[Senate Report 106-179]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 310
106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-179

======================================================================



 
          NATIONAL SUSTAINABLE FUELS AND CHEMICALS ACT OF 1999

                                _______
                                

                October 8, 1999.--Ordered to be printed

                                _______


 Mr. Lugar, from the Committee on Agriculture Nutrition, and Forestry, 
                        submitted the following

                              R E P O R T

                          [To accompany S.935]

    The Committee on Agriculture, Nutrition and Forestry, to 
which was referred S. 935, a bill to amend the National 
Agricultural Research, Extension, and Teaching Policy Act of 
1977 to authorize research to promote the conversion of biomass 
into biobased industrial products, having considered the same, 
reports favorably thereon with amendments and recommends that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
Background and need for the legislation..........................     1
    Biobased products............................................     1
    Improving American strategic security........................     4
    Cleaning the air.............................................     4
    Strengthening rural communities..............................     6
    Obstacles to be overcome.....................................     7
Purpose and summary of legislation...............................     9
Section by section analysis......................................    10
Legislative history and votes in the committee...................    18
Cost estimate....................................................    22
Evaluation of regulatory impact..................................    25
Changes in Existing law..........................................    25

                Background and Need for the Legislation


                           BIOBASED PRODUCTS

    Plants, living and dead, are an enormous store of solar 
energy collected via photosynthesis. As a consequence, grasses, 
weeds, agricultural crops and residues, and other organic 
material form a vast and sustainable energy resource. From this 
sustainable resource, referred to as ``biomass,'' a host of 
biobased industrial products can be processed. These include 
fuels, notably ethanol, important commodity chemicals like 
ethylene or acetic acid, paint, adhesives, building materials 
and the production of electrical power. Conversion of biomass 
into biobased industrial products offers outstanding potential 
for benefit to the national interest through better use of 
agricultural resources, improved strategic security and balance 
of payments, revitalized rural economies, improved 
environmental quality, near-zero net greenhouse gas emissions, 
technology export, and sustainable resource supply.
    Using nature's renewable raw material for production of 
needed fuels, chemicals and energy is not a new idea. What is 
new, however, is that a better understanding of chemistry and 
molecular biology has led to the development of advanced 
biotechnologies and processing techniques for efficiently 
converting plants to energy. With these advances, it is now 
possible to envisage a future where the world's thirst for 
additional sources of energy is fueled by biomass--a living, 
renewable raw material.
    Although a focused national research effort will be 
necessary before biobased products are commercially viable, a 
bright future fueled by renewable energy is not a distant 
dream. Already the promise of advanced biotechnology can be 
seen in the modern corn and soybean processing industry. Corn 
and soybean mills are working examples of biorefineries that 
produce an array of useful food, chemical feed and fuel 
products including ethanol, corn starch, oils, sugars and 
animal feeds. Through investments in research and process 
technology, there have been dramatic improvements in the 
efficiency of the refinement process and an increase in the 
number of products produced from corn and soybeans. As one 
example, the cost of producing corn-derived ethanol has dropped 
from $4.63 to $1.22 per gallon in constant dollars since 1979. 
The corn production and refining industry alone is responsible 
for 154,000 direct and indirect jobs and contributes more than 
$28 billion per year to the American economy.
    Building from this base of industrial experience, talented 
people and infrastructure, biorefineries of the future will be 
capable of using the entire corn or soybean plant--kernel, 
stalks, husks and leaves--to produce an even greater array of 
consumer products. In addition to using the edible parts of 
corn or other feed grains, future biorefineries will be capable 
of processing generic grasses, dedicated energy crops and 
agricultural residues, such as rice straw or sugar cane 
bagasse, for the production of biofuels and biochemicals.
    Expansion of the resource base to include virtually all 
plant matter places biomass on par with petroleum and serves to 
lower raw material costs. America produces vast quantities of 
agricultural residues. According to the 1999 Report by the 
National Research Council (NRC) of the National Academy of 
Sciences, enough waste biomass is generated each year to supply 
domestic consumption of all industrial chemicals that can be 
made readily from biomass and also contribute to the nation's 
liquid transportation fuel needs. Corn stover constitutes a 
significant proportion of waste biomass and is particularly 
attractive when considered as a potential raw material because 
land and planting costs are already accounted through sale of 
the grain.
    Biobased products have the potential to improve 
sustainability of natural resources, environmental quality and 
national security while competing economically. The diversity 
of biobased products and their many uses are staggering. 
According to the NRC Report, biobased products fall into three 
categories: commodity chemicals (including fuels), speciality 
chemicals and materials. Some of these products result from the 
direct chemical or physical processing of biomass while other 
products serve as intermediaries or precursors to other organic 
chemicals required for the production of paints, solvents, 
clothing, synthetic fibers and plastics. Ethanol is an example 
of a biobased product that can be used directly as a high 
performance fuel or as an intermediate chemical. Intermediate 
chemicals like ethylene and acetic acid are ubiquitous in a 
modern economy, contributing heavily to the high standard of 
living enjoyed by Americans. Expanding the United States' 
strategic reserves of intermediate chemicals with biobased raw 
materials is important to meet an increasing demand and 
mitigate economic disruptions caused by oil shortages.
    The case for promoting technology that will supply 
biofuels, biochemicals and biopower can be made independently 
of whether the world will continue to enjoy low cost supplies 
of petroleum. However, the Committee is aware of numerous 
scientific studies that indicate that the world's supply of 
conventional oil is nearly half exhausted and that with each 
passing year, the demand for petroleum-derived energy 
increases. Historically, individual oil wells, oil fields, and 
national petroleum outputs have all shown a decline in 
production rates when the level of reserves reaches 50 percent. 
This is estimated by two noted geologists to occur as early as 
2010. A decline in production combined with steadily rising 
energy demands, may lead to price increases or volatility in 
petroleum markets. Although the Committee is unable to predict 
the accuracy of oil reserve estimates and the future price of 
oil, it is clear that global demand for petroleum will increase 
with population growth and improving standards of living. The 
Committee believes there is a need to diversify America's 
energy options and make greater use of renewable materials as 
oil and gas reserves are gradually depleted and supply 
interruptions threaten global stability and the world's 
economy.
    Underscoring the possibility that global patterns of energy 
usage will soon begin to change dramatically is a 1997 internal 
study on world energy supplies by Shell International 
Petroleum. Shell's preferred scenario for sustained growth sees 
renewable energy sources, including biomass fuels, becoming 
significant by 2020 and exceeding fossil fuel use by 2060. 
Fossil fuels' production rates plateau after the next century's 
second decade. Backing its study with action, Shell recently 
established a fifth core business organization, with plans to 
invest nearly half a billion dollars in renewable energy 
projects over the next five years.

                 IMPROVING AMERICAN STRATEGIC SECURITY

    Recent pipeline disputes in the Caspian Sea serve as a 
reminder that oil is a magnet for conflict, arising in many 
instances from wrangling over the world's few locations that 
contain abundant supplies. Some two-thirds of the world's 
petroleum reserves are located in a single geographic region--
the oil fields of the Persian Gulf and Caspian Sea.
    As long as our dependence on oil from the Persian Gulf 
continues, Americans can never be confident that there will not 
be a repeat of the international crises of 1973, 1979, 1990 or 
worse. In the summer of 1990, Saddam Hussein was about 100 
miles from controlling half the world's oil reserves. The world 
economy could be seriously damaged by a major cutoff of oil 
supplies, or even by rapid price hikes associated with 
interruptions in supply.
    By contrast, plants, crops and trees are much more widely 
dispersed throughout the world. As such, biomass has the 
potential to minimize the chance for conflict arising from 
localized or state control of an internationally-sought 
commodity. The Committee believes it would be desirable for the 
United States to limit its over-dependence on oil imports 
through aggressive development of technology for producing 
fuels and chemicals from biomass.
    A November 1997 Report of the President's Council of 
Advisors on Science and Technology (PCAST) calculates that 4.7 
quadrillion BTUs of bioenergy (1 quad = 10\15\), or five 
percent of the total energy demand of the United States in 
1995, could be available at competitive prices by 2015. Half of 
this amount would come from agricultural residues, with the 
balance supplied by just 18 million acres of dedicated energy 
crops. Under one scenario, this vast bioenergy resource would 
produce 31 billion gallons of ethanol and 12 gigawatts of 
electricity as a byproduct of making the liquid fuel. The 
result: America's gasoline requirements would be reduced by as 
much as 22 percent, saving more than $10 billion per year on 
our bill for imported oil.
    With clear potential to be sustainable, low cost and high 
performance, biobased fuels are compatible with current and 
future transportation systems and the best means of reducing 
American dependence on imported oil. The possibility of using 
biomass as a sustainable raw material for fuels and chemicals 
offers a way to reduce America's over-dependence on unstable 
nations of the Middle East and dramatically improve our 
strategic security.

                            CLEANING THE AIR

    Biobased fuels are an outstanding way to curb greenhouse 
gas emissions that threaten climate stability. Because biobased 
fuels are derived from renewable plant sources, they do not add 
to the carbon dioxide content of the atmosphere, unlike fuels 
derived from fossil sources such as oil, natural gas or coal. 
On this point there is virtual consensus among scientists: when 
considered as a part of a complete cycle of growth, 
fermentation and combustion, the use of fuels from biomass, 
once optimized, will contribute no net carbon dioxide to the 
atmosphere.
    The PCAST Report estimates that using biomass from 
agricultural residues and energy crops grown on 18 million 
acres would produce 4.7 quads of energy per year (equivalent to 
5 percent of U.S. energy in 1995) and reduce U.S. emissions of 
carbon dioxide by at least six percent. This much biomass could 
be available at attractive costs by 2015. A Department of 
Energy study conducted by five national laboratories, 
``Scenarios of U.S. Carbon Reductions,'' is more optimistic, 
estimating that biomass has the potential to reduce U.S. carbon 
emissions by up to ten percent of current emissions by 2010. 
The Committee believes a shift to biomass fuels stands as an 
excellent way to introduce an environmentally friendly energy 
technology that has a chance of both enjoying widespread 
political and economic support and having a decisive impact on 
the risk of climate change.
    Plants and trees also act as a sink for carbon dioxide, 
storing increasing amounts as they grow. Although the ability 
of rapidly grown and harvested plants to serve as carbon sinks 
is limited, there is likely to be a positive benefit through 
the use of biomass energy systems. The evaluation of carbon 
cycle and sequestration by plants and trees is complex and 
deserves further research.
    Combustion and processing of fossil fuels release chemicals 
that pollute the air, water and soil. Biochemicals and 
biomaterials can provide functionally superior replacements for 
many products currently derived from petroleum and have clear 
potential for product life cycles that are more environmentally 
benign than their fossil fuel counterparts.
    The compatibility of water with biomass-derived products, 
including ethanol, is an important environmental consideration 
and a powerful demonstration of green chemistry. If a 
supertanker loaded with ethanol were to run aground, most of 
the spill would evaporate, with the balance rapidly broken down 
by sea water. Another example of the environmental benefits of 
biobased products is provided by poly-lactic acid (PLA), a 
polyester substitute manufactured from corn. After a product 
lifetime equivalent to petroleum-based polyester, PLA fabrics 
readily break down in soil or salt water, freeing valuable 
space in landfills.
    Advanced biomass processing technologies reduce waste. 
America generates vast amounts of agriculture residues, 280 
million metric tons according to the NRC Report. Corn stover, 
rice straw, sugar cane bagasse and chicken litter are examples 
of agricultural waste that present disposal challenges. Rice 
straw is often burned, a practice soon to be banned by the 
State of California as the burning contributes to air 
pollution. In the California's Sacramento Valley, farmers pay 
$30 per acre to plow rice straw back into the soil, a cost that 
diminishes their profits by one-quarter. The ability to convert 
rice waste into a high-valued added product, such as acetic 
acid (widely used in the food, textile and pharmaceutical 
industries) or ethylene (an important commodity chemical 
because of the value of its numerous derivatives such as 
polyethalene or acetaldehyde) would provide an additional 
source of revenue for the farmer while contributing to the 
clean-up of America's air. What is now environmentally 
challenging waste becomes a valued commodity product 
manufactured from a sustainable and home-grown raw material 
resource.

                    STRENGTHENING RURAL COMMUNITIES

    The NRC Report estimates the potential market for 
biochemicals and biomaterials, including adhesives, polymers 
and oils, to be worth hundreds of billions of dollars per year. 
A significant percentage of this amount would return to those 
that till America's fields, providing a sustainable source of 
revenue that would help strengthen rural economies. Additional 
commodity markets will be created for agricultural products, 
diversifying and increasing farm income.
    A great strength of the new biotechnologies for biomass 
conversion is that virtually any plant, crop or crop residue 
becomes a potential source of income. In addition to extra 
income, this attribute provides the farmer with increased 
flexibility regarding crop selection and stewardship of the 
land. Crops or grasses planted to enrich the soil, prevent 
erosion or improve local environmental conditions can also be 
periodically harvested and used as a raw material for biobased 
products. Scientists who have analyzed energy crop production 
agree that a significant number of issues related to its 
environmental impacts are incompletely understood, and urge a 
cautious approach and further research. Sound land use policies 
must be followed to protect wildlife habitat and other 
environmental concerns, but professional land use techniques 
should readily accomplish this.
    Biobased products offer a real possibility of increased 
rural employment. Biobased industries would likely be sited 
near the source of the biomass raw material, whether energy 
crops or agricultural residues, so as to minimize 
transportation costs. While predictions of employment for an 
emerging industry depend on extrapolation or approximation, the 
NRC Report envisions at least one million additional jobs 
processing agricultural and forest raw materials to chemicals 
only, without taking fuels such as ethanol into account.
    For less developed countries, often based on an agrarian 
society, the impact of biomass is likely to be far greater. 
Local communities would be able to generate their own supplies 
of fuel and farmers could earn extra income simply by 
collecting agricultural wastes or harvesting grasses or 
bioenergy crops. If family income is a few hundred dollars per 
year, earning even an extra $50-$100 could mean an improved 
quality of life. Land damaged by slash-and-burn agriculture 
could be planted with native grasses or trees, replenishing the 
soil while at the same time providing a local source of income 
and fuel. The cleanliness of renewable fuel technologies makes 
them particularly attractive to lesser developed countries that 
often lack a sophisticated infrastructure or network of 
regulatory controls.
    At a time when many American farmers are struggling 
economically, technologies for producing fuels and chemicals 
from biomass offer new sources of income for farmers and a 
diversification of agricultural markets. The same technologies 
that add value to corn stalks and leaves will allow farmers to 
rotate their crops with grass and forage crops and still 
receive a good economic return. Biomass will become a commodity 
and farmers stand to benefit.

                        obstacles to be overcome

    In order for America to accrue the significant economic, 
environmental and strategic benefits offered by biobased 
products, the cost of making fuels, chemicals and electricity 
from biomass must become competitive with existing methods of 
production.
    The cost of biobased products, as with any product, is the 
sum of delivered raw material costs and processing costs. 
Industries for producing fuels and chemicals are characterized 
as having significant raw material costs and minimal processing 
costs, a result of more than a century of innovation and 
investment in petroleum refining. Biomass offers the intriguing 
possibility of being able to produce necessary consumer goods 
notable for minimal processing and raw material costs.
    Generally, the delivered raw material cost per ton of 
biomass is comparable (e.g. corn grain) or much less (e.g. corn 
stover) than the cost per ton of petroleum. Crude oil at $18 
per barrel is equivalent to corn at $27.75 per bushel or about 
$110 per ton for each. When compared on an energy equivalency 
basis, agricultural residues and wastes are often considerably 
cheaper than petroleum, even in some cases negative as when a 
farmer has to pay ``tipping fees'' to haul waste away. An 
appendix to the NRC Report concludes that corn stover and other 
similar agricultural residues can be harvested, collected and 
delivered to the processing plant for only $20 per ton. Unlike 
petroleum that arrives at a processing plant as extracted, 
biomass offers flexibility for optimization prior to 
processing. Optimization may be achieved through feedstock 
selection or altering feedstock characteristics (e.g. reduction 
in lignin content) and is expected to lead to future reductions 
in the cost for biobased products.
    Corn stover constitutes a significant fraction of the 
agricultural residues produced in the United States each year 
and is likely to be a primary source of biomass for a nascent 
biobased products industry. After accounting for stover tilled 
under to replenish the soil, 100 million metric tons of corn 
stover are available, an amount that would generate 10 billion 
gallons of ethanol, approximately six times the amount of 
ethanol currently produced. The NRC Report concludes: 
``Sufficient biological wastes exist to supply the carbon for 
all 100 million metric tons of organic carbon-based chemicals 
consumed annually in the United States as well as to provide 
part of the nation's fuel requirements.''
    Processing costs remain the largest hurdle to cost-
competitive biobased products. Ongoing research has 
demonstrated that significant cost reductions are possible in 
every step of biomass processing. Among the most exciting 
developments are new genetically modified enzymes capable of 
efficiently breaking down the cellulosic component of biomass. 
Although the cost of ethanol, for instance, is significantly 
higher than gasoline, there is no suggestion that biomass 
processing is more inherently complicated than petroleum 
refining. Rather, the chief reason for the high cost is that 
the world has invested far more effort toward developing 
efficient methods for processing petroleum.
    Research is essential to produce the innovations and 
technical improvements that will lower the cost of biobased 
products. At present, the U.S. is not funding a vigorous 
program in renewable technologies. Over the last two decades, 
the Department of Energy's research program has undergone a 
sharp decline, amounting to a fivefold funding drop in real 
terms since 1978. The 1997 PCAST Report called the biomass 
energy programs ``substantially underfunded and not ambitious 
enough with regard to longer-term research and development.''
    Similarly, research and development of biobased products 
carried out by agencies within the Department of Agriculture is 
lagging. According to testimony from Secretary Glickman before 
this Committee, the USDA currently spends $9 million annually 
on biofuels research and $63 million annually for research on 
new industrial uses of biobased products. Both accounts have 
declined in real terms over the past four years. Moreover, 
agencies within the Department--including the Agricultural 
Research Service, Forest Service, and the Cooperative State 
Research, Education and Extension Program--have shifted funds 
from biomass programs under their jurisdiction into other 
areas. In many instances, programs administered by the 
Department of Agriculture designed to achieve other goals could 
also be used for biomass research or demonstration projects.
    Because private sector investment often follows federal 
government commitment, industrial research and development has 
also reached new lows. These disturbing trends occur at a 
moment of national economic prosperity, when both time and 
resources exist for investing in the potential of biofuels. The 
Committee believes we cannot afford to wait for the next energy 
crisis to marshal our intellectual and industrial resources. 
Both departments should increase their institutional commitment 
toward making cost-competitive biomass processing a reality.
    Despite two Executive Orders, coordination between the 
Department of Energy and the Department of Agriculture 
regarding biomass processing research has been inadequate. 
Failure of the two Federal agencies with principal 
responsibility in this area to work together has resulted in a 
duplication of research efforts. Ultimately, both agencies will 
have to join forces in a coherent fashion, together with other 
relevant Federal agencies, if biobased products are to result 
in significant societal benefits.
    The Committee strongly believes that as the agency with 
prime responsibility for America's farming enterprise, the 
Department of Agriculture should assume a role equal and 
complementary to the Department of Energy's ongoing biomass 
research. Both agencies appear to split their biomass programs 
between basic research and commercialization projects. This has 
the effect of ignoring the critical middle of fundamental 
research that is focused on innovation and reduction in 
processing costs.
    In the PCAST Report, a distinguished panel of scientists 
and industrial experts compared a business-as-usual approach to 
that offered by a future shaped by vigorous Federal investments 
in energy technology: ``Under business-as-usual conditions, 
U.S. oil imports could increase from 8.5 million barrels per 
day at a cost of $64 billion dollars in 1996 to nearly 16 
million barrels per day at a cost of $120 billion in 2030. With 
continued R&D to increase domestic production from marginal oil 
supplies, an aggressive ethanol program (based on cellulosic 
biomass), and rapid development and penetration of the market 
by [efficient] light- and heavy-duty truck technologies, we 
estimate that this import could be reduced on the order of 6 
million barrels per day oil import demand in 2030.''
    The PCAST Report again succinctly frames the need for a 
focused Federal response: ``a plausible argument can be made 
that the security of the United States is at least as likely to 
be imperiled in the first half of the next century by the 
consequences of inadequacies in the energy options available to 
the world as by inadequacies in the capabilities of U.S. 
weapons systems. It is striking that the Federal government 
spends about twenty times more R&D money on the latter problem 
than on the former.''

                 Purpose and Summary of the Legislation

    The National Sustainable Fuels and Chemicals Act is 
designed to effect significant reductions in biomass processing 
costs through research that will lead to a better understanding 
of the relevant fundamental chemical, biological and physical 
processes. The Committee believes that a more complete 
understanding of the underlying fundamentals will lead to 
technological innovation and the means to substantially affect 
scale-sensitive national objectives such as sustainable 
resource supply, reduced greenhouse gas emissions, healthier 
rural economies, and improved strategic security and trade 
balances.
    The National Sustainable Fuels and Chemicals Act is an 
amendment to the National Agricultural Research, Extension, and 
Teaching Policy Act of 1977. At the heart of the legislation is 
a novel research Initiative, jointly administered by the 
Secretary of Agriculture and the Secretary of Energy, that 
authorizes research for the purpose of overcoming technical 
barriers to low cost biomass processing and gives priority 
funding to consortia composed of technical experts from 
academia, national laboratories, Federal and state research 
agencies, non-profit organizations and industry. Innovative in 
both purpose and structure, the Initiative will promote 
integrated research partnerships as the best means of 
overcoming technical challenges that span multiple research and 
engineering disciplines and of gaining better leverage from 
scarce Federal research funds. The bill authorizes $49 million 
per year for six years for the Sustainable Fuels and Chemicals 
Research Initiative. Given the potential benefits in improved 
national security, rural development and greenhouse gas 
reductions, this expenditure represents a very reasonable 
investment in America's future and is in line with 
recommendations from the 1997 PCAST report.
    While the Department of Agriculture and Department of 
Energy are the two lead Federal agencies pursuing research and 
development of biomass processing, other Departments have 
important stakeholder roles. To bring coherence and 
coordination to the Federal effort in biobased industrial 
products, this Act mandates formation of the Sustainable Fuels 
and Chemicals Board consisting of senior officials of the 
Department of the Interior, the Environmental Protection 
Agency, the National Science Foundation, the Office of Science 
and Technology Policy and other relevant agencies. The Board 
will be co-chaired by points of contact designated by the 
Secretary of Agriculture and the Secretary of Energy.
    To advise the Secretary of Agriculture and Secretary of 
Energy on the technical focus and direction of the request for 
proposals issued under the research Initiative, a Sustainable 
Fuels and Chemicals Technical Advisory Committee is 
established. Modeled on the National Defense Sciences Board, 
the Advisory Committee consists of experts from academia, 
prominent engineers and scientists, representatives from 
commodity trade organizations and environmental or conservation 
groups. As an independent panel of technical experts, the 
Sustainable Fuels and Chemicals Technical Advisory Committee 
will serve an important role in the strategic planning and 
oversight of research carried out under the Initiative.

                      Section-by-Section Analysis


Sec. 1. Short title

    This Act may be cited as the ``National Sustainable Fuels 
and Chemicals Act of 1999''.

Sec. 2. Findings

    This section makes the following findings by Congress:
          (1) conversion of biomass into biobased industrial 
        products offers outstanding potential for benefit to 
        the national interest through improved strategic 
        security and balance of payments, healthier rural 
        economies, improved environmental quality, near-zero 
        net greenhouse gas emissions, technology export, and 
        sustainable resource supply;
          (2) biomass is widely available at prices that are 
        competitive with low cost petroleum; and the key 
        technical challenges to be overcome in order for 
        biobased industrial products to be cost competitive are 
        finding new technology and reducing the cost of 
        technology for converting biomass into desired biobased 
        industrial products;
          (3) biobased fuels, such as ethanol, have the clear 
        potential to be sustainable, low cost, and high 
        performance fuels that are compatible with both current 
        and future transportation systems and provide near zero 
        net greenhouse gas emissions;
          (4) biobased chemicals can provide functional 
        replacements for essentially all organic chemicals that 
        are currently derived from petroleum; and have the 
        clear potential for environmentally benign product life 
        cycles;
          (5) biobased power can provide environmental 
        benefits, promote rural economic development, and 
        diversify energy resource options;
          (6) many biomass feedstocks suitable for industrial 
        processing show the clear potential for sustainable 
        production, in some cases resulting in improved soil 
        fertility and carbon sequestration;
          (7) grain processing mills are biorefineries that 
        produce a diversity of useful food, chemical, feed, and 
        fuel products; and technologies that result in further 
        diversification of the range of value-added biobased 
        industrial products can meet a key need for the grain 
        processing industry;
          (8) cellulosic feedstocks are attractive because of 
        their low cost and widespread availability; and 
        research resulting in cost-effective technology to 
        overcome the recalcitrance of cellulosic biomass would 
        allow biorefineries to produce fuels and bulk chemicals 
        on a very large scale, with a commensurately large 
        realization of the benefit described in paragraph (1);
          (9) research into the fundamentals to understand 
        important mechanisms of biomass conversion can be 
        expected to accelerate the application and advancement 
        of biomass processing technology by increasing the 
        confidence and speed with which new technologies can be 
        scaled up, and by giving rise to processing innovations 
        based on new knowledge;
          (10) the added utility of biobased industrial 
        products developed through improvements in processing 
        technology would encourage the design of feedstocks 
        that would meet future needs more effectively;
          (11) the creation of value-added biobased industrial 
        products would create new jobs in construction, 
        manufacturing, and distribution, as well as new higher-
        valued exports of products and technology;
          (12) because of the relatively short-term time 
        horizon characteristic of private sector investments, 
        and because many benefits of biomass processing are in 
        the national interest, it is appropriate for the 
        Federal Government to provide precommercial investment 
        in fundamental research and research-driven innovation 
        in the biomass processing area; and such an investment 
        would provide a valuable complement to ongoing and past 
        governmental support in the biomass processing area; 
        and
          (13) several prominent studies, including studies by 
        the President's Council of Advisors on Science and 
        Technology and the National Research Council, support 
        the potential for large research-driven advances in 
        technologies for production of biobased industrial 
        products as well as associated benefits; and document 
        the need for a focused, integrated, and innovation-
        driven research effort to provide the appropriate 
        progress in a timely manner.

Sec. 3. Conversion of biomass into biobased industrial products

    This section adds a new Subtitle N to the National 
Agricultural Research, Extension, and Teaching Policy Act of 
1977.
            Sec. 1490. Definitions
    This section defines the following terms used in the Act:
          (1) Advisory committee.--The term ``Advisory 
        Committee'' means the Sustainable Fuels and Chemicals 
        Technical Advisory Committee established by section 
        1490C.
          (2) Biobased industrial product.--The term ``biobased 
        industrial product'' means any power, fuel, feed, 
        chemical product, or other consumer good derived from 
        biomass.
          (3) Biomass.--The term ``biomass'' means any organic 
        matter that is available on a renewable or recurring 
        basis (excluding old growth timber), including 
        dedicated energy crops and trees, wood and wood 
        residues, plants (including aquatic plants), grasses, 
        agricultural crops, residues, fibers, and animal wastes 
        and other waste materials.
          (4) Board.--The term ``Board'' means the Sustainable 
        Fuels and Chemicals Board established by section 1490B.
          (5) Initiative.--The term ``Initiative'' means the 
        Sustainable Fuels and Chemicals Research Initiative 
        established under section 1490D.
          (6) Point of contact.--The term ``point of contact'' 
        means a point of contact designated under section 
        1490A(d).
          (7) Processing.--The term ``processing'' means the 
        derivation of biobased industrial products from 
        biomass, including feedstock production; harvest and 
        handling; pretreatment or thermochemical processing; 
        fermentation; catalytic processing; product recovery; 
        and coproduct production.
            Sec. 1490A. Cooperation and coordination in sustainable 
                    fuels and chemicals
    This section mandates cooperation and coordination between 
the Department of Agriculture and the Department of Energy. The 
Committee encourages both agencies to place a high priority 
upon biobased product research and development. Improved 
cooperation and coordination will result in a better focused 
national effort and avoid duplication of research and 
administrative costs. The motivating philosophy behind enhanced 
cooperative efforts of the agencies is to understand the key 
mechanisms underlying the biomass conversion process in order 
to develop new and cost-effective technologies that would 
result in large-scale commercial production of low-cost and 
sustainable biobased industrial products. In carrying out this 
joint effort, the agencies must ensure that biobased industrial 
products are developed in a manner that enhances their 
economic, energy security, and environmental benefits.
    In order to facilitate the Departments of Agriculture and 
Energy acting in tandem with regard to biobased products, a 
senior official in each agency is designated as a ``point of 
contact.'' The points of contact shall assist in arranging 
interlaboratory and site-specific supplemental agreements for 
research, development, and demonstration projects relating to 
biobased industrial products; serve as cochairpersons of the 
Board; administer the Initiative; and respond in writing to 
each recommendation of the Advisory Committee.
            Sec. 1490B. Sustainable Fuels and Chemicals Board
    This section establishes the Sustainable Fuels and 
Chemicals Board to coordinate programs within and among 
departments and agencies of the Federal Government. The purpose 
of the Board is to promote the use of biobased industrial 
products and bring coherence to Federal strategic planning. The 
Board shall be co-chaired by the points of contact designated 
by the Department of Agriculture and the Department of Energy 
and meet at least quarterly. In addition to the cochairpersons, 
the board shall consist of senior officers of each of the 
following agencies who is appointed by the head of the agency 
and who has a rank that is equivalent to the points of contact: 
The Department of the Interior; The Environmental Protection 
Agency; The National Science Foundation; The Office of Science 
and Technology Policy; and at the option of the Secretary of 
Agriculture and the Secretary of Energy, other members 
appointed by the Secretaries.
    The Sustainable Fuels and Chemicals Board is to: (1) 
coordinate research, development, and demonstration activities 
relating to biobased industrial products between the Department 
of Agriculture and the Department of Energy and with other 
departments and agencies of the Federal Government; and (2) 
provide recommendations to the points of contact concerning 
administration of this subtitle.
    The Committee encourages each of the agencies represented 
on the Board to provide funds for any purpose under this 
subtitle.
            Sec. 1490C. Sustainable Fuels and Chemicals Technical 
                    Advisory Committee
    This section establishes a Sustainable Fuels and Chemicals 
Technical Advisory Committee consisting of representatives from 
outside the Federal agencies so as to provide for an 
independent source of technical expertise. The Advisory 
Committee is to:
          (1) advise the Secretary of Agriculture, the 
        Secretary of Energy, and the points of contact 
        concerning the technical focus and direction of 
        requests for proposals issued under the Initiative; and 
        procedures for reviewing and evaluating the proposals;
          (2) facilitate consultations and partnerships among 
        Federal and State agencies, agricultural producers, 
        industry, consumers, the research community, and other 
        interested groups to carry out program activities 
        relating to the Initiative; and
          (3) evaluate and perform strategic planning on 
        program activities relating to the Initiative.
    The Advisory Committee shall consist of the following 
members appointed by the points of contact:
          (1) An individual affiliated with the biobased 
        industrial products industry.
          (2) An individual affiliated with a college or 
        university who has expertise in biobased industrial 
        products.
          (3) 2 prominent engineers or scientists from 
        government or academia who have expertise in biobased 
        industrial products.
          (4) An individual affiliated with a commodity trade 
        association.
          (5) An individual affiliated with an environmental or 
        conservation organization.
          (6) An individual associated with State government 
        who has expertise in biobased industrial products.
          (7) At the option of the points of contact, other 
        members.
    The Advisory Committee shall meet at least quarterly to: 
(1) advise the points of contact with respect to the 
Initiative; and (2) evaluate whether, and make recommendations 
in writing to the Board to ensure that: funds authorized for 
the Initiative are distributed and used in a manner that is 
consistent with the goals of the Initiative; the points of 
contact are funding proposals under this subtitle that are 
selected on the basis of merit, as determined by an independent 
panel of scientific and technical peers; and activities under 
this subtitle are carried out in accordance with this subtitle.
            Sec. 1490D. Sustainable fuels and chemicals research 
                    initiative
    This section describes the Sustainable Fuels and Chemicals 
Research Initiative that is central to The National Sustainable 
Fuels and Chemicals Act. Under the Initiative, competitively-
awarded grants, contracts, and financial assistance are 
provided to eligible entities to carry out research on biobased 
industrial products.
    The Committee intends that grants distributed under the 
Research Initiative achieve four important purposes:
          (1) stimulate collaborative activities by a diverse 
        range of experts in all aspects of biomass processing 
        for the purpose of conducting fundamental and 
        innovation-targeted research and technology 
        development;
          (2) enhance creative and imaginative approaches 
        toward biomass processing that will serve to develop 
        the next generation of advanced technologies making 
        possible low cost and sustainable biobased industrial 
        products;
          (3) strengthen the intellectual resources of the 
        United States through the training and education of 
        future scientists, engineers, managers, and business 
        leaders in the field of biomass processing; and
          (4) promote integrated research partnerships among 
        colleges, universities, national laboratories, Federal 
        and State research agencies and the private sector as 
        the best means of overcoming technical challenges that 
        span multiple research and engineering disciplines and 
        of gaining better leverage from limited Federal 
        research funds.
    To be eligible for a grant, contract, or assistance under 
the Initiative an applicant shall be: a college or university; 
a national laboratory; a Federal research agency; a State 
research agency; a private sector entity; a nonprofit 
organization; or a consortium of 2 or more of these entities.
    Subsection (c)(2) details the administration of the 
initiative. Criteria listed in paragraph (2)(B) are important 
as they mandate how proposals are to be judged and prioritized. 
It is the belief of the Committee that only a national effort, 
focused on fundamental research and innovation, will be able to 
reduce the cost of biomass processing and hence lead to 
significant benefits in the national interest. This is 
especially relevant given the relatively small amount of funds 
authorized for the Initiative. Funding of many different 
proposals, without consideration of their potential to affect 
scale-sensitive national objectives, will result in what one 
leading researcher termed ``a thousand flowers blooming'' but 
perhaps not much in the way of reaching the goals of this Act.
    (2) Administration--After consultation with the Board, the 
points of contact, on behalf of the Board, shall
          (A) publish annually 1 or more joint requests for 
        proposals for grants, contracts, and assistance under 
        this section;
          (B) establish a priority in grants, contracts, and 
        assistance under this section for research that
                  (i) demonstrates potential for significant 
                advances in biomass processing;
                  (ii) demonstrates potential to substantially 
                impact scale-sensitive national objectives such 
                as sustainable resource supply, reduced 
                greenhouse gas emissions, healthier rural 
                economies, and improved strategic security and 
                trade balances; and
                  (iii) would improve knowledge of important 
                biomass processing systems that demonstrate 
                potential for commercial applications;
          (C) require that grants, contracts, and assistance 
        under this section be awarded competitively, on the 
        basis of merit, after the establishment of procedures 
        that provide for scientific peer review by an 
        independent panel of scientific and technical peers; 
        and
          (D) give preference to applications that:
                  (i) involve a consortia of experts from 
                multiple institutions; and
                  (ii) encourage the integration of disciplines 
                and application of the best technical 
                resources.
    Subparagraph (d) (Uses of Grants, Contracts, and 
Assistance) details three focus areas for the research effort. 
In broad terms the focus areas are identified as (1) overcoming 
the recalcitrance of cellulosic biomass, (2) development of 
biobased products and co-products and (3) research to ensure 
the economic and environmental benefits of biobased products. 
The three focus areas are fully supported by recommendations of 
the 1997 PCAST Report and the 1999 NRC report. In addition, the 
focus areas were drafted after extensive consultations with 
leading engineers, scientists, farm and agricultural concerns 
and environmental organizations.
    (d) A grant, contract, or assistance under this section 
shall be used to conduct:
          (1) research on process technology for overcoming the 
        recalcitrance of biomass, including research on key 
        mechanisms, advanced technologies, and demonstration 
        test beds for
                  (A) feedstock pretreatment and hydrolysis of 
                cellulose and hemicellulose, including new 
                technologies for
                          (i) enhanced sugar yields;
                          (ii) lower overall chemical use;
                          (iii) less costly materials; and
                          (iv) cost reduction;
                  (B) development of novel organisms and other 
                approaches to substantially lower the cost of 
                cellulase enzymes and enzymatic hydrolysis, 
                including dedicated cellulase production and 
                consolidated bioprocessing strategies; and
                  (C) approaches other than enzymatic 
                hydrolysis for overcoming the recalcitrance of 
                cellulosic biomass;
          (2) research on technologies for diversifying the 
        range of products than can be efficiently and cost-
        competitively produced from biomass, including research 
        on
                  (A) metabolic engineering of biological 
                systems (including the safe use of genetically 
                modified crops) to produce novel products, 
                especially commodity products, or to increase 
                product selectivity and tolerance, with a 
                research priority on the development of 
                biobased products that can compete in 
                performance and cost with fossil-based 
                products;
                  (B) catalytic processing to convert 
                intermediates of biomass processing into 
                products of interest;
                  (C) separation technologies for cost-
                effective product recovery and purification;
                  (D) approaches other than metabolic 
                engineering and catalytic conversion of 
                intermediates of biomass processing;
                  (E) advanced biomass gasification 
                technologies, including coproduction of power 
                and heat as an integrated component of biomass 
                processing, with the possibility of generating 
                excess electricity for sale; and
                  (F) related research in advanced turbine and 
                stationary fuel cell technology for production 
                of electricity from biomass; and
          (3) research aimed at ensuring the environmental 
        performance and economic viability of biobased 
        industrial products and their raw material input of 
        biomass when considered as an integrated system, 
        including research on--
                  (A) the analysis of, and strategies to 
                enhance, the environmental performance and 
                sustainability of biobased industrial products, 
                including research on--
                          (i) accurate measurement and analysis 
                        of greenhouse gas emissions, carbon 
                        sequestration, and carbon cycling in 
                        relation to the life cycle of biobased 
                        industrial products and feedstocks with 
                        respect to other alternatives;
                          (ii) evaluation of current and future 
                        biomass resource availability;
                          (iii) development and analysis of 
                        land management practices and 
                        alternative biomass cropping systems 
                        that ensure the environmental 
                        performance and sustainability of 
                        biomass production and harvesting;
                          (iv) land, air, water, and 
                        biodiversity impacts of large-scale 
                        biomass production, processing, and use 
                        of biobased industrial products 
                        relative to other alternatives; and
                          (v) biomass gasification and 
                        combustion to produce electricity;
                  (B) the analysis of, and strategies to 
                enhance, the economic viability of biobased 
                industrial products, including research on
                          (i) the cost of the required process 
                        technology;
                          (ii) the impact of coproducts, 
                        including power and heat generation, on 
                        biobased industrial product price and 
                        large-scale economic viability; and
                          (iii) interactions between an 
                        emergent biomass refining industry and 
                        the petrochemical refining 
                        infrastructure; and
                  (C) the field and laboratory research related 
                to feedstock production with the interrelated 
                goals of enhancing the sustainability, 
                increasing productivity, and decreasing the 
                cost of biomass processing, including research 
                on--
                          (i) altering biomass to make biomass 
                        easier and less expensive to process;
                          (ii) existing and new agricultural 
                        and energy crops that provide a 
                        sustainable resource for conversion to 
                        biobased industrial products while 
                        simultaneously serving as a source for 
                        coproducts such as food, animal feed, 
                        and fiber;
                          (iii) improved technologies for 
                        harvest, collection, transport, 
                        storage, and handling of crop and 
                        residue feedstocks; and
                          (iv) development of economically 
                        viable cropping systems that improve 
                        the conservation and restoration of 
                        marginal land.
    (e) Authorization of Appropriations. Subsection (e) 
authorizes to be appropriated to carry out this section 
$49,000,000 for each of fiscal years 2000 through 2005.
            Sec. 1490E. Administrative support and funds
    The Committee is aware of statutory limitations placed on 
the Department of Agriculture regarding administrative support 
of intergovernmental boards and advisory committees. Hence, to 
the extent administrative support and funds are not provided by 
other agencies, the Secretary of Energy shall provide 
administrative support and funds of the Department of Energy to 
the Board and the Advisory Committee as necessary. The 
Secretary of Agriculture and the heads of the agencies referred 
to in section 1490B(b)(3) and (b)(4) may, and are encouraged 
to, provide administrative support and funds of their 
respective agencies to the Board and the Advisory Committee.
            Sec. 1490F. Reports
    For each fiscal year that funds are made available to carry 
out this subtitle, the Secretary of Agriculture and the 
Secretary of Energy shall jointly transmit to Congress a 
detailed report on (1) the status and progress of the 
Initiative, including a certification from the Board that funds 
authorized for the Initiative are distributed and used in a 
manner that is consistent with the goals of the Initiative; and 
(2) the general status of cooperation and research efforts 
carried out by each Secretary with respect to sustainable 
fuels, chemicals, and electricity derived from biomass, 
including a certification from the Board that the points of 
contact are funding proposals that are selected on the basis of 
merit, as determined by an independent panel of scientific and 
technical peers.
            Sec. 1490G. Authorization of appropriations for ethanol 
                    research pilot plant
    There are authorized to be appropriated to construct a 
Department of Agriculture corn-based ethanol research pilot 
plant a total of $14,000,000 for fiscal year 2000 and 
subsequent fiscal years

Sec. 4. Use of conservation reserve land for recovery of biomass used 
        in energy production

    Under this section, farmers would be allowed to produce 
switchgrass or other biomass crops, on a demonstration project 
basis, on land enrolled in the Conservation Reserve Program. 
Proposed projects would be subject to approval by the 
Secretary. Biomass crops grown on Conservation Reserve Program 
land under this demonstration authority may be used for no 
commercial purpose other than the generation of energy, and the 
Secretary may reduce a producer's contract payment under the 
Conservation Reserve Program. The Secretary is directed to set 
standards for the growing and harvesting of biomass crops to 
ensure that any environmental and wildlife impacts are 
minimized.
    The Committee expects the Secretary to establish an 
application procedure and approval criteria for proposed 
projects authorized by this section. Among other requirements 
established by the Secretary, project proposals should 
identify: enough land to meet the minimum goals of the project; 
owners of land under current Conservation Reserve Program 
contracts who will participate and the specific acres they will 
make available for the project; and project partners, including 
the expected end-user(s) of the biomass energy and at least one 
commercial entity prepared to enter into contractual 
relationships with land owners.
    The Committee urges the Secretary to establish appropriate 
project parameters to ensure that the type of biomass crops 
grown and the manner in which they are grown and harvested 
result in a minimum of interference with wildlife protection 
and the other environmental goals of the Conservation Reserve 
Program. Finally, the Committee intends that participation by a 
land owner in a biomass project authorized under this section 
shall not preclude or otherwise prejudice a future Conservation 
Reserve Program enrollment application by that owner, and urges 
the Secretary to consider establishing a continuous sign-up 
procedure for such owners to give successful biomass projects 
maximum flexibility in expanding their acreage.

             Legislative History and Votes in the Committee

    The Senate Committee on Agriculture, Nutrition, and 
Forestry on May 27, 1999, held a hearing on ``The New 
Petroleum:'' S. 935 The National Sustainable Fuels and 
Chemicals Act. Agriculture Secretary Dan Glickman and Assistant 
Secretary for Energy Efficiency and Renewable Energy Dan 
Reicher represented the Administration. Two subsequent panels 
then testified, the first composed of representatives from farm 
groups and technical experts while the final panel featured 
environmental advocates and representatives from industry.
    Secretary of Agriculture Dan Glickman testified in support 
of S. 935. USDA currently devotes $9 million per annum on 
biofuels research and $63 million per annum toward development 
of new biobased products. Secretary Glickman noted that 
production of ethanol, a well-known biobased product, has risen 
in twenty years from virtually nothing to 1.4 billion gallons 
per year, consuming 6-8% of U.S. corn supply. The Secretary 
testified that S. 935 would reinforce the commitment of Federal 
agencies to sustainable fuels and chemicals research and would 
channel Federal funds so that they could be spent efficiently 
and leveraged with other funds. The Secretary indicated that 
the Administration hoped to accomplish a number of the goals of 
the bill through an Executive Order. Secretary Glickman 
supported Senator Harkin's proposal allowing for pilot projects 
designed to demonstrate the feasibility of using biomass grown 
on Conservation Reserve Program and other lands for production 
of energy.
    Assistant Secretary of Energy for Energy Efficiency and 
Renewable Energy Dan H. Reicher gave an overview of the 
Administration's integrated bioenergy initiative. Currently the 
bioenergy industry is small and fragmented, with chemical 
companies focused on biomass as a source of specialty and 
commodity chemicals, power companies dedicated to production of 
electricity, the ethanol industry producing ethanol from corn, 
the soybean industry developing biodiesel fuel and the forest 
products industry producing heat energy as well as developing 
gaseous fuels from biomass. Governmental efforts are also 
fragmented and Assistant Secretary Reicher testified that S. 
935 would be an important first step toward an integrated 
biomass industry. He also recommended that the bill be 
complemented by policies to promote bioenergy through the use 
of the tax code, loan programs, environmental regulation, and 
increased appropriations. This year DOE requested $117 million 
for bioenergy research and development. Assistant Secretary 
Reicher recommended that the bill place greater emphasis on 
biopower and that certain sections of the bill be made somewhat 
less prescriptive.
    Dean Kleckner, President of the American Farm Bureau 
Federation, testified in support of S. 935. He also expressed 
support for continuing the renewable alcohol tax credits and 
for ensuring that the development of a cellulosic biomass 
ethanol industry occur harmoniously with the development of the 
corn-based ethanol industry. He pointed out that for the 
farmer--whether growing corn, soybeans, switchgrass or trees--
what counts is profit per acre and the possibility of turning 
biomass into a commodity will increase the farmer's profit per 
acre.
    Professor Bruce Dale of Michigan State University 
summarized a recently issued Report of the National Research 
Council of the National Academy of Sciences on ``Biobased 
Industrial Products: Opportunities for Research and 
Commercialization.'' The Report concluded that biobased raw 
materials costs and petroleum costs are already roughly 
equivalent, with crude oil at $18 per barrel being energy 
equivalent to corn at $2.75 per bushel or about $110 per ton 
for each. Furthermore, there already exist low-cost renewable 
biobased materials available to us which can be economically 
harvested, collected and transported to a biorefinery. Thus, 
the key to making economical biobased products is reducing 
processing costs as opposed to raw material costs.
    Another key element that will lower the cost of bioabsed 
products is the development of advanced biorefineries that 
would produce a wide variety of co-products including fuels. A 
complete life cycle analysis of biobased products must be done 
to ensure sustainability. Professor Dale asserts that careful 
integration of research efforts will be necessary to achieve 
the goals of the act and make the best use of taxpayer funds. 
Such integrated, goal-directed work is best carried out in 
research centers or consortia. Professor Dale supports S. 935 
because it recognized all of these key elements.
    Mike Shuter of Frankton, Indiana testified on behalf of the 
National Corn Growers Association and the American Soybean 
Association. Mr. Shuter asserted that S. 935 is a good first 
start toward a biobased economy. He favored developing biomass 
processing and technologies not just for cellulosic biomass but 
for all plant-based resources that can be used for fuels and 
basic chemical feedstocks. Mr. Shuter urged support for Federal 
biodiesel research and for the research priorities laid down in 
the technology road map accompanying the Plant/Crop Renewables 
2020 Vision. Mr. Shuter favored an authorization for 
appropriations for a $14 million corn to ethanol pilot plant so 
that small corn processors could band together to form 
partnerships with others to pursue development and 
commercialization of new technologies that will improve corn 
processing. Mr. Shuter testified that the hydrolysis, 
fermentation and separation technologies developed by the pilot 
plant could be transferred directly to other crops and 
cellulosic materials.
    John Sellers, a farmer from Corydon, Iowa testified that 
the development of biomass and ethanol could play a very 
important role in providing sustainable economic uses for 
marginal cropland as well as contributing to restoring soils, 
improving water quality, reducing net atmospheric carbon 
emissions and establishing domestic energy supplies. Mr. 
Sellars produces switchgrass for the Chariton Valley Biomass 
Project in southern Iowa. This is a demonstration project 
designed to co-fire 5,000 tons of switchgrass with coal. The 
project uses a 4000 acre supply of switchgrass and is supported 
by the Department of Energy and Department of Agriculture 
through the Biomass Power for Rural Development Initiative.
    Professors Lee Lynd and Charles Wyman of Dartmouth College 
testified that widely available biomass feedstocks are 
available. They have published a study which concludes that at 
$40 delivered dry ton the cost of cellulosic biomass is 
equivalent on an energy basis to oil at $12.50 per barrel and 
that ethanol from wood chips could be produced for $0.50 cents 
per gallon if specified, foreseeable advances in biomass 
processing can be accomplished. They support S. 935 because the 
bill identifies three strategically well-chosen research 
priorities--overcoming the recalcitrance of cellulosic biomass, 
product diversification and evaluation of sustainability and 
economic viability. They also supported the bill's emphasis on 
applied fundamentals, that is, on understanding the underlying 
phenomena operative in biomass conversion processing. With this 
emphasis, S. 935 contrasts with past Federal government support 
for biomass R & D, that has been mostly targeted to 
demonstration and commercialization projects.
    Jeff Fiedler of the Natural Resources Defense Council 
strongly endorsed S. 935. Although the environmental 
performance of biomass technologies is generally far superior 
to conventional fossil-based fuels and chemical feedstocks, he 
urged that the bill explicitly include research on the positive 
and negative aspects of biomass technologies in all their 
aspects so that there will be no surprises. Mr. Fiedler also 
recommended that environmental benefits be included in the 
selection criteria for grants, contracts and assistance under 
the bill. Realizing the potential of biomass will require both 
long-term fundamental research and pre-commercial deployment of 
promising technologies as called for by S. 935.
    Steve Clemmer of the Union of Concerned Scientists strongly 
supported S. 935 for two reasons: first, additional research 
and development is needed to support the commercialization of 
new energy crops and advanced technologies for biobased fuels, 
power, chemicals and heat; secondly, Federal investment is 
needed because there are significant public benefits to be 
captured from increased biomass use. These include economic, 
national energy security, environmental and public health 
benefits. Federal investment has a demonstrated record of 
success. For example, in 1997, it cost a third of what it did 
in 1980 to produce a gallon of ethanol. Mr. Clemmer recommended 
that the bill place a greater emphasis on biopower, ensure 
adequate studies are performed on the environmental impacts of 
increasing biomass use and support additional R&D to identify 
and create sustainable markets for biomass use. He also urged 
support for minimum renewable content standards, extending the 
tax credit for wind and biomass and expanding the credit to 
include other biomass resources.
    Karl J. Sanford of Genencor International spoke of the need 
and great potential for moving from a fossil-carbon system 
centered around petroleum to a renewable carbon system centered 
around plants. The bulk of the world's supply of fossil carbon 
is outside of the United States. Hence its use creates balance 
of payment and national security problems for America. Fossil 
carbon is non-renewable and its use irrevocably increases the 
amount of carbon in the environment. By contrast, carbohydrates 
from plant matter are renewable resources abundant in the 
United States and around the world. Biobased industrial 
products have the potential to replace all organic chemicals 
that are derived from oil, providing enormous environmental, 
national security and rural economic benefits. But we have a 
long way to go. However, advances in biotechnology can enable 
us to reach our goals. The Biotechnology Industry Association 
endorses S. 935.
    Robert Dorsch of DuPont Central Research testified to the 
economic importance of the chemical industry, which employs 
over one million Americans at wages that are 133% above the 
average manufacturing wage. However, the use of fossil carbon 
as the sole feedstock for fuels and chemicals is exposing us to 
environmental risk. Dr. Dorsch asserted that the petrochemical 
and biobased approaches to making fuels and chemicals ought to 
be seen as complementary rather than rival approaches. He urged 
that S. 935 recognize not just the need to break down 
cellulosic materials, but also to improve the catalytic 
processes that will use that material and consider a broad 
range of approaches toward the conversion of biomass to 
finished chemicals so that the farmer can increase his value 
per acre and the supply/demand balance for petroleum products 
will not dominate the price of materials to the extent that it 
does today.

                             committee vote

    The Committee met in open session on Thursday, July 29, 
1999, to mark up this bill. An amendment in the nature of a 
substitute was agreed to by voice vote. The Committee accepted 
an amendment by voice vote offered by Senator Harkin to allow 
use of Conservation Reserve Land for collection of biomass used 
in energy production under very limited circumstances.
    The Committee accepted an amendment by recorded vote (9 
yeas and and 8 nays) offered by Senator Fitzgerald authorizing 
$14 million for construction of an Ethanol Research Pilot 
Plant. The rollcall vote was as follows:
        YEAS                          NAYS
Mr. Conrad (proxy)                  Mr. Leahy (proxy)
Mr. Daschle                         Mr. Baucus (proxy)
Mr. Johnson                         Mr. Kerrey
Ms. Lincoln                         Mr. Harkin
Mr. McConnell (proxy)               Mr. Helms (proxy)
Mr. Roberts (proxy)                 Mr. Cochran
Mr. Fitzgerald                      Mr. Coverdell (proxy)
Mr. Grassley                        Mr. Lugar
Mr. Craig

    The Committee then ordered that the bill be favorably 
reported by a voice vote.

                             Cost Estimate

    In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate, the following letter has been 
received from the Congressional Budget Office regarding the 
budgetary impact of the bill:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC., August 4, 1999.
Hon. Richard G. Lugar,
Chairman, Committee on Agriculture, Nutrition, and Forestry,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 935, the National 
Sustainable Fuels and Chemicals Act of 1999.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Jim Langley.
            Sincerely,
                                          Barry B. Anderson
                                       (For Dan Crippen, Director).
    Enclosure.

S. 935--National Sustainable Fuels and Chemicals Act of 1999

    Summary: S. 935 would amend the National Agricultural 
Research, Extension, and Teaching Policy Act of 1977 to 
authorize research to promote the conversion of biomass into 
biobased industrial products. The bill would establish a 
Sustainable Fuels and Chemicals Board to coordinate programs 
and a Sustainable Fuels and Chemicals Technical Advisory 
Committee to advise the board. S. 935 would create a 
Sustainable Fuels and Chemicals Research Initiative to award 
competitive grants, contracts, and other financial assistance 
to research entities, and it would authorize the appropriation 
of $49 million a year over the 2000-2005 period. The bill also 
would authorize the appropriation of $14 million to the U.S. 
Department of Agriculture (USDA) in 2000 to construct a pilot 
plant for corn-based ethanol research. Assuming appropriation 
of the authorized amounts, CBO estimates that implementing the 
bill would cost $274 million over the 2000-2004 period (and an 
additional $34 million after 2004).
    S. 935 would permit the use of land in the Conservation 
Reserve for recovery of biomass used in energy production if 
producers agree to a reduction in their annual Conservation 
Reserve rental payment. Because the bill would affect direct 
spending, pay-as-you-go procedures would apply. CBO estimates 
that direct spending would decrease by less than $250,000 a 
year.
    S. 935 contains on intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the federal government: For the purposes 
of this estimate, CBO assumes that all amounts authorized will 
be appropriated by the start of each fiscal year. The estimated 
budgetary impact of S. 935 is shown in the following table. The 
costs of this legislation fall within budget function 350 
(agriculture).


                                    [By fiscal year, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                              1999     2000     2001     2002     2003     2004
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION

Spending under current law:
    Estimated authorization level \1\.....................      481      491      502      512      524      535
    Estimated outlays.....................................      456      476      495      505      516      527
Proposed changes:
    Estimated authorization level.........................        0       63       49       49       49       49
    Estimated outlays.....................................        0       26       47       51       52       49
Spending under S. 935:
    Estimated authorization level.........................      481      554      551      561      573      584
    Estimated outlays.....................................      456      502      542      556      568      576
----------------------------------------------------------------------------------------------------------------
\1\ The 1999 level is the amount appropriated for that year for Cooperative State Research, Education, and
  Extension Service Research and Education Activities. The amounts shown for 2000 through 2004 are CBO's
  baseline projections, assuming annual adjustments for anticipated inflation.

    Basis of estimate: The bill would authorize the 
appropriation of $63 million in 2000 and $49 million each year 
for 2001 through 2005. Such funds would likely be spent under 
USDA's program for Cooperative State Research, Education, and 
Extension Services Research and Education Activities (CSREES). 
Estimated outlays for the authorized amounts are based on 
historical spending patterns for the CSREES program.
    In addition to providing new discretionary spending, S. 935 
would affect direct spending for USDA's Conservation Reserve 
Program (CRP). CBO estimates that those effects would be less 
than $250,000 a year because implementing the legislation would 
affect only a small amount of land covered by the CRP and would 
make only a small change in annual payments on such land.
    Spending subject to appropriation: S. 935 would amend title 
XIV of the National Agricultural Research, Extension, and 
Teaching Policy Act of 1977 (7 U.S.C. 3101, et seq.) to add new 
provisions regarding conversion of biomass into bio-based 
industrial products. The Secretary of Agriculture and the 
Secretary of Energy would be required to coordinate policies 
and procedures that promote research and development of bio-
based industrial products. Each department would designate as a 
point of contact for related activities an official who would 
be appointed by the President with the advice and consent of 
the Senate. The bill would establish a Sustainable Fuels and 
Chemicals Board to coordinate programs and award research 
grants and other authorized financial assistance. The bill 
would also establish a Sustainable Fuels and Chemicals Research 
Advisory Committee to advise the board and to facilitate 
consultations and partnerships among eligible parties. The 
Secretaries of Agriculture and Energy would have to submit 
annual reports to the Congress on their related activities. The 
Department of Energy would provide administrative support and 
funds for the board and the advisory committee. CBO estimates 
that such administrative support would cost less than $500,000 
a year, subject to the availability of appropriated funds.
    Direct spending: S. 935 would amend the Food Security Act 
of 1985 (16 U.S.C. 3822(a)(7)) to permit the use of CRP land 
for recovery of biomass used in energy production. The 
provisions would be limited to owners and operators in not more 
than six states and would be subject to certain conditions 
regarding number of acres in each Crop Reporting District, 
number of acres per contract, and subsequent use of the 
harvested crop. Owners and operators who harvest crops on CRP 
land for recovery of biomass would be required to forgo a 
portion of their annual CRP rental payment. The amount of the 
reduction in payment would be determined by the Secretary of 
Agriculture, except that the reduction must not prevent the 
producer from realizing a reasonable economic return.
    Based on information from USDA, CBO estimates that few 
acres would be harvested for recovery of biomass used in energy 
production. The lack of easily accessible processing facilities 
and the cost of harvesting biomass crops would likely result in 
relatively few owners or operators participating in this 
program. For those who did participate, the reduction in annual 
CRP payment would have to be relatively small to permit an 
economic return. USDA estimates that such a payment reduction 
would be around $5 an acre, or around 10 percent of the average 
CRP rental payment. CBO estimates that initially around 5,000 
acres of CRP land would be harvested under these provisions, 
increasing by about 5,000 acres a year as new facilities are 
constructed and new research initiatives come to fruition.
    Pay-as-you-go-considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. S. 935 
would reduce outlays for direct spending programs by less than 
$250,000 a year. The bill would not affect governmental 
receips.
    Estimated impact on State, local, and tribal governments: 
S. 935 contains no intergovernmental mandates as defined in 
UMRA and would impose no costs no state, local, or tribal 
governments. State agencies and public universities could 
receive some of the research funds authorized by this bill.
    Estimated impact on the private sector: This bill contains 
no new private-sector mandates as defined in UMRA.
    Estimated prepared by: Jim Langley.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

                    Evaluation of Regulatory Impact

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the following evaluation is made 
concerning the regulatory impact of enacting this legislation: 
The Committee has determined that this legislation will have no 
detrimental impact on the private sector as a result of 
regulatory requirements. Slight modifications to existing grant 
regulations may be required in order to administer the program. 
Additionally, the use of conservation reserve land for recovery 
of biomass authorized in this bill is strictly on a voluntary 
basis and any regulatory impact on landowners would be solely 
at their own behest. We expect a positive economic impact, no 
adverse impact on the personal privacy of the individuals 
affected by the legislation, and no amount of additional 
paperwork resulting from enactment of the bill.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made in 
the bill, as reported are shown as follows (existing law 
proposed to be omitted is stricken, new material is printed in 
italic, existing law in which no change is proposed is shown in 
roman):

 NATIONAL AGRICULTURAL RESEARCH, EXTENSION, AND TEACHING POLICY ACT OF 
                              1977

           *       *       *       *       *       *       *


  Subtitle N--Conversion of Biomass into Biobased Industrial Products

SEC. 1490. DEFINITIONS.

    In this subtitle:
          (1) Advisory committee.--The term `Advisory 
        Committee' means the Sustainable Fuels and Chemicals 
        Technical Advisory Committee established by section 
        1490C.
          (2) Biobased industrial product.--The term `biobased 
        industrial product' means any power, fuel, feed, 
        chemical product, or other consumer good derived from 
        biomass.
          (3) Biomass.--The term `biomass' means any organic 
        matter that is available on a renewable or recurring 
        basis (excluding old growth timber), including 
        dedicated energy crops and trees, wood and wood 
        residues, plants (including aquatic plants), grasses, 
        agricultural crops, residues, fibers, and animal wastes 
        and other waste materials.
          (4) Board.--The term `Board' means the Sustainable 
        Fuels and Chemicals Board established by section 1490B.
          (5) Initiative.--The term `Initiative' means the 
        Sustainable Fuels and Chemicals Research Initiative 
        established under section 1490D.
          (6) Point of contact.--The term `point of contact' 
        means a point of contact designated under section 
        1490A(d).
          (7) Processing.--The term `processing' means the 
        derivation of biobased industrial products from 
        biomass, including--
                  (A) feedstock production;
                  (B) harvest and handling;
                  (C) pretreatment or thermochemical 
                processing;
                  (D) fermentation;
                  (E) catalytic processing;
                  (F) product recovery; and
                  (G) coproduct production.

SEC. 1490A. COOPERATION AND COORDINATION IN SUSTAINABLE FUELS AND 
                    CHEMICALS RESEARCH.

    (a) In General.--The Secretary of Agriculture and the 
Secretary of Energy shall cooperate with respect to, and 
coordinate, policies and procedures that promote research and 
development leading to the production of biobased industrial 
products.
    (b) Purpose.--The purpose of the cooperation and 
coordination shall be to--
          (1) understand the key mechanisms underlying the 
        recalcitrance of biomass for conversion into biobased 
        industrial products;
          (2) develop new and cost-effective technologies that 
        would result in large-scale commercial production of 
        low cost and sustainable biobased industrial products;
          (3) ensure that biobased industrial products are 
        developed in a manner that enhances their economic, 
        energy security, and environmental benefits; and
          (4) promote the development and use of agricultural 
        and energy crops for conversion into biobased 
        industrial products.
    (c) Areas.--In carrying out this subtitle, the Secretary of 
Agriculture and the Secretary of Energy, in consultation with 
heads of appropriate departments and agencies, shall promote 
research and development to--
          (1) advance the availability and widespread use of 
        energy efficient, economically competitive, and 
        environmentally sound biobased industrial products in a 
        manner that is consistent with the goals of the United 
        States relating to sustainable and secure supplies of 
        food, chemicals, and fuel;
          (2) ensure full consideration of Federal land and 
        land management programs as potential feedstock 
        resources for biobased industrial products; and
          (3) assess the environmental, economic, and social 
        impact of production of biobased industrial products 
        from biomass on a large scale.
     (d) Points of Contact.--
          (1) In general.--To coordinate research and 
        development programs and activities relating to 
        biobased industrial products that are carried out by 
        their respective Departments--
                  (A) the Secretary of Agriculture shall 
                designate, as the point of contact for the 
                Department of Agriculture, an officer of the 
                Department of Agriculture appointed by the 
                President to a position in the Department 
                before the date of the designation, by and with 
                the advice and consent of the Senate; and
                  (B) the Secretary of Energy shall designate, 
                as the point of contact for the Department of 
                Energy, an officer of the Department of Energy 
                appointed by the President to a position in the 
                Department before the date of the designation, 
                by and with the advice and consent of the 
                Senate.
          (2) Duties.--The points of contact shall jointly--
                  (A) assist in arranging interlaboratory and 
                site-specific supplemental agreements for 
                research, development, and demonstration 
                projects relating to biobased industrial 
                products;
                  (B) serve as cochairpersons of the Board;
                  (C) administer the Initiative; and
                  (D) respond in writing to each recommendation 
                of the Advisory Committee made under section 
                1490C(c)(2).

SEC. 1490B. SUSTAINABLE FUELS AND CHEMICALS BOARD.

    (a) Establishment.--There is established the Sustainable 
Fuels and Chemicals Board to coordinate programs within and 
among departments and agencies of the Federal Government for 
the purpose of promoting the use of biobased industrial 
products by--
          (1) maximizing the benefits deriving from Federal 
        grants and assistance; and
          (2) bringing coherence to Federal strategic planning.
    (b) Membership.--The Board shall consist of:
          (1) The point of contact of the Department of 
        Agriculture designated under section 1490A(d)(1)(A), 
        who shall serve as cochairperson of the Board.
          (2) The point of contact of the Department of Energy 
        designated under section 1490A(d)(1)(B), who shall 
        serve as cochairperson of the Board.
          (3) A senior officer of each of the following 
        agencies who is appointed by the head of the agency and 
        who has a rank that is equivalent to the points of 
        contact:
                  (A) The Department of the Interior.
                  (B) The Environmental Protection Agency.
                  (C) The National Science Foundation.
                  (D) The Office of Science and Technology 
                Policy.
          (4) At the option of the Secretary of Agriculture and 
        the Secretary of Energy, other members appointed by the 
        Secretaries (after consultation with members described 
        in paragraphs (1) through (3)).
    (c) Duties.--The Board shall--
          (1) coordinate research, development, and 
        demonstration activities relating to biobased 
        industrial products--
                  (A) between the Department of Agriculture and 
                the Department of Energy; and
                  (B) with other departments and agencies of 
                the Federal Government; and
          (2) provide recommendations to the points of contact 
        concerning administration of this subtitle.
    (d) Funding.--Each agency represented on the Board is 
encouraged to provide funds for any purpose under this 
subtitle.
    (e) Meetings.--The Board shall meet at least quarterly to 
enable the Board to carry out the duties of the Board under 
subsection (c).

SEC. 1490C. SUSTAINABLE FUELS AND CHEMICALS TECHNICAL ADVISORY 
                    COMMITTEE.

    (a) Establishment.--There is established the Sustainable 
Fuels and Chemicals Technical Advisory Committee to--
          (1) advise the Secretary of Agriculture, the 
        Secretary of Energy, and the points of contact 
        concerning--
                  (A) the technical focus and direction of 
                requests for proposals issued under the 
                Initiative; and
                  (B) procedures for reviewing and evaluating 
                the proposals;
          (2) facilitate consultations and partnerships among 
        Federal and State agencies, agricultural producers, 
        industry, consumers, the research community, and other 
        interested groups to carry out program activities 
        relating to the Initiative; and
          (3) evaluate and perform strategic planning on 
        program activities relating to the Initiative.
    (b) Membership.--The Committee shall consist of the 
following members appointed by the points of contact:
          (1) An individual affiliated with the biobased 
        industrial products industry.
          (2) An individual affiliated with a college or 
        university who has expertise in biobased industrial 
        products.
          (3) 2 prominent engineers or scientists from 
        government or academia who have expertise in biobased 
        industrial products.
          (4) An individual affiliated with a commodity trade 
        association.
          (5) An individual affiliated with an environmental or 
        conservation organization.
          (6) An individual associated with State government 
        who has expertise in biobased industrial products.
          (7) At the option of the points of contact, other 
        members.
    (c) Duties.--The Advisory Committee shall--
          (1) advise the points of contact with respect to the 
        Initiative; and
          (2) evaluate whether, and make recommendations in 
        writing to the Board to ensure that--
                  (A) funds authorized for the Initiative are 
                distributed and used in a manner that is 
                consistent with the goals of the Initiative;
                  (B) the points of contact are funding 
                proposals under this subtitle that are selected 
                on the basis of merit, as determined by an 
                independent panel of scientific and technical 
                peers; and
                  (C) activities under this subtitle are 
                carried out in accordance with this subtitle.
    (d) Meetings.--The Advisory Committee shall meet at least 
quarterly to enable the Advisory Committee to carry out the 
duties of the Advisory Committee under subsection (c).

SEC. 1490D. SUSTAINABLE FUELS AND CHEMICALS RESEARCH INITIATIVE.

    (a) In General.--The Secretary of Agriculture and the 
Secretary of Energy, acting through their respective points of 
contact and in consultation with the Board, shall establish and 
carry out a Sustainable Fuels and Chemicals Research Initiative 
under which competitively-awarded grants, contracts, and 
financial assistance are provided to, or entered into with, 
eligible entities to carry out research on biobased industrial 
products.
    (b) Purposes.--The purposes of grants, contracts, and 
assistance under this section shall be to--
          (1) stimulate collaborative activities by a diverse 
        range of experts in all aspects of biomass processing 
        for the purpose of conducting fundamental and 
        innovation-targeted research and technology 
        development;
          (2) enhance creative and imaginative approaches 
        toward biomass processing that will serve to develop 
        the next generation of advanced technologies making 
        possible low cost and sustainable biobased industrial 
        products;
          (3) strengthen the intellectual resources of the 
        United States through the training and education of 
        future scientists, engineers, managers, and business 
        leaders in the field of biomass processing; and
          (4) promote integrated research partnerships among 
        colleges, universities, national laboratories, Federal 
        and State research agencies, and the private sector as 
        the best means of overcoming technical challenges that 
        span multiple research and engineering disciplines and 
        of gaining better leverage from limited Federal 
        research funds.
    (c) Eligible Entities.--
          (1) In general.--To be eligible for a grant, 
        contract, or assistance under this section, an 
        applicant shall be--
                  (A) a college or university;
                  (B) a national laboratory;
                  (C) a Federal research agency;
                  (D) a State research agency;
                  (E) a private sector entity;
                  (F) a nonprofit organization; or
                  (G) a consortium of 2 or more entities 
                described in subparagraphs (A) through (E).
          (2) Administration.--After consultation with the 
        Board, the points of contact, on behalf of the Board, 
        shall--
                  (A) publish annually 1 or more joint requests 
                for proposals for grants, contracts, and 
                assistance under this section;
                  (B) establish a priority in grants, 
                contracts, and assistance under this section 
                for research that--
                          (i) demonstrates potential for 
                        significant advances in biomass 
                        processing;
                          (ii) demonstrates potential to 
                        substantially impact scale-sensitive 
                        national objectives such as sustainable 
                        resource supply, reduced greenhouse gas 
                        emissions, healthier rural economies, 
                        and improved strategic security and 
                        trade balances; and (iii) would improve 
                        knowledge of important biomass 
                        processing systems that demonstrate 
                        potential for commercial applications;
                  (C) require that grants, contracts, and 
                assistance under this section be awarded 
                competitively, on the basis of merit, after the 
                establishment of procedures that provide for 
                scientific peer review by an independent panel 
                of scientific and technical peers; and
                  (D) give preference to applications that--
                          (i) involve a consortia of experts 
                        from multiple institutions; and
                          (ii) encourage the integration of 
                        disciplines and application of the best 
                        technical resources.
    (d) Uses of Grants, Contracts, and Assistance.--A grant, 
contract, or assistance under this section shall be used to 
conduct--
          (1) research on process technology for overcoming the 
        recalcitrance of biomass, including research on key 
        mechanisms, advanced technologies, and demonstration 
        test beds for--
                  (A) feedstock pretreatment and hydrolysis of 
                cellulose and hemicellulose, including new 
                technologies for--
                          (i) enhanced sugar yields;
                          (ii) lower overall chemical use;
                          (iii) less costly materials; and
                          (iv) cost reduction;
                  (B) development of novel organisms and other 
                approaches to substantially lower the cost of 
                cellulase enzymes and enzymatic hydrolysis, 
                including dedicated cellulase production and 
                consolidated bioprocessing strategies; and
                  (C) approaches other than enzymatic 
                hydrolysis for overcoming the recalcitrance of 
                cellulosic biomass;
          (2) research on technologies for diversifying the 
        range of products than can be efficiently and cost-
        competitively produced from biomass, including research 
        on-
                  (A) metabolic engineering of biological 
                systems (including the safe use of genetically 
                modified crops) to produce novel products, 
                especially commodity products, or to increase 
                product selectivity and tolerance, with a 
                research priority on the development of 
                biobased products that can compete in 
                performance and cost with fossil-based 
                products;
                  (B) catalytic processing to convert 
                intermediates of biomass processing into 
                products of interest;
                  (C) separation technologies for cost-
                effective product recovery and purification;
                  (D) approaches other than metabolic 
                engineering and catalytic conversion of 
                intermediates of biomass processing;
                  (E) advanced biomass gasification 
                technologies, including coproduction of power 
                and heat as an integrated component of biomass 
                processing, with the possibility of generating 
                excess electricity for sale; and
                  (F) related research in advanced turbine and 
                stationary fuel cell technology for production 
                of electricity from biomass; and
          (3) research aimed at ensuring the environmental 
        performance and economic viability of biobased 
        industrial products and their raw material input of 
        biomass when considered as an integrated system, 
        including research on--
                  (A) the analysis of, and strategies to 
                enhance, the environmental performance and 
                sustainability of biobased industrial products, 
                including research on--
                          (i) accurate measurement and analysis 
                        of greenhouse gas emissions, carbon 
                        sequestration, and carbon cycling in 
                        relation to the life cycle of biobased 
                        industrial products and feedstocks with 
                        respect to other alternatives;
                          (ii) evaluation of current and future 
                        biomass resource availability;
                          (iii) development and analysis of 
                        land management practices and 
                        alternative biomass cropping systems 
                        that ensure the environmental 
                        performance and sustainability of 
                        biomass production and harvesting;
                          (iv) land, air, water, and 
                        biodiversity impacts of large-scale 
                        biomass production, processing, and use 
                        of biobased industrial products 
                        relative to other alternatives; and
                          (v) biomass gasification and 
                        combustion to produce electricity;
                  (B) the analysis of, and strategies to 
                enhance, the economic viability of biobased 
                industrial products, including research on--
                          (i) the cost of the required process 
                        technology;
                          (ii) the impact of coproducts, 
                        including power and heat generation, on 
                        biobased industrial product price and 
                        large-scale economic viability; and
                          (iii) interactions between an 
                        emergent biomass refining industry and 
                        the petrochemical refining 
                        infrastructure; and
                  (C) the field and laboratory research related 
                to feedstock production with the interrelated 
                goals of enhancing the sustainability, 
                increasing productivity, and decreasing the 
                cost of biomass processing, including research 
                on--
                          (i) altering biomass to make biomass 
                        easier and less expensive to process;
                          (ii) existing and new agricultural 
                        and energy crops that provide a 
                        sustainable resource for conversion to 
                        biobased industrial products while 
                        simultaneously serving as a source for 
                        coproducts such as food, animal feed, 
                        and fiber;
                          (iii) improved technologies for 
                        harvest, collection, transport, 
                        storage, and handling of crop and 
                        residue feedstocks; and
                          (iv) development of economically 
                        viable cropping systems that improve 
                        the conservation and restoration of 
                        marginal land.
    (e) Authorization of Appropriations.--In addition to any 
other amounts that are authorized to be appropriated, there are 
authorized to be appropriated to carry out this section 
$49,000,000 for each of fiscal years 2000 through 2005.

  SEC. 1490E. ADMINISTRATIVE SUPPORT AND FUNDS.

    (a) In General.--To the extent administrative support and 
funds are not provided by other agencies under subsection (b), 
the Secretary of Energy shall provide such administrative 
support and funds of the Department of Energy to the Board and 
the Advisory Committee as are necessary to enable the Board and 
the Advisory Committee to carry out this subtitle.
    (b) Other Agencies.--The Secretary of Agriculture and the 
heads of the agencies referred to in section 1490B(b)(3) and 
(b)(4) may, and are encouraged to, provide administrative 
support and funds of their respective agencies to the Board and 
the Advisory Committee.

SEC. 1490F. REPORTS.

    For each fiscal year that funds are made available to carry 
out this subtitle, the Secretary of Agriculture and the 
Secretary of Energy shall jointly transmit to Congress a 
detailed report on--
          (1) the status and progress of the Initiative, 
        including a certification from the Board that funds 
        authorized for the Initiative are distributed and used 
        in a manner that is consistent with the goals of the 
        Initiative; and
          (2) the general status of cooperation and research 
        efforts carried out by each Secretary with respect to 
        sustainable fuels, chemicals, and electricity derived 
        from biomass, including a certification from the Board 
        that the points of contact are funding proposals that 
        are selected on the basis of merit, as determined by an 
        independent panel of scientific and technical peers.

SEC. 1490G. AUTHORIZATION OF APPROPRIATIONS FOR ETHANOL RESEARCH PILOT 
                    PLANT.

    There are authorized to be appropriated to construct a 
Department of Agriculture corn-based ethanol research pilot 
plant a total of $14,000,000 for fiscal year 2000 and 
subsequent fiscal years.

           *       *       *       *       *       *       *


                      FOOD SECURITY ACT OF 1985

           *       *       *       *       *       *       *


    Section 1232(a)(7) not to conduct any harvesting or 
grazing, nor otherwise make commercial use of the forage, on 
land that is subject to the contract, nor adopt any similar 
practice specified in the contract by the Secretary as a 
practice that would tend to defeat the purposes of the 
contract, [except that the Secretary may permit harvesting] 
except that the Secretary--
          (A) may permit--
                  (i) harvesting or grazing or other commercial 
                use of the forage on land that is subject to 
                the contract in response to a drought or other 
                similar [emergency, and the Secretary may 
                permit limited] emergency; and
                  (ii) limited grazing on such land where such 
                grazing is incidental to the gleaning of crop 
                residues on the fields in which such land is 
                located and occurs during the 7-month period in 
                which grazing of conserving use acreage is 
                allowed in a State under the Agricultural Act 
                of 1949 (7 U.S.C. 1421 et seq.) or after the 
                producer harvests the grain crop of the 
                surrounding field for a reduction in rental 
                payment commensurate with the limited economic 
                value of such incidental grazing; and
          (B) shall approve not more than 18 projects under 
        which crops on land subject to the contract may be 
        harvested for recovery of biomass used in energy 
        production if--
                  (i) no acreage subject to the contract is 
                harvested more than once every other year;
                  (ii) not more than 25 percent of the total 
                acreage enrolled in the program under this 
                subchapter in any crop reporting district (as 
                designated by the Secretary), is harvested in 
                any 1 year;
                  (iii) no portion of the crop is used for any 
                commercial purpose other than energy production 
                from biomass;
                  (iv) no wetland, or acreage of any type 
                enrolled in a partial field conservation 
                practice (including riparian forest buffers, 
                filter strips, and buffer strips), is 
                harvested;
                  (v) the owner or operator agrees to a payment 
                reduction under this section in an amount 
                determined by the Secretary;
                  (vi) the owner or operator agrees to 
                commission and submit to the Secretary a study 
                and report, to be conducted and written by a 
                third party approved by the Secretary, on the 
                impact of the biomass production and harvesting 
                on wildlife; and
                  (vii) the owner or operator agrees to such 
                other terms and conditions as the Secretary, in 
                consultation with the State technical committee 
                for the State and appropriate conservation and 
                wildlife advocates, may establish to ensure 
                that the production and harvesting of biomass 
                crops minimize disturbance of wildlife habitat 
                and are otherwise consistent with the purposes 
                of the program established under this 
                subchapter, with any biomass harvesting project 
                permitted to harvest at least 50,000 acres per 
                year.

                                  
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