[Congressional Record Volume 147, Number 106 (Thursday, July 26, 2001)]
[Senate]
[Pages S8284-S8291]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. WYDEN (for himself and Mr. Brownback):
  S. 1255. A bill to encourage the use of carbon storage sequestration 
practices in the United States; to the Committee on Agriculture, 
Nutrition, and Forestry.
  Mr. WYDEN. Mr. President, today Senator Brownback and I are 
introducing legislation that uses a simple, scientifically sound and 
entirely voluntary approach to combat global warming. It's not 
regulatory, and it's not revolutionary, except for the fact that this 
approach could account for and solve up to 50 percent of the United 
States' atmospheric carbon problem. The Carbon Sequestration and 
Reporting Act will expand the Nation's forested lands, protect 
watersheds, conserve agricultural lands and put forests and farms on 
the frontlines in the battle against global warming. The legislation is 
entirely voluntary and incentive-based. It makes new resources 
available to private landowners through State-operated revolving loan 
programs and USDA conservation programs to provide assistance for tree 
planting, other forest management actions, and soil conservation for 
the purposes of carbon sequestration. Both of these programs will lead 
to better water quality, less runoff pollution, better wildlife habitat 
and an additional revenue source for farmers and forest land owners.
  Thirty-eight industrialized countries account for one-half of the 
carbon released into the atmosphere. The U.S., all alone, accounts for 
one-quarter of the total carbon released into the atmosphere. This 
country cannot afford to be a bystander on the climate change issue, 
and yet two days ago the headlines read: ``Climate Agreement Leaves 
U.S. Out in the Cold;'' ``Isolated on Global Warming;'' ``178 Nations 
Reach Climate Accord; U.S. Only Looks On.'' I am convinced that it is 
possible to put together a bipartisan alternative to inaction. I 
started that process with the Forest Resources for the Environment and 
Economy Act. Today, I continue that process with Senator Brownback as 
we introduce The Carbon Sequestration and Reporting Act.
  We cannot afford to sit out this debate as it goes on around us. It 
costs between $2 and $20 per ton to store carbon in trees and soil but 
alternative strategies such as emissions reductions can cost up to $100 
per ton. Sequestering carbon in forests and soil is a scientifically 
sound and cost-effective strategy that can reduce carbon dioxide levels 
by up to 50 percent. My approach has been to use trees for carbon 
sequestration; Senator Brownback's approach has been to sequester 
carbon in agricultural soil. Our legislation joins the best of both 
these approaches.
  I am not saying that carbon sequestration should be the only tool in 
our toolbox. We need all the tools available to address the enormous 
issue of global climate change. But we believe this approach, this 
bill, will provide a jump start to a stalled political process. Carbon 
sequestration is a technology that can begin working right now, today, 
to reduce the negative effects of climate change.
  Investing in healthy forests today is an investment in the well-being 
of our

[[Page S8285]]

planet for decades to come. In the Pacific Northwest, forests are more 
than critical environmental resources, they are also a cornerstone of 
our economy. The same is true for agriculture. Last year, in Oregon 
alone, agriculture accounted for over $3 billion in trade and business 
revenues. Investing in improved land management and conservation to 
offset greenhouse gases is a win for the environment, a win for 
agriculture and a win for local economies.
  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. The forestry component of this bill works through a revolving 
loan fund for private, non-industrial landowners to be used to plant 
trees for carbon sequestration and conservation purposes. The forestry 
loans are not limited by time, but can be forgiven if the landowner 
decides to institute a permanent easement on his or her land for the 
purposes of conservation and carbon sequestration. This bill also 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.
  The agriculture portion of the bill will encourage landowners to 
offer the best plans detailing practices they would be willing to 
undertake to store additional carbon in the soil. The program is 
limited to 5 million acres, and is not a set aside. Rather, this bill 
encourages conservation practices like no-till, buffer strips and 
biomass production, to name a few, which are known to enhance soils' 
ability to store carbon. Using funding similar to current CRP payments, 
the agricultural contracts under this bill would be for a minimum of 10 
years and USDA would be required--in conjunction with other agencies--
to finalize criteria for measuring the carbon-storing ability of 
various conservation practices.
  We know these types of approaches work because of the leadership of 
our home states in carbon sequestration practice and research: Oregon 
for forestry and agriculture and Kansas for agriculture. The objectives 
of this bill will be greatly aided by institutions like Oregon State 
University and Kansas State University, who are already conducting 
significant research on various carbon-storing practices.
  This bill also makes important changes to the Energy Policy Act of 
1992: it would strengthen the voluntary accounting and verification of 
greenhouse gas reductions from forestry and agricultural activities. 
The bill directs the Secretary of Energy to develop new guidelines on 
accurate and cost-effective methods to account for and report real and 
credible greenhouse gas reductions. These guidelines are absolutely 
necessary because without them we could be doing all the environmental 
good in the world, but we have no record of it and, therefore, no 
concept of the progress we would have made. The guidelines will be 
developed with the input of a new Advisory Council representing 
agriculture, industry, foresters, States, and environmental groups.
  As in the last Congress, the forestry portion of the bill will pay 
for itself by using money that polluters pay when they are caught 
violating the Clean Air Act and Clean Water Act as there are currently 
no guarantees that these penalties, which revert to the General Fund, 
are used to improve our environment, but our bill would put the 
penalties toward this goal. We would use these fines to expand our 
forests, protect streams and rivers and help remove greenhouse gases 
from the air. The agricultural portion of this bill will be paid for by 
conservation appropriations to the USDA.
  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 forestry portion of this 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, 
Governor John A. Kitzhaber of Oregon, PacifiCorp, The Nature 
Conservancy, and The Pacific Forest Trust. The agricultural portion of 
this bill has received positive reactions from many of these same 
groups.
  I look forward to pursuing this common-sense step toward protecting 
the environment and supporting our forest workers and agricultural 
interests.
  I ask unanimous consent that the text of the bill and a summary of 
the Carbon Sequestration and Reporting Act be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1255

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Carbon 
     Sequestration and Reporting Act''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                    TITLE I--CARBON ADVISORY COUNCIL

Sec. 101. Carbon advisory council.
Sec. 102. National inventory and voluntary reporting of greenhouse 
              gases.

                   TITLE II--FOREST CARBON MANAGEMENT

Sec. 201. Forest carbon storage and sequestration.

                TITLE III--CARBON SEQUESTRATION PROGRAM

Sec. 301. Establishment.
Sec. 302. Funding.
Sec. 303. Regulations.
Sec. 304. Effective dates.

                           TITLE IV--REPORTS

Sec. 401. Initial report.
Sec. 402. Annual report.
Sec. 403. State report.

                    TITLE I--CARBON ADVISORY COUNCIL

     SEC. 101. CARBON ADVISORY COUNCIL.

       The Energy Policy Act of 1992 is amended by inserting after 
     section 1609 (42 U.S.C. 13388) the following:

     ``SEC. 1610. CARBON ADVISORY COUNCIL.

       ``(a) Definitions.--In this section:
       ``(1) Carbon advisory council.--The term `Carbon Advisory 
     Council' means the Carbon Advisory Council established under 
     subsection (b).
       ``(2) 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.
       ``(3) Carbon storage.--The term `carbon storage' means the 
     quantity of carbon sequestered from the atmosphere and stored 
     in forest carbon reservoirs.
       ``(4) Forest carbon program.--The term `forest carbon 
     program' means the program established under section 2404(b) 
     of the Global Climate Change Prevention Act of 1990 to 
     provide financial assistance for forest carbon activities 
     through--
       ``(A) cooperative agreements; and
       ``(B) State revolving loan funds.
       ``(5) Forest management action.--
       ``(A) In general.--The term `forest management action' 
     means an action that--
       ``(i) applies forestry principles to the regeneration, 
     management, utilization, and conservation of forests to meet 
     specific goals and objectives; and
       ``(ii) maintains the productivity of the forests.
       ``(B) Inclusions.--The term `forest management action' 
     includes management of forests for the benefit of--
       ``(i) aesthetics;
       ``(ii) fish;
       ``(iii) recreation;
       ``(iv) urban values;
       ``(v) water;
       ``(vi) wilderness;
       ``(vii) wildlife;
       ``(viii) wood products; and
       ``(ix) other forest values.
       ``(6) Indian tribe.--The term `Indian tribe' has the 
     meaning given the term by section 4 of the Indian Health Care 
     Improvement Act (25 U.S.C. 1603).
       ``(7) 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) reseeding; and
       ``(iii) natural regeneration.
       ``(b) Establishment.--The Secretary shall establish an 
     advisory council, to be known as the `Carbon Advisory 
     Council', to--
       ``(1) advise the Secretary on the development and updating 
     of guidelines for accurate reporting of greenhouse gas 
     sequestration from soil carbon and forest management actions;
       ``(2) evaluate the potential effectiveness of the 
     guidelines in verifying carbon inputs and outputs from 
     various soil carbon and forest management strategies;
       ``(3) estimate the effect of implementing the guidelines on 
     carbon sequestration and storage; and

[[Page S8286]]

       ``(4) assist the Secretary in preparing the annual report 
     required by section 402(a) of the Carbon Storage and 
     Sequestration Act (including the assessment of the 
     vulnerability of forests and agricultural land to the adverse 
     effects of climate change).
       ``(c) Membership.--The Carbon Advisory Council shall be 
     composed of 21 members as follows:
       ``(1) The Secretary of Agriculture (or a designee).
       ``(2) The Secretary of Energy (or a designee).
       ``(3) The Secretary of the Interior (or a designee).
       ``(4) The Secretary of State (or a designee).
       ``(5) The Administrator of the Environmental Protection 
     Agency (or a designee).
       ``(6) The Chief of the Forest Service (or a designee)
       ``(7) 15 members appointed jointly by the Secretary of 
     Agriculture and the Secretary of Energy as follows:
       ``(A) 1 member representing professional forestry 
     organizations.
       ``(B) 2 members representing environmental or conservation 
     organizations.
       ``(C) 1 member representing nonindustrial private 
     landowners.
       ``(D) 1 member representing the forest industry.
       ``(E) 1 member representing Indian tribes.
       ``(F) 1 member representing forest workers.
       ``(G) 3 members representing the academic scientific 
     community.
       ``(H) 2 members representing State forestry organizations.
       ``(I) 2 members representing nongovernmental organizations 
     who have an expertise and experience in soil carbon 
     sequestration practices.
       ``(J) 1 member representing commercial agricultural 
     producers.
       ``(d) Term.--
       ``(1) In general.--Except as provided in paragraph (3), a 
     member of the Carbon Advisory Council appointed under 
     subsection (c)(7) shall be appointed for a term of 3 years.
       ``(2) Consecutive terms.--No individual appointed under 
     subsection (c)(7) may serve on the Carbon Advisory Council 
     for more than 2 consecutive terms.
       ``(3) Initial terms.--Of the members first appointed to the 
     Carbon Advisory Council under subsection (c)(7)--
       ``(A) 5 of the members shall be appointed for a term of 1 
     year;
       ``(B) 5 of the members shall be appointed for a term of 2 
     years; and
       ``(C) 5 of the members shall be appointed for a term of 3 
     years.
       ``(e) Vacancy.--
       ``(1) In general.--A vacancy on the Carbon Advisory Council 
     shall be filled in the same manner as the original 
     appointment was made.
       ``(2) Filling of unexpired term.--An individual chosen to 
     fill a vacancy shall be appointed for the unexpired term of 
     the member replaced.
       ``(f) Compensation.--
       ``(1) Non-federal employees.--A member of the Carbon 
     Advisory Council who is not an officer or employee of the 
     Federal Government shall be compensated at a rate equal to 
     the daily equivalent of the annual rate of basic pay 
     prescribed for level IV of the Executive Schedule under 
     section 5315 of title 5, United States Code, for each day 
     (including travel time) during which the member is engaged in 
     the performance of the duties of the Carbon Advisory Council.
       ``(2) Federal employees.--A member of the Carbon Advisory 
     Council who is an officer or employee of the Federal 
     Government shall serve without compensation in addition to 
     the compensation received for the services of the member as 
     an officer or employee of the Federal Government.
       ``(3) Travel Expenses.--A member of the Carbon Advisory 
     Council shall be allowed travel expenses, including per diem 
     in lieu of subsistence, at rates authorized for an employee 
     of an agency under subchapter I of chapter 57 of title 5, 
     United States Code, while away from the home or regular place 
     of business of the member in the performance of the duties of 
     the Carbon Advisory Council.
       ``(4) Support.--The Secretary shall provide financial and 
     administrative support to the Carbon Advisory Council.
       ``(g) Use of existing council.--The Secretary may designate 
     a council in existence as of the date of enactment of this 
     section to perform the tasks of the Carbon Advisory Council 
     if (as determined by the Secretary)--
       ``(1) the responsibilities of the Carbon Advisory Council, 
     as described in subsection (b), are a high priority for the 
     existing council; and
       ``(2) the representation, membership terms, background, and 
     responsibilities of the existing council correspond to the 
     requirements for the Carbon Advisory Council established 
     under subsections (c) and (d).
       ``(h) Duties.--
       ``(1) Review of guidelines.--Not later than 18 months after 
     the date of enactment of this section, the Carbon Advisory 
     Council shall--
       ``(A) review the guidelines established under section 
     1605(b)(1) that address procedures for the accurate voluntary 
     reporting of greenhouse gas sequestration from tree planting, 
     forest management actions, and agricultural land;
       ``(B) make recommendations to the Secretary to amend the 
     guidelines; and
       ``(C) before submitting the guidelines to the Secretary, 
     provide an opportunity for public comment on the guidelines.
       ``(2) Establishment of Guidelines.--
       ``(A) Reporting guidelines.--The recommendations under 
     paragraph (1)(B) shall include recommendations for reporting 
     guidelines that--
       ``(i) are based on--

       ``(I) measuring increases in carbon storage in excess of 
     the carbon storage that would have occurred but for 
     reforestation, forest management, forest protection, or other 
     soil carbon and forest management actions; and
       ``(II) comprehensive carbon accounting that reflects net 
     increases in the carbon reservoir and takes into account any 
     carbon emissions resulting from the disturbance of carbon 
     reservoirs existing at the beginning of a soil carbon or 
     forest management action; and

       ``(ii) include options for--

       ``(I) estimating the indirect effects of soil carbon and 
     forest management actions on carbon storage, including the 
     potential displacement of carbon emissions;
       ``(II) quantifying the expected carbon storage over various 
     time periods, as determined by the Secretary, taking into 
     account the duration of carbon stored in the carbon 
     reservoir; and
       ``(III) considering the economic and social effects of soil 
     carbon and forest management alternatives.

       ``(B) Accurate monitoring, measurement, and verification 
     guidelines.--
       ``(i) In general.--The recommendations under paragraph 
     (1)(B) shall include recommended practices for monitoring, 
     measurement, and verification of carbon storage from soil 
     carbon and forest management actions.
       ``(ii) Requirements.--The recommended practices shall, to 
     the maximum extent practicable--

       ``(I) be based on statistically sound sampling strategies 
     that build on knowledge of the carbon dynamics of forests and 
     agricultural land;
       ``(II) compute carbon stocks and changes in carbon stocks, 
     by taking field condition measurements and modeling;
       ``(III) include guidelines on how to sample and calculate 
     carbon sequestration across multiple participating 
     ownerships; and
       ``(IV) encourage the use of more precise measurements at 
     the option of a reporting entity.

       ``(C) State guidelines.--The recommendations under 
     paragraph (1)(B) shall include State guidelines for 
     reporting, monitoring, and verifying carbon storage under the 
     forest carbon program.
       ``(D) Biomass energy projects.--The recommendations under 
     paragraph (1)(B) 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 of using biomass to generate electricity 
     (including co-firing of biomass with fossil fuels) on the 
     displacement of greenhouse gas emissions from fossil fuels.
       ``(3) Review of guidelines.--At least once every 24 months, 
     the Carbon Advisory Council shall meet to--
       ``(A) evaluate the latest scientific and observational 
     information on reporting, monitoring, and verification of 
     carbon storage from forest soil carbon and forest management 
     actions; and
       ``(B) recommend to the Secretary, revised guidelines for 
     reporting, monitoring, and verification of carbon storage 
     from soil carbon and forest management actions to reflect the 
     evaluation.
       ``(4) Compliance with other laws.--The Advisory Committee 
     shall meet, 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 or State laws enacted after the date of 
     enactment of this section.''.

     SEC. 102. NATIONAL INVENTORY AND VOLUNTARY REPORTING OF 
                   GREENHOUSE GASES.

       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) Amendment of guidelines.--Not later than 180 days 
     after receiving the recommendations of the Carbon Advisory 
     Council under subsection 1610(h)(1)(B), the Secretary (acting 
     through the Administrator of the Energy Information 
     Administration) shall, as appropriate, revise the guidelines 
     established under paragraph (1) to reflect the 
     recommendations of the Carbon Advisory Council.''.

                   TITLE II--FOREST CARBON MANAGEMENT

     SEC. 201. FOREST CARBON STORAGE AND SEQUESTRATION.

       The Global Climate Change Prevention Act of 1990 is amended 
     by inserting after section 2403 (7 U.S.C. 6702) the 
     following:

     ``SEC. 2404. FOREST CARBON MANAGEMENT.

       ``(a) Definitions.--In this section:
       ``(1) Carbon advisory council.--The term `Carbon Advisory 
     Council' means the Carbon Advisory Council established by 
     section 1610(b) of the Energy Policy Act of 1992.
       ``(2) Carbon storage.--The term `carbon storage' means the 
     quantity of carbon sequestered from the atmosphere and stored 
     in forest carbon reservoirs.
       ``(3) Forest carbon program.--The term `forest carbon 
     program' means the program established under subsection (b) 
     to provide financial assistance for forest carbon activities 
     through--
       ``(A) cooperative agreements; and
       ``(B) State revolving loan funds.

[[Page S8287]]

       ``(4) Forest carbon reservoir.--The term `forest carbon 
     reservoir' means--
       ``(A) trees, roots, soils, or other biomass associated with 
     forest ecosystems; and
       ``(B) products from the biomass that store carbon.
       ``(5) 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 on which forest cover may be naturally or 
     artificially regenerated; and
       ``(ii) a transition zone between a forested area and 
     nonforested area that is capable of sustaining forest cover.
       ``(6) Forest management action.--
       ``(A) In general.--The term `forest management action' 
     means an action that--
       ``(i) applies forestry principles to the regeneration, 
     management, use, and conservation of forests to meet specific 
     goals and objectives; and
       ``(ii) maintains the productivity of the forests.
       ``(B) Inclusions.--The term `forest management action' 
     includes management of forests for the benefit of--
       ``(i) aesthetics;
       ``(ii) fish;
       ``(iii) recreation;
       ``(iv) urban values;
       ``(v) water;
       ``(vi) wilderness;
       ``(vii) wildlife;
       ``(viii) wood products; and
       ``(ix) other forest values.
       ``(7) Indian tribe.--The term `Indian tribe' has the 
     meaning given the term in section 4 of the Indian Health Care 
     Improvement Act (25 U.S.C. 1603).
       ``(8) Invasive species.--The term `invasive species' means 
     a species that is not native to an ecosystem, the 
     introduction of which may cause harm to the economy, the 
     environment, or human health.
       ``(9) Nonindustrial private forest.--The term 
     `nonindustrial private forest' means forest land that is 
     privately owned by a person that--
       ``(A) does not control a forest products manufacturing 
     facility; and
       ``(B) manages the land solely for the purposes of 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) reseeding; and
       ``(iii) natural regeneration.
       ``(11) Revolving loan program.--The term `revolving loan 
     program' means a State revolving loan program established 
     under subsection (b)(2)(A).
       ``(12) Secretary.--The term `Secretary' means the Secretary 
     of Agriculture, acting through the Chief of the Forest 
     Service.
       ``(b) Forest Carbon Program.--
       ``(1) Cooperative Agreement.--The Secretary may enter into 
     a cooperative agreement with willing landowners who are State 
     or local governments, Indian tribes, private, nonprofit 
     entities, [and other persons] to carry out forest carbon 
     activities on private land, State land, Indian tribe land, 
     [or private land.]
       ``(2) Revolving Loan Program.--
       ``(A) In general.--In collaboration with State Foresters 
     and representatives of nongovernmental organizations, the 
     Secretary shall provide assistance to States to establish a 
     revolving loan program to carry out forest carbon activities 
     on nonindustrial private forest land.
       ``(B) Eligibility.--An owner of nonindustrial private 
     forest land shall be eligible for assistance from a revolving 
     loan fund for forest carbon activities on not more than a 
     total of 5,000 acres of nonindustrial private forest land of 
     the owner.
       ``(C) Loan terms.--
       ``(i) In general.--To be eligible for a loan under this 
     section, an owner of nonindustrial private forest land shall 
     enter into a loan agreement with the State.
       ``(ii) Interest rate.--The loan agreement shall have loan 
     interest rates that are established by the State--

       ``(I) to encourages participation of nonindustrial private 
     forest landowners in the revolving loan program;
       ``(II) to provide a net rate of return of not more than 3 
     percent; and
       ``(III) to further the objectives of this section.

       ``(iii) Repayment.--The loan agreement shall require that 
     loan obligations be repaid to the State--

       ``(I)(aa) at the time of harvest of land covered by the 
     revolving loan program; or
       ``(bb) in accordance with a repayment schedule determined 
     by the State; and
       ``(II) at a rate proportional to the percentage decrease of 
     carbon stock.

       ``(iv) Insurance.--The loan agreement shall include 
     provisions that provide for private insurance, or that 
     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 circumstance beyond the control of the owner; or
       ``(II) cannot be harvested because of restrictions on tree 
     harvesting imposed by the applicable Federal, State, or local 
     government after the date of the loan agreement.

       ``(v) Lien.--The loan agreement shall--

       ``(I) impose a lien on all timber, forest products, and 
     biomass produced on land covered by the loan agreement; and
       ``(II) provide an assurance that the terms of the lien 
     shall transfer with the land on sale, lease, or transfer of 
     the land.

       ``(vi) Buyout option.--The loan agreement shall include a 
     buyout option that specifies the financial terms under which 
     the owner may terminate the agreement--

       ``(I) before harvesting timber from the stand established 
     with loan funds; and
       ``(II) by repaying the loan with interest.

       ``(vii) Attribution.--The loan agreement shall provide 
     that, until the loan is paid in full by the participating 
     owner or otherwise terminated in accordance with this 
     section, all reductions in atmospheric greenhouse gases 
     achieved as the result of the loan shall be attributed to any 
     non-Federal entities that provide funding for the loan 
     (including the State or any other person or nongovernmental 
     organization that provides funding to the State for the 
     issuance of the loan).
       ``(viii) Monitoring and Verification.--The loan agreement 
     shall include provisions for the monitoring and verification 
     of carbon storage.
       ``(D) Permanent conservation easement.--
       ``(i) In general.--A borrower may donate to the State or to 
     another appropriate entity a permanent conservation easement 
     that--

       ``(I) furthers the objectives of this section, 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 that required under applicable 
     Federal, State, and local law.

       ``(ii) Terms.--A permanent conservation easement under 
     clause (i) may permit the continuation of forest management 
     actions that--

       ``(I) increase carbon storage on the land and forest; or
       ``(II) furthers the objectives of this section.

       ``(iii) Effect on loan agreement.--

       ``(I) Required cancellation.--If the borrower donates to 
     the State a permanent conservation easement under clause (i), 
     the State shall cancel--

       ``(aa) the loan agreement under subparagraph (C); and
       ``(bb) any liens on the timber, forest products, and 
     biomass under subparagraph (C)(v).

       ``(II) Permissible cancellation.--If the borrower donates 
     to another appropriate entity a permanent conservation 
     easement under clause (i), the State may cancel--

       ``(aa) the loan agreement under subparagraph (C); and
       ``(bb) any liens on the timber, forest products, and 
     biomass under subparagraph (C)(v).
       ``(E) Reinvestment of funds.--Any funds collected under a 
     loan issued under this section (including loan repayments, 
     loan buyouts, and any interest payments) shall be--
       ``(i) reinvested by the State in the revolving loan 
     program; and
       ``(ii) used by the State to make additional loans under the 
     revolving loan program.
       ``(F) Records.--The State Forester of a State shall--
       ``(i) maintain all records related to any loan agreement 
     funded by a revolving loan fund of the State; and
       ``(ii) make the records available to the public.
       ``(G) Matching funds.--
       ``(i) In general.--Beginning the second year in which a 
     State participates in the revolving loan program, and each 
     year thereafter, to be eligible to receive Federal funds 
     under this subsection a State shall provide matching non-
     Federal funds equal to at least 25 percent of the Federal 
     funds made available to the State for the revolving loan 
     program.
       ``(ii) Administration.--The State shall--

       ``(I) provide matching funds in the form of cash, in-kind 
     administrative services, or technical assistance; and
       ``(II) establish procedures to ensure accountability for 
     the use of Federal funds.

       ``(H) Loan funding distribution.--
       ``(i) Formula.--Not later than 180 days after the date of 
     enactment of this section, the Secretary, in consultation 
     with State Foresters, shall--

       ``(I) establish a formula under which Federal funds shall 
     be distributed under this section among eligible States; and
       ``(II) submit to Congress a report on the formula 
     (including the methodology used to establish the formula).

       ``(ii) Basis.--The formula shall--

       ``(I) be based on maximizing the potential for meeting the 
     objectives of this section;
       ``(II) consider--

       ``(aa) the acreage of un-stocked or under-producing private 
     forest land in each State;
       ``(bb) the potential productivity of the land;
       ``(cc) the potential long-term carbon storage of the land;
       ``(dd) the potential to achieve other environmental 
     benefits;
       ``(ee) the number of owners eligible for loans under this 
     section in each State; and
       ``(ff) the need for reforestation, timber stand 
     improvement, or other forestry investments consistent with 
     the objectives of this section; and

       ``(III) provide a priority to States that have experienced 
     or are expected to experience significant declines in 
     employment levels in the forestry industry because of 
     declining timber harvests on Federal land.

[[Page S8288]]

       ``(I) Private funding.--A revolving loan fund may accept 
     and distribute as loans any funds provided by nongovernmental 
     organizations or persons to carry out this section.
       ``(J) Bonneville power administration.--
       ``(i) 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--

       ``(I) the objectives of this section; and
       ``(II) the fish and wildlife objectives of the Bonneville 
     Power Administration under the Pacific Northwest Electric 
     Power Planning and Conservation Act (16 U.S.C. 839 et seq.).

       ``(ii) Application of requirements under other law.--An 
     application under clause (i) shall be subject to all rules 
     and procedures established by the--

       ``(I) Pacific Northwest Electric Power and Conservation 
     Planning Council; and
       ``(II) the Bonneville Power Administration under the 
     Pacific Northwest Electric Power Planning and Conservation 
     Act (16 U.S.C. 839 et seq.).

       ``(3) Eligible forestry carbon activities.--
       ``(A) In general.--An owner may use a loan or other funds 
     provided under this section to carry out eligible forestry 
     carbon activities (as determined by the Secretary) that--
       ``(i)(I) help restore under-producing or understocked 
     forest land;
       ``(II) provide for protection of forests from nonforest 
     use; or
       ``(III) allow a variety of sustainable management 
     alternatives; and
       ``(ii) have no net negative impact on watersheds and fish 
     and wildlife habitats.
       ``(B) Assistance.--The Secretary, in collaboration with 
     State Foresters, shall provide guidance on eligible forestry 
     carbon activities under this subsection.
       ``(C) Application of other laws.--Funding shall not be 
     provided under this section for activities required under 
     other applicable Federal, State, or local laws.
       ``(D) Pre-agreement activities.--Funding shall not be 
     provided for costs incurred before entering into a 
     cooperative agreement or loan agreement under this section.
       ``(E) Limitation on land considered for funding.--No owner 
     shall enter into a loan agreement under this section to fund 
     reforestation of land harvested after the date of enactment 
     of this section if the owner received revenues from the 
     harvest that are sufficient to reforest the land.
       ``(F) Eligible tree species.--
       ``(i) Invasive species.--Selection of tree species for loan 
     projects under this paragraph shall be consistent with 
     Executive Order No. 13112 (42 U.S.C. 4321 note).
       ``(ii) Program funding.--Funding for reforestation 
     activities under this section may be provided for--

       ``(I) tree species native to a region;
       ``(II) tree species that formerly occupied the site; or
       ``(III) nonnative tree species or hybrids that are 
     noninvasive.

       ``(G) Forest-management plan.--Priority shall be provided 
     under this section to projects on land under a forestry 
     management plan or forest stewardship plan that is consistent 
     with the objectives of the carbon storage program.
       ``(H) Use of funds.--
       ``(i) Permitted uses.--Funds under this section may be used 
     to--

       ``(I) pay the cost of purchasing and planting tree 
     seedlings; and
       ``(II) pay other costs associated with the planted trees, 
     including the cost of--

       ``(aa) planning;
       ``(bb) site preparation;
       ``(cc) forest management;
       ``(dd) monitoring;
       ``(ee) measurement and verification; and
       ``(ff) consultant and contractor fees.
       ``(ii) Prohibited uses.--Funds under this section shall not 
     be used to--

       ``(I) pay for the labor of the owner; or
       ``(II) purchase capital items or expendable items, such as 
     vehicles, tools, and other equipment.

       ``(I) Amount of financial assistance.--The amount of 
     financial assistance provided to an owner under this section 
     shall not exceed--
       ``(i) 100 percent of total project costs of the owner, 
     including funds received from any other source; or
       ``(ii) $100,000 during any 2-year period.
       ``(J) 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 act of appropriation, to 
     fund cooperative agreements and revolving loan funds 
     authorized under this section.
       ``(4) Allocation of funds.--The Secretary shall allocate--
       ``(A) not less than 15 percent of available funds for 
     cooperative agreements described in paragraph (1); and
       ``(B) after determining that States have implemented a 
     system to administer loans made under paragraph (2) in 
     accordance with this section, 85 percent of available funds 
     for State revolving loan programs.

                TITLE III--CARBON SEQUESTRATION PROGRAM

     SEC. 301. ESTABLISHMENT.

       Subtitle D of title XII of the Food Security Act of 1985 
     (16 U.S.C. 3830 et seq.) is amended by inserting after 
     chapter 1 the following:

               ``CHAPTER 2--CARBON SEQUESTRATION PROGRAM

     ``SEC. 1238. CARBON SEQUESTRATION PROGRAM.

       ``(a) In General.--Effective beginning with the 2002 
     calendar year, the Secretary, acting through the Chief of the 
     Natural Resources Conservation Service, shall establish a 
     carbon sequestration program to permit owners and operators 
     of land located in the United States to enroll the land in 
     the program to increase the sequestration of carbon.
       ``(b) Eligible Land.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     Secretary may include in the program established under this 
     chapter any land, as determined by the Secretary.
       ``(2) Conservation reserve land and wetlands reserve 
     land.--The Secretary may include in the carbon sequestration 
     program land that is enrolled in the conservation reserve 
     program or the wetlands reserve program established under 
     subchapters B and C, respectively, of chapter 1, if the owner 
     or operator of the land has not received any payments under 
     the program for the implementation of carbon sequestration 
     measures on the land.
       ``(c) Maximum Enrollment.--The Secretary may maintain up to 
     20,000,000 acres of land in the United States in the carbon 
     sequestration program at any 1 time during a calendar year.
       ``(d) Duration of Contract.--
       ``(1) In general.--For the purpose of carrying out this 
     chapter, the Secretary shall enter into contracts of not less 
     than 10 years.
       ``(2) Certain land.--In the case of land devoted to 
     hardwood trees, shelterbelts, windbreaks, or wildlife 
     corridors under a contract entered into under this chapter, 
     the owner or operator of the land may, within the limitations 
     prescribed under this section, specify the duration of the 
     contract.

     ``SEC. 1238A. CARBON SEQUESTRATION PRACTICES.

       ``(a) Criteria for Evaluating Carbon Sequestration 
     Practices.--
       ``(1) In general.--The Carbon Advisory Council established 
     under section 1610(b) of the Energy Policy Act of 1992 shall 
     develop, and propose to the Secretary, criteria for 
     determining the acceptability of, and evaluating, practices 
     by owners and operators that will increase the sequestration 
     of carbon for the purposes of determining the acceptability 
     of contract offers made by the owners and operators.
       ``(2) Content.--The criteria shall address--
       ``(A) forest preservation and restoration and 
     afforestation;
       ``(B) biodiversity enhancement;
       ``(C) the use of acreage to produce high-storage crops;
       ``(D) soil erosion management;
       ``(E) soil fertility restoration;
       ``(F) wetland restoration;
       ``(G) no-till farming practices;
       ``(H) conservation buffers;
       ``(I) improved cropping systems with winter cover crops; 
     and
       ``(J) any other conservation practices that the Secretary 
     determines to be appropriate for increasing carbon 
     sequestration.
       ``(3) Regulations.--The Secretary, acting through the Chief 
     of the Natural Resources Conservation Service and the Chief 
     of the Forest Service, by regulation, shall establish 
     criteria described in paragraphs (1) and (2).
       ``(b) Acceptability of Carbon Sequestration Practices.--
       ``(1) In general.--As part of a contract offer accepted 
     under this chapter, the owner or operator shall agree to 
     carry out on land enrolled in the program established under 
     this chapter carbon sequestration practices proposed by the 
     owner or operator that (as determined by the Secretary)--
       ``(A) provide for additional sequestration beyond that 
     which would be provided in the absence of enrollment of the 
     land in the program; and
       ``(B) contribute to a positive reduction of greenhouse 
     gases in the atmosphere through sequestration over at least a 
     10-year period.
       ``(2) Maximum sequestration benefits.--In determining the 
     acceptability of contract offers, the Secretary shall take 
     into consideration the extent to which enrollment of the land 
     that is the subject of the contract offer would provide the 
     maximum sequestration benefits under the criteria developed 
     under subsection (a).
       ``(c) Compliance With Carbon Sequestration Contracts.--
       ``(1) In general.--As part of a contract offer accepted 
     under this chapter, an owner or operator of land shall permit 
     the Secretary to verify that the owner or operator is 
     implementing practices that sequester carbon in accordance 
     with the contract, including an actual verification of the 
     practices at least once every 5 years and such random 
     inspections as are necessary.
       ``(2) Fraud or false statements.--Section 1001 of title 18, 
     United States Code, shall apply to a statement, 
     representation, writing, or document provided by an owner or 
     operator under this subsection.
       ``(3) Confidentiality.--Information provided by an owner or 
     operator under this subsection shall be considered to be 
     confidential information for the purposes of section 
     552(b)(4) of title 5, United States Code.
       ``(d) Monitoring.--The Secretary, in consultation with the 
     Administrator of the Energy Information Administration, shall 
     develop forms to monitor sequestration improvements made as a 
     result of the program established under this chapter and 
     distribute the forms to owners and operators of land enrolled 
     in the program.

[[Page S8289]]

       ``(e) Educational Outreach.--In consultation with the 
     Consortium for Agricultural Soils Mitigation of Greenhouse 
     Gases, the Secretary, acting through the Extension Service, 
     shall conduct an educational outreach program to collect and 
     disseminate to owners and operators of land research-based 
     information on agricultural practices that will increase the 
     sequestration of carbon, while preserving the social and 
     economic well-being of the owners and operators.

     ``SEC. 1238B. DUTIES OF OWNERS AND OPERATORS.

       ``(a) In General.--Under the terms of a contract entered 
     into under this chapter, during the term of the contract, an 
     owner or operator of a farm or ranch shall agree--
       ``(1) to implement a plan approved by the Secretary for 
     carrying out on land subject to the contract practices that 
     will increase the sequestration of carbon, substantially in 
     accordance with a schedule, covering a period of not less 
     than 10 years, that is outlined in the plan;
       ``(2) to place land subject to the contract in the carbon 
     sequestration program established under this chapter;
       ``(3) in addition to the remedies provided under section 
     1238F(d), on the violation of a term or condition of the 
     contract at any time at which the owner or operator has 
     control of the land--
       ``(A) to forfeit all rights to receive rental payments and 
     cost-sharing payments under the contract and to refund to the 
     Secretary any rental payments and cost-sharing payments 
     received by the owner or operator under the contract, and 
     interest on the payments as determined by the Secretary, 
     if the Secretary determines that the violation is of such 
     nature as to warrant termination of the contract; or
       ``(B) to refund to the Secretary, or accept adjustments to, 
     the rental payments and cost-sharing payments provided to the 
     owner or operator, as the Secretary considers appropriate, if 
     the Secretary determines that the violation does not warrant 
     termination of the contract;
       ``(4) on the transfer of the right and interest of the 
     owner or operator in land subject to the contract--
       ``(A)(i) to forfeit all rights to rental payments and cost-
     sharing payments under the contract; and
       ``(ii) to refund to the United States all rental payments 
     and cost-sharing payments received by the owner or operator, 
     or accept such payment adjustments or make such refunds 
     as the Secretary considers appropriate and consistent with 
     the objectives of this chapter; unless
       ``(B)(i) the transferee of the land agrees with the 
     Secretary to assume all obligations of the contract;
       ``(ii) the land is purchased by or for the United States 
     Fish and Wildlife Service; or
       ``(iii) the transferee and the Secretary agree to 
     modifications to the contract that are consistent with the 
     objectives of the program, as determined by the Secretary;
       ``(5) not to adopt any practice specified by the Secretary 
     in the contract as a practice that would tend to defeat the 
     purposes of this chapter; and
       ``(6) to comply with such additional provisions as the 
     Secretary determines are desirable and are included in the 
     contract to carry out this chapter or to facilitate the 
     practical administration of this chapter.
       ``(b) Plan.--The plan referred to in subsection (a)(1)--
       ``(1) shall specify the carbon sequestration practices to 
     be carried out by the owner or operator during the term of 
     the contract; and
       ``(2) may provide for the permanent retirement of any 
     existing cropland base and allotment history for the land.
       ``(c) Foreclosure.--
       ``(1) In general.--Notwithstanding any other provision of 
     law, an owner or operator that is a party to a contract 
     entered into under this chapter may not be required to make 
     repayments to the Secretary of amounts received under the 
     contract if--
       ``(A) the land that is subject to the contract has been 
     foreclosed on; and
       ``(B) the Secretary determines that forgiving the 
     repayments is appropriate in order to provide fair and 
     equitable treatment.
       ``(2) Resumption of control.--
       ``(A) In general.--This subsection shall not void the 
     responsibilities of such an owner or operator under the 
     contract if the owner or operator resumes control over the 
     land that is subject to the contract within the period 
     specified in the contract.
       ``(B) Contract applicability.--On the resumption of the 
     control over the land by the owner or operator, the 
     provisions of the contract in effect on the date of the 
     foreclosure shall apply.

     ``SEC. 1238C. DUTIES OF THE SECRETARY.

       ``In return for a contract entered into by an owner or 
     operator under section 1238B, the Secretary shall--
       ``(1) share the cost of carrying out on the land carbon 
     sequestration practices specified in the contract for which 
     the Secretary determines that cost sharing is appropriate and 
     in the public interest;
       ``(2) for a period of years not in excess of the term of 
     the contract, pay an annual rental payment in an amount 
     necessary to compensate for--
       ``(A) the use of carbon sequestration practices on the 
     land; and
       ``(B) the retirement of any cropland base and allotment 
     history that the owner or operator agrees to retire 
     permanently; and
       ``(3) provide conservation technical assistance to assist 
     the owner or operator in carrying out the contract.

     ``SEC. 1238D. PAYMENTS.

       ``(a) Time of Payment.--The Secretary shall provide payment 
     for obligations incurred by the Secretary under a contract 
     entered into under this chapter--
       ``(1) with respect to any cost-sharing payment obligation 
     incurred by the Secretary, as soon as practicable after the 
     obligation is incurred; and
       ``(2) with respect to any annual rental payment obligation 
     incurred by the Secretary--
       ``(A) as soon as practicable after October 1 of each 
     calendar year; or
       ``(B) at the option of the Secretary, at any time before 
     that date during the year in which the obligation is 
     incurred.
       ``(b) Cost-Sharing Payments.--
       ``(1) In general.--In making cost-sharing payments to an 
     owner or operator under a contract entered into under this 
     chapter, the Secretary shall pay not more than 50 percent of 
     the cost of carrying out carbon sequestration practices 
     required under the contract for which the Secretary 
     determines that cost-sharing is appropriate and in the public 
     interest.
       ``(2) Maximum amount.--The Secretary shall not make any 
     payment under this chapter to the extent that the total 
     amount of cost-sharing payments provided to an owner or 
     operator for carbon sequestration practices from all sources 
     would exceed 100 percent of the total cost of carrying out 
     the practices.
       ``(3) Other federal assistance.--An owner or operator shall 
     not be eligible to receive or retain cost-share assistance 
     for land under this subsection if the owner or operator 
     receives any other Federal cost-share assistance under this 
     subsection with respect to the land under any other provision 
     of law.
       ``(c) Rental Payments.--
       ``(1) In general.--In determining the amount of annual 
     rental payments to be paid to owners and operators for 
     carrying out carbon sequestration practices, the Secretary 
     may consider, among other factors, the amount necessary to 
     encourage owners or operators of land to participate in the 
     program established by this chapter.
       ``(2) Bids or other means.--The amounts payable to owners 
     or operators in the form of rental payments under contracts 
     entered into under this chapter may be determined through--
       ``(A) the submission of bids for such contracts by owners 
     and operators in such manner as the Secretary may prescribe; 
     or
       ``(B) such other means as the Secretary determines are 
     appropriate.
       ``(3) Factors.--In determining the acceptability of 
     contract offers, the Secretary--
       ``(A) shall take into consideration the extent to which 
     enrollment of the land that is the subject of the contract 
     offer would increase the sequestration of carbon in 
     accordance with section 1238A;
       ``(B) may take into consideration the extent to which 
     enrollment of the land that is the subject of the contract 
     offer would improve soil resources, water quality, or 
     wildlife habitat, or provide other environmental benefits; 
     and
       ``(C) may establish different criteria in various States 
     and regions of the United States based on the extent to which 
     the sequestration of carbon, water quality, or wildlife 
     habitat may be improved or erosion may be abated.
       ``(d) Form of Payment.--
       ``(1) In general.--Except as otherwise provided in this 
     section, payments under this chapter--
       ``(A) shall be made in cash or in the form of in-kind 
     commodities in such amount and on such time schedule as is 
     agreed on by the owner or operator and specified in the 
     contract; and
       ``(B) may be made in advance of determination of 
     performance.
       ``(2) In-kind commodities.--If the payment is made with in-
     kind commodities, the payment shall be made by the Commodity 
     Credit Corporation--
       ``(A) by delivery of the commodity involved to the owner or 
     operator at a warehouse or other similar facility located in 
     the county in which the land subject to the contract is 
     located or at such other location as is agreed to by the 
     Secretary and the owner or operator;
       ``(B) by the transfer of negotiable warehouse receipts; or
       ``(C) by such other method, including the sale of the 
     commodity in commercial markets, as is determined by the 
     Secretary to be appropriate to enable the owner or operator 
     to receive efficient and expeditious possession of the 
     commodity.
       ``(3) Substitution in cash.--If stocks of a commodity 
     acquired by the Commodity Credit Corporation are not readily 
     available to make full payment in kind to the owner or 
     operator, the Secretary may substitute full or partial 
     payment in cash for payment in kind.
       ``(4) State carbon sequestration program.--Payments to an 
     owner or operator under a special carbon sequestration 
     program described in subsection (f)(4) shall be in the form 
     of cash only.
       ``(e) Payment to Others.--If an owner or operator that is 
     entitled to a payment under a contract entered into under 
     this chapter

[[Page S8290]]

     dies, becomes incompetent, is otherwise unable to receive a 
     payment under this chapter, or is succeeded by another person 
     that renders or completes the required performance, the 
     Secretary shall make the payment, in accordance with 
     regulations promulgated by the Secretary and without regard 
     to any other provision of law, in such manner as the 
     Secretary determines is fair and reasonable in light of all 
     the circumstances.
       ``(f) Payment Limitations.--
       ``(1) Total amount.--The total amount of rental payments, 
     including rental payments made in the form of in-kind 
     commodities, made to a person under this chapter for any 
     fiscal year may not exceed $50,000.
       ``(2) Amount per acre.--The amount of rental payments made 
     to a person under this chapter for any fiscal year may not 
     exceed $20 per acre.
       ``(3) Regulations.--
       ``(A) In general.--The Secretary shall issue regulations--
       ``(i) defining the term `person' as used in this 
     subsection; and
       ``(ii) prescribing such rules as the Secretary determines 
     are necessary to ensure a fair and reasonable application of 
     the limitation contained in this subsection.
       ``(B) Corporations.--The regulations issued by the 
     Secretary on December 18, 1970, under section 101 of the 
     Agricultural Act of 1970 (7 U.S.C. 1307) shall be used to 
     determine whether corporations and their stockholders may be 
     considered to be separate persons under this subsection.
       ``(4) Other payments.--Rental payments received by an owner 
     or operator shall be in addition to, and shall not affect, 
     the total amount of payments that the owner or operator is 
     otherwise eligible to receive under--
       ``(A) the Federal Agriculture Improvement and Reform Act of 
     1996 (Public Law 104-127), including the Agricultural Market 
     Transition Act (7 U.S.C. 7201 et seq.);
       ``(B) the Food, Agriculture, Conservation, and Trade Act of 
     1990 (Public Law 101-624); or
       ``(C) the Agricultural Act of 1949 (7 U.S.C. 1421 et seq.).
       ``(5) State carbon sequestration program.--
       ``(A) In general.--This subsection and section 1305(f) of 
     the Agricultural Reconciliation Act of 1987 (7 U.S.C. 1308 
     note; Public Law 100-203) shall not be applicable to payments 
     received by a State, political subdivision, or agency of a 
     State or political subdivision in connection with agreements 
     entered into under a special carbon sequestration program 
     carried out by that entity that has been approved by the 
     Secretary.
       ``(B) Payments to states and political subdivisions.--The 
     Secretary may enter into such agreements for payments to 
     States, political subdivisions, or agencies of States or 
     political subdivisions as the Secretary determines will 
     advance the purposes of this chapter.
       ``(g) 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.
       ``(h) Other Assistance.--In addition to any payment under 
     this chapter, an owner or operator may receive cost-share 
     assistance, rental payments, or tax benefits from a State or 
     political subdivision of a State for enrolling land in the 
     carbon sequestration program.
       ``(i) Treatment of Payments.--Payments received by an owner 
     or operator under this chapter shall be considered rentals 
     from real estate for the purposes of section 1402(a)(1) of 
     the Internal Revenue Code of 1986.

     ``SEC. 1238E. CHANGES IN OWNERSHIP; MODIFICATION OR 
                   TERMINATION OF CONTRACTS.

       ``(a) Changes in Ownership.--
       ``(1) In general.--Subject to paragraphs (2) and (3), no 
     contract shall be entered into under this chapter concerning 
     land with respect to which the ownership has changed in the 
     1-year period preceding the first year of the contract period 
     unless--
       ``(A) the new ownership was acquired by will or succession 
     as a result of the death of the previous owner;
       ``(B) the new ownership was acquired before April 1, 2001;
       ``(C) the Secretary determines that the land was acquired 
     under circumstances that give adequate assurances that the 
     land was not acquired for the purpose of enrolling the land 
     in the carbon sequestration program; or
       ``(D) the ownership change occurred because of foreclosure 
     on the land and the owner of the land immediately before the 
     foreclosure exercises a right of redemption from the mortgage 
     holder in accordance with State law.
       ``(2) Limitations.--Paragraph (1) shall not--
       ``(A) prohibit the continuation of an agreement by a new 
     owner after an agreement has been entered into under this 
     chapter; or
       ``(B) require a person to own the land as a condition of 
     eligibility for entering into the contract if the person--
       ``(i) has operated the land to be covered by a contract 
     under this section for at least 1 year preceding the later 
     of--

       ``(I) the date of the contract; or
       ``(II) April 1, 2001; and

       ``(ii) controls the land for the contract period.
       ``(3) Options for new owner or operator.--If, during the 
     term of a contract entered into under this chapter, an owner 
     or operator of land subject to the contract sells or 
     otherwise transfers the ownership or right of occupancy of 
     the land, the new owner or operator of the land may--
       ``(A) continue the contract under the same terms or 
     conditions;
       ``(B) enter into a new contract in accordance with this 
     chapter; or
       ``(C) elect not to participate in the program established 
     by this chapter.
       ``(b) Modification of Contracts.--The Secretary may modify 
     a contract entered into with an owner or operator under this 
     chapter if--
       ``(1) the owner or operator agrees to the modification; and
       ``(2) the Secretary determines that the modification is 
     desirable--
       ``(A) to carry out this chapter;
       ``(B) to facilitate the practical administration of this 
     chapter; or
       ``(C) to achieve such other goals as the Secretary 
     determines are appropriate, consistent with this chapter.
       ``(c) Termination of Contracts.--
       ``(1) In general.--The Secretary may terminate a contract 
     entered into with an owner or operator under this chapter 
     if--
       ``(A) the owner or operator agrees to the termination; and
       ``(B) the Secretary determines that the termination would 
     be in the public interest.
       ``(2) Congressional notice.--Not later than 90 days before 
     taking any action to terminate under paragraph (1) a contract 
     entered into under this chapter, the Secretary shall provide 
     to the Committee on Agriculture of the House of 
     Representatives and the Committee on Agriculture, Nutrition, 
     and Forestry of the Senate written notice of the action.

     ``SEC. 1238F. BASE HISTORY.

       ``(a) In General.--A reduction, based on a ratio between 
     the total cropland acreage on the farm and the acreage placed 
     in the carbon sequestration program authorized by this 
     chapter, as determined by the Secretary, shall be made during 
     the period of the contract, in the aggregate, in crop bases, 
     quotas, and allotments on the farm with respect to crops for 
     which there is a production adjustment program.
       ``(b) Preservation of Base and Allotment History.--
     Notwithstanding sections 1211 and 1221, the Secretary, by 
     regulation, may provide for preservation of cropland base and 
     allotment history applicable to acreage on which carbon 
     sequestration practices are carried out under this section, 
     for the purpose of any Federal program under which the 
     history is used as a basis for participation in the program 
     or for an allotment or other limitation in the program, 
     unless the owner and operator agree under the contract to 
     retire permanently that cropland base and allotment history.
       ``(c) Extension of Base and Allotment History.--
       ``(1) In general.--The Secretary shall offer the owner or 
     operator of a farm or ranch an opportunity to extend the 
     preservation of cropland base and allotment history under 
     subsection (b) for such time as the Secretary determines is 
     appropriate after the expiration date of a contract under 
     this chapter at the request of the owner or operator.
       ``(2) Conditions.--In return for the extension, the owner 
     or operator shall agree to continue to abide by the terms and 
     conditions of the original contract, except that the owner 
     or operator shall receive no additional cost share, annual 
     rental, or bonus payment.
       ``(d) Violation of Contracts.--In addition to any other 
     remedy prescribed by law, the Secretary may reduce or 
     terminate the quantity of cropland base and allotment history 
     preserved under this section for acreage with respect to 
     which there has occurred a violation of a term or condition 
     of a contract entered into under this chapter.

     ``SEC. 1238G. CARBON MONITORING PILOT PROGRAMS.

       ``(a) Establishment.--
       ``(1) In general.--The Secretary, in cooperation with the 
     Consortium for Agricultural Soils Mitigation of Greenhouse 
     Gases, shall carry out 4 or more pilot programs to develop, 
     demonstrate, and verify the best management practices for 
     carbon monitoring on agricultural land.
       ``(2) Criteria.--The Secretary shall select pilot programs 
     based on--
       ``(A) the merit of the proposed program; and
       ``(B) the diversity of soil sequestration types available 
     at the site of the proposed program.
       ``(b) Requirements.--Pilot programs carried out under this 
     section shall--
       ``(1) involve agricultural producers in the development and 
     verification of best management practices for carbon 
     monitoring on agricultural land;
       ``(2) involve research and testing of the best management 
     practices in various soil types and climactic zones;
       ``(3) analyze the effects of the adoption of the best 
     management practices on watershed levels; and
       ``(4) use the results of the research conducted under the 
     program to--
       ``(A) encourage agricultural producers to adopt the best 
     management practices;
       ``(B) analyze the economic impact of the best management 
     practices; and
       ``(C) develop the best management practices on a regional 
     basis for watersheds and States not participating in the 
     pilot programs.

     ``SEC. 1238H. FUNDING.

       ``The Secretary shall use to carry out this chapter 
     (including to pay administrative

[[Page S8291]]

     costs incurred by the Natural Resources Conservation Service 
     in carrying out this chapter)--
       ``(1) funds of the Commodity Credit Corporation made 
     available under section 1241(a)(3); and
       ``(2) at the option of, and transfer by, another Federal 
     agency, funds of the agency that are available to the agency 
     for climate change initiatives or greenhouse gas emission 
     reductions.''.

     SEC. 302. FUNDING.

       Section 1241(a)(3) of the Food Security Act of 1985 (16 
     U.S.C. 3841(a)(3)) is amended by striking ``chapter 4'' and 
     inserting ``chapters 2 and 4''.

     SEC. 303. REGULATIONS.

       (a) Proposed Regulations.--Not later than 180 days after 
     the date of enactment of this title, the Secretary of 
     Agriculture shall publish in the Federal Register proposed 
     regulations for carrying out this title and the amendments 
     made by this title.
       (b) Final Regulations.--Not later than 60 days after the 
     date of publication of the proposed regulations, the 
     Secretary shall promulgate final regulations for carrying out 
     this title and the amendments made by this title.

     SEC. 304. EFFECTIVE DATES.

       (a) In General.--Except as provided in subsection (b), this 
     title and the amendments made by this title take effect on 
     January 1, 2002.
       (b) Regulations.--Section 203 takes effect on the date of 
     enactment of this title.

                           TITLE IV--REPORTS

     SEC. 401. INITIAL REPORT.

       (a) In general.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary of Energy, in 
     consultation with the Secretary of Agriculture and other 
     appropriate Federal agencies, shall submit to Congress a 
     report on--
       (1) the quantity of carbon contained in the forest carbon 
     reservoir of the National Forest System and the methodology 
     and assumptions used to determine that quantity;
       (2) 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;
       (3) the role of forests in the carbon cycle; and
       (4) the contributions of United States forestry to the 
     global carbon budget.
       (b) Contents.--The report shall include an assessment of 
     the impact of forest management actions on timber harvests, 
     wildlife habitat, recreation, forest health, and other 
     statutory objectives of National Forest System management.

     SEC. 402. ANNUAL REPORT.

       (a) In general.--The Secretary of Agriculture, acting 
     through the Chief of the Forest Service, and the Secretary of 
     Energy shall jointly submit an annual report on the results 
     of the carbon storage program under section 2404(b) of the 
     Global Climate Change Prevention Act of 1990 and carbon 
     sequestration program under section 1238 of the Food Security 
     Act of 1985 to--
       (1) the Committee on Agriculture of the House of 
     Representatives;
       (2) the Committee on Agriculture, Nutrition and Forestry of 
     the Senate;
       (3) the Committee on Resources of the House of 
     Representatives; and
       (4) the Committee on Energy and Natural Resources of the 
     Senate.
       (b) Guidelines.--The Secretary of Agriculture, in 
     consultation with the Carbon Advisory Council established 
     under section 1610(b) of the Energy Policy Act of 1992, shall 
     develop guidelines for the annual report that--
       (1) require a statement of the quantity of carbon storage 
     realized;
       (2) include the data used to monitor and verify the carbon 
     storage;
       (3) are consistent with reporting requirements of the 
     Energy Information Administration; and
       (4) prevent soil carbon and forest carbon management 
     actions from being counted twice.
       (c) Contents.--The report shall include--
       (1) the information required by the guidelines developed 
     under section 1610(h) of the Energy Policy Act of 1992;
       (2) an assessment of the effectiveness of carbon monitoring 
     and verification;
       (3) a report on carbon activities associated with 
     cooperative agreements for the forest carbon program under 
     section 2404(b)(1) of the Global Climate Change Prevention 
     Act of 1990;
       (4) a State forest carbon program compliance report 
     established by--
       (A) reviewing reports submitted by States under section 
     403;
       (B) verifying compliance with the guidelines developed 
     under subsection 1610(h) of the Energy Policy Act of 1992;
       (C) notifying the State of compliance status;
       (D) notifying the State of any corrections that are needed 
     to attain compliance; and
       (E) establishing an opportunity for resubmission by the 
     State; and
       (5) an assessment of the effectiveness of the carbon 
     sequestration program established under section 1238 of the 
     Food Security Act of 1985, including a report on--
       (A) sequestration improvements made as a result of the 
     carbon sequestration program;
       (B) sequestration practices on land enrolled in the carbon 
     sequestration program; and
       (C) compliance with contracts entered into under the carbon 
     sequestration program.

     SEC. 403. STATE REPORT.

       Entities participating in cooperative agreements for forest 
     carbon programs under section 2404(b)(1) of the Global 
     Climate Change Prevention Act of 1990, and States receiving 
     assistance to establish a revolving loan fund under section 
     2404(b)(2) of that Act, shall--
       (1) monitor and verify carbon storage achieved under the 
     forest carbon program in accordance with guidelines developed 
     under section 1610(h)(2) of the Energy Policy Act of 1992; 
     and
       (2) submit an annual report on the results of the carbon 
     storage program to--
       (A) the Secretary of Agriculture; and
       (B) any nongovernmental organization or person that 
     provides funding for the carbon storage program.
                                  ____


        The Carbon Sequestration and Reporting Act--Bill Summary


                                SUMMARY

       The purposes of the bill are to develop monitoring and 
     verification systems for carbon reporting in forestry and 
     agricultural soils, to increase carbon sequestration in 
     forests and agricultural soils by encouraging private sector 
     investment in forestry and conservation in agriculture, and 
     to promote both the forestry and agriculture economies in the 
     United States. This bill is a combination of two previously 
     introduced bills, S. 820 and S. 785, introduced by Senators 
     Wyden and Brownback respectively.
       Title I: Carbon Advisory Council: Guidelines for Accurate 
     Carbon Accounting for Forests. The bill directs the Secretary 
     of Energy and 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.
       Title II: Forest Carbon Management: State Revolving Loan 
     Programs/Cooperative Agreements. The bill provides assistance 
     to plant and manage underproducing or understocked forests to 
     increase carbon sequestration by authorizing a state-run 
     revolving loan program. 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).
       Title III: Carbon Sequestration Program: Agriculture 
     Conservation Program. The bill authorizes USDA contracts for 
     a minimum of 10 years for farmers who wish to conserve land, 
     improve water quality and sequester carbon by employing 
     conservation practices, like no-till farming and the use of 
     buffer strips to enhance carbon sequestration. The USDA would 
     be required--in conjunction with other agencies--to finalize 
     criteria for measuring the carbon-storing ability of various 
     conservation practices. This bill allows farmers to submit 
     plans on how they would store carbon on their land. 
     Landowners already employing carbon-conservation practices 
     would also be eligible. Participation in this program is 
     completely voluntary, and is limited to 20 million total 
     acres at a maximum $20 per acre.
       Title IV Reports: 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. Forestry and Agriculture 
     Reporting: This bill will provide for a documented carbon 
     database reported by participants to the Administrator of 
     Energy Information Administration. The Administrator shall 
     develop forms to keep track of both domestic and 
     international sequestration gains. This data will provide a 
     road map for dealing with climate change through independent 
     carbon market offsets in the future.
                                 ______