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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1232 Introduced in Senate (IS)]

109th CONGRESS
  1st Session
                                S. 1232

To amend the Clean Air Act to increase production and use of renewable 
fuel and to increase the energy independence of the United States, and 
                          for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             June 14, 2005

Mr. Lautenberg introduced the following bill; which was read twice and 
       referred to the Committee on Environment and Public Works

_______________________________________________________________________

                                 A BILL

 
To amend the Clean Air Act to increase production and use of renewable 
fuel and to increase the energy independence of the United States, and 
                          for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Fuels Security Act 
of 2005''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
                      TITLE I--GENERAL PROVISIONS

Sec. 101. Renewable content of motor vehicle fuel.
Sec. 102. Federal agency ethanol-blended gasoline and biodiesel 
                            purchasing requirement.
Sec. 103. Data collection.
                  TITLE II--FEDERAL REFORMULATED FUELS

Sec. 201. Elimination of oxygen content requirement for reformulated 
                            gasoline.
Sec. 202. Public health and environmental impacts of fuels and fuel 
                            additives.
Sec. 203. Analyses of motor vehicle fuel changes.
Sec. 204. Additional opt-in areas under reformulated gasoline program.
Sec. 205. Federal enforcement of State fuels requirements.
Sec. 206. Fuel system requirements harmonization study.
Sec. 207. Review of Federal procurement initiatives relating to use of 
                            recycled products and fleet and 
                            transportation efficiency.
Sec. 208. Report on renewable motor fuel.
                     TITLE III--CELLULOSIC BIOMASS

Sec. 301. Commercial demonstration projects.

                      TITLE I--GENERAL PROVISIONS

SEC. 101. RENEWABLE CONTENT OF MOTOR VEHICLE FUEL.

    (a) In General.--Section 211 of the Clean Air Act (42 U.S.C. 7545) 
is amended--
            (1) by redesignating subsection (o) as subsection (q); and
            (2) by inserting after subsection (n) the following:
    ``(o) Renewable Fuel Program.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Cellulosic biomass fuel.--The term 
                `cellulosic biomass fuel' means fuel derived from--
                            ``(i) any lignocellulosic or hemicellulosic 
                        matter that is derived from organic material of 
                        a plant that is planted for the purpose of 
                        producing energy (except a plant produced on 
                        land enrolled in the conservation reserve 
                        program established under subchapter B of 
                        chapter 1 of subtitle D of title XII of the 
                        Food Security Act of 1985 (16 U.S.C. 3831 et 
                        seq.), if harvesting the plant would be 
                        inconsistent with the purposes of the program); 
                        or
                            ``(ii) nonhazardous lignocellulosic or 
                        hemicellulosic matter that is segregated from 
                        other waste materials and is derived from--
                                    ``(I)(aa) trees and other plant 
                                matter removed from the immediate 
                                vicinity of homes, other occupied 
                                structures, or essential community 
                                infrastructure; or
                                    ``(bb) precommercial thinning, 
                                slash, or brush (except thinning, 
                                slash, or brush from old growth forests 
                                or publicly-owned roadless areas);
                                    ``(II) an agricultural crop, a crop 
                                byproduct, or a residue resource 
                                (except a plant produced on land 
                                enrolled in the conservation reserve 
                                program, if harvesting the plant would 
                                be inconsistent with the purposes of 
                                the program); or
                                    ``(III) miscellaneous waste (such 
                                as landscape or right-of-way tree 
                                trimmings), not including--
                                            ``(aa) recyclable 
                                        postconsumer waste paper, 
                                        including such paper in 
                                        municipal solid waste;
                                            ``(bb) painted, treated, or 
                                        pressurized wood; or
                                            ``(cc) wood that is 
                                        contaminated by plastic or 
                                        metal.
                    ``(B) Renewable fuel.--The term `renewable fuel' 
                means motor vehicle fuel that--
                            ``(i)(I) is produced from grain, starch, or 
                        oilseeds;
                            ``(II) is natural biogas produced from a 
                        landfill, a sewage waste treatment plant, or 
                        animal waste;
                            ``(III) is cellulosic biomass fuel;
                            ``(IV) is biodiesel (as defined in section 
                        312(f) of the Energy Policy Act of 1992 (42 
                        U.S.C. 13220(f))0; or
                            ``(V) is composed of a mix of components 
                        that are derived from renewable fuel; and
                            ``(ii) is used to replace or reduce the 
                        quantity of fossil fuel present in a fuel 
                        mixture used to operate a motor vehicle.
                    ``(C) Small refinery.--The term `small refinery' 
                means a refinery for which average aggregate daily 
                crude oil throughput for the calendar year (as 
                determined by dividing the aggregate throughput for the 
                calendar year by the number of days in the calendar 
                year) does not exceed 75,000 barrels.
            ``(2) Renewable fuel program.--
                    ``(A) In general.--
                            ``(i) Regulations.--Not later than 1 year 
                        after the date of enactment of this subsection, 
                        the Administrator shall promulgate regulations 
                        ensuring that motor vehicle fuel sold or 
                        dispensed to consumers in the contiguous United 
                        States, on an annual average basis, contains 
                        the applicable volume of renewable fuel 
                        specified in subparagraph (B).
                            ``(ii) Compliance.--Regardless of the date 
                        of promulgation, the regulations shall contain 
                        compliance provisions for refiners, blenders, 
                        and importers, as appropriate, to ensure that 
                        the requirements of this subsection are met, 
                        but shall not restrict where renewable fuel can 
                        be used, or impose any per-gallon obligation 
                        for the use of renewable fuel.
                            ``(iii) No regulations.--If the 
                        Administrator does not promulgate the 
                        regulations, the applicable percentage referred 
                        to in paragraph (3), on a volume percentage of 
                        gasoline basis, shall be 3.2 in 2006.
                    ``(B) Applicable volume.--
                            ``(i) Calendar years 2006 through 2012.--
                        For the purpose of subparagraph (A), the 
                        applicable volume for any of calendar years 
                        2006 through 2012 shall be determined in 
                        accordance with the following table:

                 ``Applicable volume of renewable fuel

  Calendar year:                               (In billions of gallons)
                2006.......................................        4.0 
                2007.......................................        4.7 
                2008.......................................        5.4 
                2009.......................................       6.15 
                2010.......................................        6.9 
                2011.......................................       7.55 
                2012.......................................       8.25 

                            ``(ii) Calendar years 2013 and 
                        thereafter.--For the purpose of subparagraph 
                        (A), the applicable volume for calendar year 
                        2013 and each calendar year thereafter shall be 
                        determined by the Administrator, in 
                        coordination with the Secretary of Energy and 
                        the Secretary of Agriculture, based on a review 
                        of the implementation of the program during 
                        calendar years 2006 through 2012, including a 
                        review of--
                                    ``(I) the impact of the use of 
                                renewable fuels on the environment, air 
                                quality, energy security, job creation, 
                                and rural economic development; and
                                    ``(II) the expected annual rate of 
                                future production of renewable fuels, 
                                including cellulosic ethanol.
                            ``(iii) Limitation.--The applicable volume 
                        for a calendar year under clause (ii) shall be 
                        not less than the sum of the applicable volume 
                        for that year of cellulosic biomass fuel 
                        referred to in clause (iv) and the product 
                        obtained by multiplying--
                                    ``(I) the number of gallons of 
                                gasoline that the Administrator 
                                estimates will be sold or introduced 
                                into commerce during the calendar year; 
                                and
                                    ``(I) the quotient obtained by 
                                dividing--
                                            ``(aa) 8,000,000,000; by
                                            ``(bb) the number of 
                                        gallons of gasoline sold or 
                                        introduced into commerce during 
                                        calendar year 2012.
                            ``(iv) Cellulosic biomass fuel.--For the 
                        purpose of subparagraph (A), the Administrator 
                        shall require, by regulation, that an 
                        applicable volume under clause (i) or (ii) 
                        include a volume of cellulosic biomass fuel of 
                        not less than--
                                    ``(I) in 2009, 50,000,000 gallons;
                                    ``(II) in 2010, 100,000,000 
                                gallons;
                                    ``(III) in 2011, 150,000,000 
                                gallons;
                                    ``(IV) in 2012, 250,000,000 
                                gallons;
                                    ``(V) in 2013, 500,000,000 gallons;
                                    ``(VI) in 2014, 800,000,000 
                                gallons; and
                                    ``(VII) in 2015 and each subsequent 
                                calendar year, 1,000,000,000 gallons.
                            ``(v) Inclusions in calculations.--
                                    ``(I) Biogas.--For the purposes of 
                                clauses (i) and (ii), any biogas that 
                                is a renewable fuel may be included in 
                                a calculation of the volume of 
                                renewable fuel using a conversion 
                                formula to be determined by the 
                                Administrator based on the energy 
                                content of a cubic foot of biogas at 
                                standard temperature and pressure.
                                    ``(II) Blending components.--For 
                                the purposes of clauses (i) and (ii), 
                                only the renewable fuel portion of a 
                                blending component derived from 
                                renewable fuel may be considered to be 
                                part of the applicable volume of 
                                renewable fuel.
            ``(3) Applicable percentages.--
                    ``(A) Provision of estimate of volumes of gasoline 
                sales.--Not later than October 31 of each of calendar 
                years 2006 through 2011, the Administrator of the 
                Energy Information Administration shall provide to the 
                Administrator of the Environmental Protection Agency an 
                estimate of the volumes of gasoline that will be sold 
                or introduced into commerce in the United States during 
                the following calendar year.
                    ``(B) Determination of applicable percentages.--
                            ``(i) In general.--Not later than November 
                        30 of each of calendar years 2006 through 2011, 
                        based on the estimate provided under 
                        subparagraph (A), the Administrator shall 
                        determine and publish in the Federal Register, 
                        with respect to the following calendar year, 
                        the renewable fuel obligation that ensures that 
                        the requirements under paragraph (2) are met.
                            ``(ii) Required elements.--The renewable 
                        fuel obligation determined for a calendar year 
                        under clause (i) shall--
                                    ``(I) be applicable to refiners, 
                                blenders, and importers, as 
                                appropriate;
                                    ``(II) be expressed in terms of a 
                                volume percentage of gasoline sold or 
                                introduced into commerce; and
                                    ``(III) subject to subparagraph 
                                (C)(i), consist of a single applicable 
                                percentage that applies to all 
                                categories of persons specified in 
                                subclause (I).
                    ``(C) Adjustments.--In determining the applicable 
                percentage for a calendar year, the Administrator shall 
                make adjustments--
                            ``(i) to prevent the imposition of 
                        redundant obligations to any person specified 
                        in subparagraph (B)(ii)(I); and
                            ``(ii) to account for the use of renewable 
                        fuel during the previous calendar year by small 
                        refineries that are exempt under paragraph 
                        (11).
            ``(4) Equivalency.--For the purpose of paragraph (2), 1 
        gallon of cellulosic biomass fuel in excess of the volume 
        required under paragraph (2)(B)(iv) shall be considered to be 
        the equivalent of--
                    ``(A) in 2006 through 2008, 2.5 gallons of 
                renewable fuel;
                    ``(B) in 2009, 2 gallons of renewable fuel;
                    ``(C) in 2010, 1.5 gallons of renewable fuel; and
                    ``(D) in 2011, and each subsequent calendar year, 1 
                gallon of renewable fuel.
            ``(5) Credit program.--
                    ``(A) Regulations.--The regulations promulgated to 
                carry out this subsection shall provide for--
                            ``(i) the generation of an appropriate 
                        amount of credits by any person that refines, 
                        blends, or imports gasoline that contains a 
                        quantity of renewable fuel or cellulosic 
                        biomass fuel that is greater than the quantity 
                        required under paragraph (2);
                            ``(ii) the generation of an appropriate 
                        amount of credits for biodiesel fuel; and
                            ``(iii) if a small refinery notifies the 
                        Administrator that the small refinery waives 
                        the exemption provided by this subsection, the 
                        generation of credits by the small refinery 
                        beginning in the year following the 
                        notification.
                    ``(B) Use of credits.--A person that generates 
                credits under subparagraph (A) may use the credits, or 
                transfer all or a portion of the credits to another 
                person, for the purpose of complying with paragraph 
                (2).
                    ``(C) Life of credits.--A credit generated under 
                this paragraph shall be valid to demonstrate compliance 
                for the calendar year in which the credit was 
                generated.
                    ``(D) Inability to purchase sufficient credits.--
                The regulations promulgated to carry out this 
                subsection shall include provisions permitting any 
                person that is unable to generate or purchase 
                sufficient credits to meet the requirement under 
                paragraph (2) to carry forward a renewable fuel or 
                cellulosic biomass fuel deficit if, for the calendar 
                year following the year in which the renewable fuel or 
                cellulosic biomass fuel deficit is created, the 
                person--
                            ``(i) achieves compliance with the 
                        appropriate requirement under paragraph (2); 
                        and
                            ``(ii) generates or purchases additional 
                        renewable fuels or cellulosic biomass credits 
                        to offset the deficit of the preceding year.
            ``(6) Seasonal variations in renewable fuel use.--
                    ``(A) Study.--For each of calendar years 2006 
                through 2012, the Administrator of the Energy 
                Information Administration shall conduct a study of 
                renewable fuels blending to determine whether there are 
                excessive seasonal variations in the use of renewable 
                fuels.
                    ``(B) Regulation of excessive seasonal 
                variations.--
                            ``(i) Determination.--If, for any calendar 
                        year, the Administrator of the Energy 
                        Information Administration, based on the study 
                        under subparagraph (A), makes the 
                        determinations specified in subparagraph (C), 
                        the Administrator of the Environmental 
                        Protection Agency shall determine whether 
                        promulgating regulations described in clause 
                        (ii) would prevent or interfere with the 
                        attainment or maintenance of any national 
                        ambient air quality standard.
                            ``(ii) Regulations.--
                                    ``(I) In general.--The 
                                Administrator of the Environmental 
                                Protection Agency shall promulgate 
                                regulations to ensure that 35 percent 
                                or more of the quantity of renewable 
                                fuels necessary to meet the 
                                requirements under paragraph (2) is 
                                used during each of the periods 
                                specified in subparagraph (D) of each 
                                subsequent calendar year only if--
                                            ``(aa) the Administrator 
                                        determines under clause (i) 
                                        that the regulations would not 
                                        prevent or interfere with the 
                                        attainment or maintenance of 
                                        national ambient air quality 
                                        standards; and
                                            ``(bb) final rules have 
                                        been promulgated under 
                                        subsections (h)(5) and (p)(2).
                                    ``(II) Negative determination.--The 
                                Administrator of the Environmental 
                                Protection Agency shall promulgate 
                                regulations requiring the use, during 
                                each of the periods specified in 
                                subparagraph (D) of each subsequent 
                                calendar year, of the maximum 
                                percentage of renewable fuels necessary 
                                to meet the requirements under 
                                paragraph (2) that can be used without 
                                preventing or interfering with the 
                                attainment or maintenance of national 
                                ambient air quality standards if--
                                            ``(aa) the Administrator 
                                        determines under clause (i) 
                                        that the regulations would 
                                        prevent or interfere with the 
                                        attainment or maintenance of 
                                        national ambient air quality 
                                        standards; and
                                            ``(bb) final rules have 
                                        been promulgated under 
                                        subsections (h)(5) and (p)(2).
                    ``(C) Determinations.--The determinations referred 
                to in subparagraph (B) are that--
                            ``(i) less than 35 percent of the quantity 
                        of renewable fuels necessary to meet the 
                        requirements under paragraph (2) has been used 
                        during 1 of the periods specified in 
                        subparagraph (D) of the calendar year;
                            ``(ii) a pattern of excessive seasonal 
                        variation described in clause (i) will continue 
                        in subsequent calendar years; and
                            ``(iii) promulgating regulations or other 
                        requirements to impose a 35 percent or more 
                        seasonal use of renewable fuels will not 
                        significantly increase the price of motor fuels 
                        to the consumer.
                    ``(D) Periods.--The 2 periods referred to in this 
                paragraph are--
                            ``(i) April through September; and
                            ``(ii) January through March and October 
                        through December.
                    ``(E) Exclusions.--Renewable fuels blended or 
                consumed in 2006 in a State that has received a waiver 
                under section 209(b) shall not be included in the study 
                under subparagraph (A).
            ``(7) Waivers.--
                    ``(A) In general.--The Administrator, in 
                consultation with the Secretary of Agriculture and the 
                Secretary of Energy, may waive the requirements under 
                paragraph (2), in whole or in part, on a petition by 1 
                or more States by reducing the national quantity of 
                renewable fuel or cellulosic biomass fuel required 
                under this subsection--
                            ``(i) based on a determination by the 
                        Administrator, after public notice and 
                        opportunity for comment, that implementation of 
                        the requirement would severely harm the economy 
                        or environment of a State, a region, or the 
                        United States; or
                            ``(ii) based on a determination by the 
                        Administrator, after public notice and 
                        opportunity for comment, that there is an 
                        inadequate domestic supply to meet the 
                        requirement.
                    ``(B) Petitions for waivers.--Not later than 90 
                days after the date on which a petition is received by 
                the Administrator under subparagraph (A), the 
                Administrator, in consultation with the Secretary of 
                Agriculture and the Secretary of Energy, shall approve 
                or disapprove the petition.
                    ``(C) Termination of waivers.--A waiver granted 
                under subparagraph (A) shall terminate on the date that 
                is 1 year after the date on which the waiver was 
                granted, but may be renewed by the Administrator, after 
                consultation with the Secretary of Agriculture and the 
                Secretary of Energy.
            ``(8) Small refineries.--
                    ``(A) In general.--Paragraph (2) shall not apply to 
                small refineries until the first calendar year 
                beginning more than 5 years after the first year set 
                forth in the table in paragraph (2)(B)(i).
                    ``(B) Study.--Not later than December 31, 2008, the 
                Secretary of Energy shall complete for the 
                Administrator a study to determine whether the 
                requirements under paragraph (2) would impose a 
                disproportionate economic hardship on small refineries.
                    ``(C) Small refineries and economic hardship.--For 
                any small refinery that the Secretary of Energy 
                determines would experience a disproportionate economic 
                hardship, the Administrator shall extend the small 
                refinery exemption for the small refinery for not less 
                than 2 additional years.
                    ``(D) Economic hardship.--
                            ``(i) Extension of exemption.--A small 
                        refinery may at any time petition the 
                        Administrator for an extension of the exemption 
                        from the requirements under paragraph (2) for 
                        the reason of disproportionate economic 
                        hardship.
                            ``(ii) Evaluation.--In evaluating a 
                        hardship petition, the Administrator, in 
                        consultation with the Secretary of Energy, 
                        shall consider the findings of the study in 
                        addition to other economic factors.
                            ``(iii) Deadline for action on petitions.--
                        The Administrator shall act on any petition 
                        submitted by a small refinery for a hardship 
                        exemption not later than 90 days after the 
                        receipt of the petition.
                    ``(E) Credit program.--Paragraph (6)(A)(iii) shall 
                apply to each small refinery that waives an exemption 
                under this paragraph.
                    ``(F) Opt-in for small refiners.--A small refinery 
                shall be subject to paragraph (2) if the small refinery 
                notifies the Administrator that the small refinery 
                waives the exemption under subparagraph (C).''.
    (b) Penalties and enforcement.--Section 211(d) of the Clean Air Act 
(42 U.S.C. 7545(d)) is amended--
            (1) in paragraph (1)--
                    (A) in the first sentence, by striking ``or (n)'' 
                and inserting ``(n), or (o)'' each place it appears; 
                and
                    (B) in the second sentence, by striking ``or (m)'' 
                and inserting ``(m), or (o)''; and
            (2) in the first sentence of paragraph (2), by striking 
        ``and (n)'' and inserting ``(n), and (o)'' each place it 
        appears.

SEC. 102. FEDERAL AGENCY ETHANOL-BLENDED GASOLINE AND BIODIESEL 
              PURCHASING REQUIREMENT.

    Title III of the Energy Policy Act of 1992 is amended by striking 
section 306 (42 U.S.C. 13215) and inserting the following:

``SEC. 306. FEDERAL AGENCY ETHANOL-BLENDED GASOLINE AND BIODIESEL 
              PURCHASING REQUIREMENT.

    ``(a) Ethanol-Blended Gasoline.--The head of each Federal agency 
shall ensure that, in areas in which ethanol-blended gasoline is 
reasonably available at a generally competitive price, the Federal 
agency purchases ethanol-blended gasoline containing at least 10 
percent ethanol rather than nonethanol-blended gasoline, for use in 
vehicles used by the agency that use gasoline.
    ``(b) Biodiesel.--
            ``(1) Definition of biodiesel.--In this subsection, the 
        term `biodiesel' has the meaning given the term in section 
        312(f).
            ``(2) Requirement.--The head of each Federal agency shall 
        ensure that the Federal agency purchases, for use in fueling 
        fleet vehicles that use diesel fuel used by the Federal agency 
        at the location at which fleet vehicles of the Federal agency 
        are centrally fueled, in areas in which the biodiesel-blended 
        diesel fuel described in subparagraphs (A) and (B) is available 
        at a generally competitive price--
                    ``(A) as of the date that is 5 years after the date 
                of enactment of this paragraph, biodiesel-blended 
                diesel fuel that contains at least 2 percent biodiesel, 
                rather than nonbiodiesel-blended diesel fuel; and
                    ``(B) as of the date that is 10 years after the 
                date of enactment of this paragraph, biodiesel-blended 
                diesel fuel that contains at least 20 percent 
                biodiesel, rather than nonbiodiesel-blended diesel 
                fuel.
            ``(3) Requirement of Federal Law.--The provisions of this 
        subsection shall not be considered a requirement of Federal law 
        for the purposes of section 312.
    ``(c) Exemption.--This section does not apply to fuel used in 
vehicles excluded from the definition of `fleet' by subparagraphs (A) 
through (H) of section 301(9).''.

SEC. 103. DATA COLLECTION.

    Section 205 of the Department of Energy Organization Act (42 U.S.C. 
7135) is amended by adding at the end the following:
    ``(m)(1) In order to improve the ability to evaluate the 
effectiveness of the renewable fuels mandate of the United States, the 
Administrator shall conduct and publish the results of a survey of 
renewable fuels demand in the motor vehicle fuels market in the United 
States monthly, and in a manner designed to protect the confidentiality 
of individual responses.
    ``(2) In conducting the survey, the Administrator shall collect 
information both on a national and regional basis, including--
            ``(A) information on--
                    ``(i) the quantity of renewable fuels produced;
                    ``(ii) the quantity of renewable fuels blended;
                    ``(iii) the quantity of renewable fuels imported; 
                and
                    ``(iv) the quantity of renewable fuels demanded; 
                and
            ``(B) market price data.''.

                  TITLE II--FEDERAL REFORMULATED FUELS

SEC. 201. ELIMINATION OF OXYGEN CONTENT REQUIREMENT FOR REFORMULATED 
              GASOLINE.

    (a) Elimination.--
            (1) In general.--Section 211(k) of the Clean Air Act (42 
        U.S.C. 7545(k)) is amended--
                    (A) in paragraph (2)--
                            (i) in the second sentence of subparagraph 
                        (A), by striking ``(including the oxygen 
                        content requirement contained in subparagraph 
                        (B))'';
                            (ii) by striking subparagraph (B); and
                            (iii) by redesignating subparagraphs (C) 
                        and (D) as subparagraphs (B) and (C), 
                        respectively;
                    (B) in paragraph (3)(A), by striking clause (v); 
                and
                    (C) in paragraph (7)--
                            (i) in subparagraph (A)--
                                    (I) by striking clause (i); and
                                    (II) by redesignating clauses (ii) 
                                and (iii) as clauses (i) and (ii), 
                                respectively; and
                            (ii) in subparagraph (C)--
                                    (I) by striking clause (ii); and
                                    (II) by redesignating clause (iii) 
                                as clause (ii).
            (2) Effective date.--The amendments made by paragraph (1) 
        take effect on the date that is 1 year after the date of 
        enactment of this Act, except that the amendments shall take 
        effect upon that date of enactment in any State that has 
        received a waiver under section 209(b) of the Clean Air Act (42 
        U.S.C. 7543(b)).
    (b) Maintenance of Toxic Air Pollutant Emission Reductions.--
Section 211(k)(1) of the Clean Air Act (42 U.S.C. 7545(k)(1)) is 
amended--
            (1) by striking ``Within 1 year after the enactment of the 
        Clean Air Act Amendments of 1990,'' and inserting the 
        following:
                    ``(A) In general.--Not later than November 15, 
                1991,''; and
            (2) by adding at the end the following:
                    ``(B) Maintenance of toxic air pollutant emissions 
                reductions from reformulated gasoline.--
                            ``(i) Regulations concerning emissions of 
                        toxic air pollutants.--Not later than 270 days 
                        after the date of enactment of this 
                        subparagraph, the Administrator shall establish 
                        by regulation, for each refinery or importer 
                        (other than a refiner or importer in a State 
                        that has received a waiver under section 209(b) 
                        with respect to gasoline produced for use in 
                        that State), standards for toxic air pollutants 
                        from use of the reformulated gasoline produced 
                        or distributed by the refiner or importer that 
                        maintain the reduction of the average annual 
                        emissions of toxic air pollutants for each 
                        gallon of reformulated gasoline produced or 
                        distributed by the refiner or importer during 
                        calendar years 2002 and 2003 (as determined on 
                        the basis of data collected by the 
                        Administrator with respect to the refiner or 
                        importer).
                            ``(ii) Standards applicable to specific 
                        refineries or importers.--
                                    ``(I) Applicability of standards.--
                                For any calendar year, the standards 
                                applicable to a refiner or importer 
                                under clause (i) shall apply to the 
                                total quantity of gasoline produced or 
                                distributed by the refiner or importer 
                                in such calendar year.
                                    ``(II) Standards applicable to new 
                                refineries and importers.--For any 
                                calendar year, the standard applicable 
                                under clause (i) to a refiner or 
                                importer that did not produce or import 
                                reformulated gasoline during 2002 or 
                                2003 shall be a standard that achieves 
                                the reduction of average annual 
                                emissions of toxic air pollutants for 
                                each gallon of reformulated gasoline 
                                produced or distributed during the 
                                preceding calendar year.
                            ``(iii) Credit program.--The Administrator 
                        shall provide for the granting and use of 
                        credits for emissions of toxic air pollutants 
                        in the same manner as provided in paragraph 
                        (7).''.
    (c) Consolidation in Reformulated Gasoline Regulations.--Not later 
than 180 days after the date of enactment of this Act, the 
Administrator of the Environmental Protection Agency shall revise the 
reformulated gasoline regulations under subpart D of part 80 of title 
40, Code of Federal Regulations (or any successor regulations), to 
consolidate the regulations applicable to VOC-Control Regions 1 and 2 
under section 80.41 of that title by eliminating the less stringent 
requirements applicable to gasoline designated for VOC-Control Region 2 
and instead applying the more stringent requirements applicable to 
gasoline designated for VOC-Control Region 1.
    (d) Authority of Administrator.--Nothing in this section affects or 
prejudices any legal claim or action with respect to regulations 
promulgated by the Administrator of the Environmental Protection Agency 
before the date of enactment of this Act regarding--
            (1) emissions of toxic air pollutants from motor vehicles; 
        or
            (2) the adjustment of standards applicable to a specific 
        refinery or importer made under the prior regulations.
    (e) Determination Regarding a State Petition.--Section 211(k) of 
the Clean Air Act (42 U.S.C. 7545(k)) is amended by inserting after 
paragraph (10) the following:
            ``(11) Determination regarding a state petition.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this section, not later than 30 days after 
                the date of enactment of this paragraph, the 
                Administrator shall determine the adequacy of any 
                petition received from a Governor of a State to exempt 
                gasoline sold in that State from the requirements under 
                paragraph (2)(B).
                    ``(B) Approval.--If a determination under 
                subparagraph (A) is not made by the date that is 30 
                days after the date of enactment of this paragraph, the 
                petition shall be considered to be approved.''.

SEC. 202. PUBLIC HEALTH AND ENVIRONMENTAL IMPACTS OF FUELS AND FUEL 
              ADDITIVES.

    Section 211(b) of the Clean Air Act (42 U.S.C. 7545(b)) is 
amended--
            (1) in paragraph (2)--
                    (A) by striking ``may also'' and inserting ``shall, 
                on a regular basis,''; and
                    (B) by striking subparagraph (A) and inserting the 
                following:
                    ``(A) to conduct tests to determine potential 
                public health and environmental effects of the fuel or 
                additive (including, but not limited to, carcinogenic, 
                teratogenic, or mutagenic effects); and''; and
            (2) by adding at the end the following:
            ``(4) Study on certain fuel additives and blendstocks.--
                    ``(A) In general.--Not later than 2 years after the 
                date of enactment of this paragraph, the Administrator 
                shall--
                            ``(i) conduct a study on the effects on 
                        public health, air quality, and water resources 
                        of increased use of, and the feasibility of 
                        using as substitutes for methyl tertiary butyl 
                        ether in gasoline--
                                    ``(I) ethyl tertiary butyl ether;
                                    ``(II) tertiary amyl methyl ether;
                                    ``(III) di-isopropyl ether;
                                    ``(IV) tertiary butyl alcohol;
                                    ``(V) other ethers and heavy 
                                alcohols, as determined by the 
                                Administrator;
                                    ``(VI) ethanol;
                                    ``(VII) iso-octane; and
                                    ``(VIII) alkylates;
                            ``(ii) conduct a study on the effects on 
                        public health, air quality, and water resources 
                        of the adjustment for ethanol-blended 
                        reformulated gasoline to the VOC performance 
                        requirements otherwise applicable under 
                        sections 211(k)(1) and 211(k)(3); and
                            ``(iii) submit to the Committee on 
                        Environment and Public Works of the Senate and 
                        the Committee on Energy and Commerce of the 
                        House of Representatives a report describing 
                        the results of these studies.
                    ``(B) Contracts for study.--In carrying out this 
                paragraph, the Administrator may enter into one or more 
                contracts with nongovernmental entities including but 
                not limited to National Energy Laboratories and 
                institutions of higher education (as defined in section 
                101 of the Higher Education Act of 1965 (20 U.S.C. 
                1001)).''.

SEC. 203. ANALYSES OF MOTOR VEHICLE FUEL CHANGES.

    (a) Analyses of Motor Vehicle Fuel Changes and Emissions Model.--
Section 211 of the Clean Air Act (42 U.S.C. 7545) is amended by 
inserting after subsection (o) (as added by section 101(a)(2)) the 
following:
    ``(p) Analyses of Motor Vehicle Fuel Changes and Emissions Model.--
            ``(1) Draft anti-backsliding analysis and proposed 
        emissions model.--Not later than 18 months after the date of 
        enactment of this subsection, the Administrator shall publish 
        for public comment--
                    ``(A) a draft analysis of the changes in emissions 
                of air pollutants and air quality due to the use of 
                motor vehicle fuel and fuel additives resulting from 
                implementation of the amendments made by the Fuels 
                Security Act of 2005; and
                    ``(B) a proposed emissions model for the purposes 
                of certifying fuel under subsection (k)(4)(B) that 
                reflects the effects of gasoline characteristics and 
                components on emissions from vehicles in the motor 
                vehicle fleet during calendar year 2005, taking into 
                account the best available scientific information on 
                exhaust emissions, nonexhaust emissions, and permeation 
                of gasoline components through the soft fuel system 
                components of a motor vehicle.
            ``(2) Final analysis and emissions model.--After providing 
        a reasonable opportunity for public comment and peer review by 
        the National Academy of Sciences, but not later than 2 years 
        after the date of enactment of this subsection, the 
        Administrator shall publish the analysis and emissions model 
        described in paragraph (1) in final form.''.
    (b) Reid Vapor Pressure Requirements.--Section 211(h) of the Clean 
Air Act (42 U.S.C. 7545(h)) is amended--
            (1) by redesignating paragraph (5) as paragraph (7); and
            (2) by inserting after paragraph (4) the following:
            ``(5) Exclusion from ethanol waiver.--
                    ``(A) Proposed standard.--Not later than 18 months 
                after the date of enactment of this subparagraph, the 
                Administrator shall publish for public comment a 
                proposed Reid vapor pressure standard for fuel blends 
                containing gasoline and 10 percent denatured anhydrous 
                ethanol that--
                            ``(i) causes those blends to have an 
                        equivalent effect on ozone formation to fuel 
                        that is subject to the Reid vapor pressure 
                        limitation under paragraph (1); and
                            ``(ii) reflects the effects of gasoline 
                        characteristics and components on emissions 
                        from vehicles in the motor vehicle fleet during 
                        calendar year 2005, taking into account the 
                        best available scientific information relating 
                        to exhaust emissions, nonexhaust emissions, and 
                        permeation of gasoline components through the 
                        soft fuel system components of a motor vehicle.
                    ``(B) Final rule.--
                            ``(i) Publication.--After providing a 
                        reasonable opportunity for public comment and 
                        peer review by the National Academy of 
                        Sciences, but not later than 2 years after the 
                        date of enactment of this subparagraph, the 
                        Administrator shall publish the Reid vapor 
                        pressure standard described in subparagraph (A) 
                        in final form.
                            ``(ii) Effect of publication.--Beginning on 
                        the date of publication under clause (i), the 
                        Reid vapor pressure standard described in 
                        subparagraph (A) shall replace the ethanol 
                        waiver under paragraph (4).
            ``(6) Exclusion from ethanol waiver.--On notification, 
        accompanied by supporting documentation, from the Governor of a 
        State that the Reid vapor pressure limitation established by 
        paragraph (4) will increase emissions that contribute to air 
        pollution in any area in the State, the Administrator shall, by 
        regulation, apply, in lieu of the Reid vapor pressure 
        limitation established by paragraph (4), the Reid vapor 
        pressure limitation established by paragraph (1) to all fuel 
        blends containing gasoline and 10 percent denatured anhydrous 
        ethanol that are sold, offered for sale, dispensed, supplied, 
        offered for supply, transported, or introduced into commerce in 
        the area during the high ozone season.''.
    (c) Authority for Water Quality Protection From Fuels.--Section 
211(c) of the Clean Air Act (42 U.S.C. 7545(c)) is amended--
            (1) in paragraph (1)(A)--
                    (A) by inserting ``fuel or fuel additive or'' after 
                ``Administrator any''; and
                    (B) by striking ``air pollution which'' and 
                inserting ``air pollution, or water pollution, that'';
            (2) in paragraph (4)(B), by inserting ``or water quality 
        protection,'' after ``emission control,''; and
            (3) by adding at the end the following:
            ``(5) Restrictions on use of mtbe.--
                    ``(A) In general.--Subject to subparagraph (E), not 
                later than 4 years after the date of enactment of this 
                paragraph, the use of methyl tertiary butyl ether in 
                motor vehicle fuel in any State other than a State 
                described in subparagraph (C) is prohibited.
                    ``(B) Regulations.--The Administrator shall 
                promulgate regulations to effect the prohibition in 
                subparagraph (A).
                    ``(C) States that authorize use.--A State described 
                in this subparagraph is a State that submits to the 
                Administrator a notice that the State authorizes use of 
                methyl tertiary butyl ether in motor vehicle fuel sold 
                or used in the State.
                    ``(D) Publication of notice.--The Administrator 
                shall publish in the Federal Register each notice 
                submitted by a State under subparagraph (C).
                    ``(E) Trace quantities.--In carrying out 
                subparagraph (A), the Administrator may allow trace 
                quantities of methyl tertiary butyl ether, not to 
                exceed 0.5 percent by volume, to be present in motor 
                vehicle fuel in cases that the Administrator determines 
                to be appropriate.
            ``(6) Mtbe merchant producer conversion assistance.--
                    ``(A) In general.--
                            ``(i) Grants.--The Secretary of Energy, in 
                        consultation with the Administrator, may make 
                        grants to merchant producers of methyl tertiary 
                        butyl ether in the United States to assist the 
                        producers in the conversion of eligible 
                        production facilities described in subparagraph 
                        (C) to the production of--
                                    ``(I) iso-octane or alkylates, 
                                unless the Administrator, in 
                                consultation with the Secretary of 
                                Energy, determines that transition 
                                assistance for the production of iso-
                                octane or alkylates is inconsistent 
                                with the criteria specified in 
                                subparagraph (B); and
                                    ``(II) any other fuel additive that 
                                meets the criteria specified in 
                                subparagraph (B).
                    ``(B) Criteria.--The criteria referred to in 
                subparagraph (A) are that--
                            ``(i) use of the fuel additive is 
                        consistent with this subsection;
                            ``(ii) the Administrator has not determined 
                        that the fuel additive may reasonably be 
                        anticipated to endanger public health or the 
                        environment;
                            ``(iii) the fuel additive has been 
                        registered and tested, or is being tested, in 
                        accordance with the requirements of this 
                        section;
                            ``(iv) the fuel additive will contribute to 
                        replacing quantities of motor vehicle fuel 
                        rendered unavailable as a result of paragraph 
                        (5); and
                            ``(v) the fuel additive is not an ether or 
                        a metal.
                    ``(C) Eligible production facilities.--A production 
                facility shall be eligible to receive a grant under 
                this paragraph if the production facility--
                            ``(i) is located in the United States; and
                            ``(ii) produced methyl tertiary butyl ether 
                        for consumption in nonattainment areas during 
                        the period--
                                    ``(I) beginning on the date of 
                                enactment of this paragraph; and
                                    ``(II) ending on the effective date 
                                of the prohibition on the use of methyl 
                                tertiary butyl ether under paragraph 
                                (5).
                    ``(D) Authorization of appropriations.--There is 
                authorized to be appropriated to carry out this 
                paragraph $250,000,000 for each of fiscal years 2005 
                through 2008.''.

SEC. 204. ADDITIONAL OPT-IN AREAS UNDER REFORMULATED GASOLINE PROGRAM.

    Section 211(k)(6) of the Clean Air Act (42 U.S.C. 7545(k)(6)) is 
amended--
            (1) by striking ``(6) Opt-in areas.--(A) Upon'' and 
        inserting the following:
            ``(6) Opt-in areas.--
                    ``(A) Classified areas.--
                            ``(i) In general.--Upon'';
            (2) in subparagraph (B), by striking ``(B) If'' and 
        inserting the following:
                            ``(ii) Effect of insufficient domestic 
                        capacity to produce reformulated gasoline.--
                        If'';
            (3) in subparagraph (A)(i) (as redesignated by paragraph 
        (2)), by striking ``under subpart 2'' and all that follows 
        through ``250,000).'' and inserting ``nonattainment for 
        ozone.'';
            (4) in subparagraph (A)(ii) (as redesignated by paragraph 
        (2))--
                    (A) in the first sentence, by striking ``Marginal, 
                Moderate, Serious, or Severe Areas referred to in 
                subparagraph (A)'' and inserting ``nonattainment areas 
                referred to in clause (i)''; and
                    (B) in the second sentence, by striking ``this 
                paragraph'' and inserting ``this subparagraph''; and
            (5) by adding at the end the following:
                    ``(B) Ozone transport region.--
                            ``(i) Application of prohibition.--
                                    ``(I) In general.--In addition to 
                                the provisions of subparagraph (A), 
                                upon the application of the Governor of 
                                a State in the ozone transport region 
                                established by section 184(a), the 
                                Administrator, not later than 180 days 
                                after the date of receipt of the 
                                application, shall apply the 
                                prohibition specified in paragraph (5) 
                                to any area in the State (other than an 
                                area classified as a marginal, 
                                moderate, serious, or severe ozone 
                                nonattainment area under subpart 2 of 
                                part D of title I) unless the 
                                Administrator determines under clause 
                                (iii) that there is insufficient 
                                capacity to supply reformulated 
                                gasoline.
                                    ``(II) Publication of 
                                application.--As soon as practicable 
                                after the date of receipt of an 
                                application under subclause (I), the 
                                Administrator shall publish the 
                                application in the Federal Register.
                            ``(ii) Period of applicability.--Under 
                        clause (i), the prohibition specified in 
                        paragraph (5) shall apply in a State--
                                    ``(I) commencing as soon as 
                                practicable but not later than 2 years 
                                after the date of approval by the 
                                Administrator of the application of the 
                                Governor of the State; and
                                    ``(II) ending not earlier than 4 
                                years after the commencement date 
                                determined under subclause (I).
                            ``(iii) Extension of commencement date 
                        based on insufficient capacity.--
                                    ``(I) In general.--If, after 
                                receipt of an application from a 
                                Governor of a State under clause (i), 
                                the Administrator determines, on the 
                                Administrator's own motion or on 
                                petition of any person, after 
                                consultation with the Secretary of 
                                Energy, that there is insufficient 
                                capacity to supply reformulated 
                                gasoline, the Administrator, by 
                                regulation--
                                            ``(aa) shall extend the 
                                        commencement date with respect 
                                        to the State under clause 
                                        (ii)(I) for not more than 1 
                                        year; and
                                            ``(bb) may renew the 
                                        extension under item (aa) for 2 
                                        additional periods, each of 
                                        which shall not exceed 1 year.
                                    ``(II) Deadline for action on 
                                petitions.--The Administrator shall act 
                                on any petition submitted under 
                                subclause (I) not later than 180 days 
                                after the date of receipt of the 
                                petition.''.

SEC. 205. FEDERAL ENFORCEMENT OF STATE FUELS REQUIREMENTS.

    Section 211(c)(4)(C) of the Clean Air Act (42 U.S.C. 7545(c)(4)(C)) 
is amended--
            (1) by striking ``(C) A State'' and inserting the 
        following:
                    ``(C) Authority of state to control fuels and fuel 
                additives for reasons of necessity.--
                            ``(i) In general.--A State''; and
            (2) by adding at the end the following:
                            ``(ii) Enforcement by the administrator.--
                        In any case in which a State prescribes and 
                        enforces a control or prohibition under clause 
                        (i), the Administrator, at the request of the 
                        State, shall enforce the control or prohibition 
                        as if the control or prohibition had been 
                        adopted under the other provisions of this 
                        section.''.

SEC. 206. FUEL SYSTEM REQUIREMENTS HARMONIZATION STUDY.

    (a) Study.--
            (1) In general.--The Administrator of the Environmental 
        Protection Agency and the Secretary of Energy shall jointly 
        conduct a study of Federal, State, and local requirements 
        concerning motor vehicle fuels, including--
                    (A) requirements relating to reformulated gasoline, 
                volatility (measured in Reid vapor pressure), 
                oxygenated fuel, and diesel fuel; and
                    (B) other requirements that vary from State to 
                State, region to region, or locality to locality.
            (2) Required elements.--The study shall assess--
                    (A) the effect of the variety of requirements 
                described in paragraph (1) on the supply, quality, and 
                price of motor vehicle fuels available to the consumer;
                    (B) the effect of the requirements described in 
                paragraph (1) on achievement of--
                            (i) national, regional, and local air 
                        quality standards and goals; and
                            (ii) related environmental and public 
                        health protection standards and goals;
                    (C) the effect of Federal, State, and local motor 
                vehicle fuel regulations, including multiple motor 
                vehicle fuel requirements, on--
                            (i) domestic refineries;
                            (ii) the fuel distribution system; and
                            (iii) industry investment in new capacity;
                    (D) the effect of the requirements described in 
                paragraph (1) on emissions from vehicles, refineries, 
                and fuel handling facilities;
                    (E) the feasibility of developing national or 
                regional motor vehicle fuel slates for the 48 
                contiguous States that, while protecting and improving 
                air quality at the national, regional, and local 
                levels, could--
                            (i) enhance flexibility in the fuel 
                        distribution infrastructure and improve fuel 
                        fungibility;
                            (ii) reduce price volatility and costs to 
                        consumers and producers;
                            (iii) provide increased liquidity to the 
                        gasoline market; and
                            (iv) enhance fuel quality, consistency, and 
                        supply; and
                    (F) the feasibility of providing incentives, and 
                the need for the development of national standards 
                necessary, to promote cleaner burning motor vehicle 
                fuel.
    (b) Report.--
            (1) In general.--Not later than June 1, 2006, the 
        Administrator of the Environmental Protection Agency and the 
        Secretary of Energy shall submit to Congress a report on the 
        results of the study conducted under subsection (a).
            (2) Recommendations.--
                    (A) In general.--The report shall contain 
                recommendations for legislative and administrative 
                actions that may be taken--
                            (i) to improve air quality;
                            (ii) to reduce costs to consumers and 
                        producers; and
                            (iii) to increase supply liquidity.
                    (B) Required considerations.--The recommendations 
                under subparagraph (A) shall take into account the need 
                to provide advance notice of required modifications to 
                refinery and fuel distribution systems in order to 
                ensure an adequate supply of motor vehicle fuel in all 
                States.
            (3) Consultation.--In developing the report, the 
        Administrator of the Environmental Protection Agency and the 
        Secretary of Energy shall consult with--
                    (A) the Governors of the States;
                    (B) automobile manufacturers;
                    (C) motor vehicle fuel producers and distributors; 
                and
                    (D) the public.

SEC. 207. REVIEW OF FEDERAL PROCUREMENT INITIATIVES RELATING TO USE OF 
              RECYCLED PRODUCTS AND FLEET AND TRANSPORTATION 
              EFFICIENCY.

    Not later than 180 days after the date of enactment of this Act, 
the Administrator of General Services shall submit to Congress a report 
that details efforts by each Federal agency to implement the 
procurement policies specified in Executive Order No. 13101 (63 Fed. 
Reg. 49643; relating to governmental use of recycled products) and 
Executive Order No. 13149 (65 Fed. Reg. 24607; relating to Federal 
fleet and transportation efficiency).

SEC. 208. REPORT ON RENEWABLE MOTOR FUEL.

    Not later than January 1, 2007, the Secretary of Energy and the 
Secretary of Agriculture shall jointly prepare and submit to Congress a 
report containing recommendations for achieving, by January 1, 2025, at 
least 25 percent renewable fuel content (calculated on an average 
annual basis) for all gasoline sold or introduced into commerce in the 
United States.

                     TITLE III--CELLULOSIC BIOMASS

SEC. 301. COMMERCIAL DEMONSTRATION PROJECTS.

    The Federal Nonnuclear Energy Research and Development Act of 1974 
(42 U.S.C. 5901 et seq.) is amended by adding at the end the following:

``SEC. 21. CELLULOSIC BIOMASS COMMERCIAL DEMONSTRATION PROJECTS.

    ``(a) In General.--The Secretary of Energy (referred to in this 
section as the `Secretary') shall provide loan guarantees to eligible 
entities (as determined under subsection (b)) to carry out not more 
than 3 projects to commercially demonstrate the feasibility and 
viability of converting cellulosic biomass derived from agricultural 
residue, such as corn stover or straw into ethanol.
    ``(b) Eligible Entities.--
            ``(1) In general.--To be eligible to receive a loan 
        guarantee under subsection (a), an entity shall, with respect 
        to a project described in subsection (a)--
                    ``(A) submit to the Secretary an application in 
                accordance with paragraph (2);
                    ``(B) submit to the Secretary evidence of a binding 
                commitment from an equity investor to provide to the 
                project an initial equity contribution in an amount 
                equal to not less than 20 percent of the total cost of 
                the project;
                    ``(C) validate the design of the project through 
                the operation of a continuous process facility, the 
                cumulative output of which produces at least 50,000 
                gallons of ethanol, a significant quantity of which, as 
                determined by the Secretary, is produced using the 
                protocols that are incorporated into the design of the 
                project;
                    ``(D) carry out a due diligence review of the 
                design specifications of the project;
                    ``(E) enter into 1 or more long-term sales 
                contracts for ethanol produced;
                    ``(F) use quantities of feedstock that are 
                substantially in excess of the quantity of feedstock 
                that would otherwise be used in the absence of the 
                project, as determined by the Secretary;
                    ``(G) enter into 1 or more multi-year contracts for 
                feedstock acquisition;
                    ``(H) maintain at least a minimum level of 
                inventory that is sufficient to protect against a 
                disruption in feedstock supply, as determined by the 
                Secretary;
                    ``(I) prepare a strategy to protect the project 
                against weather-related risks; and
                    ``(J) submit to the Secretary adequate project 
                performance guarantees, as determined by the Secretary, 
                including--
                            ``(i) a binding commitment to complete the 
                        construction of the project to the original 
                        design specifications of the project, backed by 
                        a performance bond that specifies a maximum 
                        completion price;
                            ``(ii) a binding commitment of each project 
                        sponsor to contribute an amount equal to 50 
                        percent of the initial equity investment of the 
                        sponsor to correct any shortfall in the 
                        technical performance of the project during the 
                        first 2 years during which the project is in 
                        operation, if the shortfall poses a significant 
                        risk to the debt repayment schedule for the 
                        project, as determined by the Secretary; and
                            ``(iii) a sustained operation guarantee 
                        giving the Federal Government recourse to 
                        reimbursement from each project participant if 
                        the project defaults on a loan guaranteed under 
                        subsection (a).
            ``(2) Application.--
                    ``(A) In general.--To receive a loan guarantee 
                under subsection (a), an eligible entity shall submit 
                to the Secretary an application in such time, in such a 
                manner, and containing such information as the 
                Secretary may require.
                    ``(B) Contents.--An application under subparagraph 
                (A) shall include assurances by the eligible entity 
                that--
                            ``(i) the project has been subject to a 
                        full technical review;
                            ``(ii) the project, with a loan guarantee 
                        under subsection (a), will be economically 
                        viable; and
                            ``(iii) the eligible entity will repay a 
                        loan guaranteed under subsection (a) in 
                        accordance with paragraph (3).
                    ``(C) Deadline for determination.--The Secretary 
                shall determine whether to approve an application of an 
                eligible entity not later than 90 days after the date 
                on which the Secretary receives the application.
            ``(3) Assurance of repayment.--To receive a loan guarantee 
        under subsection (a), an eligible entity shall provide to the 
        Secretary assurance that the eligible entity will repay the 
        loan by demonstrating 1 or more of the following:
                    ``(A) Probable risk analysis.--The project has been 
                subjected to a probable risk analysis of the volatility 
                of the project that--
                            ``(i) demonstrates--
                                    ``(I) positive economic returns to 
                                each equity investor in the project; 
                                and
                                    ``(II) full repayment of the loan 
                                under normal conditions;
                            ``(ii) identifies--
                                    ``(I) each major element of risk 
                                and volatility of the project, 
                                including an estimate of the risk value 
                                for each element of the project; and
                                    ``(II) the party that will bear the 
                                risk; and
                            ``(iii) identifies and evaluates any 
                        mitigation measure that would reduce the level 
                        of volatility in an estimate under clause 
                        (ii)(I).
                    ``(B) Commitments from equity investors.--An equity 
                investor in the project has committed to provide an 
                initial equity contribution to the project in an amount 
                equal to the sum of--
                            ``(i) not less than 20 percent of the total 
                        cost of the project; and
                            ``(ii) any additional amount, as needed to 
                        meet a performance guarantee under paragraph 
                        (1)(J).
                    ``(C) Contributions backed by federal guarantee.--
                Each equity investor in the project made a proportional 
                contribution with disbursements of loans with a Federal 
                guarantee.
    ``(c) Project Requirements.--
            ``(1) Design capacity.--A demonstration project that 
        receives a loan guarantee under subsection (a) shall have a 
        design capacity that will produce not less than 30,000,000 
        gallons of cellulose ethanol each year.
            ``(2) Cereal straw.--At least 1 project that receives a 
        loan guarantee under subsection (a) shall use cereal straw as a 
        feedstock.
    ``(d) Amount of Guarantee; Extent of Recourse.--
            ``(1) Amount of guarantee.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the amount of a loan guarantee 
                provided for a project under this section shall not 
                exceed the lesser of--
                            ``(i) 80 percent of the estimated cost of 
                        the project; or
                            ``(ii) $250,000,000.
                    ``(B) Additional guarantees.--
                            ``(i) In general.--If the actual cost of a 
                        project under this section exceeds the 
                        estimated cost of the project under 
                        subparagraph (A), the Secretary may issue an 
                        additional loan guarantee for the project in an 
                        amount not to exceed the lesser of--
                                    ``(I) 80 percent of the excess; or
                                    ``(II) 15 percent of the amount of 
                                the original loan guarantee provided 
                                for the project.
                            ``(ii) Principal and interest.--The 
                        Secretary shall guarantee 100 percent of the 
                        principal and interest of a loan made under 
                        clause (i).
            ``(2) Extent of recourse.--
                    ``(A) In general.--The extent of recourse by the 
                Federal Government for a loan guaranteed under 
                subsection (a) shall be limited to the performance 
                guarantees described in subsection (b)(1)(J).
                    ``(B) Commitment of project participants.--
                            ``(i) In general.--Each project participant 
                        described in clause (ii) shall enter into a 
                        binding commitment to reimburse the Federal 
                        Government for a loss caused by a default on a 
                        loan guaranteed under subsection (a) in an 
                        amount equal to the difference between, during 
                        the 4-year period preceding the default--
                                    ``(I) the amount paid to the 
                                project participant for the supply of 
                                goods or services for the project; and
                                    ``(II) the amount of any reasonable 
                                direct or indirect costs, as determined 
                                by the Secretary, incurred by the 
                                project participant in providing goods 
                                or services for the project.
                            ``(ii) Project participants.--The project 
                        participants referred to in clause (i) 
                        include--
                                    ``(I) each primary licenser of a 
                                cellulose conversion technology used 
                                for the project;
                                    ``(II) any supplier of a 
                                biocatalyst for the project; and
                                    ``(III) any equity participant that 
                                provides design, project management, or 
                                other services for the project.
    ``(e) Due Diligence Reviews.--
            ``(1) In general.--A due diligence review of a project 
        under this section shall be carried out in such manner and in 
        accordance with such timeline as the Secretary determines to be 
        reasonable.
            ``(2) Consideration.--In establishing a timeline for a due 
        diligence review under paragraph (1), the Secretary shall take 
        into consideration the 90-day deadline for approval of an 
        application under subsection (b)(2)(C).
    ``(f) Insufficient Appropriations.--If the amount of appropriations 
made available for a fiscal year are insufficient to provide 3 loan 
guarantees under subsection (a) during that fiscal year, the Secretary 
shall give priority to applications under subsection (b)(2) based on 
the order in which the Secretary receives the applications.
    ``(g) Direct Loans by Federal Financing Bank.--If the Federal 
Financing Bank makes a direct loan to a project under the Federal 
Financing Bank Act of 1973 (12 U.S.C. 2281 et seq.), the rate of 
interest of the loan shall not exceed the yield of a Treasury security 
of comparable maturity, as determined by the Secretary.''.
                                 <all>
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