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107TH CONGRESS

1ST SESSION H. R. 2000

To encourage the use of agricultural products in producing renewable energy.

IN THE HOUSE OF REPRESENTATIVES

MAY 24, 2001

Mr. NUSSLE introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Agriculture and Government Reform, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions

as fall within the jurisdiction of the committee concerned

A BILL

To encourage the use of agricultural products in producing

renewable energy.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Renewable Energy

5 from Agricultural Products (REAP) Act’’.
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1 SEC. 2. CREDIT FOR ELECTRICITY PRODUCED FROM BIO2 MASS.

3 (a) EXTENSION AND MODIFICATION OF PLACED-IN4 SERVICE RULES.—Paragraph (3) of section 45(c) of the

5 Internal Revenue Code of 1986 is amended—

6 (1) by striking subparagraph (B) and inserting

7 the following new subparagraph:

8 ‘‘(B) CLOSED-LOOP BIOMASS FACILITY.—

9 In the case of a facility using closed-loop bio10 mass to produce electricity, the term ‘qualified

11 facility’ means any facility—

12 ‘‘(i) owned by the taxpayer which is

13 originally placed in service after December

14 31, 1992, and before January 1, 2007, or

15 ‘‘(ii) owned by the taxpayer which is

16 originally placed in service on or before

17 December 31, 1992, and modified to use

18 closed-loop biomass to co-fire with coal be19 fore January 1, 2007.’’,

20 (2) by striking ‘‘2002’’ in subparagraph (C)

21 and inserting ‘‘2007’’, and

22 (3) by adding at the end the following new sub23 paragraphs:

24 ‘‘(D) BIOMASS FACILITIES.—In the case of

25 a facility using biomass (other than closed-loop

26 biomass) to produce electricity, the term ‘quali-
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1 fied facility’ means any facility owned by the

2 taxpayer which is originally placed in service be3 fore January 1, 2007.

4 ‘‘(E) SPECIAL RULES.—In the case of a

5 qualified facility described in subparagraph

6 (B)(ii) or (D)—

7 ‘‘(i) the 10-year period referred to in

8 subsection (a) shall be treated as beginning

9 no earlier than the date of the enactment

10 of this subparagraph,

11 ‘‘(ii) subsection (b)(3) shall not apply

12 to any such facility originally placed in

13 service before January 1, 1997, and

14 ‘‘(iii) if such a facility is leased and

15 the operator thereof is the lessee, such les16 see (and not the owner) shall be treated

17 for purposes of this section as owning such

18 facility.’’.

19 (b) BIOMASS FACILITIES.—

20 (1) IN GENERAL.—Section 45(c)(1) of such Act

21 (defining qualified energy resources) is amended—

22 (A) by striking ‘‘and’’ at the end of sub23 paragraph (B),

24 (B) by striking the period at the end of

25 subparagraph (C) and inserting ‘‘, and’’, and
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1 (C) by adding at the end the following new

2 subparagraph:

3 ‘‘(D) biomass (other than closed-loop bio4 mass).’’.

5 (2) BIOMASS DEFINED.—Section 45(c) of such

6 Code (relating to definitions) is amended by adding

7 at the end the following new paragraph:

8 ‘‘(5) BIOMASS.—The term ‘biomass’ means any

9 solid, nonhazardous, cellulosic waste material which

10 is segregated from other waste materials and which

11 is derived from—

12 ‘‘(A) any of the following forest-related re13 sources: mill residues, precommercial thinnings,

14 slash, and brush, but not including old-growth

15 timber,

16 ‘‘(B) solid wood waste materials, including

17 waste pallets, crates, dunnage, manufacturing

18 and construction wood wastes (other than pres19 sure-treated, chemically treated, or painted

20 wood wastes), and landscape or right-of-way

21 tree trimmings, but not including municipal

22 solid waste (garbage), gas derived from the bio23 degradation of solid waste, or paper that is

24 commonly recycled, or
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1 ‘‘(C) agriculture sources, including orchard

2 tree crops, vineyard, grain, legumes, sugar, and

3 other crop by-products or residues.’’.

4 (c) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to electricity sold after the date

6 of the enactment of this Act.

7 SEC. 3. CREDIT FOR ELECTRICITY PRODUCED FROM AGRI8 CULTURAL AND ANIMAL WASTE.

9 (a) IN GENERAL.—Paragraph (1) of section 45(c) of

10 the Internal Revenue Code of 1986, as amended by section

11 2, is amended by striking ‘‘and’’ at the end of subpara12 graph (C), by striking the period at the end of subpara13 graph (D) and inserting ‘‘, and’’, and by adding at the

14 end the following new subparagraph:

15 ‘‘(E) agricultural and animal waste.’’.

16 (b) AGRICULTURAL AND ANIMAL WASTE.—Section

17 45(c) of such Code (relating to definitions) is amended

18 by adding at the end the following new paragraph:

19 ‘‘(6) AGRICULTURAL AND ANIMAL WASTE.—

20 The term ‘agricultural and animal waste’ means all

21 waste heat, steam, and fuels produced from the con22 version of agricultural and animal wastes, including

23 byproducts, packaging, and any materials associated

24 with the processing, feeding, selling, transporting,

25 and disposal of agricultural and animal products or
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1 wastes, including wood shavings, straw, rice hulls,

2 and other bedding for the disposition of manure.’’.

3 (c) AGRICULTURAL AND ANIMAL WASTE FACILI4 TIES.—Paragraph (3) of section 45(c) of such Code is

5 amended by adding at the end the following new subpara6 graph:

7 ‘‘(F) AGRICULTURAL AND ANIMAL WASTE

8 FACILITIES.—In the case of a facility using ag9 ricultural and animal waste to produce elec10 tricity, the term ‘qualified facility’ means any

11 facility owned by the taxpayer which is origi12 nally placed in service after December 31,

13 1992, and before January 1, 2005.’’.

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

15 this section shall apply to electricity sold after the date

16 of the enactment of this Act.

17 SEC. 4. REDUCTION OF MOTOR FUEL EXCISE TAX ON BIO18 DIESEL MIXTURES.

19 (a) IN GENERAL.—Section 4081 of the Internal Rev20 enue Code of 1986 is amended by adding at the end the

21 following new subsection:

22 ‘‘(f) BIODIESEL MIXTURES.—Under regulations pre23 scribed by the Secretary—

24 ‘‘(1) IN GENERAL.—The rate of tax under sub25 section (a) shall be 3 cents per gallon less than the
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1 otherwise applicable rate in the case of the removal

2 or entry of a qualified biodiesel mixture.

3 ‘‘(2) TAX PRIOR TO MIXING.—In the case of the

4 removal or entry of diesel fuel for use in producing

5 at the time of such removal or entry a qualified bio6 diesel mixture, the rate of tax under subsection (a)

7 shall be the 3.06 cents per gallon less than the oth8 erwise applicable rate.

9 ‘‘(3) QUALIFIED BIODIESEL MIXTURE.—For

10 purposes of this subsection, the term ‘qualified bio11 diesel mixture’ means any mixture of diesel fuel and

12 biodiesel (as defined in section 312(f) of the Energy

13 Policy Act of 1992) if at least 2 percent of such

14 mixture is biodiesel (as so defined).

15 ‘‘(5) CERTAIN RULES TO APPLY.—Rules similar

16 to the rules of paragraphs (6) and (7) of subsection

17 (c) shall apply for purposes of this subsection.’’.

18 (b) CONFORMING AMENDMENTS.—

19 (1) Section 4041 of such Code is amended by

20 adding at the end the following new subsection:

21 ‘‘(n) BIODIESEL MIXTURES.—Under regulations pre22 scribed by the Secretary, in the case of the sale or use

23 of a qualified biodiesel mixture (as defined in section

24 4081(f)), the rates under paragraphs (1) and (2) of sub-
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1 section (a) shall be 3 cents per gallon less than the other2 wise applicable rates.’’.

3 (2) Section 6427 of such Code is amended by

4 redesignating subsection (p) as subsection (q) and

5 by inserting after subsection (o) the following new

6 subsection:

7 ‘‘(p) BIODIESEL MIXTURES.—Except as provided in

8 subsection (k), if any diesel fuel on which tax was imposed

9 by section 4081 at a rate not determined under section

10 4081(f) is used by any person in producing a qualified

11 biodiesel mixture (as defined in section 4081(f)) which is

12 sold or used in such person’s trade or business, the Sec13 retary shall pay (without interest) to such person an

14 amount equal to 3.06 cents per gallon with respect to such

15 fuel.’’.

16 (c) EFFECTIVE DATE.—The amendments made by

17 this section shall take effect on January 1, 2002.

18 (d) HIGHWAY TRUST FUND HELD HARMLESS.—

19 There are hereby transferred (from time to time) from the

20 funds of the Commodity Credit Corporation amounts

21 equivalent to the reductions that would occur (but for this

22 subsection) in the receipts of the Highway Trust Fund

23 by reason of the amendments made by this section.
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1 SEC. 5. HARVESTING OF SWITCH GRASS ON CONSERVATION

2 RESERVE ACREAGE FOR USE IN ENERGY

3 PRODUCTION.

4 Section 1232(a)(7)(A) of the Food Security Act of

5 1985 (16 U.S.C. 3832(a)(7)(A)) is amended—

6 (1) by striking ‘‘and’’ at the end of clause (i);

7 and

8 (2) by inserting after clause (ii) the following

9 new clause:

10 ‘‘(iii) harvesting of switch grass on

11 such land when the purpose of the har12 vesting is to provide biomass for energy

13 production, and such commercial use of

14 the harvested grass shall be permitted

15 without reduction in rental payments

16 under the contact; and’’.

17 SEC. 6. USE OF BIODIESEL FUEL IN FEDERAL VEHICLES.

18 Federal agencies shall use biodiesel fuel to operate

19 any Federal vehicle that uses diesel fuel, unless the cost

20 of doing so is prohibitive.

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