Food, Conservation, and Energy Act of 2008

Legislative history

One version of this legislation, the Farm, Nutrition, and Bioenergy Act of 2007 was passed by the United States House of Representatives on July 27, 2007. Despite opposition from some senators, including a failed amendment proposal by Senator Richard Lugar and a veto threat by President Bush, the Senate version of the bill, called the Food and Energy Security Act, was passed by the Senate Agriculture Committee on October 25, 2007, and later by the full Senate on December 14. In late April 2008, congressional negotiators finally reached a deal to reconcile the House and Senate bills. The deal increased spending on food stamps and other food programs while mostly maintaining the current farm subsidies, despite record farm profits.

On May 15, the House and Senate passed the bill, but President Bush issued a veto on May 21. The House voted to overturn the president's veto shortly thereafter, and with the margins by which the bill was passed, a Senate override also occurred; so the Congress overrode the president's veto, passing the bill into law (Public Law 110-234, the Food and Energy Security Act of 2007). However, the veto override was moot, as a 34-page section of the bill was omitted in the version sent to the White House. In effect, the President vetoed a bill Congress never considered. The bill had to be re-passed by Congress.

The House passed the Farm Bill again on May 22, and the Senate shortly thereafter. President Bush again vetoed the measure, but this veto was overridden in both Houses on June 18, so the Farm Bill in its entirety became law. A similar situation occurred in 2005 with the Deficit Reduction Act, where in the enrolling process certain mistakes were made changing the text of the bill. In that case, the bill was considered to be law even with the mistakes since the Speaker of the House and the President Pro Tem of the Senate attested that the language sent to the President was indeed the text that was passed by Congress..

The bill originally caused controversy because the "pay-as-you-go" (Clause 10 of Rule XXI of the Rules of the United States House of Representatives) rule was waived. That rule prohibits the consideration of bills that increase the deficit in either a six-year period or an eleven-year period. The bill itself did not cause such an increase if using a "baseline", which is an estimate of future revenue and spending levels of the U.S. government, that was issued in 2007. A more recent baseline, issued in 2008, showed a large increase in the deficit over the applicable time periods. While other points of order are waived under certain circumstances, the paygo point of order is rarely ignored.

Provisions

In regards to current farm regulation, this Act focuses on adjusting payment levels and eligibility requirements while bringing forth a new Average Crop Revenue Election program. Along with this, a permanent disaster assistance program is introduced with adjustments to the crop insurance program. Several new titles look towards horticultural crops, organic agriculture, livestock, and poultry. Also, funding is increased and more programs are instituted to support producers who are alternating to organic agriculture. Some new rules are implemented within the Act for governing hog and poultry production contracts and also safety regarding poultry plant foods.

As for conservation, working land conservation and improved environmental practices have been implemented. An expansion of the Conservation Security Program gives rise to the new Conservation Stewardship Program which is a voluntary program that influences producers to address resource concerns. This involves improving, maintaining, and managing conservation practices that already exist and also taking part in extra activities. The same changes apply to the Energy Title of the Act which also expands the development of bio-based energy sources along with other renewable sources. Tax provisions on biofuels such as ethanol are introduced as well.

Components

It accelerates the commercialization of advanced biofuels, including cellulosic ethanol, encourage the production of biomass crops, and expand the current Renewable Energy and Energy Efficiency Program.

On April 29, 2008, the Farm Bill contained three major components:

Main sections

Section 9003 of the Food, Conservation, and Energy Act of 2008 provides for grants covering up to 30% of the cost of developing and building demonstration-scale biorefineries for producing "advanced biofuels", which essentially includes all fuels that are not produced from corn kernel starch. It also allows for loan guarantees of up to $250 million for building commercial-scale biorefineries to produce advanced biofuels. The bill funds the biorefinery program by drawing $75 million in funds from the Commodity Credit Corporation (CCC) for fiscal year (FY) 2009, increasing to $245 million by FY 2010. It also authorizes $150 million per year in discretionary funds for the program.

Section 15321 of the bill establishes a new tax credit for producers of cellulosic biofuels, that is, biofuels produced from wood, grasses, or the non-edible parts of plants. The new cellulosic biofuel producer credit is set at $1.01 per gallon and applies only to fuel produced and used as fuel in the United States. In addition, Section 9005 of the bill provides $55 million in CCC funds in FY 2009 to support advanced biofuel production, increasing to $105 million by FY 2012. It also authorizes up to $25 million per year in discretionary funding.

The more crop-oriented measures include Section 9010 of the bill, which allows the CCC to buy sugar from U.S. producers and sell it to bioenergy producers, and Section 9011, which creates the Biomass Crop Assistance Program to support the establishment and production of biomass crops.

Section 9007 of the bill renames the U.S. Department of Agriculture's current Renewable Energy and Energy Efficiency Program as the "Rural Energy for America Program", providing $55 million in CCC funds for FY 2009, increasing to $70 million for FY 2011 and 2012, while authorizing another $25 million in discretionary funds. The program will provide grants of up to 25% of the cost of renewable energy systems and energy efficiency improvements for agricultural producers and rural small businesses, as well as guarantees for loans as large as $25 million.

Section 9009 of the bill creates a new "Rural Energy Self-Sufficiency Initiative", which will support efforts to develop community-wide renewable energy systems. The bill provides no firm funding for the initiative but authorizes up to $5 million per year in discretionary funds.

Section 9013 also authorizes up to $5 million per year to support community-wide wood-fueled energy systems.

Energy efficiency, renewable energy and progress

The USDA announced on 2008-08-27 that 639 farms and rural businesses in 43 states and the Virgin Islands have been selected to receive $35 million in grants and loan guarantees for renewable energy systems and energy efficiency improvements. While many of the awards typically go towards more energy-efficient grain dryers, the USDA notes that a farm in Iowa will use its grant to replace a propane heating system with a geothermal heating system, while a firm in Louisiana will purchase energy-efficient electric motors for an irrigation well.

On January 16, 2009, the USDA also announced the first loan guarantee for a commercial-scale cellulosic ethanol plant.

Section 9003 allowed the USDA Rural Development office to approve this $80 million loan to Range Fuels Inc. Range Fuels produces low carbon bio fuels from any and all biomass. The $80 million loan is dedicated to building a facility that will produce cellulosic ethanol from wood chips. In 2010 the plant is expected to achieve an output level of 20 million gallons of ethanol per year. Other benefits of the plant include an estimated 63 jobs that will be created to build and operate the facility.

The grants and loans are awarded through the Renewable Energy Systems and Energy Efficiency Improvements Program of the USDA Rural Development office. The program was created by Section 9006 of the 2002 Farm Bill and expanded under the 2008 Farm Bill.

A few renewable energy source programs under the act include:

Food assistance

Food and Nutrition Programs comprise approximately 80% of the total 2008 Food, Conservation & Energy Act bill budget. Improvements to domestic food nutrition and assistance for low-income families is greatly supported by the bill. This area provides for the Supplemental Nutrition Assistance Program (SNAP), Emergency Food Assistance Program, as well as the free fresh fruit and vegetable snack program which is meant to help schools with students in need. Also, the act provides help for organizations such as food banks and soup kitchens. Promoting savings is another provision of the act by improving resources limits and no longer counting tax-preferred retirement accounts and education accounts toward the limit of resources. The purchasing power of SNAP is also going to stop losing value each year under the act and the rules of SNAP will fully account for annual inflation.

The bill also increased funding, with the program being available in 35 elementary schools in each state. It allows more schools to be added in proportion to the student population of each state and schools are selected based on free and reduced lunch percentage. The program no longer permits nuts but rather looks to fresh fruits and vegetables instead. With the extra nutrition title funding, it appropriates $4 million to establish a pilot program in many different schools in several states. This will provide whole grain products to participating school nutrition programs. $50 million a year is distributed to provide schools with fresh fruits and vegetables with the help of the Farm Bill while $3 million is used to conduct surveys about the school nutrition to examine what exactly the students eat.

Opposition

Reports from the United Nations and the World Trade Organization (WTO) in 2007 criticized the United States and other developed nations for their continued farm trade subsidies. Such subsidies, according to the reports, prevent fair competition from developing nations. Because of its continued refusal to conform to WTO guidelines, the United States may be the target of up to $4 billion of trade sanctions by Brazil.

Other organizations have voiced opposition to the farm subsidy policy of the United States, such as the Cato Institute's Center for Trade Policy Studies, the Union of Concerned Scientists, the Center for Rural Affairs, and Oxfam America.

President George W. Bush also expressed opposition to the bill, and vetoed it because of its high cost and negative impact on poorer farmers; his veto threat enabled numerous Republican congressmen to attach pork to it, making the bill more expensive than it would have been otherwise, since Democratic leaders needed Republican votes to override the veto. Bush claimed that it was too generous for already wealthy farmers who did not truly need the extra financial assistance. Others argued that the bill should include more subsidies for renewable energy. In negotiations between Congressional legislators and the White House, President Bush indicated that the cap on payments to anyone making over $750,000 per year was still too high, and that if the cap were lowered to anyone making over $200,000, he would support the bill.

Food experts, international aid groups, and the White House suggest that the bill does not focus enough on the globally growing food crisis around the world. Some of the money could be used to feed poor children who are suffering in other countries but instead farmers in the United States are flourishing. Only about 1 percent of the bill's total cost gets sent abroad to provide a small amount of food relief to those in need. International aid groups have criticized farm bills in the United States for ignoring poor farmers in developing countries by causing them to compete with wealthy, taxpaying American farmers. Billions of dollars in subsidies are distributed to these farmers no matter how much they grow, the groups say, and lawmakers failed to help the people in need.

Payment limits

A major factor and controversial issue involved in the act included the amount of payments the farmers were receiving. Many people who qualified to receive funding were taking advantage of this opportunity by taking steps to substantially increase the funds they were gaining. This included getting access to more land thus leading to more government funds or even using a spouse to potentially be eligible for more payments. Spouses were automatically credited for being married to an actively engaged farmer which allowed for more benefits. So in order to prevent this, certain laws were enacted within the act that reduced this problem so that large operations would be less likely to try and game the system and collect high amounts of direct payments.

One of the limits that was imposed under the Farm Bill's laws was that farms are not eligible if non-farm income exceeds $500,000 or if gross farm income is over $750,000 over a three-year period. Direct and Counter-Cyclical Program limits are the same as what they were in the 2002 Farm Bill. Payments are limited to $40,000 for Direct Payments and for Counter-Cyclical Payments to $65,000 per entity. Also, a limit of $65,000 per individual is placed under ACRE payments. The only real requirement for being able to receive these program payments is to be actively engaged in farming, contributing capital, land, or machinery, and providing labor/management.

Research

The bill created the National Institute of Food and Agriculture (NIFA) which will consolidate federal sector agricultural research. In addition the bill mandates: