Managing your wetlands

Straight Talk with NDFB hosts Emmery Mehlhoff and Alisha Nord talk to Matt Retka about ND Ag Wetland Trade, a program to give farmers an opportunity to buy and sell wetlands. 

Matt  works for Stantec, the engineering firm contracted to facilitate the development and establishment of bank sites and work with landowners through every step of the process.

In this episode, learn: 

• How ND Ag Wetland Trade gives a tool to farmers who are interested in field drainage.
• More about how the program works. 
• What it looks like to sell credits. 
• What it looks like to buy credits.
• How the program provides a work-around for the Swampbuster program in the 1985 Food Security Act that prevented farmers from draining their land. 
• More about NDAM, and the six agricultural groups in North Dakota overseeing ND Ag Wetland Trade.

 Interested in NDAM’s ND Ag Wetland Trade? Contact Matt Retka 701-893-2322 or email him at matthew.retka@stantec.com to learn more.

Learn more about NDFB at ndfb.org.

Contact host Emmery Mehlhoff at emmery@ndfb.org

Transcript

[Straight Talk theme]

[00:13] Emmery: Welcome to Straight talk with NDFB. I am your host, Emmery Mehlhoff.

[00:18] And Alisha Nord.

[00:19] Emmery: We are your Farm Bureau duo bringing you your competitive edge.

[00:23] Alisha: Today, we interviewed Matt Redka of Stantec about North Dakota's Ag Wetland Trade Program.

[00:28] Emmery: Matt visits with us today about what the North Dakota Agriculture Mitigation Group is doing to help farmers to mitigate their wetlands and take their acres back. Join us for today's episode. 

[00:44] Emmery: I am here today with Matt Retka. He works for Stantec, but he's a contractor for the North Dakota Agriculture Mitigation Group. Why don't you go ahead, Matt, and introduce yourself and tell us a little bit about what you do.

[01:00] Matt: Hi, Emmery. Hi, Alisha. Yeah. My name is Matt Rutka. I work for Stantec. Stantec is a consulting company mostly in the engineering world. And my role here is a lot to do with wetlands and wetland regulation and drainage and NRCS policy. And my role specifically with the NDAM Group is the primary contractor that handles the technical side of the program. So that's working with landowners to find sites, to survey sites, the design, the correspondence with the NRCS, which is the primary kind of overseeing agency of the program, and ultimately trying to get credits approved for growers in the state of North Dakota to use for drainage projects.

[01:42] Emmery: So what exactly is NDAM?

[01:45] Matt: Well, Emmery, NDAM, as you know, is a group of really, a nonprofit that came together with six of the bigger ag associations or groups in North Dakota, Farm Bureau being one. Farmers Union is in that group. Soybean Growers Association. Corn Growers Association, Grain Growers. They came together and formed a group to act as the bank sponsor or the entity overseeing a mitigation bank that can handle the legalities of being responsible for a program and working with landowners in North Dakota to put wetland mitigation bank sites on the landscape.

[02:24] Emmery: So this basically was our attempt to provide a tool in the toolbox for producers out there. Number one, for producers who have land that they would like to tile or turn back into productive farmland, but they have to deal with the NRCS as far as having wetlands on their land and needing to potentially buy some mitigation credits, and then also looking at providing a tool in the toolbox for producers who have land that they may want to turn into a wetland or land that is potentially already a wetland but isn't designated as one, and get some money or at least get some credit for that poorer land is kind of what the idea was. And obviously we had some laws and legislation with the NRCS, et cetera, that we had to deal with as a result of the Swampbuster Act way back in the '80s.

[03:18] Matt: Yeah, nicely said, Emmery. So NDAM is an entity that kind of overseeing this whole program that stems from, really, the wetland compliance provisions of the Food Security Act, also known as Swampbuster. What they ended up doing or getting approvals for a bank that have coined, as you know, the ag wetland trade. So NDAM's an entity that's overseeing an approved bank, essentially, or as seen as a wetland bank through the eyes of the NRCS, to do exactly as you stated, to give producers who have drainage projects or maybe are out of compliance with swamp buster regulations, a tool to continue with drainage projects or get back into compliance with USDA programs, as well as provide an incentive to any landowner who may have marginal land or any other land that could be or would be eligible for wetland bank to enroll in a conservation type easement program and get a direct financial incentive to do so.

[04:18] Emmery: We really are unique as our board consists of basically growers, right? We consist of agricultural groups, and we exist for the benefit of the farmer. We're not a for profit company. We're not trying to buy credits and sell credits for the profit of ourselves, but we really did come together as a group to try to come up with some sort of a solution for these producers.

[04:42] Matt: Yeah, nicely said.

[04:44] Alisha: So I'm going to come at you with all the dumb questions because this is all very new to me. And like Emmery said, I cover the 13 counties in the southeast corner of North Dakota. So my big one is, why mitigate land? What is the core goal behind that?

[05:00] Matt: So mitigation is a term in the Food Security Act and other regulations that oversee wetlands. That's an option to replace wetlands and not break any laws. And in the case of Ag Wetland Trade and the program Farm Bureau is a part of it's really specific to the Swampbuster rules and compliance with USDA programs, or eligibility, I should say, in USDA programs. So if you're a grower in the state of North Dakota or anywhere else in the U.S., you have to abide by some of the Food Security Act compliances, the main one being wetland regulations, and another one not too well known in North Dakota but elsewhere in the United States is highly erodable lands. So those were two policies that were put into the 1985 Food Security Act for individuals that want to still receive certain farm program benefits. It's now coupled with crop insurance, EQIP payments, CRP contracts. There's a host of federal type programs and payments that are available to farmers in the United States. To remain eligible for those programs and payments, you have to be in compliance with the wetland regulation. So anybody looking to do drainage could be at risk of violating a wetland regulation if they have wetlands on a property that they're looking to drain. Mitigation provides an option to purchase credits. You ask, why mitigate and continue with your drainage project while still receiving USDA programs or being eligible for certain USDA incentives. There are some individuals, farmers, that have decided to opt out of USDA programs, and if you were to do so, you'd have no need for an ag wetland mitigation program like this. But if you want to stay eligible for USDA programs, got to watch out for your wetlands.

[06:48] Alisha: So when you're talking about credits, can you go into a little more detail like how are those sold? Is that per acre or how does that work?

[06:58] Matt: Great question. Yes, per acre basis is really how things are tracked for this program specifically, but also most other wetland-type mitigation programs. So I can expand. If you had a tile project and anybody looking to do tile or maybe done tile projects in the past have probably been at least exposed to wanting to get an NRCS wetland map or hopefully had an NRCS type wetland map for their track that they were tiling and that individual would or should look at those wetland areas and either avoid them with actual drain tile pipe in the ground or if you were going to cut into or drain a wetland, you'd go through the mitigation process. So those acres would be identified on a wetland map provided by the NRCS. That's free of charge to any producer anywhere in the state of North Dakota or elsewhere in the states to get a wetland map that shows the acres, location, and size of all the wetlands on their map. The ag wetland trade works to replace acres for acres.

[08:00] Alisha: So when a farmer is working with you guys, who keeps track of those credit transactions?

[08:08] Matt: That is part of my job, part of the NDAM group's responsibility to keep ledgers and track those internally and provide those on an annual basis to the NRCS.

[08:18] Emmery: Where are we at in the process? NDAM is relatively new, and obviously in order to sell credits to farmers who want to drain, you have to have credits to sell. So where are we at in getting those credits and where's that process at?

[08:33] Matt: Yeah, great question. I'll jump in and just give a quick little history or timeline of ag trade in North Dakota here. And where we're at today is we are currently working on getting credits available in two sites and two of the watersheds in North Dakota. So the whole program, it's done the same here in North Dakota as it is in neighboring states in South Dakota and Minnesota, where wetland transactions should be counted for in their individual watersheds. And that's at a larger watershed scale. In the state of North Dakota, there's, I believe, only four, maybe five watersheds that are identified for mitigation to occur. So if you're in the Red River Valley under the purview of the Food Security Act and the agreements we have, you need to be mitigating within the Red River Valley. And likewise, if you're in the Missouri River Valley, you need to be mitigating replacing acres in the Missouri watershed. But to get to just answer question, we're working on two sites in two different watersheds, one being the Red River, another one in the Missouri southern zone. So that's your Dickey, Ransom, Ellendale area. We have two sites that are hopefully going to be approved by the NRCS in the next few months. NDAM started just, I think came together probably within the last two years. Worked with NRCS on a grant to get some seed money to get started. And it was less than a year ago last October when we actually had the agreement approval from NRCS outlining all the specifics of how the program would be operated and the details to get credits released and track credits and just kind of whole nine yards of how the bank is supposed to be run. We just approved last October. So we are in the infancy stages a bit, but I think the future looks very optimistic.

[10:25] Emmery: Okay, so say I'm a farmer who is looking out at a quarter section of land right now and thinks that, that might be a good spot to potentially sell some mitigation credits. Can you tell me a little bit about the process of that, what you're looking for? If I go ahead and I sell those credits, what am I signing up for as far as an easement goes?

[10:48] Matt: I'm glad you brought that question up, because that's really where I get involved, and I love to work with landowners on assessing sites and coming up with options that fit into their operations. So if you're interested in the program, you know, really any landowner can come to me with a map, basically, and we - Stantec - can take a look and take that discussion from there. Ideally, if you have a wetland map for the track that you're interested in putting into the program, that's the best thing you can share with me at Stantec or individuals such as yourself, Emmery, who can forward that to me. 

Ultimately, at some point in the process, you do need a certified wetland determination map from the NRCS to get any site enrolled in the program, but we can certainly start looking at options. If you don't currently have a certified wetland map. If you have an FSA track map, that's your kind of annual map showing your farm fields and your non-cropped areas, that pretty much every operator and owner gets from the FSA every year, those are plenty good to get started on. But get a map ready and come prepared to kind of talk about what you had in mind, and we can work together on looking at the feasibility of actually getting credits developed and sold for that site. The best pieces of land, you touched on this earlier, are generally somewhat marginal lower lands that aren't currently quite wet enough to be called wetlands and or had some type of prior drainage ditching. 

We see a lot of ditching in the central part of North Dakota being conducted back in the '60s, '70s, early '80s prior to the Food Security Act rules coming out. So any of those old ditches that were constructed prior to the 1985 regulation basically kind of grandfathered in as typically non-wetland areas. And those are great spots to restore wetlands simply by plugging some of those old ditches. Or there's certainly some other options to look at doing some excavations, and we can look at options depending on the relief of a site or other factors. So if you're interested, getting a map and getting that to me somehow or somebody else in the group is step number one. If we come up with a plan, that landowner would be willing to actually enroll, so we come up with an acreage and a likely percentage of area that would be eligible for credit. We're putting together a bank site plan, the maps, and some of the legal mumble jumble, for lack of a better term, that needs to go to NRCS for approvals. And along with that comes a conservation easement on the ground. So it's a 99-year easement held enforced by NDAM, but has some restrictions to not crop the land and to keep the area wetland under the specifics of a bank site plan. Usually a berm or a ditch plug has to be in place through the life of the easment.

[13:44] Emmery: So it can't be cropped. Does that mean I can't use it for hay ground or some livestock potentially?

[13:50] Matt: You can use mitigation sites for grazing or hay land. There are some restrictions on just their frequency or frequency or just timing of some of those activities. But, yeah, they're great. As you may know, haying and grazing are good practices too, good conservation practices when they're done right. So definitely they're not excluded from the easement and can be incorporated into being used as such going forward.

[14:16] Emmery: Is that basically under the guidelines of NRCS or NDAM?

[14:20] Matt: So that would be something that will be worked out during the process in the bank site plan. And there are some covenants in the easement about grazing frequency and hayland. So, typically haying shouldn't be done during certain nesting seasons, and I'm not sure exactly offhand the grazing, some of the terms around amount of cattle on landscape for grazing or anything like that. But that's something that could certainly be worked out. If somebody had questions, I'd be more than happy to look that up and get that answer.

[14:50] Emmery: How do those credits then get sold? Do I, as the seller, get to set the price? Do they go to auction? How does that process work?

[14:58] Matt: Let me preface my answer by saying we haven't sold credits yet in North Dakota through the NDAM's ag wetland trade. But I think, as you know, Emmery and maybe others listening know, South Dakota Farm Bureau has done a similar program under the same set of rules for what's going on seven, eight years now. And there's quite a history there on credit sales in the process, which the North Dakota group anticipates emulating. Anybody who had a site that would be looking to enroll in the program would certainly ask, and we work through that. 

But the spirit of this whole program is to be really a producer driven landowner kind of driven open market. So any landowner can enroll in the program would work with NDAM to more or less let the market drive the credit price. We've seen credit prices increase in South Dakota over the last ten years just a result of commodity prices and land values going up. So we didn't want to have any real strict price ceilings or floors or anything set in NDAM's policy or with the NRCS. So that can be an open market discussion on just deciding what to have credits sell for. In one instance in South Dakota, an individual decided to have an auction for his credits, which was a pretty slick deal, if you ask me, and kind of gave everybody an option to put their highest bid forward, and it went pretty well. So hope that answered that question. It can be done a couple of different ways, but meant to be an open market.

[16:30] Emmery: And then a percentage of those credits could be used to mitigate the seller's own acres.

[16:35] Matt: Yeah, I'm glad you mentioned that. So under the policy for the program, up to 25% of the credits anybody would have from their own bank could be used on your own operation. So it's another incentive if you got some tile projects, some drainage projects coming up, and you've got a good site to do mitigation. Going through a program like this could be a good option to get the credits you need for a drainage project, as well as have some available to sell and fund the whole project and very likely come out ahead in the end.

[17:05] Alisha: So after these credits are sold or signed a contract with you guys, what's the next step? Like, who's in charge of the land? How do taxes work? How does it kind of trickle down once it's all said and done?

[17:20] Matt: Yeah. So I touched on the 99-year easement, which is held by NDAM, the ag group. So hopefully there's some comfort in knowing that it's like-minded producers that are more or less overseeing the entire program. There are options as far as you can sell the land sits under an easement. There's nothing preventing a landowner from selling that to maybe a wildlife interest or an absentee owner. If you want to retain it yourself, there would be somewhat of a tax burden on it. I'm not a tax expert to say much more than that, but certainly be some expected tax burden, as was before. 

And as part of the approval process for any bank site, a long term manager is identified for the site. And that's just somebody that's periodically checking on the site to make sure it's meeting the covenants of the evening not being farmed, being maintained as a wetland. And certain things may come up where as is kind of any piece of ground. Maybe weed spraying would be needed periodically and that long term manager would have access to some funds that are allocated as part of each credit transaction process for those specific practices. So whether the long term manager is identified as the landowner or a local conservation district or there could be other options, there would be some funds available to do those inspections and potential weed spraying or any other management practices that may be needed at the site long term. There's the website that I would direct people to if interested from either side as a buyer or a landowner. Ndagwetlandtrade.com, there's some more information on the website there that would be good resources if anybody's interested or reach out to me direct.

[19:05] Emmery: And we'll link that in the show notes. And Matt's been great to work with. Send him either that wetland determination map that you can get from NRCS or just that FSA map and shoot that in an email. And he's been very responsive and gives a pretty good idea right away on what they have available and the potential opportunity there as far as the buyers go. Have you had a lot of people contact interested in buying credits, Matt?

[19:34] Matt: Yes, in fact, maybe as to be expected, a lot more people interested in the buying side of the program than enrolling in the program, which is fine. At some point here we'll be able to actually sell some of those credits and hopefully it just takes off from there.

[19:50] Emmery: Well, and of course, a lot of us don't like Swampbuster. But if you're going to like you said, Matt, if you're going to partake in the USDA program and purchase crop insurance, there's certain rules that you have to abide by. And if you're going to play that game, then this is a tool to be able to just manage your land and manage your opportunities and so really appreciative of you and the work that you've done to make this a good opportunity for our farmers.

[20:13] Matt: Well, thank you. That feeling is certainly mutual.

[Straight Talk stinger]

[20:18] Alisha: You've been listening to Straight Talk with NDFB. To learn more about NDFB, you can visit us at www.ndfb.org.

[Straight Talk theme]