The Constitutionality of Taxing Agricultural and Land Use Emissions

Date01 October 2019
10-2019 NEWS & ANALYSIS 49 ELR 10953
Agriculture and land use a re a nontrivial source of
U.S. greenhouse gas emissions (GHGs)1 and an
even larger contributor to short-term warming, as
short-lived climate pollutants such as methane are esti-
mated to account for about 40% of current warming.2 As
such, these sectors warrant inclusion in any national cli-
mate mitigation program. Curbing carbon dioxide emis-
sions from fossil fuel combustion—the largest source of
GHGs—will understandably be the primary target of any
climate mitigation program, but a policy that excludes ag ri-
cultural and la nd use emissions leaves a signicant source
of emissions uncovered. While there may be admi nistrative
and political reasons for exempting agricultural producers
from a comprehensive GHG control scheme,3 a national
1. A substantial minority of U.S. emissions is attributable to non-carbon diox-
ide gases, primarily methane and nitrous oxide (N2O). Together, these gases
constituted about 16% of U.S. GHGs on a carbon dioxide-equivalent basis,
and are predominantly attributable to the agriculture and land use sectors.
U.S. E P A, I  U.S. G-
 G E  S: 1990-2016, at ES-6 to ES-8 (2018).
Agricultural and land use activities contribute GHGs through various pro-
cesses, including agricultural soil management, enteric fermentation, live-
stock manure management, rice cultivation, liming, urea fertilization, and
eld burning of agricultural residues. Overall, livestock—primarily cattle—
is responsible for about one-third of U.S. methane emissions. Id. at ES-21.
Methane is emitted from a wide variety of industrial and nonindustrial ac-
tivities. e largest source of U.S. methane emissions—accounting for more
than one-quarter of all anthropogenic methane emissions—is livestock, via
enteric fermentation (a byproduct of livestock digestion). Id. at ES-15. N2O
emissions, which accounts for about 6% of total U.S. GHGs, id. at ES-16,
are produced by biological processes in soil and water, although N2O is also
a byproduct of certain industrial activities. e primary source of U.S. N2O
emissions is agricultural soil management, such as the application of fertil-
izer and the growth of nitrogen-xing plants (77%, comprising nearly 4.5%
of total U.S. emissions in 2016), as well as manure management and other
sources (e.g., stationary fuel combustion, nitric acid production).
2. C A R B, S-L C P R-
 S 1 (2017), available at
3. No existing or proposed carbon-pricing schemes, in the United States or
globally, regulate emissions from agricultural or land-based sources. British
Columbia’s carbon tax, for example, only covers emissions from fossil fuels;
even so, the tax contains exemptions, including for fuel purchased by farm-
ers for on-farm use (e.g., in mechanized equipment or for heating). See Gov-
ernment of British Columbia, Motor Fuel Tax & Carbon Tax Exemptions,; B C M  F,
C F  O S (2018) (Tax Bulletin MFT-CT
003), available at is is despite the fact
that, in the words of one paper, “there is not compelling evidence for ex-
emption of the agricultural sector from the tax.” N R  B-
 S, P I  C S, T E
 B C’ C T  A T 4 (2014),
available at Other jurisdictions have imple-
mented even more limited carbon taxes, generally applying only to certain
fuels. For example, Alberta assesses a carbon tax on transportation and heat-
ing fuels (marked farm fuels are exempt from the levy). See G
 A, B 2016: T A J P—F P 94-96
(2016), available at
download/scal-plan-complete.pdf. Several other countries have some form
of carbon levy—for example, Finland, Sweden, and the United Kingdom,
among others—but none incorporate agriculture or waste; although they
vary in the details, these carbon taxes are all limited to levies on fossil fuels.
See W B G, S  T  C P 2017, at
45-53 (2017), available at No U.S. jurisdic-
of Taxing
Agricultural and
Land Use
by Michelle Melton
Michelle Melton is a recent graduate of Harvard Law
School. is Article received honorable mention in the
Environmental Law Institute’s 2018-2019 Constitutional
Environmental Law Writing Competition.
Economywide legislation to address climate change
will be ineective unless it addresses greenhouse gas
emissions from agriculture and land use. Yet incor-
porating these sectors into the most popular policy
proposal—a carbon tax—carries legal risk that poli-
cymakers and legal commentators have ignored. is
Article explores whether a carbon tax, as applied to
agriculture and land use, is a direct ta x within the
meaning of the Constitution; it concludes that text,
history, and Supreme Court precedent up through
National Federation of Independent Business v. Sebel-
ius (2012) leaves such a tax open to challenge. Conse-
quently, policymakers should avoid eliminating EPA’s
regulatory authority over greenhouse gas emissions in
exchange for a carbon tax.
Copyright © 2019 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®,, 1-800-433-5120.
GHG abatement program that does not address agricul-
tural emissions— especially from large emitters —is, at best,
incomplete. At worst, an agricultural exemption threatens
to undermine the ecacy of the mitigation program.
Policymakers have several options for enacting a n
economywide carbon policy: a sector-by-sector regulatory
approach, a cap-and-trade program, a carbon tax,4 or some
combination of these options. While experts have debated
the relative political, economic, administrative, and policy
trade os of these options for decades, they have largely
ignored emissions from agriculture and land use, despite
the signicant contribution from these sectors to U.S.
GHG emissions.5 Yet a mitigation policy that does not
address agriculture is seriously—perhaps fatally—awed.6
tion currently taxes GHGs, although there have been several proposals at
both the state and federal levels to implement a carbon tax. None of these
initiatives has proposed to tax non-fossil fuel emissions. For an overview of
the mechanics of state proposals to tax carbon, see Janet A. Milne, Carbon
Tax Choice: e Tale of Four States, in T G M T 3-7
(Stefan E. Weishaar et al. eds., Edward Elgar 2017) (discussing four of the
six state carbon tax proposals). Other states have also recently contemplated
a carbon tax, most notably Washington State, which would have covered
electricity production, electricity imports, and fossil fuels. See S.B. 6203,
65th Leg. (Wash. 2018).
4. is Article uses the term “carbon tax” as shorthand for a tax on GHGs,
regardless of whether the tax is assessed on carbon dioxide or another gas.
e name “carbon tax” is therefore potentially a misnomer, as theoretically
such a tax should (and could feasibly) apply to all GHGs, adjusted for their
warming potential.
5. Despite the importance of non-fossil fuel emissions, most federal climate
proposals, which vary in their level of specicity, are limited to fossil fuels.
Several carbon tax proposals have been introduced in the U.S. Congress
during the past few legislative sessions. All are limited to assessing a levy on
fossil fuels and, in some cases, hydrouorocarbons. See, e.g., Climate Protec-
tion and Justice Act of 2015, S. 2399, 114th Cong. (2015); Tax Pollution,
Not Prots Act, H.R. 2014, 115th Cong. (2017); American Opportunity
Carbon Fee Act of 2017, H.R. 3420/S. 1639, 115th Cong. (2017); Healthy
Climate and Family Security Act of 2018, H.R. 4889/S. 2352, 115th Cong.
(2018); Modernizing America With Rebuilding to Kick-Start the Economy
of the Twenty-First Century With a Historic Infrastructure-Centered Ex-
pansion Act (MARKET CHOICE Act), H.R. 6463, 115th Cong. (2018).
e alternative GHG pricing mechanism is a cap-and-trade program, also
known as an emissions trading scheme. Most existing and proposed carbon
trading schemes also exempt the agricultural and waste sectors from require-
ments to cover their emissions. e European Union Emissions Trading
Scheme, for example, does not currently cover agriculture or waste. Cali-
fornia has statutorily exempted agriculture from its cap-and-trade program
until at least 2024. C. H  S C §39730.7 (2018). e
American Clean Energy and Security Act (Waxman-Markey), an econo-
mywide proposed cap-and-trade program that passed in the U.S. House
of Representatives in 2010 before failing in the U.S. Senate, also did not
cover these industries. American Clean Energy and Security Act of 2009,
H.R. 2454, 111th Cong. (2009). Although none of these trading schemes
requires agricultural or waste emitters to reduce their emissions, some allow
voluntary emissions reductions in these sectors to generate oset credits for
industries subject to the regulation. See id.; California Air Resources Board,
Compliance Oset Program,
6. Despite compelling scientic reasons to address all gases and sectors,
regulating the agriculture and land use sectors are dicult owing to the
political and administrative diculties of extending a pricing system be-
yond fossil fuel combustion. Although it is a signicant source of pollu-
tion, agriculture has long been exempted from important environmental
laws and regulations, including air and water quality laws, primarily for
political reasons. See generally M S, C R
S, E R  A (2014), avail-
able at For example, §404 of the Clean
Water Act exempts agriculture from the Clean Water Act’s requirement to
obtain a permit before discharging dredged or ll material into wetlands,
streams, rivers, or other waters of the United States. 33 U.S.C. §1344(f)(1)
(A). Similarly, runo from agricultural lands, which is exempted from §402
of the Clean Water Act, 33 U.S.C. §1342(1)(1), contributes signicantly to
A more fulsome policy conversation about how to regu-
late emissions from agriculture and land use is warranted.
One conceivable way to cover these sectors is through a car-
bon tax, which is currently the only comprehensive climate
proposal to attract support from both sides of the political
aisle. e policy design issues and relative merits of carbon
taxes have been extensively discussed, but the legal issues
have not been fully explored. Including agriculture within
a carbon tax ca rries legal risk from a perhaps unexpected
source: the U.S. Constitution’s Direct Tax Clause.
is Article demonstrates t hat assessing a carbon tax on
agriculture and land use would raise a dicult question
about whether such a provision constitutes a “direct tax.” A
carbon tax scheme would either need to ignore agriculture
or assume the legal risk s set out below. Understa nding the
scope of this legal risk is e specially important in lig ht of
conservative proposals to support a carbon ta x in exchange
for elimination of the U.S. Environmental Protection
Agency’s (EPA’s) authority over GHGs.7
Whether the U.S. Congress ca n extend a carbon tax over
emissions from agriculture and land use will depend on
an interpretation of the Constitution’s Direct Tax Clause.8
e Direct Tax Clause is one of the Constitution’s most
inscrutable provisions; neither the text of the Constitution,
nor the practice at the Founding, nor the U.S. Supreme
Court’s precedents provide much insight into its mean-
water pollution. What Is Farm Runo Doing to the Water? Scientists Wade In,
NPR, July 5, 2013, Hazardous substance
releases emitted from livestock operations were, until a recent U.S. Court
of Appeals for the District of Columbia (D.C.) Circuit ruling, exempt from
the Comprehensive Environmental Response, Compensation, and Liabil-
ity Act’s requirement to report releases to federal ocials. See Waterkeeper
Alliance v. Environmental Prot. Agency, 853 F.3d 527, 47 ELR 20062
(D.C. Cir. 2017). e U.S. Environmental Protection Agency (EPA) rules
require emission controls on stationary engines, for example, but engines
used by agricultural sources are largely exempted. 40 C.F.R. §63 (2018).
Signicantly, EPA’s Greenhouse Gas Reporting Rule, which went into eect
in 2010, requires large industrial and nonindustrial sources to report their
annual GHGs. Annual appropriations riders have prohibited EPA from re-
quiring reporting from large farms. e same rider has been included every
scal year since EPA promulgated the rule in 2010. e scal year 2018
prohibition was included in Consolidated Appropriations Act, §417, 2018.
EPA estimates that 107 livestock facilities nationwide would need to re-
port under the rule. S, supra at 4. Aside from political resistance to
including these sources in any potential carbon-pricing scheme, Congress
may opt to exempt emissions from agriculture, forestry, land use, and waste
because of the administrative diculty of including such sources. e dif-
culty of incorporating these sectors is especially stark when compared with
taxing GHGs associated with fossil fuel combustion. An upstream carbon
tax on fossil fuels would cover about 80% of emissions while being assessed
on fewer than 3,000 taxpayers. See Gilbert E. Metcalf & David Weisbach,
e Design of a Carbon Tax, 33 H. E. L. R. 499, 504-05 (2009)
(estimating a carbon tax covering fossil fuels would cover 80% of U.S.
emissions). See also J H  ., U.S. T D,
M  A  C T 6 (2017) (noting that non-
fuel emissions require greater tax administration eorts and nding that
76% of emissions could be covered by an upstream or midstream carbon
tax via “modest modications to existing [tax forms]” and could be “readily
... imposed on top of existing fuel and energy taxes”), available at https://
7. See, e.g., J A. B III  ., C L C, T
C C  C D (2017), available at https://eConservativeCaseforCarbonDividends.pdf.
8. e Direct Tax Clause is actually two separate clauses, see infra Section I.A.,
but I refer to them throughout this Article in the singular, because the claus-
es impose one requirement.
Copyright © 2019 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®,, 1-800-433-5120.

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