I 

110TH CONGRESS 

1ST SESSION H. R. 2261 

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. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 10, 2007 

Mr. LUCAS introduced the following bill; which was referred to the Committee 

on Agriculture, and in addition to the Committees on Ways and Means, 

Financial Services, and Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such 

provisions as fall within the jurisdiction of the committee concerned 

A BILL 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Rural America Energy 

5 Act of 2007’’. 


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1 SEC. 2. ADJUSTMENTS TO THE BIOENERGY PROGRAM. 

2 Section 9010 of the Farm Security and Rural Invest3 ment Act of 2002 (7 U.S.C. 8108) is amended— 

4 (1) in subsection (a)— 

5 (A) in paragraph (1)— 

6 (i) in subparagraph (A), by striking 

7 ‘‘and’’; 

8 (ii) in subparagraph (B), by striking 

9 the final period and inserting a semicolon; 

10 and 

11 (iii) by adding at the end the fol12 lowing new subparagraphs: 

13 ‘‘(C) cellulosic cogeneration; 

14 ‘‘(D) biomass gasification; and 

15 ‘‘(E) hydrogen made from cellulosic com16 modities for fuel cells.’’; 

17 (B) by redesignating paragraphs (3) and 

18 (4) as paragraphs (4) and (5), respectively; 

19 (C) by inserting after paragraph (2) the 

20 following new paragraph: 

21 ‘‘(3) CELLULOSIC COGENERATION.—The term 

22 ‘cellulosic cogeneration’ means combined heat and 

23 electrical power produced from cellulose, hemi24 cellulose, and lignin found in plant cell walls.’’; and 


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1 (D) in subparagraph (A) of paragraph (4), 

2 as redesignated by subparagraph (B), by strik3 ing ‘‘corn,’’; and 

4 (2) by striking subsection (f) and inserting the 

5 following: 

6 ‘‘(f) FUNDING.—Of the funds of the Commodity 

7 Credit Corporation, the Secretary shall use to carry out 

8 this section $25,000,000 for each of fiscal years 2008 

9 through 2012.’’. 

10 SEC. 3. INCREASED FUNDING FOR THE RENEWABLE EN11 ERGY PROGRAM AND ADJUSTING THE PRO12 GRAM TO BENEFIT SMALLER PROJECTS. 

13 Section 9006 of the Farm Security and Rural Invest14 ment Act of 2002 (7 U.S.C. 8106) is amended by striking 

15 subsection (f) and inserting the following new subsections: 

16 ‘‘(f) SMALL PROJECTS.—The Secretary shall use not 

17 less than 15 percent of the funds available under this sec18 tion to provide grants for projects that have a total cost 

19 $50,000 or less. 

20 ‘‘(g) FUNDING.—Of the funds of the Commodity 

21 Credit Corporation, the Secretary shall make available to 

22 carry out this section $50,000,000 for each of fiscal years 

23 2008 through 2012.’’. 


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1 SEC. 4. 5-YEAR EXTENSION OF CREDIT FOR ELECTRICITY 

2 PRODUCED FROM CERTAIN RENEWABLE RE3 SOURCES. 

4 Section 45(d) of the Internal Revenue Code of 1986 

5 (relating to qualified facilities) is amended by striking 

6 ‘‘2009’’ each place it appears and inserting ‘‘2014’’. 

7 SEC. 5. DEDICATED ETHANOL PIPELINE FEASIBILITY STUD8 IES. 

9 (a) IN GENERAL.—The Secretary of Energy, in co10 ordination with the Secretary of Agriculture and the Sec11 retary of Transportation, shall spend up to $1,000,000 to 

12 fund feasibility studies for the construction of dedicated 

13 ethanol pipelines. 

14 (b) CONDUCT OF STUDIES.— 

15 (1) IN GENERAL.—The Secretary of Energy 

16 shall— 

17 (A) through a competitive solicitation proc18 ess, select 1 or more firms having capabilities in 

19 the planning, development, and construction of 

20 dedicated ethanol pipelines to carry out the fea21 sibility studies described in subsection (a); or 

22 (B) carry out the feasibility studies in con23 junction with such firms. 

24 (2) TIMING.— 

25 (A) IN GENERAL.—If the Secretary elects 

26 to select 1 or more firms under paragraph 


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1 (1)(A), the Secretary shall award funding under 

2 this section not later than 120 days after the 

3 date of enactment of this Act. 

4 (B) STUDIES.—As a condition of receiving 

5 funds under this section, a recipient of funding 

6 shall agree to submit to the Secretary a com7 pleted feasibility study not later than 360 days 

8 after the date of enactment of this Act. 

9 (c) STUDY FACTORS.—Feasibility studies funded 

10 under this section shall include consideration of— 

11 (1) existing or potential barriers to dedicated 

12 ethanol pipelines, including technical, siting, financ13 ing, and regulatory barriers; 

14 (2) potential evolutionary pathways for the de15 velopment of an ethanol pipeline transport system, 

16 such as starting with localized gathering networks as 

17 compared to major interstate ethanol pipelines to 

18 carry larger volumes from the Midwest to the East 

19 or West coast; 

20 (3) market risk, including throughput risk, and 

21 ways of mitigating the risk; 

22 (4) regulatory, financing, and siting options 

23 that would mitigate risk in these areas and help en24 sure the construction of dedicated ethanol pipelines; 


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1 (5) financial incentives that may be necessary 

2 for the construction of dedicated ethanol pipelines, 

3 including the return on equity that sponsors of the 

4 first dedicated ethanol pipelines will require to invest 

5 in the pipelines; 

6 (6) ethanol production of 20,000,000,000, 

7 30,000,000,000, and 40,000,000,000 gallons per 

8 year by 2020; and 

9 (7) such other factors that the Secretary con10 siders to be appropriate. 

11 (d) CONFIDENTIALITY.—If a recipient of funding 

12 under this section requests confidential treatment for crit13 ical energy infrastructure information or commercially14 sensitive data contained in a feasibility study submitted 

15 by the recipient under subsection (b)(2)(B), the Secretary 

16 shall offer to enter into a confidentiality agreement with 

17 the recipient to maintain the confidentiality of the sub18 mitted information. 

19 (e) REVIEW; REPORT.—The Secretary of Energy 

20 shall— 

21 (1) review the feasibility studies submitted 

22 under subsection (b)(2)(B) or carried out under sub23 section (b)(1)(B); and 


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1 (2) not later than 15 months after the date of 

2 enactment of this Act, submit to Congress a report 

3 that includes— 

4 (A) information about the potential bene5 fits of constructing dedicated ethanol pipelines; 

6 and 

7 (B) recommendations for legislation that 

8 could help provide for the construction of dedi9 cated ethanol pipelines. 

10 (f) FUNDING.—There are authorized to be appro11 priated to the Secretary of Energy to carry out this section 

12 $1,000,000 for fiscal year 2008, to remain available until 

13 expended. 

14 SEC. 6. CONSERVATION RESERVE PROGRAM ADJUSTMENTS 

15 TO PROTECT THE MOST ENVIRONMENTALLY 

16 SENSITIVE ACRES AND PROMOTE PRODUC17 TION OF BIOFUELS CROPS. 

18 (a) REAUTHORIZATION.—Section 1231(a) of the 

19 Food Security Act of 1985 (16 U.S.C. 3831(a)) is amend20 ed by striking ‘‘Through the 2007 calendar year’’ and in21 serting the following: 

22 ‘‘(1) PROGRAM REQUIRED.—Through the 2012 

23 calendar year’’. 


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1 (b) MAXIMUM ENROLLMENT.—Section 1231(d) of 

2 the Food Security Act of 1985 (16 U.S.C. 3831(d)) is 

3 amended— 

4 (1) by striking ‘‘39,200,000 acres’’ and insert5 ing ‘‘40,000,000 acres’’; and 

6 (2) by striking by striking ‘‘2007’’ and insert7 ing ‘‘2012’’. 

8 (c) PRIORITY FOR PROTECTION OF MOST ENVIRON9 MENTALLY SENSITIVE ACRES.—Section 1231(a) of the 

10 Food Security Act of 1985 (16 U.S.C. 3831(a)), as 

11 amended by subsection (a), is amended by adding at the 

12 end the following new paragraph: 

13 ‘‘(2) PRIORITY FOR PROTECTION OF MOST EN14 VIRONMENTALLY SENSITIVE ACRES.—In applying 

15 subsection (b) and other provisions of this sub16 chapter for the enrollment of land in the conserva17 tion reserve program, the Secretary shall ensure 

18 that, as contracts expire and lands are taken out of 

19 the program, the lands are replaced with the most 

20 environmentally sensitive acres, so that the program 

21 continues to protect highly erodible lands while in22 creasing the acreage outside of the program that is 

23 available for the production of crops to accommodate 

24 biofuel production.’’. 


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1 SECTION 7. TRANSITIONAL ASSISTANCE FOR FARMERS 

2 WHO PLANT DEDICATED ENERGY CROPS FOR 

3 A LOCAL CELLULOSIC REFINERY. 

4 (a) IN GENERAL.—The Secretary shall make transi5 tional assistance payments to an agricultural producer 

6 during the 1st year in which the producer devotes land 

7 to the production of a qualified cellulosic crop. 

8 (b) DEFINITIONS.—In this section: 

9 (1) CELLULOSIC CROP.—The term ‘‘cellulosic 

10 crop’’ means a tree or grass that is grown specifi11 cally to provide raw materials (feedstocks) for con12 version to liquid transportation fuels or chemicals 

13 through biochemical or thermochemical processes, or 

14 for energy generation through combustion, pyrolysis, 

15 or co-firing. 

16 (2) CELLULOSIC REFINER.—The term ‘‘cel17 lulosic refiner’’ means the owner or operator of a 

18 cellulosic refinery. 

19 (3) CELLULOSIC REFINERY.—The term ‘‘cel20 lulosic refinery’’ means a refinery that processes a 

21 cellulosic crop. 

22 (4) QUALIFED CELLULOSIC CROP.—The term 

23 ‘‘qualified cellulosic crop’’ means, with respect to an 

24 agricultural producer, a cellulosic crop which is— 

25 (A) the subject of a contract (or memo26 randum of understanding) between the proVerDate Aug 31 2005 20:20 May 11, 2007 Jkt 059200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2261.IH H2261

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1 ducer and a cellulosic refiner, under which the 

2 producer is obligated to sell the crop to the re3 finer at a certain date in the future; and 

4 (B) produced not more than 70 miles from 

5 a cellulosic refinery owned or operated by the 

6 refiner. 

7 (5) SECRETARY.—The term ‘‘Secretary’’ means 

8 the Secretary of Agriculture. 

9 (c) AMOUNT OF PAYMENT.— 

10 (1) DETERMINED BY FORMULA.—The Sec11 retary shall devise a formula to be used to calculate 

12 the amounts of the payments to be made to an agri13 cultural producer under this section, which shall be 

14 based on the opportunity costs incurred by the pro15 ducer during the 1st year in which the producer de16 votes land to the production of the qualified cel17 lulosic crop, subject to paragraph (2) of this sub18 section. The Secretary shall prescribe a standard to 

19 be used to determine opportunity costs using land 

20 rental rates and other costs determined by the Sec21 retary. 

22 (2) LIMITATION.—The total of the amounts 

23 paid to a single producer under this section shall not 

24 exceed 25 percent of the funds made available under 


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1 subsection (e) for the fiscal year in which the 

2 amounts are so paid. 

3 (d) REGULATIONS.—The Secretary shall prescribe 

4 such regulations as may be necessary to carry out this 

5 section. 

6 (e) LIMITATIONS ON AUTHORIZATION OF APPRO7 PRIATIONS.— 

8 (1) IN GENERAL.—To carry out this section, 

9 there are authorized to be appropriated to the Sec10 retary not more than $4,088,000 for each of fiscal 

11 years 2008 through 2012. 

12 (2) AVAILABILITY OF FUNDS.—The amounts 

13 made available under paragraph (1) are authorized 

14 to remain available until expended. 

15 SEC. 8. CREDIT FOR INSTALLATION OF WIND ENERGY 

16 PROPERTY INCLUDING BY RURAL HOME17 OWNERS, FARMERS, RANCHERS, AND SMALL 

18 BUSINESSES. 

19 (a) IN GENERAL.—Subpart B of part IV of sub20 chapter A of chapter 1 of the Internal Revenue Code of 

21 1986 is amended by adding at the end the following new 

22 section: 

23 ‘‘SEC. 30D. WIND ENERGY PROPERTY. 

24 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al25 lowed as a credit against the tax imposed by this chapter 


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1 for the taxable year an amount equal to $1,500 with re2 spect to each half kilowatt of capacity of qualified wind 

3 energy property placed in service or installed by the tax4 payer during such taxable year. 

5 ‘‘(b) LIMITATION.—No credit shall be allowed under 

6 subsection (a) unless at least 50 percent of the energy pro7 duced annually by the qualified wind energy property is 

8 consumed on the site on which the property is placed in 

9 service or installed. 

10 ‘‘(c) QUALIFIED WIND ENERGY PROPERTY.—For 

11 purposes of this section, the term ‘qualified wind energy 

12 property’ means a wind turbine of 100 kilowatts of rated 

13 capacity or less if— 

14 ‘‘(1) such turbine is placed in service or in15 stalled on or in connection with property located in 

16 the United States, 

17 ‘‘(2) in the case of an individual, the property 

18 on or in connection with which such turbine is in19 stalled is a dwelling unit, 

20 ‘‘(3) the original use of such turbine commences 

21 with the taxpayer, and 

22 ‘‘(4) such turbine carries at least a 5-year lim23 ited warranty covering defects in design, material, or 

24 workmanship, and, for property that is not installed 


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1 by the taxpayer, at least a 5-year limited warranty 

2 covering defects in installation. 

3 ‘‘(d) LIMITATION BASED ON AMOUNT OF TAX.— 

4 ‘‘(1) IN GENERAL.—The credit allowed under 

5 subsection (a) for any taxable year shall not exceed 

6 the excess of— 

7 ‘‘(A) the sum of the regular tax liability 

8 (as defined in section 26(b)) plus the tax im9 posed by section 55, over 

10 ‘‘(B) the sum of the credits allowable 

11 under this part (other than under this section 

12 and subpart C thereof, relating to refundable 

13 credits) and section 1397E. 

14 ‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the 

15 credit allowable under subsection (a) exceeds the 

16 limitation imposed by paragraph (1) for such taxable 

17 year, such excess shall be carried to the succeeding 

18 taxable year and added to the credit allowable under 

19 subsection (a) for such taxable year. 

20 ‘‘(e) SPECIAL RULES.—For purposes of this sec21 tion— 

22 ‘‘(1) TENANT-STOCKHOLDER IN COOPERATIVE

23 HOUSING CORPORATION.—In the case of an indi24 vidual who is a tenant-stockholder (as defined in sec25 tion 216(b)(2)) in a cooperative housing corporation 


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1 (as defined in section 216(b)(1)), such individual 

2 shall be treated as having paid his tenant-stock3 holder’s proportionate share (as defined in section 

4 216(b)(3)) of any expenditures paid or incurred for 

5 qualified wind energy property by such corporation, 

6 and such credit shall be allocated appropriately to 

7 such individual. 

8 ‘‘(2) CONDOMINIUMS.— 

9 ‘‘(A) IN GENERAL.—In the case of an indi10 vidual who is a member of a condominium man11 agement association with respect to a condo12 minium which he owns, such individual shall be 

13 treated as having paid his proportionate share 

14 of expenditures paid or incurred for qualified 

15 wind energy property by such association, and 

16 such credit shall be allocated appropriately to 

17 such individual. 

18 ‘‘(B) CONDOMINIUM MANAGEMENT ASSO19 CIATION.—For purposes of this paragraph, the 

20 term ‘condominium management association’ 

21 means an organization which meets the require22 ments of section 528(c)(2) with respect to a 

23 condominium project of which substantially all 

24 of the units are used by individuals as dwelling 

25 units. 


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1 ‘‘(f) BASIS ADJUSTMENT.—For purposes of this sub2 title, if a credit is allowed under this section for any ex3 penditure with respect to a dwelling unit or other prop4 erty, the increase in the basis of such dwelling unit or 

5 other property which would (but for this subsection) result 

6 from such expenditure shall be reduced by the amount of 

7 the credit so allowed. 

8 ‘‘(g) APPLICATION OF CREDIT.—The credit allowed 

9 under this section shall apply to property placed in service 

10 or installed after December 31, 2006, and before January 

11 1, 2012.’’. 

12 (b) CONFORMING AMENDMENT.—Subsection (a) of 

13 section 1016 of the Internal Revenue Code of 1986 (relat14 ing to general rule for adjustments to basis) is amended 

15 by striking ‘‘and’’ at the end of paragraph (36), by strik16 ing the period at the end of paragraph (37) and inserting 

17 ‘‘, and’’, and by adding at the end the following new para18 graph: 

19 ‘‘(38) in the case of a dwelling unit or other 

20 property with respect to which a credit was allowed 

21 under section 30D, to the extent provided in section 

22 30D(f).’’. 

23 (c) CLERICAL AMENDMENT.—The table of sections 

24 for subpart B of part IV of subchapter A of chapter 1 

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1 serting after the item relating to section 30C the following 

2 new item: 

‘‘Sec. 30D. Wind energy property.’’. 

3 (d) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years ending after De5 cember 31, 2006. 

6 SEC. 9. MODIFICATION OF ACCOUNTING PRACTICES. 

7 Within 18 months after the date of enactment of this 

8 Act, the Securities and Exchange Commission shall revise 

9 the accounting practices to be followed in the preparation 

10 of accounts by persons engaged, in whole or in part, in 

11 the production of crude oil or natural gas in the United 

12 States that were developed pursuant to section 503 of the 

13 Energy Policy Conservation Act (42 U.S.C. 6383) to es14 tablish a renewable reserves classification and disclosure 

15 system. Such classification and disclosure system shall 

16 treat contracted biomass crops for a cellulosic biorefinery 

17 as renewable reserves. 

Æ 


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