CLIMATE:

Farm groups prevail as House bill puts USDA in charge of ag offsets

The Agriculture Department will have the lead role in overseeing agriculture offsets under the House climate bill, a major victory for farm groups that pushed lawmakers to take the lead away from U.S. EPA and a defeat for environmental groups that fear the agriculture agency may be too lax in oversight.

As part of the agreement reached last night, House Energy and Commerce Chairman Henry Waxman (D-Calif.) agreed to shift agency oversight for carbon offset programs, projects that would indirectly cut emissions of heat-trapping gases.

The deal puts USDA in charge of programs that would pay farmers and other landowners to conduct the environmentally friendly projects. Waxman said he would seek guidance from the Obama administration to figure out "an appropriate role" for EPA to play in the program.

The offset programs and the federal officials in charge of them could play a significant role in shaping implementation of the massive climate plan on the American landscape. The domestic offset market will be worth $4 billion per year through 2030, according to an EPA analysis released yesterday.

The agreement clears what had been a major sticking point in negotiations on the bill and sides with the position agriculture and farmland conservation groups have been pushing heavily for the past few weeks.

Originally, Waxman's committee put EPA in charge of the program, with the option to work with other federal agencies. But House Agriculture Chairman Collin Peterson (D-Minn.) insisted on giving oversight of the program to USDA -- an issue that both chairmen said proved to be a major sticking point over the past several weeks of negotiations.

"We had a disagreement about who ought to run the program," Waxman told reporters yesterday.

"A lot of the work we did was getting this offset program so it would work," Peterson said last night, after announcing the deal. "Energy and Commerce and EPA did not get what farmers do."

Peterson has insisted that USDA has a better understanding of farmland issues and is better equipped to implement the program, with tens of thousands of employees already involved in monitoring farmland conservation and researchers already studying carbon sequestration.

"That is why we held so firm on that," Peterson told reporters last night. "We really believe that the ag people are the ones that know the most about this and are the ones that should do this."

Waxman concedes

The question of how to deal with offsets has been a controversial one. The bill allows regulated industries that cannot meet the greenhouse gas reductions at the smokestack to buy offset credits by investing in green energy or greenhouse gas reduction projects. The provision could significantly reduce compliance costs for some industries.

It could also be a boon to farmers and other landowners who plant extra trees to absorb carbon dioxide, install methane capture systems over animal waste lagoons or practice no-till farming to store carbon in the soil.

Waxman originally wanted to give oversight of the program to EPA, a setup that won the backing of many environmental groups. Environmental groups have said EPA -- with its strong regulatory and scientific focus -- is best suited for the task of carbon oversight. Those advocates argue that USDA is not a regulatory agency and is unlikely to crack down on questionable offset projects. They say EPA is more likely to stand up against fraud.

In announcing the deal last night, Waxman said that although they disagreed at first, his staff agreed to the compromise plan over the weekend. He said the offset program would still be sound under USDA's oversight.

"The offset program is very important because it will allow reductions in CO2 in the most cost-effective way," Waxman said. "To be sure there are genuine offsets."

Waxman said yesterday that he has not spoken to environmentalists about the USDA offset oversight, but he said staff have been keeping them informed. He didn't think this agreement, or others reached with Peterson, would siphon away green groups' support. "I think we will hold the environmentalists," Waxman said.

Anna Aurilio, director of the Washington office of the group Environment America, said that while she had not seen the details, she believes EPA should play a major role in ensuring that agricultural offsets indeed help reduce emissions.

"Our basic take is whatever deal happens on this bill, EPA has to be in charge of the pollution reductions, EPA has to be the bottom line to making sure we reduce pollution to the levels the science says are necessary to avoid catastrophic climate change," she said. "A ton of offsets must represent a ton of avoided emissions."

Dan Weiss, the director of climate strategy for the liberal Center for American Progress, said "the critical thing is to make sure offsets are verifiable, additional and permanent and that EPA has an important role to play to ensure that happens."

A victory for farm groups

Farm groups won the day yesterday with their insistence that USDA should oversee the program. Farmers were skittish about giving the program to EPA, an agency that Peterson has called "foolish" and "ideological," and argued USDA was better situated to implement the program.

"We think USDA is better positioned ... a lot of farmers are really comfortable with USDA, they work with the local Farm Service Agency offices quite a bit," said Liz Friedlander of the National Farmers Union. "USDA has offices in nearly every county, while EPA does not even have an office in every state -- it is much more accessible to producers."

The farmers union and other major farm groups put USDA oversight as one of their top priorities when listing their concerns over the bill to the House Agriculture Committee and House Speaker Nancy Pelosi (D-Calif.). The NFU has long been an advocate of cap-and-trade programs and started its own registry of farmers to participate in voluntary offset markets on the Chicago Climate Exchange. But the group said last week it would oppose the Waxman bill unless USDA was given a greater oversight role.

"There's a distrust that a lot of people in the farm country have about the role of EPA," Waxman told reporters last week. "And we've got to figure out a way so that everyone feels comfortable with the definition of an offset, the scientific validity of it, and the authenticity of it so the whole program will work."

The climate bill considered briefly in the Senate last year included language requiring that the same project could be verified by three separate investigators.

The issue of what agency should oversee the program is more than just a jurisdictional tug-of-war for agriculture and farmland conservation groups. They argue that with its extensive network of agents in the field that already have farmers' trust, USDA is set up to launch offset programs.

USDA distributes billions of dollars each year in payments or cost-share assistance for landowners to restore wetlands, idle fields, install stream buffers, enrich wildlife habitat or manage waste. And the agency created two special climate offices that have begun their own programs, such as an online calculator for farmers to figure potential carbon sequestration benefits.

Some advocates for farmland conservation programs say that USDA's work in the field and its relationships with farmers could make the difference in actually getting a carbon offset program off the ground.

"If the objective is to sequester carbon and turn around the situation on the planet, if that is the objective ... then we have to get practical, and one of the practical things is to encourage that behavior," said Dennis Nuxoll, director of government relations for American Farmland Trust, a nonprofit that advocates for farmland-protection programs. "We have got to have people that farmers trust, in all honesty, that is the U.S. Department of Agriculture, not the Environmental Protection Agency."

Nuxoll added: "If the objective is to sequester as much carbon as quickly as we possibly can, we need to let USDA deal with this and not make the perfect the enemy of the good."

USDA manpower

As far as manpower in farm states, USDA far exceeds EPA. The agency already has more than 25,000 employees with years of experience working out in the field with millions of landowners to implement different conservation and commodity programs.

Meanwhile, EPA's staffing is much smaller. EPA's work force numbers about 17,000 total employees, almost a third of whom are in the agency headquarters in Washington, D.C.

In his testimony on the climate bill earlier this month, Agriculture Secretary Tom Vilsack said that USDA's "extensive networks and infrastructure" to implement commodity and conservation programs could help lay the groundwork for carbon offset programs.

"Our experience with these programs provides a platform that could be used to help bring an offsets program to scale," Vilsack told the House Agriculture Committee. "In particular, existing USDA programs and systems could be used to bolster the greenhouse gas mitigation market."

The Natural Resources Conservation Service, the branch of USDA that oversees most farmland conservation programs, has offices in every state with about 11,000 employees out in the field. The field offices help landowners develop conservation plans and qualify for various federal programs that assist efforts to improve the environmental quality on farm and ranchland. NRCS has another 450 employees at USDA headquarters in Washington and the agency's research facility in Maryland.

And the Farm Service Agency -- which oversees the nation's largest land retirement program along with various crop subsidy programs -- has about 15,000 employees, 540 of whom are based in Washington, D.C., according to an agency spokesman.

"EPA is not going to hire another 30,000 to 40,000 employees, I don't think," said American Farmland Trust's Nuxoll. "It would take them a very long time to get up to speed and get enough personnel on the ground. ... [I]t is very clear to me that USDA is going to run this program day to day, no matter what."

A spotty record

But USDA's record of overseeing and implementing the programs is not spotless. Congressional and federal investigators have found major flaws with distribution and oversight of conservation contracts in three separate reports in the past year.

In particular, the department's conservation agency "routinely ignored" compliance standards when giving out wetlands and wildlife grants, an investigator for the House Agriculture Committee found. The Government Accountability Office said there is potential for duplicative payments with the conservation programs, allowing the agency to release billions of dollars in payments to landowners who do not deserve them.

Another assessment from the USDA inspector general found shoddy accounting at the Natural Resources Conservation Service. The agency was unable to provide sufficient information on transactions and account balances.

The new head of the NRCS, Dave White, has pledged to clean up the program and "move aggressively" to review all agency transactions. He has implemented a massive corrective action plan.

Despite those concerns, farm groups insist the agency is better equipped, since it at least has years of experience in trying to set up similar programs.

Senior reporters Darren Samuelsohn and Ben Geman contributed.