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

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

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 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
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)

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! 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.

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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)]

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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]

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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]

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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]

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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]

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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]

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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]

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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]