The Farm Bill: Your 2013 5-Minute Guide to $1B in US agri-energy investment

| July 14, 2013

farm-billSo, the Farm Bill passed the House and Senate, now — and heads to conference. When — and what will the Senate and House confer about, anyway?

What’s in there for you? Here are the need-to-knows.

In Washington, the House and Senate have now passed their respective versions of the proposed 2013 farm bill, which would take effect for fiscal 2014 through fiscal 2018.

Both bills have energy titles — meaning that, should they find passage, as expected this summer, in the House and Senate, the measures in the Energy title will come up for negotiation in the House-Senate conference, but not the existence of the title itself.

In what many would find surprising, the Republican-dominated House of Representatives is far more generous in the Energy title — $1.405B vs $1.184B in the Senate version.

US Agriculture Secretary Tom Vilsack and US Senator Debbie Stabenow of Michigan visit with biobased manufacturers at the Biobased Stakeholders meeting

US Agriculture Secretary Tom Vilsack and US Senator Debbie Stabenow of Michigan visit with biobased manufacturers at the Biobased Stakeholders meeting

Weighing the bills

The Senate’s bill weighs in at 1150 pages, no ounces — the House Bill at a comparatively light 610 pages.

The Overall Farm Bill

The Senate version reduces spending by $18B over the previous Farm Bill ($24.4B if the sequestration provisions are repealed by Congress, which itself slashed $6.4B), to $955B over a 10 year period between 2014 and 2023.

The House version, historically, eliminated the SNAP (“food stamp”) program entirely, representing the vast majority of the bill. Since 1973, the nutrition and farm support programs had been combined as a means to cobble together both the urban and rural votes necessary to pass the Farm Bill.

The Energy Title

Program House Senate
Biobased Markets $10M $25M
Biorefinery Assistance $375M $216M
Repowering Assistance $50M
Bioenergy Program for Advanced Biofuels $250M $100M
Biodiesel fuel education $10M $5M
Rural Energy for America $225M $440M
Biomass R&D $100M $230M
Biomass Crop Assistance $375M $143M
Community wood energy $10M $25M
Total $1.405B $1.184B

Timeline to passage

Earlier this year, House Ranking Minority Member Collin Peterson said, “With today’s action, I’m optimistic the farm bill will continue through regular order and be brought to the House floor in June. If we can stay on track, I think we should be able to conference with the Senate in July and have a new five-year farm bill in place before the August recess.”

The timeline looks nigh impossible at this stage, given the late timing of House passage – look instead for a post-recess conference wind-up aimed at having funding in place by the beginning of the federal fiscal year on October 1.

Definitions

The House Bill does not add language to include renewable chemicals under the provisions of an Energy title — the Senate does.
Similarly, the Senate bill redefines forest products to include recyclables; the House is mute, here.

Finally, the House defined biobased products to include use of biobased materials as intermediate ingredients; plus, it adds in forest products that meet biobased content requirements, regardless of market share. age of product and whether the product is new or emerging.

In short, Grandma’s rocking chair could qualify.

The Programs at a glance

Farm Bill

Biobased Markets Program

Both the Senate and House include a biobased markets program. The House voted $2 million in discretionary funding (e.g. subject to annual appropriations), through 2018.

The Senate expanded the program’s scope to include assembled products, expands outreach and educational efforts, a study on market impact — and adds $3 million in mandatory funding from the Commodity Credit Corporation in addition to the $2M in discretionary funding offered by both the House and Senate.

Biorefinery Assistance

The House offered $75M per year here in discretionary funding, while the Senate offered $100M in for 2014 in mandatory funding and $58M in each of 2015 and 2016. The Senate also broadened the language to include renewable chemicals and biobased materials.

Repowering Assistance Program

The House authorized $10M for the program per year (2014-2018) in discretionary funds, while the Senate did not vote funding.

Bioenergy Program for Advanced Biofuels

The Senate Bill authorizes $20M annually in discretionary funds, while the House authorizes $50M per year, also discretionary.

Biodiesel fuel education program

The Senate version keeps this program intact, but changes it from discretionary to mandatory funding. The House version doubles discretionary funding to $2M per year.

Rural Energy for America Program (REAP)

Both the Senate and House versions ask the Secretary to develop a three-tiered application process (for projects costing up to $80K, 80-200K, and over 200K) and structure the comprehensiveness of the information required according to the cost of the program.

The House version authorizes $45M per year in discretionary funding. The Senate offers $20M in annual discretionary funds, and $68M in mandatory funds via the Commodity Credit Corporation.

Overall, it’s a win for REAP – there were concerns that the program was on the chopping block. Instead, funding — which was pegged at $35 million at birth in 2009 — increased under both the House and Senate versions.

Biomass Research and Development

The Senate version offers $30M in annual discretionary funding, and $26M in mandatory annual funds. The House version authorizes $20M in annual discretionary funding.

Feedstock Flexibility Program

Both the Senate and House voted to extend this little-known, no-cost program through 2018. It’s purpose:

For each of the 2013 through 2018 crops, the Secretary shall purchase eligible commodities from eligible entities and sell such commodities to bioenergy producers for the purpose of producing bioenergy in a manner that ensures that section 7272 of this title is operated at no cost to the Federal Government by avoiding forfeitures to the Commodity Credit Corporation.

Biomass Crop Assistance Program

The House version eliminates the prohibition on animal, food or yard waste, and algae — and strikes the authorization to “assist agricultural and forest land owners and operators with collection, harvest, storage, and transportation of eligible material for use in a biomass conversion facility.” The House also increases funding from $20M to $75M per year, but changes this from mandatory to discretionary funding.

The Senate version adds a prohibition on funding “invasive species” and restricts use of lands enrolled in the conservation reserve program or is native sod — and generally prohibits food crops. The Senate version also sets a maximum BCAP term of 5 years for annuals or perennial crops and 15 years for woods.

Towards collection and harvesting, a maximum of $20 per ton for up to four year, on a matching dollar basis.

The Senate authorizes $38.6M per year in mandatory funding.

In general, the Senate bill goes into a lot of detail on defining eligible crops – forbidding this program from supporting food crops — but interestingly, also food and yard waste, animal residues, algae and bagasse.

Forest Biomass for Energy program

The Senate voted to repeal the program, while the House version simply ignores and thereby effectively kills by de-funding.

The program was an R&D item that sought to incentivize production of energy from biomass and stimulating tree growth for fuel markets.

Community wood energy program

The Senate voted to keep this program at $5M per year in discretionary funding, while the House version votes to reduce annual funding to $2M.

The Senate also creates a new category of ‘biomass consumer cooperative’ —”a consumer membership organization the purpose of which is to provide members with services or discounts relating to the purchase of biomass heating products or biomass heating systems.’’ and offers grants of up to $50K towards the establishment of expansion of such cooperatives.

Biofuels Infrastructure Study

The House voted to repeal this program, which calls for:

“The Energy, Transportation and Agriculture departments along with the Environmental Protection Agency to jointly assess infrastructure needs for developing and transporting biofuels with an eye toward market trends through 2025.”

The Rural Energy Self-Sufficiency Initiative

A $5 million program that offered grants for switch-over from conventional energy to renewables, ignored in both the Senate and House versions, and thereby dies via de-funding.

Renewable Fertilizer Study

This $1 million program from the 1008 Farm Bill is repealed in both the Senate and House versions.

Energy Efficiency Report

This item, in the House bill only, requires USDA to report on energy use by Department of Agriculture facilities, energy audits, energy efficiency projects in place, and future projects based on “mechanical insulation maintenance programs”.

The Bottom Line

As we highlighted at the time the bills came out of Committee — this is not a visionary Farm Bill for Energy — more about fine-tuning and maintaining provisions that were originally introduced in 2002 and 2008.

There isn’t all that much for a House-Senate conference to bicker about — primarily, the status of renewable chemicals on the downstream side, and the inclusion of various new types of crops on the upstream side. There’s language in the BCAP program that will need to be settled out.

And there are funding differences that need to be ironed out – in particular, the balance between mandatory funding and discretionary embraced in the Senate version – while the House generally opts for a discretionary approach, especially for high ticket items.

That mandatory funding option is, naturally, going to be vastly preferred by industry so that there is confidence over a five-year period — as opposed to an annual “will it happen or won’t it” that comes with the annual appropriations battle.

The Senate vote was exceptionally strong on their bill, while the House was more closely divided in approving theirs. Look for the Senate conference managers to press hard for mandatory funding. It may well be that the overall financial cost of the Energy Title goes down, while the certainty that mandatory funding provides goes up.

But that will be a sideshow, overall, this year on the Farm Bill. The main question for lawmakers in conference is whether the nutrition programs continue to be included in the Farm Bill at all. Expect the House managers to press hard on this point of definition.

Read More: The relevant current US law is here.
Read More: The House Bill is here.
Read More: The Senate Bill is here



Tags: , , , ,

Category: Top Stories

Comments (0)

Trackback URL | Comments RSS Feed

There are no comments yet. Why not be the first to speak your mind.

Comments are closed.