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The Illinois Nutrient Loss Reduction podcast explores efforts to reduce nutrients in Illinois waterways from agricultural runoff to municipal wastewater with host Todd Gleason and producers Rachel Curry, Nicole Haverback and Luke Zwilling with University of Illinois Extension.
Read the blog at extension.illinois.edu/nlr/blog.
Episode 49 | The Inflation Reduction Act
00:00:05:15 - 00:00:38:06
Todd Gleason
This is episode 49 of the Illinois Nutrient Loss Reduction Strategy podcast: he Inflation Reduction Act. I’m University of Illinois Extension's Todd Gleason. Democrats, in a bipartisan way, meaning without any support from Republicans, passed legislation during the summer of 2022, which included $18 billion with a B dollars in conservation funding. President Joe Biden signed it into law. This extra money is to be spent on existing USDA conservation programs over a ten year period.
00:00:38:09 - 00:00:58:01
Todd Gleason
Today, we'll explore which programs will benefit and how this extra funding might complicate the continued existence of them over time. We'll start with which programs are eligible for the extra dollars. I spoke with Illinois state conservationist Ivan Dozier not long after the inflation Reduction Act became law. He's since retired.
00:00:58:06 - 00:01:10:22
Ivan Dozier
Well, I think it's always exciting when we see major pieces of legislation like this that includes conservation and conservation, in names of programs that we all recognize.
00:01:10:22 - 00:01:31:23
Ivan Dozier
And we know that we have a lot of interest in, conservation from our Illinois farmers and, and just, you know, the opportunity to see we've known that they can do a lot of things, to help on a on a larger scale. So to see this come out of, major legislation like this, agriculture, most of our programs, our conservation programs, they're voluntary.
00:01:31:23 - 00:01:53:22
Ivan Dozier
And the dollars go directly to the farmers to help them, put conservation on the land. And so it's through programs like the Environmental Quality Incentives Program, the Conservation Stewardship Program, the regional Conservation Partnership Program, and then also our agricultural Conservation easement program. So it's four solid programs that have been around for a long time. Farmers are familiar.
00:01:53:24 - 00:02:09:12
Ivan Dozier
Sign ups are continuous, so we don't even have to wait on all the details if people are interested. Doesn't, doesn't take any kind of a risk, to come in, say you're interested in the programs and, get your name on the list, and, hopefully we can, we can make a difference.
00:02:09:14 - 00:02:14:10
Todd Gleason
These are cost share programs that help producers install what kinds of things?
00:02:14:12 - 00:02:41:23
Ivan Dozier
That's right. So, the environmental quality incentives program, we used to call it our fix it program. It's the thing that, helps those farmers that have existing, resource issues, whether it be erosion, or nutrient management, even, livestock facilities. And then the stewardship program, the conservation stewardship program is there for farmers that have been practicing conservation, and they're going to continue to do those things and add a few more.
00:02:41:25 - 00:03:11:00
Ivan Dozier
And, then the Regional Conservation Partnership program, there's where our partners get into the act, and they help us target, these dollars to specific areas or specific resources. So a really good thing for partners when you can leverage some of these funds. And then the easement programs, they are longer term, returning lands to wetlands, returning, grasslands and then also just preserving farmland, from encroachment, you know, from, urban sprawl.
00:03:11:03 - 00:03:18:27
Ivan Dozier
So all good acting programs that have been around for a while, our people are ready, ready to hit the ground if people come in and have questions about them.
00:03:18:29 - 00:03:30:10
Todd Gleason
Clearly, farmers, landowners will understand how the programs work mostly, and that they are doing some cost sharing with the government in some cases, and they get a benefit from that.
00:03:30:13 - 00:03:33:24
Todd Gleason
What does the taxpayer do as a benefit?
00:03:33:26 - 00:04:03:29
Ivan Dozier
You know, that's an excellent question. And that's why we always say that, when you do conservation practices that help give you cleaner air, cleaner water, balanced habitat for wildlife, there's where the entire public benefits. And that's why it's in legislation. Like this, when we look at, really, literally global issues that agriculture can have, not only an impact on the ag industry, but a greater impact beyond that, that that helps the general public.
00:04:04:02 - 00:04:09:08
Todd Gleason
Is there a backlog of folks waiting for some of these funds that this will help declare?
00:04:09:11 - 00:04:26:21
Ivan Dozier
I wish I could tell you that there wasn't a backlog, but there is. There's never enough funds to go around. We always say, to to have a real impact, whether it's, the hypoxic zone or even if we talk about climate, we know the practices that have a positive impact.
00:04:26:23 - 00:04:42:01
Ivan Dozier
And we know they work. We just need more of them and a significant amount more. And the farmers in Illinois, the fact that we have a a backlog shows that they're interested. They want to do things. And it also demonstrates that, these funds will be, wisely used.
00:04:42:04 - 00:04:53:13
Todd Gleason
Sometimes when there's a flush of cash that comes into any kind of organization, or to a particular set of taxpayers, that means that sometime in the future they may be in trouble.
00:04:53:13 - 00:05:07:09
Todd Gleason
The 2023 farm bill is coming up. These conservation programs are part of it. Is there worry that this will offset dollars that would have been allocated in that particular piece of legislation anyway?
00:05:07:12 - 00:05:17:17
Ivan Dozier
So I think that's always a thing. Anytime you talk about, legislation that would come up, the farm bill is up. In 2023, September of 2023.
00:05:17:23 - 00:05:38:06
Ivan Dozier
So having these existing programs right now so we can hit the ground running, I think is good. And then, yes, definitely, I think there's going to be a lot of discussion, as to how these dollars will fit into maybe new programs that are customized, more directly, to achieve these goals. I definitely think they'll be part of that discussion next year.
00:05:38:09 - 00:06:05:13
Todd Gleason
That was Illinois state conservationist Ivan Dozier recorded during the summer of 2022. He has since retired from the Illinois Natural Resources Conservation Services. Dozier at the time suggested that the $18 billion in conservation funding included in the Inflation Reduction Act might spawn discussions of new programing as Congress begins the task of creating the recurring legislation referred to generically as the farm Bill.
00:06:05:15 - 00:06:24:03
Todd Gleason
Maybe, maybe, even probably. But if that is the case, it's likely, as you'll hear from University of Illinois Agricultural Policy specialist Jonathan Coppess, it will come at an offsetting cost. He'll explain that, too, in a moment. But first, he has this quick reminder of how bills become laws.
00:06:24:05 - 00:06:34:29
Jonathan Coppess
If we, if we think about our, schoolhouse Rock themed, path to a farm bill, we know we got to start in the committees, House and Senate ag committees.
00:06:35:02 - 00:06:52:19
Jonathan Coppess
What what schoolhouse Rock doesn't tell you is that the CBO baseline is a huge driver of things. And so we're waiting for that information to come out and be updated if we get out of committee, we're on the floor. If we get passed the floor, we’re in conference. And if that all works, then eventually we get back through the floors and on to the president.
00:06:52:22 - 00:07:25:27
Todd Gleason
The schoolhouse Rock does not talk about the Congressional Budget Office or CBO baselines. In the end, it is simple math, but hard to get to. CBO calculates how much is likely to be spent under the current law, and compares that to how much the proposed changes, if enacted, would cost over time. That's not new, however. Jonathan Copper says there are some unique things surrounding the 2023 farm Bill debate, including the conservation spending and the Inflation Reduction Act and the ongoing battle over the debt ceiling.
00:07:25:27 - 00:07:54:02
Jonathan Coppess
From a farm bill perspective, it is really, a potential disruptive aspect that we don't know how the consequences of it will will play out. So even if they raise the debt ceiling, if we look at the 2011 debate, that got derailed also by a debt ceiling, dispute, much of the cuts that came out as part of the 2014 farm bill, were result of the debt ceiling negotiations.
00:07:54:02 - 00:08:10:29
Jonathan Coppess
So it isn't just that we're watching to see if Congress raises the debt ceiling without causing massive economic catastrophe. But whether there are consequences or negotiations produce some sort of, effort to cut spending or drive down some of the programmatic outlays.
00:08:11:00 - 00:08:18:17
Todd Gleason
We've heard these already, but let's go back through the suite of existing conservation programs, which received additional funding under the Inflation Reduction Act.
00:08:18:19 - 00:08:34:14
Todd Gleason
Some in Congress could use the IRA funding as an excuse to eliminate line items in the 2023 farm bill altogether, or to reallocate the funds. We'll get back to that. First, Coppess adds some details to each of the programs.
00:08:34:14 - 00:08:44:11
Jonathan Coppess
The big ticket item is the conservation Reserve program, running it roughly 21, 22 million acres, and about $2 billion a year in the out years.
00:08:44:14 - 00:09:07:13
Jonathan Coppess
It is followed in size by the Environmental Quality Incentives Program, of course. CRP. Sorry, I should mention the CRP, of course. Is the land retirement? Temporary retirement, long term ten year contract to put acreage under conservation cover rather than production. EQIP is the Environmental Quality Incentives Program. That is, the direct cost share assistance to the farmer for adopting, conservation practices on that farm.
00:09:07:13 - 00:09:33:22
Jonathan Coppess
So this goes for everything from, you know, adopting cover crops to, improving your manure management. If you have a livestock operation or to establishing fences and, dealing with irrigation challenges and so forth. So that's the second largest program. That's a working lands conservation program. So that assistance goes to farmers who are still in production as compared to CRP, which takes land out of production, and then CSP, the Conservation Stewardship program.
00:09:33:22 - 00:09:57:22
Jonathan Coppess
This is the five year annual contract to to qualify for the program, you have to be, meeting certain levels of conservation, and then you're going to agree over the life of that five year contract to improve and expand upon that conservation across your entire farm. And so, again, this is an annual contract payment for conservation on working lands as well.
00:09:57:28 - 00:10:21:08
Jonathan Coppess
ACEP is the agricultural conservation easement program. So these are conservation easements placed on land that run with that land or typically long term or permanent changes. So this is often for things like, maintaining or reestablishing a wetland on the farm or some of the farmland protection, policies that help put easements on farmland to, protect it from developmental pressures.
00:10:21:08 - 00:10:52:06
Jonathan Coppess
So you think, urban sprawl, suburban sprawl, protections. And then the Regional Conservation Partnership program was created in the 2014 farm bill. It works across these types of policies and programmatic issues, and it combines, public private funding. So, so private partners come in and help fund conservation on a regional scale. So maybe we're we're looking at, you know, an Upper Mississippi River basin effort, or a Great Lakes effort or out west, the Colorado River, conservation effort.
00:10:52:06 - 00:11:16:22
Jonathan Coppess
That would be on a regional basis that we can get private partnership funding to help both implement the program, but also help fund the conservation practices on the farm. And so, roughly, when we look into the out years, we're we're topping $6 billion a year in conservation. As will often be said at hearings on this, this is this is understood to be the single largest federal investment in conservation on private lands.
00:11:16:24 - 00:11:27:16
Jonathan Coppess
So, this program, these programs typically have a lot of support. But the challenge, again, being the baseline, issues and and increasing anything there.
00:11:27:19 - 00:11:30:27
Todd Gleason
This is where the Inflation Reduction Act comes in.
00:11:31:03 - 00:11:47:13
Jonathan Coppess
So in August of 2022, Congress passed through budget reconciliation procedures, which allows them to bypass, some of the rules, such as the Senate's filibuster and 60 vote threshold requirements that really can bog down legislation.
00:11:47:16 - 00:12:13:17
Jonathan Coppess
That means it passed on a party line basis and signed into law in August. It was a massive bill, with funding all crossed all across, different areas. You know, this this is there's a lot of focus on climate, health care and some tax policy changes. But tucked within this is something very important for the farm bill.
00:12:13:19 - 00:12:42:26
Jonathan Coppess
So for fiscal year 2022 through 2025, the Inflation Reduction Act and this might be offset by year should go to 26. The Inflation Reduction Act appropriated large additional amounts of funding for EQIP, for CSP, for the easement program and the Regional Conservation Partnership program. The total appropriation was exceeded $18 billion over this time frame. This is not baseline funding.
00:12:42:28 - 00:13:17:22
Jonathan Coppess
This was a separate appropriation. So we have these programs. They have permanent funding through the Commodity Credit Corporation. That is baseline. The Inflation Reduction Act provided this additional appropriation is a multi-year appropriation. The authority extends through 2031. So they have time to spend it. But it is not a baseline change. And so CBO will not be considering that in the farm bill baseline, for 2023, looking forward, which means it also is not, you know, part of that baseline negotiation and calculation in the same way.
00:13:17:24 - 00:13:28:05
Jonathan Coppess
So I want to be clear that that this additional funding, exists on top of or in addition to the baseline funds and a farm bill.
00:13:28:06 - 00:13:49:28
Todd Gleason
The $18 billion from the Inflation Reduction Act is a separate pot of money from that which is allocated for the farm bill. However, some in Congress might use that money again as a way to get to different goals, for instance, reducing the debt or finding a different way to allocate those dollars.
00:13:50:01 - 00:14:13:00
Jonathan Coppess
The number one thing we have to know that this means for your farm bill is that this is not baseline money. This is not going to be subject to the baseline, estimates, and it isn't available within that baseline, but it is spending that is out there and is estimated how CBO puts us into its, baseline forecast or how it writes this thing shows this.
00:14:13:00 - 00:14:49:06
Jonathan Coppess
I do not know. But what we see are these amounts. So when you total this up, it actually comes out to probably roughly 15 billion in spending, through 2031. Now for a farm bill, while this money is not within the baseline, it is appropriated dollars that are available. If Congress so chose, you could write legislative text that rescinded some part or all of the appropriated amount, capture that savings as an offset, maybe, and re spend it somewhere else.
00:14:49:06 - 00:15:06:08
Todd Gleason
What's not clear at this point is how the Congressional Budget Office, CBO, will capture the $18, 15 billion in spending over the ten year time period and then potentially reallocated if legislation is put forward, into a five year farm bill.
00:15:06:08 - 00:15:17:06
Jonathan Coppess
So the rough answer to the questions is yes. It's not in the baseline, but it is additional funding that may be available to be rescinded or cut as an offset.
00:15:17:08 - 00:15:29:21
Jonathan Coppess
But there's a whole lot of unknown about how exactly that would work, how much you can, how much savings you can get as an offset, and how it will then factor into the baseline, scoring analysis that CBO will do.
00:15:29:23 - 00:15:36:08
Todd Gleason
Here's one way that this could all play out. And remember, this is just a total guess on Jonathan Coppess’ part.
00:15:36:08 - 00:15:53:26
Jonathan Coppess
So you can just imagine that somebody looking at this says, oh, there's a $15 billion offset sitting there. All you gotta do is rescind the so I want to create a new program and title one for example. And I want to it's going to cost me $1 billion a year. So I'll just cut I.R.A. money and and repurpose it for that program.
00:15:53:28 - 00:16:14:02
Jonathan Coppess
Of course, if somebody is thinking that somebody else is thinking about using for something else, and so you can see this being spent 4 or 5 and six times over if you're not careful. So it kind of it's kind of, almost a little bit of a trap in that sense that, you know, it can over it can feed in over expectation of being able to use it for an offset.
00:16:14:04 - 00:16:29:13
Jonathan Coppess
To your question, it gets even more dicey if somebody is looking at this and saying, well, conservation has got all this additional funding so EQIP doesn't need the the 2 billion it's authorized to have. Now let's go cut EQIP in the baseline. That's a ten year save. And they can deal with it through this.
00:16:29:13 - 00:16:32:02
Todd Gleason
They could but it has an additional consequence.
00:16:32:07 - 00:17:04:10
Jonathan Coppess
That's absolutely correct. Because the problem under the baseline statute and in the books these are permanent funded matters. So what you change in the baseline runs permanently. So if you cut EQIP it will then be incorporated over. You know they expect the life of that program. And so it could become a much larger reduction if somebody went after, say, the the equip baseline dollars to offset something else because they think this this inflation reduction Act fills it up.
00:17:04:12 - 00:17:23:17
Jonathan Coppess
I think it's more likely that the political pressure is on the inflation reduction Act funding itself than it would be under the baseline of conservation programs. But look, in our current political environment, you know, there's a whole lot of possibilities here that, we don't know about. And it remains to be seen.
00:17:23:19 - 00:17:36:12
Todd Gleason
Given all of that, the conservation funding included in the Inflation Reduction Act of the fight battle over the debt ceiling and Congress this year, and the farm bill, which is in play right now.
00:17:36:14 - 00:17:43:22
Todd Gleason
Jonathan Coppess is still hopeful because he says conservation is something that everyone supports.
00:17:43:26 - 00:18:07:29
Jonathan Coppess
Conservation programs and policies have largely been bipartisan. They've been out of the partisan fray for the most part. They're strongly supported across, well, across farming and farm interest, are strongly supported outside of farming. They make for a really valuable, sort of political bridge to those who are not in farming to understand some of the things we're doing to help farmers.
00:18:08:01 - 00:18:32:29
Jonathan Coppess
And of course, they help everybody. Yeah. If clean water is a benefit for everybody, reducing soil erosion benefits both the farmers. And, you know, we don't have to clean that the soils out of rivers and waterways. So it would be really unfortunate. I think, if conservation policy became much more partizan because of this, this situation. So it's something to watch for.
00:18:33:01 - 00:18:39:13
Jonathan Coppess
And watch out for. And hopefully we don't see degenerate further.
00:18:39:21 - 00:19:02:29
Todd Gleason
Jonathan Coppess is an agricultural policy specialist on the Urbana-Champaign campus of the University of Illinois in the College of Agricultural Consumer and Environmental Sciences. You've been listening to episode 49 of the Illinois Nutrient Loss Reduction Strategy podcast, the Inflation reduction Act. Our program was produced in cooperation with University of Illinois Extension.
00:19:02:29 - 00:19:10:03
Todd Gleason
Special thanks go to both Nicole Haverback and Rachel Curry. I'm University of Illinois Extension's Todd Gleason.