I 

110TH CONGRESS 

1ST SESSION H. R. 2218 

To provide for a Biofuels Feedstocks Energy Reserve, and to authorize 

the Secretary of Agriculture to make and guarantee loans for the production, distribution, development, and storage of biofuels. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 8, 2007 

Ms. KAPTUR introduced the following bill; which was referred to the 

Committee on Agriculture 

A BILL 

To provide for a Biofuels Feedstocks Energy Reserve, and 

to authorize the Secretary of Agriculture to make and 

guarantee loans for the production, distribution, development, and storage of biofuels. 

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 ‘‘Biofuels Energy Inde5 pendence Act of 2007’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds as follows: 


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1 (1) The over reliance of the United States on 

2 imported petroleum creates a major strategic vulner3 ability for the Nation, with nearly half of the energy 

4 supply of the United States dependent on foreign 

5 sources. 

6 (2) From the economically damaging Arab oil 

7 embargoes of 1973–74 and 1979 to the recession 

8 precipitated by rising oil prices which began in 1999, 

9 the economic stability of the United States has too 

10 often been shaken by economic forces outside its 

11 borders. 

12 (3) Increasing fuel prices have been a particular 

13 hardship on small, independent businessmen, par14 ticularly truckers and farmers, who have no choice 

15 but to pay ever-increasing fuel bills while absorbing 

16 these higher costs in today’s economic environment. 

17 (4) This Act would shift America’s dependence 

18 away from foreign petroleum as an energy source to19 ward alternative, renewable, domestic agricultural 

20 sources. Its aim is to convert the current petroleum 

21 trade deficit to a trade balance by replacing foreign 

22 sources of supply with steady increases of biobased 

23 fuels through domestic production. 

24 (5) Today, there are nearly 140,000,000 cars 

25 and 95,000,000 trucks on our highways. More than 


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1 6,000,000 cars and trucks on our highways already 

2 run on 85 percent ethanol (E–85), and this number 

3 is increasing. For the 2007 model year, there are 23 

4 different models of vehicles capable of running on 

5 E–85. Of the nearly 200,000 retail locations selling 

6 motor fuel in the United States, approximately 

7 1,200 stations sell E–85, according to the Depart8 ment of Energy. 

9 (6) Biodiesel production is also dramatically in10 creasing, going from 5,000,000 gallons in 2001 to 

11 nearly 250,000,000 gallons in 2006, according to 

12 the National Biodiesel Board. Daimler-Chrysler has 

13 initially fueled the Diesel Jeep Liberty with a 5 per14 cent biodiesel blend, the first time a vehicle has been 

15 explicitly fueled with an alternative fuel as it rolls 

16 off the production line. 

17 (7) In 2005, the United States consumed 

18 7,592,789,000 barrels of petroleum 

19 (183,917,825,000 gallons of vehicle fuel oil and 

20 14,103,222,000 gallons of residential heating oil). 

21 Since 1983, the United States importation of petro22 leum and its derivatives has more than tripled, ris23 ing from 1,215,225,000 barrels in 1983 to 

24 4,887,772,000 barrels in 2006. In 2006, the United 

25 States imported $216,998,507,000 worth of crude 


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1 oil. The 20 percent increase in the price of imported 

2 energy products caused the United States trade def3 icit in energy to rise by about $50,000,000,000 to 

4 reach nearly $300,000,000,000 in 2006. 

5 (8) Further Strategic Petroleum Reserve policy 

6 should encourage domestic production to the great7 est extent possible. Currently, the Strategic Petro8 leum Reserve holds 689,200,000 barrels (out of a 

9 potential 727,000,000 barrels), sufficient to cushion 

10 the United States from wild price swings for a pe11 riod of 56 days. None of the fuel in this Reserve is 

12 bio-based. In fact, 92.2 percent of the Strategic Pe13 troleum Reserve has been purchased from foreign 

14 sources—41.9 percent from Mexico, 24 percent from 

15 the United Kingdom, and over 20 percent from 

16 OPEC nations. 

17 (9) Strategic Petroleum Reserve policy also 

18 should encourage the development of alternatives to 

19 the Nation’s reliance on petroleum such as biomass 

20 fuels. 

21 (10) As a first step in diversification, the Stra22 tegic Petroleum Reserve should exchange 2,100,000 

23 barrels from our current reserves for 32,000,000 

24 gallons of ethanol and biodiesel, which would comVerDate Aug 31 2005 00:55 May 10, 2007 Jkt 059200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2218.IH H2218

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1 prise less than 2 percent of the United States mar2 ket, but yield a doubling of ethanol products. 

3 (11) The benefits of biofuels are as follows: 

4 (A) ENERGY SECURITY.— 

5 (i) Biofuels hold potential to address 

6 our dependence on foreign energy sources 

7 immediately. With agricultural surpluses, 

8 commodity prices have reached record 

9 lows; concurrently world petroleum prices 

10 have reached record highs and are ex11 pected to continue rising as global petro12 leum reserves are drawn down over the 

13 next 25 years. It also is clear that eco14 nomic conditions are favorable to utilize 

15 domestic surpluses of biobased oils to en16 hance the Nation’s energy security. 

17 (ii) In the short term, biofuels can 

18 supply at least one-fifth of current United 

19 States fuel demand using existing tech20 nologies and capabilities. Additional plant 

21 research, newer processing and distribution 

22 technologies, and placing additional acres 

23 under cultivation can yield even greater re24 sults. 


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1 (iii) Biofuels can be used with existing 

2 petroleum infrastructure and conventional 

3 equipment. 

4 (B) ECONOMIC SECURITY.— 

5 (i) Continued dependence upon im6 ported sources of oil means our Nation is 

7 strategically vulnerable to disruptions in 

8 our oil supply. 

9 (ii) Renewable biofuels domestically 

10 produced directly replace imported oil. 

11 (iii) Increased use of renewable 

12 biofuels would result in significant eco13 nomic benefits to rural and urban areas 

14 and also reduce the trade deficit. 

15 (iv) According to the Department of 

16 Agriculture, a sustained annual market of 

17 100,000,000 gallons of biodiesel alone 

18 would result in $170,000,000 in increased 

19 income to farmers. 

20 (v) Farmer-owned biofuels production 

21 has already resulted in improved income 

22 for farmers, as evidenced by the experience 

23 with State-supported rural development ef24 forts in Minnesota where prices to corn 

25 producers have been increased by $1.00 


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1 per bushel. With the Department of Agri2 culture forecasting a huge increase in corn 

3 prices, the per bushel price of corn is 

4 reaching $3.70. The Department of Agri5 culture estimates that 1,500,000,000 bush6 els of corn, representing 14 percent of pro7 jected corn production in the United 

8 States, were to be used for ethanol produc9 tion in 2006. This totals approximately 

10 $5,550,000,000 in value for the corn alone. 

11 (C) ENVIRONMENTAL SECURITY.— 

12 (i) The use of grain-based ethanol re13 duces greenhouse gas emissions from 35 to 

14 46 percent compared with conventional 

15 gasoline. Biomass ethanol provides an even 

16 greater reduction. 

17 (ii) The American Lung Association 

18 of Metropolitan Chicago credits ethanol19 blended reformulated gasoline with reduc20 ing smog-forming emissions by 25 percent 

21 since 1990. 

22 (iii) Ethanol reduces tailpipe carbon 

23 monoxide emissions by as much as 30 per24 cent. 


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1 (iv) Ethanol reduces exhaust volatile 

2 organic compounds emissions by 12 per3 cent. 

4 (v) Ethanol reduces toxic emissions by 

5 30 percent. 

6 (vi) Ethanol reduces particulate emis7 sions, especially fine-particulates that pose 

8 a health threat to children, senior citizens, 

9 and those with respiratory ailments. 

10 (vii) Biodiesel contains no sulfur or 

11 aromatics associated with air pollution. 

12 (viii) The use of biodiesel provides a 

13 78.5 percent reduction in CO2 emissions 

14 compared to petroleum diesel and when 

15 burned in a conventional engine provides a 

16 substantial reduction of unburned hydro17 carbons, carbon monoxide, and particulate 

18 matter. 

19 TITLE I—NATIONAL BIOFUELS 

20 DEVELOPMENT 

21 SEC. 101. LOANS AND LOAN GUARANTEES. 

22 (a) IN GENERAL.—The Secretary of Agriculture (in 

23 this section referred to as the ‘‘Secretary’’) may make and 

24 guarantee loans for the production, distribution, develop25 ment, and storage of biofuels. 


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1 (b) ELIGIBILITY.— 

2 (1) IN GENERAL.—Except as provided in para3 graph (2), an applicant for a loan or loan guarantee 

4 under this section shall be eligible to receive such a 

5 loan or loan guarantee if— 

6 (A) the applicant is a farmer, member of 

7 an association of farmers, member of a farm co8 operative, municipal entity, nonprofit corpora9 tion, State, or Territory; and 

10 (B) the applicant is unable to obtain suffi11 cient credit elsewhere to finance the actual 

12 needs of the applicant at reasonable rates and 

13 terms, taking into consideration prevailing pri14 vate and cooperative rates and terms in the 

15 community in or near which the applicant re16 sides for loans for similar purposes and periods 

17 of time. 

18 (2) LOAN GUARANTEE ELIGIBILITY PRECLUDES

19 LOAN ELIGIBILITY.—An applicant who is eligible for 

20 a loan guarantee under this section shall not be eli21 gible for a loan under this section. 

22 (c) LOAN TERMS.— 

23 (1) INTEREST RATE.—Interest shall be payable 

24 on a loan under this section at the rate at which inVerDate Aug 31 2005 00:55 May 10, 2007 Jkt 059200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2218.IH H2218

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1 terest is payable on obligations issued by United 

2 States for a similar period of time. 

3 (2) REPAYMENT PERIOD.—A loan under this 

4 section shall be repayable in not less than 5 years 

5 and not more than 20 years. 

6 (d) REVOLVING FUND.— 

7 (1) ESTABLISHMENT.—The Secretary shall es8 tablish a revolving fund for the making of loans 

9 under this section. 

10 (2) DEPOSITS.—The Secretary shall deposit 

11 into the revolving fund all amounts received on ac12 count of loans made under this section. 

13 (3) PAYMENTS.—The Secretary shall make 

14 loans under this section, and make payments pursu15 ant to loan guarantees provided under this section, 

16 from amounts in the revolving fund. 

17 (e) REGULATIONS.—The Secretary may prescribe 

18 such regulations as may be necessary to carry out this 

19 section. 

20 (f) LIMITATIONS ON AUTHORIZATION OF APPROPRIA21 TIONS.—For the cost (as defined in section 502(5) of the 

22 Federal Credit Reform Act of 1990) of loans and loan 

23 guarantees under this section, there are authorized to be 

24 appropriated to the revolving fund established under subVerDate Aug 31 2005 00:55 May 10, 2007 Jkt 059200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2218.IH H2218

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1 section (d) of this section such sums as may be necessary 

2 for fiscal years 2005 through 2010. 

3 TITLE II—BIOFUELS FEED4 STOCKS ENERGY RESERVE 

5 PROGRAM 

6 SEC. 201. ESTABLISHMENT. 

7 The Secretary of Agriculture (in this title referred to 

8 as the ‘‘Secretary’’) may establish and administer a re9 serve of agricultural commodities (known as the ‘‘Biofuels 

10 Feedstocks Energy Reserve’’) for the purpose of— 

11 (1) providing feedstocks to support and further 

12 the production of energy from biofuels; and 

13 (2) supporting the biofuels energy industry 

14 when production is at risk of declining due to re15 duced feedstocks or significant commodity price in16 creases. 

17 SEC. 202. PURCHASES. 

18 (a) IN GENERAL.—The Secretary may purchase agri19 cultural commodities at commercial rates, subject to sub20 section (b), in order to establish, maintain, or enhance the 

21 Biofuels Feedstocks Energy Reserve when— 

22 (1)(A) the commodities are in abundant supply; 

23 and 


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1 (B) there is need for adequate carryover stocks 

2 to ensure a reliable supply of the commodities to 

3 meet the purposes of the reserve; or 

4 (2) it is otherwise necessary to fulfill the needs 

5 and purposes of the biofuels energy reserve program. 

6 (b) LIMITATION.—The agricultural commodities pur7 chased for the Biofuels Feedstocks Energy Reserve shall 

8 be— 

9 (1) of the type and quantity necessary to pro10 vide not less than 1-year’s utilization for renewable 

11 energy purposes; and 

12 (2) in such additional quantities to provide in13 centives for research and development of new renew14 able fuels and bio-energy initiatives. 

15 SEC. 203. RELEASE OF STOCKS. 

16 Whenever the market price of a commodity held in 

17 the Biofuels Feedstocks Energy Reserve exceeds 100 per18 cent of the economic cost of producing the commodity (as 

19 determined by the Economic Research Service using the 

20 best available information, and based on a 3-year moving 

21 average), the Secretary shall release stocks of the com22 modity from the reserve at cost of acquisition, in amounts 

23 determined appropriate by the Secretary. 


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1 SEC. 204. STORAGE PAYMENTS. 

2 (a) IN GENERAL.—The Secretary shall provide for 

3 the storage of agricultural commodities purchased for the 

4 Biofuels Feedstocks Energy Reserve by making payments 

5 to producers for the storage of the commodities. The pay6 ments shall— 

7 (1) be in such amounts, under such conditions, 

8 and at such times as the Secretary determines ap9 propriate to encourage producers to participate in 

10 the program; and 

11 (2) reflect local, commercial storage rates, sub12 ject to appropriate conditions concerning quality 

13 management and other factors. 

14 (b) ANNOUNCEMENT OF PROGRAM.— 

15 (1) TIME OF ANNOUNCEMENT.—The Secretary 

16 shall announce the terms and conditions of the stor17 age payments for a crop of a commodity by— 

18 (A) in the case of wheat, December 15 of 

19 the year in which the crop of wheat was har20 vested; 

21 (B) in the case of feed grains, March 15 

22 of the year following the year in which the crop 

23 of corn was harvested; and 

24 (C) in the case of other commodities, such 

25 dates as may be determined by the Secretary. 


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1 (2) CONTENT OF ANNOUNCEMENT.—In the an2 nouncement, the Secretary shall specify the max3 imum quantity of a commodity to be stored in the 

4 Biofuels Feedstocks Energy Reserve that the Sec5 retary determines appropriate to promote the orderly 

6 marketing of the commodity, and to ensure an ade7 quate supply for the production of biofuels. 

8 (c) RECONCENTRATION.—The Secretary may, with 

9 the concurrence of the owner of a commodity stored under 

10 this program, reconcentrate the commodity stored in com11 mercial warehouses at such points as the Secretary con12 siders to be in the public interest, taking into account such 

13 factors as transportation and normal marketing patterns. 

14 The Secretary shall require the rotation of stocks to pre15 serve feedstock quality under regulations that assure that 

16 the holding producer or warehouseman shall, at all times, 

17 have available for delivery at the designated place of stor18 age both the quantity and quality of the commodity cov19 ered by the producer’s or warehouseman’s commitment. 

20 (d) MANAGEMENT.—Whenever a commodity is stored 

21 under this section, the Secretary may buy and sell at an 

22 equivalent price, allowing for the customary location and 

23 grade differentials, substantially equivalent quantities of 

24 the commodity in different locations or warehouses to the 

25 extent needed to properly handle, rotate, distribute, and 


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1 locate the commodity that the Commodity Credit Corpora2 tion owns or controls. The purchases to offset sales shall 

3 be made within 2 market days following the sales. The 

4 Secretary shall make a daily list available showing the 

5 price, location, and quantity of the transactions. 

6 (e) REVIEW.—In announcing the terms and condi7 tions under which storage payments will be made under 

8 this section, the Secretary shall review standards con9 cerning the quality of a commodity to be stored in the 

10 Biofuels Feedstocks Energy Reserve, and such standards 

11 should encourage only quality commodities, as determined 

12 by the Secretary. The Secretary shall review inspection, 

13 maintenance, and stock rotation requirements and take 

14 the necessary steps to maintain the quality of the commod15 ities stored in the reserve. 

16 SEC. 205. USE OF COMMODITY CREDIT CORPORATION. 

17 The Secretary shall use the Commodity Credit Cor18 poration, to the extent feasible, to carry out this title. To 

19 the maximum extent practicable consistent with the effec20 tive and efficient administration of this title, the Secretary 

21 shall utilize the usual and customary channels, facilities, 

22 and arrangements of trade and commerce. 


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1 SEC. 206. REGULATIONS. 

2 Not later than 60 days after the date of the enact3 ment of this Act, the Secretary shall issue such regulations 

4 as are necessary to carry out this title. 

Æ 


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