FR 2025-00975

The interim rule issued by the U.S. Department of Agriculture (USDA) aims to establish a standardized framework for quantifying, reporting, and verifying greenhouse gas (GHG) emissions associated with the production of biofuel feedstock crops. These crops, grown using climate-smart agriculture (CSA) practices, are part of an effort to create more sustainable agricultural systems and to participate in environmental service markets. This rule, initially introduced as a temporary measure, seeks public feedback to refine its guidelines before finalization.

General Summary

The rule provides detailed guidelines for farm producers and other entities involved in the biofuel supply chain to measure and report the carbon intensity (CI) of crops produced with CSA practices. The focus is on reducing GHG emissions and improving carbon storage within agricultural practices. The USDA is calling for public comments to ensure that the rule effectively balances the need for precision in environmental impact measurement with practical implementation for stakeholders.

Significant Issues and Concerns

One of the pressing issues with the document is its complexity. The detailed, technical language may pose a challenge for some stakeholders, particularly smaller agricultural operations that may lack the resources to navigate and implement these standards efficiently. The reliance on the USDA Feedstock Carbon Intensity Calculator (USDA FD-CIC) for emissions calculations introduces additional complexity, raising questions about the tool's accessibility and user-friendliness for the average farmer.

Another concern is the potential economic impact, particularly on small farms. The requirement for third-party audits to verify compliance could result in significant costs and administrative burdens. There is a fear that this could disproportionately favor larger operations that are better equipped financially and logistically to meet the recordkeeping and verification requirements set forth by the rule.

Public Impact

Broadly, this rule aims to facilitate a more structured approach to climate-smart farming, potentially leading to significant environmental benefits. By establishing clear guidelines for GHG mitigation methods, the USDA is encouraging more widespread adoption of practices that may improve air and soil quality. However, as the guidelines are currently written, there is a risk that certain segments of the agricultural community may find participation challenging, thereby limiting the rule's effectiveness across diverse farming contexts.

Impact on Specific Stakeholders

For small and mid-sized farm operations, the financial and administrative demands of complying with detailed recordkeeping and verification could act as barriers to entry. These operations might struggle to justify the costs associated with these requirements, potentially leading to economic disadvantages if they are unable to secure incentives associated with reduced carbon emissions.

On the positive side, the rule could provide new market opportunities for those who can effectively adopt and demonstrate CSA practices. These practices are not only beneficial for the environment but could also translate into economic advantages via participation in environmental service markets, where crops with verified reduced GHG emissions may fetch premium prices.

Conclusion

While the USDA's interim rule represents an important step towards standardized GHG emissions reporting in agriculture, it must carefully balance the need for rigorous verification with the practical realities faced by various agricultural entities. Stakeholders' concerns about complexity, costs, and adaptability should guide revisions to ensure that the rule is inclusive and practical, fostering broader participation while effectively promoting environmental sustainability.

In examining the financial references within the document, a detailed analysis is necessary to understand the costs associated with compliance, particularly the expenses incurred by various entities such as farm producers and biofuel refiners.

Spending and Financial Allocations

The document outlines specific financial implications for different entities involved in the biofuel supply chain. For farm producers, depending on the number of Climate-Smart Agriculture (CSA) practices adopted, the annual costs range from $380 to $490. This estimate covers costs related to quantifying carbon intensity and recordkeeping, as well as legal fees for finalizing the farm attestation. In addition, if a farm producer is subject to an audit, there is an extra $470 annually per entity.

First Point Aggregators, which are essentially the first entities to purchase crops directly from farms, face verification and recordkeeping costs between $3,400 to $19,400 per year, depending on their size. This wide range suggests significant variability based on the scale of operations.

Intermediary entities, which may include crops processors or storage facilities, will incur costs estimated at $9,400 per year for complying with verification and recordkeeping standards. These entities act between the first point of aggregation and biofuel refiners within the supply chain.

Biofuel refiners, who finalize the conversion of these feedstocks into biofuels, face the highest estimated costs at $72,500 per entity annually. This substantial amount reflects the complexity and scale of operations necessary for recordkeeping and verification processes that ensure compliance with the established guidelines.

Relation to Identified Issues

The financial burdens delineated in the document may disproportionately impact smaller entities, as noted in the issues. Small farm producers may struggle more than large entities to absorb costs related to the third-party audits and extensive documentation requirements. This could lead smaller farms to face economic disadvantages relative to larger, more resource-rich operations. The extensive financial allocations suggest a potential barrier to entry for smaller producers who might be interested in participating in CSA practices but are deterred by the costs involved.

Moreover, the regulation places emphasis on existing USDA standards without adequately addressing how innovative methods or technologies could potentially reduce these financial burdens. This lack of adaptability may prevent the exploration of cost-effective solutions to comply with the rule, thus maintaining the status quo of resource expenditure.

Overall, while the costs associated with the rule are clearly defined, they highlight a critical challenge in balancing rigorous verification and recordkeeping standards with the necessity for cost-effectiveness and equitable access across various scales of agricultural producers.