The CCC BioEnergy Program was created to expand industrial consumption of agriculture commodities by promoting their use in the production of bioenergy. The program provides cash incentives to producers of ethanol and biodiesel for incremental production.
"I'm glad that USDA worked with me to improve the proposed rules so that this final rule works for producers in Iowa," Grassley said. "This program will provide added security and sustainability for farmer-producers as we move toward developing a national renewable fuels standard. Given current events, we obviously need to continue to develop renewable energy that limits U.S. dependence on foreign sources of oil."
Three major changes to the regulations have been made.
1. The payment rate on new soy-based biodiesel production is raised in the final rule to the rate applied during the first two years of the program. The proposed rule significantly lowered the payment rate. This was a problem for soy-based biodiesel production due to current cost of production estimates. The problem in the proposed regulation will be remedied in the final regulation.
2. The payment rate for animal fat-based biodiesel production will be raised from the proposed rule.
3. Increased commodity purchases will remain the focus of the program, but existing base production will also be eligible for payments. That means that a facility will be compensated for increased production as well as base production. There will be a phase-out associated with the subsidization of base production levels. The compensation formula will be based on 50 percent of base production during 2003, 30 percent for 2004, 15 percent for 2005, and phased out completely in 2006 "Compensation based on new and historic production is important until my biodiesel tax production credit proposal becomes law," Grassley said.
Producers who apply in May will be eligible to receive retro-active payments for the previous months during the lapse in program coverage. Several Iowa ethanol and biodiesel producers will benefit from the regulation changes. The biodiesel producers that may apply for the program are West Central Soy Diesel in Ralston; Ag Processing Inc (AGP) in Sergeant Bluff; and Farmers Cooperative Elevator Company in Milford. Some of the ethanol producers expected to apply for the program are Siouxland Energy and Livestock Cooperative in Sioux Center; Quad-County Corn Processors in Galva; Tall Corn Ethanol, in Coon Rapids; Midwest Grain Processors in Lakota; and Little Sioux Corn Processors in Marcus.
As the ethanol and biodiesel industries grow in Iowa, it's expected that more facilities will be able to participate in the program.
Grassley has a long history of promoting expanded use of renewable sources of energy. In April, Grassley's Finance Committee passed legislation that provides an income tax credit and excise tax rate reduction for biodiesel fuel mixtures and helps smaller, cooperative ethanol producers.