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[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1255 Introduced in Senate (IS)]

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.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Carbon 
Sequestration and Reporting Act''.
    (b) Table of Contents.--The table of contents for 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.
                   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.

                    TITLE I--CARBON ADVISORY COUNCIL

SEC. 101. CARBON ADVISORY COUNCIL.

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

``SEC. 1610. CARBON ADVISORY COUNCIL.

    ``(a) Definitions.--In this section:
            ``(1) Carbon advisory council.--The term `Carbon Advisory 
        Council' means the Carbon Advisory Council established under 
        subsection (b).
            ``(2) Carbon sequestration.--The term `carbon 
        sequestration' means the action of vegetable matter in--
                    ``(A) extracting carbon dioxide from the atmosphere 
                through photosynthesis;
                    ``(B) converting the carbon dioxide to carbon; and
                    ``(C) storing the carbon in the form of roots, 
                stems, soil, or foliage.
            ``(3) Carbon storage.--The term `carbon storage' means the 
        quantity of carbon sequestered from the atmosphere and stored 
        in forest carbon reservoirs.
            ``(4) Forest carbon program.--The term `forest carbon 
        program' means the program established under section 2404(b) of 
        the Global Climate Change Prevention Act of 1990 to provide 
        financial assistance for forest carbon activities through--
                    ``(A) cooperative agreements; and
                    ``(B) State revolving loan funds.
            ``(5) Forest management action.--
                    ``(A) In general.--The term `forest management 
                action' means an action that--
                            ``(i) applies forestry principles to the 
                        regeneration, management, utilization, and 
                        conservation of forests to meet specific goals 
                        and objectives; and
                            ``(ii) maintains the productivity of the 
                        forests.
                    ``(B) Inclusions.--The term `forest management 
                action' includes management of forests for the benefit 
                of--
                            ``(i) aesthetics;
                            ``(ii) fish;
                            ``(iii) recreation;
                            ``(iv) urban values;
                            ``(v) water;
                            ``(vi) wilderness;
                            ``(vii) wildlife;
                            ``(viii) wood products; and
                            ``(ix) other forest values.
            ``(6) Indian tribe.--The term `Indian tribe' has the 
        meaning given the term by section 4 of the Indian Health Care 
        Improvement Act (25 U.S.C. 1603).
            ``(7) Reforestation.--
                    ``(A) In general.--The term `reforestation' means 
                the reestablishment of forest cover naturally or 
                artificially.
                    ``(B) Inclusions.--The term `reforestation' 
                includes--
                            ``(i) planned replanting;
                            ``(ii) reseeding; and
                            ``(iii) natural regeneration.
    ``(b) Establishment.--The Secretary shall establish an advisory 
council, to be known as the `Carbon Advisory Council', to--
            ``(1) advise the Secretary on the development and updating 
        of guidelines for accurate reporting of greenhouse gas 
        sequestration from soil carbon and forest management actions;
            ``(2) evaluate the potential effectiveness of the 
        guidelines in verifying carbon inputs and outputs from various 
        soil carbon and forest management strategies;
            ``(3) estimate the effect of implementing the guidelines on 
        carbon sequestration and storage; and
            ``(4) assist the Secretary in preparing the annual report 
        required by section 402(a) of the Carbon Storage and 
        Sequestration Act (including the assessment of the 
        vulnerability of forests and agricultural land to the adverse 
        effects of climate change).
    ``(c) Membership.--The Carbon Advisory Council shall be composed of 
21 members as follows:
            ``(1) The Secretary of Agriculture (or a designee).
            ``(2) The Secretary of Energy (or a designee).
            ``(3) The Secretary of the Interior (or a designee).
            ``(4) The Secretary of State (or a designee).
            ``(5) The Administrator of the Environmental Protection 
        Agency (or a designee).
            ``(6) The Chief of the Forest Service (or a designee)
            ``(7) 15 members appointed jointly by the Secretary of 
        Agriculture and the Secretary of Energy as follows:
                    ``(A) 1 member representing professional forestry 
                organizations.
                    ``(B) 2 members representing environmental or 
                conservation organizations.
                    ``(C) 1 member representing nonindustrial private 
                landowners.
                    ``(D) 1 member representing the forest industry.
                    ``(E) 1 member representing Indian tribes.
                    ``(F) 1 member representing forest workers.
                    ``(G) 3 members representing the academic 
                scientific community.
                    ``(H) 2 members representing State forestry 
                organizations.
                    ``(I) 2 members representing nongovernmental 
                organizations who have an expertise and experience in 
                soil carbon sequestration practices.
                    ``(J) 1 member representing commercial agricultural 
                producers.
    ``(d) Term.--
            ``(1) In general.--Except as provided in paragraph (3), a 
        member of the Carbon Advisory Council appointed under 
        subsection (c)(7) shall be appointed for a term of 3 years.
            ``(2) Consecutive terms.--No individual appointed under 
        subsection (c)(7) may serve on the Carbon Advisory Council for 
        more than 2 consecutive terms.
            ``(3) Initial terms.--Of the members first appointed to the 
        Carbon Advisory Council under subsection (c)(7)--
                    ``(A) 5 of the members shall be appointed for a 
                term of 1 year;
                    ``(B) 5 of the members shall be appointed for a 
                term of 2 years; and
                    ``(C) 5 of the members shall be appointed for a 
                term of 3 years.
    ``(e) Vacancy.--
            ``(1) In general.--A vacancy on the Carbon Advisory Council 
        shall be filled in the same manner as the original appointment 
        was made.
            ``(2) Filling of unexpired term.--An individual chosen to 
        fill a vacancy shall be appointed for the unexpired term of the 
        member replaced.
    ``(f) Compensation.--
            ``(1) Non-federal employees.--A member of the Carbon 
        Advisory Council who is not an officer or employee of the 
        Federal Government shall be compensated at a rate equal to the 
        daily equivalent of the annual rate of basic pay prescribed for 
        level IV of the Executive Schedule under section 5315 of title 
        5, United States Code, for each day (including travel time) 
        during which the member is engaged in the performance of the 
        duties of the Carbon Advisory Council.
            ``(2) Federal employees.--A member of the Carbon Advisory 
        Council who is an officer or employee of the Federal Government 
        shall serve without compensation in addition to the 
        compensation received for the services of the member as an 
        officer or employee of the Federal Government.
            ``(3) Travel expenses.--A member of the Carbon Advisory 
        Council shall be allowed travel expenses, including per diem in 
        lieu of subsistence, at rates authorized for an employee of an 
        agency under subchapter I of chapter 57 of title 5, United 
        States Code, while away from the home or regular place of 
        business of the member in the performance of the duties of the 
        Carbon Advisory Council.
            ``(4) Support.--The Secretary shall provide financial and 
        administrative support to the Carbon Advisory Council.
    ``(g) Use of Existing Council.--The Secretary may designate a 
council in existence as of the date of enactment of this section to 
perform the tasks of the Carbon Advisory Council if (as determined by 
the Secretary)--
            ``(1) the responsibilities of the Carbon Advisory Council, 
        as described in subsection (b), are a high priority for the 
        existing council; and
            ``(2) the representation, membership terms, background, and 
        responsibilities of the existing council correspond to the 
        requirements for the Carbon Advisory Council established under 
        subsections (c) and (d).
    ``(h) Duties.--
            ``(1) Review of guidelines.--Not later than 18 months after 
        the date of enactment of this section, the Carbon Advisory 
        Council shall--
                    ``(A) review the guidelines established under 
                section 1605(b)(1) that address procedures for the 
                accurate voluntary reporting of greenhouse gas 
                sequestration from tree planting, forest management 
                actions, and agricultural land;
                    ``(B) make recommendations to the Secretary to 
                amend the guidelines; and
                    ``(C) before submitting the guidelines to the 
                Secretary, provide an opportunity for public comment on 
                the guidelines.
            ``(2) Establishment of guidelines.--
                    ``(A) Reporting guidelines.--The recommendations 
                under paragraph (1)(B) shall include recommendations 
                for reporting guidelines that--
                            ``(i) are based on--
                                    ``(I) measuring increases in carbon 
                                storage in excess of the carbon storage 
                                that would have occurred but for 
                                reforestation, forest management, 
                                forest protection, or other soil carbon 
                                and forest management actions; and
                                    ``(II) comprehensive carbon 
                                accounting that reflects net increases 
                                in the carbon reservoir and takes into 
                                account any carbon emissions resulting 
                                from the disturbance of carbon 
                                reservoirs existing at the beginning of 
                                a soil carbon or forest management 
                                action; and
                            ``(ii) include options for--
                                    ``(I) estimating the indirect 
                                effects of soil carbon and forest 
                                management actions on carbon storage, 
                                including the potential displacement of 
                                carbon emissions;
                                    ``(II) quantifying the expected 
                                carbon storage over various time 
                                periods, as determined by the 
                                Secretary, taking into account the 
                                duration of carbon stored in the carbon 
                                reservoir; and
                                    ``(III) considering the economic 
                                and social effects of soil carbon and 
                                forest management alternatives.
                    ``(B) Accurate monitoring, measurement, and 
                verification guidelines.--
                            ``(i) In general.--The recommendations 
                        under paragraph (1)(B) shall include 
                        recommended practices for monitoring, 
                        measurement, and verification of carbon storage 
                        from soil carbon and forest management actions.
                            ``(ii) Requirements.--The recommended 
                        practices shall, to the maximum extent 
                        practicable--
                                    ``(I) be based on statistically 
                                sound sampling strategies that build on 
                                knowledge of the carbon dynamics of 
                                forests and agricultural land;
                                    ``(II) compute carbon stocks and 
                                changes in carbon stocks, by taking 
                                field condition measurements and 
                                modeling;
                                    ``(III) include guidelines on how 
                                to sample and calculate carbon 
                                sequestration across multiple 
                                participating ownerships; and
                                    ``(IV) encourage the use of more 
                                precise measurements at the option of a 
                                reporting entity.
                    ``(C) State guidelines.--The recommendations under 
                paragraph (1)(B) shall include State guidelines for 
                reporting, monitoring, and verifying carbon storage 
                under the forest carbon program.
                    ``(D) Biomass energy projects.--The recommendations 
                under paragraph (1)(B) shall include guidelines for 
                calculating net greenhouse gas reductions from biomass 
                energy projects, including--
                            ``(i) net changes in carbon storage 
                        resulting from changes in land use; and
                            ``(ii) the effect of using biomass to 
                        generate electricity (including co-firing of 
                        biomass with fossil fuels) on the displacement 
                        of greenhouse gas emissions from fossil fuels.
            ``(3) Review of guidelines.--At least once every 24 months, 
        the Carbon Advisory Council shall meet to--
                    ``(A) evaluate the latest scientific and 
                observational information on reporting, monitoring, and 
                verification of carbon storage from forest soil carbon 
                and forest management actions; and
                    ``(B) recommend to the Secretary, revised 
                guidelines for reporting, monitoring, and verification 
                of carbon storage from soil carbon and forest 
                management actions to reflect the evaluation.
            ``(4) Compliance with other laws.--The Advisory Committee 
        shall meet, as necessary, to ensure that the guidelines for 
        reporting, monitoring, and verification of carbon storage from 
        forest management actions are revised to be consistent with any 
        Federal or State laws enacted after the date of enactment of 
        this section.''.

SEC. 102. NATIONAL INVENTORY AND VOLUNTARY REPORTING OF GREENHOUSE 
              GASES.

    Section 1605(b) of the Energy Policy Act of 1992 (42 U.S.C. 
13385(b)) is amended by adding at the end the following:
            ``(5) Amendment of guidelines.--Not later than 180 days 
        after receiving the recommendations of the Carbon Advisory 
        Council under subsection 1610(h)(1)(B), the Secretary (acting 
        through the Administrator of the Energy Information 
        Administration) shall, as appropriate, revise the guidelines 
        established under paragraph (1) to reflect the recommendations 
        of the Carbon Advisory Council.''.

                   TITLE II--FOREST CARBON MANAGEMENT

SEC. 201. FOREST CARBON STORAGE AND SEQUESTRATION.

    The Global Climate Change Prevention Act of 1990 is amended by 
inserting after section 2403 (7 U.S.C. 6702) the following:

``SEC. 2404. FOREST CARBON MANAGEMENT.

    ``(a) Definitions.--In this section:
            ``(1) Carbon advisory council.--The term `Carbon Advisory 
        Council' means the Carbon Advisory Council established by 
        section 1610(b) of the Energy Policy Act of 1992.
            ``(2) Carbon storage.--The term `carbon storage' means the 
        quantity of carbon sequestered from the atmosphere and stored 
        in forest carbon reservoirs.
            ``(3) Forest carbon program.--The term `forest carbon 
        program' means the program established under subsection (b) to 
        provide financial assistance for forest carbon activities 
        through--
                    ``(A) cooperative agreements; and
                    ``(B) State revolving loan funds.
            ``(4) Forest carbon reservoir.--The term `forest carbon 
        reservoir' means--
                    ``(A) trees, roots, soils, or other biomass 
                associated with forest ecosystems; and
                    ``(B) products from the biomass that store carbon.
            ``(5) Forest land--
                    ``(A) In general.--The term `forest land' means 
                land that is, or has been, at least 10 percent stocked 
                by forest trees of any size.
                    ``(B) Inclusions.--The term `forest land' 
                includes--
                            ``(i) land on which forest cover may be 
                        naturally or artificially regenerated; and
                            ``(ii) a transition zone between a forested 
                        area and nonforested area that is capable of 
                        sustaining forest cover.
            ``(6) Forest management action.--
                    ``(A) In general.--The term `forest management 
                action' means an action that--
                            ``(i) applies forestry principles to the 
                        regeneration, management, use, and conservation 
                        of forests to meet specific goals and 
                        objectives; and
                            ``(ii) maintains the productivity of the 
                        forests.
                    ``(B) Inclusions.--The term `forest management 
                action' includes management of forests for the benefit 
                of--
                            ``(i) aesthetics;
                            ``(ii) fish;
                            ``(iii) recreation;
                            ``(iv) urban values;
                            ``(v) water;
                            ``(vi) wilderness;
                            ``(vii) wildlife;
                            ``(viii) wood products; and
                            ``(ix) other forest values.
            ``(7) Indian tribe.--The term `Indian tribe' has the 
        meaning given the term in section 4 of the Indian Health Care 
        Improvement Act (25 U.S.C. 1603).
            ``(8) Invasive species.--The term `invasive species' means 
        a species that is not native to an ecosystem, the introduction 
        of which may cause harm to the economy, the environment, or 
        human health.
            ``(9) Nonindustrial private forest.--The term 
        `nonindustrial private forest' means forest land that is 
        privately owned by a person that--
                    ``(A) does not control a forest products 
                manufacturing facility; and
                    ``(B) manages the land solely for the purposes of 
                timber production.
            ``(10) Reforestation.--
                    ``(A) In general.--The term `reforestation' means 
                the reestablishment of forest cover naturally or 
                artificially.
                    ``(B) Inclusions.--The term `reforestation' 
                includes--
                            ``(i) planned replanting;
                            ``(ii) reseeding; and
                            ``(iii) natural regeneration.
            ``(11) Revolving loan program.--The term `revolving loan 
        program' means a State revolving loan program established under 
        subsection (b)(2)(A).
            ``(12) Secretary.--The term `Secretary' means the Secretary 
        of Agriculture, acting through the Chief of the Forest Service.
    ``(b) Forest Carbon Program.--
            ``(1) Cooperative agreement.--The Secretary may enter into 
        a cooperative agreement with willing landowners who are State 
        or local governments, Indian tribes, private, nonprofit 
        entities, and other persons to carry out forest carbon 
        activities on private land, State land, Indian tribe land, or 
        private land.
            ``(2) Revolving loan program.--
                    ``(A) In general.--In collaboration with State 
                Foresters and representatives of nongovernmental 
                organizations, the Secretary shall provide assistance 
                to States to establish a revolving loan program to 
                carry out forest carbon activities on nonindustrial 
                private forest land.
                    ``(B) Eligibility.--An owner of nonindustrial 
                private forest land shall be eligible for assistance 
                from a revolving loan fund for forest carbon activities 
                on not more than a total of 5,000 acres of 
                nonindustrial private forest land of the owner.
                    ``(C) Loan terms.--
                            ``(i) In general.--To be eligible for a 
                        loan under this section, an owner of 
                        nonindustrial private forest land shall enter 
                        into a loan agreement with the State.
                            ``(ii) Interest rate.--The loan agreement 
                        shall have loan interest rates that are 
                        established by the State--
                                    ``(I) to encourages participation 
                                of nonindustrial private forest 
                                landowners in the revolving loan 
                                program;
                                    ``(II) to provide a net rate of 
                                return of not more than 3 percent; and
                                    ``(III) to further the objectives 
                                of this section.
                            ``(iii) Repayment.--The loan agreement 
                        shall require that loan obligations be repaid 
                        to the State--
                                    ``(I)(aa) at the time of harvest of 
                                land covered by the revolving loan 
                                program; or
                                    ``(bb) in accordance with a 
                                repayment schedule determined by the 
                                State; and
                                    ``(II) at a rate proportional to 
                                the percentage decrease of carbon 
                                stock.
                            ``(iv) Insurance.--The loan agreement shall 
                        include provisions that provide for private 
                        insurance, or that release the owner from the 
                        financial obligation for any portion of the 
                        timber, forest products, or other biomass 
                        that--
                                    ``(I) is lost to insects, disease, 
                                fire, storm, flood, or other 
                                circumstance beyond the control of the 
                                owner; or
                                    ``(II) cannot be harvested because 
                                of restrictions on tree harvesting 
                                imposed by the applicable Federal, 
                                State, or local government after the 
                                date of the loan agreement.
                            ``(v) Lien.--The loan agreement shall--
                                    ``(I) impose a lien on all timber, 
                                forest products, and biomass produced 
                                on land covered by the loan agreement; 
                                and
                                    ``(II) provide an assurance that 
                                the terms of the lien shall transfer 
                                with the land on sale, lease, or 
                                transfer of the land.
                            ``(vi) Buyout option.--The loan agreement 
                        shall include a buyout option that specifies 
                        the financial terms under which the owner may 
                        terminate the agreement--
                                    ``(I) before harvesting timber from 
                                the stand established with loan funds; 
                                and
                                    ``(II) by repaying the loan with 
                                interest.
                            ``(vii) Attribution.--The loan agreement 
                        shall provide that, until the loan is paid in 
                        full by the participating owner or otherwise 
                        terminated in accordance with this section, all 
                        reductions in atmospheric greenhouse gases 
                        achieved as the result of the loan shall be 
                        attributed to any non-Federal entities that 
                        provide funding for the loan (including the 
                        State or any other person or nongovernmental 
                        organization that provides funding to the State 
                        for the issuance of the loan).
                            ``(viii) Monitoring and verification.--The 
                        loan agreement shall include provisions for the 
                        monitoring and verification of carbon storage.
                    ``(D) Permanent conservation easement.--
                            ``(i) In general.--A borrower may donate to 
                        the State or to another appropriate entity a 
                        permanent conservation easement that--
                                    ``(I) furthers the objectives of 
                                this section, including managing the 
                                land in a manner that maximizes the 
                                forest carbon reservoir of the land; 
                                and
                                    ``(II) permanently protects the 
                                covered private forest land and 
                                resources at a level above that 
                                required under applicable Federal, 
                                State, and local law.
                            ``(ii) Terms.--A permanent conservation 
                        easement under clause (i) may permit the 
                        continuation of forest management actions 
                        that--
                                    ``(I) increase carbon storage on 
                                the land and forest; or
                                    ``(II) furthers the objectives of 
                                this section.
                            ``(iii) Effect on loan agreement.--
                                    ``(I) Required cancellation.--If 
                                the borrower donates to the State a 
                                permanent conservation easement under 
                                clause (i), the State shall cancel--
                                            ``(aa) the loan agreement 
                                        under subparagraph (C); and
                                            ``(bb) any liens on the 
                                        timber, forest products, and 
                                        biomass under subparagraph 
                                        (C)(v).
                                    ``(II) Permissible cancellation.--
                                If the borrower donates to another 
                                appropriate entity a permanent 
                                conservation easement under clause (i), 
                                the State may cancel--
                                            ``(aa) the loan agreement 
                                        under subparagraph (C); and
                                            ``(bb) any liens on the 
                                        timber, forest products, and 
                                        biomass under subparagraph 
                                        (C)(v).
                    ``(E) Reinvestment of funds.--Any funds collected 
                under a loan issued under this section (including loan 
                repayments, loan buyouts, and any interest payments) 
                shall be--
                            ``(i) reinvested by the State in the 
                        revolving loan program; and
                            ``(ii) used by the State to make additional 
                        loans under the revolving loan program.
                    ``(F) Records.--The State Forester of a State 
                shall--
                            ``(i) maintain all records related to any 
                        loan agreement funded by a revolving loan fund 
                        of the State; and
                            ``(ii) make the records available to the 
                        public.
                    ``(G) Matching funds.--
                            ``(i) In general.--Beginning the second 
                        year in which a State participates in the 
                        revolving loan program, and each year 
                        thereafter, to be eligible to receive Federal 
                        funds under this subsection a State shall 
                        provide matching non-Federal funds equal to at 
                        least 25 percent of the Federal funds made 
                        available to the State for the revolving loan 
                        program.
                            ``(ii) Administration.--The State shall--
                                    ``(I) provide matching funds in the 
                                form of cash, in-kind administrative 
                                services, or technical assistance; and
                                    ``(II) establish procedures to 
                                ensure accountability for the use of 
                                Federal funds.
                    ``(H) Loan funding distribution.--
                            ``(i) Formula.--Not later than 180 days 
                        after the date of enactment of this section, 
                        the Secretary, in consultation with State 
                        Foresters, shall--
                                    ``(I) establish a formula under 
                                which Federal funds shall be 
                                distributed under this section among 
                                eligible States; and
                                    ``(II) submit to Congress a report 
                                on the formula (including the 
                                methodology used to establish the 
                                formula).
                            ``(ii) Basis.--The formula shall--
                                    ``(I) be based on maximizing the 
                                potential for meeting the objectives of 
                                this section;
                                    ``(II) consider--
                                            ``(aa) the acreage of un-
                                        stocked or under-producing 
                                        private forest land in each 
                                        State;
                                            ``(bb) the potential 
                                        productivity of the land;
                                            ``(cc) the potential long-
                                        term carbon storage of the 
                                        land;
                                            ``(dd) the potential to 
                                        achieve other environmental 
                                        benefits;
                                            ``(ee) the number of owners 
                                        eligible for loans under this 
                                        section in each State; and
                                            ``(ff) the need for 
                                        reforestation, timber stand 
                                        improvement, or other forestry 
                                        investments consistent with the 
                                        objectives of this section; and
                                    ``(III) provide a priority to 
                                States that have experienced or are 
                                expected to experience significant 
                                declines in employment levels in the 
                                forestry industry because of declining 
                                timber harvests on Federal land.
                    ``(I) Private funding.--A revolving loan fund may 
                accept and distribute as loans any funds provided by 
                nongovernmental organizations or persons to carry out 
                this section.
                    ``(J) Bonneville power administration.--
                            ``(i) In general.--The States of 
                        Washington, Oregon, Idaho, and Montana may 
                        apply for funding from the Bonneville Power 
                        Administration for purposes of funding loans 
                        that meet--
                                    ``(I) the objectives of this 
                                section; and
                                    ``(II) the fish and wildlife 
                                objectives of the Bonneville Power 
                                Administration under the Pacific 
                                Northwest Electric Power Planning and 
                                Conservation Act (16 U.S.C. 839 et 
                                seq.).
                            ``(ii) Application of requirements under 
                        other law.--An application under clause (i) 
                        shall be subject to all rules and procedures 
                        established by the--
                                    ``(I) Pacific Northwest Electric 
                                Power and Conservation Planning 
                                Council; and
                                    ``(II) the Bonneville Power 
                                Administration under the Pacific 
                                Northwest Electric Power Planning and 
                                Conservation Act (16 U.S.C. 839 et 
                                seq.).
            ``(3) Eligible forestry carbon activities.--
                    ``(A) In general.--An owner may use a loan or other 
                funds provided under this section to carry out eligible 
                forestry carbon activities (as determined by the 
                Secretary) that--
                            ``(i)(I) help restore under-producing or 
                        understocked forest land;
                            ``(II) provide for protection of forests 
                        from nonforest use; or
                            ``(III) allow a variety of sustainable 
                        management alternatives; and
                            ``(ii) have no net negative impact on 
                        watersheds and fish and wildlife habitats.
                    ``(B) Assistance.--The Secretary, in collaboration 
                with State Foresters, shall provide guidance on 
                eligible forestry carbon activities under this 
                subsection.
                    ``(C) Application of other laws.--Funding shall not 
                be provided under this section for activities required 
                under other applicable Federal, State, or local laws.
                    ``(D) Pre-agreement activities.--Funding shall not 
                be provided for costs incurred before entering into a 
                cooperative agreement or loan agreement under this 
                section.
                    ``(E) Limitation on land considered for funding.--
                No owner shall enter into a loan agreement under this 
                section to fund reforestation of land harvested after 
                the date of enactment of this section if the owner 
                received revenues from the harvest that are sufficient 
                to reforest the land.
                    ``(F) Eligible tree species.--
                            ``(i) Invasive species.--Selection of tree 
                        species for loan projects under this paragraph 
                        shall be consistent with Executive Order No. 
                        13112 (42 U.S.C. 4321 note).
                            ``(ii) Program funding.--Funding for 
                        reforestation activities under this section may 
                        be provided for--
                                    ``(I) tree species native to a 
                                region;
                                    ``(II) tree species that formerly 
                                occupied the site; or
                                    ``(III) nonnative tree species or 
                                hybrids that are noninvasive.
                    ``(G) Forest-management plan.--Priority shall be 
                provided under this section to projects on land under a 
                forestry management plan or forest stewardship plan 
                that is consistent with the objectives of the carbon 
                storage program.
                    ``(H) Use of funds.--
                            ``(i) Permitted uses.--Funds under this 
                        section may be used to--
                                    ``(I) pay the cost of purchasing 
                                and planting tree seedlings; and
                                    ``(II) pay other costs associated 
                                with the planted trees, including the 
                                cost of--
                                            ``(aa) planning;
                                            ``(bb) site preparation;
                                            ``(cc) forest management;
                                            ``(dd) monitoring;
                                            ``(ee) measurement and 
                                        verification; and
                                            ``(ff) consultant and 
                                        contractor fees.
                            ``(ii) Prohibited uses.--Funds under this 
                        section shall not be used to--
                                    ``(I) pay for the labor of the 
                                owner; or
                                    ``(II) purchase capital items or 
                                expendable items, such as vehicles, 
                                tools, and other equipment.
                    ``(I) Amount of financial assistance.--The amount 
                of financial assistance provided to an owner under this 
                section shall not exceed--
                            ``(i) 100 percent of total project costs of 
                        the owner, including funds received from any 
                        other source; or
                            ``(ii) $100,000 during any 2-year period.
                    ``(J) Federal funding.--During fiscal years 2001 
                through 2010, civil penalties collected under section 
                113 of the Clean Air Act (42 U.S.C. 7413) and under 
                section 309(d) of the Federal Water Pollution Control 
                Act (33 U.S.C. 1319(d)) shall be available, without 
                further act of appropriation, to fund cooperative 
                agreements and revolving loan funds authorized under 
                this section.
            ``(4) Allocation of funds.--The Secretary shall allocate--
                    ``(A) not less than 15 percent of available funds 
                for cooperative agreements described in paragraph (1); 
                and
                    ``(B) after determining that States have 
                implemented a system to administer loans made under 
                paragraph (2) in accordance with this section, 85 
                percent of available funds for State revolving loan 
                programs.''.

                TITLE III--CARBON SEQUESTRATION PROGRAM

SEC. 301. ESTABLISHMENT.

    Subtitle D of title XII of the Food Security Act of 1985 (16 U.S.C. 
3830 et seq.) is amended by inserting after chapter 1 the following:

               ``CHAPTER 2--CARBON SEQUESTRATION PROGRAM

``SEC. 1238. CARBON SEQUESTRATION PROGRAM.

    ``(a) In General.--Effective beginning with the 2002 calendar year, 
the Secretary, acting through the Chief of the Natural Resources 
Conservation Service, shall establish a carbon sequestration program to 
permit owners and operators of land located in the United States to 
enroll the land in the program to increase the sequestration of carbon.
    ``(b) Eligible Land.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        Secretary may include in the program established under this 
        chapter any land, as determined by the Secretary.
            ``(2) Conservation reserve land and wetlands reserve 
        land.--The Secretary may include in the carbon sequestration 
        program land that is enrolled in the conservation reserve 
        program or the wetlands reserve program established under 
        subchapters B and C, respectively, of chapter 1, if the owner 
        or operator of the land has not received any payments under the 
        program for the implementation of carbon sequestration measures 
        on the land.
    ``(c) Maximum Enrollment.--The Secretary may maintain up to 
20,000,000 acres of land in the United States in the carbon 
sequestration program at any 1 time during a calendar year.
    ``(d) Duration of Contract.--
            ``(1) In general.--For the purpose of carrying out this 
        chapter, the Secretary shall enter into contracts of not less 
        than 10 years.
            ``(2) Certain land.--In the case of land devoted to 
        hardwood trees, shelterbelts, windbreaks, or wildlife corridors 
        under a contract entered into under this chapter, the owner or 
        operator of the land may, within the limitations prescribed 
        under this section, specify the duration of the contract.

``SEC. 1238A. CARBON SEQUESTRATION PRACTICES.

    ``(a) Criteria for Evaluating Carbon Sequestration Practices.--
            ``(1) In general.--The Carbon Advisory Council established 
        under section 1610(b) of the Energy Policy Act of 1992 shall 
        develop, and propose to the Secretary, criteria for determining 
the acceptability of, and evaluating, practices by owners and operators 
that will increase the sequestration of carbon for the purposes of 
determining the acceptability of contract offers made by the owners and 
operators.
            ``(2) Content.--The criteria shall address--
                    ``(A) forest preservation and restoration and 
                afforestation;
                    ``(B) biodiversity enhancement;
                    ``(C) the use of acreage to produce high-storage 
                crops;
                    ``(D) soil erosion management;
                    ``(E) soil fertility restoration;
                    ``(F) wetland restoration;
                    ``(G) no-till farming practices;
                    ``(H) conservation buffers;
                    ``(I) improved cropping systems with winter cover 
                crops; and
                    ``(J) any other conservation practices that the 
                Secretary determines to be appropriate for increasing 
                carbon sequestration.
            ``(3) Regulations.--The Secretary, acting through the Chief 
        of the Natural Resources Conservation Service and the Chief of 
        the Forest Service, by regulation, shall establish criteria 
        described in paragraphs (1) and (2).
    ``(b) Acceptability of Carbon Sequestration Practices.--
            ``(1) In general.--As part of a contract offer accepted 
        under this chapter, the owner or operator shall agree to carry 
        out on land enrolled in the program established under this 
        chapter carbon sequestration practices proposed by the owner or 
        operator that (as determined by the Secretary)--
                    ``(A) provide for additional sequestration beyond 
                that which would be provided in the absence of 
                enrollment of the land in the program; and
                    ``(B) contribute to a positive reduction of 
                greenhouse gases in the atmosphere through 
                sequestration over at least a 10-year period.
            ``(2) Maximum sequestration benefits.--In determining the 
        acceptability of contract offers, the Secretary shall take into 
        consideration the extent to which enrollment of the land that 
        is the subject of the contract offer would provide the maximum 
        sequestration benefits under the criteria developed under 
        subsection (a).
    ``(c) Compliance With Carbon Sequestration Contracts.--
            ``(1) In general.--As part of a contract offer accepted 
        under this chapter, an owner or operator of land shall permit 
        the Secretary to verify that the owner or operator is 
        implementing practices that sequester carbon in accordance with 
        the contract, including an actual verification of the practices 
        at least once every 5 years and such random inspections as are 
        necessary.
            ``(2) Fraud or false statements.--Section 1001 of title 18, 
        United States Code, shall apply to a statement, representation, 
        writing, or document provided by an owner or operator under 
        this subsection.
            ``(3) Confidentiality.--Information provided by an owner or 
        operator under this subsection shall be considered to be 
        confidential information for the purposes of section 552(b)(4) 
        of title 5, United States Code.
    ``(d) Monitoring.--The Secretary, in consultation with the 
Administrator of the Energy Information Administration, shall develop 
forms to monitor sequestration improvements made as a result of the 
program established under this chapter and distribute the forms to 
owners and operators of land enrolled in the program.
    ``(e) Educational Outreach.--In consultation with the Consortium 
for Agricultural Soils Mitigation of Greenhouse Gases, the Secretary, 
acting through the Extension Service, shall conduct an educational 
outreach program to collect and disseminate to owners and operators of 
land research-based information on agricultural practices that will 
increase the sequestration of carbon, while preserving the social and 
economic well-being of the owners and operators.

``SEC. 1238B. DUTIES OF OWNERS AND OPERATORS.

    ``(a) In General.--Under the terms of a contract entered into under 
this chapter, during the term of the contract, an owner or operator of 
a farm or ranch shall agree--
            ``(1) to implement a plan approved by the Secretary for 
        carrying out on land subject to the contract practices that 
        will increase the sequestration of carbon, substantially in 
        accordance with a schedule, covering a period of not less than 
        10 years, that is outlined in the plan;
            ``(2) to place land subject to the contract in the carbon 
        sequestration program established under this chapter;
            ``(3) in addition to the remedies provided under section 
        1238F(d), on the violation of a term or condition of the 
        contract at any time at which the owner or operator has control 
        of the land--
                    ``(A) to forfeit all rights to receive rental 
                payments and cost-sharing payments under the contract 
and to refund to the Secretary any rental payments and cost-sharing 
payments received by the owner or operator under the contract, and 
interest on the payments as determined by the Secretary, if the 
Secretary determines that the violation is of such nature as to warrant 
termination of the contract; or
                    ``(B) to refund to the Secretary, or accept 
                adjustments to, the rental payments and cost-sharing 
                payments provided to the owner or operator, as the 
                Secretary considers appropriate, if the Secretary 
                determines that the violation does not warrant 
                termination of the contract;
            ``(4) on the transfer of the right and interest of the 
        owner or operator in land subject to the contract--
                    ``(A)(i) to forfeit all rights to rental payments 
                and cost-sharing payments under the contract; and
                    ``(ii) to refund to the United States all rental 
                payments and cost-sharing payments received by the 
                owner or operator, or accept such payment adjustments 
                or make such refunds as the Secretary considers 
                appropriate and consistent with the objectives of this 
                chapter; unless
                    ``(B)(i) the transferee of the land agrees with the 
                Secretary to assume all obligations of the contract;
                    ``(ii) the land is purchased by or for the United 
                States Fish and Wildlife Service; or
                    ``(iii) the transferee and the Secretary agree to 
                modifications to the contract that are consistent with 
                the objectives of the program, as determined by the 
                Secretary;
            ``(5) not to adopt any practice specified by the Secretary 
        in the contract as a practice that would tend to defeat the 
        purposes of this chapter; and
            ``(6) to comply with such additional provisions as the 
        Secretary determines are desirable and are included in the 
        contract to carry out this chapter or to facilitate the 
        practical administration of this chapter.
    ``(b) Plan.--The plan referred to in subsection (a)(1)--
            ``(1) shall specify the carbon sequestration practices to 
        be carried out by the owner or operator during the term of the 
        contract; and
            ``(2) may provide for the permanent retirement of any 
        existing cropland base and allotment history for the land.
    ``(c) Foreclosure.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, an owner or operator that is a party to a contract entered 
        into under this chapter may not be required to make repayments 
        to the Secretary of amounts received under the contract if--
                    ``(A) the land that is subject to the contract has 
                been foreclosed on; and
                    ``(B) the Secretary determines that forgiving the 
                repayments is appropriate in order to provide fair and 
                equitable treatment.
            ``(2) Resumption of control.--
                    ``(A) In general.--This subsection shall not void 
                the responsibilities of such an owner or operator under 
                the contract if the owner or operator resumes control 
                over the land that is subject to the contract within 
                the period specified in the contract.
                    ``(B) Contract applicability.--On the resumption of 
                the control over the land by the owner or operator, the 
                provisions of the contract in effect on the date of the 
                foreclosure shall apply.

``SEC. 1238C. DUTIES OF THE SECRETARY.

    ``In return for a contract entered into by an owner or operator 
under section 1238B, the Secretary shall--
            ``(1) share the cost of carrying out on the land carbon 
        sequestration practices specified in the contract for which the 
        Secretary determines that cost sharing is appropriate and in 
        the public interest;
            ``(2) for a period of years not in excess of the term of 
        the contract, pay an annual rental payment in an amount 
        necessary to compensate for--
                    ``(A) the use of carbon sequestration practices on 
                the land; and
                    ``(B) the retirement of any cropland base and 
                allotment history that the owner or operator agrees to 
                retire permanently; and
            ``(3) provide conservation technical assistance to assist 
        the owner or operator in carrying out the contract.

``SEC. 1238D. PAYMENTS.

    ``(a) Time of Payment.--The Secretary shall provide payment for 
obligations incurred by the Secretary under a contract entered into 
under this chapter--
            ``(1) with respect to any cost-sharing payment obligation 
        incurred by the Secretary, as soon as practicable after the 
        obligation is incurred; and
            ``(2) with respect to any annual rental payment obligation 
        incurred by the Secretary--
                    ``(A) as soon as practicable after October 1 of 
                each calendar year; or
                    ``(B) at the option of the Secretary, at any time 
                before that date during the year in which the 
                obligation is incurred.
    ``(b) Cost-Sharing Payments.--
            ``(1) In general.--In making cost-sharing payments to an 
        owner or operator under a contract entered into under this 
        chapter, the Secretary shall pay not more than 50 percent of 
        the cost of carrying out carbon sequestration practices 
        required under the contract for which the Secretary determines 
        that cost-sharing is appropriate and in the public interest.
            ``(2) Maximum amount.--The Secretary shall not make any 
        payment under this chapter to the extent that the total amount 
        of cost-sharing payments provided to an owner or operator for 
        carbon sequestration practices from all sources would exceed 
        100 percent of the total cost of carrying out the practices.
            ``(3) Other federal assistance.--An owner or operator shall 
        not be eligible to receive or retain cost-share assistance for 
        land under this subsection if the owner or operator receives 
        any other Federal cost-share assistance under this subsection 
        with respect to the land under any other provision of law.
    ``(c) Rental Payments.--
            ``(1) In general.--In determining the amount of annual 
        rental payments to be paid to owners and operators for carrying 
        out carbon sequestration practices, the Secretary may consider, 
        among other factors, the amount necessary to encourage owners 
        or operators of land to participate in the program established 
        by this chapter.
            ``(2) Bids or other means.--The amounts payable to owners 
        or operators in the form of rental payments under contracts 
        entered into under this chapter may be determined through--
                    ``(A) the submission of bids for such contracts by 
                owners and operators in such manner as the Secretary 
                may prescribe; or
                    ``(B) such other means as the Secretary determines 
                are appropriate.
            ``(3) Factors.--In determining the acceptability of 
        contract offers, the Secretary--
                    ``(A) shall take into consideration the extent to 
                which enrollment of the land that is the subject of the 
                contract offer would increase the sequestration of 
                carbon in accordance with section 1238A;
                    ``(B) may take into consideration the extent to 
                which enrollment of the land that is the subject of the 
                contract offer would improve soil resources, water 
                quality, or wildlife habitat, or provide other 
                environmental benefits; and
                    ``(C) may establish different criteria in various 
                States and regions of the United States based on the 
                extent to which the sequestration of carbon, water 
                quality, or wildlife habitat may be improved or erosion 
                may be abated.
    ``(d) Form of Payment.--
            ``(1) In general.--Except as otherwise provided in this 
        section, payments under this chapter--
                    ``(A) shall be made in cash or in the form of in-
                kind commodities in such amount and on such time 
                schedule as is agreed on by the owner or operator and 
                specified in the contract; and
                    ``(B) may be made in advance of determination of 
                performance.
            ``(2) In-kind commodities.--If the payment is made with in-
        kind commodities, the payment shall be made by the Commodity 
        Credit Corporation--
                    ``(A) by delivery of the commodity involved to the 
                owner or operator at a warehouse or other similar 
                facility located in the county in which the land 
                subject to the contract is located or at such other 
                location as is agreed to by the Secretary and the owner 
                or operator;
                    ``(B) by the transfer of negotiable warehouse 
                receipts; or
                    ``(C) by such other method, including the sale of 
                the commodity in commercial markets, as is determined 
                by the Secretary to be appropriate to enable the owner 
                or operator to receive efficient and expeditious 
                possession of the commodity.
            ``(3) Substitution in cash.--If stocks of a commodity 
        acquired by the Commodity Credit Corporation are not readily 
        available to make full payment in kind to the owner or 
        operator, the Secretary may substitute full or partial payment 
        in cash for payment in kind.
            ``(4) State carbon sequestration program.--Payments to an 
        owner or operator under a special carbon sequestration program 
        described in subsection (f)(4) shall be in the form of cash 
        only.
    ``(e) Payment to Others.--If an owner or operator that is entitled 
to a payment under a contract entered into under this chapter dies, 
becomes incompetent, is otherwise unable to receive a payment under 
this chapter, or is succeeded by another person that renders or 
completes the required performance, the Secretary shall make the 
payment, in accordance with regulations promulgated by the Secretary 
and without regard to any other provision of law, in such manner as the 
Secretary determines is fair and reasonable in light of all the 
circumstances.
    ``(f) Payment Limitations.--
            ``(1) Total amount.--The total amount of rental payments, 
        including rental payments made in the form of in-kind 
        commodities, made to a person under this chapter for any fiscal 
        year may not exceed $50,000.
            ``(2) Amount per acre.--The amount of rental payments made 
        to a person under this chapter for any fiscal year may not 
        exceed $20 per acre.
            ``(3) Regulations.--
                    ``(A) In general.--The Secretary shall issue 
                regulations--
                            ``(i) defining the term `person' as used in 
                        this subsection; and
                            ``(ii) prescribing such rules as the 
                        Secretary determines are necessary to ensure a 
                        fair and reasonable application of the 
                        limitation contained in this subsection.
                    ``(B) Corporations.--The regulations issued by the 
                Secretary on December 18, 1970, under section 101 of 
                the Agricultural Act of 1970 (7 U.S.C. 1307) shall be 
                used to determine whether corporations and their 
                stockholders may be considered to be separate persons 
                under this subsection.
            ``(4) Other payments.--Rental payments received by an owner 
        or operator shall be in addition to, and shall not affect, the 
        total amount of payments that the owner or operator is 
        otherwise eligible to receive under--
                    ``(A) the Federal Agriculture Improvement and 
                Reform Act of 1996 (Public Law 104-127), including the 
                Agricultural Market Transition Act (7 U.S.C. 7201 et 
                seq.);
                    ``(B) the Food, Agriculture, Conservation, and 
                Trade Act of 1990 (Public Law 101-624); or
                    ``(C) the Agricultural Act of 1949 (7 U.S.C. 1421 
                et seq.).
            ``(5) State carbon sequestration program.--
                    ``(A) In general.--This subsection and section 
                1305(f) of the Agricultural Reconciliation Act of 1987 
                (7 U.S.C. 1308 note; Public Law 100-203) shall not be 
                applicable to payments received by a State, political 
                subdivision, or agency of a State or political 
                subdivision in connection with agreements entered into 
                under a special carbon sequestration program carried 
                out by that entity that has been approved by the 
                Secretary.
                    ``(B) Payments to states and political 
                subdivisions.--The Secretary may enter into such 
                agreements for payments to States, political 
                subdivisions, or agencies of States or political 
                subdivisions as the Secretary determines will advance 
                the purposes of this chapter.
    ``(g) Exemption From Automatic Sequester.--Notwithstanding any 
other provision of law, no order issued for any fiscal year under 
section 252 of the Balanced Budget and Emergency Deficit Control Act of 
1985 (2 U.S.C. 902) shall affect any payment under this chapter.
    ``(h) Other Assistance.--In addition to any payment under this 
chapter, an owner or operator may receive cost-share assistance, rental 
payments, or tax benefits from a State or political subdivision of a 
State for enrolling land in the carbon sequestration program.
    ``(i) Treatment of Payments.--Payments received by an owner or 
operator under this chapter shall be considered rentals from real 
estate for the purposes of section 1402(a)(1) of the Internal Revenue 
Code of 1986.

``SEC. 1238E. CHANGES IN OWNERSHIP; MODIFICATION OR TERMINATION OF 
              CONTRACTS.

    ``(a) Changes in Ownership.--
            ``(1) In general.--Subject to paragraphs (2) and (3), no 
        contract shall be entered into under this chapter concerning 
        land with respect to which the ownership has changed in the 1-
        year period preceding the first year of the contract period 
        unless--
                    ``(A) the new ownership was acquired by will or 
                succession as a result of the death of the previous 
                owner;
                    ``(B) the new ownership was acquired before April 
                1, 2001;
                    ``(C) the Secretary determines that the land was 
                acquired under circumstances that give adequate 
                assurances that the land was not acquired for the 
                purpose of enrolling the land in the carbon 
                sequestration program; or
                    ``(D) the ownership change occurred because of 
                foreclosure on the land and the owner of the land 
                immediately before the foreclosure exercises a right of 
                redemption from the mortgage holder in accordance with 
                State law.
            ``(2) Limitations.--Paragraph (1) shall not--
                    ``(A) prohibit the continuation of an agreement by 
                a new owner after an agreement has been entered into 
                under this chapter; or
                    ``(B) require a person to own the land as a 
                condition of eligibility for entering into the contract 
                if the person--
                            ``(i) has operated the land to be covered 
                        by a contract under this section for at least 1 
                        year preceding the later of--
                                    ``(I) the date of the contract; or
                                    ``(II) April 1, 2001; and
                            ``(ii) controls the land for the contract 
                        period.
            ``(3) Options for new owner or operator.--If, during the 
        term of a contract entered into under this chapter, an owner or 
        operator of land subject to the contract sells or otherwise 
        transfers the ownership or right of occupancy of the land, the 
        new owner or operator of the land may--
                    ``(A) continue the contract under the same terms or 
                conditions;
                    ``(B) enter into a new contract in accordance with 
                this chapter; or
                    ``(C) elect not to participate in the program 
                established by this chapter.
    ``(b) Modification of Contracts.--The Secretary may modify a 
contract entered into with an owner or operator under this chapter if--
            ``(1) the owner or operator agrees to the modification; and
            ``(2) the Secretary determines that the modification is 
        desirable--
                    ``(A) to carry out this chapter;
                    ``(B) to facilitate the practical administration of 
                this chapter; or
                    ``(C) to achieve such other goals as the Secretary 
                determines are appropriate, consistent with this 
                chapter.
    ``(c) Termination of Contracts.--
            ``(1) In general.--The Secretary may terminate a contract 
        entered into with an owner or operator under this chapter if--
                    ``(A) the owner or operator agrees to the 
                termination; and
                    ``(B) the Secretary determines that the termination 
                would be in the public interest.
            ``(2) Congressional notice.--Not later than 90 days before 
        taking any action to terminate under paragraph (1) a contract 
        entered into under this chapter, the Secretary shall provide to 
        the Committee on Agriculture of the House of Representatives 
        and the Committee on Agriculture, Nutrition, and Forestry of 
        the Senate written notice of the action.

``SEC. 1238F. BASE HISTORY.

    ``(a) In General.--A reduction, based on a ratio between the total 
cropland acreage on the farm and the acreage placed in the carbon 
sequestration program authorized by this chapter, as determined by the 
Secretary, shall be made during the period of the contract, in the 
aggregate, in crop bases, quotas, and allotments on the farm with 
respect to crops for which there is a production adjustment program.
    ``(b) Preservation of Base and Allotment History.--Notwithstanding 
sections 1211 and 1221, the Secretary, by regulation, may provide for 
preservation of cropland base and allotment history applicable to 
acreage on which carbon sequestration practices are carried out under 
this section, for the purpose of any Federal program under which the 
history is used as a basis for participation in the program or for an 
allotment or other limitation in the program, unless the owner and 
operator agree under the contract to retire permanently that cropland 
base and allotment history.
    ``(c) Extension of Base and Allotment History.--
            ``(1) In general.--The Secretary shall offer the owner or 
        operator of a farm or ranch an opportunity to extend the 
        preservation of cropland base and allotment history under 
        subsection (b) for such time as the Secretary determines is 
        appropriate after the expiration date of a contract under this 
        chapter at the request of the owner or operator.
            ``(2) Conditions.--In return for the extension, the owner 
        or operator shall agree to continue to abide by the terms and 
conditions of the original contract, except that the owner or operator 
shall receive no additional cost share, annual rental, or bonus 
payment.
    ``(d) Violation of Contracts.--In addition to any other remedy 
prescribed by law, the Secretary may reduce or terminate the quantity 
of cropland base and allotment history preserved under this section for 
acreage with respect to which there has occurred a violation of a term 
or condition of a contract entered into under this chapter.

``SEC. 1238G. CARBON MONITORING PILOT PROGRAMS.

    ``(a) Establishment.--
            ``(1) In general.--The Secretary, in cooperation with the 
        Consortium for Agricultural Soils Mitigation of Greenhouse 
        Gases, shall carry out 4 or more pilot programs to develop, 
        demonstrate, and verify the best management practices for 
        carbon monitoring on agricultural land.
            ``(2) Criteria.--The Secretary shall select pilot programs 
        based on--
                    ``(A) the merit of the proposed program; and
                    ``(B) the diversity of soil sequestration types 
                available at the site of the proposed program.
    ``(b) Requirements.--Pilot programs carried out under this section 
shall--
            ``(1) involve agricultural producers in the development and 
        verification of best management practices for carbon monitoring 
        on agricultural land;
            ``(2) involve research and testing of the best management 
        practices in various soil types and climactic zones;
            ``(3) analyze the effects of the adoption of the best 
        management practices on watershed levels; and
            ``(4) use the results of the research conducted under the 
        program to--
                    ``(A) encourage agricultural producers to adopt the 
                best management practices;
                    ``(B) analyze the economic impact of the best 
                management practices; and
                    ``(C) develop the best management practices on a 
                regional basis for watersheds and States not 
                participating in the pilot programs.

``SEC. 1238H. FUNDING.

    ``The Secretary shall use to carry out this chapter (including to 
pay administrative costs incurred by the Natural Resources Conservation 
Service in carrying out this chapter)--
            ``(1) funds of the Commodity Credit Corporation made 
        available under section 1241(a)(3); and
            ``(2) at the option of, and transfer by, another Federal 
        agency, funds of the agency that are available to the agency 
        for climate change initiatives or greenhouse gas emission 
        reductions.''.

SEC. 302. FUNDING.

    Section 1241(a)(3) of the Food Security Act of 1985 (16 U.S.C. 
3841(a)(3)) is amended by striking ``chapter 4'' and inserting 
``chapters 2 and 4''.

SEC. 303. REGULATIONS.

    (a) Proposed Regulations.--Not later than 180 days after the date 
of enactment of this title, the Secretary of Agriculture shall publish 
in the Federal Register proposed regulations for carrying out this 
title and the amendments made by this title.
    (b) Final Regulations.--Not later than 60 days after the date of 
publication of the proposed regulations, the Secretary shall promulgate 
final regulations for carrying out this title and the amendments made 
by this title.

SEC. 304. EFFECTIVE DATES.

    (a) In General.--Except as provided in subsection (b), this title 
and the amendments made by this title take effect on January 1, 2002.
    (b) Regulations.--Section 203 takes effect on the date of enactment 
of this title.

                           TITLE IV--REPORTS

SEC. 401. INITIAL REPORT.

    (a) In General.--Not later than 1 year after the date of enactment 
of this Act, the Secretary of Energy, in consultation with the 
Secretary of Agriculture and other appropriate Federal agencies, shall 
submit to Congress a report on--
            (1) the quantity of carbon contained in the forest carbon 
        reservoir of the National Forest System and the methodology and 
        assumptions used to determine that quantity;
            (2) the potential to increase the quantity of carbon in the 
        National Forest System and provide positive impacts on 
        watersheds and fish and wildlife habitats through forest 
        management actions;
            (3) the role of forests in the carbon cycle; and
            (4) the contributions of United States forestry to the 
        global carbon budget.
    (b) Contents.--The report shall include an assessment of the impact 
of forest management actions on timber harvests, wildlife habitat, 
recreation, forest health, and other statutory objectives of National 
Forest System management.

SEC. 402. ANNUAL REPORT.

    (a) In General.--The Secretary of Agriculture, acting through the 
Chief of the Forest Service, and the Secretary of Energy shall jointly 
submit an annual report on the results of the carbon storage program 
under section 2404(b) of the Global Climate Change Prevention Act of 
1990 and carbon sequestration program under section 1238 of the Food 
Security Act of 1985 to--
            (1) the Committee on Agriculture of the House of 
        Representatives;
            (2) the Committee on Agriculture, Nutrition, and Forestry 
        of the Senate;
            (3) the Committee on Resources of the House of 
        Representatives; and
            (4) the Committee on Energy and Natural Resources of the 
        Senate.
    (b) Guidelines.--The Secretary of Agriculture, in consultation with 
the Carbon Advisory Council established under section 1610(b) of the 
Energy Policy Act of 1992, shall develop guidelines for the annual 
report that--
            (1) require a statement of the quantity of carbon storage 
        realized;
            (2) include the data used to monitor and verify the carbon 
        storage;
            (3) are consistent with reporting requirements of the 
        Energy Information Administration; and
            (4) prevent soil carbon and forest carbon management 
        actions from being counted twice.
    (c) Contents.--The report shall include--
            (1) the information required by the guidelines developed 
        under section 1610(h) of the Energy Policy Act of 1992;
            (2) an assessment of the effectiveness of carbon monitoring 
        and verification;
            (3) a report on carbon activities associated with 
        cooperative agreements for the forest carbon program under 
        section 2404(b)(1) of the Global Climate Change Prevention Act 
        of 1990;
            (4) a State forest carbon program compliance report 
        established by--
                    (A) reviewing reports submitted by States under 
                section 403;
                    (B) verifying compliance with the guidelines 
                developed under subsection 1610(h) of the Energy Policy 
                Act of 1992;
                    (C) notifying the State of compliance status;
                    (D) notifying the State of any corrections that are 
                needed to attain compliance; and
                    (E) establishing an opportunity for resubmission by 
                the State; and
            (5) an assessment of the effectiveness of the carbon 
        sequestration program established under section 1238 of the 
        Food Security Act of 1985, including a report on--
                    (A) sequestration improvements made as a result of 
                the carbon sequestration program;
                    (B) sequestration practices on land enrolled in the 
                carbon sequestration program; and
                    (C) compliance with contracts entered into under 
                the carbon sequestration program.

SEC. 403. STATE REPORT.

    Entities participating in cooperative agreements for forest carbon 
programs under section 2404(b)(1) of the Global Climate Change 
Prevention Act of 1990, and States receiving assistance to establish a 
revolving loan fund under section 2404(b)(2) of that Act, shall--
            (1) monitor and verify carbon storage achieved under the 
        forest carbon program in accordance with guidelines developed 
        under section 1610(h)(2) of the Energy Policy Act of 1992; and
            (2) submit an annual report on the results of the carbon 
        storage program to--
                    (A) the Secretary of Agriculture; and
                    (B) any nongovernmental organization or person that 
                provides funding for the carbon storage program.
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