In 1986, President Ronald Reagan famously quipped “The nine most terrifying words in the English language are: I’m from the government, and I’m here to help.” Thirty-five years later, his admonition against overreliance on the federal government seems to have gone by the wayside, but the sentiment that government intervention should be viewed warily has never been truer. Case in point, the Biden administration’s call for the creation of a carbon bank within the USDA to combat climate change.
Premise of a carbon bank
The idea of a carbon bank for agriculture is a novel one, but not entirely new. Progressives and climate activists have been ramping up scrutiny on agriculture emissions for several years now and looking at agriculture as an untapped resource in the battle against climate change. Recent calls for a Green New Deal and the use of buzz words like “regenerative agriculture” have been dismissed as far-fetched and non-sensical. However, the new administration and Congress are bringing these ideas to the forefront, beginning with the establishment of a carbon bank.
The premise of a carbon bank is simple. The USDA would pay farmers a fixed amount per ton for sequestering carbon in soil, creating carbon credits. The USDA would then sell those credits to corporations that want to offset their carbon emissions.
The ramifications of the federal government establishing a carbon bank are not simple. For starters, The USDA has always been a far-ranging agency involved in many areas. The 1862 congressional act establishing the agency ensured that when it stated the duties of which shall be: “to acquire and to diffuse among the people of the United States useful information on subjects connected with agriculture in the most general and comprehensive sense of that word, and to procure, propagate, and distribute among the people new and valuable seeds and plants.”
Despite that, the agency has become largely bipartisan and focused on agriculture production. The new administration sees the USDA quite differently and is embracing the comprehensive nature of the agency to use it for other purposes.
A presidential transition memo sheds light on the topic. Authored by several former environmental policy advisors under President Obama, including the current deputy chief of staff for policy at USDA, the memo clearly states how the Biden administration views the new role for the agency: “While USDA has historically not received the sustained political attention of other agencies that play a role in climate policy, the department’s national footprint, broad loan and grantmaking authorities, and unrivaled ability to influence decision-making in rural America should make it a lynchpin of the next Administration’s climate strategy.”
President Biden affirmed the memo’s position when he recently said that he sees “farmers making American agriculture first in the world to achieve net-zero emissions and gaining new sources of income in the process.”
By new income, President Biden was referring to the establishment of a carbon bank. Both the president and the transition memo are short on details for how carbon would be sequestered, and how farmers would be incentivized to do so. The transition memo, entitled Climate 21 Project, suggests expansion of the Conservation Reserve Program and the Conservation Stewardship Program. Another target area would be crop insurance and using the nearly ubiquitous government program to create discount rates based on conservation practices and emissions.
Authorization and funding
Previous attempts to create similar concepts such as a carbon bank have failed because Congress was not willing to create enabling legislation and provide funding. The Biden administration has a plan to circumvent those pesky details. The transition memo once again informs us of its intent: “While the U.S. Department of Agriculture (USDA) has not historically been at the center of the public conversation on federal climate policy, the Department has enormous and underappreciated discretionary financial resources. . .”
By financial resources, the memo goes on to clarify that the Credit Commodity Corporation would serve as the primary source of funding for these endeavors. The CCC was established in the 1930s, but was minimally used after WWII. In 2010, Republicans eliminated funding for the CCC, and it was Republicans who reauthorized funding under the Trump administration to offset trade war impacts on agriculture. The appropriation for the CCC is now $30 billion and largely discretionary under the direction of the secretary of agriculture.
USDA Secretary Tom Vilsack is no stranger to USDA, having served as secretary of the agency the entirety of the Obama administration. During his confirmation hearings, Secretary Vilsack noted that CCC funding could be repurposed right away to aid carbon sequestration efforts and alluded to the ability to set up a carbon bank without legislation or congressional approval. The ranking member of the Senate Agriculture Committee, Sen. John Boozman (R-AR), disagreed with that assertion and believes enabling legislation is necessary to create a carbon bank.
The Democratic leadership in the House seems to be in lockstep with the administration on whether legislation would be necessary to create a carbon bank. The new Chairman of the House Agriculture Committee, Rep. David Scott (D-GA), expressed that his first public committee hearing will be on the authority to establish a carbon bank without legislation.
Unanswered Questions
One of the aspects about allowing the creation of a carbon bank without legislation is the lack of deliberation that will provide answers to numerous questions about the effects of the USDA establishing a government run carbon bank. There are a number of considerations ranging from the impact on existing, private sector carbon marketplaces to the eventual size and scope of a federal carbon market. Many are speculating on whether this is the beginning of a federal cap and trade program that Congress has thus far rejected.
And the biggest question undergirding the entire conversation is how this would affect farming behavior and practices, something that seems to be entirely lost in the focus on climate change policy. That is the crux of the problem. Whether the USDA should be the epicenter of climate policy seems like a debate that our representatives and stakeholders should have rather than a foregone conclusion reached by the executive branch.
The transition memo explicitly mentions more than once the USDA has historically been an apolitical agency. Why change that now? As one of the few refuges from political rancor, the USDA generally receives high marks for carrying out its mission to promote agriculture production, but the Biden administration wants to turn that on its head because of the latitude given to the agency to carry out its mission, both in funding and policy choices. Every good leader knows that when you stray too far from your core competencies, the fundamentals begin to falter.
More Deliberation
As another prudent president once noted, “farming looks mighty easy when your plow is a pencil, and you’re a thousand miles from the corn field.” Both Reagan and Dwight D. Eisenhower understood that Washington often conjures up grand schemes that have little resemblance to reality, especially when it comes to agriculture policy.
Congress should not abdicate its authority on this issue and at the very least should be concerned the USDA is quickly being reconstructed as the “Department of Climate” beginning with the unilateral creation of a carbon bank.
Article Written By Eric Wareham
Eric Wareham is vice president of government affairs for the Western Equipment Dealers Association. He is a graduate of the Willamette University College of Law and Augusta State University. Eric may be reached by writing to ewareham@westerneda.com.
