Congress once again gives away the farm

Tom Vilsack will once again assume the top spot at the U.S. Department of Agriculture (USDA), after the Senate voted overwhelmingly to support his confirmation. Vilsack previously served as Secretary of Agriculture for all eight years of President Barack Obama’s administration. In light of his track record at the USDA, where he flagrantly disregarded the will of Congress on a key renewable energy matter, it’s troubling that Congress would once again give Vilsack free rein to pursue his own policies and dispense funds without pesky congressional impediments.

The story starts back in 2008, when the Rural Energy for America Program (REAP) was first authorized under the quinquennial Farm Bill. It was intended to encourage the growth of renewable energy systems in rural areas by providing grants and loans for installation of thermal, solar, wind and other green energy sources, along with projects that could increase energy efficiency. Though corn ethanol was originally barred from participating in the REAP, in 2011 the program was extended to this biofuel. Corn ethanol is a problematic fuel in many regards and a mature industry with a guaranteed market—not exactly the underdeveloped energy producers Congress intended the REAP to assist.

Specifically, Secretary Vilsack and the USDA unilaterally changed the regulations governing the REAP, without congressional approval, to include grants and guaranteed loans for corn ethanol infrastructure: blender pumps and storage systems at gas stations to help make higher blends of ethanol more widely available (because ethanol is highly corrosive, it can’t be stored or pumped through conventional gas station systems).

Congress quickly took steps to halt this overreach, voting repeatedly on a bipartisan basis in both chambers to prohibit funds from being used to subsidize blender pumps and the corn ethanol industry, though it wasn’t until the 2014 Farm Bill that a ban finally made it all the way to the president’s desk.

Despite the clear will of Congress on this matter, Vilsack remained intent on using the USDA to boost corn ethanol. In May 2015, he announced $100 million in new funding for blender pumps. Unlike previous funds (a mix of both mandatory and discretionary dollars) that were subject to congressional appropriations and authorization, these funds were completely outside any congressional authority, thanks to the generous Commodity Credit Corporation (CCC).

Taxpayers for Common Sense, an organization that keeps a watchful eye on the CCC, describes the program this way:

Through section 5 of the Commodity Credit Corporation (CCC) Charter Act, adopted in 1948, Congress provided the Secretary nearly limitless power to spend taxpayer dollars to “assist” agriculture. Specifically, Congress allowed the Secretary to support agricultural commodity prices, procure and remove surplus commodities, expand markets, aid in the export of commodities, and administer conservation programs under the authority of the CCC.

The CCC is, in effect, controlled by the U.S. Department of Agriculture (USDA). In 1948, the CCC became a federal corporation within USDA. Everyone from its board of directors – which is made up of the Secretary of Agriculture himself, plus seven other USDA officials – to its own employees are staff with USDA day jobs. The Secretary of Agriculture sits at the CCC’s helm, thus wielding significant power over its direction and use of taxpayer dollars.

The CCC is funded via $100 million in capital stock and an additional $30 billion in permanent borrowing authority straight from the U.S. Treasury that Congress “reimburses” each year under regular appropriations. The funds are primarily intended to fulfill obligations set forth in the Farm Bill, including commodity support programs (Agricultural Risk Coverage and Price Loss Coverage), sugar, dairy, conservation and disaster programs. But the CCC’s charter gives the Secretary of Agriculture broad powers to use these dollars—which are ultimately tax dollars—as they see fit.

Following Secretary Vilsack’s precedent, former Secretary of Agriculture, Sonny Perdue, likewise saw fit to continue using the CCC to subsidize biofuels infrastructure and soon went even further, creating the “Market Facilitation Program” to send billions of dollars to farmers affected by the Trump administration’s trade wars. These new direct payments went to farmers already covered by, and receiving funds from, the Farm Bill’s commodity support programs as well as crop insurance, which is often used to guarantee income, rather than mere crop losses or damage. Perdue also used the CCC to send coronavirus relief payments to farmers, who again already have a robust safety net.

Now, just after installing the new secretary who defied Congress in the past, there’s a bipartisan push in Congress to expand the CCC by more than doubling its borrowing capacity from $30 billion to almost $68 billion. This comes despite the fact that the farm economy is booming and there’s no clear case to be made for additional aid, trade-related or otherwise. And it appears that Secretary Vilsack may already have big plans for the CCC. Politico reports the administration is considering using the CCC to “create a carbon bank that effectively pays farmers and ranchers for storing greenhouse gases in their soil.” This would be a massive policy shift and could result in equally massive spending, all without any input from Congress.

By reinstating a secretary who demonstrated little regard for congressional authority as the head of an agency with billions of unallocated dollars at his disposal, Congress has indeed given away the farm.

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Nan Swift
Nan Swift researches, writes and builds relationships across party lines to promote R Street’s Governance Program with Congress. Prior to R Street,...

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