[Code of Federal Regulations]
[Title 7, Volume 1]
[Revised as of January 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR12.5]

[Page 334-339]
 
                          TITLE 7--AGRICULTURE
 
PART 12_HIGHLY ERODIBLE LAND AND WETLAND CONSERVATION--Table of Contents
 
                      Subpart A_General Provisions
 
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 1981 
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.

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    (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

[[Page 336]]

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.
    (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,

[[Page 337]]

    (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

[[Page 338]]

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 farmed 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 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

[[Page 339]]

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) Responsibility 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.

[61 FR 47025, Sept. 6, 1996; 61 FR 53491, Oct. 11, 1996]