On May 20, 2014, the House Committee on Appropriations' Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies (House Agriculture Appropriations Subcommittee) and the Senate Committee on Appropriations' Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies (Senate Agriculture Appropriations Subcommittee) marked up and passed their separate versions of a Fiscal Year (FY) 2015 spending bill for USDA. A copy of the House Agriculture Appropriations Subcommittee's draft bill is available online. A copy of the Senate Agriculture Appropriations Subcommittee's "Mark-up Bill Summary" for its version of the FY 2015 USDA spending bill is available online.
The House Agriculture Appropriations Subcommittee's bill is controversial and includes steep cuts to Farm Bill Energy Title programs recently expanded and provided mandatory funding by the Agricultural Act of 2014 (the 2014 Farm Bill), including to the Biomass Crop Assistance Program and Biorefinery, Renewable Chemical and Biobased Product Manufacturing Assistance Program. Mandatory funding is not usually subject to cuts through the annual appropriations process. The biofuels and renewable chemicals industries are working to ensure mandatory funding for these programs is included in the final FY 2015 USDA spending bill.
The Biobased and Renewable Products Advocacy Group (BRAG™) reported on the significance of the expanded Energy Title programs and mandatory funding for them provided under the 2014 Farm Bill. A copy of that report is available online.
On April 3, 2014, the U.S. Department of Agriculture (USDA) announced that it has launched a website that provides details on Farm Bill implementation. The website provides useful information on USDA's implementation of the Farm Bill and includes information on the economic implications of the bill's implementation prepared by the Economic Research Service.
On December 11, 2013, the U.S. Departments of Agriculture (USDA) and Navy announced that as part of their joint "Farm-to-Fleet" initiative, the acquisition of biofuel blends will be included into regular Department of Defense domestic solicitations for jet engine and marine diesel fuels. The Navy will seek to purchase JP-5 and F-76 advanced drop-in biofuels blended from 10 to 50 percent with conventional fuels. Funds from USDA's Commodity Credit Corporation will assist the effort.
The Navy and USDA plan to hold an "Industry Day" to explain the effort on January 30, 2014. A copy of the USDA press release on the announcement is available online.
In 2011, DOE, USDA, and the Navy announced a joint $510 million effort to help promote the commercialization of domestic advanced drop-in biofuels for military and commercial use. The Navy and DOE have been challenged with securing their portion of the funding through the appropriations process. Several in Congress have criticized the cost of the biofuels compared to traditional sources of energy. Under the initiative announced this week, the Navy will expect that drop-in biofuels will be available for less than $4 per gallon by 2016, making them competitive with traditional sources of fuel.
On November 25, 2013, the U.S. Department of Agriculture (USDA) published a notice inviting applications for nearly $10.5 million in USDA value-added producer grants (VAPG), which help agricultural producers enter into value-added activities related to the processing and/or marketing of biobased value-added products. A copy of the USDA press release on the announcement is available online, and a copy of the Federal Register notice is available online. The funding notice encourages "applications from eligible entities supporting value-added activities related to bio-based products…Bio-based products are defined as commercial or industrial products composed of biological products or renewable domestic agricultural materials or forestry materials, including construction materials, fibers, papers, compost, fertilizer, lubricants, plastics and paint (see online for more information)." Applications are due by February 24, 2014.
This week could determine whether Congress will be able to pass its next five-year Farm Bill by the end of this year. Congress is expected to adjourn for its Thanksgiving recess at the end of this week, and the House of Representatives is expected to adjourn for the year on December 13, 2013. With the little time remaining to conduct official Congressional business this year, two of the four principal Farm Bill conferees working to join the House and Senate versions of the Farm Bill into one final piece of legislation, have made public statements stressing the importance of reaching a deal by the end of the week. Senator Debbie Stabenow (D-MI) reported that the four principal conferees are working intensely this week to reach agreement on a framework for the final bill. Representative Frank Lucas (R-OK) has reportedly asserted that this is the "deadline" week for conferees to reach agreement on final legislation to provide the House of Representatives time to pass it before the year's end.
While there are some reports that progress is being made to merge the House and Senate versions of crop insurance programs, the most significant difference apparently remains on food stamps. The Senate-passed version contains $4 billion in cuts to the program over ten years, while the House version would cut $40 billion. There is some talk that Congress could look to pass a short term extension of the current Farm Bill if enough progress is not made this week.
Last week, part of EPA's much anticipated 2014 proposed RFS rule, or at least a draft of the rule, was leaked and widely disseminated. If the text of the leaked proposed rule is representative of the actual proposed rule, the oil and gas industry would likely view it more favorably than would the biofuels industry. In the leaked version of the proposal, EPA would use its authority under the RFS to adjust downward the cellulosic, advanced, and overall renewable fuel volume requirements for 2014. It would require obligated parties to blend or use 15.21 billion gallons of renewable fuel in 2014, as opposed to the 18.15 which is required under the 2007 statute.
In the past few months, AFPM and API filed a joint petition, and Valero Energy Corporation filed a petition, requesting that EPA grant a partial waiver of the 2014 statutory RFS requirements. Generally, AFPM and API argued that because the 2014 RFS requirements would require obligated parties to blend more E10 than they are permitted to under the law, they would necessarily restrict the U.S. fuel supply, which would harm consumers. To avoid this harm, AFPM and API requested that EPA waive the 2014 RFS requirements to no more than 9.7 percent of the U.S. fuel supply. Valero's letter pointed out that due to the blend wall, RIN prices are higher than they should be, which reportedly is causing economic harm to affected parties, including consumers.
The Renewable Fuels Association (RFA) and the Biotechnology Industry Organization (BIO) sent separate letters to EPA urging EPA to deny the AFPM and API joint petition. They both assert that there are several options obligated parties have to meet their 2014 RFS requirements, including the greater use of E85, E15, and drop-in fuels.
Both U.S. Department of Agriculture (USDA) Secretary Tom Vilsack and EPA Administrator Gina McCarthy have issued statements denouncing the leak and reiterating that the final version of the 2014 RFS proposed rule is still being deliberated.
On September 30, 2013, the U.S. Department of Agriculture (USDA) announced it had completed its second sale of sugar under the Food, Conservation and Energy Act of 2008 (the 2008 Farm Bill) Feedstock Flexibility Program (FFP). Reportedly, USDA purchased the sugar for $65.9 million and sold it immediately for $12.6 million, a $53.3 million loss. Currently, no information is available about the sale on USDA's website because the website is suspended during the government shutdown.
The 2008 Farm Bill, which expired on September 30, directs USDA to keep sugar prices at or above certain levels, and authorizes USDA either to acquire sugar through forfeiture of sugar loans made by the USDA's Commodity Credit Corporation or to buy sugar and sell it to bioenergy producers until prices raise to those levels. Domestic sugar prices have been falling this year.
USDA was criticized for its first sale of sugar as part of the FFP because in that instance USDA had purchased 7,118 short tons of refined beet sugar for $3.6 million and sold it to renewable fuel producer Front Range Energy for $900,000 (a loss of $2.7 million).
Not only did the U.S. government shut down at midnight on Monday, but so did the nine month extension of the 2008 Farm Bill. With no new five-year Farm Bill, the future is uncertain for rural energy programs supported by the U.S. Department of Agriculture (USDA), including the Biorefinery Assistance Program that promotes the development of biorefineries in the U.S.
As we have reported earlier this year, the U.S. Senate passed its version of the next five-year Farm Bill, including funding for farm, nutrition, and energy programs. Importantly, the Senate bill continues and provides mandatory funding for existing Farm Bill energy programs and extends eligibility to renewable chemicals. After failing to pass a combined bill, the U.S. House of Representatives passed a "farm-only" bill this summer and a nutrition-only bill cutting $40 billion in food stamps just last week. The House farm-only Farm Bill contains an energy title without mandatory funding that will instead be subject to annual appropriations, and it does not extend the energy programs to renewable chemicals.
There has been hope that though the differences are deep, the House and Senate will be able to pass a five-year Farm Bill by the end of the year when mandatory funds for commodity subsidies and food stamps expire. Whether this is true now largely depends on how quickly Congress re-opens the government and raises the debt ceiling to ensure the ability of the U.S. to meet its financial obligations.
Last week, the U.S. Department of Agriculture (USDA) announced that it is seeking bids from bioenergy producers to purchase sugar from the Department as part of the Food, Conservation and Energy Act of 2008 (the 2008 Farm Bill) Feedstock Flexibility Program (FFP). This will be the second time that USDA will utilize the FFP. The 2008 Farm Bill directs USDA to keep sugar prices at or above certain levels, and authorizes USDA to either acquire sugar through forfeiture of sugar loans made by the USDA's Commodity Credit Corporation or to buy sugar and sell it to bioenergy producers until prices raise to those levels. Domestic sugar prices have been falling this year.
USDA was criticized for its first sale of sugar as part of the FFP about a month ago because in that instance USDA had purchased 7,118 short tons of refined beet sugar for $3.6 million and sold it to renewable fuel producer Front Range Energy for $900,000 (a loss of $2.7 million).
The Federal Aviation Administration (FAA) has announced that it will provide $40 million for a Center of Excellence (COE) on sustainable aviation fuel and the environment. The funds will be distributed in $4 million increments each year for the next ten years. Washington State University and the Massachusetts Institute of Technology will be leading the effort, and several other universities will be involved. For a full list of participants and more information on the initiative, please see a copy of FAA's press release, which is available online.
This announcement illustrates the federal government's important role in and commitment to facilitating the ongoing development and commercialization of U.S. biofuels. This year, the FAA and the U.S. Department of Agriculture (USDA) renewed their joint agreement to promote the development of aviation biofuels. They are aiming for one billion gallons of commercial aviation capacity by 2018.