The 2002 Farm Bill: Conservation and Energy Highlights

Martha L. Noble
mnoble@msawg.org

On May 13, 2002, President Bush signed the Farm Security and Rural Investment Act of 2002 (the 2002 Farm Bill), Public Law 107-171. The 2002 Farm Bill authorizes federal farm programs through 2007 and includes significant changes to the federal farm conservation programs and the addition of a new Energy Title. The Conference Report for the 2002 Farm Bill, House Report 107-424, with the Act's text and the Joint Explanatory Statement of the Conference Committee is posted on the Thomas Website at http://thomas.loc.gov/cp107/cp107query.html (see list of Conference Reports). This article briefly describes conservation and energy highlights of the 2002 Farm Bill.

Conservation - Title II
Conservation Security Program: The Conservation Title includes a new nationwide, green payment program, the Conservation Security Program (CSP), which is open to all types of agricultural producers and agricultural land. The program is established as an entitlement program, with mandatory funding. The CSP focuses on conservation planning and implementation of conservation practices and systems to address specified resources of concern. Program payments include a base payment dependent on the amount of enrolled acreage, cost-share payments for both the establishment and the maintenance of conservation practices, and enhanced payments for exceptional performance or participation in a variety of monitoring and assessment programs. The program provides for three, graduated tiers of enrollment, with Tier I addressing a resource of concern on part of an agricultural operation, Tier II addressing at least one resource of concern on the entire agricultural operation, and Tier III addressing all resources of concern on the entire agricultural operation. Overall limits on program payments increase with the tiers. The USDA Natural Resources Conservation Service is administering the CSP and intends to have program regulations in place in time for the 2003 crop year.

Grasslands Reserve Program: Another new addition to the Conservation Title is the Grasslands Reserve Program (GRP), which provides for the USDA to enroll up to 2 million acres of uncultivated or restored grasslands in long-term contracts or permanent easements. Under the agreements or easements, the landowner may not produce crops, except hay, or other agricultural commodities that break the soil surface including fruit trees or vineyards. The landowner may use the land for grazing with measures to protect nesting birds and to provide for fire rehabilitation and construction of fire breaks and fences. USDA may delegate the authority to hold and enforce easements to private organizations and state agencies. USDA has not yet assigned an agency to administer this program.

Environmental Quality Incentives Program: The most controversy concerning existing conservation programs was generated by amendment of the Environmental Quality Incentives Program (EQIP). The program was targeted by the large-scale confined animal feeding operation sector as a vehicle to receive federal farm payments to comply with federal and state regulatory measures dealing with environmental and public health threats from these operations. Statutory provisions removed from EQIP included directives to maximize environmental benefits from program dollars spent, to address serious environmental threats, to encourage low cost alternatives, and to target funding to priorities identified by local working groups. Explicit statutory discretion given to the USDA to establish a blanket prohibition on funding construction of animal waste handling structures and facilities for large confined livestock and poultry feeding operations was also deleted. In addition, maximum program payments were raised from $50,000 to $450,000 per producer over the 6-year life of the 2002 Farm Bill, with a provision for direct attribution of payment. Authorized program funding, set at $200 million per fiscal year under the 1996 Farm Bill, increases over the term of the 2002 Farm Bill to a level of $1.3 billion in fiscal year 2007 with a total of $6.2 billion authorized over the life of the 2002 Farm Bill. Additional funding is authorized for the USDA to promote surface and groundwater conservation through improvement of irrigation systems, conversion to less water-intensive crops or dryland farming, and other measures.

Conservation Reserve Program: The Conservation Reserve Program (CRP) allows USDA to enter into long-term agreements to provide rental payments and cost-share payments to landowners who remove land from agricultural commodity production and restore the land to conserving uses. The program also provides for the sign-up of smaller acreage under a buffer initiative that incorporates a variety of conservation practices into working agricultural land. The 2002 Farm Bill raised the acreage cap on the program from 36.4 million acres to 39.2 million acres. New measures were included to discourage landowners from bringing uncultivated cropland into production in order to enroll it into the program and to allow haying and grazing on CRP land with wildlife protections and rental rate adjustments. In addition, the program was amended to allow wind turbines and the harvesting of biomass energy crops on CRP land.

Wetlands Reserve Program: Under the Wetlands Reserve Program, USDA may enter into agreements or easements with landowners to provide compensation for retiring land from agricultural production and restoring and maintaining the land as functional wetlands or buffer areas adjacent to wetlands. The 2002 Farm Bill raises the acreage cap for this program from 975,000 acres to 2,275,000 acres and directs the USDA to enroll 250,000 acres each calendar year.

Wildlife Habitat Incentives Program: This program authorizes USDA to enter into agreements with private landowners to develop and improve fish and wildlife habitat. The 2002 Farm Bill targeted fifteen percent of program funds to long-term agreements and increased total funding to $360 million.

Farmland Protection Program: This program allows the USDA to provide federal funds for the purchase of farmland conservation easements to protect working agricultural land from conversion to non-agricultural uses. The 2002 Farm Bill expands the program by adding nonprofit private organizations as eligible entities that may receive program funds in order to hold easements. States, local governments, and tribes continue to be eligible entities. In addition, the acreage limitation on the program is removed, and farm and ranch land containing historical and archaeological sites is eligible for inclusion in an easement.

Miscellaneous Provisions: The 2002 Farm Bill establishes a new initiative for partnerships and cooperation that authorizes the Secretary of Agriculture to enter into stewardship agreements with state and local governmental agencies, tribes, and non-governmental organizations to enhance technical and financial assistance to owners, operators, and producers for innovative projects addressing natural resource issues related to agricultural production. The Bill also establishes programs targeted geographically, including a conservation corridor program for the Chesapeake Bay region, a Desert Terminal Lakes program to provide water to selected western lakes, and a Great Lakes Basin program for soil erosion and sediment control.

Energy - Title IX
The 2002 Farm Bill includes a new Energy Title that focuses on renewable energy, energy efficiency, and biobased products. The Bill includes the following programs and initiatives authorized with mandatory funding:

Commodity Credit Corporation Bioenergy Program: This program was established administratively in 2000 under the USDA Secretary's general power to increase consumption of domestic commodities and is now codified by the 2002 Farm Bill. See 7 C.F.R. 1424. Under the program, Commodity Credit Corporation funds may be used to compensate bioenergy producers for a portion of agricultural commodities, cellulose commodities (such as switchgrass), oils, fats, greases, or animal byproducts purchased to expand production of biodiesel, ethanol, or other commodity byproduct fuels.

Biobased Product Purchasing Requirement: This is a program for the purchase of biobased products by federal agencies, with funding used to test biobased products.

Biodiesel Fuel Education: This is a small grant program to educate government and private fuel consumers about the benefits of biodiesel.

Renewable Energy and Energy Efficiency Improvements: This initiative establishes loan, loan guarantee, and grant programs to assist farmers and ranchers in purchasing renewable energy systems and making energy efficiency improvements.

Biomass Research and Development: This provision reauthorizes and funds the Biomass Research and Development Act of 2000 through 2007.

The 2002 Farm Bill also includes two energy programs that require appropriations for implementation:

Energy Audit and Renewable Energy Program: This is a grant program that supports audits and renewable energy assessments for farmers, ranchers, and rural small businesses.

Biorefinery Development Grants: This grant program supports the development of biorefineries for the conversion of biomass into fuels, chemicals, and electricity.

Additional measures concerning energy are scattered throughout the 2002 Farm Bill. As noted above, wind turbines and the harvesting of biomass energy crops is now allowed on land enrolled in the Conservation Reserve Program. The Agricultural Risk Protection Act has authorized funds to research carbon sequestration on agricultural land. Loans and loan guarantees are available for wind-based energy production and methane digesters. In addition, a rural development program, the Value-Added Agricultural Product Development Grant Program explicitly provides for renewable energy systems to qualify for grants.

Ultimately, the fate of these 2002 Farm Bill conservation and energy programs will depend on congressional budgets and appropriations and on decisions made by USDA as the programs are implemented.