines these three requirements as separate, mandatory requirements").

         The three terms are not self-explanatory to judges and other laypeople, so we look to the statute and its implementing regulations for further guidance:

(1) Hydric Soil is soil that is conducive to potentially supporting the types of vegetation that might be found in wetlands, i.e., "soil that, in its un-drained condition, is saturated, flooded, or ponded long enough during a growing season to develop an anaerobic condition that supports the growth and regeneration of hydrophytic vegetation." 16 U.S.C. § 38Ol(a)(l2); 7 C.F.R. § 12.2.
(2) Hydrophytic vegetation refers to plants known as "hydrophytes," which can be found "growing in water or in soil too waterlogged for most plants to survive." Webster's Third New Int'l Dictionary 1109 (1993). The technical statutory definition describes this type of plant as those which grow "in water or in a substrate that is at least periodically deficient in oxygen during a growing season as a result of excessive water content." 7 C.F.R. § 12.2; 16 U.S.C. § 38Ol(a)(l3).
(3) Hydrology in this context is the fancy word for water, and lots of it. A wetland must be wet enough (at least for some period of the year) that typical wetland plants can grow or-in formal terms-the land must be observed to be "in-undat[ed] or saturat[ed] by surface or groundwater during a growing season at a frequency and duration sufficient to support a prevalence of hydrophytic vegetation." 7 C.F.R. § 12.2; see also Army Corps of Engineers Wetland Delineation Manual at A6 (1987) ("Hydrology" is "[t]he science of dealing with the properties, distribution, and circulation of water.").

         The final key term is that the land must in fact be wetlands under "normal circumstances," which means "the soil and hydrologic conditions that are normally present, without regard to whether the vegetation has been removed." 7 C.F.R. § 12.31 (b)(2)(i). As explained in agency guidance: "The premise for the concept of normal circumstances is that for many wetlands where the vegetation has been removed, the soil and hydrological characteristics remain to the extent that hydrophytic vegetation could return if vegetation management ceased." NRCS National Food Security Act Manual § 514.2H (2010).

         The federal laws also address "converted" wetlands, defined by statute as:

Wetland that has been drained, dredged, filled, leveled, or otherwise manipulated (including any activity that results in impairing or reducing the flow, circulation, or reach of water) for the purpose or to have the effect of making the production of an agricultural commodity possible.

16 U.S.C. § 3801(a)(7)(A). And relevant to this appeal, any "converted wetland" that was converted before December 23, 1985 (i.e., before passage of the Swampbuster provisions), is simply deemed "non-wetland." 7 C.F.R. § 12.2.[2]

         NRCS agents are required to identify wetlands and implement the Swampbuster provisions across the varying geography of the United States. Several sources of detailed guidance have been developed. Beyond the statutory provisions and regulations, NRCS agents rely on the Corps of Engineers Wetlands Delineation Manual (1987) (the "Corps Manual"), the Regional Supplement to the Corps of Engineers Wetland Delineation Manual: Midwest Region (Version 2.0) (Aug. 2010) ("Corps Supplement"), the NRCS's National Food Security Act Manual (2010) ("NRCS Manual"), and the NRCS's Food Security Act Wetland Identification Procedures (2010) ("NRCS Procedures").[3]

         Using a combination of off-site resources (e.g., aerial pictures, regional soil maps) and on-site investigations, NRCS agents or experts are charged with certifying a "wetland determination [that] is of sufficient quality to make a determination of ineligibility for program benefits." 7 C.F.R. §§ 12.30(c)(1); l2.6(c)(5)-(7); NRCS Manual at §§ 5l4.lA(1) & (3), B(1) (on-site visits are required in several circumstances that apply to the present case); NRCS Procedures at (1-3), (2-2), (2-3), (4-1), (5-2), (5-3).

         C. Making a Wetland Determination: Typical and Atypical Situations

         To assess whether the USDA's wetland determination for the Boucher farm is defensible, we set out in general terms the process and the rationales for that process in the agency's governing statutes, regulations, and guidance manuals. As noted above, the overarching statutory command is that NRCS agents must determine whether all three of the required characteristics-wetland soil, plants, and water-are present, or could be present, on disputed sites.

         There are scientific reasons why only one or two of the criteria are insufficient for a wetland determination. As one of NRCS's primary sources of guidance cautions, NRCS agents should be careful not to overweight the potentially "misleading" presence of only hydric soils or wetland vegetation: "Many plant species can grow successfully in both wetlands and nonwetlands, and hydrophytic vegetation and hydric soils may persist for decades following alteration of hydrology that will render an area a nonwetland." Corps Manual at 6. Because "[i]ndicators of hydrophytic vegetation and hydric soil generally reflect a site's medium- to long-term wetness history/' it is "[w]etland hydrology indicators [that] provide evidence that the site has a continuing wetland hydrologic regime and that hydric soils and hydrophytic vegetation are not relic[s] of a past hydrologic regime." Corps Supplement at 68. Thus, the Corps Manual advises at page 6, a certification of "[t]he presence of hydric soils and wetland hydrology indicators in addition to vegetation indicators will provide a logical, easily defensible, and technical basis for the presence of wetlands." (Emphasis added.)[4]

         As in this case, NRCS also may need to determine whether a specific area should be deemed a converted wetland after changes have been made to the land's soil, vegetation, and/or hydrology. In these "atypical situations," NRCS agents have guidance they can and should follow to determine whether such activity has indeed converted a wetland. Corps Manual at 73-74; Corps Supplement at 100 ("Atypical situations are wetlands in which vegetation, soil, or hydrology indicators are absent due to recent human activities or natural events."); NRCS Procedures (2-4), (2-15) (again, alteration must have occurred after 1985).

         NRCS has some "flexibility" when "[s]tandard sampling methodology must be modified if it does not accurately assess the site," but even in non-standard situations, "the basic approach for making wetland determinations should not be altered (i.e., the determination should be based on the vegetative, soil, and hydrologic characteristics of the area in question)." NRCS Procedures (5-5). "Any variation from the sampling methods should be fully documented." Id. Agency guidance addresses typical and atypical situations when NRCS agents assess a parcel of land's soil, vegetation, and water.

         1. Hydric Soil

         The presence of hydric soil alone is not controlling: "not all areas having hydric soils will qualify as wetlands." Corps Manual at 21. "Only when a hydric soil supports hydrophytic vegetation and the area has indicators of wetland hydrology may the soil be referred to as a 'wetland' soil." Id. If NRCS agents believe that ground or surface waters (i.e., hydrology) have been removed from otherwise hydric soils, they are instructed to look for "Onsite evidence of drained soils," such as the presence of ditches or canals, dikes, levees, or similar structures, or the "Presence of a tile system to promote subsurface drainage." Id. at 21-22. Whether such drainage will preclude a wetland designation depends on how successful it is; if such areas are not sufficiently drained, they "may continue to have wetland hydrology." Id. at 22.

         If NRCS agents face an atypical situation in which they believe hydric soils themselves have been altered, they follow three investigative steps. First, they must describe the alteration (e.g., dredging, removal of surface layers). Corps Manual at 77. Then they should determine the date of the alteration and finally, characterize the soils that were present before the alteration. Id. at 77-79.

         2. Hydrophytic Vegetation

         The presence of hydric soil alone is not controlling, and neither is the growth of some potentially hydrophytic vegetation-i.e., the type of plants found "growing in water or in soil too waterlogged for most plants to survive." Webster's Third New Int'l Dictionary 1109 (1993).

         The vegetation that NRCS agents encounter runs along a spectrum from species that will grow only in wetlands (called Obligate Wetland Plants, which occur more than 99% of the time in wetlands) to species that typically cannot survive in a wetland's anaerobic soil conditions (called Obligate Upland Plants, which occur less than 1% of the time in wetlands). Corps Manual at 13-14 & Table 1. The categories of plants that lie between these extremes include Facultative Wetland Plants (occurring approximately 67% of the time in wetlands), Facultative Plants (those "with a similar likelihood of occurring in both wetlands and nonwetlands"), and Facultative Upland Plants (occurring less than 33% of the time in wetlands). Id.[5]

         Thus, the presence (or former presence) of some vegetation should typically not control wetland status, except perhaps if it is Obligate Wetland or Obligate Upland vegetation. NRCS agents are provided with extensive guidance on the measurement and evaluation of vegetation in order to rely on it as a wetland indicator. See, e.g., Corps Supplement at 15-31. Key in such determinations are the "hydrologic factors [that] exert an overriding influence on [plant] species that occur in wetlands." Corps Manual at 13.

         NRCS agents may face atypical situations in which vegetation has been removed or altered. For example, the predominant land use in the Midwest is agricultural. "Wetlands used for agriculture may be considered atypical because they generally lack a natural plant community and may be planted in crops or pasture species or altered by mowing, grazing, or other management practices." Corps Supplement at 101. Such parcels of land may indeed be "wetlands [that] exhibit indicators of hydric soil and wetland hydrology but lack any of the hydrophytic vegetation indicators." Id. at 104.

         In such circumstances, before proceeding with a further assessment, NRCS must "[v]erify that at least one indicator of hydric soil and one primary or two secondary indicators of wetland hydrology are present." Corps Supplement at 105. "[U]nless soil and/or hydrology are also disturbed," the absence of "hydric soil or wetland hydrology" indicators means "the area is likely non-wetland." Id. And if the NRCS agent believes that hydrology was also altered, then the agent should determine whether the disputed land could have wetland hydrology and "[v]erify that the area is in a landscape position that is likely to collect or concentrate water," such as a "[c]oncave surface (e.g., depression or swale)." Id. Thus, in such an atypical situation, an NRCS agent may proceed with a wetland determination only after the agent is convinced that the disputed area has: (1) hydric ...

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