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Congress Considers Very Different Farm Bills

As the Senate continues debate on the Farm Bill, the stakes are high for a growing source of new farm income, jobs, business opportunities and environmental progress. Farm Bill clean energy programs leverage private investment to tap renewable resources of all sorts from America’s agricultural sector as a new, reliable “cash crop” that increases and diversifies income and creates jobs.

The Agriculture Committees of the House and Senate passed sharply different Farm Bills, with big differences for clean energy progress. The Senate Ag Committee provided funding to continue program operations, although at lower levels, while the House Farm Bill eliminates mandatory funding entirely for energy programs.

Senate Agriculture Committee Supports Strong Energy Title

On Tuesday, May 14, the US Senate Agriculture Committee passed a new Farm Bill –  S.954, the Agriculture Reform, Food, and Jobs Act of 2013 – that continues the most successful programs of the 2008 Farm Bill Energy Title, with mandatory funding. The committee repealed several other programs in a move to consolidate programs.  Mandatory funding keeps programs operational, while discretionary funding is decided annually and seldom provided.

The Committee began their work based on the Farm Bill passed last year by the full Senate. That bill included mandatory funding introduced in a bipartisan amendment from Senators Kent Conrad (D-ND) and Richard Lugar (R-IN) and others, to provide $800 million over five years in mandatory funding. The Senate Agriculture Committee’s Farm Bill provides $900 million in five year Energy Title funding, a reduction of 31% per year as compared to the four-year 2008 Farm Bill.

Energy title funding is less than one tenth of 1% of total (five year) mandatory funding for the entire bill before the Senate.

A key Energy Title program, REAP – the Rural Energy for American Program – is a diverse, national program that has supported over 8,700 farm energy projects in every state, helping farmers and rural small businesses to cut energy costs with energy efficiency and homegrown renewable energy, or to sell renewable energy from the farm. REAP supports the full range of renewable energy options for agriculture; wind, solar, biogas digesters, biomass, small hydroelectric, marine and energy efficiency.

Senator Amy Klobuchar, Farm Energy ChampionSenator Amy Klobuchar (D-MN) introduced and passed an amendment to increase the mandatory funding for REAP by an additional $20 million per year, from $48.2 to $68.2 million, bringing the overall Energy Title funding to $900 million. For REAP, Senator Klobuchar’s amendment brought REAP funding to only a slight reduction from the last year’s mandatory funding of $70 million as set in the 2008 Farm Bill.

House Agriculture Committee Guts Energy Title

On May 15, 2013, the House Agriculture Committee passed their version of the Farm Bill, H.R. 1947, the Federal Agriculture Reform and Risk Management (FARRM) Act of 2013. The House Committee eliminated all mandatory funding for Energy Title programs. They did, however, provide about the same discretionary funding over five years as was provided in the four year 2008 Farm Bill, but that funding is not expected to materialize.

Rep Tim Walz, Farm Energy ChampionRepresentative Tim Walz (D-MN) introduced an amendment to bring the funding in the House bill in parity with the Senate, by proposing restoration of $800 million in mandatory funding over five years. Representative Walz gathered support from other Representatives and argued for their amendment, but did not seek a vote.

Proposed Legislative Changes to Farm Bill Energy Title

Beyond the funding picture, both Farm Bills reduce the number of Energy Title programs and focus on programs that continue to show promise for benefitting agriculture and society through energy conservation and renewable energy technology implementation and advancement.

In both bills, studies were eliminated for renewable fertilizer and biofuels infrastructure, along with Section 9009 – Rural Energy Self-Sufficiency Initiative, and Section 9012 – Forest Biomass for Energy.

Biobased Markets Program, Section 9002 in the 2008 Farm Bill

Biobased Markets provides a federal preference for procurement of biobased products and the “BioPreferred” labeling program. The House bill makes no substantive changes and eliminates all mandatory funding.

The Senate bill makes some changes:

  • Expands procurement preferences for certain targeted biobased product categories, as determined by the USDA.
  • Focuses on products with innovative manufacturing and distribution approaches.
  • Reduces reporting requirements for biobased product vendors and allows outreach, education and promotion activities for biobased markets program.
  • Requires the USDA to report on quantities and types of biobased products purchased by procuring agencies, along with auditing and compliance activities.

Biorefinery Assistance, Section 9003 in the 2008 Farm Bill

The Biorefinery Assistance Program accelerates marketplace introduction of emerging technologies to convert biomass to advanced biofuels. The program provides grants for demonstration-scale projects and loan guarantees for demonstration and commercial scale projects.

The House bill:

  • Eliminates all mandatory funding.
  • Reduces the scope of the program by focusing only on loan guarantees and removing cost-sharing grants for the development and construction of demonstration-scale biorefineries.

The Senate bill:

  • Broadens the program in a number of ways, as indicated by the new name; “Biorefinery, Renewable Chemical and Biobased Product Manufacturing Assistance.” It now expands program eligibility to renewable chemicals and biobased products.
  • Expands grants to commercial scale plants.
  • Adds definition of “biobased product manufacturing.”
  • Caps mandatory funding of biobased product manufacturing loan guarantees at $25 million per year (actual loan guarantees would be much higher given that funding only covers the risk-adjusted amount).

Repowering Assistance Program, Section 9004 in the 2008 Farm Bill

Repowering Assistance provides cost-share grants to encourage existing biorefineries to install new energy systems to use biomass for heat and power. In a number of cases this approach can lower the carbon footprint for a given facility.

The Senate bill ends Repowering Assistance. The House bill allows it to continue, but with modest discretionary funding.

Bioenergy Program for Advanced Biofuels, Section 9005 in the 2008 Farm Bill

The Bioenergy Program provides production-based incentive payments for advanced biofuels facilities that includes cellulosic biofuels, biodiesel and biogas digesters. No major changes are made to the program in either bill. The Senate provides $20 million in annual discretionary funding for FY 2014-18, while the house provides $50 million.

Rural Energy for American Program (REAP), Section 9007 in the 2008 Farm Bill

The Rural Energy for America Program (REAP), first created as “Section 9006” in the 2002 Farm Bill and re-authorized under the 2008 Farm Bill, provides grants and loan guarantees to agricultural producers and rural small businesses to incentivize energy efficiency improvements, renewable energy system investments, energy audits and feasibility studies. The public wins with more clean energy production, lower energy demand and an enhanced environment.

The House bill:

  • Eliminates all mandatory funding for REAP.
  • Repeals feasibility studies as an eligible stand-alone activity.
  • Simplifies application requirements with a tiered application process, based on project costs ($80,000 and under, $80-200,000, and $200,000 and over).

The Senate bill:

  • Repeals feasibility studies as an eligible stand-alone activity.
  • Allows Rural Development Councils to qualify for energy audit and technical assistance grants.
  • Eliminates 2-meter rule for small renewable systems on farmsteads.
  • Simplifies application requirements with a tiered application process, based on project costs ($80,000 and under, $80,000-200,000, and $200,000 and over).

Biomass Research and Development Initiative, Section 9007 in the 2008 Farm Bill

The Biomass Research and Development Initiative supports advanced research to improve bioenergy technologies through research, development and demonstration in a collaborative initiative with the US Department of Energy.  The House bill eliminates mandatory funding.

Biomass Crop Assistance Program (BCAP), Section 9011 in the 2008 Farm Bill

The Biomass Crop Assistance Program (BCAP or “Bee-cap”), helps America develop a new homegrown energy resource that generates farm income while also improving soil conservation and water quality. BCAP focuses on establishing the first generation of energy crops grown at a commercial scale, as working models of a new renewable resource.

The House bill:

  • Eliminates all mandatory funding for REAP.
  • Eliminates the matching payments program for collection, harvest, transport and storage (CHST).
  • Allows funding for existing project areas.

The Senate bill:

  • Repeals feasibility studies as an eligible stand-alone activity.
  • Specifies that eligible materials must be harvested consistent with a conservation or forest stewardship plan, and that these plans be included in the contract.
  • Clarifies that commodity and other subsidized crops are not eligible materials.
  • Reduces cost-sharing for establishment payments from 75% to 50% (or $500 per acre, $750/acre for socially disadvantaged farmers). Conservation reserve program or agricultural conservation easement program lands are explicitly excluded.
  • Maintains the matching payments (CHST) program, with payment limit reduced from $45 per ton over two years to $20 per dry ton over four years.
  • Requires 10-50% of mandatory funding to be used for matching payments (CHST).

A more detailed, side-by-side comparison of the two bills may be found here (PDF).