Short title

(a)

Short title

This Act may be cited as the

Chesapeake’s Healthy and Environmentally Sound Stewardship of Energy and Agriculture Act of 2007

or the

CHESSEA Act of 2007

. (b)

Table of contents

The table of contents for this Act is as follows:

Sec. 1. Short title.

Sec. 2. Findings.

Sec. 3. Environmental quality incentives program.

Sec. 4. Regional water quality enhancement program.

Sec. 5. Conservation innovation grants.

Sec. 6. Conservation reserve program.

Sec. 7. Conservation security program.

Sec. 8. Comprehensive planning technical assistance pilot program.

Sec. 9. Wetlands reserve program.

Sec. 10. Agricultural management assistance.

Sec. 11. Biorefinery and biofuel project grants.

Sec. 12. Renewable energy systems and energy efficiency improvements program.

Findings

Congress finds the following: (1)The Chesapeake Bay is the largest estuary in North America, the world’s most productive estuary, and a resource of worldwide significance. (2)The Chesapeake Bay watershed encompasses portions of six States, New York, Pennsylvania, Delaware, Maryland, Virginia, and West Virginia, and the District of Columbia, and contains 150 major tributaries. (3)Agricultural operations, small family farms in particular, is a defining feature of the economy, heritage, culture, landscape, and environment of the States of the Chesapeake Bay watershed, and these agricultural operations account for nearly one quarter of the land in the Chesapeake Bay watershed, stretching across 10 million acres and involving tens of thousands of individual farmers. (4)Unfortunately, these same agricultural operations are the source of more than 40 of the nitrogen and phosphorus loads going into the Chesapeake Bay; (5)In the landmark regional agreement known as Chesapeake 2000, the Federal Government, the six States of the Chesapeake Bay watershed, and the District of Columbia, agreed to significantly reduce annual nitrogen, phosphorus, and sediment loadings by 2010 to restore the Chesapeake Bay and its tidal tributaries sufficiently to remove them from the list of impaired waters under the Clean Water Act. (6)Current efforts to implement Chesapeake 2000 and achieve the nitrogen and phosphorus reduction goals specified in the agreement are significantly underfunded. (7)The implementation of improved conservation practices in agricultural operations in the Chesapeake Bay watershed and increased agricultural bioenergy production can serve the dual purposes of enhancing the environmental health of the Chesapeake Bay and the economic vitality of farmers in the watershed.

Environmental quality incentives program

(a)

Extension

(1)

Funding extension and increase

Section 1241(a) of the Food Security Act of 1985 (16 U.S.C. 3841(a)) is amended by striking paragraph (6) and inserting the following new paragraph:

(6)The environmental quality incentives program under chapter 4, using, to the maximum extent practicable, $2,000,000,000 in each of fiscal years 2008 through 2013.

(2)

Conforming amendments

Section 1240B of such Act (16 U.S.C. 3839aa–2) is amended— (A)in subsection (a)(1), by striking 2010 and inserting 2013; and (B)in subsection (g), by striking 2007 and inserting 2013. (b)

Priority given to State allocations

Section 1240F of such Act (16 U.S.C. 3839aa–6) is amended— (1)by striking To and inserting (a) Assistance, information, and training.—To; and (2)by adding at the end the following new subsections:

(b)

Interstate watersheds

When making program allocations to States, the Secretary shall give priority to States located within watersheds that— (1)encompass more than one State; (2)are recognized under the Clean Water Act as having nutrient-related water quality impairments or sediment-related water quality impairments (or both); and (3)are subject to State-approved tributary strategies or watershed management plans designed to address such impairments. (c)

Prohibited allocation factor

The Secretary shall not use the total number of acres as an allocation factor.

(c)

Cost share payment exception

Section 1240B(d)(2) of such Act (16 U.S.C. 3839aa–2(d)(2)) is amended by striking subparagraph (A) and inserting the following new subparagraph:

(A)

Limited resource and beginning farmers

The Secretary may increase the amount provided to a producer under paragraph (1) to not more than 90 percent if the producer is a limited resource or beginning farmer or rancher, as determined by the Secretary, but in no event shall the cost-share payment under the program be less than 15 percent more than the payment that the Secretary may determine under paragraph (1).

(d)

Forest conservation and performance incentives for States

Chapter 4 of subtitle D of title XII of such Act is amended by adding at the end the following new sections:

1240J.

Promotion of forest stewardship practices

(a)

Cost-share payments and incentive payments

In carrying out the program under this chapter, the Secretary shall promote forest stewardship by providing cost-share payments and incentive payments to non-industrial private forest owners to carry out eligible conservation activities, to— (1)improve water quality; (2)improve habitat for at-risk species; (3)restore ecologically important forest types; or (4)control invasive species. (b)

Priority

The Secretary shall give priority to projects that involve multiple landowners implementing eligible conservation activities in a coordinated way to address the purposes described in subsection (a). (c)

Funding

(1)

Amounts

The Secretary shall use funds of the Commodity Credit Corporation to carry out this section in the following amounts: (A)$25,000,000 for fiscal year 2008. (B)$45,000,000 for fiscal year 2009. (C)$60,000,000 for fiscal year 2010. (D)$75,000,000 for each of fiscal years 2011 and 2012. (E)$100,000,000 for fiscal year 2013.

1240K.

Performance incentives for States

(a)

High level of performance bonus

For each of fiscal years 2008 through 2013, 10 percent of the funds made available under this chapter shall be reserved by the Secretary for bonus allocations to States that demonstrate a high level of performance in implementing the program. (b)

Special considerations

In evaluating State performance under subsection (a), the Secretary shall reward States that— (1)consistently meet the requirements of section 1240C in evaluating offers and payments; (2)dedicate a portion of their annual environmental quality incentives program allocation to multi-producer cooperative efforts to address specific resource concerns; (3)collaborate with other Federal and State agencies, local governments, educational institutions, and for-profit and nonprofit organizations to monitor and evaluate the environmental outcomes associated with implementation of the program; (4)demonstrate effective and efficient program delivery, including the provision of adequate technical assistance to all program participants through appropriate staffing and through cooperation with other Federal, State, Tribal, and local agencies, for-profit and nonprofit organizations, and individuals with demonstrated expertise in the planning and implementation of conservation practices, systems, and approaches; (5)support and encourage innovative approaches to addressing resource concerns; (6)effectively leverage Federal funding with local and state matching funds; and (7)demonstrate effective outreach and innovative approaches to reaching and serving beginning farmers and ranchers, limited-resource producers, and operators with lower rates of historical participation in Federal farm and conservation programs.

Regional water quality enhancement program

(a)

Program requirements

Chapter 5 of subtitle D of title XII of the Food Security Act of 1985 is amended by inserting after section 1240P (16 U.S.C. 3839bb–3) the following new section:

1240Q.

Regional water quality enhancement program

(a)

Program required

In order to increase, facilitate, and further implement cooperative partnerships between States, producers, and other interested persons or parties to improve water quality in the largest waterbodies in the United States, the Secretary shall enter into agreements with States containing all or a portion of such a waterbody or containing tributaries of such a waterbody to assist such States to carry out special initiatives focused on the enhanced stewardship of such waterbodies. The Chesapeake Bay and its tributaries shall be one of the waterbodies regarding which the Secretary enters into agreements under this section. (b)

Term of agreement

An agreement under this section shall be for a term of not shorter than three years nor longer than five years. (c)

Competitive Process; Set-Aside

The Secretary shall establish a competitive process for considering applications for agreements under this section, consistent with the evaluation criteria listed in subsection (d). However, not less than 25 percent of total funds available for agreements under this section shall be awarded to States containing a portion of the Chesapeake Bay watershed. (d)

Evaluation of applications; criteria

In evaluating applications for an agreement under this section, the Secretary shall consider the extent to which the program proposed by the State will accomplish the following: (1)Most cost-effectively achieve the greatest improvements to water quality, utilizing one or more of the following: (A)Adoption of management practices and systems, including soil amendments, soil and stalk testing, alternative cropping systems, cover crops, buffers, and other measures. (B)Innovative or advanced conservation techniques that hold substantial promise for producing long-term, cost-effective improvements to water quality. (C)Reduction in nutrient inputs to agricultural operations, such as through feed management. (D)Manure processing and treatment technologies to permit more efficient use and transport of manure to produce energy, restore nutrient-deficient lands, or reduce air emissions. (2)Leverage financial and technical resources from sources other than the programs authorized by this subtitle, including financial and technical resources provided by other Federal agencies, State agencies, local governments, nongovernmental organizations and associations, and other private sector entities. (3)Provide necessary technical assistance to producers and other cooperators participating in the project or initiative, including in the application cost estimates for technical assistance and whether such assistance will be provided by technical service providers. (4)Establish a program of education and outreach to attract new participants. (5)Serve as a transferable model for other regional watershed efforts. (6)Evaluate progress and measure results. (e)

Priorities

To the maximum extent practicable, consistent with the requirements of subsection (d), the Secretary shall ensure that, each fiscal year, agreements are entered into under this section to support projects and initiatives that collectively address water quality impairments. (f)

Selection Process

In evaluating applications under this section, the Secretary shall consider recommendations from scientists, regional experts, and other persons with appropriate expertise in the Department of Agriculture, other Federal and State agencies, and interest groups, including producer associations and conservation and environmental organizations. (g)

Cost Share requirements

The Secretary shall not require more than 25 percent of the cost of a project or initiative supported under an agreement entered into under this section to come from non-Federal sources. However, the Secretary may award more points to projects or initiatives offering to cover a higher percentage of the cost of the project or initiative from non-Federal sources. If the Secretary establishes a cost-share requirement for a project or initiative, the Secretary shall allow the use of in-kind contributions to meet that requirement. (h)

State

In this section, the term State includes the District of Columbia.

(b)

Funding

Section 1241(a) of such Act (16 U.S.C. 3841(a)) is amended by adding at the end the following new paragraph:

(8)The regional water quality enhancement program under section 1240Q, using, to the maximum extent practicable— (A)$175,000,000 for fiscal year 2008; and (B)$200,000,000 in each of fiscal years 2009 through 2013.

Conservation innovation grants

Section 1240H of such Act (16 U.S.C. 3839aa–8) is amended— (1)in subsection (a), by striking may and inserting shall; (2)in subsection (b)— (A)by striking may and inserting shall; (B)by striking and at the end of paragraph (2); (C)by striking the period at the end of paragraph (3) and inserting ; and; and (D)by adding at the end the following new paragraph:

(4)include a plan for technology transfer.

; and

(3)by adding at the end the following new subsections:

(d)

Technology transfer

In making grants under this section, the Secretary shall give priority to projects that ensure transferability of innovative conservation technologies and approaches to achieve widespread implementation by producers. (e)

Additional Funding

In addition to amounts made available under section 1241(a)(6) to carry out this chapter, the Secretary shall use $100,000,000 in funds of the Commodity Credit Corporation in each of fiscal years 2008 through 2013 to carry out this section:

Conservation reserve program

(a)

Extension

(1)

Funding extension

Section 1241(a) of the Food Security Act of 1985 (16 U.S.C. 3841(a)) is amended— (A)in the matter preceding paragraph (1), by striking 2007 and inserting 2013; and (B)in paragraph (1), by striking The and inserting For each of fiscal years 2002 through 2013, the. (2)

Conforming amendments

Section 1231 of such Act (16 U.S.C. 3831) is amended— (A)in subsection (a), by striking 2007 and inserting 2013; (B)in subsection (d), by striking 2007 and inserting 2013; (C)in subsection (e)(3), by striking 2002 and inserting 2008; and (D)in subsection (h)(1), by striking 2007 and inserting 2013. (b)

Enrollment goals and use of general signup

Section 1231(d) of such Act (16 U.S.C. 3831(d)) is amended— (1)by striking The Secretary and inserting:

(1)

Acreage authorized

The Secretary

; and

(2)by adding at the end the following new paragraphs:

(2)

Enrollment goals

For the period beginning on the date of the enactment of this paragraph and ending on December 31, 2013, the Secretary shall establish a goal to enroll not less than 7,000,000 acres of eligible land through the continuous enrollment program and the conservation reserve enhancement program, with priority given to riparian buffers, restored wetlands, and other habitats known to improve water quality and called for under established, State-approved tributary strategies or watershed management plans to reduce nutrients and sediments from agricultural sources to impaired waters. (3)

Limitation on use of general signup

To the maximum extent practicable, the Secretary shall ensure that not more than 80 percent of the acres maintained in the conservation reserve at any one time during the 2008 through 2013 calendar years are acres that were enrolled through a general signup under section 1234(c)(2)(A). For an offer to be accepted into the conservation reserve under the general signup, the offer must have an environmental benefit index score at or above a threshold that is 15 percent higher than the average of the thresholds used in general signups during fiscal years 1996 through 2006, adjusted for changes in the index over these fiscal years.

(c)

Payment limitation

Section 1234(f)(1) of such Act is (16 U.S.C. 3834(f)) is amended by adding at the end the following new sentence: The Secretary may waive this payment limitation for persons participating in a conservation reserve enhancement program if the Secretary determines such a waiver is necessary to achieve the objectives of the conservation reserve enhancement program..

Conservation security program

(a)

Repeal of funding cap

Section 1241(a)(3) of the Food Security Act of 1985 (16 U.S.C. 3841(a)(3)) is amended by striking , using not more than and all that follows through 2015. (b)

Program extension

Section 1238A(a) of such Act (16 U.S.C. 3838a(a)) is amended by striking 2011 and inserting 2013. (c)

Assistance to certain states

Section 1238A(b) of such Act (16 U.S.C. 3838a(b)) is amended by adding at the end the following new paragraph:

(5)

Continuous enrollment

The Secretary shall provide for a continuous enrollment of eligible land in any State that, through a written agreement, is partnering with other States and the Federal government to achieve specific numeric reductions in nutrient and sediment pollution loadings within a multi-State watershed in an effort to remove the waters in that watershed from the list of impaired waters under the Clean Water Act.

(d)

Enhanced payments for water quality

Section 3838C(b)(1)(C)(iii) of such Act (16 U.S.C. 3838c(b)(1)(C)(iii)) is amended— (1)by striking or at the end of subclause (IV); (2)by striking the period at the end of subclause (V) and inserting ; and; and (3)by adding at the end the following new subclause:

(VI)implements practices that will significantly improve water quality in watersheds associated with waters impaired by agricultural nutrients, with priority given to the most effective practices.

(e)

Duties of the Secretary

Section 3838c of such Act (16 U.S.C. 3838c) is amended by striking subsections (f) and (g) and inserting the following new subsections:

(f)

Enrollment priority

In any fiscal year in which funding for the conservation security program is limited, the Secretary shall prioritize contracts to address water quality in watersheds of water bodies impaired by nutrients, based on the degree to which a producer proposes to increase the management intensity with which the producer addresses nutrient impairment of water quality in the watershed. (g)

Prohibited allocation factor

The Secretary shall not use the total number of acres as an allocation factor. (h)

Technical assistance

For each of fiscal years 2008 through 2013, the Secretary shall provide technical assistance to producers for the development and implementation of conservation security contracts in an amount based on actual cost, but not to exceed 23 percent of amounts expended for the fiscal year.

Comprehensive planning technical assistance pilot program

Section 1242 of the Food Security Act of 1985 (16 U.S.C. 3842) is amended by adding at the end the following new subsection:

(c)

Comprehensive planning technical assistance pilot program

(1)

Chesapeake Bay watershed

The Secretary shall establish a pilot program in the Chesapeake Bay watershed to assist producers with comprehensive conservation planning, design, and implementation, both before applying for assistance under any of the conservation programs authorized by subtitle D and through the process of design and implementation of conservation projects. (2)

Comprehensive assessment

The pilot program will assist producers by making a comprehensive assessment of the resource concerns, needs, and alternative solutions for the producer’s entire operation, as determined by the Secretary, following the procedures in the Natural Resources Conservation Service conservation planning manual, and by providing technical assistance in design and implementation of the solutions. (3)

Provision of assistance

Assistance to producers under the pilot program shall be provided by the Secretary directly or through third party providers certified by the Secretary. The results of the comprehensive planning, design, and implementation assistance shall be provided to the producer to enable informed choices on the type of financial assistance available through conservation programs administered by the Secretary under subtitle D that would most effectively address the resource needs of the operation consistent with the environmental goals for the area in which the operation is located. (4)

Cost

Assistance under the pilot program shall be provided by the Secretary without cost to producers. (5)

Funding

The Secretary shall provide $10,000,000 of the funds of the Commodity Credit Corporation each of fiscal years 2008 through 2013 to carry out the pilot program.

Wetlands reserve program

(a)

Extension

(1)

Funding extension

Section 1241(a)(2) of the Food Security Act of 1985 (16 U.S.C. 3841(a)(2)) is amended by striking The and inserting For each of fiscal years 2002 through 2013, the. (2)

Conforming amendment

Section 1237(c) of such Act (16 U.S.C. 3837(c)) is amended by striking 2007 and inserting 2013. (b)

Maximum and yearly enrollment

Section 1237(b)(1) of such Act (16 U.S.C. 3837(b)(1)) is amended by striking 2,275,000 acres, and all that follows through the period at the end and inserting 3,500,000 acres, of which, to the maximum extent practicable, 5,000 acres in calendar year 2008 and 10,000 acres in each of calendar years 2009 and 2010 shall be enrolled to meet State and Federal 2010 goals established pursuant to the Chesapeake 2000 agreement for the Chesapeake Bay watershed.. (c)

Priority

Section 1237 of such Act (16 U.S.C. 3837) is amended by adding at the end the following new subsection:

(g)

Priority

The Secretary shall give priority to enrollments benefitting water quality and shall consider whether States are implementing the program consistent with these priorities when allocating program funding to states.

(d)

Additional purpose

Section 1237A(b)(3) of such Act (16 U.S.C. 3837a(b)(3)) is amended by inserting after wetlands the following: , including the reduction of excess nutrients. (e)

Increased cost share

Section 1237C(b)(2) of such Act (16 U.S.C. 3837c(b)(2)) is amended by adding at the end the following new sentence: However, the Secretary may increase the cost-share percentage if the restoration plan referred to in section 1237A(b) results in significant reduction of excess nutrients in watersheds of waterbodies impaired by agricultural nutrients or results in land placed under permanent easement.. (f)

Easement priority

Section 1237C(d) of such Act (16 U.S.C. 3837c(d)) is amended by inserting before the period at the end the following: or for achieving nutrient reductions in watersheds of waterbodies impaired by agricultural nutrients.

10.

Agricultural management assistance

(a)

Additional State

Subsection (b)(1) of section 524 of the Federal Crop Insurance Act (7 U.S.C. 1524) is amended by inserting Virginia, after Vermont,. (b)

Funding and Duration

Subsection (b)(4)(B) of such section is amended— (1)in clause (ii)— (A)by striking fiscal years 2003 through 2007 and inserting fiscal years 2008 through 2013; and (B)by striking $20,000,000 and inserting $50,000,000; and (2)in clause (iii)— (A)by striking fiscal years 2004 through 2007 and inserting fiscal years 2008 through 2013; (B)in subclause (I), by striking $14,000,000 and inserting $38,000,000; (C)in subclause (II), by striking $1,000,000 and inserting $2,000,000; and (D)in subclause (III), by striking $5,000,000 and inserting $10,000,000.

11.

Biorefinery and biofuel project grants

(a)

Definitions

Subsection (b) of section 9003 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 8103) is amended by— (1)redesignating paragraph (3) as paragraph (4); and (2)inserting after paragraph (3) the following new paragraph:

(3)

Chesapeake Bay Watershed States

The term Chesapeake Bay Watershed States means the States of Delaware, Maryland, New York, Pennsylvania, Virginia, and West Virginia and the District of Columbia.

(b)

Assistance methods

Subsection (c) of such section is amended to read as follows:

(c)

Assistance

(1)

Grants

The Secretary shall award grants and make loans and loan guarantees to eligible entities to assist in covering the cost of development and construction of biorefineries to carry out projects to demonstrate the commercial viability of one or more processes for converting biomass to fuels or chemicals. (2)

Chesapeake bay watershed projects

In the case of a project to be operated in one or more of the Chesapeake Bay Watershed States, the Secretary shall award grants under this subsection for the purpose of developing and promoting the commercial viability of no-till soybean biodiesel production, cellulosic ethanol production, manure to energy processes and technologies, and other technologies that promote the conversion of biomass to fuels and chemicals and the reduction of nutrient impacts to water quality.

(c)

Environmental goals; distribution of grants

Subsection (e) of such section is amended— (1)in paragraph (2)(A)— (A)by striking and at the end of clause (i); (B)by redesignating clause (ii) as clause (iii); and (C)by inserting after clause (i) the following new clause:

(ii)shall select projects based upon the extent to which the projects meet environmental goals for feed stocks and refineries developed by the Secretary in consultation with the Secretary of the Interior, the Secretary of Energy, the Administrator of the Environmental Protection Agency, and the National Academy of Sciences taking into consideration clean water and air goals; and

(2)by adding at the end the following new paragraph:

(3)

Funds for Chesapeake Bay States

The Secretary shall ensure that not less than 15 percent of the total funds available under this section are provided to projects operated in Chesapeake Bay Watershed States that benefit the Chesapeake Bay watershed .

(d)

Funding

Subsection (h) of such section is amended to read as follows:

(h)Of the funds of the Commodity Credit Corporation, the Secretary shall use $100,000,000 for each of fiscal years 2008 through 2013 to carry out this section.

12.

Renewable energy systems and energy efficiency improvements program

Section 9006 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 8106) is amended— (1)in subsection (c)— (A)by striking paragraph (2)(C) and inserting the following:

(C)the expected environmental benefits of the renewable energy system, including in watersheds of bodies of water degraded by agricultural nutrients and to water quality;

; and

(B)by adding at the end the following new paragraph:

(3)

Preference for community projects

The Secretary shall give preference in funding and grant and loan selection to activities that the Secretary determines— (A)are undertaken jointly by more than one eligible entity in a local community; (B)involve direct cooperation between two or more eligible entities; and (C)foster community or cooperative approaches to renewable energy and energy efficiency development.

; and

(2)by striking subsection (f) and inserting the following:

(f)

Production-based incentive in lieu of grant

(1)

In general

In addition to the authority under subsection (a), the Secretary may, on the request of an applicant the Secretary determines is eligible under subsection (b), make production-based payments to the applicant in lieu of a grant. (2)

Contingency

The Secretary shall only make a payment under paragraph (1) if the applicant provides the Secretary with documentation showing energy production and sales from a renewable energy system to a third party. (3)

Limitation

The total net present value of a production-based incentive may not exceed the lower of— (A)25 percent of the eligible project costs; and (B)any other limits that the Secretary establishes by rule or guidance. (g)

Distribution of grants

The Secretary shall ensure that not less than 15 percent of the grants, loans, and loan guarantees provided under this section are provided to projects in Chesapeake Bay Watershed States that benefit the Chesapeake Bay watershed. (h)

Definition

In this section, the term Chesapeake Bay Watershed States means the States of Delaware, Maryland, New York, Pennsylvania, Virginia, and West Virginia and the District of Columbia. (i)

Funding

Of the funds of the Commodity Credit Corporation, the Secretary shall make available to carry out this section— (1)$60,000,000 for fiscal year 2008, to remain available until expended; (2)$90,000,000 for fiscal year 2009, to remain available until expended; (3)$130,000,000 for fiscal year 2010, to remain available until expended; (4)$180,000,000 for fiscal year 2011, to remain available until expended; and (5)$250,000,000 for fiscal year 2012, to remain available until expended.