Finally, an Energy Bill
As I sit and type this first column for Render, it’s the last days of July and the House of Representatives is debating the conference committee report on the “Energy Policy Act,” the comprehensive legislative package designed to reduce U.S. dependence on foreign oil. The full House vote will occur in a couple of minutes, and likely a Senate vote will come immediately thereafter. A month ago I would have bet we’d be watching this debate in mid-September, but by the time you read this, I’m guessing President George W. Bush will have finally signed a broad energy policy bill.
The House debate – and no doubt, the discourse in the Senate – has been about as partisan and regionalized as you could imagine, and these two factors have been the hallmarks of energy legislation evolution.
President Bush came into office in 2001 calling for a sweeping, broad-based energy policy to move the United States away from foreign energy imports. Included in that policy blueprint was the so-called “Renewable Fuels Standard” (RFS), a federal mandate to diesel refiners that requires them to blend a designated amount of renewable fuels (ethanol and biodiesel) over the life of the bill to extend the country’s diesel supplies while reducing emissions. Production and processed agriculture overwhelmingly embraced the RFS because it meant an automatic market boost for corn-based ethanol and vegetable- and animal-based biodiesel, increasing demand for these rural feedstocks.
During the 108th Congress, the House and Senate couldn’t get past partisan bickering to enact the broad package and it died for lack of action in late 2004, taking the RFS down with it. Insurmountable issues included liability protection for refiners of the gasoline additive MTBE, drilling in the Arctic National Wildlife Refuge (ANWR), and the sheer cost of the overall program, including a broad array of federal tax incentives to sweeten the pot for diesel refiners.
The energy bill priority for the rendering industry was a tax incentive package rewriting a good chunk of the Internal Revenue Service’s federal excise tax code, a priority for Senator Charles Grassley (R-IA), chair of the Senate Finance Committee. Grassley included in the excise tax rewrite an incentive program for biodiesel. Initially, the tax incentive only benefited vegetable-based biodiesel, but the National Renderers Association (NRA) lobbied hard for inclusion of animal fat-based biodiesel and biodiesel refined from used cooking oils. The NRA was successful in getting the program expanded, so biodiesel from first-use vegetable and animal fats enjoys a $1 per gallon tax incentive, while biodiesel from yellow grease carries a 50 cents per gallon tax benefit to diesel refiners through the end of 2006. (Why all biodiesel isn’t treated the same is a topic for another column.)
The biodiesel tax incentive program was enacted during the last Congress when, at the 11th hour, Grassley stripped it from the stalled energy bill and successfully attached it to must-pass legislation to correct export subsidy problems for foreign sales corporations.
In January 2005, with the opening bell of the 109th Congress, President Bush renewed his call for a new national energy program, and the rendering industry’s new goal was to get the biodiesel tax incentive program extended through 2010. Senators Jim Talent (R-MO) and Blanche Lincoln (D-AR) made sure a straight extension of the biodiesel program was included – with Grassley’s blessing – in this session’s version of the Senate energy package. And this time around, everyone on the biodiesel bandwagon – soybean producers, renderers, and others – was unanimous in their support for the extension.
The conference report is a generally good deal for biodiesel. While price tag issues caused the excise extension to be pared back to 2008, the conference report not only provides incentives for diesel refiners to use biodiesel to meet their RFS obligations on blending, but also provides for biodiesel from waste biomass, including animal waste, provides tax incentives for small biodiesel refiners – and right now, they’re all “small’ refiners – as well as studies on the availability of biodiesel, consumer demand for biodiesel, and a study on the utilization of new technologies to more fully embrace biodiesel either in blends or as an exclusive motor vehicle fuel.
And the RFS has survived in fine fashion. Gasoline and diesel fuel makers will be required to blend up to 7.5 billion gallons of alternative fuels by 2012.
Most of the ugly issues disappeared during conference, which is what conference committees are supposed to accomplish. The MTBE liability protection is gone, drilling in ANWR is gone, and by getting tough on spending, the bill comes in at $14.5 billion, way below the ceiling on spending set by the White House.
Anteing up for BSE
The Food and Drug Administration (FDA) is offering state and local governments $2 million – not a lot in federal spending terms – to improve animal feed safety and bovine spongiform encephalopathy (BSE) programs. The money is in addition to, not to replace, state funding for such programs. State and local agencies need to apply for cooperative agreements with FDA to enhance “the infrastructure of…animal feed safety and BSE prevention programs.” The new money is to pay for more personnel, equipment, supplies, and training to help enforce FDA’s ruminant feed ban. This translates into more feed mill inspections, the hiring and training of feed mill inspection and laboratory personnel, as well as visits to livestock and poultry operations where ruminant feeding is permitted. FDA said the money can also be used to conduct surveillance of renderers and protein blenders using prohibited materials, and the states would need to present quarterly reports to FDA.
Possible BSE No. 3?
The U.S. Department of Agriculture (USDA) announced late on July 27 that it had received from a private veterinarian a brain tissue sample from a cow which died on-farm “in a very remote area” while calving. The testing of this sample resulted in a “non-definitive” result using the immunohistochemistry, or IHC, test. Neither the rapid screening test nor the Western blot confirmatory test could be conducted on the sample because it had been preserved by the veterinarian. So, again, USDA has sent the sample off to Weybridge, England, in hopes the folks in the United Kingdom can determine whether this suspect animal had BSE. The animal was more than 12 years old and the vet took the brain and burned the carcass so no part of the animal reached either the food or feed systems.
August 2005 Render