II

107TH CONGRESS

1ST SESSION S. 1255

To encourage the use of carbon storage sequestration practices in the United

States.

IN THE SENATE OF THE UNITED STATES

JULY 26, 2001

Mr. WYDEN (for himself and Mr. BROWNBACK) introduced the following bill;

which was read twice and referred to the Committee on Agriculture, Nutrition, and Forestry

A BILL

To encourage the use of carbon storage sequestration

practices in the United States.

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; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Carbon Sequestration and Reporting Act’’.

6 (b) TABLE OF CONTENTS.—The table of contents for

7 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—CARBON ADVISORY COUNCIL

Sec. 101. Carbon advisory council.

Sec. 102. National inventory and voluntary reporting of greenhouse gases.
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TITLE II—FOREST CARBON MANAGEMENT

Sec. 201. Forest carbon storage and sequestration.

TITLE III—CARBON SEQUESTRATION PROGRAM

Sec. 301. Establishment.

Sec. 302. Funding.

Sec. 303. Regulations.

Sec. 304. Effective dates.

TITLE IV—REPORTS

Sec. 401. Initial report.

Sec. 402. Annual report.

Sec. 403. State report.

1 TITLE I—CARBON ADVISORY

2 COUNCIL

3 SEC. 101. CARBON ADVISORY COUNCIL.

4 The Energy Policy Act of 1992 is amended by insert5 ing after section 1609 (42 U.S.C. 13388) the following:

6 ‘‘SEC. 1610. CARBON ADVISORY COUNCIL.

7 ‘‘(a) DEFINITIONS.—In this section:

8 ‘‘(1) CARBON ADVISORY COUNCIL.—The term

9 ‘Carbon Advisory Council’ means the Carbon Advi10 sory Council established under subsection (b).

11 ‘‘(2) CARBON SEQUESTRATION.—The term ‘car12 bon sequestration’ means the action of vegetable

13 matter in—

14 ‘‘(A) extracting carbon dioxide from the at15 mosphere through photosynthesis;

16 ‘‘(B) converting the carbon dioxide to car17 bon; and
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1 ‘‘(C) storing the carbon in the form of

2 roots, stems, soil, or foliage.

3 ‘‘(3) CARBON STORAGE.—The term ‘carbon

4 storage’ means the quantity of carbon sequestered

5 from the atmosphere and stored in forest carbon res6 ervoirs.

7 ‘‘(4) FOREST CARBON PROGRAM.—The term

8 ‘forest carbon program’ means the program estab9 lished under section 2404(b) of the Global Climate

10 Change Prevention Act of 1990 to provide financial

11 assistance for forest carbon activities through—

12 ‘‘(A) cooperative agreements; and

13 ‘‘(B) State revolving loan funds.

14 ‘‘(5) FOREST MANAGEMENT ACTION.—

15 ‘‘(A) IN GENERAL.—The term ‘forest man16 agement action’ means an action that—

17 ‘‘(i) applies forestry principles to the

18 regeneration, management, utilization, and

19 conservation of forests to meet specific

20 goals and objectives; and

21 ‘‘(ii) maintains the productivity of the

22 forests.

23 ‘‘(B) INCLUSIONS.—The term ‘forest man24 agement action’ includes management of forests

25 for the benefit of—
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1 ‘‘(i) aesthetics;

2 ‘‘(ii) fish;

3 ‘‘(iii) recreation;

4 ‘‘(iv) urban values;

5 ‘‘(v) water;

6 ‘‘(vi) wilderness;

7 ‘‘(vii) wildlife;

8 ‘‘(viii) wood products; and

9 ‘‘(ix) other forest values.

10 ‘‘(6) INDIAN TRIBE.—The term ‘Indian tribe’

11 has the meaning given the term by section 4 of the

12 Indian Health Care Improvement Act (25 U.S.C.

13 1603).

14 ‘‘(7) REFORESTATION.—

15 ‘‘(A) IN GENERAL.—The term ‘reforest16 ation’ means the reestablishment of forest cover

17 naturally or artificially.

18 ‘‘(B) INCLUSIONS.—The term ‘reforest19 ation’ includes—

20 ‘‘(i) planned replanting;

21 ‘‘(ii) reseeding; and

22 ‘‘(iii) natural regeneration.

23 ‘‘(b) ESTABLISHMENT.—The Secretary shall estab24 lish an advisory council, to be known as the ‘Carbon Advi25 sory Council’, to—
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1 ‘‘(1) advise the Secretary on the development

2 and updating of guidelines for accurate reporting of

3 greenhouse gas sequestration from soil carbon and

4 forest management actions;

5 ‘‘(2) evaluate the potential effectiveness of the

6 guidelines in verifying carbon inputs and outputs

7 from various soil carbon and forest management

8 strategies;

9 ‘‘(3) estimate the effect of implementing the

10 guidelines on carbon sequestration and storage; and

11 ‘‘(4) assist the Secretary in preparing the an12 nual report required by section 402(a) of the Carbon

13 Storage and Sequestration Act (including the assess14 ment of the vulnerability of forests and agricultural

15 land to the adverse effects of climate change).

16 ‘‘(c) MEMBERSHIP.—The Carbon Advisory Council

17 shall be composed of 21 members as follows:

18 ‘‘(1) The Secretary of Agriculture (or a des19 ignee).

20 ‘‘(2) The Secretary of Energy (or a designee).

21 ‘‘(3) The Secretary of the Interior (or a des22 ignee).

23 ‘‘(4) The Secretary of State (or a designee).

24 ‘‘(5) The Administrator of the Environmental

25 Protection Agency (or a designee).
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1 ‘‘(6) The Chief of the Forest Service (or a des2 ignee)

3 ‘‘(7) 15 members appointed jointly by the Sec4 retary of Agriculture and the Secretary of Energy as

5 follows:

6 ‘‘(A) 1 member representing professional

7 forestry organizations.

8 ‘‘(B) 2 members representing environ9 mental or conservation organizations.

10 ‘‘(C) 1 member representing nonindustrial

11 private landowners.

12 ‘‘(D) 1 member representing the forest in13 dustry.

14 ‘‘(E) 1 member representing Indian tribes.

15 ‘‘(F) 1 member representing forest work16 ers.

17 ‘‘(G) 3 members representing the academic

18 scientific community.

19 ‘‘(H) 2 members representing State for20 estry organizations.

21 ‘‘(I) 2 members representing nongovern22 mental organizations who have an expertise and

23 experience in soil carbon sequestration prac24 tices.
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1 ‘‘(J) 1 member representing commercial

2 agricultural producers.

3 ‘‘(d) TERM.—

4 ‘‘(1) IN GENERAL.—Except as provided in para5 graph (3), a member of the Carbon Advisory Council

6 appointed under subsection (c)(7) shall be appointed

7 for a term of 3 years.

8 ‘‘(2) CONSECUTIVE TERMS.—No individual ap9 pointed under subsection (c)(7) may serve on the

10 Carbon Advisory Council for more than 2 consecu11 tive terms.

12 ‘‘(3) INITIAL TERMS.—Of the members first ap13 pointed to the Carbon Advisory Council under sub14 section (c)(7)—

15 ‘‘(A) 5 of the members shall be appointed

16 for a term of 1 year;

17 ‘‘(B) 5 of the members shall be appointed

18 for a term of 2 years; and

19 ‘‘(C) 5 of the members shall be appointed

20 for a term of 3 years.

21 ‘‘(e) VACANCY.—

22 ‘‘(1) IN GENERAL.—A vacancy on the Carbon

23 Advisory Council shall be filled in the same manner

24 as the original appointment was made.
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1 ‘‘(2) FILLING OF UNEXPIRED TERM.—An indi2 vidual chosen to fill a vacancy shall be appointed for

3 the unexpired term of the member replaced.

4 ‘‘(f) COMPENSATION.—

5 ‘‘(1) NON-FEDERAL EMPLOYEES.—A member

6 of the Carbon Advisory Council who is not an officer

7 or employee of the Federal Government shall be

8 compensated at a rate equal to the daily equivalent

9 of the annual rate of basic pay prescribed for level

10 IV of the Executive Schedule under section 5315 of

11 title 5, United States Code, for each day (including

12 travel time) during which the member is engaged in

13 the performance of the duties of the Carbon Advi14 sory Council.

15 ‘‘(2) FEDERAL EMPLOYEES.—A member of the

16 Carbon Advisory Council who is an officer or em17 ployee of the Federal Government shall serve with18 out compensation in addition to the compensation

19 received for the services of the member as an officer

20 or employee of the Federal Government.

21 ‘‘(3) TRAVEL EXPENSES.—A member of the

22 Carbon Advisory Council shall be allowed travel ex23 penses, including per diem in lieu of subsistence, at

24 rates authorized for an employee of an agency under

25 subchapter I of chapter 57 of title 5, United States
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1 Code, while away from the home or regular place of

2 business of the member in the performance of the

3 duties of the Carbon Advisory Council.

4 ‘‘(4) SUPPORT.—The Secretary shall provide fi5 nancial and administrative support to the Carbon

6 Advisory Council.

7 ‘‘(g) USE OF EXISTING COUNCIL.—The Secretary

8 may designate a council in existence as of the date of en9 actment of this section to perform the tasks of the Carbon

10 Advisory Council if (as determined by the Secretary)—

11 ‘‘(1) the responsibilities of the Carbon Advisory

12 Council, as described in subsection (b), are a high

13 priority for the existing council; and

14 ‘‘(2) the representation, membership terms,

15 background, and responsibilities of the existing

16 council correspond to the requirements for the Car17 bon Advisory Council established under subsections

18 (c) and (d).

19 ‘‘(h) DUTIES.—

20 ‘‘(1) REVIEW OF GUIDELINES.—Not later than

21 18 months after the date of enactment of this sec22 tion, the Carbon Advisory Council shall—

23 ‘‘(A) review the guidelines established

24 under section 1605(b)(1) that address proce25 dures for the accurate voluntary reporting of
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1 greenhouse gas sequestration from tree plant2 ing, forest management actions, and agricul3 tural land;

4 ‘‘(B) make recommendations to the Sec5 retary to amend the guidelines; and

6 ‘‘(C) before submitting the guidelines to

7 the Secretary, provide an opportunity for public

8 comment on the guidelines.

9 ‘‘(2) ESTABLISHMENT OF GUIDELINES.—

10 ‘‘(A) REPORTING GUIDELINES.—The rec11 ommendations under paragraph (1)(B) shall in12 clude recommendations for reporting guidelines

13 that—

14 ‘‘(i) are based on—

15 ‘‘(I) measuring increases in car16 bon storage in excess of the carbon

17 storage that would have occurred but

18 for reforestation, forest management,

19 forest protection, or other soil carbon

20 and forest management actions; and

21 ‘‘(II) comprehensive carbon ac22 counting that reflects net increases in

23 the carbon reservoir and takes into

24 account any carbon emissions result25 ing from the disturbance of carbon
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1 reservoirs existing at the beginning of

2 a soil carbon or forest management

3 action; and

4 ‘‘(ii) include options for—

5 ‘‘(I) estimating the indirect ef6 fects of soil carbon and forest man7 agement actions on carbon storage,

8 including the potential displacement

9 of carbon emissions;

10 ‘‘(II) quantifying the expected

11 carbon storage over various time peri12 ods, as determined by the Secretary,

13 taking into account the duration of

14 carbon stored in the carbon reservoir;

15 and

16 ‘‘(III) considering the economic

17 and social effects of soil carbon and

18 forest management alternatives.

19 ‘‘(B) ACCURATE MONITORING, MEASURE20 MENT, AND VERIFICATION GUIDELINES.—

21 ‘‘(i) IN GENERAL.—The recommenda22 tions under paragraph (1)(B) shall include

23 recommended practices for monitoring,

24 measurement, and verification of carbon
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1 storage from soil carbon and forest man2 agement actions.

3 ‘‘(ii) REQUIREMENTS.—The rec4 ommended practices shall, to the maximum

5 extent practicable—

6 ‘‘(I) be based on statistically

7 sound sampling strategies that build

8 on knowledge of the carbon dynamics

9 of forests and agricultural land;

10 ‘‘(II) compute carbon stocks and

11 changes in carbon stocks, by taking

12 field condition measurements and

13 modeling;

14 ‘‘(III) include guidelines on how

15 to sample and calculate carbon se16 questration across multiple partici17 pating ownerships; and

18 ‘‘(IV) encourage the use of more

19 precise measurements at the option of

20 a reporting entity.

21 ‘‘(C) STATE GUIDELINES.—The rec22 ommendations under paragraph (1)(B) shall in23 clude State guidelines for reporting, monitoring,

24 and verifying carbon storage under the forest

25 carbon program.
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1 ‘‘(D) BIOMASS ENERGY PROJECTS.—The

2 recommendations under paragraph (1)(B) shall

3 include guidelines for calculating net green4 house gas reductions from biomass energy

5 projects, including—

6 ‘‘(i) net changes in carbon storage re7 sulting from changes in land use; and

8 ‘‘(ii) the effect of using biomass to

9 generate electricity (including co-firing of

10 biomass with fossil fuels) on the displace11 ment of greenhouse gas emissions from

12 fossil fuels.

13 ‘‘(3) REVIEW OF GUIDELINES.—At least once

14 every 24 months, the Carbon Advisory Council shall

15 meet to—

16 ‘‘(A) evaluate the latest scientific and ob17 servational information on reporting, moni18 toring, and verification of carbon storage from

19 forest soil carbon and forest management ac20 tions; and

21 ‘‘(B) recommend to the Secretary, revised

22 guidelines for reporting, monitoring, and

23 verification of carbon storage from soil carbon

24 and forest management actions to reflect the

25 evaluation.
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1 ‘‘(4) COMPLIANCE WITH OTHER LAWS.—The

2 Advisory Committee shall meet, as necessary, to en3 sure that the guidelines for reporting, monitoring,

4 and verification of carbon storage from forest man5 agement actions are revised to be consistent with

6 any Federal or State laws enacted after the date of

7 enactment of this section.’’.

8 SEC. 102. NATIONAL INVENTORY AND VOLUNTARY REPORT9 ING OF GREENHOUSE GASES.

10 Section 1605(b) of the Energy Policy Act of 1992

11 (42 U.S.C. 13385(b)) is amended by adding at the end

12 the following:

13 ‘‘(5) AMENDMENT OF GUIDELINES.—Not later

14 than 180 days after receiving the recommendations

15 of the Carbon Advisory Council under subsection

16 1610(h)(1)(B), the Secretary (acting through the

17 Administrator of the Energy Information Adminis18 tration) shall, as appropriate, revise the guidelines

19 established under paragraph (1) to reflect the rec20 ommendations of the Carbon Advisory Council.’’.
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1 TITLE II—FOREST CARBON

2 MANAGEMENT

3 SEC. 201. FOREST CARBON STORAGE AND SEQUESTRATION.

4 The Global Climate Change Prevention Act of 1990

5 is amended by inserting after section 2403 (7 U.S.C.

6 6702) the following:

7 ‘‘SEC. 2404. FOREST CARBON MANAGEMENT.

8 ‘‘(a) DEFINITIONS.—In this section:

9 ‘‘(1) CARBON ADVISORY COUNCIL.—The term

10 ‘Carbon Advisory Council’ means the Carbon Advi11 sory Council established by section 1610(b) of the

12 Energy Policy Act of 1992.

13 ‘‘(2) CARBON STORAGE.—The term ‘carbon

14 storage’ means the quantity of carbon sequestered

15 from the atmosphere and stored in forest carbon res16 ervoirs.

17 ‘‘(3) FOREST CARBON PROGRAM.—The term

18 ‘forest carbon program’ means the program estab19 lished under subsection (b) to provide financial as20 sistance for forest carbon activities through—

21 ‘‘(A) cooperative agreements; and

22 ‘‘(B) State revolving loan funds.

23 ‘‘(4) FOREST CARBON RESERVOIR.—The term

24 ‘forest carbon reservoir’ means—
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1 ‘‘(A) trees, roots, soils, or other biomass

2 associated with forest ecosystems; and

3 ‘‘(B) products from the biomass that store

4 carbon.

5 ‘‘(5) FOREST LAND—

6 ‘‘(A) IN GENERAL.—The term ‘forest land’

7 means land that is, or has been, at least 10 per8 cent stocked by forest trees of any size.

9 ‘‘(B) INCLUSIONS.—The term ‘forest land’

10 includes—

11 ‘‘(i) land on which forest cover may be

12 naturally or artificially regenerated; and

13 ‘‘(ii) a transition zone between a for14 ested area and nonforested area that is ca15 pable of sustaining forest cover.

16 ‘‘(6) FOREST MANAGEMENT ACTION.—

17 ‘‘(A) IN GENERAL.—The term ‘forest man18 agement action’ means an action that—

19 ‘‘(i) applies forestry principles to the

20 regeneration, management, use, and con21 servation of forests to meet specific goals

22 and objectives; and

23 ‘‘(ii) maintains the productivity of the

24 forests.
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1 ‘‘(B) INCLUSIONS.—The term ‘forest man2 agement action’ includes management of forests

3 for the benefit of—

4 ‘‘(i) aesthetics;

5 ‘‘(ii) fish;

6 ‘‘(iii) recreation;

7 ‘‘(iv) urban values;

8 ‘‘(v) water;

9 ‘‘(vi) wilderness;

10 ‘‘(vii) wildlife;

11 ‘‘(viii) wood products; and

12 ‘‘(ix) other forest values.

13 ‘‘(7) INDIAN TRIBE.—The term ‘Indian tribe’

14 has the meaning given the term in section 4 of the

15 Indian Health Care Improvement Act (25 U.S.C.

16 1603).

17 ‘‘(8) INVASIVE SPECIES.—The term ‘invasive

18 species’ means a species that is not native to an eco19 system, the introduction of which may cause harm

20 to the economy, the environment, or human health.

21 ‘‘(9) NONINDUSTRIAL PRIVATE FOREST.—The

22 term ‘nonindustrial private forest’ means forest land

23 that is privately owned by a person that—

24 ‘‘(A) does not control a forest products

25 manufacturing facility; and
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1 ‘‘(B) manages the land solely for the pur2 poses of timber production.

3 ‘‘(10) REFORESTATION.—

4 ‘‘(A) IN GENERAL.—The term ‘reforest5 ation’ means the reestablishment of forest cover

6 naturally or artificially.

7 ‘‘(B) INCLUSIONS.—The term ‘reforest8 ation’ includes—

9 ‘‘(i) planned replanting;

10 ‘‘(ii) reseeding; and

11 ‘‘(iii) natural regeneration.

12 ‘‘(11) REVOLVING LOAN PROGRAM.—The term

13 ‘revolving loan program’ means a State revolving

14 loan program established under subsection

15 (b)(2)(A).

16 ‘‘(12) SECRETARY.—The term ‘Secretary’

17 means the Secretary of Agriculture, acting through

18 the Chief of the Forest Service.

19 ‘‘(b) FOREST CARBON PROGRAM.—

20 ‘‘(1) COOPERATIVE AGREEMENT.—The Sec21 retary may enter into a cooperative agreement with

22 willing landowners who are State or local govern23 ments, Indian tribes, private, nonprofit entities, and

24 other persons to carry out forest carbon activities on
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1 private land, State land, Indian tribe land, or private

2 land.

3 ‘‘(2) REVOLVING LOAN PROGRAM.—

4 ‘‘(A) IN GENERAL.—In collaboration with

5 State Foresters and representatives of non6 governmental organizations, the Secretary shall

7 provide assistance to States to establish a re8 volving loan program to carry out forest carbon

9 activities on nonindustrial private forest land.

10 ‘‘(B) ELIGIBILITY.—An owner of non11 industrial private forest land shall be eligible

12 for assistance from a revolving loan fund for

13 forest carbon activities on not more than a total

14 of 5,000 acres of nonindustrial private forest

15 land of the owner.

16 ‘‘(C) LOAN TERMS.—

17 ‘‘(i) IN GENERAL.—To be eligible for

18 a loan under this section, an owner of non19 industrial private forest land shall enter

20 into a loan agreement with the State.

21 ‘‘(ii) INTEREST RATE.—The loan

22 agreement shall have loan interest rates

23 that are established by the State—
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1 ‘‘(I) to encourages participation

2 of nonindustrial private forest land3 owners in the revolving loan program;

4 ‘‘(II) to provide a net rate of re5 turn of not more than 3 percent; and

6 ‘‘(III) to further the objectives of

7 this section.

8 ‘‘(iii) REPAYMENT.—The loan agree9 ment shall require that loan obligations be

10 repaid to the State—

11 ‘‘(I)(aa) at the time of harvest of

12 land covered by the revolving loan

13 program; or

14 ‘‘(bb) in accordance with a repay15 ment schedule determined by the

16 State; and

17 ‘‘(II) at a rate proportional to

18 the percentage decrease of carbon

19 stock.

20 ‘‘(iv) INSURANCE.—The loan agree21 ment shall include provisions that provide

22 for private insurance, or that release the

23 owner from the financial obligation for any

24 portion of the timber, forest products, or

25 other biomass that—
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1 ‘‘(I) is lost to insects, disease,

2 fire, storm, flood, or other cir3 cumstance beyond the control of the

4 owner; or

5 ‘‘(II) cannot be harvested be6 cause of restrictions on tree har7 vesting imposed by the applicable

8 Federal, State, or local government

9 after the date of the loan agreement.

10 ‘‘(v) LIEN.—The loan agreement

11 shall—

12 ‘‘(I) impose a lien on all timber,

13 forest products, and biomass produced

14 on land covered by the loan agree15 ment; and

16 ‘‘(II) provide an assurance that

17 the terms of the lien shall transfer

18 with the land on sale, lease, or trans19 fer of the land.

20 ‘‘(vi) BUYOUT OPTION.—The loan

21 agreement shall include a buyout option

22 that specifies the financial terms under

23 which the owner may terminate the

24 agreement—
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1 ‘‘(I) before harvesting timber

2 from the stand established with loan

3 funds; and

4 ‘‘(II) by repaying the loan with

5 interest.

6 ‘‘(vii) ATTRIBUTION.—The loan agree7 ment shall provide that, until the loan is

8 paid in full by the participating owner or

9 otherwise terminated in accordance with

10 this section, all reductions in atmospheric

11 greenhouse gases achieved as the result of

12 the loan shall be attributed to any non13 Federal entities that provide funding for

14 the loan (including the State or any other

15 person or nongovernmental organization

16 that provides funding to the State for the

17 issuance of the loan).

18 ‘‘(viii) MONITORING AND

19 VERIFICATION.—The loan agreement shall

20 include provisions for the monitoring and

21 verification of carbon storage.

22 ‘‘(D) PERMANENT CONSERVATION EASE23 MENT.—

24 ‘‘(i) IN GENERAL.—A borrower may

25 donate to the State or to another appro-
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1 priate entity a permanent conservation

2 easement that—

3 ‘‘(I) furthers the objectives of

4 this section, including managing the

5 land in a manner that maximizes the

6 forest carbon reservoir of the land;

7 and

8 ‘‘(II) permanently protects the

9 covered private forest land and re10 sources at a level above that required

11 under applicable Federal, State, and

12 local law.

13 ‘‘(ii) TERMS.—A permanent conserva14 tion easement under clause (i) may permit

15 the continuation of forest management ac16 tions that—

17 ‘‘(I) increase carbon storage on

18 the land and forest; or

19 ‘‘(II) furthers the objectives of

20 this section.

21 ‘‘(iii) EFFECT ON LOAN AGREE22 MENT.—

23 ‘‘(I) REQUIRED CANCELLA24 TION.—If the borrower donates to the

25 State a permanent conservation ease-
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1 ment under clause (i), the State shall

2 cancel—

3 ‘‘(aa) the loan agreement

4 under subparagraph (C); and

5 ‘‘(bb) any liens on the tim6 ber, forest products, and biomass

7 under subparagraph (C)(v).

8 ‘‘(II) PERMISSIBLE CANCELLA9 TION.—If the borrower donates to an10 other appropriate entity a permanent

11 conservation easement under clause

12 (i), the State may cancel—

13 ‘‘(aa) the loan agreement

14 under subparagraph (C); and

15 ‘‘(bb) any liens on the tim16 ber, forest products, and biomass

17 under subparagraph (C)(v).

18 ‘‘(E) REINVESTMENT OF FUNDS.—Any

19 funds collected under a loan issued under this

20 section (including loan repayments, loan

21 buyouts, and any interest payments) shall be—

22 ‘‘(i) reinvested by the State in the re23 volving loan program; and
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1 ‘‘(ii) used by the State to make addi2 tional loans under the revolving loan pro3 gram.

4 ‘‘(F) RECORDS.—The State Forester of a

5 State shall—

6 ‘‘(i) maintain all records related to

7 any loan agreement funded by a revolving

8 loan fund of the State; and

9 ‘‘(ii) make the records available to the

10 public.

11 ‘‘(G) MATCHING FUNDS.—

12 ‘‘(i) IN GENERAL.—Beginning the sec13 ond year in which a State participates in

14 the revolving loan program, and each year

15 thereafter, to be eligible to receive Federal

16 funds under this subsection a State shall

17 provide matching non-Federal funds equal

18 to at least 25 percent of the Federal funds

19 made available to the State for the revolv20 ing loan program.

21 ‘‘(ii) ADMINISTRATION.—The State

22 shall—

23 ‘‘(I) provide matching funds in

24 the form of cash, in-kind administra-
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1 tive services, or technical assistance;

2 and

3 ‘‘(II) establish procedures to en4 sure accountability for the use of Fed5 eral funds.

6 ‘‘(H) LOAN FUNDING DISTRIBUTION.—

7 ‘‘(i) FORMULA.—Not later than 180

8 days after the date of enactment of this

9 section, the Secretary, in consultation with

10 State Foresters, shall—

11 ‘‘(I) establish a formula under

12 which Federal funds shall be distrib13 uted under this section among eligible

14 States; and

15 ‘‘(II) submit to Congress a report

16 on the formula (including the method17 ology used to establish the formula).

18 ‘‘(ii) BASIS.—The formula shall—

19 ‘‘(I) be based on maximizing the

20 potential for meeting the objectives of

21 this section;

22 ‘‘(II) consider—

23 ‘‘(aa) the acreage of un24 stocked or under-producing pri25 vate forest land in each State;
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1 ‘‘(bb) the potential produc2 tivity of the land;

3 ‘‘(cc) the potential long-term

4 carbon storage of the land;

5 ‘‘(dd) the potential to

6 achieve other environmental ben7 efits;

8 ‘‘(ee) the number of owners

9 eligible for loans under this sec10 tion in each State; and

11 ‘‘(ff) the need for reforest12 ation, timber stand improvement,

13 or other forestry investments

14 consistent with the objectives of

15 this section; and

16 ‘‘(III) provide a priority to States

17 that have experienced or are expected

18 to experience significant declines in

19 employment levels in the forestry in20 dustry because of declining timber

21 harvests on Federal land.

22 ‘‘(I) PRIVATE FUNDING.—A revolving loan

23 fund may accept and distribute as loans any

24 funds provided by nongovernmental organiza25 tions or persons to carry out this section.
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1 ‘‘(J) BONNEVILLE POWER ADMINISTRA2 TION.—

3 ‘‘(i) IN GENERAL.—The States of

4 Washington, Oregon, Idaho, and Montana

5 may apply for funding from the Bonneville

6 Power Administration for purposes of

7 funding loans that meet—

8 ‘‘(I) the objectives of this section;

9 and

10 ‘‘(II) the fish and wildlife objec11 tives of the Bonneville Power Admin12 istration under the Pacific Northwest

13 Electric Power Planning and Con14 servation Act (16 U.S.C. 839 et seq.).

15 ‘‘(ii) APPLICATION OF REQUIREMENTS

16 UNDER OTHER LAW.—An application

17 under clause (i) shall be subject to all rules

18 and procedures established by the—

19 ‘‘(I) Pacific Northwest Electric

20 Power and Conservation Planning

21 Council; and

22 ‘‘(II) the Bonneville Power Ad23 ministration under the Pacific North24 west Electric Power Planning and
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1 Conservation Act (16 U.S.C. 839 et

2 seq.).

3 ‘‘(3) ELIGIBLE FORESTRY CARBON ACTIVI4 TIES.—

5 ‘‘(A) IN GENERAL.—An owner may use a

6 loan or other funds provided under this section

7 to carry out eligible forestry carbon activities

8 (as determined by the Secretary) that—

9 ‘‘(i)(I) help restore under-producing

10 or understocked forest land;

11 ‘‘(II) provide for protection of forests

12 from nonforest use; or

13 ‘‘(III) allow a variety of sustainable

14 management alternatives; and

15 ‘‘(ii) have no net negative impact on

16 watersheds and fish and wildlife habitats.

17 ‘‘(B) ASSISTANCE.—The Secretary, in col18 laboration with State Foresters, shall provide

19 guidance on eligible forestry carbon activities

20 under this subsection.

21 ‘‘(C) APPLICATION OF OTHER LAWS.—

22 Funding shall not be provided under this sec23 tion for activities required under other applica24 ble Federal, State, or local laws.
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1 ‘‘(D) PRE-AGREEMENT ACTIVITIES.—

2 Funding shall not be provided for costs in3 curred before entering into a cooperative agree4 ment or loan agreement under this section.

5 ‘‘(E) LIMITATION ON LAND CONSIDERED

6 FOR FUNDING.—No owner shall enter into a

7 loan agreement under this section to fund refor8 estation of land harvested after the date of en9 actment of this section if the owner received

10 revenues from the harvest that are sufficient to

11 reforest the land.

12 ‘‘(F) ELIGIBLE TREE SPECIES.—

13 ‘‘(i) INVASIVE SPECIES.—Selection of

14 tree species for loan projects under this

15 paragraph shall be consistent with Execu16 tive Order No. 13112 (42 U.S.C. 4321

17 note).

18 ‘‘(ii) PROGRAM FUNDING.—Funding

19 for reforestation activities under this sec20 tion may be provided for—

21 ‘‘(I) tree species native to a re22 gion;

23 ‘‘(II) tree species that formerly

24 occupied the site; or
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1 ‘‘(III) nonnative tree species or

2 hybrids that are noninvasive.

3 ‘‘(G) FOREST-MANAGEMENT PLAN.—Pri4 ority shall be provided under this section to

5 projects on land under a forestry management

6 plan or forest stewardship plan that is con7 sistent with the objectives of the carbon storage

8 program.

9 ‘‘(H) USE OF FUNDS.—

10 ‘‘(i) PERMITTED USES.—Funds under

11 this section may be used to—

12 ‘‘(I) pay the cost of purchasing

13 and planting tree seedlings; and

14 ‘‘(II) pay other costs associated

15 with the planted trees, including the

16 cost of—

17 ‘‘(aa) planning;

18 ‘‘(bb) site preparation;

19 ‘‘(cc) forest management;

20 ‘‘(dd) monitoring;

21 ‘‘(ee) measurement and

22 verification; and

23 ‘‘(ff) consultant and con24 tractor fees.
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•S 1255 IS

1 ‘‘(ii) PROHIBITED USES.—Funds

2 under this section shall not be used to—

3 ‘‘(I) pay for the labor of the

4 owner; or

5 ‘‘(II) purchase capital items or

6 expendable items, such as vehicles,

7 tools, and other equipment.

8 ‘‘(I) AMOUNT OF FINANCIAL ASSIST9 ANCE.—The amount of financial assistance pro10 vided to an owner under this section shall not

11 exceed—

12 ‘‘(i) 100 percent of total project costs

13 of the owner, including funds received from

14 any other source; or

15 ‘‘(ii) $100,000 during any 2-year pe16 riod.

17 ‘‘(J) FEDERAL FUNDING.—During fiscal

18 years 2001 through 2010, civil penalties col19 lected under section 113 of the Clean Air Act

20 (42 U.S.C. 7413) and under section 309(d) of

21 the Federal Water Pollution Control Act (33

22 U.S.C. 1319(d)) shall be available, without fur23 ther act of appropriation, to fund cooperative

24 agreements and revolving loan funds authorized

25 under this section.
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1 ‘‘(4) ALLOCATION OF FUNDS.—The Secretary

2 shall allocate—

3 ‘‘(A) not less than 15 percent of available

4 funds for cooperative agreements described in

5 paragraph (1); and

6 ‘‘(B) after determining that States have

7 implemented a system to administer loans made

8 under paragraph (2) in accordance with this

9 section, 85 percent of available funds for State

10 revolving loan programs.’’.

11 TITLE III—CARBON

12 SEQUESTRATION PROGRAM

13 SEC. 301. ESTABLISHMENT.

14 Subtitle D of title XII of the Food Security Act of

15 1985 (16 U.S.C. 3830 et seq.) is amended by inserting

16 after chapter 1 the following:

17 ‘‘CHAPTER 2—CARBON SEQUESTRATION

18 PROGRAM

19 ‘‘SEC. 1238. CARBON SEQUESTRATION PROGRAM.

20 ‘‘(a) IN GENERAL.—Effective beginning with the

21 2002 calendar year, the Secretary, acting through the

22 Chief of the Natural Resources Conservation Service, shall

23 establish a carbon sequestration program to permit owners

24 and operators of land located in the United States to en-
34

•S 1255 IS

1 roll the land in the program to increase the sequestration

2 of carbon.

3 ‘‘(b) ELIGIBLE LAND.—

4 ‘‘(1) IN GENERAL.—Except as provided in para5 graph (2), the Secretary may include in the program

6 established under this chapter any land, as deter7 mined by the Secretary.

8 ‘‘(2) CONSERVATION RESERVE LAND AND WET9 LANDS RESERVE LAND.—The Secretary may include

10 in the carbon sequestration program land that is en11 rolled in the conservation reserve program or the

12 wetlands reserve program established under sub13 chapters B and C, respectively, of chapter 1, if the

14 owner or operator of the land has not received any

15 payments under the program for the implementation

16 of carbon sequestration measures on the land.

17 ‘‘(c) MAXIMUM ENROLLMENT.—The Secretary may

18 maintain up to 20,000,000 acres of land in the United

19 States in the carbon sequestration program at any 1 time

20 during a calendar year.

21 ‘‘(d) DURATION OF CONTRACT.—

22 ‘‘(1) IN GENERAL.—For the purpose of car23 rying out this chapter, the Secretary shall enter into

24 contracts of not less than 10 years.
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1 ‘‘(2) CERTAIN LAND.—In the case of land de2 voted to hardwood trees, shelterbelts, windbreaks, or

3 wildlife corridors under a contract entered into

4 under this chapter, the owner or operator of the

5 land may, within the limitations prescribed under

6 this section, specify the duration of the contract.

7 ‘‘SEC. 1238A. CARBON SEQUESTRATION PRACTICES.

8 ‘‘(a) CRITERIA FOR EVALUATING CARBON SEQUES9 TRATION PRACTICES.—

10 ‘‘(1) IN GENERAL.—The Carbon Advisory

11 Council established under section 1610(b) of the En12 ergy Policy Act of 1992 shall develop, and propose

13 to the Secretary, criteria for determining the accept14 ability of, and evaluating, practices by owners and

15 operators that will increase the sequestration of car16 bon for the purposes of determining the acceptability

17 of contract offers made by the owners and operators.

18 ‘‘(2) CONTENT.—The criteria shall address—

19 ‘‘(A) forest preservation and restoration

20 and afforestation;

21 ‘‘(B) biodiversity enhancement;

22 ‘‘(C) the use of acreage to produce high23 storage crops;

24 ‘‘(D) soil erosion management;

25 ‘‘(E) soil fertility restoration;
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•S 1255 IS

1 ‘‘(F) wetland restoration;

2 ‘‘(G) no-till farming practices;

3 ‘‘(H) conservation buffers;

4 ‘‘(I) improved cropping systems with win5 ter cover crops; and

6 ‘‘(J) any other conservation practices that

7 the Secretary determines to be appropriate for

8 increasing carbon sequestration.

9 ‘‘(3) REGULATIONS.—The Secretary, acting

10 through the Chief of the Natural Resources Con11 servation Service and the Chief of the Forest Serv12 ice, by regulation, shall establish criteria described

13 in paragraphs (1) and (2).

14 ‘‘(b) ACCEPTABILITY OF CARBON SEQUESTRATION

15 PRACTICES.—

16 ‘‘(1) IN GENERAL.—As part of a contract offer

17 accepted under this chapter, the owner or operator

18 shall agree to carry out on land enrolled in the pro19 gram established under this chapter carbon seques20 tration practices proposed by the owner or operator

21 that (as determined by the Secretary)—

22 ‘‘(A) provide for additional sequestration

23 beyond that which would be provided in the ab24 sence of enrollment of the land in the program;

25 and
37

•S 1255 IS

1 ‘‘(B) contribute to a positive reduction of

2 greenhouse gases in the atmosphere through se3 questration over at least a 10-year period.

4 ‘‘(2) MAXIMUM SEQUESTRATION BENEFITS.—In

5 determining the acceptability of contract offers, the

6 Secretary shall take into consideration the extent to

7 which enrollment of the land that is the subject of

8 the contract offer would provide the maximum se9 questration benefits under the criteria developed

10 under subsection (a).

11 ‘‘(c) COMPLIANCE WITH CARBON SEQUESTRATION

12 CONTRACTS.—

13 ‘‘(1) IN GENERAL.—As part of a contract offer

14 accepted under this chapter, an owner or operator of

15 land shall permit the Secretary to verify that the

16 owner or operator is implementing practices that se17 quester carbon in accordance with the contract, in18 cluding an actual verification of the practices at

19 least once every 5 years and such random inspec20 tions as are necessary.

21 ‘‘(2) FRAUD OR FALSE STATEMENTS.—Section

22 1001 of title 18, United States Code, shall apply to

23 a statement, representation, writing, or document

24 provided by an owner or operator under this sub25 section.
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•S 1255 IS

1 ‘‘(3) CONFIDENTIALITY.—Information provided

2 by an owner or operator under this subsection shall

3 be considered to be confidential information for the

4 purposes of section 552(b)(4) of title 5, United

5 States Code.

6 ‘‘(d) MONITORING.—The Secretary, in consultation

7 with the Administrator of the Energy Information Admin8 istration, shall develop forms to monitor sequestration im9 provements made as a result of the program established

10 under this chapter and distribute the forms to owners and

11 operators of land enrolled in the program.

12 ‘‘(e) EDUCATIONAL OUTREACH.—In consultation

13 with the Consortium for Agricultural Soils Mitigation of

14 Greenhouse Gases, the Secretary, acting through the Ex15 tension Service, shall conduct an educational outreach pro16 gram to collect and disseminate to owners and operators

17 of land research-based information on agricultural prac18 tices that will increase the sequestration of carbon, while

19 preserving the social and economic well-being of the own20 ers and operators.

21 ‘‘SEC. 1238B. DUTIES OF OWNERS AND OPERATORS.

22 ‘‘(a) IN GENERAL.—Under the terms of a contract

23 entered into under this chapter, during the term of the

24 contract, an owner or operator of a farm or ranch shall

25 agree—
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1 ‘‘(1) to implement a plan approved by the Sec2 retary for carrying out on land subject to the con3 tract practices that will increase the sequestration of

4 carbon, substantially in accordance with a schedule,

5 covering a period of not less than 10 years, that is

6 outlined in the plan;

7 ‘‘(2) to place land subject to the contract in the

8 carbon sequestration program established under this

9 chapter;

10 ‘‘(3) in addition to the remedies provided under

11 section 1238F(d), on the violation of a term or con12 dition of the contract at any time at which the

13 owner or operator has control of the land—

14 ‘‘(A) to forfeit all rights to receive rental

15 payments and cost-sharing payments under the

16 contract and to refund to the Secretary any

17 rental payments and cost-sharing payments re18 ceived by the owner or operator under the con19 tract, and interest on the payments as deter20 mined by the Secretary, if the Secretary deter21 mines that the violation is of such nature as

22 to warrant termination of the contract; or

23 ‘‘(B) to refund to the Secretary, or accept

24 adjustments to, the rental payments and cost25 sharing payments provided to the owner or op-
40

•S 1255 IS

1 erator, as the Secretary considers appropriate,

2 if the Secretary determines that the violation

3 does not warrant termination of the contract;

4 ‘‘(4) on the transfer of the right and interest of

5 the owner or operator in land subject to the

6 contract—

7 ‘‘(A)(i) to forfeit all rights to rental pay8 ments and cost-sharing payments under the

9 contract; and

10 ‘‘(ii) to refund to the United States all

11 rental payments and cost-sharing payments re12 ceived by the owner or operator, or accept such

13 payment adjustments or make such refunds as

14 the Secretary considers appropriate and con15 sistent with the objectives of this chapter; un16 less

17 ‘‘(B)(i) the transferee of the land agrees

18 with the Secretary to assume all obligations of

19 the contract;

20 ‘‘(ii) the land is purchased by or for the

21 United States Fish and Wildlife Service; or

22 ‘‘(iii) the transferee and the Secretary

23 agree to modifications to the contract that are

24 consistent with the objectives of the program,

25 as determined by the Secretary;
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•S 1255 IS

1 ‘‘(5) not to adopt any practice specified by the

2 Secretary in the contract as a practice that would

3 tend to defeat the purposes of this chapter; and

4 ‘‘(6) to comply with such additional provisions

5 as the Secretary determines are desirable and are in6 cluded in the contract to carry out this chapter or

7 to facilitate the practical administration of this

8 chapter.

9 ‘‘(b) PLAN.—The plan referred to in subsection

10 (a)(1)—

11 ‘‘(1) shall specify the carbon sequestration prac12 tices to be carried out by the owner or operator dur13 ing the term of the contract; and

14 ‘‘(2) may provide for the permanent retirement

15 of any existing cropland base and allotment history

16 for the land.

17 ‘‘(c) FORECLOSURE.—

18 ‘‘(1) IN GENERAL.—Notwithstanding any other

19 provision of law, an owner or operator that is a

20 party to a contract entered into under this chapter

21 may not be required to make repayments to the Sec22 retary of amounts received under the contract if—

23 ‘‘(A) the land that is subject to the con24 tract has been foreclosed on; and
42

•S 1255 IS

1 ‘‘(B) the Secretary determines that for2 giving the repayments is appropriate in order to

3 provide fair and equitable treatment.

4 ‘‘(2) RESUMPTION OF CONTROL.—

5 ‘‘(A) IN GENERAL.—This subsection shall

6 not void the responsibilities of such an owner or

7 operator under the contract if the owner or op8 erator resumes control over the land that is

9 subject to the contract within the period speci10 fied in the contract.

11 ‘‘(B) CONTRACT APPLICABILITY.—On the

12 resumption of the control over the land by the

13 owner or operator, the provisions of the con14 tract in effect on the date of the foreclosure

15 shall apply.

16 ‘‘SEC. 1238C. DUTIES OF THE SECRETARY.

17 ‘‘In return for a contract entered into by an owner

18 or operator under section 1238B, the Secretary shall—

19 ‘‘(1) share the cost of carrying out on the land

20 carbon sequestration practices specified in the con21 tract for which the Secretary determines that cost

22 sharing is appropriate and in the public interest;

23 ‘‘(2) for a period of years not in excess of the

24 term of the contract, pay an annual rental payment

25 in an amount necessary to compensate for—
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•S 1255 IS

1 ‘‘(A) the use of carbon sequestration prac2 tices on the land; and

3 ‘‘(B) the retirement of any cropland base

4 and allotment history that the owner or oper5 ator agrees to retire permanently; and

6 ‘‘(3) provide conservation technical assistance

7 to assist the owner or operator in carrying out the

8 contract.

9 ‘‘SEC. 1238D. PAYMENTS.

10 ‘‘(a) TIME OF PAYMENT.—The Secretary shall pro11 vide payment for obligations incurred by the Secretary

12 under a contract entered into under this chapter—

13 ‘‘(1) with respect to any cost-sharing payment

14 obligation incurred by the Secretary, as soon as

15 practicable after the obligation is incurred; and

16 ‘‘(2) with respect to any annual rental payment

17 obligation incurred by the Secretary—

18 ‘‘(A) as soon as practicable after October

19 1 of each calendar year; or

20 ‘‘(B) at the option of the Secretary, at any

21 time before that date during the year in which

22 the obligation is incurred.

23 ‘‘(b) COST-SHARING PAYMENTS.—

24 ‘‘(1) IN GENERAL.—In making cost-sharing

25 payments to an owner or operator under a contract
44

•S 1255 IS

1 entered into under this chapter, the Secretary shall

2 pay not more than 50 percent of the cost of carrying

3 out carbon sequestration practices required under

4 the contract for which the Secretary determines that

5 cost-sharing is appropriate and in the public inter6 est.

7 ‘‘(2) MAXIMUM AMOUNT.—The Secretary shall

8 not make any payment under this chapter to the ex9 tent that the total amount of cost-sharing payments

10 provided to an owner or operator for carbon seques11 tration practices from all sources would exceed 100

12 percent of the total cost of carrying out the prac13 tices.

14 ‘‘(3) OTHER FEDERAL ASSISTANCE.—An owner

15 or operator shall not be eligible to receive or retain

16 cost-share assistance for land under this subsection

17 if the owner or operator receives any other Federal

18 cost-share assistance under this subsection with re19 spect to the land under any other provision of law.

20 ‘‘(c) RENTAL PAYMENTS.—

21 ‘‘(1) IN GENERAL.—In determining the amount

22 of annual rental payments to be paid to owners and

23 operators for carrying out carbon sequestration

24 practices, the Secretary may consider, among other

25 factors, the amount necessary to encourage owners
45

•S 1255 IS

1 or operators of land to participate in the program

2 established by this chapter.

3 ‘‘(2) BIDS OR OTHER MEANS.—The amounts

4 payable to owners or operators in the form of rental

5 payments under contracts entered into under this

6 chapter may be determined through—

7 ‘‘(A) the submission of bids for such con8 tracts by owners and operators in such manner

9 as the Secretary may prescribe; or

10 ‘‘(B) such other means as the Secretary

11 determines are appropriate.

12 ‘‘(3) FACTORS.—In determining the accept13 ability of contract offers, the Secretary—

14 ‘‘(A) shall take into consideration the ex15 tent to which enrollment of the land that is the

16 subject of the contract offer would increase the

17 sequestration of carbon in accordance with sec18 tion 1238A;

19 ‘‘(B) may take into consideration the ex20 tent to which enrollment of the land that is the

21 subject of the contract offer would improve soil

22 resources, water quality, or wildlife habitat, or

23 provide other environmental benefits; and

24 ‘‘(C) may establish different criteria in

25 various States and regions of the United States
46

•S 1255 IS

1 based on the extent to which the sequestration

2 of carbon, water quality, or wildlife habitat may

3 be improved or erosion may be abated.

4 ‘‘(d) FORM OF PAYMENT.—

5 ‘‘(1) IN GENERAL.—Except as otherwise pro6 vided in this section, payments under this chapter—

7 ‘‘(A) shall be made in cash or in the form

8 of in-kind commodities in such amount and on

9 such time schedule as is agreed on by the owner

10 or operator and specified in the contract; and

11 ‘‘(B) may be made in advance of deter12 mination of performance.

13 ‘‘(2) IN-KIND COMMODITIES.—If the payment is

14 made with in-kind commodities, the payment shall

15 be made by the Commodity Credit Corporation—

16 ‘‘(A) by delivery of the commodity involved

17 to the owner or operator at a warehouse or

18 other similar facility located in the county in

19 which the land subject to the contract is located

20 or at such other location as is agreed to by the

21 Secretary and the owner or operator;

22 ‘‘(B) by the transfer of negotiable ware23 house receipts; or

24 ‘‘(C) by such other method, including the

25 sale of the commodity in commercial markets,
47

•S 1255 IS

1 as is determined by the Secretary to be appro2 priate to enable the owner or operator to receive

3 efficient and expeditious possession of the com4 modity.

5 ‘‘(3) SUBSTITUTION IN CASH.—If stocks of a

6 commodity acquired by the Commodity Credit Cor7 poration are not readily available to make full pay8 ment in kind to the owner or operator, the Secretary

9 may substitute full or partial payment in cash for

10 payment in kind.

11 ‘‘(4) STATE CARBON SEQUESTRATION PRO12 GRAM.—Payments to an owner or operator under a

13 special carbon sequestration program described in

14 subsection (f)(4) shall be in the form of cash only.

15 ‘‘(e) PAYMENT TO OTHERS.—If an owner or operator

16 that is entitled to a payment under a contract entered into

17 under this chapter dies, becomes incompetent, is otherwise

18 unable to receive a payment under this chapter, or is suc19 ceeded by another person that renders or completes the

20 required performance, the Secretary shall make the pay21 ment, in accordance with regulations promulgated by the

22 Secretary and without regard to any other provision of

23 law, in such manner as the Secretary determines is fair

24 and reasonable in light of all the circumstances.

25 ‘‘(f) PAYMENT LIMITATIONS.—
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1 ‘‘(1) TOTAL AMOUNT.—The total amount of

2 rental payments, including rental payments made in

3 the form of in-kind commodities, made to a person

4 under this chapter for any fiscal year may not ex5 ceed $50,000.

6 ‘‘(2) AMOUNT PER ACRE.—The amount of rent7 al payments made to a person under this chapter for

8 any fiscal year may not exceed $20 per acre.

9 ‘‘(3) REGULATIONS.—

10 ‘‘(A) IN GENERAL.—The Secretary shall

11 issue regulations—

12 ‘‘(i) defining the term ‘person’ as used

13 in this subsection; and

14 ‘‘(ii) prescribing such rules as the Sec15 retary determines are necessary to ensure

16 a fair and reasonable application of the

17 limitation contained in this subsection.

18 ‘‘(B) CORPORATIONS.—The regulations

19 issued by the Secretary on December 18, 1970,

20 under section 101 of the Agricultural Act of

21 1970 (7 U.S.C. 1307) shall be used to deter22 mine whether corporations and their stock23 holders may be considered to be separate per24 sons under this subsection.
49

•S 1255 IS

1 ‘‘(4) OTHER PAYMENTS.—Rental payments re2 ceived by an owner or operator shall be in addition

3 to, and shall not affect, the total amount of pay4 ments that the owner or operator is otherwise eligi5 ble to receive under—

6 ‘‘(A) the Federal Agriculture Improvement

7 and Reform Act of 1996 (Public Law 104–

8 127), including the Agricultural Market Transi9 tion Act (7 U.S.C. 7201 et seq.);

10 ‘‘(B) the Food, Agriculture, Conservation,

11 and Trade Act of 1990 (Public Law 101–624);

12 or

13 ‘‘(C) the Agricultural Act of 1949 (7

14 U.S.C. 1421 et seq.).

15 ‘‘(5) STATE CARBON SEQUESTRATION PRO16 GRAM.—

17 ‘‘(A) IN GENERAL.—This subsection and

18 section 1305(f) of the Agricultural Reconcili19 ation Act of 1987 (7 U.S.C. 1308 note; Public

20 Law 100–203) shall not be applicable to pay21 ments received by a State, political subdivision,

22 or agency of a State or political subdivision in

23 connection with agreements entered into under

24 a special carbon sequestration program carried
50

•S 1255 IS

1 out by that entity that has been approved by

2 the Secretary.

3 ‘‘(B) PAYMENTS TO STATES AND POLIT4 ICAL SUBDIVISIONS.—The Secretary may enter

5 into such agreements for payments to States,

6 political subdivisions, or agencies of States or

7 political subdivisions as the Secretary deter8 mines will advance the purposes of this chapter.

9 ‘‘(g) EXEMPTION FROM AUTOMATIC SEQUESTER.—

10 Notwithstanding any other provision of law, no order

11 issued for any fiscal year under section 252 of the Bal12 anced Budget and Emergency Deficit Control Act of 1985

13 (2 U.S.C. 902) shall affect any payment under this chap14 ter.

15 ‘‘(h) OTHER ASSISTANCE.—In addition to any pay16 ment under this chapter, an owner or operator may receive

17 cost-share assistance, rental payments, or tax benefits

18 from a State or political subdivision of a State for enroll19 ing land in the carbon sequestration program.

20 ‘‘(i) TREATMENT OF PAYMENTS.—Payments received

21 by an owner or operator under this chapter shall be con22 sidered rentals from real estate for the purposes of section

23 1402(a)(1) of the Internal Revenue Code of 1986.
51

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1 ‘‘SEC. 1238E. CHANGES IN OWNERSHIP; MODIFICATION OR

2 TERMINATION OF CONTRACTS.

3 ‘‘(a) CHANGES IN OWNERSHIP.—

4 ‘‘(1) IN GENERAL.—Subject to paragraphs (2)

5 and (3), no contract shall be entered into under this

6 chapter concerning land with respect to which the

7 ownership has changed in the 1-year period pre8 ceding the first year of the contract period unless—

9 ‘‘(A) the new ownership was acquired by

10 will or succession as a result of the death of the

11 previous owner;

12 ‘‘(B) the new ownership was acquired be13 fore April 1, 2001;

14 ‘‘(C) the Secretary determines that the

15 land was acquired under circumstances that

16 give adequate assurances that the land was not

17 acquired for the purpose of enrolling the land in

18 the carbon sequestration program; or

19 ‘‘(D) the ownership change occurred be20 cause of foreclosure on the land and the owner

21 of the land immediately before the foreclosure

22 exercises a right of redemption from the mort23 gage holder in accordance with State law.

24 ‘‘(2) LIMITATIONS.—Paragraph (1) shall not—
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•S 1255 IS

1 ‘‘(A) prohibit the continuation of an agree2 ment by a new owner after an agreement has

3 been entered into under this chapter; or

4 ‘‘(B) require a person to own the land as

5 a condition of eligibility for entering into the

6 contract if the person—

7 ‘‘(i) has operated the land to be cov8 ered by a contract under this section for at

9 least 1 year preceding the later of—

10 ‘‘(I) the date of the contract; or

11 ‘‘(II) April 1, 2001; and

12 ‘‘(ii) controls the land for the contract

13 period.

14 ‘‘(3) OPTIONS FOR NEW OWNER OR OPER15 ATOR.—If, during the term of a contract entered

16 into under this chapter, an owner or operator of

17 land subject to the contract sells or otherwise trans18 fers the ownership or right of occupancy of the land,

19 the new owner or operator of the land may—

20 ‘‘(A) continue the contract under the same

21 terms or conditions;

22 ‘‘(B) enter into a new contract in accord23 ance with this chapter; or

24 ‘‘(C) elect not to participate in the pro25 gram established by this chapter.
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1 ‘‘(b) MODIFICATION OF CONTRACTS.—The Secretary

2 may modify a contract entered into with an owner or oper3 ator under this chapter if—

4 ‘‘(1) the owner or operator agrees to the modi5 fication; and

6 ‘‘(2) the Secretary determines that the modi7 fication is desirable—

8 ‘‘(A) to carry out this chapter;

9 ‘‘(B) to facilitate the practical administra10 tion of this chapter; or

11 ‘‘(C) to achieve such other goals as the

12 Secretary determines are appropriate, con13 sistent with this chapter.

14 ‘‘(c) TERMINATION OF CONTRACTS.—

15 ‘‘(1) IN GENERAL.—The Secretary may termi16 nate a contract entered into with an owner or oper17 ator under this chapter if—

18 ‘‘(A) the owner or operator agrees to the

19 termination; and

20 ‘‘(B) the Secretary determines that the ter21 mination would be in the public interest.

22 ‘‘(2) CONGRESSIONAL NOTICE.—Not later than

23 90 days before taking any action to terminate under

24 paragraph (1) a contract entered into under this

25 chapter, the Secretary shall provide to the Com-
54

•S 1255 IS

1 mittee on Agriculture of the House of Representa2 tives and the Committee on Agriculture, Nutrition,

3 and Forestry of the Senate written notice of the ac4 tion.

5 ‘‘SEC. 1238F. BASE HISTORY.

6 ‘‘(a) IN GENERAL.—A reduction, based on a ratio be7 tween the total cropland acreage on the farm and the acre8 age placed in the carbon sequestration program authorized

9 by this chapter, as determined by the Secretary, shall be

10 made during the period of the contract, in the aggregate,

11 in crop bases, quotas, and allotments on the farm with

12 respect to crops for which there is a production adjust13 ment program.

14 ‘‘(b) PRESERVATION OF BASE AND ALLOTMENT HIS15 TORY.—Notwithstanding sections 1211 and 1221, the

16 Secretary, by regulation, may provide for preservation of

17 cropland base and allotment history applicable to acreage

18 on which carbon sequestration practices are carried out

19 under this section, for the purpose of any Federal program

20 under which the history is used as a basis for participation

21 in the program or for an allotment or other limitation in

22 the program, unless the owner and operator agree under

23 the contract to retire permanently that cropland base and

24 allotment history.
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1 ‘‘(c) EXTENSION OF BASE AND ALLOTMENT HIS2 TORY.—

3 ‘‘(1) IN GENERAL.—The Secretary shall offer

4 the owner or operator of a farm or ranch an oppor5 tunity to extend the preservation of cropland base

6 and allotment history under subsection (b) for such

7 time as the Secretary determines is appropriate after

8 the expiration date of a contract under this chapter

9 at the request of the owner or operator.

10 ‘‘(2) CONDITIONS.—In return for the extension,

11 the owner or operator shall agree to continue to

12 abide by the terms and conditions of the original

13 contract, except that the owner or operator shall re14 ceive no additional cost share, annual rental, or

15 bonus payment.

16 ‘‘(d) VIOLATION OF CONTRACTS.—In addition to any

17 other remedy prescribed by law, the Secretary may reduce

18 or terminate the quantity of cropland base and allotment

19 history preserved under this section for acreage with re20 spect to which there has occurred a violation of a term

21 or condition of a contract entered into under this chapter.

22 ‘‘SEC. 1238G. CARBON MONITORING PILOT PROGRAMS.

23 ‘‘(a) ESTABLISHMENT.—

24 ‘‘(1) IN GENERAL.—The Secretary, in coopera25 tion with the Consortium for Agricultural Soils Miti-
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1 gation of Greenhouse Gases, shall carry out 4 or

2 more pilot programs to develop, demonstrate, and

3 verify the best management practices for carbon

4 monitoring on agricultural land.

5 ‘‘(2) CRITERIA.—The Secretary shall select

6 pilot programs based on—

7 ‘‘(A) the merit of the proposed program;

8 and

9 ‘‘(B) the diversity of soil sequestration

10 types available at the site of the proposed pro11 gram.

12 ‘‘(b) REQUIREMENTS.—Pilot programs carried out

13 under this section shall—

14 ‘‘(1) involve agricultural producers in the devel15 opment and verification of best management prac16 tices for carbon monitoring on agricultural land;

17 ‘‘(2) involve research and testing of the best

18 management practices in various soil types and cli19 mactic zones;

20 ‘‘(3) analyze the effects of the adoption of the

21 best management practices on watershed levels; and

22 ‘‘(4) use the results of the research conducted

23 under the program to—

24 ‘‘(A) encourage agricultural producers to

25 adopt the best management practices;
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1 ‘‘(B) analyze the economic impact of the

2 best management practices; and

3 ‘‘(C) develop the best management prac4 tices on a regional basis for watersheds and

5 States not participating in the pilot programs.

6 ‘‘SEC. 1238H. FUNDING.

7 ‘‘The Secretary shall use to carry out this chapter

8 (including to pay administrative costs incurred by the Nat9 ural Resources Conservation Service in carrying out this

10 chapter)—

11 ‘‘(1) funds of the Commodity Credit Corpora12 tion made available under section 1241(a)(3); and

13 ‘‘(2) at the option of, and transfer by, another

14 Federal agency, funds of the agency that are avail15 able to the agency for climate change initiatives or

16 greenhouse gas emission reductions.’’.

17 SEC. 302. FUNDING.

18 Section 1241(a)(3) of the Food Security Act of 1985

19 (16 U.S.C. 3841(a)(3)) is amended by striking ‘‘chapter

20 4’’ and inserting ‘‘chapters 2 and 4’’.

21 SEC. 303. REGULATIONS.

22 (a) PROPOSED REGULATIONS.—Not later than 180

23 days after the date of enactment of this title, the Secretary

24 of Agriculture shall publish in the Federal Register pro-
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1 posed regulations for carrying out this title and the

2 amendments made by this title.

3 (b) FINAL REGULATIONS.—Not later than 60 days

4 after the date of publication of the proposed regulations,

5 the Secretary shall promulgate final regulations for car6 rying out this title and the amendments made by this title.

7 SEC. 304. EFFECTIVE DATES.

8 (a) IN GENERAL.—Except as provided in subsection

9 (b), this title and the amendments made by this title take

10 effect on January 1, 2002.

11 (b) REGULATIONS.—Section 203 takes effect on the

12 date of enactment of this title.

13 TITLE IV—REPORTS

14 SEC. 401. INITIAL REPORT.

15 (a) IN GENERAL.—Not later than 1 year after the

16 date of enactment of this Act, the Secretary of Energy,

17 in consultation with the Secretary of Agriculture and other

18 appropriate Federal agencies, shall submit to Congress a

19 report on—

20 (1) the quantity of carbon contained in the for21 est carbon reservoir of the National Forest System

22 and the methodology and assumptions used to deter23 mine that quantity;

24 (2) the potential to increase the quantity of car25 bon in the National Forest System and provide posi-
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1 tive impacts on watersheds and fish and wildlife

2 habitats through forest management actions;

3 (3) the role of forests in the carbon cycle; and

4 (4) the contributions of United States forestry

5 to the global carbon budget.

6 (b) CONTENTS.—The report shall include an assess7 ment of the impact of forest management actions on tim8 ber harvests, wildlife habitat, recreation, forest health, and

9 other statutory objectives of National Forest System man10 agement.

11 SEC. 402. ANNUAL REPORT.

12 (a) IN GENERAL.—The Secretary of Agriculture, act13 ing through the Chief of the Forest Service, and the Sec14 retary of Energy shall jointly submit an annual report on

15 the results of the carbon storage program under section

16 2404(b) of the Global Climate Change Prevention Act of

17 1990 and carbon sequestration program under section

18 1238 of the Food Security Act of 1985 to—

19 (1) the Committee on Agriculture of the House

20 of Representatives;

21 (2) the Committee on Agriculture, Nutrition,

22 and Forestry of the Senate;

23 (3) the Committee on Resources of the House

24 of Representatives; and
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1 (4) the Committee on Energy and Natural Re2 sources of the Senate.

3 (b) GUIDELINES.—The Secretary of Agriculture, in

4 consultation with the Carbon Advisory Council established

5 under section 1610(b) of the Energy Policy Act of 1992,

6 shall develop guidelines for the annual report that—

7 (1) require a statement of the quantity of car8 bon storage realized;

9 (2) include the data used to monitor and verify

10 the carbon storage;

11 (3) are consistent with reporting requirements

12 of the Energy Information Administration; and

13 (4) prevent soil carbon and forest carbon man14 agement actions from being counted twice.

15 (c) CONTENTS.—The report shall include—

16 (1) the information required by the guidelines

17 developed under section 1610(h) of the Energy Pol18 icy Act of 1992;

19 (2) an assessment of the effectiveness of carbon

20 monitoring and verification;

21 (3) a report on carbon activities associated with

22 cooperative agreements for the forest carbon pro23 gram under section 2404(b)(1) of the Global Climate

24 Change Prevention Act of 1990;
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1 (4) a State forest carbon program compliance

2 report established by—

3 (A) reviewing reports submitted by States

4 under section 403;

5 (B) verifying compliance with the guide6 lines developed under subsection 1610(h) of the

7 Energy Policy Act of 1992;

8 (C) notifying the State of compliance sta9 tus;

10 (D) notifying the State of any corrections

11 that are needed to attain compliance; and

12 (E) establishing an opportunity for resub13 mission by the State; and

14 (5) an assessment of the effectiveness of the

15 carbon sequestration program established under sec16 tion 1238 of the Food Security Act of 1985, includ17 ing a report on—

18 (A) sequestration improvements made as a

19 result of the carbon sequestration program;

20 (B) sequestration practices on land en21 rolled in the carbon sequestration program; and

22 (C) compliance with contracts entered into

23 under the carbon sequestration program.
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1 SEC. 403. STATE REPORT.

2 Entities participating in cooperative agreements for

3 forest carbon programs under section 2404(b)(1) of the

4 Global Climate Change Prevention Act of 1990, and

5 States receiving assistance to establish a revolving loan

6 fund under section 2404(b)(2) of that Act, shall—

7 (1) monitor and verify carbon storage achieved

8 under the forest carbon program in accordance with

9 guidelines developed under section 1610(h)(2) of the

10 Energy Policy Act of 1992; and

11 (2) submit an annual report on the results of

12 the carbon storage program to—

13 (A) the Secretary of Agriculture; and

14 (B) any nongovernmental organization or

15 person that provides funding for the carbon

16 storage program.

Æ