[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 388 Introduced in House (IH)]






109th CONGRESS
  1st Session
                                H. R. 388

 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

                            January 26, 2005

   Ms. Kaptur (for herself, Mr. Abercrombie, Mr. Brown of Ohio, Mr. 
 Filner, Mr. Grijalva, Mr. Hinchey, Mr. Kildee, Mr. Oberstar, Mr. Ryan 
 of Ohio, and Mr. Strickland) 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 
2005''.

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 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) Increasing fuel prices have been a particular hardship 
        on small, independent businessmen, particularly truckers and 
        farmers, who have no choice but to pay ever-increasing fuel 
        bills while absorbing these higher costs in today's economic 
        environment,
            (4) 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.
            (5) Today, there are nearly 140,000,000 cars and 85,000,000 
        trucks on our highways. Of this amount, approximately 3,300,000 
        cars and trucks already on our highways will run on 85 percent 
        ethanol (E-85), and this number is increasing. For the 2005 
        model year, there are 20 different models of vehicles capable 
        of running on E-85. Yet given this market, the alternative fuel 
        is used less than 1 percent of the time given that of the more 
        than 187,000 retail locations selling motor fuel in the United 
        States, only 400 stations across 38 States sell E-85.
            (6) Biodiesel production is also dramatically increasing, 
        going from 5,000,000 gallons in 2001 to nearly 25,000,000 
        gallons in 2003. Daimler-Chrysler has also announced its 
        intentions to initially fuel the Diesel Jeep Liberty with a 5 
        percent biodiesel blend, the first time a vehicle has been 
        explicitly fueled with an alternative fuel as it rolls off the 
        production line.
            (7) Currently the United States annually consumes about 
        7,171,885,000 barrels of petroleum. (164,000,000,000 gallons of 
        vehicle fuels and 5,600,00,000 gallons of heating oil.) In 
        2002, 62 percent of these fuels were imported, part of a total 
        $358,200,000,000 trade deficit with the rest of the world. 
        Since 1983, the United States importation of petroleum and its 
        derivatives has more than tripled, rising from 1,215,225,000 
        barrels in 1983 to 4,476,501,000 barrels in 2003.
            (8) Further Strategic Petroleum Reserve policy should 
        encourage domestic production to the greatest extent possible. 
        Currently, the Strategic Petroleum Reserve holds 670,700,000 
        barrels (out of a potential 727,000,000 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 bio-based. 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.
            (9) Strategic Petroleum Reserve policy also should 
        encourage the development of alternatives to the Nation's 
        reliance on petroleum such as biomass fuels.
            (10) 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.
            (11) 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. With the 
                        Department of Agriculture having forecast 
                        prices of $2.10 per bushel of corn for the 
                        2004-2005 marketing year, the portion of the 
                        corn crop that goes for ethanol has a farm 
                        value of $2,100,000,000.
                    (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 or 
                        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--NATIONAL BIOFUELS DEVELOPMENT

SEC. 101. 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 2005 
through 2010.

          TITLE II--BIOFUELS FEEDSTOCKS ENERGY RESERVE PROGRAM

SEC. 201. 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. 202. 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. 203. 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. 204. 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. 205. 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. 206. REGULATIONS.

    Not later than 60 days after the date of the enactment of this Act, 
the Secretary shall issue such regulations as are necessary to carry 
out this title.
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