[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1457 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                S. 1457

   To amend the Energy Policy Act of 1992 to assess opportunities to 
  increase carbon storage on national forests derived from the public 
  domain and to facilitate voluntary and accurate reporting of forest 
projects that reduce atmospheric carbon dioxide concentrations, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 29, 1999

 Mr. Wyden (for himself and Mr. Craig) introduced the following bill; 
   which was read twice and referred to the Committee on Energy and 
                           Natural Resources

_______________________________________________________________________

                                 A BILL


 
   To amend the Energy Policy Act of 1992 to assess opportunities to 
  increase carbon storage on national forests derived from the public 
  domain and to facilitate voluntary and accurate reporting of forest 
projects that reduce atmospheric carbon dioxide concentrations, and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Forest Resources for the Environment 
and the Economy Act''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--Congress finds that--
            (1) the Federal Government should increase the forest 
        carbon storage on public land while pursuing existing statutory 
        objectives;
            (2) insufficient information exists on the opportunities to 
        increase carbon storage on public land through improvements in 
        forest land management;
            (3) important environmental benefits to national forests 
        can be achieved through cooperative forest projects that 
        enhance fish and wildlife habitats, water, and other resources 
        on public or private land located in national forest 
        watersheds;
            (4) forest projects also provide economic benefits, 
        including--
                    (A) employment and income that contribute to the 
                sustainability of rural communities; and
                    (B) ensuring future supplies of forest products;
            (5) monitoring and verification of forest carbon storage 
        provides an important opportunity to create employment in rural 
        communities and substantiate improvements in natural habitats 
        or watersheds due to forestry activities; and
            (6) sustainable production of biomass energy feedstocks 
        provides a renewable source of energy that can reduce carbon 
        dioxide emissions and improve the energy security of the United 
        States by diversifying energy fuels.
    (b) Purpose.--The purpose of this Act is to promote sustainable 
forestry in the United States by--
            (1) increasing forest carbon sequestration in the United 
        States;
            (2) improving the health of national forests;
            (3) enhancing wildlife and fish habitats;
            (4) improving water quality;
            (5) providing employment and income to rural communities;
            (6) providing new sources of forest products; and
            (7) increasing use of renewable biomass energy and 
        improving the energy security of the United States.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Forestry carbon activity.--The term ``forestry carbon 
        activity'' means a forest management action that--
                    (A) increases long-term carbon storage; and
                    (B) has a positive impact on watersheds, fish 
                habitats, and wildlife diversity.
            (2) Forest carbon reservoir.--The term ``forest carbon 
        reservoir'' means trees, roots, soils, or other biomass 
        associated with forest ecosystems or products from the biomass 
        that store carbon.
            (3) Forest carbon storage.--The term ``forest carbon 
        storage'' means the quantity of carbon sequestered from the 
        atmosphere and stored in forest carbon reservoirs, including 
        forest products.
            (4) Forest land.--
                    (A) In general.--The term ``forest land'' means 
                land that is, or has been, at least 10 percent stocked 
                by forest trees of any size.
                    (B) Inclusions.--The term ``forest land'' 
                includes--
                            (i) land that had such forest cover and 
                        that will be naturally or artificially 
                        regenerated; and
                            (ii) a transition zone between a forested 
                        and nonforested area that is capable of 
                        sustaining forest cover.
            (5) Forest management action.--
                    (A) In general.--The term ``forest management 
                action'' means the practical application of forestry 
principles to the regeneration, management, utilization, and 
conservation of forests to meet specific goals and objectives, while 
maintaining the productivity of the forests.
                    (B) Inclusions.--The term ``forest management 
                action'' includes management of forests for aesthetics, 
                fish, recreation, urban values, water, wilderness, 
                wildlife, wood products, and other forest values.
            (6) National forest watershed.--The term ``national forest 
        watershed'' means a watershed--
                    (A) that contains national forest land;
                    (B) that consequently has unique interest to 
                Federal land managers; and
                    (C) in which all landowners, including the Federal 
                Government, share interest and influence in the 
                management and health of the watershed.
            (7) Reforestation.--
                    (A) In general.--The term ``reforestation'' means 
                the reestablishment of forest cover naturally or 
                artificially.
                    (B) Inclusions.--The term ``reforestation'' 
                includes--
                            (i) planned replanting;
                            (ii) reseeding; and
                            (iii) managed natural regeneration.
            (8) Revolving loan fund.--The term ``revolving loan fund'' 
        means a State revolving loan fund established under section 5.
            (9) Secretary.--The term ``Secretary'' means the Secretary 
        of Agriculture.
            (10) Sequestration.--The term ``sequestration'' means the 
        action of vegetable matter in--
                    (A) extracting carbon dioxide from the atmosphere 
                through photosynthesis;
                    (B) converting the carbon dioxide to carbon; and
                    (C) storing the carbon in the form of roots, stems, 
                soil, or foliage.

SEC. 4. CARBON MANAGEMENT ON FEDERAL LAND; CARBON MONITORING AND 
              VERIFICATION GUIDELINES.

    (a) Definitions.--Title XVI of the Energy Policy Act of 1992 is 
amended by inserting before section 1601 (42 U.S.C. 13381) the 
following:

``SEC. 1600. DEFINITIONS.

    ``In this title:
            ``(1) Forest carbon storage.--The term `forest carbon 
        storage' means the quantity of carbon sequestered from the 
        atmosphere and stored in forest carbon reservoirs, including 
        forest products.
            ``(2) Carbon storage program.--The term `carbon storage 
        program' means the program established by the Secretary of 
        Agriculture under section 5 of the Forest Resources for the 
        Environment and the Economy Act, to provide assistance through 
        State revolving loan funds.
            ``(3) Forest carbon reservoir.--The term `forest carbon 
        reservoir' means trees, roots, soils, or other biomass 
        associated with forest ecosystems or products from the biomass 
        that store carbon.
            ``(4) Forest management action.--
                    ``(A) In general.--The term `forest management 
                action' means the practical application of forestry 
                principles to the regeneration, management, 
                utilization, and conservation of forests to meet 
                specific goals and objectives, while maintaining the 
                productivity of the forests.
                    ``(B) Inclusions.--The term `forest management 
                action' includes management of forests for aesthetics, 
                fish, recreation, urban values, water, wilderness, 
                wildlife, wood products, and other forest values.
            ``(5) Sequestration.--The term `sequestration' means the 
        action of vegetable matter in--
                    ``(A) extracting carbon dioxide from the atmosphere 
                through photosynthesis;
                    ``(B) converting the carbon dioxide to carbon; and
                    ``(C) storing the carbon in the form of roots, 
                stems, soil, or foliage.''.
    (b) Carbon Management on Federal Land.--Section 1604 of the Energy 
Policy Act of 1992 (42 U.S.C. 13384) is amended--
            (1) by inserting ``(a) Report.--'' before ``Not''; and
            (2) by adding at the end the following:
    ``(b) Carbon Management on Federal Land.--
            ``(1) In general.--Not later than 1 year after the date of 
        enactment of this subsection, after consultation with 
        appropriate Federal agencies, the Secretary of Agriculture 
        shall report to Congress on--
                    ``(A) the quantity of carbon contained in the 
                forest carbon reservoir on national forests derived 
                from the public domain, and the methodology and 
                assumptions used to ascertain that quantity;
                    ``(B) the potential to increase that quantity and 
                provide positive impacts on watersheds and fish and 
                wildlife habitats through forest management actions; 
                and
                    ``(C) the role of forests in the carbon cycle and 
                the contributions of forestry to the global carbon 
                budget.
            ``(2) Contents.--The report shall also include an 
        assessment of any impacts of the forest management actions 
        identified under paragraph (1)(B) on timber harvests, wildlife 
        habitat, recreation, forest health, and other statutory 
        objectives of national forest management on a watershed 
        basis.''.
    (c) Monitoring and Verification of Carbon Storage.--Section 1605(b) 
of the Energy Policy Act of 1992 (42 U.S.C. 13385(b)) is amended by 
adding at the end the following:
            ``(5) Guidelines on reporting, monitoring, and verification 
        of carbon storage from forest management actions.--
                    ``(A) In general.--Not later than 18 months after 
                the date of enactment of this paragraph, the Secretary 
                of Agriculture shall--
                            ``(i) review the guidelines established 
                        under paragraph (1) that address procedures for 
                        the accurate voluntary reporting of greenhouse 
                        gas sequestration from forest management 
                        actions; and
                            ``(ii) make recommendations to the 
                        Secretary of Energy for amendment of the 
                        guidelines.
                    ``(B) Carbon and forestry advisory council.--
                            ``(i) Establishment.--The Secretary of 
                        Agriculture shall establish a Carbon and 
                        Forestry Advisory Council for the purpose of--
                                    ``(I) advising the Department of 
                                Agriculture in the development of 
                                guidelines for accurate voluntary 
                                reporting of greenhouse gas 
                                sequestration from forest management 
                                actions;
                                    ``(II) evaluating the potential 
                                implementation of the guidelines;
                                    ``(III) estimating the effect of 
                                proposed implementation on atmospheric 
                                carbon mitigation;
                                    ``(IV) reviewing and updating the 
                                guidelines;
                                    ``(V) assisting the Secretary of 
                                Agriculture in reporting annually to 
                                Congress on the results of the carbon 
                                storage program; and
                                    ``(VI) assisting the Secretary of 
                                Agriculture in assessing the 
                                vulnerability of forests to climate 
                                change.
                            ``(ii) Membership.--The Advisory Council 
                        shall be composed of the following 18 members 
                        with interest and expertise in carbon 
                        sequestration and forestry management, 
                        appointed by the Secretary:
                                    ``(I) 1 member representing 
                                national professional forestry 
                                organizations.
                                    ``(II) 2 members representing 
                                environmental or conservation 
                                organizations.
                                    ``(III) 1 member representing 
                                nonindustrial, private landowners.
                                    ``(IV) 1 member representing forest 
                                industry.
                                    ``(V) 1 member representing 
                                forestry trade associations.
                                    ``(VI) 1 member representing forest 
                                laborers.
                                    ``(VII) 3 members representing the 
                                academic scientific community.
                                    ``(VIII) 2 members representing 
                                State forestry organizations.
                                    ``(IX) 1 member representing the 
                                Department of Energy.
                                    ``(X) 1 member representing the 
                                Environmental Protection Agency.
                                    ``(XI) 1 member representing the 
                                Department of Agriculture.
                                    ``(XII) 1 member representing the 
                                Department of the Interior.
                                    ``(XIII) 1 member representing the 
                                National Aeronautics and Space 
                                Administration.
                                    ``(XIV) 1 member representing the 
                                National Oceanic and Atmospheric 
                                Administration.
                            ``(iii) Terms.--
                                    ``(I) In general.--Except as 
                                provided in subclause (III), a member 
                                of the Advisory Council shall be 
                                appointed for a term of 3 years.
                                    ``(II) Consecutive terms.--No 
                                individual may serve on the Advisory 
                                Council for more than 2 consecutive 
                                terms.
                                    ``(III) Initial terms.--Of the 
                                members first appointed to the Advisory 
                                Council--
                                            ``(aa) 1 member appointed 
                                        under each of subclauses (II), 
                                        (VI), (VII), (VIII), (X), and 
                                        (XIII) of clause (ii) shall 
                                        serve an initial term of 1 
                                        year; and
                                            ``(bb) 1 member appointed 
                                        under each of subclauses (I), 
                                        (IV), (VII), (IX), (XI), and 
                                        (XIV) shall serve an initial 
                                        term of 2 years.
                            ``(iv) Vacancy.--A vacancy on the Advisory 
                        Council shall be filled in the manner in which 
                        the original appointment was made.
                            ``(v) Continuation.--Any member appointed 
                        to fill a vacancy occurring before the 
                        expiration of the term shall be appointed only 
                        for the remainder of the term.
                            ``(vi) Compensation.--
                                    ``(I) In general.--Except as 
                                provided in subclause (II), a member of 
                                the Advisory Council shall serve 
                                without compensation, but may be 
                                reimbursed for reasonable costs 
                                incurred while in the actual 
                                performance of duties vested in the 
                                Advisory Council.
                                    ``(II) Federal officers and 
                                employees.--A member of the Advisory 
                                Council who is a full-time officer or 
                                employee of the United States shall 
                                receive no additional compensation or 
                                allowances because of the service of 
                                the member on the Advisory Council.
                                    ``(III) Support.--The Secretary of 
                                Agriculture shall provide financial and 
                                administrative support for the Advisory 
                                Council.
                    ``(C) Public comment.--The Secretary of Agriculture 
                shall provide an opportunity for public comment on the 
                guidelines established under subparagraph (A) that 
                address procedures for the accurate voluntary reporting 
                of greenhouse gas sequestration from forest management 
                actions.
                    ``(D)  Criteria.--
                            ``(i)  In general.--The recommendations 
                        described in subparagraph (A)(ii) shall include 
                        reporting guidelines that--
                                    ``(I) are based on--
                                            ``(aa) measuring increases 
                                        in carbon storage in excess of 
                                        the carbon storage that would 
                                        have occurred in the absence of 
                                        the reforestation, forest 
                                        management, forest protection, 
                                        or other forest management 
                                        actions; and
                                            ``(bb) comprehensive carbon 
                                        accounting that reflects net 
                                        increases in the carbon 
                                        reservoir and takes into 
                                        account any carbon emissions 
                                        resulting from disturbance of 
                                        carbon reservoirs existing at 
                                        the start of a forest 
                                        management action;
                                    ``(II) include options for--
                                            ``(aa) estimating the 
                                        indirect effects of forest 
                                        management actions on carbon 
                                        storage, including possible 
                                        emissions of carbon that may 
                                        result elsewhere as a result of 
                                        the project's impact on timber 
                                        supplies or possible 
                                        displacement of carbon 
                                        emissions to other lands owned 
                                        by the reporting party; and
                                            ``(bb) quantifying the 
                                        expected carbon storage over 
                                        various time periods, taking 
                                        into account the likely 
                                        duration of carbon stored in 
                                        the carbon reservoir.
                            ``(ii) Accurate monitoring, measurement, 
                        and verification.--
                                    ``(I) In general.--The 
                                recommendations described in 
                                subparagraph (A)(ii) shall include 
                                recommended practices for monitoring, 
                                measurement, and verification of carbon 
                                storage from forest management actions.
                                    ``(II) Requirements.--The 
                                recommended practices shall, to the 
                                maximum extent practicable--
                                            ``(aa) be based on 
                                        statistically sound sampling 
                                        strategies that build on 
                                        knowledge of the carbon 
                                        dynamics of forests and 
                                        agricultural land;
                                            (bb) include cost-effective 
                                        combinations of inexpensive 
                                        measurements of field 
                                        conditions with modeling to 
                                        compute carbon stocks and 
                                        changes in stocks;
                                            ``(cc) include guidance on 
                                        how to sample and calculate 
                                        carbon sequestration across 
                                        multiple participating 
                                        ownerships; and
                                            ``(dd) not prevent use of 
                                        more precise measurements, if 
                                        desired by a reporting entity.
                    ``(E) State carbon storage programs.--The 
                recommendations described in subparagraph (A)(ii) shall 
                include guidelines to States for reporting, monitoring, 
                and verifying carbon storage under the carbon storage 
                program.
                    ``(F) Biomass energy projects.--The recommendations 
                described in subparagraph (A)(ii) shall include 
                guidelines for calculating net greenhouse gas 
                reductions from biomass energy projects, including--
                            ``(i) net changes in carbon storage 
                        resulting from changes in land use; and
                            ``(ii) the effect that using biomass to 
                        generate electricity (including cofiring of 
                        biomass with fossil fuels) has on the 
                        displacement of greenhouse gas emissions from 
                        fossil fuels.
                    ``(G) Amendment of guidelines.--Not later than 180 
                days after receiving the recommendations from the 
                Secretary of Agriculture, the Secretary of Energy, 
                acting through the Administrator of the Energy 
                Information Administration, shall revise the guidelines 
                established under paragraph (1) to include the 
                recommendations.
                    ``(H) Review of guidelines by the advisory 
                council.--
                            ``(i) Periodic review.--At least every 24 
                        months, the Secretary of Agriculture shall--
                                    ``(I) convene the Advisory Council 
                                to evaluate the latest scientific and 
                                observational information on reporting, 
                                monitoring, and verification of carbon 
                                storage from forest management actions; 
                                and
                                    ``(II) issue revised guidelines for 
                                reporting, monitoring, and verification 
                                of carbon storage from forest 
                                management actions as necessary.
                            ``(ii) Consistency with future laws.--The 
                        Secretary of Agriculture shall convene the 
                        Advisory Council as necessary to ensure that 
                        the guidelines for reporting, monitoring, and 
                        verification of carbon storage from forest 
                        management actions are revised to be consistent 
                        with any Federal laws enacted after the date of 
                        enactment of this Act that provide recognition, 
                        credit, or reward for reductions of atmospheric 
                        greenhouse gas concentrations resulting from 
                        forest management actions.
            ``(6) Monitoring of carbon storage programs by 
        participating states.--
                    ``(A) In general.--Each State that participates in 
                the carbon storage program shall, in accordance with 
                the guidelines issued under paragraph (1), monitor and 
                verify carbon storage achieved under the program.
                    ``(B) Reports.--
                            ``(i) States.--Each State shall report 
                        annually to the Secretary of Agriculture on the 
                        results of the carbon storage program.
                            ``(ii) Secretary of agriculture.--The 
                        Secretary of Agriculture shall--
                                    ``(I) maintain a database on the 
                                results of the carbon storage program; 
                                and
                                    ``(II) report annually to Congress 
                                on the results of the carbon storage 
                                program, including an assessment of the 
                                effectiveness of monitoring and 
                                verification.
                    ``(C) Reporting of carbon storage.--
                            ``(i) In general.--For each project under 
                        the carbon storage program funded, in whole or 
                        in part, with funds provided by nongovernmental 
organizations, businesses, or other persons, for each year in which the 
carbon storage is realized from the project, the State shall submit to 
the nongovernmental organizations, businesses, or other persons and the 
Secretary of Agriculture a report that--
                                    ``(I) states the quantity of carbon 
                                storage realized; and
                                    ``(II) includes the data used to 
                                monitor and verify the carbon storage.
                            ``(ii) Guidelines.--The carbon storage 
                        shall be calculated, monitored, and verified 
                        according to guidelines issued under paragraph 
                        (5).
                            ``(iii) Review by the secretary of 
                        agriculture.--The Secretary of Agriculture 
                        shall--
                                    ``(I) review each report under 
                                clause (i) to verify compliance with 
                                the guidelines under clause (ii);
                                    ``(II) if the report is in 
                                compliance, certify that the report is 
                                in compliance, notify the State, 
                                participating nongovernmental 
                                organizations, businesses, or other 
                                persons, and submit a copy of the 
                                certified report to the Secretary of 
                                Energy; and
                                    ``(III) if the report is not in 
                                compliance, notify the State and the 
                                participating nongovernmental 
                                organizations, businesses, or other 
                                persons of any corrections that are 
                                needed for certification, and establish 
                                an opportunity for resubmittal by the 
                                State.
                            ``(iv) Inclusion in data base.--The 
                        Secretary, acting through the Administrator of 
                        the Energy Information Administration, shall--
                                    ``(I) include the reports under 
                                clause (i) in the data base maintained 
                                under subsection (b)(4); and
                                    ``(II) establish a reporting 
                                process to ensure the avoidance of 
                                double counting of carbon storage from 
                                forestry activities.''.

SEC. 5. CARBON STORAGE AND WATERSHED RESTORATION PROGRAM.

    (a) National Forest Watershed Restoration Cooperative Agreements.--
The Secretary may enter into cooperative agreements with willing State 
and local governments, Indian tribes, private and nonprofit entities, 
and landowners for protection, restoration, and enhancement of fish and 
wildlife habitat and other resources on public land, Indian land, or 
private land in a national forest watershed.
    (b) Revolving Loan Funds.--
            (1) In general.--In collaboration with State Foresters and 
        nongovernmental organizations, the Secretary shall establish a 
        program to provide assistance through State revolving loan 
        funds to Indian tribes and owners of nonindustrial private 
        forest land to undertake forestry carbon activities.
            (2) Eligibility.--
                    (A) Private forest landowners.--An owner of private 
                forest land shall be eligible for assistance from a 
                revolving loan fund if the owner owns not more than 
                5,000 acres of nonindustrial private forest land.
                    (B) Indian tribes.--Any Indian Tribe shall be 
                eligible for assistance from a revolving loan fund.
            (3) Forestry carbon activities.--
                    (A) Objectives of forestry carbon activities.--
                Eligible forestry carbon activities shall be activities 
                that, when evaluated in their entirety for a 
                watershed--
                            (i) increase long-term carbon storage or 
                        provide new sources of biomass feedstocks for 
                        renewable energy generation; and
                            (ii) have a positive impact on watersheds, 
                        fish habitats, and wildlife diversity.
                    (B) Guidance.--The Secretary, in collaboration with 
                States, shall provide guidance on eligible forestry 
                carbon activities based on the criteria of this Act, 
                recognizing that States should have maximum flexibility 
                to achieve the purposes of this Act in ways most 
                appropriate for each State.
                    (C) Activities required under other law.--Funding 
                shall not be provided under this section for activities 
                required under other applicable Federal, State, or 
                local laws.
                    (D) Preagreement activities.--Funding shall not be 
                provided for costs incurred before entering into a loan 
                agreement with the State under this Act.
                    (E) Limitation on land considered for funding.--
                States shall not enter into new loan agreements under 
this Act to fund reforestation of land that has been harvested after 
the date of enactment of this Act if the landowner receives revenues 
from the harvest sufficient to reforest the land.
                    (F) Native species.--Funding of reforestation 
                activities shall be provided only for a species that is 
                native to a region, with preference given to species 
                that formerly occupied the land.
                    (G) Sustainable forest management plan.--States 
                shall give priority to projects on land under a 
                sustainable forestry management program or forest 
                stewardship plan, if the projects are consistent with 
                the program or plan.
                    (H) Cooperative agreements.--Cooperative agreements 
                entered into under this section shall be eligible for 
                loan funds.
            (4) Use of loan funds.--The proceeds of a loan under the 
        program--
                    (A) may be used to pay--
                            (i) the cost of purchasing and planting 
                        tree seedlings; and
                            (ii) other costs, including consultant and 
                        contractor fees, associated with planning, site 
                        preparation, tree planting, forest management, 
                        and other forest management actions; and
                    (B) may not be used to--
                            (i) pay the owner for the owner's own 
                        labor; or
                            (ii) purchase capital items or expendable 
                        items, such as vehicles, tools, and other 
                        equipment.
            (5) Loan amount.--The amount of a loan made from a 
        revolving loan fund shall not exceed--
                    (A) 100 percent of total project costs, whether 
                they constitute the only funding source or are used in 
                combination with any other funds received from any 
                other source; or
                    (B) $100,000 during any 2-year period.
            (6) Loan terms.--A loan agreement under the program shall--
                    (A) require that all loan obligations be repaid to 
                the State with interest at a rate of at least 5 percent 
                per annum--
                            (i) at the time of harvest of land covered 
                        by the program; or
                            (ii) in accordance with any other repayment 
                        schedule determined by the State;
                    (B) include provisions that provide for private 
                insurance or that otherwise release the owner from the 
                financial obligation for any portion of the timber, 
                forest products, or other biomass that--
                            (i) is lost to insects, disease, fire, 
                        storm, flood, or other natural destruction 
                        through no fault of the owner; or
                            (ii) cannot be harvested because of 
                        restrictions on tree harvesting imposed by the 
                        Federal, State, or local government after the 
                        date of the agreement;
                    (C) impose a lien on all timber, forest products, 
                and biomass grown on land covered by the loan, with an 
                assurance that the terms of the lien shall transfer 
                with the land on sale, lease, or transfer of the land;
                    (D) include a buyout option that--
                            (i) specifies financial terms allowing the 
                        owner to terminate the agreement before 
                        harvesting timber from the stand established 
                        with loan funds; and
                            (ii) repays the loan with interest;
                    (E) recognize that, until the loan is paid in full 
                by the participating landowner or otherwise terminated 
                in accordance with this Act, all reductions in 
                atmospheric greenhouse gases achieved by the project 
                funded by the loan are attributable to the non-Federal 
                entities that provide funding for a loan (including the 
                State or any other person, company, or nongovernmental 
                organization that provides funding to the State for 
                purposes of issuing the loan); and
                    (F) include provisions for the monitoring and 
                verification of carbon storage.
            (7) Cancellation of loan terms for permanent 
        conservation.--
                    (A) In general.--The State shall cancel the loan 
                agreement under paragraph (6) and any liens on the 
                timber, forest products, and biomass under paragraph 
                (6)(C) if the borrower donates to the State or another 
                appropriate entity a permanent conservation easement 
                that--
                            (i) furthers the purposes of this Act, 
                        including managing the land in a manner that 
                        maximizes the forest carbon reservoir of the 
                        land; and
                            (ii) permanently protects the covered 
                        private forest land and resources at a level 
                        above what is required under applicable 
                        Federal, State, and local law.
                    (B) Continuation of forest management actions.--The 
                conservation easement may allow the continuation of 
                forest management actions that increase carbon storage 
                on the land and forest or otherwise further the 
                purposes of this Act.
                    (C) Tax treatment.--Only the value of the 
                conservation easement in excess of the amount owed 
                under the repayment terms of a land agreement shall be 
                tax deductible to the extent allowed under applicable 
                Federal, State, or local law.
            (8) Reinvestment of funds.--All funds collected under a 
        loan issued under this Act (including loan repayments, loan 
        buyouts, and any interest payments) shall be reinvested by the 
        State in the program and used by the State to make additional 
        loans under the program in accordance with this subsection.
            (9) Records.--The State Forester shall--
                    (A) maintain all records related to any loan 
                agreement funded from a revolving loan fund; and
                    (B) make the records available to the public.
            (10) Allocation of funds.--
                    (A) In general.--The Secretary shall allocate funds 
                available for loans to a State after determining that 
                the State has implemented a system to administer the 
                loans in accordance with this Act.
                    (B) Matching funds.--
                            (i) In general.--Effective beginning in the 
                        second year of the participation of a State in 
                        the program under this section, to be eligible 
                        to participate in the program, the 
                        participating State shall provide matching 
                        funds equal to at least 25 percent of the 
                        Federal funds made available to the State for 
                        the program.
                            (ii) Form.--The State may provide the 
                        matching funds in the form of in-kind 
                        administrative services, technical assistance, 
                        and procedures to ensure accountability for the 
                        use of Federal funds.
                    (C) Formula.--
                            (i) In general.--Not later than 180 days 
                        after the date of enactment of this Act, in 
                        consultation with State Foresters, the 
                        Secretary shall--
                                    (I) establish a formula under 
                                which, subject to clause (ii), Federal 
                                funds shall be distributed under this 
                                section among eligible States; and
                                    (II) report the formula and 
                                methodology to Congress.
                            (ii) Basis.--The formula shall--
                                    (I) be based on maximizing the 
                                potential for meeting the objectives of 
                                this Act;
                                    (II) give appropriate consideration 
                                to--
                                            (aa) the acreage of 
                                        unstocked or underproducing 
                                        private forest land in each 
                                        State within national forest 
                                        watersheds;
                                            (bb) the potential 
                                        productivity of such land;
                                            (cc) the potential long-
                                        term carbon storage of such 
                                        land;
                                            (dd) the potential to 
                                        achieve other environmental 
                                        benefits, such as restoration 
                                        of native forest communities in 
                                        riparian areas;
                                            (ee) the number of owners 
                                        eligible for loans under this 
                                        section in each State; and
                                            (ff) the need for 
                                        reforestation, timber stand 
                                        improvement, or other forestry 
                                        investments consistent with the 
                                        objectives of this Act; and
                                    (III) give priority to States that 
                                have experienced or are expected to 
                                experience significant declines in 
                                employment levels in the forestry 
                                industries due to declining timber 
                                harvests on Federal land.
            (11) Private funding.--A revolving loan fund may accept and 
        distribute as loans any funds provided by nongovernmental 
        organizations, businesses, or persons in support of the 
        purposes of this Act.
            (12) Bonneville power administration.--
                    (A) In general.--The States of Washington, Oregon, 
                Idaho, and Montana may apply for funding from the 
                Bonneville Power Administration for purposes of funding 
                loans that meet both the objectives of this Act and the 
                fish and wildlife objectives of the Bonneville Power 
                Administration under the Pacific Northwest Electric 
                Power and Conservation Act (16 U.S.C. 839 et seq.).
                    (B) Application of requirements under other law.--
                An application under subparagraph (A) shall be subject 
                to all rules and procedures established by the Pacific 
                Northwest Electric Power and Conservation Planning 
                Council and the Bonneville Power Administration under 
                the Pacific Northwest Electric Power and Conservation 
                Act (16 U.S.C. 839 et seq.).
            (13) Authorization of appropriations.--There is authorized 
        to be appropriated to carry out the revolving loan program 
        under this section for each of fiscal years 2001 through 2010, 
        respectively, an amount equal to the amount of civil penalties 
        collected under section 113 of the Clean Air Act (42 U.S.C. 
        7413) and under section 309(d) of the Federal Water Pollution 
        Control Act (33 U.S.C. 1319(d)) in the second preceding fiscal 
        year.
                                 <all>