Biden signs historic Inflation Reduction Act into law

President Joe Biden signed the Inflation Reduction Act (IRA) into law on Aug. 16 with the goal of lowering prescription drug costs, funding new energy, climate and health care initiatives and reducing budget deficits. The Biden administration aims to reduce carbon emissions by roughly 40 percent by 2030 with the nearly $739 billion spending package.

The Senate passed the bill on Aug. 7, along a party-line 50-50 vote requiring Vice President Kamala Harris to cast the tie-breaking vote. The House passed the bill on Aug. 12, also along party lines, 220-207. 

Agriculture allocation

The IRA includes nearly $40 billion for agriculture, forestry and rural development. This includes nearly $20 billion in funding for the Agricultural Conservation Easement Program (ACEP), Conservation Stewardship Program (CSP), Environmental Quality Incentives Program (EQIP) and Regional Conservation Partnership Program (RCPP). 

The spending package provides $4 billion to mitigate the impacts of drought in Western states, with priority given to the Colorado River Basin and other basins experiencing long-term drought. 

Wyoming Farm Bureau Federation Executive Vice President Ken Hamilton says the bill raises a few concerns for Western producers.

“We are concerned about the impact the whole program will have for the U.S. budget – the cost is concerning,” he says. 

“There are provisions in there that do have some support for ag,” he adds. “I think a lot of these ag programs depend on where the ag committee shakes out as far as prices.”

Conservation funding 

The IRA would provide about $19.5 billion for agricultural conservation efforts. The bill will add approximately $18.05 billion in additional funding for existing farm bill working lands conservation programs through Fiscal Year (FY) 2026 and extend the program’s authorities through FY 2031. 

U.S. Department of Agriculture (USDA) is expecting to be able to spend the additional IRA money through FY 2026, but not beyond FY 2031. 

Conversations will continue on how the IRA funding fits into the 2023 Farm Bill.

IRA language related to these four programs would extend their authorizations through 2031, as well as extend authorization of the Conservation Reserve Program, though it was not provided additional funding in the bill. 

EQIP was appropriated $8.45 billion, RCPP was appropriated $4.95 billion, CSP was appropriated $3.25 billion and ACEP was appropriated $1.40 billion. The IRA has invested 9.35 times over the amount of funding previously included in the 2018 Farm Bill for the four working lands programs in the next four years.

An additional $1 billion in funding for conservation technical assistance, $300 million for a carbon sequestration and greenhouse gas emissions quantification program and $100 million in funding for administrative expenses will also be included in the IRA.

Drought management

Hamilton says drought mitigation is a key concern for Western producers.

“For folks in the West, the whole issue about Western drought mitigation is probably going to be a pretty big deal,” says Hamilton. “Particularly, the focus on the Colorado River will impact us.”

The IRA provides $4 billion in FY 2022 through FY 2026 for grants, contracts or financial assistance agreements to mitigate the impacts of drought in reclamation states, with priority given to the Colorado River Basin and other basins experiencing comparable levels of long-term drought. 

Funding may also go toward compensation for a temporary or multiyear voluntary reduction in diversion of water or consumptive water use, voluntary system conservation projects or ecosystem and habitat restoration projects.

USDA funding

The IRA includes debt relief for distressed borrowers of direct or guaranteed loans administered by the Farm Service Agency. It also includes additional assistance for undeserved farmers and ranchers.

Funding includes $3.1 billion to provide payments for the cost of loans or loan modifications. Approximately $125 million is provided for USDA technical assistance and customer service support for underserved farmers, ranchers and foresters, with an additional $250 million in grants and loans for eligible entities to improve land access.   

The IRA appropriated the USDA a budget of $10 million to create an equity commission. This includes $2.2 billion for financial assistance to farmers, ranchers or forestland owners determined to have experienced discrimination in a USDA lending program before Jan. 1, 2021 and $24 million for administrative costs associated with carrying out this section of the bill.

USDA is also appropriated $250 million to support and supplement agricultural research, education and Extension. 

As this bill continues to move forward, questions will be raised concerning how the IRA will affect the 2023 Farm Bill budget. 

Kaitlyn Root is an editor for the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.