For other versions of this document, see http://wikileaks.org/wiki/CRS-RL31271 ------------------------------------------------------------------------------ Order Code RL31271 Report for Congress Received through the CRS Web 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 bill­The 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 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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) CRS-2 ! 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/Policy House Farm Bill (H.R. 2646 EH) Senate Farm Bill (H.R. 2646 EAS) Final Version (P.L. 107-171) Miscellaneous laws and regulations Various titles Title IX - Energy, and other sections Title IX - Energy, and other sections (see below) Commodity Credit Corporation (CCC) Bioenergy Program Under the Bioenergy Program, CCC Animal fats, agricultural byproducts, No Provision. The program is extended and may grant payments to ethanol and and oils are added to the list of expanded. Mandatory spending of up biodiesel producers who expand their allowable commodities. Note: S. 1731 expresses the sense of to $150 million is provided annually production capacity. Payments are [Section 922] the Congress that the Bioenergy for FY2003 through FY2006. The intended to help cover the purchase Program should be continued and Congressional Budget Office cost of the additional commodities expanded. In addition, the section estimates that $204 million total will necessary for that expansion. states that expanded ethanol and be authorized between FY2002 and Allowable commodities include biodiesel production will be needed FY2006. crops such as barley, corn, soybeans, to phase out methyl tertiary butyl [Section 9010] and wheat, as well as cellulosic crops ether (MTBE)­a common additive in such as switchgrass and short rotation gasoline that has contaminated trees. The program is scheduled to groundwater in several states. terminate at the end of 2002. [Section 907] [7 CFR 1424] Renewable Energy on Conservation Reserve Program (CRP) Lands The Farm Security Act of 1985 Amends Section 3832 of the Act to Amends Section 3832 of the act to Amends Section 3832 of the act to created the Conservation Reserve allow the use of CRP land for wind allow the use of CRP land for wind allow the use of CRP land for wind Program (16 U.S.C. 3830 et. seq.) to energy generation and biomass energy generation, with reduced energy generation and biomass assist and encourage farmers and harvesting for energy production, payments. harvesting for energy production. ranchers to conserve and enhance soil with reduced payments. [Sec. 212(h)] [Sec. 2101] and other resources, but does not [Sec. 213] specify renewable energy projects. [Sec. 3832(a)(7)(A)] CRS-4 Previous Law/Policy House Farm Bill (H.R. 2646 EH) Senate Farm Bill (H.R. 2646 EAS) Final Version (P.L. 107-171) Emergency Loans to Respond to Sharply Increasing Energy Costs The Consolidated Farm and Rural Amends the Act to allow loans in No provision. No provision. Development Act (7 U.S.C. 1969) response to economic emergencies, provides for emergency loans for which are defined to include sharply natural disasters, but does not include increasing energy costs. high energy costs as a disaster. [Sec. 510] [Sec. 329] Grants to Reduce Hazardous Forest Fuels for Energy Production The Cooperative Forestry Assistance Creates a new section of law which Similar to the House provision, but No provision. Act of 1978 (16 U.S.C. 2101 et. seq) authorizes the Secretary of amends the Cooperative Forestry provides for technical and financial Agriculture to provide grants to Assistance Act to add a section on assistance for rural fire control. energy producers who purchase hazardous fuels reductions instead of There are no provisions for biomass biomass that poses a wildfire hazard establishing a new section of the reduction grants. for the production of electric power, code. [P.L. 95-313] useful heat, or transportation fuels. [Sec. 808] Authorizes $50 million each fiscal year. [Sec. 921] Clean Energy Under the current law, the Several sections amend various laws. CFRDA is amended to add a Subtitle In several sections, existing laws are Consolidated Farm and Rural (See below.) L (3 chapters) on "Clean Energy" not amended, but new sections of law Development Act (CFRDA) (7 that establishes programs on are created. (See below.) U.S.C. 1921 et. seq.), there are no biobased products, renewable energy provisions for clean energy. and energy efficiency, and carbon [P.L. 87-128] sequestration. [Section 902] CRS-5 Previous Law/Policy House Farm Bill (H.R. 2646 EH) Senate Farm Bill (H.R. 2646 EAS) Final Version (P.L. 107-171) Clean Energy - Chapter 1: Biobased Product Development 1. Biobased products. No provision 1. No provision 1. Requires the Secretary of 1. Similar to the Senate provision. for biobased products under CFRDA. Agriculture to publish a list of However, products are not required biobased products that are to be environmentally preferable. environmentally preferable (defined Mandatory spending of $1 million as a having a reduced effect on annually is provided for FY2002 human health and the environment through FY2007. compared with competing products). [Section 9002] Federal agencies are required to purchase environmentally preferable biobased products, if available. For FY2002 through FY2006, $2 million per year in mandatory spending is authorized, to remain available until expended. [Section 388B] 2. Biorefineries. No provision for 2. There is no provision for 2. Establishes a new grant program to 2. Similar to the Senate provision. biorefineries under CFRDA. biorefineries. However, the bill assist in the development and However, no mandatory spending is amends the Agricultural Research, construction of biorefineries, defined authorized. Extension, Education, and Reform as facilities that convert biomass into [Sec. 9003] Act of 1988 (7 U.S.C. 7624) to fuels and chemicals. For FY2002 extend authority to provide grants for through FY2006, $15 million per pilot projects on biobased product year in mandatory spending is development. Authority, which authorized, to remain available until expired at the end of FY2001, is expended. 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/Policy House Farm Bill (H.R. 2646 EH) Senate Farm Bill (H.R. 2646 EAS) Final Version (P.L. 107-171) 3. Biodiesel fuel. No provision for 3. No provision. 3. Establishes a new program to 3. Similar to the Senate provision. biodiesel fuel under CFRDA. provide grants to nonprofit However, only $1 million in annual organizations that educate fleet mandatory spending is authorized for operators and the public about the FY2003 through FY2007. benefits of biodiesel. For FY2002 [Section 9004] through FY2006, $5 million annually is authorized to remain available until expended. [Section 388D] Clean Energy - Chapter 2: Renewable Energy Development and Energy Efficiency 1. Loans and loan guarantees. 1. Amends Sec. 310 of the Act to 1. Establishes a new program to 1. Similar to the House provision. CFRDA allows loans and loan allow loans and loan guarantees for assist farmers, ranchers, and rural No new budget authority is provided. guarantees for the installation of solar renewable energy systems, including business ventures in the [Section 6013] energy systems. wind generators and anaerobic establishment or expansion of [Sec. 310] digesters. No new budget authority electrical facilities powered by is provided. renewable energy. For FY2002 [Sec. 606] through FY2006,$16 million per year in mandatory spending is authorized, to remain available until expended. [Section 388E] 2. Energy audits. No provision for 2. No provision 2. Establishes a new grant program 2. Similar to the Senate provision. energy audits under CFRDA. for entities that assist farmers, However, no mandatory spending is ranchers, and rural small businesses authorized. 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/Policy House Farm Bill (H.R. 2646 EH) Senate Farm Bill (H.R. 2646 EAS) Final Version (P.L. 107-171) 3. Grants for energy systems. No 3. No provision. 3. Establishes a new system of grants 3. Similar to the Senate provision, provision for energy systems under and loans to farmers, ranchers, and except that energy efficiency CFRDA. rural small businesses for the improvements are also eligible. purchase of renewable energy Further, the Secretary of Agriculture systems. Recipients must have sales is given authority to define a "small less than $1 million per year. For business." $23 million in annual FY2002 through FY2006, $33 mandatory spending is authorized for million per year in mandatory FY2003 through FY2007. spending is authorized, to remain [Section 9006] available until expended. [Section 388G] 4. Hydrogen and fuel cell 4. No provision. 4. Establishes a new grant program 4. The Departments of Agriculture applications. No provision for for cooperative research on hydrogen and Energy are required to cooperate hydrogen and fuel cells under and fuel cell technologies for use in on research into farm and rural CFRDA. farm, ranch, and rural applications. applications for hydrogen fuel and For FY2002 through FY2006,$5 fuel cell technologies. No new million per year in mandatory budget authority is provided. spending is authorized, to remain [Section 9007] available until expended. [Section 388H] 5. Technical assistance. No 5. Amends the Food Security Act of 5. Allows USDA to provide 5. No provision. provision for technical assistance to 1985 (16 U.S.C. 3839aa) to allow the technical assistance to farmers and support energy development under Secretary to provide education and ranchers to develop renewable energy CFRDA. technical assistance to farmers and resources. The Secretary may retain ranchers to develop and market up to 4% of the funds in the above renewable energy resources. No new areas to assist farmers and ranchers budget authority is created. in developing and marketing [Sec. 942] renewable energy. [Section 388I] CRS-8 Previous Law/Policy House Farm Bill (H.R. 2646 EH) Senate Farm Bill (H.R. 2646 EAS) Final Version (P.L. 107-171) Clean Energy - Chapter 3: Carbon Sequestration Research, Development and Demonstration Program 1. Carbon sequestration research. 1. Amends the Agricultural Risk 1. Authorizes new funding for basic 1. Similar to the House provision. No provision for carbon sequestration Protection Act of 2000 (P.L. 106- and applied carbon sequestration Research authority is extended research under CFRDA, however, 224, Sec. 211) to extend the research, conducted either by the through FY2007, but no new other programs under the Department authorization of the Carbon Cycle Secretary of Agriculture, or by other mandatory spending is provided. of Agriculture, as well as the Research Program, which provides entities funded through competitive [Sec. 9009] Department's general authority for grants to land grant universities for grants. The research goals include research, do provide for such carbon cycle research. Authorization the study of net sequestration of research. is extended through FY2011 carbon by soils and plants, and the (originally a one-time authorization net greenhouse gas emissions from of $15 million). agriculture. $25 million is authorized [Sec. 751] annually for FY2002 through FY2006. [Section 388J] 2. Carbon sequestration 2. No provision. 2. Authorizes projects, administered 2. No provision. demonstration projects. No by the Secretary, to demonstrate the provision 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/Policy House Farm Bill (H.R. 2646 EH) Senate Farm Bill (H.R. 2646 EAS) Final Version (P.L. 107-171) Biomass Research and Development The Biomass Research and Extends authority for the program Amends the Act to provide additional Similar to the Senate version. Development Act of 2000 provides through FY2011; adds animal mandatory funding of $15 million Authority is extended through competitive funding for R&D byproducts to the definition of each year for FY2002 through FY2007. This section provides projects on biofuels and other "biomass"; and adds a livestock trade FY2006, to remain available until mandatory spending of $5 million for biobased chemicals and products, association representative to the expended. Program authority is FY2002 and $14 million annually administered by the Secretaries of Technical Advisory Board. extended by one year, to September between FY2003 and FY2007. An Agriculture and Energy. $49 million Authorized appropriations will 30, 2006, and an additional $49 additional $49 million annually in per year is authorized for FY2002 increase from zero to $49 million in million in discretionary funding discretionary funding is also through FY2005. The authority for each of FY2006 through FY2011. authorized for FY2006. provided for FY2002 through the program expires December 31, [Section 746] [Section 903] FY2007. 2005. Note: Congress appropriated $15 [Section 9008] [P.L. 106-244, Title III] million for this initiative in FY2002. In effect, the current funding would be made mandatory. Renewable Energy Projects The Rural Electrification Act of 1936 Amends the Act to allow loan Amends the Act to establish a loan No provision. authorizes the Rural Utilities Service, guarantees for the purchase of and grant program to assist which provides credit assistance to renewable energy systems by renewable energy projects at rural build and operate electric generating farmers, ranchers, and rural small electric utilities and cooperatives. facilities, wholesale transmission businesses. Grants may cover up to 75% of a equipment, and local distribution [Section 605] feasibility study or for technical lines. The Secretary of Agriculture is assistance on a project. Loans may authorized to provide loans and be used to cover a percentage (to be grants to improve electricity supply determined by the Secretary) of the in rural areas. Currently, there are no project cost. For FY2002 through provisions for renewable energy. FY2006, $9 million per year in [7 U.S.C. 901 et. seq.] mandatory spending is provided, to remain available until expended. [Section 904] CRS-10 Previous Law/Policy House Farm Bill (H.R. 2646 EH) Senate Farm Bill (H.R. 2646 EAS) Final Version (P.L. 107-171) Carbon Sequestration Demonstration Program The Agricultural Research, No provision. Amends the Act (adding Sec. 409) to No provision. Extension, and Education Reform authorize $20 million each year for Act of 1998 establishes an account in FY2002 through FY2006 to establish the Treasury to be used by the projects that can show demonstrable Secretary of Agriculture for matching reductions in net greenhouse gas grants to address critical emerging emissions or increases in carbon agricultural issues. sequestration by soils and forests. [P.L. 105-185] It also adds farmer cooperatives to the list of eligible entities. [Section 905] ------------------------------------------------------------------------------ For other versions of this document, see http://wikileaks.org/wiki/CRS-RL31271