[Congressional Record Volume 147, Number 59 (Thursday, May 3, 2001)]
[Senate]
[Pages S4249-S4254]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. WYDEN (for himself and Mr. Craig):
  S. 820. 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; to the Committee on Energy and 
Natural Resources.
  Mr. WYDEN. Mr. President, today Senator Craig and I are introducing 
legislation that uses a simple, scientifically sound and entirely 
voluntary approach to combat global warming. It's not revolutionary, 
and it's not regulatory. We believe growing more trees, bigger trees 
and healthier trees is one of the most effective ways to remove 
greenhouse gases from the atmosphere and help protect the earth's 
climate. The Forest Resources for the environment and the Economy Act 
of 2001 will expand the nation's forested lands and put our forests on 
the frontlines in the battle against global warming.
  Investing in healthy forests today is an investment in the well-being 
of our planet for decades to come. In the Pacific Northwest, forests 
are more than critical environmental resources--they are also a 
cornerstone of our economy. In debates about forest policies, there are 
those who have advocated an exclusively environmental pathway, and 
others who have stressed an exclusively economic pathway. This bill is 
part of what I believe is a third pathway through the woods, a path to 
both stronger rural economies and healthier forests.
  I introduced this bill with Senator Craig in the 106th Congress. 
Though there have been numerous changes to the bill to address specific 
concerns, the underlying functions of the bill remain the same: this 
bill will reduce the buildup of greenhouse gases in the atmosphere and 
help protect our global climate for ourselves, our children and our 
grandchildren. It will provide improved wildlife and fish habitats and 
protect our waterways. It will enhance our national forests by reducing 
water pollution within their watersheds. It will provide jobs in the 
forestry sector in areas that have been hard hit by declining timber 
harvests. And it will grow additional timber resources on 
underproductive private lands.
  The legislation does all of this through entirely voluntary, 
incentive-based approach. The bill makes new resources available to 
private landowners through state-operated revolving loan programs that 
provide assistance for tree planting and other forest management 
actions. I know that this approach works because of the leadership of 
my home state, Oregon. The loan

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program is modeled after the innovative Forest Resource Trust, which 
was established in Oregon in 1993, and is just one of the many ways 
Oregon continues to lead the nation in state actions to reduce 
greenhouse gas emissions. I am introducing this bill to make sure that 
we take advantage of these opportunities across the country and 
encourage more businesses to invest in the nation's forests.
  The bill is based on recommendations of the National Academy of 
Sciences to overcome the capital constraints that prevent non-
industrial, private forest land owners from growing healthy forests. 
Almost 10 million landowners in the United States own 42 percent of the 
non-industrial, private forest land in parcels of less than 100 acres. 
Access to the low-interest loans provided by this bill can empower 
these landowners to improve their lands while providing global 
environmental protection.

  In addition to establishing the state revolving loan programs, the 
bill makes important changes to the Energy Policy Act of 1992 to 
strengthen the voluntary accounting and verification of greenhouse gas 
reductions from forestry activities. The bill directs the Secretary of 
Agriculture to develop new guidelines on accurate and cost-effective 
methods to account for and report real and credible greenhouse gas 
reductions. These guidelines will be developed with the input of a new 
Advisory Council representing industry, foresters, states, and 
environment groups.
  As I said above, numerous changes have been made to the bill since 
its introduction in the 106th Congress. By a process of intellectual 
give and take between various Congressional offices, stakeholder groups 
and environmental organizations, this bill has been improved to offer 
greater environmental protection opportunities and better science. The 
bill now requires that all funded projects have ``a positive impact on 
watersheds, fish habitats, and wildlife diversity.'' It promotes 
reforestion activities for species that are native to a region. Also, 
the bill now allows flexibility in the loan repayment requirements that 
encourage the longer rotation, and permanent protection, of lands 
reforested under this program. In addition, the new Advisory Council 
will have three independent scientists instead of one and the members 
must have an expertise in forest management; carbon storage reporting 
will include monitoring requirements to assure the net increase of 
carbon storage; and the bill allows for the incorporation of the latest 
scientific and observational information. Overall, this bill is a solid 
step forward in the long journey towards addressing global climate 
change.
  As in the last Congress, this bill will pay for itself by taking the 
money that polluters pay when they are caught violating the Clean Air 
Act and Clean Water Act and use it to expand our forests, protect 
streams and rivers and help remove greenhouse gases from the air. In 
fiscal year 1998, $45 million of these environmental penalties were 
assessed against polluters. There are currently no guarantees that 
these penalties, which revert to the General Fund, are used to improve 
our environment. This bill would make this money available as loans to 
small and medium landowners to cover the upfront costs of tree planting 
and other activities that aid in the growth of healthy, productive 
forests and provide better wildlife habitats.
  We cannot afford to play Russian roulette with our global climate. 
The total amount of greenhouse gases in our atmosphere depends, in 
part, on the efficiency of forests and other natural ``sinks'' that 
absorb carbon dioxide--the most significant greenhouse gas--from the 
atmosphere. The implications are as simple as they are scientifically 
sound--if we grow more trees, bigger trees, and healthier trees, we 
will remove more greenhouse gases from the atmosphere and help protect 
the global climate. According to the Pacific Forest Trust, our forest 
lands in the United States are only storing one-quarter of the carbon 
they can ultimately store. Just tapping a portion of this potential by 
expanding and increasing the productivity of the nation's 737 million 
acres of forests is an important part of a win-win strategy to slow 
global warming. This bill takes an important first step toward 
sequestering greenhouse gases on Federal lands: it directs the Forest 
Service to report to Congress on options to increase carbon storage in 
our national forests.

  It is hard to believe that nine years ago, during the first Bush 
Administration, both Democrat and Republican Senators proclaimed their 
support for taking action to protect the climate system and reducing 
the buildup of greenhouse gases in the atmosphere. When the 1992 United 
Nations Framework Convention on Climate Change was ratified by the 
Senate, Senators from both parties came to the floor to applaud this 
commitment to begin reducing greenhouse gas emissions. And then-
President Bush supported that position as well. We cannot afford to let 
the current debates about international treaties paralyze this Congress 
when their are opportunities here at home to protect our environment in 
ways that also provide jobs and economic growth.
  This bill is about taking advantage of a clear win-win opportunity. 
It's a win for the global environment. It's a win for sustainable 
forestry. It's a win for local water protection. And it's a win for 
rural communities. For these reasons, the bill has already received 
positive reactions from timber companies and environmental 
organizations alike, including the National Association of State 
Foresters and the Society of American Foresters, American Forest and 
Paper Association, American Forests, Environmental Defense Fund, 
Governor John A. Kitzhaber of Oregon, PacificCorp, The Nature 
Conservancy, and The Pacific Forest Trust.
  I look forward to pursuing this common-sense step toward protecting 
the environment and supporting our forest workers. This bill will have 
a sequential referral to both the Senate Energy and Natural Resources 
Committee and the Senate Agriculture Committee. These Committees share 
jurisdiction over all our nations forests, public and private. They 
represent the interests of the people who use our forests from the 
National Forest visitor, to the large industrial land owner, to the 
small woodlot owner. Through the combined efforts of both of these 
Committees, I am sure that the bill will receive a thorough hearing. I 
look forward to starting this process with a hearing in early May in 
the Energy and Natural Resources Committee.
  I ask unanimous consent that the text of the bill and the section-by-
section analysis of the Forest Resources for the Environment and the 
Economy Act be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 820

       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 long-term 
     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) encouraging long term carbon storage in forests of the 
     United States;
       (3) improving water quality;
       (4) enhancing fish and wildlife habitats;

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       (5) providing employment and income to rural communities;
       (6) providing new sources of forest products;
       (7) providing opportunities for use of renewable biomass 
     energy; and
       (8) improving the energy security of the United States.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Carbon sequestration.--The term ``carbon 
     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.
       (2) Forestry carbon activity.--The term ``forestry carbon 
     activity'' means a forest management action that--
       (A) increases carbon sequestration and/or maintains carbon 
     sinks,
       (B) encourages long-term carbon storage, and
       (C) has no net negative impact on watersheds and fish and 
     wildlife habitats.
       (a) Forest carbon program.--The term ``forest carbon 
     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 cooperative agreements and State revolving loan 
     funds.
       (4) 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.
       (5) 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.
       (6) 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.
       (7) Forest management action.--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, including management of forests for aesthetics, 
     fish, recreation, urban values, water, wilderness, wildlife, 
     wood products, and other forest values.
       (8) Invasive species.--The term ``invasive species'' means 
     any species that is not native to an ecosystem and whose 
     introduction does or is likely to cause economic or 
     environmental harm or harm to human health.
       (9) Nonindustrial private forest.--The term ``nonindustrial 
     private forest'' means forest land that is privately owned by 
     an individual or corporation that does not control a forest 
     products manufacturing facility and where management may 
     include objectives other than timber production.
       (10) 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) re-seeding; and
       (iii) natural regeneration.
       (11) revolving loan program.--The term ``revolving loan 
     program'' means a State revolving loan program established 
     under section 5.

     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) Carbon sequestration.--The term `carbon 
     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.'
       ``(2) 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.
       ``(3) Forest carbon program.--The term `forest carbon 
     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 financial 
     assistance through cooperative agreements and State revolving 
     loan funds for forest carbon activities.
       ``(4) 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.
       ``(5) Forest management action.--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, including management of forests for aesthetics, 
     fish, recreation, urban values, water, wilderness, wildlife, 
     wood products, and other forest values.''
       (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, 
     acting through the Chief of the Forest Service, shall report 
     to Congress on--
       ``(A) the quantity of carbon contained in the forest carbon 
     reservoir of the National Forest System and the methodology 
     and assumptions used to ascertain that quantity;
       ``(B) the potential to increase the quantity of carbon in 
     the National Forest System 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 U.S. 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 system management.''
       (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, 
     acting through the Chief of the Forest Service, shall--
       ``(i) review the guidelines established under paragraph (1) 
     that address procedures for the accurate voluntary reporting 
     of greenhouse gas sequestration from tree planting and forest 
     management actions;
       ``(ii) make recommendations to the Secretary of Energy for 
     amendment of the guidelines; and
       ``(iii) provide an opportunity for public comment on the 
     guidelines established under subparagraph (A) prior to their 
     submission to the Secretary of Energy.
       ``(B) Carbon and forestry advisory council.--
       ``(i) Establishment.--The Secretary of Agriculture, acting 
     through the Chief of the Forest Service, shall establish a 
     Carbon and Forestry Advisory Council for the purpose of--
       ``(I) advising the Secretary of Agriculture in the 
     development and updating of guidelines for accurate voluntary 
     reporting of greenhouse gas sequestration from forest 
     management actions;
       (II) evaluating the potential effectiveness of the 
     guidelines in verifying carbon inputs and outputs from 
     various forest management strategies;
       ``(III) estimating the effect of proposed implementation on 
     carbon sequestration and storage;
       ``(IV) assisting the Secretary of Agriculture in reporting 
     annually to Congress on the results of the carbon storage 
     program; and
       ``(V) assisting the Secretary of Agriculture in assessing 
     the vulnerability of forests to adverse effects of climate 
     change.
       ``(ii) Membership.--The Advisory Council shall be composed 
     of the following 16 members with interest and expertise in 
     carbon sequestration and forestry management, appointed by 
     the Secretaries of Agriculture and Energy:
       ``(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 American Indian Tribes;
       ``(VI) 1 member representing forest laborers;
       ``(VII) 3 members representing the academic scientific 
     community;
       ``(VII) 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
       ``(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), (X), and (XIII) of

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     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 shall provide financial and 
     administrative support for the Advisory Council.
       ``(vii) Use of existing council.--The Secretary of 
     Agriculture may use an existing council to perform the tasks 
     of the Carbon and Forestry Advisory Council providing--
       ``(I) Council representation, membership terms and 
     background, and Council responsibilities reflect those stated 
     in subparagraph (B), and
       ``(II) The responsibilities of the Council, as described in 
     subparagraph (A), are a priority for the Council.
       ``(C) 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;
       ``(bb) quantifying the expected carbon storage over various 
     time periods, taking into account the likely duration of 
     carbon stored in the carbon reservoir; and
       ``(cc) considering the economic and social affects of 
     management alternatives.
       ``(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 field 
     conditions measurements 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) do not prevent use of more precise measurements, if 
     desired by a reporting entity.
       ``(D) State forest carbon programs.--The recommendations 
     described in subparagraph (A)(ii) shall include guidelines to 
     States for reporting, monitoring, and verifying carbon 
     storage under the forest carbon program.
       ``(E) 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 co-firing of biomass with fossil 
     fuels) has on the displacement of greenhouse gas emissions 
     from fossil fuels.
       ``(F) 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.
       ``(G) 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.
       ``(6) Monitoring of forest carbon programs.--
       ``(A) In general.--Forest Carbon Program reports shall--
       ``(i) be developed in accordance with the guidelines issued 
     under paragraph (1),
       ``(ii) state the quantity of carbon storage realized;
       ``(iii) include the data used to monitor and verify the 
     carbon storage,
       ``(iv) be consistent with reporting requirements of the 
     Energy Information Administration, and
       ``(v) ensure the avoidance of double counting of forest 
     carbon activities.
       ``(B) States and cooperative agreement participants.--
     States receiving assistance to establish revolving loans and 
     entities participating in cooperative agreements for forest 
     carbon programs shall--
       ``(i) monitor and verify carbon storage achieved under the 
     program in accordance with guidelines issued under 
     subparagraph (5)(E),
       ``(ii) report annually to the Secretary of Agriculture on 
     the results of the carbon storage program, and
       ``(iii) report annually to any non-governmental 
     organization, business, or other entity that provides funding 
     for the carbon storage program.
       ``(C) Secretary of agriculture.--
       ``(i) In general.--The Secretaries shall report annually to 
     Congress on the results of the carbon storage program.
       ``(ii) Inclusions.--The report shall include--
       ``(I) specifications consistent with subparagraph (A),
       ``(II) an assessment of the effectiveness of monitoring and 
     verification,
       ``(III) a report on carbon activities associated with 
     cooperative agreements for the forest carbon program, and
       ``(IV) a State Forest Carbon Program compliance report 
     established by--
       ``(aa) reviewing reports submitted by states under clause 
     (B)(ii),
       ``(bb) verifying compliance with the guidelines under 
     subparagraph (A),
       ``(cc) notifying the State of compliance status,
       ``(dd) notifying the State of any corrections that are 
     needed to attain compliance, and
       ``(ee) establishing an opportunity for re-submission by the 
     State.''

     SEC. 5. FOREST CARBON COOPERATIVE AGREEMENTS AND LOAN 
                   PROGRAM.

       (a) Forest Carbon Cooperative Agreement.--The Secretary may 
     enter into cooperative agreements with willing landowners 
     from State or local governments, American Indian tribes, 
     Alaska Natives, native Hawaiians and private, nonprofit 
     entities for forest carbon activities on private land, state 
     land, American Indian land, Alaska Native land, or native 
     Hawaiian land.
       (b) Forest Carbon Revolving Loan Program.--
       (1) In general.--In collaboration with State Foresters and 
     non-governmental organizations, the Secretary shall provide 
     assistance to States so that States may establish a revolving 
     loan program for forest carbon activities on non-industrial 
     private forest (NIPF) land.
       (2) Eligibility.--An owner of non-industrial private forest 
     land shall be eligible for assistance from a revolving loan 
     fund for forest carbon activity on not more than a total of 
     5,000 acres of their NIPF land holdings.
       (3) Loan terms.--A loan agreement under the program shall--
       (A) have loan interest rates that are established by the 
     State--
       (i) as necessary to encourage participation of NIPF 
     landowners in the loan program,
       (ii) not to exceed a real rate of return in excess of 3%, 
     and
       (iii) that will further the forest carbon program 
     objectives;
       (B) require that all loan obligations be repaid to the 
     State--
       (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;
       (iii) proportional to the percentage decrease of carbon 
     stock;
       (C) 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;
       (D) 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;
       (E) 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

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       (ii) repays the loan with interest;
       (F) 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 non-
     governmental organization that provides funding to the State 
     for purposes of issuing the loan); and
       (G) include provisions for the monitoring and verification 
     of carbon storage.
       (4) Cancellation of loan terms for permanent 
     conservation.--
       (A) In general.--The State shall cancel the loan agreement 
     under paragraph (3) and any liens on the timber, forest 
     products, and biomass under paragraph (3)(C) if the borrower 
     donates to the State or may cancel the loan agreement under 
     paragraph (3) and any liens on the timber, forest products, 
     and biomass under paragraph (3)(C) if the borrower donates to 
     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.
       (5) Reinvestment of funds.--All funds collected under a 
     loan issued under this subsection (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.
       (6) 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.
       (7) Matching funds.--
       (A) In general.--In order to be eligible to continue 
     participating in the program, any State in the program under 
     this section shall provide matching funds equal to at least 
     25 percent of the Federal funds made available to the State 
     for the program, beginning the second year of program 
     participation.
       (B) 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.
       (8) Loan funding distribution.--
       (A) 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 Federal funds shall be 
     distributed under this subsection among eligible States; and
       (ii) report the formula and methodology to Congress.
       (B) Basis.--The formula shall--
       (i) be based on maximizing the potential for meeting the 
     objectives of this Act;
       (ii) give appropriate consideration to--
       (I) the acreage of un-stocked or under-producing private 
     forest land in each State;
       (II) the potential productivity of such land;
       (III) the potential long-term carbon storage of such land;
       (IV) the potential to achieve other environmental benefits;
       (V) the number of owners eligible for loans under this 
     section in each State; and
       (VI) 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.
       (9) Private funding.--A revolving loan fund may accept and 
     distribute as loans any funds provided by non-governmental 
     organizations, businesses, or persons in support of the 
     purposes of this Act.
       (10) 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.).
       (c) Requirements.--
       (1) Eligible forestry carbon activities.--Eligible forestry 
     carbon activities that--
       (A) help restore under-producing or understocked forest 
     lands,
       (B) provide for protection of forests from non-forest use,
       (C) allow a variety of sustainable management alternatives, 
     and
       (D) have no net negative impact on watersheds and fish and 
     wildlife habitats.
       (2) Guidance.--The Secretary, working through the US Forest 
     Service and in collaboration with States, shall provide 
     guidance on eligible forestry carbon activities based on the 
     criteria of this section.
       (3) Activities required under other law.--Funding shall not 
     be provided under this section for activities required under 
     other applicable Federal, State, or local laws.
       (4) Pre-agreement activities.--Funding shall not be 
     provided for costs incurred before entering into a 
     cooperative or loan agreement under this Act.
       (5) Limitation on land considered for funding.--No new loan 
     agreements shall be entered into under this section to fund 
     reforestation of land harvested after the date of enactment 
     of this Act if the landowner received revenues from the 
     harvest sufficient to reforest the land.
       (6) Eligible tree species.--
       (A) In general.--Selection of tree species for loan 
     projects shall be consistent with Executive Order No. 13112, 
     ``Invasive Species''.
       (B) Program funding.--Funding for reforestation activities 
     shall be provided for--
       (i) tree species native to a region,
       (ii) tree species that formerly occupied the site, or
       (iii) non-native tree species or hybrids that are non-
     invasive.
       (7) Forest-management plan.--Priority shall be given to 
     projects on land under a forestry management plan or forest 
     stewardship plan, if the plan is consistent with the 
     objectives of the carbon storage program.
       (8) Use of funds.--
       (A) funds will be used to pay--
       (i) the cost of purchasing and planting tree seedings; and
       (ii) other costs associated with the planted trees, 
     including planning, site preparation, forest management, 
     monitoring, measurement and verification, and consultant and 
     contractor fees.
       (B) funds will 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.
       (9) Financial assistance amount.--The amount of financial 
     assistance provided under this section shall not exceed--
       (A) 100 percent of total project costs, whether they 
     constitute the only funding source or are used in combination 
     with funds received from any other source; or
       (B) $100,000 during any 2-year period.
       (10) Federal funding.--During fiscal years 2001 through 
     2010, 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)) 
     shall be available, without further appropriation, to fund 
     cooperative agreements and revolving loan funds authorized in 
     this section.
       (11) Allocation of funds.--
       (A) In general.--The Secretary shall--
       (i) allocate 15 percent of available funds for Cooperative 
     agreements as specified under subsection (a), and
       (ii) allocate 85 percent of available funds for State 
     revolving loan programs as specified under subsection (b), 
     after determining that States have implemented a system to 
     administer the loans in accordance with this Act.
                                  ____


 The Forest Resources for the Environment and the Economy Act--Section-
                          by-Section Analysis

       The purposes of the bill are to develop monitoring and 
     verification systems for carbon reporting in forestry, to 
     increase carbon sequestration in forests by encouraging 
     private sector investment in forestry, and to promote 
     employment in forestry in the United States. The bill 
     achieves these purposes through three major actions: (1) 
     Guidelines for Accurate Carbon Accounting for Forests.--The 
     bill directs the Secretary of Agriculture, through the Forest 
     Service, to establish scientifically-based guidelines for 
     accurate reporting, monitoring, and verification of carbon 
     storage from forest management actions. The bill establishes 
     a multi-stakeholder Carbon and Forestry Advisory Council to 
     assist USDA in developing the guidelines.
       (2) Report on Options to Increase Carbon Storage on Federal 
     Lands--The bill directs the Secretary of Agriculture, through 
     the Forest Service, to report to Congress on forestry options 
     to increase carbon storage in the National Forest System.
       (3) State Revolving Loan Programs/Cooperative Agreements--
     The bill provides assistance to plant and manage 
     underproducing or understocked forests to increase carbon 
     sequestration. Assistance is provided through Cooperative 
     Agreements with State or local governments, American Indian 
     Tribes, Alaska natives, native Hawaiians, and private-
     nonprofit entities; or through loans to nonindustrial private 
     forest landowners. The Federal share of funding for 
     Cooperative Agreements and the loan program will come from 
     penalties that are being assessed against violators of the 
     Clean Air Act and the Clean Water Act (civil penalties 
     assessed in FY 1998 totaled $45 million).


                         section 1. short title

       The title of the bill is the ``Forest Resources for the 
     Environment and the Economy Act''.


                    SECTION 2. FINDINGS AND PURPOSES

       This section states the findings of the bill, including: 
     there is a need or additional information opportunities to 
     increase carbon

[[Page S4254]]

     storage on public land through improvements in forest land 
     management; monitoring and verification of forest carbon 
     storage can provide employment opportunities for rural 
     communities; and the sustainable production of biomass energy 
     feedstocks provides a renewable source of energy that can 
     improve the energy security of the United States.
       This section also states the purposes of the bill: to 
     increase carbon sequestration in forests; to provide 
     employment and income to rural communities; and to improve 
     the energy security of the United States by providing 
     opportunities for development of renewable biomass energy


                         section 3. definitions

       This section defines terms used in the bill, including the 
     following: ``Carbon sequestration''; ``Forestry carbon 
     activity''; ``Forest carbon program''; ``Forest carbon 
     reservoir''; ``Forest carbon storage''; ``Forest land''; 
     ``Forest management action''; ``Invasive species''; 
     ``Nonindustrial private forest''; ``Reforestation''; and 
     ``Revolving loan program''.


  section 4. carbon management on federal land; carbon monitoring and 
                        verification guidelines

       This section amends Title XVI (``Global Climate Change'') 
     of the Energy Policy Act of 1992.
       (a) Definitions: This subsection amends the Energy Policy 
     ACt to add the definitions for ``carbon 
     sequestration''``forest carbon storage,'' ``forest carbon 
     program,'' ``forest carbon reservoir,'' and ``forest 
     management action'' that were specified in Section 3.
       (b) Carbon Management on Federal Land: This subsection 
     directs the Secretary of Agriculture to report to Congress on 
     the quantity of carbon contained in the forest carbon 
     reservoir in the national forest system. The report will 
     include an assessment of forest management actions that can 
     increase carbon storage on these national forest system 
     lands. Finally, the report will include an assessment of the 
     role of forests in the carbon cycle and the contributions of 
     forestry to the global carbon budget. This subsection is 
     accomplished by amendment to section 1604 of the Energy 
     Policy Act (``Assessment of Alternative Policy Mechanisms for 
     Addressing Greenhouse Gas Emissions'').
       (c) Monitoring and Verification of Carbon Storage. This 
     subsection amends section 1605(b) of the Energy Policy Act 
     (``Voluntary Reporting''). It directs the Secretary of 
     Agriculture to review the existing Federal guidelines on 
     reporting, monitoring, and verification of carbon storage 
     from forest management actions and to make recommendations to 
     the Secretary of Energy for amendment of the guidelines.
       Carbon and Forestry Advisory Council: This subsection also 
     directs the Secretary of Agriculture to establish a 16-
     member, multi-stakeholder Carbon and Forestry Advisory 
     Council for the purpose of advising the Department of 
     Agriculture on: the development of the guidelines for 
     accurate voluntary reporting of greenhouse gas sequestration 
     from forest management actions, and for other purposes.
       Criteria: The guidelines developed by the Secretary of 
     Agriculture must take account of additionality and leakage. 
     The guidelines must include recommended practices for 
     monitoring, measurement and verification of carbon storage 
     that are scientifically sound and cost-effective.
       State Forest Carbon Programs: The guidelines will include 
     guidance to States for reporting, monitoring and verifying 
     carbon storage achieved under the carbon storage program 
     established in Section 5 of the bill.
       Biomass energy projects: The guidelines will include 
     guidance on calculating net greenhouse gas reductions from 
     biomass energy projects.
       Amendment of guidelines: The subsection directs the 
     Secretary of Energy to revise the existing voluntary 
     reporting guidelines to include the recommendations provided 
     by the Secretary of Agriculture.
       Review of guidelines: Guidelines must be reviewed at least 
     every 24 months, and as necessary for consistency with any 
     future Federal laws that credit for reductions of atmospheric 
     greenhouse gas concentrations resulting from forest 
     management actions.
       Monitoring of Forest Carbon Programs: Participants in the 
     Forest Carbon Program established in Section 5 of the bill 
     must report annually to the Secretary of Agriculture on the 
     results of the program. Reports that are certified to comply 
     with the guidelines in this section will be submitted to the 
     Department of Energy for inclusion in the 1605(b) voluntary 
     reporting data base.


    section 5. forest carbon cooperative agreements and loan program

       This section authorizes the Secretary of Agriculture to 
     enter into cooperative agreements and directs the Secretary 
     to provide assistance to States to establish revolving loan 
     funds to undertake forestry carbon activities.
       (a) Forest Carbon Activity Cooperative Agreements. This 
     subsection authorizes the Secretary of Agriculture to enter 
     into cooperative agreements with willing State or local 
     governments, American Indian tribes, Alaska natives, native 
     Hawaiians, and private-nonprofit landowners for forest carbon 
     activities.
       (b) Forest Carbon Activity Revolving Loan Program. This 
     subsection establishes a program to provide assistance 
     through State established revolving loan funds to 
     nonindustrial private forest land owners (NIPF) for eligible 
     forest carbon activities. Requirements include:
       Eligibility: Funds may be used to support eligible forest 
     carbon activities on not more than 5,000 acres of an NIPF 
     landowners' holdings.
       Loan terms: Loans must be repaid with interest at a rate 
     not to exceed a 3 percent real rate of return. They must be 
     repaid when the land is harvested, although the owner may pay 
     off the loan prior to harvesting. Loans must include a 
     transferable lien on all timber, forest products and biomass. 
     The State assumes the risk of loss of timber due to natural 
     disaster. A loan agreement must include recognition that, 
     until the loan is paid off, all reductions in atmospheric 
     greenhouse gases achieved by projects funded by the loan are 
     attributable to the entity that provides funding for the 
     loan.
       Permanent conservation easements: Loan recipients can 
     cancel the loan by donating a permanent conservation 
     easement.
       Reinvestment of funds: All repayments collected by a State 
     must be reinvested in the program and used by the State to 
     make additional loans.
       Records: The State Forester shall maintain all loan records 
     and make them available to the public.
       Matching funds: A State must match Federal funding by at 
     least 25% beginning in the second year of participating in 
     the program.
       Loan Funding Distribution: The Secretary will report to 
     Congress on a formula under which Federal funds will be 
     distributed among eligible States. The distribution formula 
     will 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.
       Private funding: A revolving loan fund may accept any funds 
     provided by nongovernmental organizations, businesses or 
     persons for the purpose of this Act.
       Bonneville Power Administration (BPA): States served by BPA 
     (Washington, Oregon, Idaho and Montana) may apply for funding 
     from BPA for purposes of funding loans that meet both the 
     objectives of this Act and the fish and wildlife objectives 
     of BPA under current law.
       (c) Requirements: This subsection specifies requirements of 
     any financial assistance arrangement for forest carbon 
     activities.
       Eligibility: This gives a general definition of eligible 
     forestry carbon activities.
       Guidance: The Forest Service, in collaboration with the 
     States, will provide guidance on eligible forestry carbon 
     activities.
       Activities require under law: Funding shall not be provided 
     for activities required under existing laws.
       Pre-agreements: Funding shall not be provided for costs 
     already incurred.
       Limitation on land considered for funding: No funding shall 
     be provided for reforestation of land that has been 
     harvested, if the landowner received revenues from the 
     harvest sufficient to reforest the land.
       Eligible tree species: Planted tress must be native or non-
     invasive species.
       Forest management plan: Priority shall be given to projects 
     on land under a forest management plan or forest stewardship 
     plan.
       Use of funds: Funds shall be used for planting of trees and 
     their management.
       Financial assistance amount: Cooperative agreements or 
     loans may cover up to 100 percent of total project costs, not 
     to exceed $100,000 during any 2-year period.
       Authorization of appropriations: Authorizes funding from FY 
     2001 to FY 2010 at amounts equal to civil penalties collected 
     under the Clean Water Act and the Clean Air Act, which 
     currently revert to the Treasury as General Revenues. In 
     fiscal year 1998, $45 million in penalties were assessed.
       Allocation of funds: The Secretary shall allocate 15 
     percent of available funds for cooperative agreements and the 
     remaining 85 percent for the State revolving loan fund.
                                 ______