By Cami Koons Iowa Capital Dispatch

CEDAR RAPIDS, Iowa -- A federal judge heard oral arguments Monday for a case that could overturn a decades-old statute tying wetland conservation to federal farm benefit eligibility.

The plaintiff CTM Holdings, which owns and rents land to Iowa farmers, sued over the U.S. Department of Agriculture's "swampbuster" rule, alleging its implementation is unconstitutional and that it takes land without any compensation to landowners.

The government defendants and intervening environmental groups argued against CTM and alleged the company had no standing as it had not suffered any injury from the statute.

Chief Judge C.J. Williams, for the U.S. District Court for the Northern District of Iowa, questioned if the whole issue was a "failure to communicate" between the landowner and Natural Resources Conservation Service, which carries out the swampbuster rule.

The case, CTM Holdings v. U.S. Department of Agriculture, pertains to a 9-acre portion of land in Delaware County which was designated a wetland by NRCS prior to the company's purchase of the land.

The company wanted to cut down trees and remove stumps from the wetland area, which it alleges is dry land, for the purpose of farming.

CTM Holdings, represented by the nonprofit litigation groups Liberty Justice Center and Pacific Legal Foundation, argue the Wetland Conservation Compliance provisions of the 1985 Farm Bill, often referred to as "swampbuster," unconstitutionally puts conditions on a farmer's ability to receive farm credits. Additionally, the group holds that farmers are not properly compensated for these wetland easements.

Iowa Farmers Union, Dakota Rural Action, Food & Water Watch, and Iowa Environmental Council were approved as intervenors in the case, on behalf of USDA and NRCS, in December 2024.

The groups argued that overturning the swampbuster rule would "threaten" their members and communities by removing wetland conservation practices from neighboring farmland.

A MISCOMMUNICATION?

Loren Seehase on behalf of CTM Holdings argued the company requested a "redetermination" by NRCS of the wetland portion of the land in 2023, but that it's "near impossible" to get the agency to reevaluate its ruling.

The lawsuit holds NRCS "exceeds the statutory definition" by only considering a redetermination if a "natural event alters the topography or hydrology" of the land or if the agency agrees it made an error in its initial determination.

Brandon Gray, on behalf of USDA, former Agriculture Secretary Tom Vilsack, NRCS and other government officials named in the complaint, said the company did not request a redetermination of the wetland. Gray said the action in 2023 dealt with a different portion of the 72-acre parcel that had not yet been determined, though he agreed the letters from NRCS were "confusing."

Judge Williams wondered if this was just a misunderstanding between CTM and the regulating agency.

Jim Conlan, owner of CTM Holdings, with over 1,000 acres of land in Iowa, said the opposing counsel was "very creative" with this argument and holds that he did apply for a redetermination of the wetland.

Seehase, Conlan's attorney, said it is "disingenuous" for the government to say NRCS did a "piecemeal" determination in 2023 rather than examining the whole property.

COMPENSATION

Seehase said CTM "has and will continue to suffer" under swampbuster because the nine acres of the parcel cannot be rented.

The lawsuit also holds that the landowner should be compensated for the wetland acreage that cannot be farmed. Seehase said there should be a program for wetlands like the Conservation Reserve Program, which pays farmers to keep sensitive land in long-term vegetative covers.

Dani Replogle, staff attorney with the environmental group Food & Water Watch, one of the intervenors, said this argument doesn't "have a leg to stand on."

"The compensation is clearly the farm benefits that swampbuster provides access to," Replogle said.

These farm benefits include crop insurance and other important farming subsidies distributed by USDA.

Judge Williams asked if it was "coercive" on behalf of the government to condition these funds.

Gray, for USDA, said swampbuster does not stop property owners from doing what they want to the land. He said the fact that government subsidies are "a good deal" for farmers doesn't mean it's coercive.

He said the conditions follow Congress' directive to ensure government spending is for the "general welfare."

Kathleen Garvey, on behalf of the intervenors, said there are also "myriad" exemptions from swampbuster, including a farmer's ability to drain and farm over a wetland by purchasing a mitigation credit.

Garvey said ruling in favor of the plaintiff would "radically curtail" Congress' power and "drastically change" farm policy.

She said CTM Holdings has not suffered injury from the issue, and said the company actually profited from a lower purchase price of the land, the sale of timber on the wetland portion and it has maintained consistent farming tenants.

Jeffery McCoy, with Pacific Legal Foundation on behalf of CTM Holdings, said the injury is in the government's "ask" to "waive a constitutional right" to receive benefits.

"Farmers need crop insurance," McCoy said.

Seehase said "it's really not a choice" for a farmer to forgo their farm benefits. CTM Holdings is eligible for farm benefits, which Conlan said are passed on to his tenants in return for a higher lease price.

Plaintiffs also argued the NRCS definition of altering a wetland exceeds the statute set by Congress.

The law holds that filling, draining, leveling, clearing woody vegetation or diverting run-off water are all actions considered to alter a wetland for the purpose of agriculture use.

Gray, on behalf of the government, said just because the statute and the agency rules are different, does not automatically mean the intent is also different.

Gray said it is the agency's job to define a statute to make it applicable.

CHANGE IN SWAMPBUSTER WOULD HAVE LASTING IMPLICATIONS

According to a study from the Union of Concerned Scientists, wetlands provide protection from residential flood damages that equal nearly $23 billion annually. Wetlands in Iowa alone have the potential to mitigate $477 million, annually, in flood damage according to the study.

The same study approximates there are more than 640,000 acres of wetlands in Iowa, though the Iowa Department of Natural Resources estimates the state has lost 95% of what were once wetlands, the majority of which were drained for agricultural uses.

Defendants of swampbuster feel that without the law, wetlands across the country would be drained.

"The impacts of us losing the case would be that federal farm benefits would be open to any farmer or holding company or corporate landowner that wanted to just destroy all the ecosystems on their property and farm every acre," Replogle, one of the intervening attorneys, said.

Replogle said the lawsuit would have implications on quite a few federal farm credit programs that have eligibility requirements, especially on a similar statute, known as "sodbuster" which protects highly erodible land from being farmed.

Replogle said there is "no limiting principle" in CTM Holdings' case that would prevent sodbuster from being ruled unconstitutional along with swampbuster.

Judge Williams said he will take the oral arguments into advisory and issue judgment at a later date.

Both parties said they would appeal the case if the judge rules against them.

Cami Koons is an Iowa Capital Dispatch reporter covering agriculture and the environment. She previously worked at publications in Kansas and Missouri, covering rural affairs.

Iowa Capital Dispatch is part of States Newsroom, the nation's largest state-focused nonprofit news organization.

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