[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3099 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 3099
To provide for a Biofuels Feedstocks Energy Reserve, and to authorize
the Secretary of Agriculture to make and guarantee loans for the
production, distribution, development, and storage of biofuels.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 11, 2001
Ms. Kaptur introduced the following bill; which was referred to the
Committee on Agriculture
_______________________________________________________________________
A BILL
To provide for a Biofuels Feedstocks Energy Reserve, and to authorize
the Secretary of Agriculture to make and guarantee loans for the
production, distribution, development, and storage of biofuels.
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 ``Biofuels Energy Independence Act of
2001''.
SEC. 2. FINDINGS.
The Congress finds as follows:
(1) The over reliance of the United States on imported
petroleum creates a major strategic vulnerability for the
Nation, with nearly half of the energy supply of the United
States dependent on foreign sources.
(2) From the economically damaging Arab oil embargoes of
1973-74 and 1979 to the current recession precipitated by
rising oil prices which began in 1999, the economic stability
of the United States has too often been shaken by economic
forces outside its borders.
(3) This Act would shift America's dependence away from
foreign petroleum as an energy source toward alternative,
renewable, domestic agricultural sources. Its aim is to convert
the current petroleum trade deficit to a trade balance by
replacing foreign sources of supply with steady increases of
biobased fuels through domestic production.
(4) Currently the United States annually consumes about
164,000,000,000 gallons of vehicle fuels and 5,600,00,000
gallons of heating oil. In 2000, 52.9 percent of these fuels
were imported, yielding a $109,000,000,000 trade deficit with
the rest of the world. Since 1983, the United States
importation of petroleum and its derivatives has nearly
tripled, rising from 1,215,225,000 barrels in 1983 to
3,319,816,000 barrels in 2000.
(5) Further Strategic Petroleum Reserve policy should
encourage domestic production to the greatest extent possible.
Currently the Strategic Petroleum Reserve holds 545,000,000
barrels (out of a potential 700,000,000 barrels), sufficient to
cushion the United States from wild price swings for a period
of 53 days. None of the fuel in this Reserve is biobased. In
fact, 92.2 percent of the Strategic Petroleum Reserve has been
purchased from foreign sources: 41.9 percent from Mexico, 24
percent from the United Kingdom, and over 20 percent from OPEC
nations.
(6) Strategic Petroleum Reserve policy also should
encourage the development of alternatives to the Nation's
reliance on petroleum such as biomass fuels.
(7) As a first step in diversification, the Strategic
Petroleum Reserve should exchange 2,100,000 barrels from our
current reserves for 32,000,000 gallons of ethanol and
biodiesel, which would comprise less than 2 percent of the
United States market, but yield a doubling of ethanol products.
(8) The benefits of biofuels are as follows:
(A) Energy security.--
(i) Biofuels hold potential to address our
dependence on foreign energy sources
immediately. With agricultural surpluses,
commodity prices have reached record lows;
concurrently world petroleum prices have
reached record highs and are expected to
continue rising as global petroleum reserves
are drawn down over the next 25 years. It also
is clear that economic conditions are favorable
to utilize domestic surpluses of biobased oils
to enhance the Nation's energy security.
(ii) In the short term, biofuels can supply
at least one-fifth of current United States
fuel demand using existing technologies and
capabilities. Additional plant research, newer
processing and distribution technologies, and
placing additional acres under cultivation can
yield even greater results.
(iii) Biofuels can be used with existing
petroleum infrastructure and conventional
equipment.
(B) Economic security.--
(i) Continued dependence upon imported
sources of oil means our Nation is
strategically vulnerable to disruptions in our
oil supply.
(ii) Renewable biofuels domestically
produced directly replace imported oil.
(iii) Increased use of renewable biofuels
would result in significant economic benefits
to rural and urban areas and also reduce the
trade deficit.
(iv) According to the Department of
Agriculture, a sustained annual market of
100,000,000 gallons of biodiesel alone would
result in $170,000,000 in increased income to
farmers.
(v) Farmer-owned biofuels production has
already resulted in improved income for
farmers, as evidenced by the experience with
State-supported rural development efforts in
Minnesota where prices to corn producers have
been increased by $1.00 per bushel.
(C) Environmental security.--
(i) The use of grain-based ethanol reduces
greenhouse gas emissions from 35 to 46 percent
compared with conventional gasoline. Biomass
ethanol provides an even greater reduction.
(ii) The American Lung Association of
Metropolitan Chicago credits ethanol-blended
reformulated gasoline with reducing smog-
forming emissions by 25 percent since 1990.
(iii) Ethanol reduces tailpipe carbon
monoxide emissions by as much as 30 percent.
(iv) Ethanol reduces exhaust volatile
organic compounds emissions by 12 percent.
(v) Ethanol reduces toxic emissions by 30
percent.
(vi) Ethanol reduces particulate emissions,
especially fine-particulates that pose a health
threat to children, senior citizens, and those
with respiratory ailments.
(vii) Biodiesel contains no sulfur of
aromatics associated with air pollution.
(viii) The use of biodiesel provides a 78.5
percent reduction in CO<INF>2</INF> emissions
compared to petroleum diesel and when burned in
a conventional engine provides a substantial
reduction of unburned hydrocarbons, carbon
monoxide, and particulate matter.
TITLE I--BIOFUELS FEEDSTOCKS ENERGY RESERVE PROGRAM
SEC. 101. ESTABLISHMENT.
The Secretary of Agriculture (in this title referred to as the
``Secretary'') may establish and administer a reserve of agricultural
commodities (known as the ``Biofuels Feedstocks Energy Reserve'') for
the purpose of--
(1) providing feedstocks to support and further the
production of energy from biofuels; and
(2) supporting the biofuels energy industry when production
is at risk of declining due to reduced feedstocks or
significant commodity price increases.
SEC. 102. PURCHASES.
(a) In General.--The Secretary may purchase agricultural
commodities at commercial rates, subject to subsection (b), in order to
establish, maintain, or enhance the Biofuels Feedstocks Energy Reserve
when--
(1)(A) the commodities are in abundant supply; and
(B) there is need for adequate carryover stocks to ensure a
reliable supply of the commodities to meet the purposes of the
reserve; or
(2) it is otherwise necessary to fulfill the needs and
purposes of the biofuels energy reserve program.
(b) Limitation.--The agricultural commodities purchased for the
Biofuels Feedstocks Energy Reserve shall be--
(1) of the type and quantity necessary to provide not less
than 1-year's utilization for renewable energy purposes; and
(2) in such additional quantities to provide incentives for
research and development of new renewable fuels and bio-energy
initiatives.
SEC. 103. RELEASE OF STOCKS.
Whenever the market price of a commodity held in the Biofuels
Feedstocks Energy Reserve exceeds 100 percent of the economic cost of
producing the commodity (as determined by the Economic Research Service
using the best available information, and based on a 3-year moving
average), the Secretary shall release stocks of the commodity from the
reserve at cost of acquisition, in amounts determined appropriate by
the Secretary.
SEC. 104. STORAGE PAYMENTS.
(a) In General.--The Secretary shall provide for the storage of
agricultural commodities purchased for the Biofuels Feedstocks Energy
Reserve by making payments to producers for the storage of the
commodities. The payments shall--
(1) be in such amounts, under such conditions, and at such
times as the Secretary determines appropriate to encourage
producers to participate in the program; and
(2) reflect local, commercial storage rates, subject to
appropriate conditions concerning quality management and other
factors.
(b) Announcement of Program.--
(1) Time of announcement.--The Secretary shall announce the
terms and conditions of the storage payments for a crop of a
commodity by--
(A) in the case of wheat, December 15 of the year
in which the crop of wheat was harvested;
(B) in the case of feed grains, March 15 of the
year following the year in which the crop of corn was
harvested; and
(C) in the case of other commodities, such dates as
may be determined by the Secretary.
(2) Content of announcement.--In the announcement, the
Secretary shall specify the maximum quantity of a commodity to
be stored in the Biofuels Feedstocks Energy Reserve that the
Secretary determines appropriate to promote the orderly
marketing of the commodity, and to ensure an adequate supply
for the production of biofuels.
(c) Reconcentration.--The Secretary may, with the concurrence of
the owner of a commodity stored under this program, reconcentrate the
commodity stored in commercial warehouses at such points as the
Secretary considers to be in the public interest, taking into account
such factors as transportation and normal marketing patterns. The
Secretary shall permit rotation of stocks and facilitate maintenance of
quality under regulations that assure that the holding producer or
warehouseman shall, at all times, have available for delivery at the
designated place of storage both the quantity and quality of the
commodity covered by the producer's or warehouseman's commitment.
(d) Management.--Whenever a commodity is stored under this section,
the Secretary may buy and sell at an equivalent price, allowing for the
customary location and grade differentials, substantially equivalent
quantities of the commodity in different locations or warehouses to the
extent needed to properly handle, rotate, distribute, and locate the
commodity that the Commodity Credit Corporation owns or controls. The
purchases to offset sales shall be made within 2 market days following
the sales. The Secretary shall make a daily list available showing the
price, location, and quantity of the transactions.
(e) Review.--In announcing the terms and conditions under which
storage payments will be made under this section, the Secretary shall
review standards concerning the quality of a commodity to be stored in
the Biofuels Feedstocks Energy Reserve, and such standards should
encourage only quality commodities, as determined by the Secretary. The
Secretary shall review inspection, maintenance, and stock rotation
requirements and take the necessary steps to maintain the quality of
the commodities stored in the reserve.
SEC. 105. USE OF COMMODITY CREDIT CORPORATION.
The Secretary shall use the Commodity Credit Corporation, to the
extent feasible, to carry out this title. To the maximum extent
practicable consistent with the effective and efficient administration
of this title, the Secretary shall utilize the usual and customary
channels, facilities, and arrangements of trade and commerce.
SEC. 106. REGULATIONS.
Not later than 60 days after November 28, 2001, the Secretary shall
issue such regulations as are necessary to carry out this title.
TITLE II--BIOFUELS FINANCIAL ASSISTANCE
SEC. 201. LOANS AND LOAN GUARANTEES.
(a) In General.--The Secretary of Agriculture (in this section
referred to as the ``Secretary'') may make and guarantee loans for the
production, distribution, development, and storage of biofuels.
(b) Eligibility.--
(1) In general.--Except as provided in paragraph (2), an
applicant for a loan or loan guarantee under this section shall
be eligible to receive such a loan or loan guarantee if--
(A) the applicant is a farmer, member of an
association of farmers, member of a farm cooperative,
municipal entity, nonprofit corporation, State, or
Territory; and
(B) the applicant is unable to obtain sufficient
credit elsewhere to finance the actual needs of the
applicant at reasonable rates and terms, taking into
consideration prevailing private and cooperative rates
and terms in the community in or near which the
applicant resides for loans for similar purposes and
periods of time.
(2) Loan guarantee eligibility precludes loan
eligibility.--An applicant who is eligible for a loan guarantee
under this section shall not be eligible for a loan under this
section.
(c) Loan Terms.--
(1) Interest rate.--Interest shall be payable on a loan
under this section at the rate at which interest is payable on
obligations issued by United States for a similar period of
time.
(2) Repayment period.--A loan under this section shall be
repayable in not less than 5 years and not more than 20 years.
(d) Revolving Fund.--
(1) Establishment.--The Secretary shall establish a
revolving fund for the making of loans under this section.
(2) Deposits.--The Secretary shall deposit into the
revolving fund all amounts received on account of loans made
under this section.
(3) Payments.--The Secretary shall make loans under this
section, and make payments pursuant to loan guarantees provided
under this section, from amounts in the revolving fund.
(e) Regulations.--The Secretary may prescribe such regulations as
may be necessary to carry out this section.
(f) Limitations on Authorization of Appropriations.--For the cost
(as defined in section 502(5) of the Federal Credit Reform Act of 1990)
of loans and loan guarantees under this section, there are authorized
to be appropriated to the revolving fund established under subsection
(d) of this section such sums as may be necessary for fiscal years 2002
through 2009.
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