Federal Agencies Must Release IRA Funds

OMAHA (DTN) -- USDA must release billions of dollars to farmers, non-profit groups and others funded under the Inflation Reduction Act, a federal judge ruled Monday.

USDA, EPA, and the departments of Energy, Interior and Housing and Urban Development are enjoined from freezing, halting or pausing funding that "has already been awarded" under the Inflation Reduction Act or the Infrastructure Investment and Jobs Act. The agencies were ordered to immediately resume processing, disbursement and payment of funding under the two laws.

U.S. District Judge Mary S. McElroy, a Trump appointee in the U.S. District Court of Rhode Island, handed down the preliminary injunction against the federal departments stemming from a lawsuit from a collection of conservation and non-profit groups.

McElroy wrote the Trump administration can implement its agenda but cannot pull federal funding granted under the past administration from a law passed by Congress. "The Court wants to be crystal clear: elections have consequences and the President is entitled to enact his agenda."

Still, McElroy added, "Agencies do not have unlimited authority to further a President's agenda, nor do they have unfettered power to hamstring in perpetuity two statutes passed by Congress during the previous administration."

The way funding cuts were enacted shows the agencies did not consider the consequences of their "broad indefinite freezes: projects halted, staff laid off, goodwill tarnished." Instead agencies "essentially adopted a 'freeze first, ask questions later' approach."

The judge ordered the White House Office of Management and Budget (OMB) and the National Economic Council to provide a written notice of the court's preliminary injunction to all agencies that had blocked funding of the IRA or infrastructure law.

The agencies are also ordered to provide a notice of the preliminary injunction to all grantees that have been awarded funds under the two acts.

McElroy also ordered the agencies to provide an update on their status by the end of business on Wednesday.

The Trump administration put a freeze on all federal spending related to the IRA. Other reports have cited that renewable energy grants at EPA and the Department of Energy have been halted to communities around the country.

USDA received $19.5 billion for conservation programs in the IRA for "climate-smart" practices that support soil health, reduce greenhouse gas emissions or sequester carbon in the soil. That funding has been part of the tug-and-pull in the farm bill debate. EQIP under the law was supposed to have $8.45 billion. The law included $4.9 billion for the Regional Conservation Partnership Program -- grants for public-private partnership for large-scale conservation projects. Another $3.5 billion went to the Conservation Stewardship Program (CSP). An easement program got $1.4 billion and NRCS got $1 billion for technical assistance.

Agriculture Secretary Brooke Rollins announced in February that USDA was releasing approximately $20 million in conservation contracts -- a small share of the dollars from contracts that farmers have signed in the past two years as the Biden administration boosted conservation funding tied to climate-smart agriculture.

USDA under the Biden administration moved to sign as many contracts as they could with producers to get the funds out the door.

A cost-share essentially pays back the farmer after the contracted work is done, often in phases.

USDA also received another $13.5 billion for renewable energy under the IRA. USDA had announced in late March the department was releasing funds under those energy programs such as Rural Energy For America Program (REAP), Empowering Rural America (New ERA) and Powering Affordable Clean Energy (PACE) programs.

In 2023, the Biden administration spent $850 million in IRA funds to sign up farmers under the Environmental Quality Incentives Program (EQIP), the Conservation Stewardship Program (CSP), the Agricultural Conservation Easement Program (ACEP) and the Regional Conservation Partnership Program (RCPP).

The Natural Resources Conservation Service (NRCS) announced in early October that the agency had planned to spend $5.7 billion for conservation contracts in FY 2025 through the Inflation Reduction Act (IRA). At the time, the Biden administration herald the funding as the "most conservation assistance made available in a single year." It's unclear how much of that funding was contracted to farmers before the change in administration.

USDA received 156,485 applications for conservation programs from farmers in FY 2024. The IRA dollars were set to make up the bulk of spending for those contracts.

USDA had announced 92 RCPP contracts last year worth $1.5 billion. RCPP generally funds projects that include multiple partners and agencies and are meant to scale up conservation practices in areas such as a large watershed.

USDA did not immediately respond to questions about whether the administration will comply with the court order or appeal the decision.

Jeremy Peters, CEO of the National Association of Conservation Districts, said in response to DTN, "NACD remains supportive of the release of IRA conservation funding to continue to provide much-needed financial and technical assistance to farmers and ranchers. In these difficult economic times, conservation assistance to farmers is more important than ever to help farmers become as efficient and resilient as possible."

A similar but separate case filed by farm groups was also filed in mid-March in South Carolina, but there has been no ruling on that lawsuit.

USDA on Monday had announced it was canceling the Partnership for Climate-Smart Commodities, which was funded by the Commodity Credit Corp. USDA stated grants under that program could continue under a different name "Advancing Markets for Producers" if the grant awards meet certain requirements.

Chris Clayton can be reached at Chris.Clayton@dtn.com

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