The energy debate on Capitol Hill this year could turn quickly into talk of farm policy as a large section of the utility sector and other groups prepare to make sure energy policy doesn’t get overlooked in next year’s farm bill.
The next five-year reauthorization of the farm bill comes up in 2018, which has groups set to make sure the bill’s increased energy focus over the last decade doesn’t face the cuts it experienced in the last Congress.
The farm bill, formally the Agricultural Act of 2014, authorizes a number of funding programs used by the Agriculture Department to help maintain the nation’s electricity grid, much of which is controlled by nonprofit rural utilities that supply the bulk of rural America’s energy. The co-ops want to make sure Congress doesn’t forget the importance of the programs to the functioning of the grid, which also means more jobs.
“We want to make sure that the rural utility service, which is based within the Department of Agriculture, which has been around for a long time, we want to make sure it remains an important financing source for both electric infrastructure and broadband infrastructure,” said Jim Matheson, president and CEO of the National Rural Electric Cooperative Association.
The Agriculture Department’s utility program supports loan programs that the utility co-ops use to update power plants and power lines that bring electricity to homes and businesses. It also is used to update the local distribution grid through increased energy efficiency and renewable energy, according to the agency, as well as provide water and sewage infrastructure and telecommunications to rural areas.
Matheson’s group represents much of the U.S. utility sector, including almost 1,000 co-operative electric utilities in 47 states. And those aren’t all small operations. The Oglethorpe Power electric cooperative in Georgia, for example, includes 38 utility corporations that comprise a total of $10 billion in assets and serve more than 4 million customers. The company owns shares in a number of hydropower, coal, natural gas and nuclear power plants.
Along with opposing the Environmental Protection Agency’s climate rules, Matheson’s group wants to make sure adequate attention is paid to maintaining the Department of Agriculture’s energy funding, which comes largely from the farm bill and its continually shrinking energy priorities.
The last farm bill was passed in 2014 and saw one of the steepest cuts for energy since the section was created in 2002.
Lawmakers took three years of painstaking deliberations to hash out the extensive 2014 legislation, according to a memo issued by a major Midwest environmental group. The bill provides $694 million in mandatory funding for a group of energy programs from 2014 to 2018. That is a significant drop from the $1.12 billion in the 2008 farm bill and $800 million over five years in the 2002 farm bill, according to the Environmental Law and Policy Center.
Underfunded programs have been a concern for Matheson’s group. “We are going to look a lot at the rural development programs within the Department of Agriculture,” he said. “Some of them have been exceptionally successful. Others have been underfunded.”
He says the new bill provides the opportunity to make the programs stronger. The Rural Economic Loan Grant Program is one such program, which rural utilities want to bolster because the co-ops “are so tied into their communities.” The grant program helps the utilities create revolving funds they can use for projects with the specific purpose of creating jobs.
Matheson said momentum is growing to begin looking at the programs comprehensively in the new Congress. He admits that Congress has had a history of not getting to the large reauthorization bills in the same year they are up, but that only underscores the need to start the discussion now.
In the House, committee aides said the farm bill is on lawmakers’ minds, but the agendas in the agriculture committees and other panels that focus on rural development are still in flux.
House Agriculture Committee spokeswoman Haley Graves said Chairman K. Michael Conaway, R-Texas, has no set agenda yet, but he intends to reauthorize the farm bill before it expires Sept. 30, 2018. Conaway said he believes the bill is enormously important to rural economies, especially when it comes to energy development, and he supports the renewable energy aspects of the legislation.
“The farm bill serves a variety of other important purposes,” including “guaranteed loan financing and grant funding to agricultural producers and rural small businesses to purchase or install renewable energy systems or make energy efficiency improvements,” he told the Washington Examiner. “It also authorizes programs that provide much-needed infrastructure or infrastructure improvements to rural communities, including water and waste treatment, electric power and telecommunications services.”
A leading trade group for bio-based energy and renewable fuels, the Biotechnology Industry Organization, will continue to push for the grant and loan guarantee programs under the farm bill’s section 9003 program and the Biobased Markets Program, according to Paul Winters, director of communications for the group.
The program was set up to help spur development, construction and retrofitting of facilities that produce advanced biofuels, renewable chemicals and bio-based products with loan guarantees of up to $250 million.
BIO wants to “clarify and extend availability of the 9003 program for renewable chemical producers and ensure robust funding for the program,” Winters wrote in an email. “And we would like to work with federal agencies to expand demand and purchasing preference for renewable chemicals and biobased products.”
Many of the programs that support clean energy, renewable fuels and green products under the Agriculture Department are loan guarantees and grants, some of which have mandatory spending levels, which mean the spending can’t be shorthanded when appropriated by Congress. But in the past that funding has made them a target by Republicans looking to rein in spending and green jobs programs.
Winters pointed out that the chemical companies and advanced biofuels companies that have benefited from farm bill funding are substantial job creators. The environmental chemical company Myriant built a plant in Louisiana with an Agriculture Department loan guarantee to produce succinic acid, which is commonly used in the food and beverage industry. Another company, Fulcrum, received conditional approval under the 9003 program, he said.
“The program received significant mandatory funding in the last farm bill and it has been successful in helping companies prove the commercial viability of biorefineries,” he said. “Those biorefineries create new, well-paying jobs in rural areas – including engineers, plant operations and biotech scientists.”
The Myriant plant employs 53 full-time workers, which is four more than its pre-construction target, according to the company. It estimates that 137 indirect jobs were created from the facility, for a total of 190 permanent jobs. In addition, Myriant estimated that 500 jobs were created during the plant’s construction phase. Fulcrum estimates 53 full-time employees once its plant is built, along with over 430 nonpermanent engineering and construction jobs.
Winters added that “there are more renewable chemical companies now seeking to make use of the program, and we want to ensure they have full access.”
Other committees outside of those directly involved in the farm bill, such as the House Small Business Committee, are also likely to begin looking for opportunities for job growth in rural America. The committee has a subcommittee panel directly focused on energy and agriculture policy.
That subcommittee was focused last Congress on expanding the use of renewable and non-renewable energy, as well as conducting oversight of EPA rules under then-GOP chairman Rep. Carlos Curbelo, R-Fla.
Aides were unsure how the oversight agenda will overlap with rural energy priorities in the new Congress. In the Senate, however, the environment committee’s new chairman, Sen. John Barrasso, R-Wyo., said his “early” priorities will include correcting EPA’s regulatory overreach and addressing rural infrastructure projects.
“Our committee will work closely with the next administration to remove these obstacles to economic growth, while protecting the environment,” said Barrasso in a statement soon after being elected the committee’s new chairman on Wednesday.
“We will also work to pass badly needed reforms to problematic EPA regulations issued over the past eight years, as well as finding ways to better empower rural communities by addressing aging roads, bridges and dams,” he said.
An aide said the committee would work to address aging dams that are controlled by the Army Corps of Engineers, some of which produce electricity.
Barrasso has been a strong advocate for increasing rural hydroelectric power plants, which would correspond with his goal of updating of the nation’s aging dam systems.
