Energy Provisions of the Farm Bill: Comparison of New Law with Previous Law and House and Senate Bills

Report for Congress
Energy Provisions of the Farm Bill:
Comparison of the New Law with Previous
Law and House and Senate Bills
Updated January 22, 2003
Brent D. Yacobucci
Environmental Policy Analyst
Resources, Science, and Industry Division


Congressional Research Service ˜ The Library of Congress

Energy Provisions of the Farm Bill: Comparison of
Current Law with House and Senate Bills
Summary
On May 13, 2002, President Bush signed a new farm bill–The Farm Security
and Rural Investment Act of 2002 (P.L. 107-171). The new farm bill contains many
energy-related provisions. The previous farm bill was the Federal Agriculture
Improvement and Reform Act of 1996 (P.L. 104-127), popularly called the FAIR
Act. Most of the authorities of the FAIR Act expired at the end of FY2002.
Increased concerns about energy security, greenhouse gas emissions, and
pollution have led to an increase in congressional interest in energy policy. In that
general context, there is growing interest in biofuels (including ethanol and
biodiesel), bioenergy, and biobased products as a strategy to improve domestic
energy security and increase farm income. Further, open spaces used for agricultural
production are seen by some as ideal places to install renewable energy systems such
as wind turbines and solar cells. In addition, farmers have been concerned with high
energy costs because energy can be a major production cost. Although there were no
energy provisions in the FAIR Act, the final version of the farm bill contains several
provisions on renewable energy, biomass and biofuels, carbon sequestration, and
other energy issues.
This report provides a side-by-side comparison of the energy provisions of the
new law with previously existing law, as well as the versions engrossed by the House
and Senate in the 107th Congress. While the energy provisions in the House version
were spread throughout the bill, the Senate version consolidated most of its energy
provisions into Title IX - Energy. Both bills provided for the use of reserve land for
renewable energy production. The House version also allowed for loans to farmers
in response to high energy prices, while the Senate version did not. The Senate
version created several new grant and/or loan programs for biorefineries, biodiesel
fuel education, renewable energy systems, energy audits, rural energy systems,
hydrogen and fuel cells, and technical assistance. Among these topics, the House
version addressed grants for biobased product research and loans for renewable
energy systems, and instead of creating new programs, expanded or extended existing
programs. Further, the Senate version created new programs for carbon sequestration
research and demonstration, while the House version extended the authority of an
existing research program.
The final version generally follows the Senate provisions, although there are
some key differences, including the addition of funding for the Commodity Credit
Corporation Bioenergy Program (which supports ethanol and biodiesel production),
and reductions in funding for several other programs. CBO estimates that the new
law will require $366 million in mandatory spending between FY2002 and FY2006.



Contents
In troduction ......................................................1
List of Tables
Table 1. Comparison of Energy Provisions in the New Law with Previous Law
and House and Senate Versions of H.R. 2646........................3



Energy Provisions: Comparison of the New
Law with Previous Law and House and
Senate Farm Bills
Introduction
The most recent farm bill was the Federal Agriculture Improvement and Reform
Act of 1996 (P.L. 104-127), popularly called the FAIR Act. Most of the authorities
of the FAIR Act expired at the end of FY2002. The 107th Congress enacted new farm
legislation. The House approved its version of the farm bill (H.R. 2646) on October

5, 2001, and the Senate approved its version on February 13, 2002. In some cases,


the two bills had dramatically different provisions for various policies, including
provisions on energy policy. The new farm bill, the Farm Security and Rural
Investment Act of 2002 (P.L. 107-171) was signed by President Bush on May 13,

2002.


Increased concerns about energy security, greenhouse gas emissions, and
pollution have led to an increase in congressional interest in energy policy. In that
general context, there is growing interest in biofuels (including ethanol and
biodiesel), bioenergy, and biobased products as a strategy to improve domestic
energy security and increase farm income. Further, open spaces used for agricultural
production are seen by some as ideal places to install renewable energy systems such
as wind turbines and solar cells. In addition, farmers have been concerned with high
energy costs because energy can be a major production cost. Although there were no
energy provisions in the FAIR Act, the new law contains several provisions on
renewable energy, biomass and biofuels, carbon sequestration, and other energy
issues.
This report provides a side-by-side comparison of the energy provisions in the
various versions of the bill. While the energy provisions in the House version were
spread throughout the bill, the Senate version consolidated most of its energy
provisions into Title IX - Energy. The final version follows the Senate model and
also consolidates energy provisions in Title IX. Table 1 presents the comparison.
The table is organized such that stand-alone provisions in the House bill are
presented first, followed by provisions Title IX of the Senate bill, and Title IX in the
final version, in section-by-section order.
Key provisions of the bills include:
!Grants to farmers for economic emergencies, including drastic increases in
energy costs (House);
!Grants for energy production from hazardous forest fuel (House and Senate);
!A requirement that the federal government purchase biobased products (Final
and Senate)



!Grants and loans for the development of biorefineries (Final and Senate),
renewable energy generation (Final, House, and Senate), energy audits (Final
and Senate), hydrogen and fuel cells (Final and Senate), and technical
assistance (House and Senate);
!Carbon sequestration research (Final, House, and Senate) and demonstration
programs (Senate).
The new law authorizes $366 million in mandatory spending for FY2002
through FY2006, and $405 million through FY2011. The new law also authorizes
increases in discretionary spending.



CRS-3
Table 1. Comparison of Energy Provisions in the New Law with Previous Law
and House and Senate Versions of H.R. 2646
Previous Law/PolicyHouse Farm Bill (H.R. 2646 EH)Senate Farm Bill (H.R. 2646 EAS)Final Version (P.L. 107-171)
ulationsVarious titlesTitle IX - Energy, and other sectionsTitle IX - Energy, and other sections
)
modity Credit Corporation (CCC) Bioenergy Program
y Program, CCCAnimal fats, agricultural byproducts,No Provision.The program is extended and
ay grant payments to ethanol andand oils are added to the list ofexpanded. Mandatory spending of up
who expand theirallowable commodities.Note: S. 1731 expresses the sense ofto $150 million is provided annually
. Payments are[Section 922]the Congress that the Bioenergyfor FY2003 through FY2006. The
iki/CRS-RL31271er the purchaseProgram should be continued andCongressional Budget Office
g/wmoditiesexpanded. In addition, the sectionestimates that $204 million total will
s.or for that expansion. states that expanded ethanol andbe authorized between FY2002 and
leakable commodities includebiodiesel production will be neededFY2006.
, corn, soybeans,to phase out methyl tertiary butyl[Section 9010]
://wikiheat, as well as cellulosic cropsether (MTBE)–a common additive in
httprass and short rotationgasoline that has contaminated
he program is scheduled togroundwater in several states.
inate at the end of 2002.[Section 907]
CFR 1424]
able Energy on Conservation Reserve Program (CRP) Lands
e Farm Security Act of 1985Amends Section 3832 of the Act toAmends Section 3832 of the act toAmends Section 3832 of the act to
onservation Reserveallow the use of CRP land for windallow the use of CRP land for windallow the use of CRP land for wind
ram (16 U.S.C. 3830 et. seq.) toenergy generation and biomassenergy generation, with reducedenergy generation and biomass
e farmers andharvesting for energy production,payments.harvesting for energy production.
e and enhance soilwith reduced payments.[Sec. 212(h)][Sec. 2101]


[Sec. 213]
renewable energy projects.
ec. 3832(a)(7)(A)]

CRS-4
Previous Law/PolicyHouse Farm Bill (H.R. 2646 EH)Senate Farm Bill (H.R. 2646 EAS)Final Version (P.L. 107-171)
ergency Loans to Respond to Sharply Increasing Energy Costs
e Consolidated Farm and RuralAmends the Act to allow loans inNo provision.No provision.
elopment Act (7 U.S.C. 1969)response to economic emergencies,
ides for emergency loans forwhich are defined to include sharply
increasing energy costs.
h energy costs as a disaster.[Sec. 510]
ec. 329]
rants to Reduce Hazardous Forest Fuels for Energy Production
e Cooperative Forestry AssistanceCreates a new section of law whichSimilar to the House provision, butNo provision.
authorizes the Secretary ofamends the Cooperative Forestry
iki/CRS-RL31271ides for technical and financialAgriculture to provide grants toAssistance Act to add a section on
g/wenergy producers who purchasehazardous fuels reductions instead of
s.orere are no provisions for biomassbiomass that poses a wildfire hazardestablishing a new section of the
leakrants.for the production of electric power,code.
://wiki.L. 95-313]useful heat, or transportation fuels. Authorizes $50 million each fiscal[Sec. 808]
http year.
[Sec. 921]
ean Energy
Several sections amend various laws.CFRDA is amended to add a SubtitleIn several sections, existing laws are
and Rural(See below.)L (3 chapters) on “Clean Energy”not amended, but new sections of law
velopment Act (CFRDA) (7that establishes programs onare created. (See below.)


biobased products, renewable energy
isions for clean energy.and energy efficiency, and carbon
.L. 87-128]sequestration.
[Section 902]

CRS-5
Previous Law/PolicyHouse Farm Bill (H.R. 2646 EH)Senate Farm Bill (H.R. 2646 EAS)Final Version (P.L. 107-171)
iobased Product Development
Biobased products. No provision1. No provision1. Requires the Secretary of1. Similar to the Senate provision.
Agriculture to publish a list ofHowever, products are not required
biobased products that areto be environmentally preferable.
environmentally preferable (definedMandatory spending of $1 million
as a having a reduced effect onannually is provided for FY2002
human health and the environmentthrough FY2007.
compared with competing products). [Section 9002]
Federal agencies are required to
purchase environmentally preferable
biobased products, if available. For
iki/CRS-RL31271FY2002 through FY2006, $2 million
g/wper year in mandatory spending is
s.orauthorized, to remain available until
leak expended.
[Section 388B]
://wiki
httpBiorefineries. No provision for2. There is no provision for2. Establishes a new grant program to2. Similar to the Senate provision.
biorefineries. However, the billassist in the development andHowever, no mandatory spending is
amends the Agricultural Research,construction of biorefineries, definedauthorized.
Extension, Education, and Reformas facilities that convert biomass into[Sec. 9003]


Act of 1988 (7 U.S.C. 7624) tofuels and chemicals. For FY2002
extend authority to provide grants forthrough FY2006, $15 million per
pilot projects on biobased productyear in mandatory spending is
development. Authority, whichauthorized, to remain available until
expired at the end of FY2001, isexpended.
extended to FY2011.[Section 388C]
[Sec. 725]Also, Sec. 379 of the Act is amended
to give priority to bioenergy and
biochemical projects for grants.
[Sec. 644]

CRS-6
Previous Law/PolicyHouse Farm Bill (H.R. 2646 EH)Senate Farm Bill (H.R. 2646 EAS)Final Version (P.L. 107-171)
Biodiesel fuel. No provision for3. No provision.3. Establishes a new program to3. Similar to the Senate provision.
provide grants to nonprofitHowever, only $1 million in annual
organizations that educate fleetmandatory spending is authorized for
operators and the public about theFY2003 through FY2007.
benefits of biodiesel. For FY2002[Section 9004]
through FY2006, $5 million annually
is authorized to remain available until
expended.
[Section 388D]
ean Energy - Chapter 2: Renewable Energy Development and Energy Efficiency
iki/CRS-RL31271Loans and loan guarantees. RDA allows loans and loan1. Amends Sec. 310 of the Act toallow loans and loan guarantees for1. Establishes a new program toassist farmers, ranchers, and rural1. Similar to the House provision. No new budget authority is provided.
g/warantees for the installation of solarrenewable energy systems, includingbusiness ventures in the[Section 6013]
s.ory systems.wind generators and anaerobicestablishment or expansion of
leakec. 310]digesters. No new budget authorityelectrical facilities powered by
://wikiis provided.renewable energy. For FY2002
http[Sec. 606]through FY2006,$16 million per year
in mandatory spending is authorized,
to remain available until expended.
[Section 388E]
Energy audits. No provision for2. No provision2. Establishes a new grant program2. Similar to the Senate provision.
y audits under CFRDA.for entities that assist farmers,However, no mandatory spending is
ranchers, and rural small businessesauthorized.
in performing audits to identify[Section 9005]


potential for improving energy
efficiency and developing renewable
energy. For FY2002 through
FY2006, $15 million per year in
mandatory spending is authorized.
[Section 388F]

CRS-7
Previous Law/PolicyHouse Farm Bill (H.R. 2646 EH)Senate Farm Bill (H.R. 2646 EAS)Final Version (P.L. 107-171)
Grants for energy systems. No3. No provision.3. Establishes a new system of grants3. Similar to the Senate provision,
ision for energy systems underand loans to farmers, ranchers, andexcept that energy efficiency
rural small businesses for theimprovements are also eligible.
purchase of renewable energyFurther, the Secretary of Agriculture
systems. Recipients must have salesis given authority to define a “small
less than $1 million per year. Forbusiness.” $23 million in annual
FY2002 through FY2006, $33mandatory spending is authorized for
million per year in mandatoryFY2003 through FY2007.
spending is authorized, to remain[Section 9006]
available until expended.
[Section 388G]
iki/CRS-RL31271Hydrogen and fuel cell4. No provision.4. Establishes a new grant program4. The Departments of Agriculture
g/wNo provision forfor cooperative research on hydrogenand Energy are required to cooperate
s.ordrogen and fuel cells underand fuel cell technologies for use inon research into farm and rural
leakfarm, ranch, and rural applications. applications for hydrogen fuel and
For FY2002 through FY2006,$5fuel cell technologies. No new
://wikimillion per year in mandatorybudget authority is provided.
httpspending is authorized, to remain[Section 9007]
available until expended. [Section

388H]


Technical assistance. No5. Amends the Food Security Act of5. Allows USDA to provide5. No provision.


ision for technical assistance to1985 (16 U.S.C. 3839aa) to allow thetechnical assistance to farmers and
y development underSecretary to provide education andranchers to develop renewable energy
technical assistance to farmers andresources. The Secretary may retain
ranchers to develop and marketup to 4% of the funds in the above
renewable energy resources. No newareas to assist farmers and ranchers
budget authority is created.in developing and marketing
[Sec. 942]renewable energy.
[Section 388I]

CRS-8
Previous Law/PolicyHouse Farm Bill (H.R. 2646 EH)Senate Farm Bill (H.R. 2646 EAS)Final Version (P.L. 107-171)
on Sequestration Research, Development and Demonstration Program
Carbon sequestration research. 1. Amends the Agricultural Risk1. Authorizes new funding for basic1. Similar to the House provision.
ision for carbon sequestrationProtection Act of 2000 (P.L. 106-and applied carbon sequestrationResearch authority is extended
er,224, Sec. 211) to extend theresearch, conducted either by thethrough FY2007, but no new
rams under the Departmentauthorization of the Carbon CycleSecretary of Agriculture, or by othermandatory spending is provided.
griculture, as well as theResearch Program, which providesentities funded through competitive[Sec. 9009]
ent’s general authority forgrants to land grant universities forgrants. The research goals include
ide for suchcarbon cycle research. Authorizationthe study of net sequestration of
is extended through FY2011carbon by soils and plants, and the
(originally a one-time authorizationnet greenhouse gas emissions from
of $15 million).agriculture. $25 million is authorized
iki/CRS-RL31271[Sec. 751]annually for FY2002 through
g/w FY2006.
s.or[Section 388J]
leakCarbon sequestration2. No provision.2. Authorizes projects, administered2. No provision.


://wikiNoby the Secretary, to demonstrate the
httpision for demonstration projects.ability to monitor and verify carbon
sequestration, and to educate farmers
and ranchers about the economic and
environmental benefits of
conservation practices that increase
sequestration. $10 million is
authorized each year for FY2002
through FY2006.
[Section 388K]

CRS-9
Previous Law/PolicyHouse Farm Bill (H.R. 2646 EH)Senate Farm Bill (H.R. 2646 EAS)Final Version (P.L. 107-171)
omass Research and Development
e Biomass Research andExtends authority for the programAmends the Act to provide additionalSimilar to the Senate version.
elopment Act of 2000 providesthrough FY2011; adds animalmandatory funding of $15 millionAuthority is extended through
petitive funding for R&Dbyproducts to the definition ofeach year for FY2002 throughFY2007. This section provides
ects on biofuels and other“biomass”; and adds a livestock tradeFY2006, to remain available untilmandatory spending of $5 million for
icals and products,association representative to theexpended. Program authority isFY2002 and $14 million annually
inistered by the Secretaries ofTechnical Advisory Board.extended by one year, to Septemberbetween FY2003 and FY2007. An
riculture and Energy. $49 millionAuthorized appropriations will30, 2006, and an additional $49additional $49 million annually in
ear is authorized for FY2002increase from zero to $49 million inmillion in discretionary fundingdiscretionary funding is also
h FY2005. The authority foreach of FY2006 through FY2011.authorized for FY2006.provided for FY2002 through
ram expires December 31,[Section 746][Section 903]FY2007.
iki/CRS-RL31271Note: Congress appropriated $15[Section 9008]
g/w.L. 106-244, Title III]million for this initiative in FY2002.
s.orIn effect, the current funding would
leakbe made mandatory.
://wikinewable Energy Projects
httpe Rural Electrification Act of 1936Amends the Act to allow loanAmends the Act to establish a loanNo provision.


es the Rural Utilities Service,guarantees for the purchase ofand grant program to assist
ich provides credit assistance torenewable energy systems byrenewable energy projects at rural
eneratingfarmers, ranchers, and rural smallelectric utilities and cooperatives.
holesale transmissionbusinesses.Grants may cover up to 75% of a
ent, and local distribution[Section 605]feasibility study or for technical
he Secretary of Agriculture isassistance on a project. Loans may
ed to provide loans andbe used to cover a percentage (to be
ants to improve electricity supplydetermined by the Secretary) of the
urrently, there are noproject cost. For FY2002 through
isions for renewable energy.FY2006, $9 million per year in
U.S.C. 901 et. seq.]mandatory spending is provided, to
remain available until expended.
[Section 904]

CRS-10
Previous Law/PolicyHouse Farm Bill (H.R. 2646 EH)Senate Farm Bill (H.R. 2646 EAS)Final Version (P.L. 107-171)
rogram
e Agricultural Research,No provision.Amends the Act (adding Sec. 409) toNo provision.


authorize $20 million each year for
t of 1998 establishes an account inFY2002 through FY2006 to establish
reasury to be used by theprojects that can show demonstrable
of Agriculture for matchingreductions in net greenhouse gas
ants to address critical emergingemissions or increases in carbon
ricultural issues.sequestration by soils and forests.
.L. 105-185]It also adds farmer cooperatives to
the list of eligible entities.
[Section 905]
iki/CRS-RL31271
g/w
s.or
leak
://wiki
http