USDA, DOE Sign Major MOU to Promote Rural Energy, Advance Rural Communities, Domestic Manufacturing.

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October 25, 2019

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by Jim Lane (Biofuels Digest) In Washington, U.S. Department of Agriculture Deputy Under Secretary Donald “DJ” LaVoy and U.S. Department of Energy Under Secretary of Energy Mark W. Menezes today (October 24, 2019) announced a Memorandum of Understanding between the two departments to promote rural energy and the development of technologies that will support and advance rural and agricultural communities and domestic manufacturing.

The deal

The signed MOU, which was required under section 6501 of the 2018 Farm Bill, will enhance collaboration and coordination between the Department of Energy (DOE) and USDA. The areas covered by the MOU include facilitating energy-related investments in America’s rural communities; streamlining, leveraging and optimizing program resources; encouraging innovation; offering technical assistance to rural communities; strengthening energy-related infrastructure; ensuring affordable and reliable power; and helping rural businesses export energy products and manufactured goods around the world.

The background

In April 2017, President Donald J. Trump established the Interagency Task Force on Agriculture and Rural Prosperity to identify legislative, regulatory and policy changes that could promote agriculture and prosperity in rural communities. In January 2018, Secretary Perdue presented the Task Force’s findings to President Trump. These findings included 31 recommendations to align the federal government with state, local and tribal governments to take advantage of opportunities that exist in rural America. The task force recognized that boosting all sources of energy including renewable sources is essential to achieving energy independence, strengthening America’s national security, and bolstering rural America’s economy.

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USDA and DOE have convened interagency working groups. The working groups will focus on five major areas:

(1) Develop and expand energy- and manufacturing-related businesses, industries and technologies in rural America;

(2) Encourage investments in new or improved rural energy infrastructure;

(3) Enhance capital access for energy-related businesses and industries in rural America;

(4) Support rural community investments that anticipate growth associated with rural energy investment and development; and

(5) Encourage, support and invest in cyber security initiatives and grid improvement.

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3. Increase Public Acceptance of Biotech Products – The Department of State, the Department of Agriculture, and other relevant agencies should develop a communications strategy to increase acceptance of biotech products and open and maintain markets for U.S. farmers abroad. To complement this strategy, the U.S. Trade Representative should initiate interagency deliberations to identify an international strategy that removes unjustified trade barriers and expands markets for American products.

4. Develop a Streamlined, Science-based Regulatory Policy for Biotechnology – The federal government should continue efforts to modernize the federal regulatory system for biotechnology products. These efforts will improve transparency, coordination, and predictability of the system and support public confidence by assessing products in a risk-based manner, providing predictable pathways for commercialization. These efforts should be continued to ensure the success of consumers, farmers, and their products. More efficient and effective communication must be employed to build evidence-based confidence in the safety of products for health and the environment. It is critical that these improvements: (1) maintain high standards that are based on the best available science and that deliver appropriate health and environmental protection; (2) establish transparent, coordinated, predictable, and efficient regulatory practices across agencies with overlapping jurisdiction; and (3) promote public confidence in the oversight of the products of biotechnology through clear and transparent public and diplomatic engagement.

The Task Force recommends that the Administration:

a. Coordinate Federal Regulation of Biotechnology Products – Reaffirm strong support of the Coordinated Framework for the Regulation of Biotechnology, and the corresponding National Strategy for Modernizing the Regulatory Systems for Biotechnology Products.

b. Coordinate Interagency Action Through the Office of Science and Technology Policy – Endorse and empower the Biotechnology Working Group, led by the White House Office of Science and Technology Policy, to continue cooperation across relevant government agencies and improve science-based regulatory approaches directed in 2015 by the White House memorandum to federal agencies, including: updating science-based regulations navigable by small and mid-sized innovators and promoting understanding of how a risk- and science based regulatory approach effectively protects consumers.

c. Expedite Commercialization of Biotechnology Products – Create a forum led by the White House Office of Science and Technology Policy that connects regulators with the funding and R&D agencies to increase awareness and speed the safe commercialization of novel biotechnology products.

5. Enable Rural Uses of Unmanned Technologies – Federal regulations currently restrict many agricultural uses of unmanned aircraft systems (UAS). The FAA should expedite regulatory waiver approvals for low-altitude UAS operations in rural environments. State and local governments should be enabled to propose increased UAS operations in their jurisdictions to be considered by the FAA for streamlined regulatory waiver approvals. These could include rural communities seeking reduced restrictions on UAS operations for precision agriculture

applications and improved production monitoring capacity.

Economic Development

Infusing rural areas with stronger businesses and agricultural economies empowers America. Expanding funding options to increase the productivity of farmers and ranchers will lead to the enhanced viability and competitiveness of rural America. By promoting innovative farm technologies, energy security, recreation, agritourism and sustainable forest management, communities will be empowered to leverage the bounties of rural America. Investing in rural transportation infrastructure is needed for carrying more “Made in America” products to markets at home and abroad, and boosting our country’s global competitiveness. Reducing regulatory burdens and attracting private capital will support our ultimate mission of empowering Rural America to feed the world.

Objectives & Recommended Actions

1. Access to Capital – Rural business men and women, entrepreneurs, as well as beginning farmers and ranchers, often have difficulty accessing capital to help them start, grow, and expand their businesses. They are often either too large or too small to qualify for, or gain access to, available loans and lending programs. In addition, Wall Street and Silicon Valley have struggled to access rural markets which are therefore not primed to take their cash. Agricultural lenders tend to operate far differently than venture capital firms and global private investors. With the number of small and community banks declining, we need to help communities identify and develop projects appropriate for private investment. The Task Force recommends that future strategies include:

a. Equity Financing – Allowing new obligations in federal and state loan and credit programs to be used to meet equity requirements, or a first-loss-position, could help rural communities bring additional financing to the table.

b. Debt Financing – With renewed focus and goals for agricultural and non-agricultural lending in rural counties by both the Department of Agriculture and Small Business Administration (SBA), SBA is able to provide loans up to $5.5 million.

c. Bundle/Repackage Projects and Deals – A legal/finance vehicle to bundle projects can bring the necessary scale to attract private sector interest and take advantage of economies of scale to deliver cost savings.

d. Regional and State Collaboration – Projects can draw upon larger revenue streams when approached regionally. There are more financing options and deeper expertise when state wide and regional entities are involved.

2. Leverage Existing Market Opportunities – Larger and more strategic public-private sector opportunities should be sought for rural America. Locally-transformative actions create jobs and lift up local economies. Many of these opportunities languish in regulatory uncertainty, or struggle with volatile economic risk profiles. Among the expertise within the federal family, lies the opportunity to make a big difference in the lives of rural families, farmers and ranchers. We should engage the private financial sector and work to identify opportunities already in their pipeline. The federal government could provide guidance to find ways to help capital markets expedite deal execution that quickly benefit rural economies.

3. Create a Rural Prosperity Investment Portal – A web based portal enabling rural based investment partnerships – public or private – will serve as a matchmaking tool for project promoters to reach domestic and international investors. The portal can mobilize investments, promote economic growth and create more jobs across rural America. In partnership with the Opportunity Project, the proposed Commission on Agriculture and Rural Prosperity should coordinate with the Department of Commerce and the Department of Agriculture to engage the tech sector through the creation of digital tools that expand rural prosperity, such as an investment portal.

The Opportunity Project involves collaboration across government agencies, local governments, tech companies, community organizations, and more, to create new digital solutions that help families, businesses, local officials, and other members of the public access economic opportunity. To date, over 45 digital tools have been created by tech companies through the Opportunity Project.

4. Build a Better Tax Code – Rural Americans who work hard every day to provide food, fiber, fuel, manufactured goods, and services for their fellow citizens shouldn’t be overburdened by the tax collector. Reforms to federal tax policy are long overdue. Most family farms and rural entrepreneurs operate as small businesses, where the line between success and failure is razor thin. Add to that the complexity and costs of merely complying with the tax code, and their budgets are stretched even tighter. The federal government should build a better tax code to encourage investment, create jobs and help Americans keep more of their hard-earned money.

5. Increase Agricultural, Forestry and Food Production – With world food demand expected to double in 40 years, leadership is necessary to meet this economic opportunity and humanitarian imperative. Keeping future generations on the farm is one of the best ways to ensure that the demand for food, fiber, and energy production is met. Family-run operations provide economic and social continuity  to their communities across generations, so federal policies should encourage their transfer to family members willing to remain on the farm. For example, key community stakeholders, including grocery stores, distributors, value-chain actors, universities, and more, will soon be able to engage and franchise a community economic development model as well as share success stories. In addition, local, regional, and state leaders will be convened to engage in a discussion on effective methods of economic development and coordination with federal investment as well as to discuss how federal, regional, state and local incentives and regulations can support and/or hinder agriculture in their area. This coordination will result in“Agricultural Community Economic Development” model tool kits being developed and deployed for the Department of Agriculture, rural partners, and farmers.

6. Remove Regulatory Barriers to Developing and Accessing Natural Resources – Rural communities are often rich in natural and renewable natural resources, energy sources, and minerals. These communities should be able to responsibly and sustainably access, use, and profit from those local assets without undue federal restrictions and intervention. The Task Force recommends that the following actions be initiated within the federal government: improve interagency coordination to reduce process burden through environmental analysis and decision-making efficiencies; streamline consultation processes using standard decision-making templates and implementing regulatory changes; integrate digital service systems to improve customer service, and reduce delivery of services; develop and test the issuance of permits electronically (e-Permitting); and, develop and implement a modernized ‘special use’ permitting system, including a web-based ePermit system that offers convenience and a high-quality user experience to the public. Components of this system are already taking shape between the Department of Agriculture and Department of Interior.

7. Regain American Energy Dominance – Rural America is a source of resources that can fuel the nation and the world. Boosting production of all sources of energy from natural gas, oil, coal, nuclear, and renewables is essential to America’s national security interest and rural America’s economy. The federal government must ensure a regulatory environment which can unleash this potential while keeping Americans safe and healthy. This increase in production of domestic fuels will bring jobs back to rural America and promote energy security. We must also continue research and development for new sources of energy to ensure that America leads the world in innovative energy sources. Overall, this boost in energy production will benefit rural communities, boost U.S. tax revenues, and increase our power in the global energy market.

8. Rebuild and Modernize Rural America’s Infrastructure – The economic success of future generations and rural communities depends on rehabilitating transportation infrastructure, closing the infrastructure gaps within rural communities, and enhancing connection to metropolitan areas.

a. Increase “Made in America” Outputs – Increasing “Made in America” output in agriculture, manufacturing, forestry, and mining requires investment in capacity and modernization of rural infrastructure to connect rural production facilities and businesses to nationwide and global commerce. Increased output will result in unleashing the full potential of the U.S. economy and the creation of rural job opportunities, ensuring that rural areas are attractive and prosperous places to live for generations to come.

b. Address Commercial Infrastructure Gaps – The key infrastructure gaps that need to be addressed are those that carry commerce for rural America, especially in the first and last mile. Transportation infrastructure of all modes – roads, bridges, railways, and waterways – must be upgraded and expanded with the capacity needed to accommodate the additional crops and products that are made in America’s rural economies, including food, fiber, forests, and factory- made commodities and specialty-goods.

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