To increase the diversity and independence of the United States energy supply by providing encouragement of energy sources from rural America, including biofuels and wind energy, and for other purposes.

Summary: Rural America Energy Act of 2007 - Amends the Farm Security and Rural Investment Act of 2002 to redefine "bioenergy" to include: (1) cellulosic cogeneration; (2) biomass gasification; and (3) hydrogen made from cellulosic commodities for fuel cells.

Instructs the Secretary of Agriculture (Secretary) to make available increased funds of the Commodity Credit Corporation to implement: (1) the bioenergy program; (2) renewable energy systems and energy efficiency improvements; and (3) grants for small projects.

Amends the Internal Revenue Code to: (1) provide a five-year extension of credit for electricity produced from certain renewable resources; and (2) allow a tax credit for certain wind energy property placed in service or installed by the taxpayer during the taxable year.

Instructs the Secretary of Energy to spend up to $1 million to fund feasibility studies for the construction of dedicated ethanol pipelines.

Amends the Food Security Act of 1985 to: (1) extend the conservation reserve program through calendar 2012; and (2) direct the Secretary to ensure that, as contracts expire and lands are taken out of the program, the lands are replaced with the most environmentally sensitive acres, so that the program continues to protect highly erodible lands while increasing the acreage outside of the program available for the production of crops to accommodate biofuel production.

Instructs the Secretary to make transitional assistance payments to an agricultural producer during the first year in which the producer devotes land to the production of a qualified cellulosic crop.

Requires the Securities and Exchange Commission to revise specified accounting practices of persons engaged in crude oil or natural gas production in the United States to establish a renewable reserves classification and disclosure system, which shall treat contracted biomass crops for a cellulosic biorefinery as renewable reserves.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Rural America Energy Act of 2007''.

SEC. 2. ADJUSTMENTS TO THE BIOENERGY PROGRAM.

    Section 9010 of the Farm Security and Rural Investment Act of 2002 
(7 U.S.C. 8108) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)--
                            (i) in subparagraph (A), by striking 
                        ``and'';
                            (ii) in subparagraph (B), by striking the 
                        final period and inserting a semicolon; and
                            (iii) by adding at the end the following 
                        new subparagraphs:
                    ``(C) cellulosic cogeneration;
                    ``(D) biomass gasification; and
                    ``(E) hydrogen made from cellulosic commodities for 
                fuel cells.'';
                    (B) by redesignating paragraphs (3) and (4) as 
                paragraphs (4) and (5), respectively;
                    (C) by inserting after paragraph (2) the following 
                new paragraph:
            ``(3) Cellulosic cogeneration.--The term `cellulosic 
        cogeneration' means combined heat and electrical power produced 
        from cellulose, hemicellulose, and lignin found in plant cell 
        walls.''; and
                    (D) in subparagraph (A) of paragraph (4), as 
                redesignated by subparagraph (B), by striking 
                ``corn,''; and
            (2) by striking subsection (f) and inserting the following:
    ``(f) Funding.--Of the funds of the Commodity Credit Corporation, 
the Secretary shall use to carry out this section $25,000,000 for each 
of fiscal years 2008 through 2012.''.

SEC. 3. INCREASED FUNDING FOR THE RENEWABLE ENERGY PROGRAM AND 
              ADJUSTING THE PROGRAM TO BENEFIT SMALLER PROJECTS.

    Section 9006 of the Farm Security and Rural Investment Act of 2002 
(7 U.S.C. 8106) is amended by striking subsection (f) and inserting the 
following new subsections:
    ``(f) Small Projects.--The Secretary shall use not less than 15 
percent of the funds available under this section to provide grants for 
projects that have a total cost $50,000 or less.
    ``(g) Funding.--Of the funds of the Commodity Credit Corporation, 
the Secretary shall make available to carry out this section 
$50,000,000 for each of fiscal years 2008 through 2012.''.

SEC. 4. 5-YEAR EXTENSION OF CREDIT FOR ELECTRICITY PRODUCED FROM 
              CERTAIN RENEWABLE RESOURCES.

    Section 45(d) of the Internal Revenue Code of 1986 (relating to 
qualified facilities) is amended by striking ``2009'' each place it 
appears and inserting ``2014''.

SEC. 5. DEDICATED ETHANOL PIPELINE FEASIBILITY STUDIES.

    (a) In General.--The Secretary of Energy, in coordination with the 
Secretary of Agriculture and the Secretary of Transportation, shall 
spend up to $1,000,000 to fund feasibility studies for the construction 
of dedicated ethanol pipelines.
    (b) Conduct of Studies.--
            (1) In general.--The Secretary of Energy shall--
                    (A) through a competitive solicitation process, 
                select 1 or more firms having capabilities in the 
                planning, development, and construction of dedicated 
                ethanol pipelines to carry out the feasibility studies 
                described in subsection (a); or
                    (B) carry out the feasibility studies in 
                conjunction with such firms.
            (2) Timing.--
                    (A) In general.--If the Secretary elects to select 
                1 or more firms under paragraph (1)(A), the Secretary 
                shall award funding under this section not later than 
                120 days after the date of enactment of this Act.
                    (B) Studies.--As a condition of receiving funds 
                under this section, a recipient of funding shall agree 
                to submit to the Secretary a completed feasibility 
                study not later than 360 days after the date of 
                enactment of this Act.
    (c) Study Factors.--Feasibility studies funded under this section 
shall include consideration of--
            (1) existing or potential barriers to dedicated ethanol 
        pipelines, including technical, siting, financing, and 
        regulatory barriers;
            (2) potential evolutionary pathways for the development of 
        an ethanol pipeline transport system, such as starting with 
        localized gathering networks as compared to major interstate 
        ethanol pipelines to carry larger volumes from the Midwest to 
        the East or West coast;
            (3) market risk, including throughput risk, and ways of 
        mitigating the risk;
            (4) regulatory, financing, and siting options that would 
        mitigate risk in these areas and help ensure the construction 
        of dedicated ethanol pipelines;
            (5) financial incentives that may be necessary for the 
        construction of dedicated ethanol pipelines, including the 
        return on equity that sponsors of the first dedicated ethanol 
        pipelines will require to invest in the pipelines;
            (6) ethanol production of 20,000,000,000, 30,000,000,000, 
        and 40,000,000,000 gallons per year by 2020; and
            (7) such other factors that the Secretary considers to be 
        appropriate.
    (d) Confidentiality.--If a recipient of funding under this section 
requests confidential treatment for critical energy infrastructure 
information or commercially-sensitive data contained in a feasibility 
study submitted by the recipient under subsection (b)(2)(B), the 
Secretary shall offer to enter into a confidentiality agreement with 
the recipient to maintain the confidentiality of the submitted 
information.
    (e) Review; Report.--The Secretary of Energy shall--
            (1) review the feasibility studies submitted under 
        subsection (b)(2)(B) or carried out under subsection (b)(1)(B); 
        and
            (2) not later than 15 months after the date of enactment of 
        this Act, submit to Congress a report that includes--
                    (A) information about the potential benefits of 
                constructing dedicated ethanol pipelines; and
                    (B) recommendations for legislation that could help 
                provide for the construction of dedicated ethanol 
                pipelines.
    (f) Funding.--There are authorized to be appropriated to the 
Secretary of Energy to carry out this section $1,000,000 for fiscal 
year 2008, to remain available until expended.

SEC. 6. CONSERVATION RESERVE PROGRAM ADJUSTMENTS TO PROTECT THE MOST 
              ENVIRONMENTALLY SENSITIVE ACRES AND PROMOTE PRODUCTION OF 
              BIOFUELS CROPS.

    (a) Reauthorization.--Section 1231(a) of the Food Security Act of 
1985 (16 U.S.C. 3831(a)) is amended by striking ``Through the 2007 
calendar year'' and inserting the following:
            ``(1) Program required.--Through the 2012 calendar year''.
    (b) Maximum Enrollment.--Section 1231(d) of the Food Security Act 
of 1985 (16 U.S.C. 3831(d)) is amended--
            (1) by striking ``39,200,000 acres'' and inserting 
        ``40,000,000 acres''; and
            (2) by striking by striking ``2007'' and inserting 
        ``2012''.
    (c) Priority for Protection of Most Environmentally Sensitive 
Acres.--Section 1231(a) of the Food Security Act of 1985 (16 U.S.C. 
3831(a)), as amended by subsection (a), is amended by adding at the end 
the following new paragraph:
            ``(2) Priority for protection of most environmentally 
        sensitive acres.--In applying subsection (b) and other 
        provisions of this subchapter for the enrollment of land in the 
        conservation reserve program, the Secretary shall ensure that, 
        as contracts expire and lands are taken out of the program, the 
        lands are replaced with the most environmentally sensitive 
        acres, so that the program continues to protect highly erodible 
        lands while increasing the acreage outside of the program that 
        is available for the production of crops to accommodate biofuel 
        production.''.

SECTION 7. TRANSITIONAL ASSISTANCE FOR FARMERS WHO PLANT DEDICATED 
              ENERGY CROPS FOR A LOCAL CELLULOSIC REFINERY.

    (a) In General.--The Secretary shall make transitional assistance 
payments to an agricultural producer during the 1st year in which the 
producer devotes land to the production of a qualified cellulosic crop.
    (b) Definitions.--In this section:
            (1) Cellulosic crop.--The term ``cellulosic crop'' means a 
        tree or grass that is grown specifically to provide raw 
        materials (feedstocks) for conversion to liquid transportation 
        fuels or chemicals through biochemical or thermochemical 
        processes, or for energy generation through combustion, 
        pyrolysis, or co-firing.
            (2) Cellulosic refiner.--The term ``cellulosic refiner'' 
        means the owner or operator of a cellulosic refinery.
            (3) Cellulosic refinery.--The term ``cellulosic refinery'' 
        means a refinery that processes a cellulosic crop.
            (4) Qualifed cellulosic crop.--The term ``qualified 
        cellulosic crop'' means, with respect to an agricultural 
        producer, a cellulosic crop which is--
                    (A) the subject of a contract (or memorandum of 
                understanding) between the producer and a cellulosic 
                refiner, under which the producer is obligated to sell 
                the crop to the refiner at a certain date in the 
                future; and
                    (B) produced not more than 70 miles from a 
                cellulosic refinery owned or operated by the refiner.
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of Agriculture.
    (c) Amount of Payment.--
            (1) Determined by formula.--The Secretary shall devise a 
        formula to be used to calculate the amounts of the payments to 
        be made to an agricultural producer under this section, which 
        shall be based on the opportunity costs incurred by the 
        producer during the 1st year in which the producer devotes land 
        to the production of the qualified cellulosic crop, subject to 
        paragraph (2) of this subsection. The Secretary shall prescribe 
        a standard to be used to determine opportunity costs using land 
        rental rates and other costs determined by the Secretary.
            (2) Limitation.--The total of the amounts paid to a single 
        producer under this section shall not exceed 25 percent of the 
        funds made available under subsection (e) for the fiscal year 
        in which the amounts are so paid.
    (d) Regulations.--The Secretary shall prescribe such regulations as 
may be necessary to carry out this section.
    (e) Limitations on Authorization of Appropriations.--
            (1) In general.--To carry out this section, there are 
        authorized to be appropriated to the Secretary not more than 
        $4,088,000 for each of fiscal years 2008 through 2012.
            (2) Availability of funds.--The amounts made available 
        under paragraph (1) are authorized to remain available until 
        expended.

SEC. 8. CREDIT FOR INSTALLATION OF WIND ENERGY PROPERTY INCLUDING BY 
              RURAL HOMEOWNERS, FARMERS, RANCHERS, AND SMALL 
              BUSINESSES.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 30D. WIND ENERGY PROPERTY.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to $1,500 with respect to each half kilowatt of capacity of 
qualified wind energy property placed in service or installed by the 
taxpayer during such taxable year.
    ``(b) Limitation.--No credit shall be allowed under subsection (a) 
unless at least 50 percent of the energy produced annually by the 
qualified wind energy property is consumed on the site on which the 
property is placed in service or installed.
    ``(c) Qualified Wind Energy Property.--For purposes of this 
section, the term `qualified wind energy property' means a wind turbine 
of 100 kilowatts of rated capacity or less if--
            ``(1) such turbine is placed in service or installed on or 
        in connection with property located in the United States,
            ``(2) in the case of an individual, the property on or in 
        connection with which such turbine is installed is a dwelling 
        unit,
            ``(3) the original use of such turbine commences with the 
        taxpayer, and
            ``(4) such turbine carries at least a 5-year limited 
        warranty covering defects in design, material, or workmanship, 
        and, for property that is not installed by the taxpayer, at 
        least a 5-year limited warranty covering defects in 
        installation.
    ``(d) Limitation Based on Amount of Tax.--
            ``(1) In general.--The credit allowed under subsection (a) 
        for any taxable year shall not exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                part (other than under this section and subpart C 
                thereof, relating to refundable credits) and section 
                1397E.
            ``(2) Carryover of unused credit.--If the credit allowable 
        under subsection (a) exceeds the limitation imposed by 
        paragraph (1) for such taxable year, such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year.
    ``(e) Special Rules.--For purposes of this section--
            ``(1) Tenant-stockholder in cooperative housing 
        corporation.--In the case of an individual who is a tenant-
        stockholder (as defined in section 216(b)(2)) in a cooperative 
        housing corporation (as defined in section 216(b)(1)), such 
        individual shall be treated as having paid his tenant-
        stockholder's proportionate share (as defined in section 
        216(b)(3)) of any expenditures paid or incurred for qualified 
        wind energy property by such corporation, and such credit shall 
        be allocated appropriately to such individual.
            ``(2) Condominiums.--
                    ``(A) In general.--In the case of an individual who 
                is a member of a condominium management association 
                with respect to a condominium which he owns, such 
                individual shall be treated as having paid his 
                proportionate share of expenditures paid or incurred 
                for qualified wind energy property by such association, 
                and such credit shall be allocated appropriately to 
                such individual.
                    ``(B) Condominium management association.--For 
                purposes of this paragraph, the term `condominium 
                management association' means an organization which 
                meets the requirements of section 528(c)(2) with 
                respect to a condominium project of which substantially 
                all of the units are used by individuals as dwelling 
                units.
    ``(f) Basis Adjustment.--For purposes of this subtitle, if a credit 
is allowed under this section for any expenditure with respect to a 
dwelling unit or other property, the increase in the basis of such 
dwelling unit or other property which would (but for this subsection) 
result from such expenditure shall be reduced by the amount of the 
credit so allowed.
    ``(g) Application of Credit.--The credit allowed under this section 
shall apply to property placed in service or installed after December 
31, 2006, and before January 1, 2012.''.
    (b) Conforming Amendment.--Subsection (a) of section 1016 of the 
Internal Revenue Code of 1986 (relating to general rule for adjustments 
to basis) is amended by striking ``and'' at the end of paragraph (36), 
by striking the period at the end of paragraph (37) and inserting ``, 
and'', and by adding at the end the following new paragraph:
            ``(38) in the case of a dwelling unit or other property 
        with respect to which a credit was allowed under section 30D, 
        to the extent provided in section 30D(f).''.
    (c) Clerical Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 30C the 
following new item:

``Sec. 30D. Wind energy property.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 2006.

SEC. 9. MODIFICATION OF ACCOUNTING PRACTICES.

    Within 18 months after the date of enactment of this Act, the 
Securities and Exchange Commission shall revise the accounting 
practices to be followed in the preparation of accounts by persons 
engaged, in whole or in part, in the production of crude oil or natural 
gas in the United States that were developed pursuant to section 503 of 
the Energy Policy Conservation Act (42 U.S.C. 6383) to establish a 
renewable reserves classification and disclosure system. Such 
classification and disclosure system shall treat contracted biomass 
crops for a cellulosic biorefinery as renewable reserves.