The agreement reached by Peterson and House Energy and Commerce chairman Henry Waxman on the agricultural concerns means the bill now will have an offset program that will allow farmers and ranchers to receive carbon credits for practices they have put in place back to 2001.

In a key decision, the USDA will be the lead agency on running the offset program and conducting the rulemaking and operation "without EPA involvement", Peterson told reporters.

Noting his negotiators were able to write the language, Peterson said, "basically we'll have an offset program for agriculture that we believe will work".

In a major breakthrough, he reported "the indirect land use is out of the bill".

The agreement removes EPA's authority to use international indirect land use changes, which are allegedly caused by US ethanol production, in assessing the rule for RFS2. (RFS2 is the proposal to expand the U.S. Renewable Fuels Standard.)

Peterson said getting the indirect land use calculation out of the RFS2 "is a huge deal…it's in the law and I don't think we'll ever get it out any other way. That's one of the reasons I'm going along with this (agreement)."

House Ag Committee members and their constituents believed EPA's attempt to include indirect land use changes was unmeasurable and would kill US expansion of biofuels.

The agreement on the climate change bill mandates an EPA five-year study on the indirect land use issue with recommendations.

It also provides for a one-year review of the issue jointly by EPA, USDA, and the Department of Energy, which would allow USDA "veto power", Peterson said.

Congress would have an additional year to intervene on assessing the study.

In two other key concessions, the agreement restored agriculture's exemption from the carbon emissions cap and increased the carbon allowances that will be made available to rural power generating cooperatives.