On August 16, 2022, President Biden officially signed the $739 billion spending package known as the Inflation Reduction Act (“IRA”) into law. One of the primary goals of the IRA is to address climate change, with a specific focus on cutting greenhouse gas emissions and battling the impacts of drought in the American West. Many of the financial incentives and other funding measures incorporated into the IRA are aimed at agriculture, including $18 billion for four United States Department of Agriculture (“USDA”) conservation programs.
The following is an overview of the environmental measures of the IRA that are likely to impact agriculture in the United States.
Conservation Programs
The IRA will provide billions of dollars in funding to four voluntary agriculture conservation programs that are primarily implemented by the USDA’s Natural Resource Conservation Service (“NRCS”). Funding for each of the four programs will begin in 2023 and last through 2026. All four of the programs are Farm Bill programs, and it is currently unclear how funding from the IRA will impact the upcoming 2023 Farm Bill.
Environmental Quality Incentives Program
The Environmental Quality Incentives Program (“EQIP”) will receive a total of $8.45 billion under the IRA. That funding will be issued annually in increasing amounts through fiscal year 2026. The IRA states that EQIP proposals that utilize “diet and feed management to reduce enteric methane emissions from ruminants” should be prioritized for funding. H.R. 5376, 117th Cong. § 21001(a)(1)(B)(ii)(II). In other words, EQIP proposals that would limit methane emissions from cattle should be prioritized for IRA funding. Additionally, the IRA states that EQIP funds should be made available for conservation practices that “directly improve soil carbon, reduce nitrogen losses, or reduce, capture, avoid, or sequester carbon dioxide, methane, or nitrous oxide emissions associated with agricultural production.” H.R. 5376, 117th Cong. § 21001(a)(1)(B)(iii). USDA has already announced that it intends to direct some of the funding specifically towards nutrient management activities.
EQIP offers financial and technical assistance to agricultural producers to implement conservation practices on agricultural land. EQIP conservation practices may be aimed at addressing water and air quality, soil health, erosion, wildlife habitat, and ground and surface water conservation. The practices may include activities such as improving irrigation efficiency, restoring pastureland, and improving nutrient or pest management. To participate in EQIP, agricultural producers must apply to NRCS by working with an NRCS agent to develop a proposal outlining the conservation practices that would be implemented. Applications may be submitted year-round, however acceptance is highly competitive. To learn more about EQIP, click here.
Conservation Stewardship Program
Under the IRA, the Conservation Stewardship Program (“CSP”) will receive $3.25 billion dollars to be dispersed in increasing amounts annually from fiscal year 2023 to fiscal year 2026. The IRA conditions the use of those funds so that they are only available for conservation practices that “directly improve soil carbon, reduce nitrogen losses, or reduce, capture, avoid, or sequester carbon dioxide, methane, or nitrous oxide emissions, associated with agricultural production[.]” H.R. 5376, 117th Cong. § 21001(a)(2)(B).
The CSP is one of the largest conservation programs by acreage in the United States. Under the CSP, agricultural producers enter into five-year contracts with NRCS to implement a conservation plan in exchange for annual payments. CSP conservation plans are usually aimed at addressing water quality, soil erosion, biodiversity, pollinator habitat, carbon sequestration, and energy conservation. Applications for CSP may be submitted to NRCS at any time, although like EQIP, acceptance is competitive. To learn more about CSP, click here.
Agricultural Conservation Easement Program
The IRA provides $1.40 billion in funding to the Agricultural Conservation Easement Program (“ACEP”). Funding for the program will be distributed annually in increasing increments through 2026. Specifically, the funding will be made available for easements or interests in land “that will most reduce, capture, avoid, or sequester carbon dioxide, methane, or nitrous oxide emissions associated with land eligible for the [ACEP].” H.R. 5376, 117th Cong. § 21001(a)(3).
Created in 2014, the ACEP is a conservation easement program that incorporates three other easement programs that had previously been separate – the Wetlands Reserve Program, the Grassland Reserve Program, and the Farm and Ranch Lands Protection Program. The ACEP functions by allowing participants to enroll lands into either long-term or permanent easements. Participants may either enroll wetlands, or working farm or ranch lands to protect them from development. In exchange for enrolling lands into the ACEP, landowners will receive payments from NRCS. To learn more about the ACEP, click here.
Regional Conservation Partnership Program
Finally, the Regional Conservation Partnership Program (“RCPP”) will receive $4.95 billion in funding through the IRA. Like the other conservation programs funded under the IRA, funding for the RCPP will be dispersed in increasing amounts annually from fiscal year 2023 through fiscal year 2026. The funding is conditioned on NRCS prioritizing partnership agreements that will “assist agricultural producers and nonindustrial private forestland owners in directly improving soil carbon, reducing nitrogen losses, or reducing, capturing, avoiding, or sequestering carbon dioxide, methane, or nitrous oxide emissions, associated with agricultural production.” H.R. 5376, 117th Cong. § 21001(a)(4)(B)(ii).
Under the RCPP, NRCS partners with state agencies, and non-governmental organizations to provide financial and technical assistance to agricultural producers for conservation activities tailored to address local natural resource concerns. Participants in the RCPP may work with NRCS and its partners to carry out activities such as cover cropping, nutrient management, and watershed improvement. Unlike the conservation programs discussed above, farmers do not apply directly for funding through the RCPP. Instead, entities such as state agencies or nonprofit organizations looking to partner with NRCS will submit project proposals. Once a proposal has been accepted, farmers are able to apply to NRCS to participate in an RCPP project. To learn more about the RCPP, click here.
Drought Relief
Along with funding for conservation programs, the IRA also includes $4 billion in funding for drought relief efforts in the Western United States. Specifically, the funding will go towards projects in the “Reclamation States” which include Arizona, California, Colorado, Idaho, Kansas, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Utah, Washington, and Wyoming. 43 U.S.C. § 391. The $4 billion has been set aside for “grants, contracts, or financial assistance agreements” that will provide for certain activities intended to mitigate the impacts of long-term drought, with priority being given to the Colorado River Basin. H.R. 5376, 117th Cong. § 50233(b). Those activities include:
(1) compensation for a temporary or multiyear voluntary reduction in diversion of water or consumptive water use; (2) voluntary system conservation projects that achieve verifiable reductions in either use of or demand for water supplies or provide environmental benefits in the Lower Basin or Upper Basin of the Colorado River; (3) ecosystem and habitat restoration projects to address issues directly caused by drought in a river basin or inland water body.
H.R. 5376, 117th Cong. § 50233(b). The funding will be administered by the Bureau of Reclamation (“Reclamation”).
Natural Resources & Other Provisions
While the allocations of funding for conservation programs and drought mitigation are the environmental provisions of the IRA most likely to impact agriculture, there are some other provisions worth reviewing.
Millions of dollars have been provided to various agencies – including the Department of Energy, the United States Forest Service and the Environmental Protection Agency – to help facilitate more timely and efficient environmental reviews and permit authorizations. H.R. 5376, 117th Cong. §§ 50301, 60115. Time-intensive environmental reviews and permit processes can slow down project authorization, which can impact agricultural operations in need of a particular permit or funding that requires environmental review.
Additionally, $1.8 billion has been allocated to the United States Forest Service for “hazardous fuels reduction projects on National Forest System land within the wildland-urban interface.” H.R. 5376, 117th Cong. § 23001 (a). The IRA goes on to define a “hazardous fuels reduction project” as “any activity, including the use of prescribed fire, to protection structures and communities from wildfire that is carried out on National Forest System land.” H.R. 5376, 117th Cong. § 23001 (e)(3). Over the past several years, large wildfires have posed a threat to agricultural operations, including grazing activities on national forest land. Reducing the amount of material that could fuel a wildfire may help to decrease that threat.
Conclusion
Overall, much of the funding granted under the IRA is aimed at addressing the effects of climate change by reducing greenhouse gas emissions and the impacts of drought. By setting aside billions of dollars for conservation programs, Congress has indicated that participation from agricultural producers is important to achieving the IRA’s goals.
To read the text of the IRA, click here.
To read more about the environmental provisions of the IRA, click here.
For more National Agricultural Law Center resources on conservation programs, click here.