December 01, 1997
Environmental policy invariably seems to be created in a melodramatic world of good-guy government officials and bad-guy private interests. Actual history plays no discernable role in how policy is made. Consequently, bad policy is adopted to cover up earlier bad policy.
In 1991, the Minnesota Wetlands Conservation Act (WCA) was passed with only a dozen of the 201 members of the combined Minnesota legislature dissenting. The lopsided margin of the vote probably most reflected the popularity of protecting wetlands (or the unpopularity of opposing such protection), and not an accurate understanding of the causes of wetland drainage.
The WCA passed amid hysteria over the purported loss of over half of our wetlands and that environmental calamity was imminent. The truth, however, was that the bulk of drainage in Minnesota happened between 1900 and 1915, immediately following a state-wide public works project to drain swampland. Drainage virtually ceased until after World War II, but then resumed during the post-war agricultural boom and continued until the late 1950s, when legislation was passed at the behest of Minnesota duck hunters allowing tax relief to those who preserved wetlands. By the early 1970s, the legislature required that the Commissioner of the Department of Natural Resources and drainage authorities examine environmental and conservation criteria before establishing drainage projects. In the mid-1970s, the Army Corps of Engineers was ordered as a result of Natural Resources Defense Council, Inc. v. Callaway to match the EPA's jurisdiction over wetlands, that is, the "Nation's waters." By the 1980s, a combination of factors, the "Swampbuster" provision in the federal Food Security Act of 1985 which withheld farm subsidies from farmers who drained wetlands, and falling commodity prices and land values, caused wetland drainage to slow to a trickle. Finally, by 1991, the tile drain systems in Minnesota were old and clogged with years of accumulated vegetation, and were often in disrepair.
Notwithstanding these trends, one report used as a basis for the WCA findings claimed that 11 million acres of the state's wetlands had been drained between 1982 and 1992. Because of the legislative and economic events affecting agriculture in the 1980s, there is good reason to be suspicious of this. In fact, in 1996, when citizens mounted a modest effort to make changes in WCA, evidence surfaced showing that the claim of 60% drained wetlands wildly overstated the problem in Minnesota. USDA surveys showed that a mere 26,000 acres, or 1/18th of one percent of the state's wetlands had been drained during this time. In addition, what seemed more likely, was that despite particular locations being drained, the aggregate acreage of Minnesota wetlands had been increasing for some time. No matter, a crisis is a crisis.
The story of the Minnesota WCA is an important one because it illustrates four phenomena that are common to almost all situations where environmental problems arise. First, government seeks to create economic development, underwrites large public works projects to support it, and ultimately uses statutory schemes to change property rights which stand in the way of that development. Second, the development occurs, new reliances are fostered, and the externalities of that development become problematic. Third, the externalities of the development are attributed to private activity. And finally, fourth, sweeping legislation is passed which further undermines property rights.
The story in Minnesota begins with the westward expansion in the mid-19th century. At this time, "wetlands" were called "swamps" and were looked upon as evil incarnate, as places of "treachery, mires of despair, homes of pests, and refuges for outlaw and rebel," according to one Ohio judge in Reeves v. Treasurer. Missouri granted farmers the power of eminent domain to fill swamps for agricultural purposes. The U.S. Congress passed the Swampland Act of 1850 to "enable the State... to construct the necessary levees and drains to reclaim the swamp and overflowed lands therein, the whole of those swamp and overflowed lands made unfit thereby for cultivation, which shall be unsold at the passage of this Act, shall be, and the same are hereby, granted to the said State."
The federal government saw its ownership of these lands as liabilities and wanted to divest itself of them hoping that the locals could make something out of them and settle the continent. In fact, until 1977, Congress promoted this policy through the Agricultural Conservation Program which helped farmers convert swampland for agricultural production.
Minnesota's first major initiative, however, came in 1897 when it instituted a state-wide ditch drainage system. At the heart of this project was a vision of state-wide economic development and its consequences for public finance. From an economic development point-of-view, however, common law property rights were a major impediment. Under common law, drainage rights were limited by reasonableness without the consent of adjacent landowners. Large-scale drainage, however, required a statutory scheme to organize, build, and finance the drainage infrastructure, and finally to make consent of potential hold-outs (i.e. those whose land was already relatively dry) irrelevant. The costs of the ditch system was assessed to land, whether occupied or not.
Fortunately for these planners, common law property rights had been under attack for nearly a half century. Nuisance law had steadily moved from its common law trespass origins to a more social utilitarian benefits and burdens analysis. In Ryan v. New York Central, for example, a farmer whose crops were ignited by sparks from passing trains was without a remedy in light of the social benefit of the expanding railroads. When economic development was at stake, property rights, particularly the right to be free of nuisance, typically yielded.
Shortly after Minnesota instituted its state-wide ditch system, 9 million acres - roughly half of the state's wetlands - were drained. Nearly all of this drainage was for agriculture. As a direct result of this project, agricultural production which otherwise was not economically viable flourished in Minnesota.
In short order, though, groups of Minnesotans began noticing the environmental change was not all positive. Hunters were upset by declining duck and geese populations and lobbied for the protection of waterfowl habitat. In 1934, the federal government began selling "Duck Stamps" to fund purchases of habitats. In 1951, Minnesota passed its first real wetlands legislation, the Small Wetlands Program authorizing the purchase of these lands for wildlife management areas, funded in part by hunting license fees. In 1957, the Minnesota Water Bank Act authorized even more purchases of critical habitats, not merely for the benefit of hunters, but as an extension of overall state water policy. Subsequent changes in the law followed as detailed above.
What is important to understand is that the negative externalities attributable to this period of development arose because of Minnesota statute and government policy, not because individual property owners decided on their own to drain wetlands. In many cases, drainage of the land preceded private ownership of it (even if speculators who knew the scope of the project actually held title); the state was acting as the developer. Consequently, those who purchased the land took it subject to the assessment of the project and in reliance of the land being drainable indefinitely. But for the drainage project, most of this land would probably not be privately held.
When the WCA was being debated in 1991, the allegations of environmentalists predictably centered around how the excesses of the market economy and the selfishness of private property owners led to the present state. The response was - silence. It was simply unthinkable that government-as-economic-developer could have created the problem.
Recently, PBS aired the documentary Cadillac Desert where this same scenario was played out, but the geographical facts were reversed. The Central Valley in California is a desert during most of the growing season. At the turn of the century, the U.S. Congress was trying to foster family farming and awarded 160 acre tracts in the Valley for that purpose. An underground aquifer supplied water and farming was relatively successful for a while. But then, the aquifer began to drop, and the land began literally to drop with it. In response, the federal government began the Central Valley Project (CVP) to bring snowmelt from Sierra Nevada mountains to irrigate desert land in the Valley. The CVP, although initiated prior to the New Deal, was finished and opened under Franklin Roosevelt. Its maze of dams, aquaducts, and pumping stations was called the largest public works project since the Great Wall of China. Eventually, the Central Valley became the richest agricultural area in the world.
The CVP provided water at a fraction of the actual cost for irrigation. Despite the desert climate, Valley farms produced crops which were more suitable for a wet climate, like say, Minnesota. Ultimately, the CVP began to unravel in the 1970s after grossly deformed ducks were discovered in a waterfowl preserve contaminated with the trace mineral selenium, accumulated from the run-off of billions of gallons of artificially transported water. The culprit here? Corporate greed, of course. While the Central Valley is still a large agricultural producer, the artificially favorable economics are being phased out, and the Valley's reversion to desert is not far off.
Both Minnesota's drainage law and the CVP were epitomes of central planning in the pursuit of large-scale economic development. It is absolutely clear that it was government policy to alter the environment first, and then establish property interests second. The depressing fact of these two cases, however, is that the remedy for centralized planning in which property rights are altered and lost always seems to be more centralized planning and a further loss of property rights after the initial plan runs amok.
Minnesota drainage law and the CVP illustrate what happens when government programs and property rights get intertwined. The public/private partnership between property owners and government leaves property owners blamed for the problem and the government liability strictly limited.
*John Povejsil is a Minnesota attorney and leader in the Minnesota Lawyers Federalist Society Chapter.