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Path to the 2012 Farm Bill: Senate Markup – Energy Title

May 1, 2012

Note to Readers — This is the sixth in a series of posts on the 2012 Farm Bill reported out of the Senate Agriculture Committee on April 26.

Major action on the Farm Bill’s Energy Title was mostly about money as the Senate Agriculture Committee marked up the Agriculture Reform, Food and Jobs Act – the proposed name for the 2012 Farm Bill.  The draft Farm Bill offered to the Committee for consideration provided no mandatory funding for the Energy Title.

Senators Kent Conrad (D-ND) and Richard Lugar (D-IN) offered an Amendment  to provide $800 million in mandatory funding for Farm Bill energy programs.  The Amendment also made significant changes to some of the Title’s programs. Other supporters of the Amendment included Senators Stabenow (D-MI), Harkin (D-IA), Bennet (D-CO), Casey (D-PA), Klobuchar (D-MN), Brown (D-OH), Grassley (R-IA), Thune (R-SD), Cochran (R-MS) and Hoeven (R-ND).

Initially, the Amendment provided that the $800 million was to come from the Economic Adjustment Assistance to Users of Upland Cotton and by a reduction in the premium for catastrophic risk protection for cotton producers.  These offsets were opposed in an Amendment to the Conrad-Lugar Amendment filed by Senator Saxby Chambliss (R-GA).

But at the 11th hour, an additional $1.7 billion was found in the Farm Bill budget when the Congressional Budget scored the savings of the bill offered to the Committee at $24.7 billion. The Committee had committed to a $23 billion reduction in the Farm Bill budget, so the additional amount of $1.7 billion in scored “savings” was available to the Committee during the markup.  With the availability of the funding, the Committee by voice vote approved the Conrad-Lugar Amendment, with only Ranking Member Pat Roberts (R-KS) asking that his disapproval to be noted for the record.

Here are details on how some key Energy Title programs fared in the markup:

Biomass Crop Assistance Program (BCAP):  The Conrad-Lugar Amendment included a complete substitution for BCAP.  The Amendment provides BCAP with $38.6 million in mandatory for each fiscal from FY2013 through FY2017, for a total of $193 million in mandatory funding.  Of this amount, not less than 10 percent or more than 50 percent each fiscal year can be used for collection, harvest, storage and transportation payments (CHST).  NSAC has called for the removal of the CHST component of BCAP but instead the Amendment not only retains CHST but also expressly expands its scope to include the removal of commodity crop residues such as corn stover, from commodity crops.  CHST activities on agricultural land would require conservation plans.

The Conrad-Lugar Amendment limits the removal of woody material under CHST to private land or federal land that is not in a BCAP project area and to material that is a byproduct of preventative treatment to reduce fire hazards or to reduce or contain disease or insect infestation.  The CHST matching payment levels are set at any amount up to $1 for each $1 per ton of eligible material provided by a biomass conversion facility, in an amount not to exceed $20 per ton for a period of four years.  The limit in the current Farm Bill is set at an amount not to exceed $45 per ton for a period of two years.

The Amendment also modifies BCAP project provisions.  A new limit is set for payments to farmers or foresters for establishing a crop or trees in a BCAP project.  The limits are 50 percent of the costs of establishment in an amount not to exceed $500 per acre.  For socially disadvantaged farmers or ranchers the maximum payment for establishment is raised to $750 per acre.  In the current Farm Bill, the USDA Secretary is authorized to make establishment payments up to 75 percent of the costs to establish an eligible perennial crop.  The Amendment did not change the authorization for the Secretary to set annual payments for BCAP project participants subject to specific reductions.

Rural Energy for America Program (REAP):  The Senate Committee bill incorporated some provisions from the Franken-Harkin bill (S.2225) introduced in March.  REAP grants are capped at the lesser of $500,000 or 25 percent of the costs of the activity funded by the grant.

In addition, the Senate Committee bill provides a tiered process for REAP grants and loan guarantees.  The three tiers are grant and loan guarantee applications requesting not more than $80,000; from $80,000 to not more than $200,000; and equal to or greater than $200,000.

The bill requires that USDA provide a more streamlined application process for the applications requesting lower amounts of funding.  Another change to REAP is the addition of Resource Conservation and Development Councils to the list of entities eligible to receive REAP grants for energy audits and renewable energy development assistance.

The Conrad-Lugar Amendment modified the Senate bill to increase REAP funding from discretionary funding of $20 million per year to a total of $241 million in mandatory funding from FY2013 through FY2017, or $48.2 million per year.

Rural Energy Savings Program: The Conrad-Lugar Amendment would add this new program to the Energy Title with $15 million in mandatory funding from FY2013 through FY2017.  The program allows rural electric cooperatives to provide their customers with low-interest loans for energy efficiency upgrades.  The loans would be paid back on a customer’s monthly electricity bill.

Other programs provided with mandatory funding from FY2013 through FY2017 include the Biobased Markets Program provided $15 million; the Biorefinery Assistance Program provided $216 million; the Biofuel Education Program provided $5 million; and the Biomass Research and Development Program provided $130 million.

Both the Repowering Assistance Program and the Forest Biomass for Energy Program are repealed in the Senate Bill, as is a requirement for a Renewable Fertilizer Study.

Categories: Conservation, Energy & Environment, Farm Bill

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