[Federal Register Volume 61, Number 174 (Friday, September 6, 1996)]
[Rules and Regulations]
[Pages 47019-47038]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-22784]



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  Federal Register / Vol. 61, No. 174 / Friday, September 6, 1996 / 
Rules and Regulations  

[[Page 47019]]



DEPARTMENT OF AGRICULTURE

Office of the Secretary

7 CFR Part 12

RIN 0578-AA17


Highly Erodible Land and Wetland Conservation

AGENCY: Office of the Secretary, USDA.

ACTION: Interim final rule with request for comments.

-----------------------------------------------------------------------

SUMMARY: The United States Department of Agriculture (USDA) is issuing 
an interim final rule for the Highly Erodible Land and Wetland 
Conservation provisions of the Food Security Act of 1985, as amended. 
This interim final rule incorporates specific changes required by the 
Federal Agriculture Improvement and Reform Act of 1996 and makes other 
changes to improve the administration of these provisions. USDA is 
seeking comments from the public which will be considered prior to 
issuing a final rule.

DATES: Effective Dates: September 6, 1996.
    Comments must be received by November 5, 1996.

ADDRESSES:  All comments concerning this interim final rule should be 
addressed to Lloyd E. Wright, Director, Conservation Ecosystems 
Assistance Division, Natural Resources Conservation service, P.O. Box 
2890, Washington, D.C. 20013-2890. Attention: HELWC. Fax: 202-720-1838. 
This rule may also be accessed, and comments submitted, via Internet. 
Users can access the NRCS Federal Register homepage and submit comments 
at http:/astro.itc.nrcs.usda.gov:6500.

FOR FURTHER INFORMATION CONTACT:
 Sandra N. Penn, Conservation Ecosystems Assistance Division, Natural 
Resources Conservation Service, 202-720-1845.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be significant and was reviewed by 
the Office of Management and Budget (OMB) under Executive Order 12866. 
Pursuant to Sec. 6(a)(3) of Executive Order 12866, CCC and NRCS have 
conducted an economic analysis of the potential impacts associated with 
this interim final rule. The economic analysis concluded that the past 
ten years of experience in implementing these provisions demonstrates 
that the provisions are an effective incentive to implementing 
conservation practices. Changes in the 1985 Act and the implementing 
regulations will help to increase that incentive by making compliance 
achievable by more producers, providing more liberal technical 
assistance, and increasing flexibility in farm operations that deterred 
some producers from participation in USDA programs in the past. A copy 
of this cost-benefit analysis is available upon request from Sandra N. 
Penn, Conservation Ecosystems Assistance Division, Natural Resources 
Conservation Service, P.O. Box 1890, Washington, D.C. 20013-1890.

Regulatory Flexibility Act

    The Regulatory Flexibility Act is not applicable to this rule 
because USDA is not required by 5 U.S.C. 533 or any other provisions of 
law to publish a notice of proposed rulemaking with respect to the 
subject matter of this rule.

Environmental Evaluation

    It has been determined through an environmental assessment that the 
issuance of this interim final rule will not have a significant impact 
upon the human environment. Copies of the environmental assessment may 
be obtained from Sandra N. Penn, Conservation Ecosystems Assistance 
Division, Natural Resources Conservation Service, P.O. Box 2890, 
Washington, D.C. 20013-2890.

Paperwork Reduction Act

    No substantive changes have been made in this interim final rule 
that affect the recordkeeping requirements and estimated burdens 
previously reviewed and approved under OMB control number 0560-0004.

Executive Order 12788

    This interim final rule has been reviewed in accordance with 
Executive Order 12778. The provisions of this interim final rule are 
not retroactive except for Sec. 12.5(b)(4)-(8) in relation to certain 
actions or determinations that occurred after December 23, 1985, 
relative to the conversion of wetlands or the production of an 
agricultural commodity upon a converted wetland. Furthermore, the 
provisions of this final interim rule preempt State and local laws to 
the extent such laws are inconsistent with this interim final rule. 
Before an action may be brought in a Federal court of competent 
jurisdiction, the administrative appeal rights afforded persons at CFR 
parts 11,614,780 and 1900 Subpart B of this title, as appropriate, must 
be exercised and exhausted.

Unfunded Mandates Reform Act of 1995

    Pursuant to Title II of the unfunded Mandates Reform Act of 1995, 
Pub. L. 104-4, the effects of this rulemaking action on State, local, 
and tribal governments, and the public have been assessed. This action 
does not compel the expenditure of $100 million or more by any State, 
local, or tribal governments, or anyone in the private sector; 
therefore a statement under Sec. 202 of the Unfunded Mandates Reform 
Act of 1995 is not required.

Discussion of Provisions

    Title XII of the Food Security Act of 1985, as amended (the 1985 
Act), encourages participants in United States Department of 
Agriculture (USDA) programs to adopt land management measures by 
linking eligibility for USDA program benefits to farming practices on 
highly erodible land and converted wetlands. In particular, the highly 
erodible land provisions (HEL) of the 1985 Act provide that after 
December 23, 1985, a program participant is ineligible for certain USDA 
program benefits for the production of an agricultural commodity on a 
field in which highly erodible land is predominant. Additionally, the 
wetland conservation (WC) provisions of the 1985 Act provide that after 
December 23, 1985, a program participant is ineligible for certain USDA 
program benefits for the production of an agricultural commodity on a 
converted

[[Page 47020]]

wetland, or after November 28, 1990, for the conversion of a wetland 
that makes the production of an agriculture commodity possible. The 
1985 Act, however, affords relief to program participants who meet 
certain conditions identified under the 1985 Act by exempting such 
actions from the ineligibility provisions.
    The USDA issued a final rule implementing the HEL and WC provisions 
of the 1985 Act on September 17, 1987. These regulations, found at 7 
CFR part 12, provided the terms of program ineligibility, described the 
several exemptions from ineligibility, outlined the responsibilities of 
the several USDA agencies involved in implementing the provisions, and 
generally established the framework for administration of the 
provisions.
    The Food, Agriculture, Conservation, and Trade Act of 1990 (the 
1990 Act), amended the 1985 Act and made some significant modifications 
to the HEL and WC conservation provisions. These statutory changes were 
incorporated into part 12 through amendments issued April 23, 1991, and 
May 23, 1991.
    The implementing regulations mirror the 1985 Act's structure by 
listing the activities that will cause a person to lose program 
benefits, the program benefits that are at risk, and the conditions 
under which these activities can occur without losing program 
eligibility. The current regulations are divided into three subparts. 
Subpart A describes the terms of ineligibility, USDA programs 
encompassed by its terms, the list of exemptions from ineligibility, 
the agency responsibilities, and the appeal provisions for persons 
adversely affected by an agency determination. Subpart B describes in 
greater detail the technical aspects of the highly erodible land 
provisions, including the criteria for identification of highly 
erodible lands, criteria for highly erodible field determinations, and 
requirements for the development of conservation plans and conservation 
systems. Subpart C describes in greater detail the technical aspects of 
the wetland conservation provisions, including the criteria for 
determining a wetland, the criteria for determining a converted 
wetland, and the uses of wetlands and converted wetlands that can be 
made without losing program eligibility.
    Since December 23, 1985, program participants have farmed in a more 
sustainable manner, resulting in more soil remaining on the field and 
more wetlands remaining available to wildlife and migratory fowl. 
Meeting the objectives of the HEL and WC provisions, however, has been 
difficult for some producers. Wherever possible, USDA helps individual 
program participants address their unique resources concerns in a 
manner that meets the requirements of the HEL and WC provisions. The 
Federal Agriculture Improvement and Reform Act (the 1996 Act), enacted 
April 4, 1996, made several modifications to the HEL and WC provisions 
which will increase USDA's ability to meet these individual situations 
in a more flexible manner.

The Federal Agriculture Improvement and Reform Act

    The 1996 Act amendments to the HEL and WC provisions became 
effective 90 days after the date of enactment, i.e., July 3, 1996. 
Accordingly, delaying implementation of this rule would be contrary to 
the public interest and it has been determined that this rule should, 
therefore, be effective when issued but subject to further review based 
on comments submitted in response to this interim final rule.
    The 1996 Act made the following changes to the implementation of 
the HEL and WC provisions:
     Adds new programs to the list of USDA program benefits 
covered.
     Deletes some programs from the list of USDA program 
benefits covered.
     Under certain conditions, allows a person who is 
determined to be ineligible for USDA program benefits because of 
failure to apply a conservation system up to 1 year to implement the 
necessary practices without loss of benefits.
     Provides for expedited variances related to weather, pest, 
and disease problems and establishes a time period to render a decision 
on whether to grant those variances.
     Requires a measurement of soil erosion on a highly 
erodible field prior to the implementation of a conservation system, 
based on estimated average annual soil erosion rates.
     Provides for self-certification of compliance for HEL and 
authorizes the Natural Resources Conservation Service (NRCS) to exclude 
that person from status review on the basis of that certification of 
compliance.
     Provides for revision or modification of a conservation 
plan by a person if the same level of treatment is maintained.
     Permits a person to use, on a field-trial basis, 
conservation practices other than those currently approved if NRCS 
determines in advance that the practices have a reasonable likelihood 
of success.
     Provides for a review, and relief to a person, by the 
local county committee if applying a conservation system would cause 
the person undue economic hardship.
     Requires that an employee of USDA who notices a 
conservation compliance deficiency on a person's farm while providing 
technical assistance on other land inform the person of the deficiency 
and actions necessary to come into compliance, and allow up to 1 year 
for the person to fully implement corrective action before reporting 
the observation as a compliance violation.
     Requires that highly erodible land exiting the 
Conservation Reserve Program not be held to a higher conservation 
compliance standard than similar cropland in the same area.
     Permits a person to cease using farmed wetlands, or 
farmed-wetland pastures, as identified by NRCS, for cropping or forage 
production, and allows the lands to return to wetland conditions, and 
subsequently bring these lands back into agricultural production after 
any length of time without loss of eligibility for USDA program 
benefits, given certain conditions.
     Allows flexibility in determining the programs for which a 
person who violates wetland conservation provisions will become 
ineligible.
     Ensures that persons the right to request and appeal a 
certified wetland determination.
     Provides that a certified wetland delineation will remain 
in effect until the person requests a new determination and 
certification.
     Ensures that wetlands that were certified as prior-
converted cropland will continue to be considered prior-converted 
cropland even if wetland characteristics return as a result of lack of 
maintenance of the land or other circumstances beyond the person's 
control provided the prior-converted cropland continues to be used for 
agricultural purposes.
     Requires USDA to identify on a regional basis which 
categories of activities constitute a minimal effect on wetland 
functions and values.
     Provides persons who convert a wetland greater flexibility 
to mitigate the loss of wetland functions and values through 
restoration, enhancement, or creation of wetlands.
     Allows the Farm Service Agency (FSA) to waive a person's 
ineligibility for benefits if FSA believes the person acted in good 
faith and without intent to violate the wetland provisions.
     Provides for a pilot program for wetland mitigation 
banking.
     Repeals the requirements for consultation with the Fish 
and Wildlife Service (FWS).

[[Page 47021]]

     Provides that benefits of affiliates of a business 
enterprise who violate HEL or WC provisions will be reduced in 
proportion to the interest held by the affiliate in the business 
enterprise.
     Defines ``agricultural lands'' for the purpose of 
implementing the January 6, 1994, interagency memorandum of agreement 
on Federal wetland delineations on agricultural lands.

Public Listing Forums

    In April 1996, USDA held nine forums to provide opportunities for 
public comment in advance of this rulemaking action. These forums were 
held at Sacramento, California; Longmont, Colorado; Columbus, Georgia; 
Springfield, Illinois; Wyomissing, Pennsylvania; Sioux Falls, South 
Dakota; Abilene, Texas, Spokane, Washington; and, Washington, D.C. More 
than 850 people, including 206 speakers, attended these forums. In 
addition, USDA accepted written comments. The USDA considered the 
public comments provided at these forums in the preparation of this 
interim final rule. The documents relating to these forums are 
available for public inspection at Room 6029 South Building, USDA, 14th 
and Independence Ave. SW, Washington, D.C. The following discussion is 
a brief 3summary of how USDA responded to the issues generated by the 
comments:
    USDA received seven comments related to the granting of variance 
for persons who fail to meet the highly erodible land conservation 
requirements. Section 12.5(a)(6)(ii) addresses procedures for granting 
variances for weather, pest, and disease problems, and the factors that 
NRCS will consider in granting those variances.
    USDA received three comments related to procedures for determining 
whether a conservation system results in a substantial reduction in 
erosion. Section 12.23 addresses procedures for evaluating conservation 
systems for land with and without cropping history.
    USDA received 25 comments related to policies regarding when a 
violation is in good faith. Sections 12.5(a)(5) and (b)(5) address 
procedures for determining when a violation is in good faith.
    USDA received 16 comments related to procedures for conducting 
status reviews. Although procedures for conducting status reviews are 
not addressed in the rule, the NRCS will consider these comments in 
preparing its internal operating procedures.
    USDA received 46 comments related to procedures on wetland 
mitigation; these included the suggestion that mitigation always be in 
the same watershed; that mitigation should place priority on 
restoration or enhancement rather than creation of wetlands; that 
mitigation should be flexible; and, that mitigation should meet the 
requirements of the WC provision. Section 12.5(b)(4) sets forth 
procedures to be used for wetland mitigation, and adds that the State 
Conservationist may determine that mitigation for certain types or 
classes of wetlands will not be considered because it is not possible 
to achieve equivalent replacement of wetland functions and values 
within a reasonable time frame. USDA received another 28 comments 
related to mitigation banking.
    USDA received 68 comments related to certification of wetland 
determinations. Some commenters favored reviewing all wetland 
determinations and correcting errors; other commenters favored not 
reviewing existing wetland determinations. Some commenters suggested 
that landowners should be formally notified of the certification of 
wetland determinations. Some commenters suggested that NRCS should be 
the lead agency for wetland determinations. Section 12.30(c) describes 
the proposed approach to certification of wetland determinations. It 
also specifies that a certified wetland determination will remain valid 
and in effect until the person affected by the certification requests 
review of the certification by NRCS.
    USDA received 17 comments related to the role of FWS in carrying 
out the wetland conservation provisions. Of these, four commenters 
expressed support for FWS involvement and eight commenters favored 
decreasing the role of the FWS. Five commenters made no specific 
recommendation. The 1996 Act removed the requirement for consultation 
with FWS, and that requirement has been removed from the rule. In 
addition, Sec. 12.30 defines the role of the FWS in carrying out the 
wetland conservation provisions.
    USDA received 36 comments related to prior-converted cropland 
issues and abandonment of wetlands. Of these, 19 commenters expressed 
support for the ``once a PC, always a PC'' change made by the 1996 Act; 
three commenters expressed concern over that change. Section 12.33 
incorporates changes made by the 1996 Act amendments.
    USDA received four comments stating that NRCS should withdraw from 
the Interagency Memorandum of Agreement on Wetlands (MOA) with FWS, 
Environmental Protection Agency (EPA), and the U.S. Army Corps of 
Engineers (Corps). This comment is outside the scope of this rule, but 
as discussed in greater detail below, NRCS is dedicated to continued 
coordination with the other Federal agencies with wetland 
responsibilities. Currently, the MOA provides a useful and available 
framework for this coordination.

Description of Amendments

    As the summary of the forum comments indicates, the statutory 
changes affect provisions throughout 7 CFR part 12. Because of these 
numerous changes, USDA will republish part 12 in its entirety to help 
the public form opinions and offer comments. When USDA reviews the 
comments received from the public, those comments concerning new 
regulatory provisions will receive greater consideration.
    In addition to revisions necessary to accommodate changes in the 
Act, USDA makes several changes to interpret, clarify, or specify 
procedures followed in the implementation for the HEL and WC 
provisions. USDA invites public comment on these changes.

Amendments to the HEL Provisions

    USDA finds that the following regulatory changes will improve the 
quality of implementation of the HEL provisions of the 1985 Act:
     Section 12.5(a)(6)(ii) is amended to list factors that 
NRCS will consider when a landowner requests a variance related to 
weather, pest, or disease problems.
     Section 12.22(c) is added to clarify that when fields are 
combined, the part of the new field that was previously a highly 
erodible field shall continue to be subject to the highly erodible land 
requirements.
     Section 12.23(a) is amended to clarify that the adequacy 
of a conservation system will be evaluated according to whether it 
conforms to the NRCS field office technical guide in use at the time 
that the plan or system is developed or revised.
     Section 12.23(b) is added to clarify procedures to be used 
to evaluate the adequacy of conservation systems for achieving 
substantial reduction in soil erosion on land with and without cropping 
history.
     Section 12.23(c) is added to specify that conservation 
field trials included in a person's conservation plan must have prior 
approval by NRCS and must be documented in the person's conservation 
plan specifying the limited time period during which the field trial is 
in effect.
     Section 12.23(j) sets forth the factors to be considered 
by the FSA State Committee in determining whether to grant a person's 
request for relief based on undue economic

[[Page 47022]]

hardship in implementing a conservation system.

Amendments to the WC Provisions

    USDA finds that the following changes will improve the 
implementation of the WC provisions of the 1985 Act (WC provisions):
    Identification of wetland types: The WC provisions clearly limit 
the conversion of wetlands and the planting of an agricultural 
commodity on a converted wetland, yet the technical identification of 
when these provisions are triggered can prove complex. Even though the 
1985 Act implicitly identifies three distinct land types (wetlands, 
converted wetlands, and non-wetlands), the inherent complexity of 
natural systems and the diversity of land management methods available 
to an agricultural producer require that greater sophistication be used 
in application of broad national standards to local conditions. Some 
areas of land have been planted to an agricultural commodity but still 
exhibit the characteristic of a natural wetland if cropping ceases for 
even a short period of time. Likewise, areas managed for hay or pasture 
can exhibit the characteristics of a natural wetland if the management 
of the area ceases. Some activities can permanently remove most of the 
water from an area without making the production of an agricultural 
commodity possible while natural events can make the production of an 
agricultural commodity possible without permanently removing water from 
an area.
    Since 1987, USDA has identified in policy the threshold 
characteristics that define when: a wetland has been manipulated 
sufficiently to make the production of an agricultural commodity 
possible; a wetland is ``converted;'' conditions meet a particular 
exemption identified under the 1985 Act; and a producer has expanded 
the drainage system beyond what existed prior to December 23, 1985. The 
USDA is adding definitions to Sec. 12.2 to state more precisely the 
variety of wetland types found in the agricultural landscape. Section 
12.5 and Secs. 12.30-12.33 are amended to describe how these wetland 
types relate to particular exemptions from ineligibility. In this 
manner, agricultural producers are provided the maximum flexibility to 
manage their lands in a manner that will not trigger the ineligibility 
provisions of the 1985 Act.
    Coordination with other Federal agencies: Consistent with the 
intent expressed in the Manager's Report accompanying the 1996 Act 
amendments, the changes made in this rule ``do not supersede the 
wetland protection authorities and responsibilities of the 
Environmental Protection Agency [EPA] or the Corps of Engineers [the 
Corps] under Section 404 of the Clean Water Act.'' This rule is 
promulgated under the authority of the 1985 Act, as amended, and 
therefore does not affect the obligations of any person under other 
Federal statutes, or the legal authorities of any other Federal agency 
including, for example, EPA's authority to determine the geographic 
scope of Clean Water Act jurisdiction. Nonetheless, NRCS, the Corps, 
and EPA place a high priority on adopting procedures and policies that 
minimize duplication and inconsistencies between the wetland 
conservation provisions of the 1985 Act and the Clean Water Act section 
404 programs. To help achieve these important policy objectives, on 
January 6, 1994, four Federal agencies with wetland responsibilities 
(USDA, EPA, the Department of the Interior, the Department of the Army) 
entered into a Memorandum of Agreement (MOA), regarding the delineation 
of wetlands for purposes of section 404 of the Clean Water Act and the 
WC provisions. This MOA provides a framework for continuing 
coordination between the Federal agencies regarding the administration 
of Federal wetland laws. Consistent with the objectives of the MOA, the 
NRCS will continue to coordinate with the other Federal agencies in the 
development of its policies and procedures related to the 
implementation of these regulations.
    More specifically, the agencies will coordinate to develop policies 
and procedures for evaluating the accuracy of existing non-certified 
wetland determinations made by NRCS. The necessary first step in these 
procedures will be to make an assessment of the quality of previous 
determinations. After completing the quality assessment, in order to 
provide certainty for the agricultural community, the Federal agencies 
will complete the process of validating prior determinations in an 
expeditious manner.
    It is also the goal of the agencies to minimize duplication and 
inconsistencies between the WC provisions and the Clean Water Act. The 
agencies will coordinate to develop policies and procedures to minimize 
duplication and inconsistencies between the WC provisions and the Clean 
Water Act programs regarding other issues; in particular, conversion 
for non-agricultural use, minimal effects determinations (including 
categorical minimal effects exemptions), mitigation determination, or 
other written agreements between persons and NRCS, the re-establishment 
of agriculture use on abandoned farmed wetlands and farmed-wetland 
pasture, conversions due to NRCS wetland determination errors, and 
drainage maintenance. As part of this effort, the Corps intends to 
develop a new Clean Water Act nationwide permit that addresses NRCS 
minimal effects determinations, NRCS mitigation requirements, and 
modify the existing nationwide permit that addresses voluntary wetland 
restoration (See 61 FR part VII (June 17, 1996)).
    In the MOA, the agencies agreed to follow certain guidelines for 
delineating wetlands. The MOA agencies currently use the 1987 Corps of 
Engineers Wetland Delineation Manual (1987 Corps Manual) for 
delineating wetlands on areas where the native vegetation is intact 
(i.e., non-agricultural lands) and use the National Food Security Act 
Manual, Third ed. (NFSAM), for delineating wetlands on areas where the 
native vegetation has been removed due to ongoing agricultural 
activities (i.e., agricultural lands).
    Copies of the NFSAM and the MOA are available from the NRCS, P.O. 
Box 2890, Washington, D.C., 20013. Copies of the 1987 Corps Manual are 
available from the National Technical Information Service (NTIS), 5285 
Port Royal Road, Attn: Order Department, Springfield, Virginia, 22171. 
Copies of the Supplemental guidance issued by the Corps concerning use 
of the 1987 Manual (i.e., the October 7, 1991, Questions and Answers, 
and the March 6, 1992, Clarification and Interpretation Memorandum) may 
be obtained by contacting the Regulatory Branch of the local Corps 
district, the EPA Wetlands Hotline at (800) 832-7828, or the Regulatory 
Branch of Corps headquarters (Office of the Chief of Engineers) at 
(202) 272-0199. NRCS will publish notice in the Federal Register 
concerning a change in the Federal wetland delineation criteria that 
may be used in implementation of the WC provisions.
    This interim final rule, however, only applies to administration of 
Title XII of the 1985 Act. As discussed earlier, the four agencies have 
identified a need to expand and revise the MOA to assure consistency 
and fairness in the implementation of these acts. The current MOA will 
remain in effect until it is amended or rescinded by the four agencies.
    A goal of the Administration's 1993 Wetlands Plan is to harmonize 
the WC provisions and the Clean Water Act to the extent practicable. 
These regulations are modified in several ways to further the 
President's Wetlands Plan. In

[[Page 47023]]

particular, Sec. 12.5(b)(5) provides that when a person requests relief 
on the basis that an action was conducted in good faith, USDA may 
consider whether the person has a record of violating the wetland 
provisions of these regulations or other Federal, State, or local 
wetland provisions.
    Additionally, Sec. 12.6(e) is added to state that NRCS may accept 
the assistance of other Federal agencies to carry out the wetland 
responsibilities of these regulations. Sections 12.30(a) and (b) 
provide that NRCS will consult with FWS at the State level to develop a 
process for implementation of the WC provisions.
    Section 12.30(c) describes the procedure for certification of 
wetland determinations and specifies that certified wetland 
determinations will meet current Federal mapping conventions.
    A certified wetland determination will remain in effect unless the 
person affected by the certification requests a review under certain 
circumstances or the wetland characteristics are changed as a result of 
human activities.
    Section 12.31(b)(3) is amended to provide that the determination of 
prevalence of hydrophytic vegetation will be made in accordance with 
the current Federal wetland delineation methodology in use at the time 
of the determination. This change assures that the four agencies will 
utilize consistent and up-to-date technical standards and criteria.

Summary of Rule Modifications

    Based on the changes in the 1996 Act and the other considerations 
set forth above, the changes to 7 CFR part 12 adopted in this notice 
are as follows:

Subpart A

    This interim final rule adds several new definitions to Sec. 12.2. 
The Department of Agriculture Reorganization Act of 1994 abolished 
several agencies and established new agencies to assume Department 
responsibilities. Therefore, Sec. 12.2 is amended to reflect the new 
agencies with responsibilities for implementation of these regulations.
    Section 12.2: This interim final rule adds new definitions for 
``conservation plan,'' ``conservation system,'' and ``field'' as stated 
in the statute. It also adds several new definitions related to types 
of wetlands and management actions related to wetlands that have 
previously only been identified in policy. Definitions for ``prior-
converted cropland,'' ``farmed wetland,'' ``farmed-wetland pasture,'' 
and ``commenced-conversion wetland'' have been added. Other provisions 
of the rule have been amended, including Sec. 12.5 and Secs. 12.31-.33, 
to incorporate these new definitions where applicable.
    The 1996 Act amendments provide that a person who converts a 
wetland may remain eligible for USDA program benefits if the loss of 
wetland functions and values are mitigated through the restoration, 
enhancement, or creation of a wetland. Therefore, definitions for 
``creation'', ``enhancement'', and ``restoration'', have been added to 
clarify this new flexibility.
    Section 12.3: This interim final rule applies to all actions taken 
after July 3, 1996, and to determinations made after, or pending on, 
July 3, 1996, the date on which the HEL and WC statutory amendments 
become effective. This section is amended to reflect the passage of the 
1996 Act and the scope of these new provisions.
    Section 12.4: Section 12.4 describes the actions that will cause a 
person to lose eligibility for USDA program benefits and the program 
benefits that are subject to reduction or loss. The 1996 Act treats HEL 
and WC differently regarding the programs encompassed by each provision 
and the extent of the sanctions if the provisions are violated. Section 
12.4 deletes applicability to some programs, such as crop insurance and 
obsolete programs. A person who violates the WC provisions may lose all 
or only a portion of certain USDA benefits, but a person who violates 
HEL could lose all of of these same benefits and additional program 
benefits. Sections 12.4(c) is amended to include an interpretation of 
which crop year's benefits are affected by a violation decision, and 
sets forth the factors that FSA will consider in determining the extent 
of benefits to be lost based on the seriousness of the violation.
    Section 12.5: The 1996 Act amendments modify the provisions of 
Sec. 12.5 regarding the exemptions from ineligibility for USDA program 
benefits. Section 12.5(a) addresses the exemptions that apply to HEL 
and Sec. 12.5(b) addresses the exemptions that apply to WC.
    Section 12.5(a)(5) specifies that HEL violations that are 
determined to have been made in good-faith are eligible for graduated 
sanctions if they were on land that was converted from native 
vegetation, i.e., rangeland or woodland, to crop production after 
December 23, 1985. For good faith violations on land that was converted 
from native vegetation, i.e., rangeland or woodland, to crop production 
before December 23, 1985, the person will be allowed up to one year to 
correct the problem before being found ineligible. After one year, if 
the problem is not corrected, the ineligibility provisions of Sec. 12.4 
will apply. Section 12.5(a)(6) grants an automatic variance if within 
30 days NRCS fails to respond to a persons request for a variance 
because of weather, pest, or disease. It describes criteria that NRCS 
will consider when determining whether to grant a variance for a 
natural disaster such as weather, pest, or disease. NRCS is especially 
soliciting comments on how these criteria may be specified to ensure 
that variances are granted where appropriate.
    Under Sec. 12.5(b), the exemptions from ineligibility relative to 
wetland conservation, there exists a new exemption for land that was 
certified as having been converted prior to December 23, 1985, (prior-
converted croplands), but had returned to wetland characteristics after 
that date. This exemption provides that if certain requirements are 
met, a prior-converted cropland will not be considered abandoned for 
purposes of implementation of these regulations. Likewise, there exists 
another new exemption for areas that NRCS determined were manipulated 
but were not completely converted prior to December 23, 1985, (farmed 
wetlands and farmed-wetland pastures), but may revert to wetland status 
through a voluntary restoration, enhancement, or creation action. This 
exemption provides that if certain requirements are met, the area will 
not be considered abandoned for purposes of implementation of these 
regulations.
    These exemptions do not address how the Corps may treat these 
wetland types for purposes of section 404 of the Clean Water Act. The 
Corps has a notice in 61 FR part VII (June 17, 1996) to issue, reissue, 
and modify the nationwide permits for section 404 of the Clean Water 
Act that addresses these issues.
    The 1996 Act provides that certain wetland conversion activities 
that were conducted pursuant to a permit issued under section 404 of 
the Clean Water Act may be exempt from ineligibility under the WC 
provisions, if the conversion activity was adequately mitigated for 
purposes of these provisions. This rule provides that a person who 
received an individual permit under section 404 of the Clean Water Act 
after December 23, 1985, and met certain sequencing requirements, is 
exempt from the ineligibility provisions of these regulations.
    This rule, however, provides that a person whose conversion 
activity is encompassed by a nationwide or regional general permit 
issued pursuant to section 404 of the Clean Water Act

[[Page 47024]]

may not be exempt under these regulations. USDA will evaluate whether 
any mitigation was required, and whether the wetland functions and 
values lost by the conversion activity were adequately replaced before 
USDA decides whether the conversion activity is exempt from 
ineligibility under these regulations.
    The regulations that existed prior to this interim final rule 
described a detailed procedure by which a person could receive a 
commenced conversion determination from FSA. Persons who believed that 
they qualified for such a determination had to request one from FSA by 
September 19, 1988. The purpose of the determination was to minimize 
any unnecessary economic hardship to someone who had incurred 
substantial financial obligations related to the conversion of a 
wetland prior to December 23, 1985, but had not actually converted the 
wetland by that date. Any person who received a commenced-conversion 
wetland determination had to complete the conversion activity by 
January 1, 1995, to retain the exemption status. Because the commenced 
conversion determination had to be received by 1988 and the conversion 
had to be completed by the end of 1994, the references in the rule 
related to the process to obtain a determination have been removed. If 
a person completed conversion activity by January 1, 1995, the land 
will qualify for the same exemptions from ineligibility as prior-
converted cropland. If, however, a person did not complete the 
conversion activity by that date, the land will be subject to the same 
requirements under this rule as farmed wetlands.
    The 1996 Act provides that a person may remain eligible for an 
action resulting in the conversion of a wetland if the wetland 
functions and values are adequately mitigated through the restoration 
of a converted wetland, the enhancement of an existing wetland, or the 
creation of a new wetland. Section 12.5(b)(4) provides that this 
exemption applies if the mitigation is completed in accordance with 
several requirements, including that the person implement a mitigation 
plan approved by NRCS. The mitigation plan may be a single document or 
it may be a component of a larger conservation plan created voluntarily 
by the program participant. The requirements for this exemption are 
similar to the requirements for restoration of a converted wetland 
under the current regulations, such as the granting of an easement to 
USDA, recording an easement on the public land records, and that such 
mitigation not be at the expense of the Federal government.
    The 1996 Act provides that USDA may expend Federal funds for the 
establishment of a pilot program for mitigation banking. USDA has not 
yet decided whether it will establish such a pilot program or what the 
particulars of such a program would be. During the public comment 
period, USDA is especially soliciting comments from the public 
regarding this subject.
    The 1996 Act removes the requirement for graduated sanctions if the 
FSA determines that a wetland violation was committed in good faith. 
Central to the determination about whether a person acted in good faith 
is the knowledge available to the person concerning the existence of a 
wetland on the subject land. This knowledge can either be direct, such 
as information received from NRCS in the form of a wetland 
determination, or can be inferred from a person's past experience with 
violating wetland laws or regulations. This interim final rule provides 
that if a person is considered to have acted in good faith and the 
person agrees to implement a mitigation plan, then USDA may waive 
applying the ineligibility provisions of Sec. 12.4.
    Section 12.6: Section 12.6 concerns the respective responsibilities 
of USDA agencies; the new responsibilities created by the 1996 Act have 
been added. Section 12.6(b) is amended to specify that FSA is 
responsible for determining the extent of reduction in benefits for 
wetland violations based on the seriousness of the violation, and for 
determining whether a person should receive relief because application 
of a conservation system would result in undue economic hardship. 
Section 12.6(c) is amended to reflect that NRCS is responsible for 
providing information to FSA relating to the seriousness of a 
violation.
    In response to the need to coordinate with the MOA agencies 
regarding wetland determinations, a new paragraph has been added to 
Sec. 12.6 New paragraph (f) provides that NRCS may accept the 
assistance of the MOA agencies in implementing these regulations. This 
paragraph also confirms that NRCS will continue to seek the 
coordination of the other agencies on wetland matters to increase the 
public's understanding of the importance of wetland functions and 
values and the objectives of the WC provisions and the Clean Water Act.
    Section 12.7: Section 12.7 addresses certification by a program 
participant that such participant is in compliance with the HEL and WC 
provisions. Section 12.7 is amended to allow a person to certify 
application of practices in a plan or measurement of residue required 
by a plan.
    Section 12.8: Section 12.8 is amended to revise the definition of 
affiliated persons for the purpose of determining whose benefits may be 
affected by a decision and to what extent. In particular, Sec. 12.8(b) 
is amended to provide that spouses who provide sufficient evidence of 
separate operations shall not be considered affiliates, and 
partnerships, trusts, and joint ventures are not considered affiliates 
if the interest is held indirectly through another business enterprise. 
Section 12.8(d) limits the reduction in payments for partnerships, 
joint ventures, trust, or other enterprises to the extent of interest 
held by the person responsible for the violation. Section 12.8(e) 
states that limitations on affiliations if action has been taken to 
avoid payment reductions for partnerships, joint ventures, trusts, or 
the application of the sanctions provided for in the regulations.

Subpart B

    Section 12.21: Section 12.21 is amended to include a reference to 
publication of soil loss equations at 7 CFR part 610.
    Section 12.22: Section 12.22 is amended to allow combining HEL and 
non-HEL fields, but the requirements of these regulations continue to 
apply to the previous HEL portion only.
    Section 12.23: Section 12.23 is amended to specify that: 
conservation systems shall be technically and economically feasible 
(based on local resource conditions and available technology), cost 
effective, and shall not cause undue economic hardship; the standard 
for determining whether a plan provides a substantial reduction in 
erosion is the estimated annual level of erosion compared to the level 
before the system is applied; for new land brought into production, in 
no case will the required conservation system permit a substantial 
increase in erosion; procedures for conducting field trials as on-farm 
reseach; and procedures and criteria used by FSA when a person requests 
relief based on undue economic hardship.

Subpart C

    Subpart C addresses the technical responsibilities of NRCS and the 
technical criteria used to make the necessary determinations for 
wetland conservation under these regulations.
    Section 12.30: Section 12.30 is amended to reflect that NRCS will 
continue to work with the Corps, EPA, and FWS to improve the quality of 
wetland determinations and other

[[Page 47025]]

processes that affect the implementation of the WC provisions.
    The 1996 Act repealed the requirement for consultation with FWS, 
thus allowing the Secretary to determine under what circumstances FWS 
should be utilized in the implementation of the WC provisions. Section 
12.30 is amended to reflect that NRCS will develop a process at the 
State level, in coordination with FWS, for implementing the WC 
provisions and review such implementation on an annual basis. The 
technical expertise of FWS may be utilized whenever NRCS determines 
that such expertise is needed to address adequately the requirements of 
the WC provisions or to enhance the quality of implementation.
    Under the new mitigation flexibility provided by the 1996 Act, the 
expertise of FWS will be valuable for conducting wetland functional 
assessments associated with minimal effects determinations and 
formulation of mitigation plans. The State-level process is intended, 
in part, to identify any geographic or programmatic areas where NRCS 
may need additional technical expertise to assess biological impacts of 
proposed wetland conversions.
    Section 12.30 is also amended to address the process for 
certification of wetland determinations for the implementation of the 
WC provisions of the 1985 Act. If NRCS certified a wetland 
determination prior to July 3, 1996, the certification will remain 
valid. Upon request, a person may obtain certification of a wetland 
determination. A certified wetland determination means that the 
determination is of sufficient quality to make a determination of 
ineligibility for program benefits under these regulations. As 
indicated above, NRCS will continue to work with the other MOA agencies 
to coordinate the identification and certification of wetlands for the 
purposes of these regulations and for the Clean Water Act. The agencies 
recognize the importance of providing certainty for the agricultural 
community as to the status of their wetland determinations which have 
not been certified. The Federal agencies are therefore considering 
establishing a specific time frame for completing the evaluation of 
existing wetland determinations. During this time frame, an evaluation 
would be made as to the accuracy of wetland determinations within a 
given geographic area or of a specific type of wetland. Based on the 
evaluation, landowners would be notified whether their current wetland 
determinations are acceptable for both the WC provisions and the Clean 
Water Act. USDA is especially seeking comments regarding implementation 
of this process.
    Section 12.31; Section 12.31 is amended to reflect that NRCS will 
utilize the 1987 Corps Manual for determining the prevalence of 
hydrophytic vegetation. Section 12.31 is also amended to add the 
criteria for determining ``categorical minimal effect exemptions.'' If 
NRCS identifies any categories of conversion activities and conditions 
which would only have a minimal effect on wetland functions and values, 
then such activities and conditions will be placed on a list of 
``categorical minimal effect exemptions'' and such conversion 
activities and conditions will be considered exempt from the 
ineligibility provisions of these regulations. NRCS will incorporate 
such activities and conditions in the provisions of these regulations 
USDA is especially seeking comments regarding implementation of this 
new exemption. For purposes of the Clean Water Act, the Corps intends 
to address this provision as part of its reissuance of the Clean Water 
Act section 404 nationwide permits (See 61 FR part VII (June 17, 
1996)).
    Sections 12.32 and 12.33: Sections 12.32 and 12.33 have been 
amended to incorporate the definitions for farmed wetland, farmed-
wetland pasture, commenced-conversion wetland, and prior-converted 
cropland, where appropriate.
    Section 12.33: Section 12.33 has also been amended to modify the 
conditions under which NRCS will consider a particular site to be 
abandoned for purposes of these regulations. A person who wishes to 
allow a particular site to revert to wetland conditions should contact 
NRCS to ascertain what documentation is necessary to prevent such land 
from being considered abandoned for purposes of the WC provisions of 
these regulations. For purposes of the Clean Water Act, the Corps 
intends to address this provision as part of its re-issuance of the 
Clean Water Act section 404 nationwide permits (See 61 FR part VII 
(June 17, 1996)).
    The amendments to part 12 do not affect the recordkeeping 
requirements and estimated burdens previously reviewed and approved 
under Office of Management and Budget control number 0560-0004.

List of Subjects in 7 CFR Part 12

    Administrative practices and procedures, Soil Conservation, 
Wetlands.
    Accordingly, Title 7 of the Code of Federal Regulations is amended 
by revising Part 12 as follows:

PART 12--HIGHLY ERODIBLE LAND AND WETLAND CONSERVATION

Subpart A--General Provisions

Sec.
12.1  General.
12.2  Definitions.
12.3  Applicability.
12.4  Determination of ineligibility.
12.5  Exemptions.
12.6  Administration.
12.7  Certification of compliance.
12.8  Affiliated persons.
12.9  Landlords and tenants.
12.10  Scheme or device.
12.11  Action based upon advice or action of USDA.
12.12  Appeals.

Subpart B--Highly Erodible Land Conservation

12.20  NRCS responsibilities regarding highly erodible land.
12.21  Identification of highly erodible lands criteria.
12.22  Highly erodible field determination criteria.
12.23  Conservation plans and conservation systems.

Subpart C--Wetland Conservation

12.30  NRCS responsibilities regarding wetlands.
12.31  Onn-site wetland identification criteria.
12.32  Converted wetland identification criteria.
12.33  Use of wetland and converted wetland.
12.34  Paperwork Reduction Act assigned number.

    Authority: 16 U.S.C. 3801 et seq.

Subpart A--General Provisions


Sec. 12.1   General.

    (a) Scope. This part sets forth the terms and conditions under 
which a person who produces an agricultural commodity on highly 
erodible land or designates such land for conservation use, plants an 
agricultural commodity on a converted wetland, or converts a wetland 
shall be determined to be ineligible for certain benefits provided by 
the United States Department of Agriculture (USDA) and agencies and 
instrumentalities of USDA.
    (b) Purpose. The purpose of the provisions of this part are to 
remove certain incentives for persons to produce agricultural 
commodities on highly erodible land or converted wetland and to 
thereby--
    (1) Reduce soil loss due to wind and water erosion;
    (2) Protect the Nation's long-term capability to produce food and 
fiber;
    (3) Reduce sedimentation and improve water quality; and
    (4) Assist in preserving the functions and values of the Nation's 
wetlands.

[[Page 47026]]

Sec. 12.2   Definitions.

    (a) General. The following definitions shall be applicable for the 
purposes of this part:
    Agricultural commodity means any crop planted and produced by 
annual tilling of the soil, including tilling by one-trip planters, or 
sugarcane.
    CCC means the Commodity Credit Corporation, wholly-owned government 
corporation within USDA organized under the provisions of 15 U.S.C. 714 
et seq.
    Conservation District (CD) means a subdivision of a State or local 
government organized pursuant to the applicable law to develop and 
implement soil and water conservation activities or programs.
    Conservation plan means the document that--
    (1) Applies to highly erodible cropland;
    (2) Describes the conservation system applicable to the highly 
erodible cropland and describes the decisions of the person with 
respect to location, land use, tillage systems, and conservation 
treatment measures and schedules; and
    (3) Is approved by the local soil conservation district in 
consultation with the local committees established under section 
8(b)(5) of the Soil Conservation and Domestic Allotment Act (16 U.S.C. 
590h(b)(5)) and the Natural Resources Conservation Service (NRCS) for 
purposes of compliance with this part.
    Conservation system means a combination of one or more conservation 
measures or management practices that are--
    (1) Based on local resource conditions, available conservation 
technology, and the standards and guidelines contained in the NRCS 
field office technical guides (available from NRCS State offices); and
    (2) Designed for purposes of this part to achieve, in a cost-
effective and technically practicable manner, a substantial reduction 
in soil erosion or a substantial improvement in soil conditions on a 
field or group of fields containing highly erodible cropland when 
compared to the level of erosion or soil conditions that existed before 
the application of the conservation measures and management practices.
    Conservation use or set aside means cropland that is designated as 
conservation-use acreage, set aside, or other similar designation for 
the purpose of fulfilling provisions under any acreage-limitation or 
land-diversion program administered by the Secretary of Agriculture 
requiring that the producer devote a specified acreage to conservation 
or other non-crop production uses.
    Creation of a wetland means the development of the hydrologic, 
geochemical, and biological components necessary to support and 
maintain a wetland where a wetland did not previously exist. Any 
wetland established on a non-hydric soil will be considered a created 
wetland.
    CSREES means the Cooperative State Research, Education, and 
Extension Service, an agency of USDA which is generally responsible for 
coordinating the information and educational programs of USDA.
    Department means the United States Department of Agriculture 
(USDA).
    Enhancement of a wetland means the alteration of an existing 
wetland to increase its specific functions and values. Enhancement 
actions include new capabilities, management options, structures, or 
other actions to influence one or several functions and values.
    Erodibility index means a numerical value that expresses the 
potential erodibility of a soil in relation to its soil loss tolerance 
value without consideration of applied conservation practices or 
management.
    FSA means the Farm Service Agency, an agency of USDA which is 
generally responsible for administering commodity production adjustment 
and certain conservation programs of USDA.
    Field means a part of a farm that is separated from the balance of 
the farm by permanent boundaries such as fences, roads, permanent 
waterways, or other similar features. At the option of the owner or 
operator of the farm, croplines may also be used to delineate a field 
if farming practices make it probable that the croplines are not 
subject to change. Any highly erodible land on which an agricultural 
commodity is produced after December 23, 1985, and is not exempt under 
Sec. 12.5(a), shall be considered part of the field in which the land 
was included on December 23, 1985, unless, to carry out this title, the 
owner and FSA agree to modify the boundaries of the field.
    Highly erodible land means land that has an erodibility index of 8 
or more.
    Hydric soils means soils that, in an undrained condition, are 
saturated, flooded, or ponded long enough during a growing season to 
develop an anaerobic condition that supports the growth and 
regeneration of hydrophytic vegetation.
    Hydrophytic vegetation means plants growing 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.
    Landlord means a person who rents or leases farmland to another 
person.
    Local FSA office means the county office of the Farm Service Agency 
serving the county or a combination of counties in the area in which a 
person's land is located for administrative purposes.
    NRCS means the Natural Resources Conservation Service, an agency 
within USDA which is generally responsible for providing technical 
assistance in matters of natural resources conservation and for 
administering certain conservation programs of USDA.
    Operator means the person who is in general control of the farming 
operations on the farm during the crop year.
    Owner means a person who is determined to have legal ownership of 
farmland and shall include a person who is purchasing farmland under 
contract.
    Person means an individual, partnership, association, corporation, 
cooperative, estate, trust, joint venture, joint operation, or other 
business enterprise or other legal entity and, whenever applicable, a 
State, a political subdivision of a State, or any agency thereof, and 
such person's affiliates as provided in Sec. 12.8 of this part.
    Restoration of a wetland means the re-establishment of wetland 
conditions, including hydrologic condition or native hydrophytic 
vegetation, to an area where a wetland had previously existed.
    Secretary means the Secretary of USDA.
    Sharecropper means a person who performs work in connection with 
the production of a crop under the supervision of the operator and who 
receives a share of such crop for such labor.
    Soil map unit means an area of the landscape shown on a soil map 
which consists of one or more soils.
    State means each of the 50 states, the District of Columbia, the 
Commonwealth of Puerto Rico, Guam, the Virgin Islands of the United 
States, American Samoa, the Commonwealth of the Northern Mariana 
Islands, or the Trust Territory of the Pacific Islands.
    Tenant means a person usually called a ``cash tenant'', ``fixed-
rent tenant'', or ``standing rent tenant'' who rents land from another 
for a fixed amount of cash or a fixed amount of a commodity to be paid 
as rent; or a person (other than a sharecropper) usually called a 
``share tenant'' who rents land from another person and pays as rent a 
share of the crops or proceeds therefrom. A tenant shall not be 
considered the farm operator unless the tenant is determined

[[Page 47027]]

to be the operator pursuant to this part and 7 CFR part 718.
    Wetland, except when such term is a part of the term ``converted 
wetland'', means land that--
    (1) Has predominance of hydric soils;
    (2) 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
    (3) Under normal circumstances does not support a prevalence of 
such vegetation, except that this term does not include lands in Alaska 
identified as having a high potential for agricultural development and 
a predominance of permafrost soils.
    Wetland determination means a decision regarding whether or not an 
area is a wetland, including identification of wetland type and size. A 
wetland determination may include identification of an area as one of 
the following types of wetland--
    (1) Artificial wetland is an area that was formerly non-wetland, 
but now meets wetland criteria due to human activities, such as:
    (i) An artificial lake or pond created by excavating or diking land 
that is not a wetland to collect and retain water that is used 
primarily for livestock, fish production, irrigation, wildlife, fire 
control, flood control, cranberry growing, or rice production, or as a 
settling pond; or
    (ii) A wetland that is temporarily or incidentally created as a 
result of adjacent development activity;
    (2) Commenced-conversion wetland is a wetland, farmed wetland, 
farmed-wetland pasture, or a converted wetland on which conversion 
began, but was not completed, prior to December 23, 1985.
    (3) Converted wetland is a wetland that has been drained, dredged, 
filled, leveled, or otherwise manipulated (including the removal of 
woody vegetation or any activity that results in impairing or reducing 
the flow and circulation of water) for the purpose of or to have the 
effect of making possible the production of an agricultural commodity 
without further application of the manipulations described herein if:
    (i) Such production would not have been possible but for such 
action, and
    (ii) Before such action such land was wetland, farmed wetland, or 
farmed-wetland pasture and was neither highly erodible land nor highly 
erodible cropland;
    (4) Farmed wetland is a wetland that prior to December 23, 1985, 
was manipulated and used to produce an agricultural commodity, and on 
December 23, 1985, did not support woody vegetation and met the 
following hydrologic criteria:
    (i) Is inundated for 15 consecutive days or more during the growing 
season or 10 percent of the growing season, whichever is less, in most 
years (50 percent chance or more), or
    (ii) If a pothole, playa, or pocosion, is ponded for 7 or more 
consecutive days during the growing season in most years (50 percent 
chance of more) or is saturated for 14 or more consecutive days during 
the growing season in most years (50 percent chance or more);
    (5) Farmed-wetland pasture is wetland that was manipulated and 
managed for pasture or hayland prior to December 23, 1985, and on 
December 23, 1985, met the following hydrologic criteria:
    (i) Inundated or ponded for 7 or more consecutive days during the 
growing season in most years (5) percent chance or more), or
    (ii) Saturated for 14 or more consecutive days during the growing 
season in most years (50 percent chance or more);
    (6) Not-inventoried land, is an area for which no evaluation of 
soils, vegetation, or hydrology has been conducted to determine if 
wetland criteria are met;
    (7) Non-wetland is;
    (i) Land that under natural conditions does not meet wetland 
criteria, or
    (ii) Is converted wetland the conversion of which occurred prior to 
December 23, 1985, and on that date, the land did not meet wetland 
criteria but and agricultural commodity was not produced and the area 
was not managed for pasture or hay;
    (8) Prior-converted cropland is a converted wetland where the 
conversion occurred prior to December 23, 1985, an agricultural 
commodity had been produced at least once before December 23, 1985, and 
as of December 23, 1985, the converted wetland did not support woody 
vegetation and met the following hydrologic criteria:
    (i) Inundation was less than 15 consecutive days during the growing 
season or 10 percent of the growing season, whichever is less, in most 
years (50 percent chance or more); and
    (ii) If a pothole, playa or pocosin, ponding was less than 7 
consecutive days during the growing season in most years (50 percent 
chance or more) and saturation was less than 14 consecutive days during 
the growing season most years (50 percent chance or more); or
    (9) Wetland, as defined above in this section.
    Wetland delineation means outlining the boundaries of a wetland 
determination on aerial photography, digital imagery, other graphic 
representation of the area, or on the land.
    (b) Terms for FSA operations. In the regulations in this part, and 
in all instructions, forms, and documents in connection therewith, all 
other words and phrases specifically relating to FSA operations shall, 
unless required by the subject matter or the specific provisions of 
this part, have the meanings assigned to them in the regulations at 
part 718 of this title that govern reconstitutions of farms, 
allotments, and bases and any subsequent amendment thereto.


Sec. 12.3  Applicability.

    (a) Geographic scope. The provisions of this part shall apply to 
all land, including Indian tribal land, in the fifty States, the 
District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin 
Island of the United States, American Samoa, the Commonwealth of the 
Northern Mariana Islands, and the Federated States of Micronesia, the 
Republic of Palau, and the Republic of the Marshall Islands.
    (b) Effective date. The provisions of this part apply to all 
actions taken after July 3, 1996, and to determinations made after or 
pending on July 3, 1996, except to the extent that Sec. 12.5(a)(5) and 
12.5 (b)(4) through (b)(8) specify retroactive application on December 
23, 1985, and November 28, 1990, for certain actions and determinations 
regarding wetlands and converted wetlands. Actions taken and 
determinations made prior to July 3, 1996, are subject to regulations 
set forth in this part as of July 2, 1996, except as otherwise provided 
in this part. Further, to the extent that a person may be eligible for 
an exemption for an action taken before July 3, 1996, the action is 
subject to the provisions of this part.


Sec. 12.4  Determination of ineligibility.

    (a) Actions. Except as provided in Sec. 12.5, a person shall be 
ineligible for all or a portion of USDA program benefits listed in this 
section if:
    (1) The person produces an agricultural commodity on a field in 
which highly erodible land is predominant, or designates such a field 
for conservation use;
    (2) The person produces an agricultural commodity on wetland that 
was converted after December 23, 1995; or
    (3) After November 28, 1990, the person converts a wetland by 
draining, dredging, filling, leveling, removing woody vegetation, or 
other means for the purpose, or to have the effect, of making the 
production of an agricultural commodity possible.

[[Page 47028]]

    (b) Highly erodible land. A person determined to be ineligible 
under paragraph (a)(1) of this section may be ineligible for all 
program benefits listed in (d) and (e) of this section.
    (c) Wetland conservation. A person determined to be ineligible 
under paragraph (a)(2) of this section shall be ineligible for all or a 
portion of the USDA program benefits listed in paragraph (d) of this 
section for which the person otherwise would have been eligible during 
the crop year of the commodity that was planted on the converted 
wetland. A person determined to be ineligible under paragraph (a)(3) of 
this section for the conversion of a wetland shall be ineligible for 
all or a portion of the USDA program benefits listed in paragraph (d) 
of this section for which the person otherwise would have been eligible 
during the crop year which is equal to the calendar year during which 
the violation occurred and each subsequent crop year until the 
converted wetland is restored or the loss of wetland functions and 
values have been mitigated prior to the beginning of such calendar year 
in accordance with Sec. 12.5(b)(4)(i) (A) and (C) through (F) of this 
part. Ineligibility under paragraph (a)(2) or (a)(3) of this section 
may be reduced, in lieu of the loss of all benefits specified under 
paragraph (d) of this section for such crop year, based on the 
seriousness of the violation, as determined by the FSA Deputy 
Administrator for Farm Programs or designee upon recommendation by the 
FSA County Committee. Factors such as the information that was 
available to the affected person prior to the violation, previous land 
use patterns, the existence of previous wetland violations under this 
part or under other Federal, State, or local wetland provisions, the 
wetland functions and values affected, the recovery time for full 
mitigation of the wetland functions and values, and the impact that a 
reduction in payments would have on the person's ability to repay a 
USDA farm loan shall be considered to making this determination.
    (d) Programs subject to either highly erodible land or wetland 
conservation. USDA program benefits covered by a determination of 
ineligibility under this rule are:
    (1) Contract payments under a production flexibility contract, 
marketing assistance loans, and any type of price support or payment 
made available under the Agricultural Market Transition Act, the 
Commodity Credit Corporation Charter Act (15 U.S.C. 714 et seq.), or 
any other Act;
    (2) A farm credit program loan made or guaranteed under the 
Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.) or 
any other provision of law administered by FSA if the Secretary 
determines that the proceeds of such loan will be used for a purpose 
that contributes to the conversion of wetlands that would make 
production of an agricultural commodity possible or for a purpose that 
contributes to excessive erosion of highly erodible land (i.e., 
production of an agricultural commodity or highly erodible land without 
a conservation plan or conservation system as required by this part);
    (3) A payment made pursuant to a contract entered into under the 
Environmental Quality Incentives Program under chapter 4 of subtitle D 
of the Food Security Act of 1985, as amended; or a payment under any 
other provision of Subtitle D of that Act;
    (4) A payment made under section 401 or 402 of the Agricultural 
Credit Act of 1978 (16 U.S.C. 2201 or 2202);
    (5) A payment, loan, or other assistance under section 3 or 8 of 
the Watershed Protection and Flood Prevention Act (16 U.S.C. 1003 or 
1006a).
    (e) Programs subject to highly erodible land only. In addition to 
programs listed in paragraph (d) of this section, a person determined 
to be ineligible under paragraph (a)(1) of this section shall be 
ineligible as determined by FSA for the following USDA program benefits 
for which the person otherwise would have been eligible during the crop 
year for which the determination applies:
    (1) A farm storage facility loan made under section 4(h) of the 
Commodity Credit Corporation Charter Act (15 U.S.C. 714b(h));
    (2) A disaster payment made under the Federal Agricultural 
Improvement and Reform Act, Pub. L. 104-127, or any other act; and
    (3) A payment made under section 4 or 5 of the Commodity Credit 
Corporation Charter Act (15 U.S.C. 714b or 714c) for the storage of an 
agricultural commodity acquired by the Commodity Credit Corporation.
    (f) Prior loans. The provisions of paragraphs (a), (b), and (c) of 
this section do not apply to any loan described in paragraphs (d) or 
(e) of this section that was made prior to December 23, 1985.
    (g) Determination of ineligibility. For the purpose of paragraph 
(a) of this section, a person shall be determined to have produced an 
agricultural commodity on a field in which highly erodible land is 
predominant or to have designated such a field for conservation use, to 
have produced an agricultural commodity on converted wetland, or to 
have converted a wetland if:
    (1) NRCS has determined that--
    (i) Highly erodible land is predominant in such field, or
    (ii) All or a portion of the field is converted wetland; and
    (2) FSA has determined that the person is or was the owner or 
operator of the land, or entitled to share in the crops available from 
the land, or in the proceeds thereof; and
    (3) With regard to the provisions of paragraph (a)(1) and (a)(2) of 
this section, FSA has determined that the land is or was planted to an 
agricultural commodity or was designated as conversation use during the 
year for which the person is requesting benefits.
    (h) Intent to participate in USDA programs. Persons who wish to 
participate in any of the USDA programs described in paragraph (d) or 
(e) of this section are responsible for contacting the appropriate 
agency of USDA well in advance of the intended participated date so 
that Form AD-1026 can be completed. This contact will help assure that 
the appropriate determinations regarding highly erodible land or 
wetland, and conversation plans or conversation systems are scheduled 
in a timely manner. A late contact may not allow sufficient time for 
USDA to service the request and could result in a substantial delay in 
receiving a USDA determination of eligibility or ineligibility.


Sec. 12.5  Exemption.

    (a) Exemptions regarding highly erodible land.
    (1) Highly erodible cropland in production or in USDA programs 
during 1981 through 1985 crop years. During the period beginning on 
December 23, 1985, and ending on the later of January 1, 1990, or the 
date that is two years after the date the cropland on which an 
agricultural commodity is produced was surveyed by NRCS to determine if 
such land is highly erodible, no person shall be determined to be 
ineligible for benefits as provided in Sec. 12.4 as the result of the 
production of an agricultural commodity on any highly erodible land:
    (i) That was planted to an agricultural commodity in any year 1081 
through 1985; or
    (ii) That was set aside, diverted, or otherwise not cultivated in 
any such crop years under a program administered by the Secretary for 
any such crops to reduce production of an agricultural commodity.

[[Page 47029]]

    (2) Compliance with a conservation plan or conservation system. as 
further specified in this part, no person shall be ineligible for the 
program benefits described in Sec. 12.4 as the result of production of 
an agricultural commodity on highly erodible land or the designation of 
such land for conservation use if such production or designation is in 
compliance with a conservation plan or conservation system approved 
under paragraph (a)(2)(i) or (a)(2)(ii) of this section. A person shall 
not be ineligible for program benefits under Sec. 12.4 as the result of 
the production of an agricultural commodity on highly erodible land or 
as the result of designation of such land as conservation use if the 
production or designation is:
    (i) In an area within a CD, under a conservation system that has 
been approved by the CD after the CD determines that the conservation 
system is in conformity with technical standards set forth in the NRCS 
field office technical guide for such district; or
    (ii) In an area not within a CD, under a conservation system that 
has been approved by NRCS to be adequate for the production of such 
agricultural commodity on highly erodible land or for the designation 
of such land as conservation use.
    (3) Reliance upon NRCS determination for highly erodible land. A 
person may be relieved from ineligibility for program benefits as the 
result of the production of an agricultural commodity which was 
produced on highly erodible land or for the designation of such land as 
conservation use in reliance on a determination by NRCS that such land 
was not highly erodible land, except that this paragraph shall not 
apply to any agricultural commodity that was planted on highly erodible 
land, or for the designation of highly erodible land as conservation 
use after NRCS determines that such land is highly erodible land, and 
the person is notified of such determinations.
    (4) Areas of 2 acres or less. No person shall be determined to be 
ineligible under Sec. 12.4 for noncommercial production of agricultural 
commodities on highly erodible land on an area of 2 acres or less if it 
is determined by FSA that such production is not intended to circumvent 
the conservation requirements otherwise applicable under this part.
    (5) Good faith.
    (i) No person shall become ineligible under Sec. 12.4 as a result 
of the failure of such person to apply a conservation system on highly 
erodible land that was converted from native vegetation, i.e. rangeland 
or woodland, to crop production before December 23, 1985, if FSA 
determines such person has acted in good faith and without the intent 
to violate the provisions of this part and if NRCS determines that the 
person complies with paragraph (a)(5)(ii) of this section.
    (ii) A person is who determined to meet the requirements of 
paragraph (a)(5)(i) of this section shall be allowed a reasonable 
period of time, as determined by NRCS, but not to exceed one year, 
during which to implement the measures and practices necessary to be 
considered applying the person's conservation plan. If a person does 
not take the required corrective actions, the person may be determined 
to be ineligible for the crop year during which such actions were to be 
taken as well as any subsequent crop years. Notwithstanding the good-
faith requirements of paragraph (a)(5)(i) of this section, if NRCS 
observes a possible compliance deficiency while providing on-site 
technical assistance, NRCS shall provide to the responsible person, not 
later than 45 days after observing the possible violation, information 
regarding actions needed to comply with the plan and this subtitle. 
NRCS shall provide this information in lieu of reporting the 
observation as a violation, if the responsible person attempts to 
correct the deficiencies as soon as practicable, as determined by NRCS, 
after receiving the information, and if the person takes corrective 
action as directed by NRCS not later than one year after receiving the 
information. If a person does not take the required corrective actions, 
the person may be determined to be ineligible for the crop year during 
which the compliance deficiencies occurred as well as any subsequent 
crop years.
    (iii) No person shall become ineligible under Sec. 12.4 as a result 
of failure to apply a conservation system with respect to highly 
erodible cropland that was converted from native vegetation, i.e., 
rangeland or woodland, to crop production after December 23, 1985, if 
such person has acted in good faith and without an intent to violate 
the provisions of this part. The person shall, in lieu of the loss of 
all benefits specified under Sec. 12.4 (d) and (e) for such crop year, 
be subject to a reduction in benefits of not less than $500 nor more 
than $5,000 depending upon the seriousness of the violation, as 
determined by FSA. The dollar amount of the reduction will be 
determined by FSA and may be based on the number of acres and the 
degree of erosion hazard for the area in violation, as determined by 
NRCS, or upon such other factors as FSA deems appropriate.
    (iv) Any person whose benefits are reduced in a crop year under 
paragraph (a)(5) of this section may be eligible for all of the 
benefits specified under Sec. 12.4 (d) and (e) for any subsequent crop 
year if NRCS determines that such person is applying a conservation 
plan according to the schedule set forth in the plan on all highly 
erodible land planted to an agricultural commodity or designated as 
conservation use.
    (6) Allowable variances.
    (i) Notwithstanding any other provisions of this part, no person 
shall be determined to be ineligible for benefits as a result of the 
failure of such person to apply a conservation system if NRCS 
determines that--
    (A) The failure is technical and minor in nature and that such 
violation has little effect on the erosion control purposes of the 
conservation plan applicable to the land on which the violation has 
occurred; or
    (B) The failure is due to circumstances beyond the control of the 
person; or
    (C) NRCS grants a temporary variance from the practices specified 
in the plan for the purpose of handling a specific problem, including 
weather, pest, and disease problems, which NRCS determines cannot 
reasonably be addressed except through such variance.
    (ii) If the person's request for a temporary variance involves the 
use of practices or measures to address weather, pest, or disease 
problems, NRCS shall make a decision on whether to grant the variance 
during the 30-day period beginning on the date of receipt of the 
request. If NRCS fails to render a decision during the period, the 
temporary variance shall be considered granted unless the person 
seeking the variance had reason to know that the variance would not be 
granted. In determining whether to grant a variance for natural 
disasters such as weather, pest, or disease problems, NRCS will 
consider such factors as:
    (A) The percent of a stand damaged or destroyed by the event;
    (B) The percent of expected crop production compared to normal 
production for that crop;
    (C) The documented invasion of non-native insects, weeds, or 
diseases for which no recognized treatment exists;
    (D) Whether an event is severe or unusual based on historical 
weather records; and
    (E) Other specific circumstances caused by a natural event that 
prevented the implementation of conservation practices or systems, 
installation of structures, or planting of cover crops.

[[Page 47030]]

    (b) Exemptions for wetlands and converted wetlands.
    (1) General exemptions. A person shall not be determined to be 
ineligible for program benefits under Sec. 12.4 as the result of the 
production of an agricultural commodity on converted wetland or the 
conversion of wetland if:
    (i) The land is a prior-converted cropland and meets the definition 
of a prior-converted cropland as of the date of a wetland determination 
by NRCS;
    (ii) The land has been determined by NRCS to be a prior-converted 
cropland and such determination has been certified, and NRCS determines 
that the wetland characteristics returned after the date of the wetland 
certification as a result of--
    (A) The lack of maintenance of drainage, dikes, levees, or similar 
structures,
    (B) The lack of management of the lands containing the wetland, or
    (C) Circumstances beyond the control of the person;
    (iii) The land was determined by NRCS to be a farmed wetland or a 
farmed-wetland pasture and--
    (A) Such land meets wetland criteria through a voluntary 
restoration, enhancement, or creation action after that determination,
    (B) The technical determinations regarding the baseline site 
conditions and the restoration, enhancement, or creation action have 
been adequately documented by NRCS,
    (C) The proposed conversion action is documented by the NRCS prior 
to implementation, and
    (D) The extent of the proposed conversion is limited so that the 
conditions will be at least equivalent to the wetland functions and 
values that existed at the time of implementation of the voluntary 
wetland restoration, enhancement, or creation action;
    (iv) NRCS has determined that the conversion if for a purpose that 
does not make the production of an agricultural commodity possible, 
such as conversions for fish production, trees, vineyards, shrubs, 
cranberries, agricultural waste management structures, livestock ponds, 
fire control, or building and road construction and no agricultural 
commodity is produced on such land;
    (v) NRCS has determined that the actions of the person with respect 
to the conversion of the wetland or the combined effect of the 
production of an agricultural commodity on a wetland converted by the 
person or by someone else, individually and in connection with all 
other similar actions authorized by NRCS in the area, would have only a 
minimal effect on the wetland functions and values of wetlands in the 
area;
    (vi) (A) After December 23, 1985, the Army Corps of Engineers 
issued an individual permit pursuant to section 404 of the Clean Water 
Act, 33 U.S.C. 1344, authorizing such action and the permit required 
mitigation that adequately replaced the functions and values of the 
wetlands converted, as determined by NRCS, or
    (B) After December 23, 1985, the action is encompassed under 
section 404 of the Clean Water Act, 33 U.S.C. 1344, by an Army Corps of 
Engineers nationwide or regional general permit and the wetland 
functions and values were adequately mitigated, as determined by NRCS; 
or
    (vii) The land is determined by NRCS to be--
    (A) An artificial wetland,
    (B) A wet area created by a water delivery system, irrigation, 
irrigation system, or application of water for irrigation,
    (C) A nontidal drainage or irrigation ditch excavated in non-
wetland, or
    (D) A wetland converted by actions of persons other than the person 
applying for USDA program benefits or any of the person's predecessors 
in interest after December 23, 1985, if such conversion was not the 
result of a scheme or device to avoid compliance with this part. 
Further drainage improvement on such land is not permitted without loss 
of eligibility for USDA program benefits, unless NRCS determines under 
paragraph (b)(1)(v) of this section that further drainage activities 
applied to such land would have minimal effect on the wetland functions 
and values in the area. In applying this paragraph, a converted wetland 
shall be presumed to have been converted by the person applying for 
USDA program benefits unless the person can show that the conversion 
was caused by a third party with whom the person was not associated 
through a scheme or device as described under Sec. 12.10 of this part. 
In this regard, activities of a water resource district, drainage 
district, or similar entity will be attributed to all persons within 
the jurisdiction of the district or other entity who are assessed for 
the activities of the district or entity. Accordingly, where a person's 
wetland is converted due to the actions of the district or entity, the 
person shall be considered to have caused or permitted the drainage. 
Notwithstanding the provisions of the preceding sentences and as 
determined by FSA to be consistent with the purposes of this part, the 
activities of a drainage district or other similar entity will not be 
attributed to a person to the extent that the activities of the 
district or entity were beyond the control of the person and the 
wetland converted is not used by the person for the production of an 
agricultural commodity or a forage crop for harvest by mechanical means 
or mitigation for the converted wetland occurs in accordance with this 
part.
    (2) Commenced conversion wetlands.
    (i) The purpose of a determination of a commenced conversion made 
under this paragraph is to implement the legislative intent that those 
persons who had actually started conversion of a wetland or obligated 
funds for conversion prior to December 23, 1985, would be allowed to 
complete the conversion so as to avoid unnecessary economic hardship.
    (ii) All persons who believed they had a wetland or converted 
wetland for which conversion began but was not completed prior to 
December 23, 1985, must have requested by September 19, 1988, FSA to 
make a determination of commencement in order to be considered exempt 
under this section.
    (iii) Any conversion activity considered by FSA to be commenced 
under this section lost its exempt status if such activity as not 
completed on or before January 1, 1995. For purposes of this part, land 
on which such conversion activities were completed by January 1, 1995, 
shall be evaluated by the same standards and qualify for the same 
exemptions as prior-converted croplands. For purposes of this part, 
land on which such conversion activities were not completed by January 
1, 1995, shall be evaluated by the same standards and qualify for the 
same exemptions as wetlands or famed wetlands, as applicable.
    (iv) Only those wetlands for which the construction had begun, or 
to which the contract or purchased supplies and materials related, 
qualified for a determination of commencement. However, in those 
circumstances where the conversion of wetland did not meet the specific 
requirements of this paragraph, the person could have requested a 
commencement of conversion determination from the FSA Deputy 
Administrator for Farm Programs, upon a showing that undue economic 
hardship would have resulted because of substantial financial 
obligations incurred prior to December 23, 1985, for the primary and 
direct purpose of converting the wetland.
    (3) Wetlands farmed under natural conditions. A person shall not be 
determined to be ineligible for program benefits under Sec. 12.4 of 
this part as a result of the production of an agricultural commodity on 
a wetland on which the owner or operator of a farm

[[Page 47031]]

or ranch uses normal cropping or ranching practices to produce 
agricultural commodities in a manner that is consistent for the area, 
where such production is possible as a result of natural conditions, 
such as drought, and is without action by the producer that alters the 
hydrology or removes woody vegetation.
    (4) Mitigation.
    (i) No person shall be determined to be ineligible under Sec. 12.4 
for any action associated with the conversion of a wetland if the 
wetland functions and values are adequately mitigated, as determined by 
NRCS, through the restoration of a converted wetland, the enhancement 
of an existing wetland, or the creation of a new wetland, if the 
mitigation--
    (A) Is in accordance with a mitigation plan approved by NRCS;
    (B) Is in advance of, or concurrent with, the wetland conversion or 
the production of an agricultural commodity, as applicable;
    (C) Is not at the expense of the federal government in either 
supporting the direct or indirect costs of the restoration activity or 
costs associated with acquiring or securing mitigation sites, except if 
conducted under a mitigation banking pilot program established by USDA;
    (D) Occurs on lands in the same general area of the local watershed 
as the converted wetlands, provided that for purposes of this 
paragraph, lands in the same general area of the local watershed may 
include regional mitigation banks;
    (E) Is on lands for which the owner has granted an easement to 
USDA, recorded the easement on public land records, and has agreed to 
the maintenance of the restored, created, or enhanced wetland for as 
long as the converted wetland for which the mitigation occurred remains 
in agricultural use or is not returned to its original wetland 
classification with equivalent functions and values; and
    (F) Provides the equivalent functions and values that will be lost 
as a result of the wetland conversion.
    (ii) A mitigation plan is a record of decisions that document the 
actions necessary to compensate for the loss of wetland functions and 
values that result from converting a wetland. The mitigation plan may 
be a component of a larger natural resources conservation plan.
    (iii) The State Conservationist, in consultation with the State 
Technical Committee, may name certain types or classes of wetland not 
eligible for exemption under paragraph (b)(4)(i) of this section where 
the State Conservationist determines that mitigation will not achieve 
equivalent replacement of wetland functions and values within a 
reasonable time frame or for other reasons identified by the State 
Conservationist. Any type or class of wetland that a State 
Conservationist identifies as not eligible for exemption under 
paragraph (b)(4)(i) of this section will be published in the Federal 
Register for inclusion in this part.
    (5) Good Faith Violations.
    (i) A person who is determined under Sec. 12.4 to be ineligible for 
benefits as the result of the production of an agricultural commodity 
on a wetland converted after December 23, 1985, or as the result of the 
conversion of a wetland after November 28, 1990, may regain eligibility 
for benefits if--
    (A) FSA determines that such person acted in good faith and without 
the intent to violate the wetland provisions of this part, and
    (B) NRCS determines that the person within an agreed to period, not 
to exceed 1 year, is implementing all practices in a mitigation plan.
    (ii) In determining whether a person acted in good faith under 
paragraph (b)(5)(i)(A) of this section, the FSA shall consider such 
factors as whether--
    (A) The characteristics of the site were such that the person 
should have been aware that a wetland existed on the subject land,
    (B) NRCS had informed the person about the existence of a wetland 
on the subject land,
    (C) The person did not convert the wetland, but planted an 
agricultural commodity on converted wetland when the person should have 
known that a wetland previously existed on the subject land,
    (D) The person has a record of violating the wetland provisions of 
this part or other Federal, State, or local wetland provisions, or
    (E) There exists other information that demonstrates that the 
person acted with the intent to violate the wetland provisions of this 
part.
    (iii) After the requirements of paragraph (b)(5)(i) of this section 
are met, USDA may waive applying the ineligibility provisions of 
Sec. 12.4.
    (6) Reliance upon NRCS wetland determination. (i) A person shall 
not be ineligible for program benefits as a result of taking an action 
in reliance on a previous certified wetland determination by NRCS.
    (ii) A person who may be ineligible for program benefits as the 
result of the production of an agricultural commodity on converted 
wetland or for the conversion of a wetland may seek relief under 
Sec. 12.11 of this part if such action was taken in reliance on an 
incorrect technical determination by NRCS as to the status of such 
land. If the error caused the person to make a substantial financial 
investment, as determined by the NRCS, for the conversion of a wetland, 
the person may be relieved of ineligibility for actions related to that 
portion of the converted wetland for which the substantial financial 
investment was expended in conversion activities. The relief available 
under this paragraph shall not apply to situations in which the person 
knew or reasonably should have known that the determination was in 
error because the characteristics of the site were such that the person 
should have been aware that a wetland existed on the subject land, or 
for other reasons.
    (7) Responsibliity to provide evidence. It is the responsibility of 
the person seeking an exemption related to converted wetlands under 
this section to provide evidence, such as receipts, crop-history data, 
drawings, plans or similar information, for purposes of determining 
whether the conversion or other action is exempt in accordance with 
this section.


Sec. 12.6   Administration.

    (a) General. A determination of ineligibility for benefits in 
accordance with the provisions of this part shall be made by the agency 
of USDA to which the person has applied for benefits. All 
determinations required to be made under the provisions of this part 
shall be made by the agency responsible for making such determinations, 
as provided in this section.
    (b) Administration by FSA.
    (1) The provisions of this part which are applicable to FSA will be 
administered under the general supervision of the Administrator, FSA, 
and shall be carried out in the field in part by State FSA committees 
and county FSA committees (COC).
    (2) The FSA Deputy Administrator for Farm Programs may determine 
any question arising under the provisions of this part which are 
applicable to FSA and may reverse or modify any determination of 
eligibility with respect to programs administered by FSA made by a 
State FSA committee or COC or any other FSA office or FSA official 
(except the Administrator) in connection with the provisions of this 
part.
    (3) FSA shall make the following determinations which are required 
to be made in accordance with this part:
    (i) Whether a person produced an agricultural commodity on a 
particular field as determined under Sec. 12.5(a)(1);
    (ii) The establishment of field boundaries;

[[Page 47032]]

    (iii) Whether land was planted to an agricultural commodity in any 
of the years, 1981 through 1985, for the purposes of Sec. 12.5(a)(1);
    (iv) Whether land was set aside, diverted, or otherwise not 
cultivated under a program administered by the Secretary for any crop 
to reduce production of an agricultural commodity under Sec. 12.4(g) 
and Sec. 12.5(a)(1);
    (v) Whether for the purposes of Sec. 12.9, the production of an 
agricultural commodity on highly erodible land or converted wetland by 
a landlord's tenant or sharecropper is required under the terms and 
conditions of the agreement between the landlord and such tenant or 
sharecropper;
    (vi) Whether the conversion of a particular wetland was commenced 
before December 23, 1985, for the purposes of Sec. 12.5(b)(3);
    (vii) Whether the conversion of a wetland was caused by a third 
party under Sec. 12.5(b)(1)(vii)(D);
    (viii) Whether certain violations were made in good faith under 
Secs. 12.5(a)(5) or 12.5(b)(5);
    (ix) The determination of the amount of reduction in benefits based 
on the seriousness of the violation, based on technical information 
provided by NRCS;
    (x) The determination of whether the application of the producer's 
conservation system would impose an undue economic hardship on the 
producer; and
    (xi) Whether the proceeds of a farm loan made, insured, or 
guaranteed by FSA will be used for a purpose that will contribute to 
excessive erosion of highly erodible land or to the conversion of 
wetland.
    (4) A representative number of farms selected in accordance with 
instructions issued by the Deputy Administrator shall be inspected by 
an authorized representative of FSA to determine compliance with any 
requirement specified in this part as a prerequisite for obtaining 
program benefits.
    (5) FSA may consult with U.S. Fish and Wildlife Service on third-
party determinations.
    (c) Administraiton by NRCS.
    (1) The provisions of this part that are applicable to NRCS shall 
be administered under the general supervision of the Deputy Chief for 
Natural Resources Conservation Programs, and shall be carried out in 
the field by the regional conservationist, state conservationist, area 
conservationist, and district conservationist or other NRCS 
representative.
    (2) An NRCS representative shall make the following determinations 
which are required to be made in accordance with this part:
    (i) Whether land is highly erodible or has a wetland type or a 
converted wetland identified in accordance with the provisions of this 
part;
    (ii) Whether highly erodible land is predominant on a particular 
field under Sec. 12.22;
    (iii) Whether the conservation plan that a person is applying is 
based on the local NRCS field office technical guide and is approved 
by--
    (A) The CD and NRCS, or
    (B) By NRCS;
    (iv) Whether the conservation system that a person is using has 
been approved by the CD under Sec. 12.5(a)(2) or, in an area not within 
a CD, a conservation system approved by NRCS to be adequate for the 
production of an agricultural commodity on highly erodible land;
    (v) Whether the actions of a person(s) with respect to the 
conversion of a wetland or production of an agricultural commodity on 
converted wetland would have only a minimal effect on the functions and 
values of wetlands in the area;
    (vi) Whether an approved conservation plan is being applied on 
highly erodible fields in accordance with the schedule specified 
therein or whether a failure to apply the plan is technical and minor 
in nature, due to circumstances beyond the control of the person, or 
whether a temporary variance form the requirements of the plan should 
be granted;
    (vii) Whether an approved conservation system is being used on a 
highly erodible field;
    (viii) Whether the conversion of a wetland is for the purpose or 
has the effect of making the production of an agricultural commodity 
possible;
    (ix) Whether a farmed wetland or farmed-wetland pasture is 
abandoned;
    (x) Whether the planting of an agricultural commodity on a wetland 
is possible under natural conditions;
    (xi) Whether maintenance of existing drainage of a wetland 
described in Sec. 12.33 exceeds the scope and effect of the original 
drainage;
    (xii) Whether a plan for the mitigation of a converted wetland will 
be approved and whether the mitigation of a converted wetland is 
accomplished according to the approved mitigation plan;
    (xiii) Whether all technical information relating to the 
determination of a violation and severity of a violation has been 
provided to FSA for making payment-reduction determinations; and
    (xiv) Whether or not a commenced-conversion activity was completed 
by January 1, 1995.
    (3) NRCS may provide such other technical assistance for 
implementation of the provisions of this part as is determined to be 
necessary.
    (4) A person may obtain a highly erodible land or a wetland scope-
and-effect determination by making a written request on Form AD-1026. 
The determination will be made in writing, and a copy will be provided 
to the person.
    (5) A determination of whether or not an area meets the highly 
erodible land criteria or whether wetland criteria, identified in 
accordance with the current Federal wetland delineation methodology in 
use at the time of the determination and that are consistent with 
current mapping conventions, may be made by the NRCS representative 
based upon existing records or other information and without the need 
for an on-site determination. This determination will be made by the 
NRCS representative as soon as possible following a request for such a 
determination.
    (6) An on-site determination as to whether an area meets the 
applicable criteria shall be made by an NRCS representative if the 
person has disagreed with the determination made under paragraph (c)(5) 
of this section, or if adequate information is not otherwise available 
to an NRCS representative on which to make an off-site determination.
    (7) An on-site determination, where applicable, will be made by the 
NRCS representative as soon as possible following a request for such a 
determination, but only when site conditions are favorable for the 
evaluation of soils, hydrology, or vegetation.
    (8) With regard to wetland determinations, if an area is 
continuously inundated or saturated for long periods of time during the 
growing season to such an extent that access by foot to make a 
determination of predominance of hydric soils or prevalence of 
hydrophytic vegetation is not feasible, the area will be determined to 
be a wetland.
    (9) Persons who are adversely affected by a determination made 
under this section and believe that the requirements of this part were 
improperly applied may appeal, under Sec. 12.12 of this part, any 
determination by NRCS.
    (d) Administration by CSREES. The CSREES shall coordinate the 
related information and education program for

[[Page 47033]]

USDA concerning implementation of this rule.
    (e) Assistance of other Federal agencies. If NRCS determines, 
through agreement or otherwise, that the purposes of this part would be 
furthered by the assistance of other Federal agencies with wetland 
responsibilities, NRCS may accept such assistance and adopt any or all 
such actions by these agencies as an action by an NRCS representative 
under this part.


Sec. 12.7  Certification of compliance.

    (a) Self-certification. In order for a person to be determined to 
be eligible for any of the benefits specified in Sec. 12.4:
    (1) It must be determined by USDA whether any field in which the 
person applying for the benefits has an interest and intends to produce 
an agricultural commodity contains highly erodible land;
    (2) The person applying for or receiving the benefits must certify 
in writing on Form AD-1026 that such person will not produce an 
agricultural commodity on highly erodible land, or designate such land 
for conservation use; or plant an agricultural commodity on a converted 
wetland; or convert a wetland to make possible the production of an 
agricultural commodity during the crop year in which the person is 
seeking such benefits, unless such actions are exempt, under Sec. 12.5, 
from the provisions of Sec. 12.4 of this part;
    (3) A person may certify application of practices required by the 
person's conservation plan. NRCS shall permit a person who makes such a 
certification with respect to a conservation plan to revise the 
conservation plan in any manner, if the same level of conservation 
treatment provided for by the conservation system under the person's 
conservation plan is maintained. NRCS may not revise the person's 
conservation plan without the concurrence of the person;
    (4) The person applying for a FSA direct or guaranteed farm credit 
program loan must certify that such person shall not use the proceeds 
of the loan for a purpose that will contribute to excessive erosion on 
highly erodible land or to conversion of wetlands for the purpose, or 
to have the effect, of making the production of an agricultural 
commodity possible; and
    (5) The person applying for the benefits must authorize and provide 
representatives of USDA access to all land in which such person has an 
interest for the purpose of verifying any such certification.
    (b) Availability to other agencies. Each agency of USDA shall make 
all certifications of compliance received by such agency and the 
results of investigations concerning such certifications of compliance 
available to other agencies.
    (c) Compliance. A certification made in accordance with this 
section does not relieve any person from compliance with provisions of 
this part.


Sec. 12.8  Affiliated persons.

    (a) Ineligibility of affiliated persons. Ineligibility of an 
individual or entity under this part for benefits shall also be an 
ineligibility for benefits for ``affiliated persons'' as defined in 
this section.
    (b) Affiliated persons of an individual. If the person requesting 
benefits is an individual, the affiliated persons are:
    (1) The spouse and minor child of such person or guardian of such 
child; except that spouses who establish to the satisfaction of the COC 
that operations of the husband and wife are maintained separately and 
independently shall not be considered affiliates;
    (2) Any partnership, joint venture, or other enterprise in which 
the person or any person listed in paragraphs (b)(1) has an ownership 
interest or financial interest; unless such interest is held indirectly 
through another business enterprise; or
    (3) Any trust in which the individual, business enterprise, or any 
person listed in paragraph (b)(1) is a beneficiary or has a financial 
interest, unless such interest is held indirectly through another 
business enterprise.
    (c) Affiliated persons of an entity. If the person who has 
requested benefits from USDA is a corporation, partnership, or other 
joint venture, the affiliated persons are any participant or 
stockholder therein of the corporation, partnership, or other joint 
venture, except for persons who have an indirect interest through 
another business enterprise in such corporation, partnership, or other 
joint venture or persons with a 20 percent or less share in a 
corporation.
    (d) Limitation. Any reduction in payments which results only from 
the application of the affiliation provisions of this section to a 
partnership, joint venture, trust, or other enterprise shall be limited 
to the extent of interest held in such partnership, joint venture, 
trust, or other enterprise by the person or business enterprise that 
committed the violation. However, for violations for which the business 
enterprise is considered directly responsible under the provisions of 
this part, the business enterprise shall be subject to a full loss of 
benefits, including those instances in which the business enterprise 
has an interest in the land where the violation occurred or where the 
business enterprise had an interest in the crops produced on the land.
    (e) Avoidance of this part. Limitations on affiliation shall not 
apply as needed to correct for any action that would otherwise tend to 
defeat the purposes of this part.


Sec. 12.9  Landlords and tenants.

    (a) Landlord eligibility.
    (1) Except as provided in paragraph (a)(2) of this section, the 
ineligibility of a tenant or sharecropper for benefits (as determined 
under Sec. 12.4) shall not cause a landlord to be ineligible for USDA 
program benefits accruing with respect to land other than those in 
which the tenant or sharecropper has an interest.
    (2) The provisions of paragraph (a)(1) of this section shall not be 
applicable to a landlord if the production of an agricultural commodity 
on highly erodible land or converted wetland by the landlord's tenant 
or sharecropper is required under the terms and conditions of the 
agreement between the landlord and such tenant or sharecropper and such 
agreement was entered into after December 23, 1985, or if the landlord 
has acquiesced in such activities by the tenant or sharecropper.
    (b) Tenant or renter eligibility.
    (1) The ineligibility of a tenant or renter may be limited to the 
program benefits listed in Sec. 12.4(c) accruing with respect to only 
the farm on which the violation occurred if:
    (i) The tenant or renter shows that a good-faith effort was made to 
comply by developing an approved conservation plan for the highly 
erodible land in a timely manner and prior to any violation of the 
provisions of this part; and
    (ii) The owner of such farm refuses to apply such a plan and 
prevents the tenant or renter from implementing certain practices that 
are a part of the approved conservation plan; and
    (iii) FSA determines that the lack of compliance is not a part of a 
scheme or device as described in Sec. 12.10.
    (2) If relief is granted under paragraph (b)(1) of this section, 
the tenant or renter must actively apply those conservation treatment 
measures that are determined to be within the control of the tenant or 
renter.


Sec. 12.10  Scheme or device.

    All or any part of the benefits listed in Sec. 12.4 otherwise due a 
person from USDA may be withheld or required to be refunded if the 
person adopts or participates in adopting any scheme or

[[Page 47034]]

device designed to evade, or which has the effect of evading, the 
provisions of this part. Such acts shall include, but are not limited 
to, concealing from USDA any information having a bearing on the 
application of the provisions of this part or submitting false 
information to USDA or creating entities for the purpose of concealing 
the interest of a person in a farming operation or to otherwise avoid 
compliance with the provisions of this part. Such acts shall also 
include acquiescence in, approval of, or assistance to acts which have 
the effect of, or the purpose of, circumventing these regulations.


Sec. 12.11  Action based upon advice or action of USDA.

    The provisions of part 718 of this Title, as amended, relating to 
performance based upon the action or advice of a County Committee (COC) 
or State FSA Committee shall be applicable to the provisions of this 
part. In addition, if it is determined by the appropriate USDA agency 
that the action of a person which would form the basis of any 
ineligibility under this part was taken by such person in good-faith 
reliance on erroneous advice, information, or action of any other 
authorized representative of USDA, the appropriate agency may make such 
benefits available to the extent that similar relief would be allowed 
under 7 CFR part 718.


Sec. 12.12  Appeals.

    Any person who has been or who would be denied program benefits in 
accordance with Sec. 12.4 as the result of any determination made in 
accordance with the provisions of this part may obtain a review of such 
determination in accordance with the administrative appeals procedures 
of the agency which rendered such determination. Agency appeal 
procedures are contained in the Code of Federal Regulations as follows: 
FSA, part 780 of this title; NRCS, part 614 of this title; Rural 
Utilities Service, part 1900, subpart B of this title.

Subpart B--Highly Erodible Land Conservation


Sec. 12.20  NRCS responsibilities regarding highly erodible land.

    In implementing the provisions of this part, NRCS shall, to the 
extent practicable:
    (a) Develop and maintain criteria for identifying highly erodible 
lands;
    (b) Prepare and make available to the public lists of highly 
erodible soil map units;
    (c) Make soil surveys for purposes of identifying highly erodible 
land; and
    (d) Provide technical guidance to conservation districts which 
approve conservation plans and systems, in consultation with local 
county FSA committees, for the purposes of this part.


Sec. 12.21  Identification of highly erodible lands criteria.

    (A) Basis for identification as highly erodible. Soil map units and 
an erodibility index will be used as the basis for identifying highly 
erodible land. The erodibility index for a soil is determined by 
dividing the potential average annual rate of erosion for each soil by 
its predetermined soil loss tolerance (T) value. The T value represents 
the maximum annual rate of soil erosion that could occur without 
causing a decline in long-term productivity. The equation for measuring 
erosion is described below.
    (1) The potential average annual rate of sheet and rill erosion is 
estimated by multiplying the following factors of the Universal Soil 
Loss Equation (USLE):
    (i) Rainfall and runoff (R);
    (ii) The degree to which the soil resists water erosion (K); and
    (iii) The function (LS), which includes the effects of slope length 
(L) and steepness (S).
    (2) The potential average annual rate of wind erosion is estimated 
by multiplying the following factors of the Wind Erosion Equation 
(WEQ): Climatic characterization of windspeed and surface soil moisture 
(C) and the degree to which soil resists wind erosion (I).
    (3) The USLE is explained in the U.S. Department of Agriculture 
Handbook 537, ``Predicting Rainfall Erosion Losses.'' The WEQ is 
explained in the paper by Woodruff, N.P., and F. H. Siddaway, 1965, ``A 
Wind Erosion Equation,'' Soil Science Society of America Proceedings, 
Vol. 29. No. 5, pages 602-608. Values for all the factors used in these 
equations are contained in the NRCS field office technical guide and 
the references which are a part of the guide. The Universal Soil Loss 
Equation, the Revised Universal Soil Loss Equation, and the Wind 
Erosion Equation and the rules under which NRCS uses the equations are 
published at Secs. 610.11 through 610.15 of this title.
    (b) Highly erodible. A soil map unit shall be determined to be 
highly erodible if either the RKLS/T or the CI/T value for the map unit 
equals or exceeds 8.
    (c) Potentially highly erodible. Whenever a soil map unit 
description contains a range of a slope length and steepness 
characteristics that produce a range of LS values which result in RKLS/
T quotients both above and below 8, the soil map unit will be entered 
on the list of highly erodible soil map units as ``potentially highly 
erodible.'' The final determination of erodibility for an individual 
field containing these soil map unit delineations will be made by an 
on-site investigation.


Sec. 12.22  Highly erodible field determination criteria.

    (a) Predominance. Highly erodible land shall be considered to be 
predominant on a field if either:
    (1) 33.33 percent or more of the total field acreage is identified 
as soil map units which are highly erodible; or
    (2) 50 or more acres in such field are identified as soil map units 
which are highly erodible.
    (b) Modification of field boundaries. A person may request the 
modification of field boundaries for the purpose of excluding highly 
erodible land from a field. Such a request must be submitted to, and is 
subject to the approval of, FSA. FSA shall use the technical 
determination of NRCS in approving this request.
    (C) Impact of changing field boundaries. When field boundaries are 
changed to include areas of land that were included in a field that was 
previously determined to be predominately highly erodible according to 
paragraph (a) of this section, such areas shall continue to be subject 
to the requirements for predominately highly erodible fields, except as 
provided in paragraph (b) of this section.
    (d) Small area of noncropland. Small areas of noncropland within or 
adjacent to the boundaries of existing highly erodible crop fields such 
as abandoned farmsteads, areas around filled or capped wells, rock 
piles, trees, or brush which are converted to cropland are considered 
to meet the requirement of Sec. 12.5(a)(2) if they are included in an 
approved conservation plan for the entire highly erodible field.


Sec. 12.23  Conservation plans and conservation systems.

    (a) Use of field office technical guide. A conservation plan or 
conservation system developed for the purposes of Sec. 12.5(a) must be 
based on, and to the extent practicable conform with, the NRCS field 
office technical guide in use at the time the plan is developed or 
revised. For highly erodible croplands which were used to produce 
agricultural commodities prior to December 23, 1985, the applicable 
conservation systems in the field office technical guide are designed 
to achieve substantial reductions in soil erosion. Conservation systems 
shall be

[[Page 47035]]

technically and economically feasible; based on local resource 
conditions and available conservation technology; cost-effective; and 
shall not cause undue economic hardship on the person applying the 
conservation system. Any conservation plans or systems that were 
approved prior to July 3, 1996, are deemed to be in compliance with 
this paragraph.
    (b) Substantial reduction in soil erosion. For the purpose of 
determining whether there is a substantial reduction in soil erosion on 
a field containing highly erodible cropland which was used to produce 
an agricultural commodity prior to December 23, 1985, the measurement 
of erosion reduction achieved by applying a conservation plan or system 
shall be based on a comparison of the estimated annual level of erosion 
that is expected to occur on that portion of the field for which a 
conservation plan or system was developed and is being applied, to the 
estimated annual level of erosion that existed on that same portion of 
the field before the application of a conservation plan or system. On a 
field that is converted from native vegetation after July 3, 1996, and 
where any crop production will result in increased erosion, in no case 
will the required conservation plan or system permit a substantial 
increase in erosion.
    (c) Field trials. NRCS may allow a person to include in the 
person's conservation plan or a conservation system under the plan, on 
a field-trial basis, practices that are not currently approved but that 
NRCS considers have a reasonable likelihood of success. These trials 
must have prior approval by NRCS, and must be documented in the 
person's conservation plan specifying the limited time period during 
which the field trial is in effect. If, at the end of the conservation 
field trial period, NRCS finds that the practice does not meet 
conservation compliance requirements, the person will not be ineligible 
for USDA program benefits during the period of the field trial.
    (d) Highly erodible land previously under a Conservation Reserve 
Program contract. Any person who owns or operates highly erodible land 
that was under a Conservation Reserve Program contract as authorized by 
section 1231 of the Food Security Act of 1985, as amended, shall have 2 
years after the expiration of termination of the contract to fully 
apply a conservation system if the conservation plan for such land 
requires the installation of structural measures for the production of 
an agricultural commodity. NRCS officials may extend this period one 
additional year for circumstances beyond the control of the person. The 
person shall not be required to meet a higher conservation standard 
than the standard applied to other highly erodible cropland located 
within the area served by the field office technical guide for the area 
in which the field is located.
    (e) Information regarding conservation options. NRCS, in providing 
assistance to a person for the preparation or revision of a 
conservation plan under this part, will provide such person with 
information concerning cost-effective and applicable erosion control 
alternatives, crop flexibility, or other conservation assistance 
options that may be available.
    (f) Timely request for assistance. Persons who require NRCS 
assistance for the development of a conservation plan or the 
installation of a conservation system are encouraged to request this 
assistance well in advance of deadline dates for compliance; otherwise 
the person may not be able to comply with these provisions and maintain 
eligibility for USDA program benefits.
    (g) Action by conservation districts. Conservation districts 
approve or disapprove conservation plans or conservation systems after 
NRCS determines that the plans or systems conform to the NRCS field 
office technical guide. If a conservation district fails, without due 
cause, to act on a request for conservation plan or conservation system 
approval within 45 days, or if no conservation district exists, NRCS 
will approve or disapprove, as appropriate, the conservation plan or 
system in question.
    (h) Application of a conservation plan or system. A person is 
considered to be applying a conservation plan for purposes of 
Sec. 12.5(a) if the conservation system or plan being applied achieves 
or exceeds the substantial reduction in soil erosion as described in 
paragraph (b) which the conservation system or plan was designed to 
achieve. It is the responsibility of the person to:
    (1) Certify that the conservation plan or system is being applied; 
and
    (2) Arrange for a revision of the conservation plan with NRCS, if 
changes are made in land use, crop rotation or management, conservation 
practices, or in the original schedule of practice installation that 
would affect the achievement of substantial reduction in soil erosion 
in a given crop year.
    (i) Appeal to FSA. Persons who are adversely affected by the 
determinations made under this subpart and believe that the 
requirements of this subpart were improperly applied may appeal the 
decision to FSA under Sec. 12.12.
    (j) Undue economic hardship. After a technical determination has 
been made, the FSA county committee shall, if a person asserts that the 
application of the person's conservation system would impose an undue 
economic hardship on the person, make a recommendation to the State FSA 
Committee as to whether or not the application of the conservation 
system would impose an undue economic hardship. The State FSA Committee 
may provide the person with a variance on the basis of the hardship. 
Under this variance, and any conditions that may be required in the 
variance, the person will be considered to be in compliance with the 
applicable provisions of this part. The State FSA Committee will 
consider relevant factors, such as the cost of installation of required 
conservation practices and benefits earned through programs subject to 
compliance with this part, and the person's general economic situation.

Subpart C--Wetland Conservation


Sec. 12.30  NRCS responsibilities regarding wetlands.

    (a) Technical and coordination responsibilities. In carrying out 
the provisions of this part, NRCS shall:
    (1) Oversee the development and application of criteria to identify 
hydric soils in consultation with the National Technical Committee for 
Hydric Soils and make available to the public an approved county list 
of hydric soil map units, which is based upon the National List of 
Hydric Soils;
    (2) Coordinate with the U.S. Fish and Wildlife Service and others 
in updating the National List of Plant Species that Occur in Wetlands;
    (3) Make or approve wetland determinations, delineations and 
certifications, functional assessments, mitigation plans, categorical 
minimal effects, and other technical determinations relative to the 
implementation of the wetland conservation provisions of this part;
    (4) Develop and utilize off-site and on-site wetland identification 
procedures;
    (5) Assure quality of service and determinations through procedures 
developed by NRCS in consultation with other Federal agencies that have 
wetland responsibilities;
    (6) Investigate complaints and make technical determinations 
regarding potential violations;
    (7) Develop a process at the state level, in coordination with the 
U.S. Fish and Wildlife Service, to ensure that these provisions are 
carried out in a technically defensible and timely

[[Page 47036]]

manner, seek assistance as appropriate, and annually review the 
progress being made on implementation; and
    (8) Conduct reviews of implementation and provide the Army Corps of 
Engineers, Environmental Protection Agency, and the U.S. Fish and 
Wildlife Service an opportunity to participate in this review.
    (b) Technical assistance from others In carrying out the provisions 
of this part, NRCS may request technical assistance from the U.S. Fish 
and Wildlife Service, State or local agencies conservation districts, 
or qualified private entities when NRCS determines that additional 
staff resources or technical expertise are needed to address adequately 
the requirements of this part or to enhance the quality of 
implementation of this part.
    (c) Certification of wetland determinations and wetland 
delineations.
    (1) Certification of a wetland determination means that the wetland 
determination is of sufficient quality to make a determination of 
ineligibility for program benefits under Sec. 12.4 of this part. 
Certification of a wetland determination shall be completed according 
to delineation procedures agreed to by the Army Corps of Engineers, the 
Environmental Protection Agency, the U.S. Fish and Wildlife Service and 
NRCS. NRCS may certify a wetland determination without making a field 
investigation. NRCS will notify the person affected by the 
certification and provide an opportunity to appeal the certification 
prior to the certification becoming final. All wetland determinations 
made after July 3, 1996, will be done on a tract basis and will be 
considered certified wetland determinations. A not-inventoried 
designation within a certified wetland is subject to change when the 
soil, hydrology, and vegetation evaluation is completed and identified 
as to type of wetland or as a non-wetland. This change from a not-
inventoried designation to an approved wetland designation will be done 
at the request of the landowner or during a formal investigation of a 
potential violation.
    (2) The wetland determination and wetland delineation shall be 
certified as final by the NRCS official 30 days after providing the 
person notice of certification or, if an appeal is filed with USDA, 
after the administrative appeal procedures are exhausted.
    (3) In the case of an appeal, NRCS will review and certify the 
accuracy of the determination of all lands subject to the appeal to 
ensure that the subject lands have been accurately delineated. Prior to 
a decision being rendered on the appeal, NRCS will conduct an on-site 
investigation of the subject land.
    (4) Before any benefits are withheld, an on-site investigation of a 
potential wetland violation will be made by NRCS. The affected person 
will be provided an opportunity to appeal the on-site determination to 
USDA if the on-site determination differs from the original 
determination. Such action by NRCS shall be considered a review of the 
prior determination and certification of the delineation. If the prior 
determination was a certified wetland determination, an appeal of the 
NRCS on-site determination shall be limited to the determination that 
the wetland was converted in violation of this part.
    (5) A copy of the information from the final certified wetland 
determination and the wetland delineation shall be recorded on official 
USDA aerial photography, digital imagery, or other graphic 
representation of the area.
    (6) As long as the affected person is in compliance with the 
wetland conservation provision of this part, and as long as the area is 
devoted to the use and management of the land for production of food, 
fiber, horticultural crops, a certification made under this section 
will remain valid and in effect until such time as the person affected 
by the certification requests review of the certification by NRCS. A 
person may request review of a certification only if a natural event 
alters the topography or hydrology of the subject land to the extent 
that the final certification is no longer a reliable indication of site 
conditions, or if NRCS concurs with an affected person that an error 
exists in the current wetland determination


Sec. 12.31  On-site wetland identification criteria.

    (a) Hydric soils.
    (1) NRCS shall identify hydric soils through the use of published 
soil maps which reflect soil surveys completed by NRCS or through the 
use of on-site reviews. If a published soil map is unavailable for a 
given area, NRCS may use unpublished soil maps which were made 
according to the specifications of the National Cooperative Soil Survey 
or may conduct an on-site evaluation of the land.
    (2) NRCS shall determine whether an area of a field or other parcel 
of land has a predominance of hydric soils that are inundated or 
saturated as follows:
    (i) If a soil map unit has hydric soil as all or part of its name, 
that soil map unit or portion of the map unit related to the hydric 
soil shall be determined to have a predominance of hydric soils;
    (ii) If a soil map unit is named for a miscellaneous area that 
meets the criteria for hydric soils (i.e., riverwash, playas, beaches, 
or water) the soil map unit shall be determined to have a predominance 
of hydric soils; or
    (iii) If a soil map unit contains inclusions of hydric soils, that 
portion of the soil map unit identified as hydric soil shall be 
determined to have a predominance of hydric soils.
    (3) List of hydric soils.
    (i) Hydric soils are those soils which meet criteria set forth in 
the publication ``Hydric Soils of the United States 1985'' which was 
developed by the National Technical Committee for Hydric Soils and 
which is incorporated by reference. This publication may be obtained 
upon request by writing NRCS at U.S. Department of Agriculture, P.O. 
Box 2890, Washington, DC 20013, and is available for inspection at the 
Office of the Federal Register Information Center, 800 North Capitol 
Street NW., Suite 700, Washington, DC 20408. Incorporation of this 
publication by reference was approved by the Director of the Federal 
Register on June 24, 1986. The materials are incorporated as they exist 
on the date of the approval and a notice of any change in these 
materials will be published in the Federal Register.
    (ii) An official list of hydric soil map units shall be maintained 
at the local NRCS office and shall include--
    (A) All soils from the National List of Hydric Soils that can be 
found in that field office area, and
    (B) Any soil map units or areas which the state conservationist 
determines to meet such hydric soil criteria.
    (iii) Any deletions of a hydric soil unit from the hydric soil map 
unit list must be made according to the established procedure contained 
in the publication ``Hydric Soils of the United States 1985'' for 
adding or deleting soils from the National List of Hydric Soils.
    (b) Hydrophytic vegetation. Hydrophytic vegetation consists of 
plants growing 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.
    (1) A plant shall be considered to be a plant species that occurs 
in wetland if such plant is listed in the National List of Plant 
Species that Occur in Wetlands. The publication may be obtained upon 
request from the U.S. Fish and Wildlife Service at National Wetland 
Inventory, Monroe Bldg. Suite 101, 9720 Executive Center Drive, St. 
Petersburg, Florida 33702.
    (2) For the purposes of the definition of ``wetland'' in Sec. 12.2 
of this part, land shall be determined to have a prevalence of 
hydrophytic vegetation if:
    (i) NRCS determines through the criteria specified in paragraph 
(b)(3) of

[[Page 47037]]

this section that under normal circumstances such land supports a 
prevalence of hydrophytic vegetation. The term ``normal circumstances'' 
refers to the soil and hydrologic conditions that are normally present, 
without regard to whether the vegetation has been removed; or
    (ii) In the event the vegetation on such land has been altered or 
removed, NRCS will determine if a prevalence of hydrophytic vegetation 
typically exists in the local area on the same hydric soil map unit 
under non-altered hydrologic conditions.
    (3) The determination of prevalence of hydrophytic vegetation will 
be made in accordance with the current Federal wetland delineation 
methodology in use by NRCS at the time of the determination.
    (c) Mitigation wetlands. Notwithstanding the provisions of this 
section, wetlands which are created in order to mitigate the loss of 
other wetlands as a result of irrigation, recreation, municipal water, 
flood control, or other similar projects shall not be considered to be 
artificial wetland for the purposes of Sec. 12.5(b)(1)(vii)(A) of this 
part.
    (d) Minimal effect determination. For the purposes of 
Sec. 12.5(b)(1)(v) of this part, NRCS shall determine whether the 
effect of any action of a person associated with the conversion of a 
wetland, the conversion of wetland and the production of an 
agricultural commodity on converted wetland, or the combined effect of 
the production of an agricultural commodity on a wetland converted by 
someone else has a minimal effect on the functions and values of 
wetlands in the area. Such determination shall be based upon a 
functional assessment of functions and values of the wetland under 
consideration and other related wetlands in the area, and will be made 
through an on-site evaluation. A request for such determination will be 
made prior to the beginning of activities that would convert the 
wetland. If a person has converted a wetland and then seeks a 
determination that the effect of such conversion on wetland was 
minimal, the burden will be upon the person to demonstrate to the 
satisfaction of NRCS that the effect was minimal.
    The production of an agricultural commodity on any portion of a 
converted wetland in conformance with a minimal-effect determination by 
NRCS is exempt under Sec. 12.5(b)(1)(v) of this part. However, any 
additional action of a person that will change the functions and values 
of a wetland for which a minimal-effect determination has been made 
shall be reported to NRCS for a determination of whether the effect 
continues to be minimal. The loss of a minimal effect determination 
will cause a person who produces an agricultural commodity on the 
converted wetland after such change in status to be ineligible, under 
Sec. 12.4, for certain program benefits. In situations where the 
wetland functions and values are replaced by the restoration, 
enhancement or creation of a wetland in accordance with a mitigation 
plan approved by NRCS, the exemption provided by the determination will 
be effective after NRCS determines that all practices in a mitigation 
plan are being implemented.
    (e) Categorical Minimal Effect Exemptions.
    (1) The state conservationist, in consultation with the state 
technical committee established under 16 U.S.C. 3861, shall identify 
any categories of conversion activities and conditions which are 
routinely determined by NRCS to have minimal effect on wetland 
functions and values, as described in paragraph (d) of this section, 
and recommend to the Chief, NRCS, or a designee, inclusion on a list of 
categorical minimal effect exemptions.
    (2) The Chief, or designee, shall evaluate the conversion practices 
recommended by the state conservationists in the region to ensure 
consistency across State and regional lines, and to determine whether 
any categories of conversion activities identified pursuant to 
paragraph (e)(1) of this section, if such activities were exempt from 
the ineligibility provisions of Sec. 12.4, would only have a minimal 
effect on wetland functions and values in a wetland system within the 
region.
    (3) Any categories of conversion activities which meet the criteria 
of paragraph (e)(2) of this section will be published in the Federal 
register for inclusion in this part and shall be exempt under 
Sec. 12.5(b)(1)(v) of this part.
    (4) The NRCS local field office shall maintain a list of any 
activities and conditions which are determined by the Chief, or 
designee, exempt pursuant to this section and will provide the list to 
a person upon request.


Sec. 12.32  Converted wetland identification criteria.

    (a) Converted wetland shall be identified by determining whether 
the wetland was altered so as to meet the definition of converted 
wetland. In making this determination, the following factors are to be 
considered:
    (1) Where hydric soils have been used for production of an 
agricultural commodity and the effect of the drainage or other altering 
activity is not clearly discernible, NRCS will compare the site with 
other sites containing the same hydric soils in a natural condition to 
determine if the hydric soils can or cannot be used to produce an 
agricultural commodity under natural conditions. If the soil on the 
comparison site could not produce an agricultural commodity under 
natural conditions, the subject wetland will be considered to be 
converted wetland.
    (2) Where woody hydrophytic vegetation has been removed from hydric 
soils for the purpose of or permitting the production of an 
agricultural commodity, the area will be considered to be converted 
wetland.
    (b) A wetland shall not be considered to be converted if:
    (1) Production of an agricultural commodity on such land is 
possible as a result of a natural condition, such as drought, and it is 
determined that the actions of the person producing such agricultural 
commodity does not permanently alter or destroy natural wetland 
characteristics. Destruction of herbaceous hydrophytic vegetation 
(i.e., plants other than woody shrubs or trees) as a result of the 
production of an agricultural commodity shall not be considered as 
altering or destroying natural wetland characteristic if such 
vegetation could return following cessation of the natural condition 
which made production of the agricultural commodity possible; or
    (2) Such land is correctly identified as farmed wetland or farmed-
wetland pasture.


Sec. 12.33  Use of wetland and converted wetland.

    (a) The provisions of Sec. 12.32(b)(2) are intended to protect 
remaining functions and values of the wetlands described therein. 
Persons may continue to farm such wetlands under natural conditions or 
as they did prior to December 23, 1985. However, no action can be taken 
to increase effects on the water regime beyond that which existed on 
such lands on or before December 23, 1985, unless NRCS determines the 
effect on losing remaining wetland values would be minimal under 
Sec. 12.5(b)(1)(v). If, after December 23, 1985, changes due to human 
activity occurred in the watershed and resulted in an increase in the 
water regime on a person's land, the person may be allowed to adjust 
the existing drainage system to accommodate the increased water regime 
on the condition that the person affected by this additional water 
provides NRCS with appropriate documentation of the increased water 
regime, the causes thereof, and the

[[Page 47038]]

planned changes in the existing drainage system. In order to maintain 
program eligibility, a person must provide sufficient documentation and 
receive approval from NRCS prior to making any changes that will have 
the effect of increasing the capacity of the existing drainage systems.
    (b) Unless otherwise provided in this part, the production of an 
agricultural commodity on land determined by NRCS to be prior-converted 
cropland is exempted by law from these regulations for the area which 
was converted. Maintenance or improvement of drainage systems on prior-
converted croplands are not subject to this rule so long as the prior-
converted croplands are used for the production of food, forage, or 
fiber and as long as such actions do not alter the hydrology of nearby 
wetlands or do not make possible the production of an agricultural 
commodity on these other wetlands. Other wetlands under this section 
means any natural wetland, farmed wetland, farmed-wetland pasture, or 
any converted wetland that is not exempt under Sec. 12.5 of this part.
    (c) Abandonment is the cessation for five consecutive years of 
management or maintenance operations related to the use of a farmed 
wetland or a farmed-wetland pasture. Unless the criteria for receiving 
an exemption under Sec. 12.5(b)(1)(iii) are met, such land is 
considered to be abandoned when the land meets the wetland criteria of 
Sec. 12.31. In order for documentation of site conditions to be 
considered adequate under Sec. 12.5(b)(1)(iii), the affected person 
must provide to NRCS available information concerning the extent of 
hydrological manipulation, the extent of woody vegetation, and the 
history of use. In accordance with Sec. 12.5(b)(1)(iii), participation 
in a USDA approved wetland restoration, set-aside, diverted acres, or 
similar programs shall not be deemed to constitute abandonment.
    (d) The maintenance of the drainage capacity or any alteration or 
manipulation, including the maintenance of a natural waterway operated 
and maintained as a drainage outlet, that affects the circulation and 
flow of water made to a farmed wetland or farmed-wetland pasture would 
not cause a person to be determined to be ineligible under this part, 
provided that the maintenance does not exceed the scope and effect of 
the original alteration or manipulation, as determined by NRCS, and 
provided that the area is not abandoned. Any resultant conversion of 
wetlands is to be at the minimum extent practicable, as determined by 
NRCS.


Sec. 12.34  Paperwork Reduction Act assigned number.

    The information collection requirements contained in this 
regulation (7 CFR part 12) have been approved by the Office of 
Management and Budget under provisions of 44 U.S.C. chapter 35 and have 
been assigned OMB Number 0560-0004.

    Signed at Washington, D.C. on August 23, 1996.
Dan Glickman,
Secretary.
[FR Doc. 96-22784 Filed 9-5-96; 8:45 am]
BILLING CODE 3410-01-M