[Congressional Record Volume 147, Number 71 (Tuesday, May 22, 2001)]
[Senate]
[Pages S5461-S5468]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HARKIN (for himself, Mr. Smith of Oregon, Mr. Johnson, Mr. 
        Daschle, Mr. Leahy, Mr. Schumer, Mr. Dorgan, Mr. Dayton, Mrs. 
        Clinton, Ms. Stabenow, Mr. Kennedy, Mr. Kohl, Mr. Kerry, Mr. 
        Sarbanes. Mr. Wellstone, Mr. Durbin, and Mrs. Boxer):
  S. 932. A bill to amend the Food Security Act of 1985 to establish 
the conservation security program; to the Committee on Agriculture, 
Nutrition, and Forestry.
  Mr. HARKIN. Mr. President, today I am introducing the Conservation 
Security Act of 2001, a bill that represents a fresh bipartisan farmer-
friendly approach to farm policy and agricultural conservation. I am 
pleased to be joined by my colleague Senator Gordan Smith from Oregon, 
as well as Senators Daschle, Leahy, Dorgan, Johnson, Dayton, Schumer, 
Clinton, Stabenow, Kohl, Sarbanes, Kerry, Kennedy, Wellstone, Durbin, 
and Boxer.
  America's farmers and ranches produce a bountiful, safe, and 
nourishing food supply, and they also protect our natural resources, 
environment and wildlife habitat. Farmers and ranches have a long 
history of stewardship of private lands. They are the key to enhancing 
conservation of resources for future generations.
  Private land conservation became a national priority in the days of 
the Dust Bowl, leading to the creation in the 1930s of the Soil 
Conservation Service, (now the Natural Resources Conservation Service), 
at the Department of Agriculture. With the very foundation of our food 
supply at risk, the federal government stepped forward with billions of 
dollars in assistance to help farmers conserve their precious soils.
  Since that time, total federal spending on conservation has steadily 
declined in inflation-adjusted dollars. Funds for lands in production 
have been especially hard hit. Yet today, agriculture faces a wide 
range of environmental challenges, from overgrazing and manure 
management to cropland runoff and air quality impairment. Urban and 
rural citizens alike are increasingly interested in supporting 
conservation on agricultural lands.
  Farmers and ranchers pride themselves on being good stewards of the 
land, but they are limited by financial constraints. Every dollar spent 
on constructing a filter strip or developing a nutrient management plan 
is a dollar unavailable for other purposes. And even in better times, 
there is a lot of competition for each dollar in a farm's budget.
  Who benefits from conservation on agricultural lands? As much or more 
than farmers, all of us, depend on the careful stewardship of our air, 
water, soil and other natural resources. Farmers and ranchers tend not 
only to their crops and animals, but also to our nation's natural 
resources.
  Since all Americans share in these benefits, it is only right that we 
contribute to conserving private lands. It

[[Page S5462]]

is time to enter into a true conservation partnership with farmers and 
ranchers to help ensure hat conservation is an integral and permanent 
part of our agricultural policy nationwide.
  In the 1985 farm bill, we required farmers who wanted to participate 
in USDA farm programs to develop soil conservation plans for their 
highly erodible land. This provision helped put new conservation plans 
in place for our most fragile farmlands. In the most recent farm bill, 
we streamlined conservation programs and established new cost-share and 
incentive payments for certain practices. These measures have helped 
enhance the environment and natural resources, but we still have more 
to do.

  The Conservation Security Act of 2001 builds on our past successes 
and takes a bold step forward in farm and conservation policy.
  The Conservation Security Act would establish a universal and 
voluntary incentive payment program, the Conservation Security Program, 
to support and encourage conservation activities by farmers and 
ranchers. Under this program, farmers and ranchers could receive as 
much as $50,000 a year in-conservation payments by entering into 5- to 
10-year agreements with USDA and carrying out eligible conservation 
practices. Moreover, the program is designed to encourage 
implementation of practices that address local conservation priorities. 
Payments are based on the number and types of practices and level of 
conservation carried out on their lands in agricultural production. 
Farmers and ranchers may choose to implement practices from one or more 
of the following three tiers of practices.
  In Tier I, participating farmers would adopt or maintain basic 
individual practices, including nutrient management, soil conservation, 
and wildlife habitat management on part or all of their operation. Tier 
I plans are for 5-year periods. Based on enrolled acreage, practices 
and the level of conservation, farmers or ranchers in Tier I would 
receive annual payments that could reach as much as $20,000. A one-time 
advance payment could be made of the greater of $1,000 or 20 percent of 
the annual payment.
  Farmers or ranchers in Tier II would implement more extensive 
conservation practices on their working lands. They could choose from 
Tier I practices and practices II practices, including controlled 
rotational grazing, partial field practices like buffers strips and 
windbreaks, wetland restoration and wildlife habitat enhancement, for a 
period of 5 to 10 years, at the farmer's discretion. The practices 
adopted in Tier II must address at least one resource of concern (i.e. 
water quality, air quality, soil quality, wildlife habitat, etc.) for 
the entire operation. For adopting or maintaining Tier II practices, 
farmers or ranchers would receive up to $35,000 a year with access to a 
one-time advance payment of the greater of $2,000 or 20 percent of the 
annual payment.
  To qualify under Tier III, farmers and ranchers would adopt a 
comprehensive set of conservation practices on the entire operation. 
The Practices would address all resources of concern on the operation, 
including air, land, water and wildlife. For carrying out a Tier III 
plan of practices, farmers and ranchers would receive up to $50,000 a 
year with access to a one-time advance payment of the greater of $3,000 
or 20 percent of the annual payment.
  Again, I emphasize, the Conservation Security Program would be 
totally voluntary. Farmers and ranchers would decide if they want to 
participate and to what extent they want to participate. The more 
conservation they do, the greater the payment. Many farmers are already 
using many of these practices, but they receive little or no financial 
support. This legislation changes that by rewarding those farmers and 
ranchers who have already implemented these practices through payments 
for maintaining them.
  In addition, the Conservation Security Act provides a strong 
incentive to go beyond the farm's current level of conservation. And it 
does so in a way that is compatible with our international trade 
obligations. The payments received under the Conservation Security 
Program would fit into the ``Green Box'' under the WTO Uruguay Round.

  Payments received under the Conservation Security Program are not 
linked to participation in commodity programs, and farmers don't have 
to participate in the Conservation Security Program to be eligible for 
commodity payments. Further, the Conservation Security Act, which 
focuses on land in production, complements and does not interfere with 
the existing conservation programs. A farmer or rancher may participate 
in these programs, including the Conservation Reserve Program, the 
Wetlands Reserve Program, and the Farmland Protection Program and still 
participate in the Conservation Security Program. We need to support 
these and the other conservation programs, but to truly benefit 
agriculture and address the public's desire to enhance the environment, 
natural resources and wildlife habitat on agricultural land we must 
also address conservation needs on land in production.
  Farmers and ranchers across our country want to take actions to 
enhance the environment, but they need financial and technical 
assistance. The Conservation Security Act provides that needed 
assistance. Further, the Conservation Security Act was crafted to 
include opportunities for all producers nationwide, including producers 
of fruits, vegetables, speciality crops, row crops and livestock to 
participate in the Conservation Security Program.
  Our private lands are a national treasure, and conservation on farm 
and ranchlands provides environmental benefits that are just as 
important as the production of abundant and safe food. The Conservation 
Security Act will help secure the economic future of our farmers and 
ranchers by providing them the means to increase their income while 
conserving our natural resources, the environment, and wildlife habitat 
for today and for future generations.
  I thank the Chair.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 932

       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 ``Conservation Security Act of 
     2001''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) in addition to producing food and fiber, agricultural 
     producers can contribute to the public good by providing 
     improved soil productivity, clean air and water, fish and 
     wildlife habitat, landscape and recreational amenities, and 
     other natural resources and environmental benefits;
       (2) agricultural producers in the United States have a long 
     history of embracing environmentally friendly conservation 
     practices and desire to continue those practices and engage 
     in new and additional conservation practices;
       (3) agricultural producers that engage in conservation 
     practices--
       (A) may not receive economic rewards for implementing 
     conservation practices; and
       (B) should be encouraged to engage in good stewardship, and 
     should be rewarded for doing so;
       (4) despite significant progress in recent years, 
     significant environmental challenges on agricultural land 
     remain;
       (5) since the 1930's, when agricultural conservation became 
     a national priority, Federal resources for conservation 
     assistance have declined over 50 percent, when adjusted for 
     inflation;
       (6) existing conservation programs do not provide 
     opportunities for all interested agricultural producers to 
     participate;
       (7) a voluntary, incentive-based conservation program open 
     to all agricultural producers that qualify and desire to 
     participate would--
       (A) encourage greater improvement of natural resources and 
     the environment;
       (B) address the economic implications of conservation 
     practices in a manner consistent with international 
     obligations of the United States;
       (C) enable United States farmers and ranchers to produce 
     food for a growing world population; and
       (D) encourage conservation practices that provide a public 
     benefit while not infringing on the freedom of an 
     agricultural producer to manage agricultural operations as 
     the agricultural producer chooses;
       (8) total farm conservation planning can help producers 
     increase profitability, enhance resource protection, and 
     improve quality of life;
       (9) on-farm practices may help deter invasive species that 
     jeopardize native species or impair agricultural land of the 
     United States; and
       (10) a conservation program described in paragraph (7) 
     would help achieve a better

[[Page S5463]]

     balance between Federal payments supporting conservation on 
     land used for agricultural production and Federal payments 
     for the purpose of retiring agricultural land from 
     production.

     SEC. 3. CONSERVATION SECURITY PROGRAM.

       (a) In General.--Subtitle D of title XII of the Food 
     Security Act of 1985 (16 U.S.C. 3830 et seq.) is amended by 
     adding at the end the following:

               ``CHAPTER 6--CONSERVATION SECURITY PROGRAM

     ``SEC. 1240P. DEFINITIONS.

       ``In this chapter:
       ``(1) Conservation practice.--The term `conservation 
     practice' means a land-based farming technique that--
       ``(A) requires planning, implementation, management, and 
     maintenance; and
       ``(B) promotes 1 or more of the purposes described in 
     section 1240Q(a).
       ``(2) Conservation security contract.--The term 
     `conservation security contract' means a contract described 
     in section 1240Q(e).
       ``(3) Conservation security plan.--The term `conservation 
     security plan' means a plan described in section 1240Q(c).
       ``(4) Conservation security program.--The term 
     `conservation security program' means the program established 
     under section 1240Q(a).
       ``(5) Nutrient management.--The term `nutrient management' 
     means management of the quantity, source, placement, form, 
     and timing of the land application of nutrients on land 
     enrolled in the conservation security program and other 
     additions to soil--
       ``(A) to achieve or maintain adequate soil fertility for 
     agricultural production; and
       ``(B) to minimize the potential for loss of environmental 
     quality, including soil, water, fish and wildlife habitat, 
     and air quality impairment.
       ``(6) Resource of concern.--The term `resource of concern' 
     means a conservation priority of the State and locality under 
     section 1240Q(c)(3).
       ``(7) Resource-conserving crop.--The term `resource-
     conserving crop' means--
       ``(A) a perennial grass;
       ``(B) a legume grown for use as forage, seed for planting, 
     or green manure;
       ``(C) a legume-grass mixture;
       ``(D) a small grain grown in combination with a grass or 
     legume, whether interseeded or planted in succession; and
       ``(E) such other plantings, including trees and annual 
     grasses, as the Secretary considers appropriate for a 
     particular area.
       ``(8) Resource-conserving crop rotation.--The term 
     `resource-conserving crop rotation' means a crop rotation 
     that--
       ``(A) includes at least 1 resource-conserving crop;
       ``(B) reduces erosion;
       ``(C) improves soil fertility and tilth; and
       ``(D) interrupts pest cycles.
       ``(9) Resource management system.--The term `resource 
     management system' means a system of conservation practices 
     and management relating to land or water use that is designed 
     to prevent resource degradation and permit sustained use of 
     the land and water, as defined in the Natural Resource 
     Conservation Service technical guidance handbooks.

     ``SEC. 1240Q. CONSERVATION SECURITY PROGRAM.

       ``(a) In General.--The Secretary shall establish a 
     conservation security program to assist owners and operators 
     of agricultural operations to promote, as is applicable for 
     each operation--
       ``(1) conservation of soil, water, energy, and other 
     related resources;
       ``(2) soil quality protection and improvement;
       ``(3) water quality protection and improvement;
       ``(4) air quality protection and improvement;
       ``(5) soil, plant, or animal health and well-being;
       ``(6) diversity of flora and fauna;
       ``(7) on-farm conservation and regeneration of biological 
     resources, including plant and animal germplasm;
       ``(8) wetland restoration, conservation, and enhancement;
       ``(9) wildlife habitat management, with special emphasis on 
     species identified by the Natural Heritage Program of the 
     State;
       ``(10) reduction of greenhouse gas emissions and 
     enhancement of carbon sequestration;
       ``(11) systems that protect human health and safety;
       ``(12) environmentally sound management of invasive 
     species; or
       ``(13) any similar conservation purpose (as determined by 
     the Secretary).
       ``(b) Eligibility.--
       ``(1) Eligible owners and operators.--To be eligible to 
     participate in the conservation security program (other than 
     to receive technical assistance under subsection (h)(6) for 
     the development of conservation security contracts), an owner 
     or operator shall--
       ``(A) develop and submit to the Secretary, and obtain the 
     approval of the Secretary of, a conservation security plan 
     that meets the requirements of subsection (c)(1); and
       ``(B) enter into a conservation security contract with the 
     Secretary to carry out the conservation security plan.
       ``(2) Eligible land.--
       ``(A) In general.--Except as provided in subparagraph 
     (C)(iii), private agricultural land (including cropland, 
     rangeland, grassland, and pasture land) that is entirely used 
     as part of the agricultural operation of an owner or operator 
     on the date of enactment of this chapter shall be eligible 
     for enrollment in the conservation security program.
       ``(B) Forested land.--Private forested land shall be 
     eligible for enrollment in the conservation security program 
     if the forested land is integrated into the agricultural 
     operation, including land that is used for--
       ``(i) alleycropping;
       ``(ii) forest farming;
       ``(iii) forest buffers;
       ``(iv) windbreaks;
       ``(v) silvopasture systems; and
       ``(vi) such other uses as the Secretary may determine 
     appropriate.
       ``(C) Exclusions.--
       ``(i) Conservation reserve program.--Land enrolled in the 
     conservation reserve program under subchapter B of chapter I 
     shall not be eligible for enrollment in the conservation 
     security program except for land enrolled in partial field 
     conservation practice enrollment options.
       ``(ii) Wetlands reserve program.--Land enrolled in the 
     wetlands preserve program established under subchapter C of 
     chapter 1 of subtitle D shall not be eligible for enrollment 
     in the conservation security program.
       ``(iii) Tolerance level.--The Secretary shall promulgate 
     regulations to ensure that land shall not be eligible for 
     enrollment in the conservation security program if the land--

       ``(I) is initially used for the production of an 
     agricultural commodity after the date of enactment of this 
     chapter; and
       ``(II) cannot be used for the production of an agricultural 
     commodity without resulting in the loss of soil at a level 
     that exceeds the soil loss tolerance level.

       ``(c) Conservation Security Plans.--
       ``(1) In general.--A conservation security plan shall--
       ``(A) identify the resources and designated land to be 
     conserved under the conservation security plan;
       ``(B) describe the tier of conservation practices, and the 
     particular conservation practices to be implemented, 
     maintained, or improved, in accordance with subsection (d) on 
     the land covered by the conservation security contract for 
     the specified term;
       ``(C) contain a schedule for the implementation, 
     maintenance, or improvement of the conservation practices 
     described in the conservation security plan during the term 
     of the conservation security contract;
       ``(D) meet the requirements of the highly erodible land and 
     wetland conservation requirements of subtitles B and C; and
       ``(E) contain such other terms as the Secretary determines 
     to be appropriate.
       ``(2) Comprehensive planning.--The Secretary shall 
     encourage owners and operators that enter into conservation 
     security contracts--
       ``(A) to undertake a comprehensive examination of the 
     opportunities for conserving natural resources and improving 
     the profitability, environmental health, and quality of life 
     in relation to their entire agricultural operations;
       ``(B) to develop a long-term strategy for implementing, 
     monitoring, and evaluating conservation practices and 
     environmental results in the entire agricultural operation;
       ``(C) to participate in other Federal, State, local, or 
     private conservation programs;
       ``(D) to maintain the agricultural integrity of the land; 
     and
       ``(E) to adopt innovative conservation technologies and 
     management practices.
       ``(3) State and local conservation priorities.--To the 
     maximum extent practicable and in a manner consistent with 
     the conservation security program, each conservation security 
     plan shall address the conservation priorities of the State 
     and locality in which the agricultural operation is located 
     (as determined by the State conservationist in consultation 
     with the State technical committee established under subtitle 
     G and the local working groups of the State technical 
     committee).
       ``(d) Conservation Practices.--
       ``(1) In general.--
       ``(A) Establishment of tiers.--The Secretary shall 
     establish 3 tiers of conservation practices that are eligible 
     for payment under a conservation security contract.
       ``(B) Eligible conservation practices.--
       ``(i) In general.--The Secretary shall make eligible for 
     payment under a conservation security contract land 
     management, vegetative, and structural practices that--

       ``(I) are necessary to achieve the objectives of the 
     conservation security plan; and
       ``(II) primarily provide for and have as the primary 
     purpose resource protection and environmental improvement.

       ``(ii) Determination.--

       ``(I) In general.--In determining the eligibility of a 
     practice described in clause (i), the Secretary shall require 
     the lowest cost alternatives be used to fulfill the 
     objectives of the conservation security plan.
       ``(II) Limitation.--Notwithstanding subclause (I), the 
     adoption of innovative technologies shall, to the maximum 
     extent practicable, not be limited.

       ``(2) Sustainable economic uses.--With respect to land 
     enrolled in the conservation security program, including all 
     land use adjustment activities specified under Tier II, the 
     Secretary shall permit economic uses of the land that--
       ``(A) maintain the agricultural nature of land;
       ``(B) achieve the natural resource and environmental 
     benefits of the plan; and

[[Page S5464]]

       ``(C) are approved as part of the conservation security 
     plan.
       ``(3) On-farm research and demonstration.--With respect to 
     land enrolled in the conservation security program that will 
     be maintained using a Tier II or Tier III conservation 
     practice established under paragraph (5), the Secretary may 
     approve a conservation security plan that includes on-farm 
     research and demonstration activities, including innovative 
     approaches to--
       ``(A) total farm planning;
       ``(B) total resource management;
       ``(C) integrated farming systems;
       ``(D) germplasm conservation and regeneration;
       ``(E) greenhouse gas reduction and carbon sequestration;
       ``(F) agro-ecological restoration and wildlife habitat 
     restoration;
       ``(G) agro-forestry;
       ``(H) invasive species control;
       ``(I) energy conservation and management; or
       ``(J) farm and environmental results monitoring and 
     evaluation.
       ``(4) Use of handbook and guides.--
       ``(A) In general.--In determining eligible conservation 
     practices under the conservation security program, the 
     Secretary shall use the National Handbook of Conservation 
     Practices and the field office technical guides of the 
     Natural Resources Conservation Service.
       ``(B) Conservation practice standards.--To the maximum 
     extent practicable, the Secretary shall establish guidance 
     standards for implementation of eligible conservation 
     practices that shall include measurable goals for enhancing 
     and preventing degradation of resources.
       ``(C) Adjustments.--After providing notice and an 
     opportunity for public participation, the Secretary shall 
     make such adjustments to the National Handbook of 
     Conservation Practices as are necessary to carry out this 
     chapter.
       ``(D) Pilot testing.--
       ``(i) In general.--Under any of the 3 tiers of conservation 
     practices established under paragraph (5), the Secretary may 
     approve requests by an owner or operator for pilot testing of 
     new technologies and innovative conservation practices and 
     systems.
       ``(ii) Incorporation into standards.--After evaluation by 
     the Secretary and provision of notice and an opportunity for 
     public participation, the Secretary may incorporate new 
     technologies and innovative conservation practices and 
     systems into the standards for implementation of conservation 
     practices established under paragraph (1)(C).
       ``(5) Tiers.--To carry out this subsection, the Secretary 
     shall establish the following 3 tiers of conservation 
     practices:
       ``(A) Tier i.--
       ``(i) In general.--A conservation security plan for land 
     enrolled in the conservation security program that will be 
     maintained using Tier I conservation practices shall--

       ``(I) if applicable, address at least 1 resource of concern 
     to the particular agricultural operation;
       ``(II) apply to the total agricultural operation or to a 
     particular unit of the agricultural operation;
       ``(III) cover both--

       ``(aa) conservation practices that are being implemented as 
     of the date on which the conservation security contract is 
     entered into; and
       ``(bb) conservation practices that are newly implemented 
     under the conservation security contract; and

       ``(IV) meet applicable standards for implementation of 
     conservation practices established under paragraph (4);

       ``(ii) Conservation practices.--Tier I conservation 
     practices shall consist of, as appropriate for the 
     agricultural operation of an owner or operator, 1 or more of 
     the following basic conservation activities:

       ``(I) Soil conservation, quality, and residue management.
       ``(II) Nutrient management.
       ``(III) Pest management.
       ``(IV) Invasive species management.
       ``(V) Irrigation water conservation and water quality 
     management.
       ``(VI) Grazing, pasture, and rangeland management.
       ``(VII) Fish and wildlife habitat management, with special 
     emphasis on species identified by the Natural Heritage 
     Program of the State or the appropriate State agency.
       ``(VIII) Fish and wildlife protection and enhancement.
       ``(IX) Air quality management.
       ``(X) Energy conservation measures.
       ``(XI) Biological resource conservation and regeneration.
       ``(XII) Worker health and safety protection measures.
       ``(XIII) Animal welfare management.
       ``(XIV) Plant and animal germplasm conservation, 
     evaluation, and development.
       ``(XV) Contour farming.
       ``(XVI) Strip cropping.
       ``(XVII) Cover cropping.
       ``(XVIII) Sediment dams.
       ``(XIX) Recordkeeping.
       ``(XX) Monitoring and evaluation.
       ``(XXI) Any other conservation practice that the Secretary 
     determines to be appropriate and comparable to other 
     conservation practices described in this clause.

       ``(iii) Tier ii practices.--A conservation security plan 
     for land enrolled in the conservation security program that 
     will be maintained using Tier I conservation practices may 
     include Tier II conservation practices.
       ``(B) Tier ii.--
       ``(i) In general.--A conservation security plan for land 
     enrolled in the conservation security program that will be 
     maintained using Tier II conservation practices shall--

       ``(I) address at least 1 resource of concern as specified 
     in the conservation security plan covering the total 
     agricultural operation;
       ``(II) cover both--

       ``(aa) conservation practices that are being implemented as 
     of the date on which the conservation security contract is 
     entered into; and
       ``(bb) conservation practices that are newly implemented 
     under the conservation security contract; and

       ``(III) meet applicable resource management system criteria 
     for the chosen resource of concern of the agricultural 
     operation;

       ``(ii) Conservation practices.--Tier II conservation 
     practices shall consist of, as appropriate for the 
     agricultural operation of an owner or operator, any of the 
     Tier I conservation practices and 1 or more of the following 
     land use adjustment or protection practices:

       ``(I) Resource-conserving crop rotations.
       ``(II) Controlled, rotational grazing.
       ``(III) Conversion of portions of cropland from a soil-
     depleting use to a soil-conserving use, including production 
     of cover crops.
       ``(IV) Partial field conservation practices (including 
     windbreaks, grass waterways, shelter belts, filter strips, 
     riparian buffers, wetland buffers, contour buffer strips, 
     living snow fences, crosswind trap strips, field borders, 
     grass terraces, wildlife corridors, and critical area 
     planting appropriate to the agricultural operation).
       ``(V) Fish and wildlife habitat protection and restoration.
       ``(VI) Native grassland and prairie protection and 
     restoration.
       ``(VII) Wetland protection and restoration.
       ``(VIII) Agroforestry practices and systems.
       ``(IX) Any other conservation practice involving 
     modification of the use of land that the Secretary determines 
     to be appropriate and comparable to other conservation 
     practices described in this clause.

       ``(C) Tier iii.--
       ``(i) In general.--A conservation security plan for land 
     enrolled in the conservation security program that will be 
     maintained using Tier III conservation practices shall--

       ``(I) address all resources of concern in the total 
     agricultural operation;
       ``(II) cover both--

       ``(aa) conservation practices that are being implemented as 
     of the date on which the conservation security contract is 
     entered into; and
       ``(bb) conservation practices that are newly implemented 
     under the conservation security contract; and

       ``(III) meet applicable resource management system 
     criteria;

       ``(ii) Conservation practices.--Tier III conservation 
     practices shall consist of, as appropriate for the 
     agricultural operation of an owner or operator--

       ``(I) appropriate Tier I and Tier II conservation 
     practices; and
       ``(II) development, implementation, and maintenance of a 
     conservation security plan that, over the term of the 
     conservation security contract--

       ``(aa) integrates a full complement of conservation 
     practices to foster environmental enhancement and the long-
     term sustainability of the natural resource base of an 
     agricultural operation; and
       ``(bb) improves profitability and quality of life 
     associated with the agricultural operation.
       ``(e) Conservation Security Contracts.--
       ``(1) In general.--On approval of a conservation security 
     plan of an owner or operator, the Secretary shall enter into 
     a conservation security contract with the owner or operator 
     to enroll the land covered by the conservation security plan 
     in the conservation security program.
       ``(2) Term.--Subject to paragraphs (3) and (4)--
       ``(A) a conservation security contract for land enrolled in 
     the conservation security program that will be maintained 
     using 1 or more Tier I conservation practices shall have a 
     term of 5 years; and
       ``(B) a conservation security contract for land enrolled in 
     the conservation security program that implements a 
     conservation security plan that meets the requirements of 
     subparagraph (B) or (C) of subsection (d)(5) shall have a 
     term of 5 to 10 years, at the option of the owner or 
     operator.
       ``(3) Modifications.--
       ``(A) Optional modifications.--
       ``(i) In general.--An owner or operator may apply to the 
     Secretary to modify the conservation security plan in a 
     manner consistent with the purposes of the conservation 
     security program.
       ``(ii) Approval by the secretary.--Any modification under 
     clause (i)--

       ``(I) shall be approved by the Secretary; and
       ``(II) shall authorize the Secretary to redetermine, if 
     necessary, the amount and timing of the payments pursuant to 
     the conservation security contract under subsection 
     (h)(2)(C).

       ``(B) Other modifications.--
       ``(i) In general.--The Secretary may in writing require an 
     owner or operator to modify a conservation security contract 
     before the expiration of the conservation security contract 
     if the Secretary determines that a change made to the type, 
     size, management,

[[Page S5465]]

     or other aspect of the agricultural operation of the owner or 
     operator would, without the modification, significantly 
     interfere with achieving the purposes of the conservation 
     security program.
       ``(ii) Payments.--The Secretary may adjust the amount and 
     timing of the payment schedule under the conservation 
     security contract to reflect any modifications required under 
     this subparagraph.
       ``(iii) Deadline.--The Secretary may terminate a 
     conservation security contract if a modification required 
     under this subparagraph is not submitted to the Secretary in 
     the form of an amended conservation security contract by the 
     date that is 90 days after the date of receipt of the written 
     request for the modification.
       ``(iv) Termination.--An owner or operator that is required 
     to modify a conservation security contract under this 
     subparagraph may, in lieu of modifying the contract--

       ``(I) terminate the conservation security contract; and
       ``(II) retain payments received under the conservation 
     security contract, if the owner or operator fully complied 
     with the obligations of the owner or operator under the 
     conservation security contract.

       ``(4) Renewal.--
       ``(A) In general.--At the option of an owner or operator, 
     the conservation security contract of the owner or operator 
     may be renewed, for a term described in subparagraph (B), 
     if--
       ``(i) the owner or operator agrees to any modification of 
     the applicable conservation security contract that the 
     Secretary determines to be necessary to achieve the purposes 
     of the conservation security program;
       ``(ii) the Secretary determines that the owner or operator 
     has complied with the terms and conditions of the 
     conservation security contract, including the conservation 
     security plan; and
       ``(iii) in the case of a conservation security contract for 
     land previously enrolled at the tier I level in the 
     conservation security program, the owner or operator shall 
     increase the level of conservation treatment on lands 
     enrolled in the conservation security program by--

       ``(I) adopting new conservation practices; or
       ``(II)expanding existing practices to meet the resource 
     management systems criteria.

       ``(B) Terms of renewal.--Under subparagraph (A)--
       ``(i) a conservation security contract for land enrolled in 
     the conservation security program that will be maintained 
     using a Tier I conservation practice may be renewed for 5-
     year terms;
       ``(ii) a conservation security contract for land enrolled 
     in the conservation security program that will be maintained 
     using a Tier II or Tier III conservation practice may be 
     renewed for 5-year to 10-year terms, at the option of the 
     owner or operator; and
       ``(iii) previous participation in the conservation security 
     program does not bar renewal more than once.
       ``(f) No Violation for Noncompliance Due to Circumstances 
     Beyond the Control of the Owner or Operator.--The Secretary 
     shall include in the conservation security contract a 
     provision, and may modify a conservation security contract 
     under subsection (e)(3)(B), to ensure that an owner or 
     operator shall not be considered in violation of a 
     conservation security contract for failure to comply with the 
     conservation security contract due to circumstances beyond 
     the control of the owner or operator, including a disaster or 
     related condition.
       ``(g) Duties of Owners and Operators.--Under a conservation 
     security contract, an owner or operator shall agree, during 
     the term specified under the conservation security contract--
       ``(1) to implement the applicable conservation security 
     plan approved by the Secretary;
       ``(2) to keep appropriate records showing the effective and 
     timely implementation of the conservation security plan;
       ``(3) not to engage in any activity that would interfere 
     with the purposes of the conservation security plan;
       ``(4) at the option of the Secretary, to refund all or a 
     portion of the payments to the Secretary if the owner or 
     operator fails to maintain a conservation practice, as 
     specified in the conservation security contract; and
       ``(5) on the violation of a term or condition of the 
     conservation security contract--
       ``(A) if the Secretary determines that the violation 
     warrants termination of the conservation security contract--
       ``(i) to forfeit all rights to receive payments under the 
     conservation security contract; and
       ``(ii) to refund to the Secretary all or a portion of the 
     payments received by the owner or operator under the 
     conservation security contract, including an advance payment 
     and interest on the payments, as determined by the Secretary; 
     or
       ``(B) if the Secretary determines that the violation does 
     not warrant termination of the conservation security 
     contract, to refund to the Secretary, or accept adjustments 
     to, the payments provided to the owner or operator, as the 
     Secretary determines to be appropriate.
       ``(h) Duties of the Secretary.--
       ``(1) Advance payment.--At the time at which a person 
     enters into a conservation security contract, the Secretary 
     shall make an advance payment to the person in an amount not 
     to exceed--
       ``(A) in the case of a contract to maintain Tier I 
     conservation practices described in subsection (d)(5)(A), the 
     greater of--
       ``(i) $1,000; or
       ``(ii) 20 percent of the value of the annual payment under 
     the contract, as determined by the Secretary;
       ``(B) in the case of a contract to maintain Tier II 
     conservation practices described in subsection (d)(5)(B), the 
     greater of--
       ``(i) $2,000; or
       ``(ii) 20 percent of the value of the annual payment under 
     the contract, as determined by the Secretary; or
       ``(C) in the case of a contract to maintain Tier III 
     conservation practices described in subsection (d)(5)(C), the 
     greater of--
       ``(i) $3,000; or
       ``(ii) 20 percent of the value of the annual payment under 
     the contract, as determined by the Secretary.
       ``(2) Annual payments.--
       ``(A) In general.--Subject to subparagraphs (B) through 
     (F), under a conservation security contract, the Secretary 
     shall, in amounts and for a period of years specified in the 
     conservation security contract and taking into account any 
     advance payments, make an annual payment to the person in an 
     amount not to exceed--
       ``(i) in the case of a contract to maintain Tier I 
     conservation practices described in subsection (d)(5)(A), 
     $20,000;
       ``(ii) in the case of a contract to maintain Tier II 
     conservation practices described in subsection (d)(5)(B), 
     $35,000; or
       ``(iii) in the case of a contract to maintain Tier III 
     conservation practices described in subsection (d)(5)(C), 
     $50,000.
       ``(B) Inflation adjustment.--The Secretary may 
     periodically, including at the time at which a conservation 
     security contract is renewed, adjust the payment and payment 
     limitations under subparagraph (A) to reflect changes in the 
     Prices Paid by Farmers Index.
       ``(C) Time of payment.--The Secretary shall provide payment 
     under a conservation security contract as soon as practicable 
     after October 1 of each calendar year.
       ``(D) Criteria for determining amount of payments.--Subject 
     to subparagraphs (A) and (F), the Secretary shall establish 
     criteria for determining the amount of an annual payment to a 
     person under this paragraph that--
       ``(i) shall be as objective and transparent as practicable; 
     and
       ``(ii) shall be based on--

       ``(I) to the maximum extent practicable, outcome-based 
     factors related to the natural resource and environmental 
     benefits that result from the adoption, maintenance, and 
     improvement in implementation of the conservation practices 
     carried out by the person;
       ``(II) practice-based factors, including--

       ``(aa) the number of eligible practices established or 
     maintained;
       ``(bb) the schedule for the conservation practices 
     described in subsection (c)(1)(C);
       ``(cc) the cost of the adoption, maintenance, and 
     improvement in implementation of conservation practices that 
     are newly implemented under the conservation security 
     contract;
       ``(dd) the extent to which compensation will ensure 
     maintenance and improvement of conservation practices that 
     are or have been implemented;
       ``(ee) the extent to which the conservation security plan 
     meets applicable resource management system standards;
       ``(ff) the extent to which the conservation security plan 
     addresses State and local conservation priorities as provided 
     for under subsection (c)(3); and
       ``(gg) the extent of activities undertaken beyond what is 
     required to comply with any applicable Federal agricultural 
     law;

       ``(III) additional cost factors, including--

       ``(aa) the income loss or economic value forgone by the 
     person due to land use adjustments resulting from the 
     adoption, maintenance, and improvement of conservation 
     practices;
       ``(bb) the costs associated with any on-farm research, 
     demonstration, or pilot testing components of the 
     conservation security plan; and
       ``(cc) the costs associated with monitoring and evaluating 
     results under the conservation security plan; and

       ``(IV) such other factors as the Secretary determines to be 
     appropriate to encourage participation in the conservation 
     security program and to reward environmental stewardship.

       ``(E) Bonus payment.--Subject to subparagraph (A), the 
     Secretary shall offer bonus payments based on--
       ``(i) participation in a watershed or regional resource 
     conservation plan involving at least 75 percent of landowners 
     in the targeted area; and
       ``(ii) the special considerations associated with an owner 
     or operator that is a qualified beginning farmer or rancher 
     (as defined in section 343(a) of the Consolidated Farm and 
     Rural Development Act (7 U.S.C. 1991(a))).
       ``(F) Land enrolled in other conservation programs.--
       ``(i) In general.--Notwithstanding any other provision of 
     law, if an owner or operator has land enrolled in another 
     conservation program administered by the Secretary and has 
     applied to enroll the same land in the conservation security 
     program, the owner or operator may elect to--

       ``(I) convert the contract under the other conservation 
     program to a conservation security contract, without penalty, 
     except

[[Page S5466]]

     that this subclause shall not apply to a long-term permanent 
     conservation or easement; or
       ``(II) have each annual payment to the owner or operator 
     under this paragraph reduced to reflect payment for practices 
     the owner or operator receives under the other conservation 
     program, except that the annual payment under this paragraph 
     may include incentives for qualified practices that enhance 
     or extend the conservation benefit achieved under the other 
     conservation program.

       ``(ii) Payment limitations.--If an owner or operator has 
     identical land enrolled in the conservation security program 
     and 1 or more other conservation programs administered by the 
     Secretary, the Secretary shall include all payments, other 
     than easement or rental payments, from the conservation 
     security program and the other conservation programs in 
     applying the annual payment limitations under subparagraph 
     (A).
       ``(iii) Payment from non-federal agricultural programs.--
     Payments received from a Federal program administered by the 
     Secretary, or any State, local, or private agricultural 
     program, shall not be considered an annual payment for 
     purposes of the annual payment limitations under subparagraph 
     (A).
       ``(G) Waste storage or treatment facilities.--An annual 
     payment to an owner or operator under this paragraph shall 
     not be provided for the purpose of construction or 
     maintenance of animal waste storage or treatment facilities 
     or associated waste transport or transfer devices for animal 
     feeding operations.
       ``(3) Regulations.--
       ``(A) In general.--The Secretary shall issue regulations--
       ``(i) defining the term `person' for the purposes of this 
     chapter--

       ``(I) which regulations shall conform, to the extent 
     practicable, to the regulations defining the term `person' 
     issued under section 1001; and
       ``(II) which term shall be defined so that no individual 
     directly or indirectly may receive payments exceeding the 
     applicable amount specified in paragraph (1) or (2);

       ``(ii) providing adequate safeguards to protect the 
     interests of tenants and sharecroppers, including provision 
     for sharing, on a fair and equitable basis; and
       ``(iii) prescribing such other rules as the Secretary 
     determines to be necessary to ensure a fair and reasonable 
     application of the limitations established under paragraphs 
     (1) and (2).
       ``(B) Penalties for schemes or devices.--
       ``(i) In general.--If the Secretary determines that a 
     person has adopted a scheme or device to evade, or that has 
     the purpose of evading, the regulations issued under 
     subparagraph (A), the person shall be ineligible to 
     participate in the conservation security program for the year 
     for which the scheme or device was adopted and each of the 
     following 5 years.
       ``(ii) Fraud.--If the Secretary determines that fraud was 
     committed in connection with the scheme or device, the person 
     shall be ineligible to participate in the conservation 
     security program for the year for which the scheme or device 
     was adopted and each of the following 10 years.
       ``(4) Termination.--
       ``(A) In general.--Subject to subsection (g), the Secretary 
     shall allow an owner or operator to terminate the 
     conservation security contract.
       ``(B) Payments.--The owner or operator may retain any or 
     all payments received under a terminated conservation 
     security contract if--
       ``(i) the owner or operator is in full compliance with the 
     terms and conditions, including any maintenance requirements, 
     of the conservation security contract; and
       ``(ii) the Secretary determines that retention of payment 
     will not defeat the goals enumerated in the conservation 
     security plan of the owner or operator.
       ``(5) Transfer or change of interest in land subject to 
     conservation security contract.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the transfer, or change in the interest, of an owner or 
     operator in land subject to a conservation security contract 
     shall result in the termination of the conservation security 
     contract.
       ``(B) Transfer of duties and rights.--Subparagraph (A) 
     shall not apply if, not later than 60 days after the date of 
     the transfer or change in the interest in land, the 
     transferee of the land provides written notice to the 
     Secretary that all duties and rights under the conservation 
     security contract have been transferred to the transferee.
       ``(6) Technical assistance.--
       ``(A) In general.--For each fiscal year, the Secretary 
     shall use such sums as are necessary from funds of the 
     Commodity Credit Corporation to provide technical assistance 
     to owners and operators for the development and 
     implementation of conservation security contracts.
       ``(B) Technical assistance provided by persons not employed 
     by the department of agriculture.--
       ``(i) In general.--Under subparagraph (A), subject to 
     clause (ii), technical assistance provided by qualified 
     persons not employed by the Department of Agriculture, 
     including farmers, ranchers, and local conservation district 
     personnel, may include--

       ``(I) conservation planning;
       ``(II) design, installation, and certification of 
     conservation practices;
       ``(III) training for producers; and
       ``(IV) such other activities as the Secretary determines to 
     be appropriate.

       ``(ii) Outside assistance.--

       ``(I) In general.--The Secretary may contract directly with 
     qualified persons not employed by the Department of 
     Agriculture to provide technical assistance.
       ``(II) Payment by secretary.--The Secretary may provide a 
     payment or voucher to an owner or operator enrolled in the 
     conservation security program if the owner or operator 
     chooses to contract with qualified persons not employed by 
     the Department of Agriculture.

       ``(iii) Coordination by the secretary.--The Secretary shall 
     provide overall technical coordination and leadership for the 
     conservation security program, including final approval of 
     all conservation security plans.
       ``(7) Education, outreach, monitoring, and evaluation.--
       ``(A) In general.--
       ``(i) Funding.--In addition to the amounts made available 
     under paragraph (6), for each fiscal year, the Secretary 
     shall use such sums as are necessary from funds of the 
     Commodity Credit Corporation to carry out education, 
     outreach, monitoring, and evaluation activities in support of 
     the conservation security program, of which not less than 50 
     percent of the sums shall be used for monitoring and 
     evaluation activities.
       ``(ii) Amount.--For each fiscal year, the amount made 
     available under clause (i) shall be not less than 40 percent 
     of the amount made available for technical assistance under 
     paragraph (6) for the fiscal year.
       ``(B) Use of persons not affiliated with department of 
     agriculture.--
       ``(i) In general.--In carrying out activities described in 
     subparagraph (A), the Secretary may use persons not employed 
     by the Department of Agriculture, including networks of 
     agricultural producers operating in a small watershed, local 
     conservation district personnel, or other appropriate local 
     entity.
       ``(ii) Education, outreach, and monitoring.--The Secretary 
     may contract with private non-profit, community-based 
     organizations, and educational institutions with demonstrated 
     experience in providing education, outreach, monitoring, 
     evaluation, or related services to agricultural producers 
     (including owners and operators of small and medium-size 
     farms, socially disadvantaged agricultural producers, and 
     limited resource agricultural producers).
       ``(C) Included activities.--Activities described in 
     subparagraph (A) may include innovative uses of computer 
     technology and remote sensing to monitor and evaluate 
     resource and environmental results on a local, regional, or 
     national level.
       ``(8) Socially disadvantaged and limited resource owners 
     and operators.--The Secretary shall provide outreach, 
     training, and technical assistance specifically to encourage 
     and assist socially disadvantaged owners and operators to 
     participate in the conservation security program.
       ``(9) Program evaluation.--The Secretary shall maintain 
     data concerning conservation security plans, conservation 
     practices planned or implemented, environmental outcomes, 
     economic costs, and related matters under this section.
       ``(10) Confidentiality.--To maintain confidentiality, the 
     Secretary shall not release or disclose publicly the 
     conservation security plan of an owner or operator under this 
     chapter unless the Secretary--
       ``(A) obtains the authorization of the owner or operator 
     for the release or disclosure;
       ``(B) releases the information in an anonymous or 
     aggregated form; or
       ``(C)(i) is otherwise required by law to release or 
     disclose the plan and;
       ``(ii) releases the plan in an anonymous or aggregated 
     form.
       ``(11) Mediation and informal hearings.--If the Secretary 
     makes a decision under this chapter that is adverse to an 
     owner or operator, at the request of the owner or operator, 
     the Secretary shall provide the owner or operator with 
     mediation services or an informal hearing on the decision.
       ``(i) Reports.--Not later than 18 months after the date of 
     enactment of this chapter and at the end of each 2-year 
     period thereafter, the Secretary shall submit to Congress a 
     report evaluating the results of the conservation security 
     program, including--
       ``(1) an evaluation of the scope, quality, and outcomes of 
     the conservation practices carried out under this section; 
     and
       ``(2) recommendations for achieving specific and 
     quantifiable improvements for each of the purposes specified 
     in subsection (a).
       ``(j) Funding.--Of the funds of the Commodity Credit 
     Corporation, the Corporation shall make available to carry 
     out this chapter such sums as are necessary, to remain 
     available until expended.
       ``(k) Exemption From Automatic Sequester.--Notwithstanding 
     any other provision of law, no order issued for any fiscal 
     year under section 252 of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 (2 U.S.C. 902) shall affect any 
     payment under this chapter.''.
       (b) Administration.--Section 1243(a) of the Food Security 
     Act of 1985 (16 U.S.C. 3843(a)) is amended--
       (1) in paragraph (1)(C), by striking ``and'' at the end;
       (2) in paragraph (2), by striking the period at the end and 
     inserting ``; and''; and
       (3) by adding at the end the following:

[[Page S5467]]

       ``(3) the conservation security program established under 
     chapter 6 of subtitle D.''.
       (c) State Technical Committees.--Section 1262(c)(8) of the 
     Food Security Act of 1985 (16 U.S.C. 3862(c)(8)) is amended 
     by striking ``chapter 4'' and inserting ``chapters 4 and 6''.

     SEC. 4. REGULATIONS.

       The Secretary of Agriculture shall promulgate such 
     regulations as are necessary to carry out this Act and the 
     amendments made by this Act.
                                 1_____
                                 
      By Mr. JEFFORDS (for himself, Mrs. Clinton, Mr. Leahy, Mr. 
        Lieberman, and Mr. Schumer):
  S. 933. A bill to amend the Federal Power Act to encourage the 
development and deployment of innovative and efficient energy 
technologies; to the Committee on Energy and Natural Resources.
  Mr. JEFFORDS. Mr. President, I rise today to introduce, with Senators 
Clinton, Leahy, Lieberman, and Schumer, the Combined Heat and Power 
Advancement Act of 2001. This legislation ensures that highly efficient 
sources of electricity, such as combined heat and power systems, are 
able to interconnect nationwide with the electricity grid by 
establishing uniform and nondiscriminatory interconnection standards. 
Enabling these innovative, clean, and efficient technologies to come 
online will reduce energy costs and help protect public health and the 
environment.
  Last week, President bush released the National Energy Policy 
Development Group's comprehensive energy plan. I am pleased this plan 
includes recommendations related to increasing energy conservation and 
efficiency. Specially, the plan recommends the development of well-
designed combined heat and power, CHP, systems.
  I am heartened that President Bush recognizes the positive impact 
that CHP systems can have on our nation's energy needs. These 
innovative systems produce both electricity and steam from a single 
fuel source in a facility located near the consumer. By recovering and 
utilizing waste heat, these systems save fuel that would otherwise be 
needed to produce heat or steam in a separate unit. CHP systems can 
reach energy efficiency levels in excess of 80 percent. This is well 
above the 33 percent average for conventional electrical generation 
technologies. In short, the U.S. can obtain more than twice the power 
from the same amount of energy by widely implementing combined heat and 
power technologies and applications.
  Unfortunately, several regulatory and policy barriers block the 
widespread use of these innovative technologies. The bill would ensure 
that CHP systems and other innovative technologies can interconnect 
with a local distribution utility and that the costs of such 
interconnections shall be just reasonable, and not unduly 
discriminatory.
  Currently, there are roughly 50 Gigawatts, GW, of energy produced 
from CHP systems annually. If this barrier is removed, 50 GW of 
additional CHP electrical generating capacity could be brought to 
market by 2010. To illustrate the magnitude of potential savings to the 
entire nation, the result of this additional capacity is equal to all 
the energy needed to power Massachusetts. Most of these systems are 
targeted for industry, where thermal and electrical needs are most 
often located close together. However, there is also tremendous 
potential for CHP in homes. Fifty GW of CHP could light and heat 50 
million homes, or 43 percent of all U.S. homes, for the same energy 
that the central station plans could only light the homes. With removal 
of regulatory barriers, these efficient systems may begin to be 
economical at the small sizes suitable for homes.
  We cannot solve today's energy problems with yesterday's solutions. 
CHP represents an innovative approach to expanding energy supply by 
maximizing energy efficiency. These systems will encourage 
technological innovations, reduce energy prices, spur economic 
development, enhance productivity, increase employment, improve 
environmental quality, and advance energy security and reliability in 
the United States.
  I invite my colleagues to join me in my efforts to promote combined 
heat and power by co-sponsoring this important legislation. I ask that 
the text of the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 933

       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 ``Combined Heat and Power 
     Advancement Act of 2001''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) the removal of barriers to the development and 
     deployment of combined heat and power technologies and 
     systems, an example of an array of innovative energy-supply 
     and energy-efficient technologies and systems, would--
       (A) encourage technological innovation;
       (B) reduce energy prices;
       (C) spur economic development;
       (D) enhance productivity;
       (E) increase employment; and
       (F) improve environmental quality and energy self-
     sufficiency;
       (2) the level of efficiency of the United States 
     electricity-generating system has been stagnant over the past 
     several decades;
       (3) technologies and systems available as of the date of 
     enactment of this Act, including a host of innovative onsite, 
     distributed generation technologies, could--
       (A) dramatically increase productivity;
       (B) double the efficiency of the United States electricity-
     generating system; and
       (C) reduce emissions of regulated pollutants and greenhouse 
     gases;
       (4) innovative electric technologies emit a much lower 
     level of pollutants as compared to the average quantity of 
     pollutants generated by United States electric generating 
     plants as of the date of enactment of this Act;
       (5) a significant proportion of the United States energy 
     infrastructure will need to be replaced by 2010;
       (6) the public interest would best be served if that 
     infrastructure were replaced by innovative technologies that 
     dramatically increase productivity, improve efficiency, and 
     reduce pollution;
       (7) financing and regulatory practices in effect as of the 
     date of enactment of this Act do not recognize the 
     environmental and economic benefits to be obtained from the 
     avoidance of transmission and distribution losses, and the 
     reduced load on the electricity-generating system, provided 
     by onsite, combined heat and power production;
       (8) many legal, regulatory, informational, and perceptual 
     barriers block the development and dissemination of combined 
     heat and power and other innovative energy technologies; and
       (9) because of those barriers, United States taxpayers are 
     not receiving the benefits of the substantial research and 
     development investment in innovative energy technologies made 
     by the Federal Government.

     SEC. 3. PURPOSE.

       The purpose of this Act is to encourage energy productivity 
     and efficiency increases by removing barriers to the 
     development and deployment of combined heat and power 
     technologies and systems.

     SEC. 4. INTERCONNECTION.

       (a) Definitions.--Section 3 of the Federal Power Act (16 
     U.S.C. 796) is amended--
       (1) by striking paragraph (23) and inserting the following:
       ``(23) Transmitting utility.--The term `transmitting 
     utility' means any entity (notwithstanding section 201(f)) 
     that owns, controls, or operates an electric power 
     transmission facility that is used for the sale of electric 
     energy.''; and
       (2) by adding at the end the following:
       ``(26) Appropriate regulatory authority.--The term 
     `appropriate regulatory authority' means--
       ``(A) the Commission;
       ``(B) a State commission;
       ``(C) a municipality; or
       ``(D) a cooperative that is self-regulating under State law 
     and is not a public utility.
       ``(27) Generating facility.--The term `generating facility' 
     means a facility that generates electric energy.
       ``(28) Local distribution utility.--The term `local 
     distribution utility' means an entity that owns, controls, or 
     operates an electric power distribution facility that is used 
     for the sale of electric energy.
       ``(29) Non-federal regulatory authority.--The term `non-
     Federal regulatory authority' means an appropriate regulatory 
     authority other than the Commission.''.
       (b) Interconnection to Distribution Facilities.--Section 
     210 of the Federal Power Act (16 U.S.C. 824i) is amended--
       (1) by redesignating subsection (e) as subsection (g); and
       (2) by inserting after subsection (d) the following:
       ``(e) Interconnection to Distribution Facilities.--
       ``(1) Interconnection.--
       ``(A) In general.--A local distribution utility shall 
     interconnect a generating facility with the distribution 
     facilities of the local distribution utility if the owner of 
     the generating facility--
       ``(i) complies with the final rule promulgated under 
     paragraph (2); and
       ``(ii) pays the costs of the interconnection.
       ``(B) Costs.--The costs of the interconnection--
       ``(i) shall be just and reasonable, and not unduly 
     discriminatory, as determined by the appropriate regulatory 
     authority; and
       ``(ii) shall be comparable to the costs charged by the 
     local distribution utility for interconnection by any 
     similarly situated

[[Page S5468]]

     generating facility to the distribution facilities of the 
     local distribution utility.
       ``(C) Applicable requirements.--The right of a generating 
     facility to interconnect under subparagraph (A) does not--
       ``(i) relieve the generating facility or the local 
     distribution utility of other Federal, State, or local 
     requirements; or
       ``(ii) provide the generating facility with transmission or 
     distribution service.
       ``(2) Rule.--
       ``(A) In general.--Not later than 1 year after the date of 
     enactment of this subparagraph, the Commission shall 
     promulgate a final rule to establish reasonable and 
     appropriate technical standards for the interconnection of a 
     generating facility with the distribution facilities of a 
     local distribution utility.
       ``(B) Process.--To the extent feasible, the Commission 
     shall develop the standards through a process involving 
     interested parties.
       ``(C) Advisory committee.--The Commission shall establish 
     an advisory committee composed of qualified experts to make 
     recommendations to the Commission concerning development of 
     the standards.
       ``(D) Administration.--
       ``(i) By a non-federal regulatory authority.--Except where 
     subject to the jurisdiction of the Commission pursuant to 
     provisions other than clause (ii), a non-Federal regulatory 
     authority may administer and enforce the rule promulgated 
     under subparagraph (A).
       ``(ii) By the commission.--To the extent that a non-Federal 
     regulatory authority does not administer and enforce the 
     rule, the Commission shall administer and enforce the rule 
     with respect to interconnection in that jurisdiction.
       ``(3) Right to backup power.--
       ``(A) In general.--In accordance with subparagraph (B), a 
     local distribution utility shall offer to sell backup power 
     to a generating facility that has interconnected with the 
     local distribution utility to the extent that the local 
     distribution utility--
       ``(i) is not subject to an order of a non-Federal 
     regulatory authority to provide open access to the 
     distribution facilities of the local distribution utility;
       ``(ii) has not offered to provide open access to the 
     distribution facilities of the local distribution utility; or
       ``(iii) does not allow a generating facility to purchase 
     backup power from another entity using the distribution 
     facilities of the local distribution utility.
       ``(B) Rates, terms, and conditions.--A sale of backup power 
     under subparagraph (A) shall be at such a rate, and under 
     such terms and conditions, as are just and reasonable and not 
     unduly discriminatory or preferential, taking into account 
     the actual incremental cost, whenever incurred by the local 
     distribution utility, to supply such backup power service 
     during the period in which the backup power service is 
     provided, as determined by the appropriate regulatory 
     authority.
       ``(C) No requirement for certain sales.--A local 
     distribution utility shall not be required to offer backup 
     power for resale to any entity other than the entity for 
     which the backup power is purchased.
       ``(D) New or expanded loads.--To the extent backup power is 
     used to serve a new or expanded load on the distribution 
     system, the generating facility shall pay any reasonable 
     costs associated with any transmission, distribution, or 
     generation upgrade required to provide such service.''.
       (c) Interconnection to Transmission Facilities.--Section 
     210 of the Federal Power Act (16 U.S.C. 824i) is amended by 
     inserting after subsection (e) (as added by subsection (b)) 
     the following:
       ``(f) Interconnection to Transmission Facilities.--
       ``(1) Interconnection.--
       ``(A) In general.--Notwithstanding subsections (a) and (c), 
     a transmitting utility shall interconnect a generating 
     facility with the transmission facilities of the transmitting 
     utility if the owner of the generating facility--
       ``(i) complies with the final rule promulgated under 
     paragraph (2); and
       ``(ii) pays the costs of the interconnection.
       ``(B) Costs.--
       ``(i) In general.--Subject to clause (ii), the costs of the 
     interconnection--

       ``(I) shall be just and reasonable and not unduly 
     discriminatory; and
       ``(II) shall be comparable to the costs charged by the 
     transmitting utility for interconnection by any similarly 
     situated generating facility to the transmitting facilities 
     of the transmitting utility.

       ``(ii) Effect of ferc lite.--A non-Federal regulatory 
     authority that, under any provision of Federal law enacted 
     before, on, or after the date of enactment of this 
     subparagraph, is authorized to determine the rates for 
     transmission service shall be authorized to determine the 
     costs of any interconnection under this subparagraph in 
     accordance with that provision of Federal law.
       ``(C) Applicable requirements.--The right of a generating 
     facility to interconnect under subparagraph (A) does not--
       ``(i) relieve the generating facility or the transmitting 
     utility of other Federal, State, or local requirements; or
       ``(ii) provide the generating facility with transmission or 
     distribution service.
       ``(2) Rule.--
       ``(A) In general.--Not later than 1 year after the date of 
     enactment of this subparagraph, the Commission shall 
     promulgate a final rule to establish reasonable and 
     appropriate technical standards for the interconnection of a 
     generating facility with the transmission facilities of a 
     transmitting utility.
       ``(B) Process.--To the extent feasible, the Commission 
     shall develop the standards through a process involving 
     interested parties.
       ``(C) Advisory committee.--The Commission shall establish 
     an advisory committee composed of qualified experts to make 
     recommendations to the Commission concerning development of 
     the standards.
       ``(3) Right to backup power.--
       ``(A) In general.--In accordance with subparagraph (B), a 
     transmitting utility shall offer to sell backup power to a 
     generating facility that has interconnected with the 
     transmitting utility unless--
       ``(i) Federal or State law (including regulations) allows a 
     generating facility to purchase backup power from an entity 
     other than the transmitting utility; or
       ``(ii) a transmitting utility allows a generating facility 
     to purchase backup power from an entity other than the 
     transmitting utility using--

       ``(I) the transmission facilities of the transmitting 
     utility; and
       ``(II) the transmission facilities of any other 
     transmitting utility.

       ``(B) Rates, terms, and conditions.--A sale of backup power 
     under subparagraph (A) shall be at such a rate, and under 
     such terms and conditions, as are just and reasonable and not 
     unduly discriminatory or preferential, taking into account 
     the actual incremental cost, whenever incurred by the local 
     distribution utility, to supply such backup power service 
     during the period in which the backup power service is 
     provided, as determined by the appropriate regulatory 
     authority.
       ``(C) No requirement for certain sales.--A transmitting 
     utility shall not be required to offer backup power for 
     resale to any entity other than the entity for which the 
     backup power is purchased.
       ``(D) New or expanded loads.--To the extent backup power is 
     used to serve a new or expanded load on the transmission 
     system, the generating facility shall pay any reasonable 
     costs associated with any transmission, distribution, or 
     generation upgrade required to provide such service.''.
       (d) Conforming Amendments.--Section 210 of the Federal 
     Power Act (16 U.S.C. 824i) is amended--
       (1) in subsection (a)(1)--
       (A) by inserting ``transmitting utility, local distribution 
     utility,'' after ``electric utility,''; and
       (B) in subparagraph (A), by inserting ``any transmitting 
     utility,'' after ``small power production facility,'';
       (2) in subsection (b)(2), by striking ``an evidentiary 
     hearing'' and inserting ``a hearing'';
       (3) in subsection (c)(2)--
       (A) in subparagraph (B), by striking ``or'' at the end;
       (B) in subparagraph (C), by striking ``and'' at the end and 
     inserting ``or''; and
       (C) by adding at the end the following:
       ``(D) promote competition in electricity markets, and''; 
     and
       (4) in subsection (d), by striking the last sentence.
                                 ______