```

[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1766 Introduced in House (IH)]

110th CONGRESS
  1st Session
                                H. R. 1766

   To amend conservation and biofuels programs of the Department of 
  Agriculture to promote the compatible goals of economically viable 
 agricultural production and reducing nutrient loads in the Chesapeake 
  Bay and its tributaries by assisting agricultural producers to make 
    beneficial, cost-effective changes to cropping systems, grazing 
   management, and nutrient management associated with livestock and 
 poultry production, crop production, bioenergy production, and other 
 agricultural practices on agricultural land within the Chesapeake Bay 
                   watershed, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 29, 2007

Mr. Van Hollen (for himself, Mr. Scott of Virginia, Mr. Gilchrest, Mr. 
   Tom Davis of Virginia, Mr. Hoyer, Mr. Wynn, Mrs. Jo Ann Davis of 
 Virginia, Mr. Ruppersberger, Ms. Norton, Mr. Sarbanes, Mr. Wolf, Mr. 
 Moran of Virginia, Mrs. Drake, Mr. Cummings, Mr. Hinchey, Mr. Platts, 
 Mr. Carney, and Mr. Hall of New York) introduced the following bill; 
           which was referred to the Committee on Agriculture

_______________________________________________________________________

                                 A BILL

 
   To amend conservation and biofuels programs of the Department of 
  Agriculture to promote the compatible goals of economically viable 
 agricultural production and reducing nutrient loads in the Chesapeake 
  Bay and its tributaries by assisting agricultural producers to make 
    beneficial, cost-effective changes to cropping systems, grazing 
   management, and nutrient management associated with livestock and 
 poultry production, crop production, bioenergy production, and other 
 agricultural practices on agricultural land within the Chesapeake Bay 
                   watershed, and for other purposes.

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

SECTION 1. SHORT TITLE.

    (a) Short Title.--This Act may be cited as the ``Chesapeake's 
Healthy and Environmentally Sound Stewardship of Energy and Agriculture 
Act of 2007'' or the ``CHESSEA Act of 2007'' .
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title.
Sec. 2. Findings.
Sec. 3. Environmental quality incentives program.
Sec. 4. Regional water quality enhancement program.
Sec. 5. Conservation innovation grants.
Sec. 6. Conservation reserve program.
Sec. 7. Conservation security program.
Sec. 8. Comprehensive planning technical assistance pilot program.
Sec. 9. Wetlands reserve program.
Sec. 10. Agricultural management assistance.
Sec. 11. Biorefinery and biofuel project grants.
Sec. 12. Renewable energy systems and energy efficiency improvements 
                            program.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) The Chesapeake Bay is the largest estuary in North 
        America, the world's most productive estuary, and a resource of 
        worldwide significance.
            (2) The Chesapeake Bay watershed encompasses portions of 
        six States, New York, Pennsylvania, Delaware, Maryland, 
        Virginia, and West Virginia, and the District of Columbia, and 
        contains 150 major tributaries.
            (3) Agricultural operations, small family farms in 
        particular, is a defining feature of the economy, heritage, 
        culture, landscape, and environment of the States of the 
        Chesapeake Bay watershed, and these agricultural operations 
        account for nearly one quarter of the land in the Chesapeake 
        Bay watershed, stretching across 10 million acres and involving 
        tens of thousands of individual farmers.
            (4) Unfortunately, these same agricultural operations are 
        the source of more than 40 of the nitrogen and phosphorus loads 
        going into the Chesapeake Bay;
            (5) In the landmark regional agreement known as Chesapeake 
        2000, the Federal Government, the six States of the Chesapeake 
        Bay watershed, and the District of Columbia, agreed to 
        significantly reduce annual nitrogen, phosphorus, and sediment 
        loadings by 2010 to restore the Chesapeake Bay and its tidal 
        tributaries sufficiently to remove them from the list of 
        impaired waters under the Clean Water Act.
            (6) Current efforts to implement Chesapeake 2000 and 
        achieve the nitrogen and phosphorus reduction goals specified 
        in the agreement are significantly underfunded.
            (7) The implementation of improved conservation practices 
        in agricultural operations in the Chesapeake Bay watershed and 
        increased agricultural bioenergy production can serve the dual 
        purposes of enhancing the environmental health of the 
        Chesapeake Bay and the economic vitality of farmers in the 
        watershed.

SEC. 3. ENVIRONMENTAL QUALITY INCENTIVES PROGRAM.

    (a) Extension.--
            (1) Funding extension and increase.--Section 1241(a) of the 
        Food Security Act of 1985 (16 U.S.C. 3841(a)) is amended by 
        striking paragraph (6) and inserting the following new 
        paragraph:
            ``(6) The environmental quality incentives program under 
        chapter 4, using, to the maximum extent practicable, 
        $2,000,000,000 in each of fiscal years 2008 through 2013.''.
            (2) Conforming amendments.--Section 1240B of such Act (16 
        U.S.C. 3839aa-2) is amended--
                    (A) in subsection (a)(1), by striking ``2010'' and 
                inserting ``2013''; and
                    (B) in subsection (g), by striking ``2007'' and 
                inserting ``2013''.
    (b) Priority Given to State Allocations.--Section 1240F of such Act 
(16 U.S.C. 3839aa-6) is amended--
            (1) by striking ``To'' and inserting ``(a) Assistance, 
        Information, and Training.--To''; and
            (2) by adding at the end the following new subsections:
    ``(b) Interstate Watersheds.--When making program allocations to 
States, the Secretary shall give priority to States located within 
watersheds that--
            ``(1) encompass more than one State;
            ``(2) are recognized under the Clean Water Act as having 
        nutrient-related water quality impairments or sediment-related 
        water quality impairments (or both); and
            ``(3) are subject to State-approved tributary strategies or 
        watershed management plans designed to address such 
        impairments.
    ``(c) Prohibited Allocation Factor.--The Secretary shall not use 
the total number of acres as an allocation factor.''.
    (c) Cost Share Payment Exception.--Section 1240B(d)(2) of such Act 
(16 U.S.C. 3839aa-2(d)(2)) is amended by striking subparagraph (A) and 
inserting the following new subparagraph:
                    ``(A) Limited resource and beginning farmers.--The 
                Secretary may increase the amount provided to a 
                producer under paragraph (1) to not more than 90 
                percent if the producer is a limited resource or 
                beginning farmer or rancher, as determined by the 
                Secretary, but in no event shall the cost-share payment 
                under the program be less than 15 percent more than the 
                payment that the Secretary may determine under 
                paragraph (1).''
    (d) Forest Conservation and Performance Incentives for States.--
Chapter 4 of subtitle D of title XII of such Act is amended by adding 
at the end the following new sections:

``SEC. 1240J. PROMOTION OF FOREST STEWARDSHIP PRACTICES.

    ``(a) Cost-Share Payments and Incentive Payments.--In carrying out 
the program under this chapter, the Secretary shall promote forest 
stewardship by providing cost-share payments and incentive payments to 
non-industrial private forest owners to carry out eligible conservation 
activities, to--
            ``(1) improve water quality;
            ``(2) improve habitat for at-risk species;
            ``(3) restore ecologically important forest types; or
            ``(4) control invasive species.
    ``(b) Priority.--The Secretary shall give priority to projects that 
involve multiple landowners implementing eligible conservation 
activities in a coordinated way to address the purposes described in 
subsection (a).
    ``(c) Funding.--
            ``(1) Amounts.--The Secretary shall use funds of the 
        Commodity Credit Corporation to carry out this section in the 
        following amounts:
                    ``(A) $25,000,000 for fiscal year 2008.
                    ``(B) $45,000,000 for fiscal year 2009.
                    ``(C) $60,000,000 for fiscal year 2010.
                    ``(D) $75,000,000 for each of fiscal years 2011 and 
                2012.
                    ``(E) $100,000,000 for fiscal year 2013.

``SEC. 1240K. PERFORMANCE INCENTIVES FOR STATES.

    ``(a) High Level of Performance Bonus.--For each of fiscal years 
2008 through 2013, 10 percent of the funds made available under this 
chapter shall be reserved by the Secretary for bonus allocations to 
States that demonstrate a high level of performance in implementing the 
program.
    ``(b) Special Considerations.--In evaluating State performance 
under subsection (a), the Secretary shall reward States that--
            ``(1) consistently meet the requirements of section 1240C 
        in evaluating offers and payments;
            ``(2) dedicate a portion of their annual environmental 
        quality incentives program allocation to multi-producer 
        cooperative efforts to address specific resource concerns;
            ``(3) collaborate with other Federal and State agencies, 
        local governments, educational institutions, and for-profit and 
        nonprofit organizations to monitor and evaluate the 
        environmental outcomes associated with implementation of the 
        program;
            ``(4) demonstrate effective and efficient program delivery, 
        including the provision of adequate technical assistance to all 
        program participants through appropriate staffing and through 
        cooperation with other Federal, State, Tribal, and local 
        agencies, for-profit and nonprofit organizations, and 
        individuals with demonstrated expertise in the planning and 
        implementation of conservation practices, systems, and 
        approaches;
            ``(5) support and encourage innovative approaches to 
        addressing resource concerns;
            ``(6) effectively leverage Federal funding with local and 
        state matching funds; and
            ``(7) demonstrate effective outreach and innovative 
        approaches to reaching and serving beginning farmers and 
        ranchers, limited-resource producers, and operators with lower 
        rates of historical participation in Federal farm and 
        conservation programs.''.

SEC. 4. REGIONAL WATER QUALITY ENHANCEMENT PROGRAM.

    (a) Program Requirements.--Chapter 5 of subtitle D of title XII of 
the Food Security Act of 1985 is amended by inserting after section 
1240P (16 U.S.C. 3839bb-3) the following new section:

``SEC. 1240Q. REGIONAL WATER QUALITY ENHANCEMENT PROGRAM.

    ``(a) Program Required.--In order to increase, facilitate, and 
further implement cooperative partnerships between States, producers, 
and other interested persons or parties to improve water quality in the 
largest waterbodies in the United States, the Secretary shall enter 
into agreements with States containing all or a portion of such a 
waterbody or containing tributaries of such a waterbody to assist such 
States to carry out special initiatives focused on the enhanced 
stewardship of such waterbodies. The Chesapeake Bay and its tributaries 
shall be one of the waterbodies regarding which the Secretary enters 
into agreements under this section.
    ``(b) Term of Agreement.--An agreement under this section shall be 
for a term of not shorter than three years nor longer than five years.
    ``(c) Competitive Process; Set-Aside.--The Secretary shall 
establish a competitive process for considering applications for 
agreements under this section, consistent with the evaluation criteria 
listed in subsection (d). However, not less than 25 percent of total 
funds available for agreements under this section shall be awarded to 
States containing a portion of the Chesapeake Bay watershed.
    ``(d) Evaluation of Applications; Criteria.--In evaluating 
applications for an agreement under this section, the Secretary shall 
consider the extent to which the program proposed by the State will 
accomplish the following:
            ``(1) Most cost-effectively achieve the greatest 
        improvements to water quality, utilizing one or more of the 
        following:
                    ``(A) Adoption of management practices and systems, 
                including soil amendments, soil and stalk testing, 
                alternative cropping systems, cover crops, buffers, and 
                other measures.
                    ``(B) Innovative or advanced conservation 
                techniques that hold substantial promise for producing 
                long-term, cost-effective improvements to water 
                quality.
                    ``(C) Reduction in nutrient inputs to agricultural 
                operations, such as through feed management.
                    ``(D) Manure processing and treatment technologies 
                to permit more efficient use and transport of manure to 
                produce energy, restore nutrient-deficient lands, or 
                reduce air emissions.
            ``(2) Leverage financial and technical resources from 
        sources other than the programs authorized by this subtitle, 
        including financial and technical resources provided by other 
        Federal agencies, State agencies, local governments, 
        nongovernmental organizations and associations, and other 
        private sector entities.
            ``(3) Provide necessary technical assistance to producers 
        and other cooperators participating in the project or 
        initiative, including in the application cost estimates for 
        technical assistance and whether such assistance will be 
        provided by technical service providers.
            ``(4) Establish a program of education and outreach to 
        attract new participants.
            ``(5) Serve as a transferable model for other regional 
        watershed efforts.
            ``(6) Evaluate progress and measure results.
    ``(e) Priorities.--To the maximum extent practicable, consistent 
with the requirements of subsection (d), the Secretary shall ensure 
that, each fiscal year, agreements are entered into under this section 
to support projects and initiatives that collectively address water 
quality impairments.
    ``(f) Selection Process.--In evaluating applications under this 
section, the Secretary shall consider recommendations from scientists, 
regional experts, and other persons with appropriate expertise in the 
Department of Agriculture, other Federal and State agencies, and 
interest groups, including producer associations and conservation and 
environmental organizations.
    ``(g) Cost Share Requirements.--The Secretary shall not require 
more than 25 percent of the cost of a project or initiative supported 
under an agreement entered into under this section to come from non-
Federal sources. However, the Secretary may award more points to 
projects or initiatives offering to cover a higher percentage of the 
cost of the project or initiative from non-Federal sources. If the 
Secretary establishes a cost-share requirement for a project or 
initiative, the Secretary shall allow the use of in-kind contributions 
to meet that requirement.
    ``(h) State.--In this section, the term `State' includes the 
District of Columbia.''.
    (b) Funding.--Section 1241(a) of such Act (16 U.S.C. 3841(a)) is 
amended by adding at the end the following new paragraph:
            ``(8) The regional water quality enhancement program under 
        section 1240Q, using, to the maximum extent practicable--
                    ``(A) $175,000,000 for fiscal year 2008; and
                    ``(B) $200,000,000 in each of fiscal years 2009 
                through 2013.''.

SEC. 5. CONSERVATION INNOVATION GRANTS.

    Section 1240H of such Act (16 U.S.C. 3839aa-8) is amended--
            (1) in subsection (a), by striking ``may'' and inserting 
        ``shall'';
            (2) in subsection (b)--
                    (A) by striking ``may'' and inserting ``shall'';
                    (B) by striking ``and'' at the end of paragraph 
                (2);
                    (C) by striking the period at the end of paragraph 
                (3) and inserting ``; and''; and
                    (D) by adding at the end the following new 
                paragraph:
            ``(4) include a plan for technology transfer.''; and
            (3) by adding at the end the following new subsections:
    ``(d) Technology Transfer.--In making grants under this section, 
the Secretary shall give priority to projects that ensure 
transferability of innovative conservation technologies and approaches 
to achieve widespread implementation by producers.
    ``(e) Additional Funding.--In addition to amounts made available 
under section 1241(a)(6) to carry out this chapter, the Secretary shall 
use $100,000,000 in funds of the Commodity Credit Corporation in each 
of fiscal years 2008 through 2013 to carry out this section:''.

SEC. 6. CONSERVATION RESERVE PROGRAM.

    (a) Extension.--
            (1) Funding extension.--Section 1241(a) of the Food 
        Security Act of 1985 (16 U.S.C. 3841(a)) is amended--
                    (A) in the matter preceding paragraph (1), by 
                striking ``2007'' and inserting ``2013''; and
                    (B) in paragraph (1), by striking ``The'' and 
                inserting ``For each of fiscal years 2002 through 2013, 
                the''.
            (2) Conforming amendments.--Section 1231 of such Act (16 
        U.S.C. 3831) is amended--
                    (A) in subsection (a), by striking ``2007'' and 
                inserting ``2013'';
                    (B) in subsection (d), by striking ``2007'' and 
                inserting ``2013'';
                    (C) in subsection (e)(3), by striking ``2002'' and 
                inserting ``2008''; and
                    (D) in subsection (h)(1), by striking ``2007'' and 
                inserting ``2013''.
    (b) Enrollment Goals and Use of General Signup.--Section 1231(d) of 
such Act (16 U.S.C. 3831(d)) is amended--
            (1) by striking ``The Secretary'' and inserting:
            ``(1) Acreage authorized.--The Secretary''; and
            (2) by adding at the end the following new paragraphs:
            ``(2) Enrollment goals.--For the period beginning on the 
        date of the enactment of this paragraph and ending on December 
        31, 2013, the Secretary shall establish a goal to enroll not 
        less than 7,000,000 acres of eligible land through the 
        continuous enrollment program and the conservation reserve 
        enhancement program, with priority given to riparian buffers, 
        restored wetlands, and other habitats known to improve water 
        quality and called for under established, State-approved 
        tributary strategies or watershed management plans to reduce 
        nutrients and sediments from agricultural sources to impaired 
        waters.
            ``(3) Limitation on use of general signup.--To the maximum 
        extent practicable, the Secretary shall ensure that not more 
        than 80 percent of the acres maintained in the conservation 
        reserve at any one time during the 2008 through 2013 calendar 
        years are acres that were enrolled through a general signup 
        under section 1234(c)(2)(A). For an offer to be accepted into 
        the conservation reserve under the general signup, the offer 
        must have an environmental benefit index score at or above a 
        threshold that is 15 percent higher than the average of the 
        thresholds used in general signups during fiscal years 1996 
        through 2006, adjusted for changes in the index over these 
        fiscal years.''.
    (c) Payment Limitation.--Section 1234(f)(1) of such Act is (16 
U.S.C. 3834(f)) is amended by adding at the end the following new 
sentence: ``The Secretary may waive this payment limitation for persons 
participating in a conservation reserve enhancement program if the 
Secretary determines such a waiver is necessary to achieve the 
objectives of the conservation reserve enhancement program.''.

SEC. 7. CONSERVATION SECURITY PROGRAM.

    (a) Repeal of Funding Cap.--Section 1241(a)(3) of the Food Security 
Act of 1985 (16 U.S.C. 3841(a)(3)) is amended by striking ``, using not 
more than'' and all that follows through ``2015''.
    (b) Program Extension.--Section 1238A(a) of such Act (16 U.S.C. 
3838a(a)) is amended by striking ``2011'' and inserting ``2013''.
    (c) Assistance to Certain States.--Section 1238A(b) of such Act (16 
U.S.C. 3838a(b)) is amended by adding at the end the following new 
paragraph:
            ``(5) Continuous enrollment.--The Secretary shall provide 
        for a continuous enrollment of eligible land in any State that, 
        through a written agreement, is partnering with other States 
        and the Federal government to achieve specific numeric 
        reductions in nutrient and sediment pollution loadings within a 
        multi-State watershed in an effort to remove the waters in that 
        watershed from the list of impaired waters under the Clean 
        Water Act.''.
    (d) Enhanced Payments for Water Quality.--Section 
3838C(b)(1)(C)(iii) of such Act (16 U.S.C. 3838c(b)(1)(C)(iii)) is 
amended--
            (1) by striking ``or'' at the end of subclause (IV);
            (2) by striking the period at the end of subclause (V) and 
        inserting ``; and''; and
            (3) by adding at the end the following new subclause:
                    ``(VI) implements practices that will significantly 
                improve water quality in watersheds associated with 
                waters impaired by agricultural nutrients, with 
                priority given to the most effective practices.''.
    (e) Duties of the Secretary.--Section 3838c of such Act (16 U.S.C. 
3838c) is amended by striking subsections (f) and (g) and inserting the 
following new subsections:
    ``(f) Enrollment Priority.--In any fiscal year in which funding for 
the conservation security program is limited, the Secretary shall 
prioritize contracts to address water quality in watersheds of water 
bodies impaired by nutrients, based on the degree to which a producer 
proposes to increase the management intensity with which the producer 
addresses nutrient impairment of water quality in the watershed.
    ``(g) Prohibited Allocation Factor.--The Secretary shall not use 
the total number of acres as an allocation factor.
    ``(h) Technical Assistance.--For each of fiscal years 2008 through 
2013, the Secretary shall provide technical assistance to producers for 
the development and implementation of conservation security contracts 
in an amount based on actual cost, but not to exceed 23 percent of 
amounts expended for the fiscal year.''.

SEC. 8. COMPREHENSIVE PLANNING TECHNICAL ASSISTANCE PILOT PROGRAM.

    Section 1242 of the Food Security Act of 1985 (16 U.S.C. 3842) is 
amended by adding at the end the following new subsection:
    ``(c) Comprehensive Planning Technical Assistance Pilot Program.--
            ``(1) Chesapeake bay watershed.--The Secretary shall 
        establish a pilot program in the Chesapeake Bay watershed to 
        assist producers with comprehensive conservation planning, 
        design, and implementation, both before applying for assistance 
        under any of the conservation programs authorized by subtitle D 
        and through the process of design and implementation of 
        conservation projects.
            ``(2) Comprehensive assessment.--The pilot program will 
        assist producers by making a comprehensive assessment of the 
        resource concerns, needs, and alternative solutions for the 
        producer's entire operation, as determined by the Secretary, 
        following the procedures in the Natural Resources Conservation 
        Service conservation planning manual, and by providing 
        technical assistance in design and implementation of the 
        solutions.
            ``(3) Provision of assistance.--Assistance to producers 
        under the pilot program shall be provided by the Secretary 
        directly or through third party providers certified by the 
        Secretary. The results of the comprehensive planning, design, 
        and implementation assistance shall be provided to the producer 
        to enable informed choices on the type of financial assistance 
        available through conservation programs administered by the 
        Secretary under subtitle D that would most effectively address 
        the resource needs of the operation consistent with the 
        environmental goals for the area in which the operation is 
        located.
            ``(4) Cost.--Assistance under the pilot program shall be 
        provided by the Secretary without cost to producers.
            ``(5) Funding.--The Secretary shall provide $10,000,000 of 
        the funds of the Commodity Credit Corporation each of fiscal 
        years 2008 through 2013 to carry out the pilot program.''.

SEC. 9. WETLANDS RESERVE PROGRAM.

    (a) Extension.--
            (1) Funding extension.--Section 1241(a)(2) of the Food 
        Security Act of 1985 (16 U.S.C. 3841(a)(2)) is amended by 
        striking ``The'' and inserting ``For each of fiscal years 2002 
        through 2013, the''.
            (2) Conforming amendment.--Section 1237(c) of such Act (16 
        U.S.C. 3837(c)) is amended by striking ``2007'' and inserting 
        ``2013''.
    (b) Maximum and Yearly Enrollment.--Section 1237(b)(1) of such Act 
(16 U.S.C. 3837(b)(1)) is amended by striking ``2,275,000 acres,'' and 
all that follows through the period at the end and inserting 
``3,500,000 acres, of which, to the maximum extent practicable, 5,000 
acres in calendar year 2008 and 10,000 acres in each of calendar years 
2009 and 2010 shall be enrolled to meet State and Federal 2010 goals 
established pursuant to the Chesapeake 2000 agreement for the 
Chesapeake Bay watershed.''.
    (c) Priority.--Section 1237 of such Act (16 U.S.C. 3837) is amended 
by adding at the end the following new subsection:
    ``(g) Priority.--The Secretary shall give priority to enrollments 
benefitting water quality and shall consider whether States are 
implementing the program consistent with these priorities when 
allocating program funding to states.''
    (d) Additional Purpose.--Section 1237A(b)(3) of such Act (16 U.S.C. 
3837a(b)(3)) is amended by inserting after ``wetlands'' the following: 
``, including the reduction of excess nutrients''.
    (e) Increased Cost Share.--Section 1237C(b)(2) of such Act (16 
U.S.C. 3837c(b)(2)) is amended by adding at the end the following new 
sentence: ``However, the Secretary may increase the cost-share 
percentage if the restoration plan referred to in section 1237A(b) 
results in significant reduction of excess nutrients in watersheds of 
waterbodies impaired by agricultural nutrients or results in land 
placed under permanent easement.''.
    (f) Easement Priority.--Section 1237C(d) of such Act (16 U.S.C. 
3837c(d)) is amended by inserting before the period at the end the 
following: ``or for achieving nutrient reductions in watersheds of 
waterbodies impaired by agricultural nutrients''.

SEC. 10. AGRICULTURAL MANAGEMENT ASSISTANCE.

    (a) Additional State.--Subsection (b)(1) of section 524 of the 
Federal Crop Insurance Act (7 U.S.C. 1524) is amended by inserting 
``Virginia,'' after ``Vermont,''.
    (b) Funding and Duration.--Subsection (b)(4)(B) of such section is 
amended--
            (1) in clause (ii)--
                    (A) by striking ``fiscal years 2003 through 2007'' 
                and inserting ``fiscal years 2008 through 2013''; and
                    (B) by striking ``$20,000,000'' and inserting 
                ``$50,000,000''; and
            (2) in clause (iii)--
                    (A) by striking ``fiscal years 2004 through 2007'' 
                and inserting ``fiscal years 2008 through 2013'';
                    (B) in subclause (I), by striking ``$14,000,000'' 
                and inserting ``$38,000,000'';
                    (C) in subclause (II), by striking ``$1,000,000'' 
                and inserting ``$2,000,000''; and
                    (D) in subclause (III), by striking ``$5,000,000'' 
                and inserting ``$10,000,000''.

SEC. 11. BIOREFINERY AND BIOFUEL PROJECT GRANTS.

    (a) Definitions.--Subsection (b) of section 9003 of the Farm 
Security and Rural Investment Act of 2002 (7 U.S.C. 8103) is amended 
by--
            (1) redesignating paragraph (3) as paragraph (4); and
            (2) inserting after paragraph (3) the following new 
        paragraph:
            ``(3) Chesapeake bay watershed states.--The term 
        `Chesapeake Bay Watershed States' means the States of Delaware, 
        Maryland, New York, Pennsylvania, Virginia, and West Virginia 
        and the District of Columbia.''.
    (b) Assistance Methods.--Subsection (c) of such section is amended 
to read as follows:
    ``(c) Assistance.--
            ``(1) Grants.--The Secretary shall award grants and make 
        loans and loan guarantees to eligible entities to assist in 
        covering the cost of development and construction of 
        biorefineries to carry out projects to demonstrate the 
        commercial viability of one or more processes for converting 
        biomass to fuels or chemicals.
            ``(2) Chesapeake bay watershed projects.--In the case of a 
        project to be operated in one or more of the Chesapeake Bay 
        Watershed States, the Secretary shall award grants under this 
        subsection for the purpose of developing and promoting the 
        commercial viability of no-till soybean biodiesel production, 
        cellulosic ethanol production, manure to energy processes and 
        technologies, and other technologies that promote the 
        conversion of biomass to fuels and chemicals and the reduction 
        of nutrient impacts to water quality.''.
    (c) Environmental Goals; Distribution of Grants.--Subsection (e) of 
such section is amended--
            (1) in paragraph (2)(A)--
                    (A) by striking ``and'' at the end of clause (i);
                    (B) by redesignating clause (ii) as clause (iii); 
                and
                    (C) by inserting after clause (i) the following new 
                clause:
                            ``(ii) shall select projects based upon the 
                        extent to which the projects meet environmental 
                        goals for feed stocks and refineries developed 
                        by the Secretary in consultation with the 
                        Secretary of the Interior, the Secretary of 
                        Energy, the Administrator of the Environmental 
                        Protection Agency, and the National Academy of 
                        Sciences taking into consideration clean water 
                        and air goals; and''.
            (2) by adding at the end the following new paragraph:
            ``(3) Funds for chesapeake bay states.--The Secretary shall 
        ensure that not less than 15 percent of the total funds 
        available under this section are provided to projects operated 
        in Chesapeake Bay Watershed States that benefit the Chesapeake 
        Bay watershed .''.
    (d) Funding.--Subsection (h) of such section is amended to read as 
follows:
    ``(h) Of the funds of the Commodity Credit Corporation, the 
Secretary shall use $100,000,000 for each of fiscal years 2008 through 
2013 to carry out this section.''.

SEC. 12. RENEWABLE ENERGY SYSTEMS AND ENERGY EFFICIENCY IMPROVEMENTS 
              PROGRAM.

    Section 9006 of the Farm Security and Rural Investment Act of 2002 
(7 U.S.C. 8106) is amended--
            (1) in subsection (c)--
                    (A) by striking paragraph (2)(C) and inserting the 
                following:
                    ``(C) the expected environmental benefits of the 
                renewable energy system, including in watersheds of 
                bodies of water degraded by agricultural nutrients and 
                to water quality;''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(3) Preference for community projects.--The Secretary 
        shall give preference in funding and grant and loan selection 
        to activities that the Secretary determines--
                    ``(A) are undertaken jointly by more than one 
                eligible entity in a local community;
                    ``(B) involve direct cooperation between two or 
                more eligible entities; and
                    ``(C) foster community or cooperative approaches to 
                renewable energy and energy efficiency development.''; 
                and
            (2) by striking subsection (f) and inserting the following:
    ``(f) Production-Based Incentive in Lieu of Grant.--
            ``(1) In general.--In addition to the authority under 
        subsection (a), the Secretary may, on the request of an 
        applicant the Secretary determines is eligible under subsection 
        (b), make production-based payments to the applicant in lieu of 
        a grant.
            ``(2) Contingency.--The Secretary shall only make a payment 
        under paragraph (1) if the applicant provides the Secretary 
        with documentation showing energy production and sales from a 
        renewable energy system to a third party.
            ``(3) Limitation.--The total net present value of a 
        production-based incentive may not exceed the lower of--
                    ``(A) 25 percent of the eligible project costs; and
                    ``(B) any other limits that the Secretary 
                establishes by rule or guidance.
    ``(g) Distribution of Grants.--The Secretary shall ensure that not 
less than 15 percent of the grants, loans, and loan guarantees provided 
under this section are provided to projects in Chesapeake Bay Watershed 
States that benefit the Chesapeake Bay watershed.
    ``(h) Definition.--In this section, the term `Chesapeake Bay 
Watershed States' means the States of Delaware, Maryland, New York, 
Pennsylvania, Virginia, and West Virginia and the District of Columbia.
    ``(i) Funding.--Of the funds of the Commodity Credit Corporation, 
the Secretary shall make available to carry out this section--
            ``(1) $60,000,000 for fiscal year 2008, to remain available 
        until expended;
            ``(2) $90,000,000 for fiscal year 2009, to remain available 
        until expended;
            ``(3) $130,000,000 for fiscal year 2010, to remain 
        available until expended;
            ``(4) $180,000,000 for fiscal year 2011, to remain 
        available until expended; and
            ``(5) $250,000,000 for fiscal year 2012, to remain 
        available until expended.''.
                                 <all>
```