I 
108TH CONGRESS 
1ST SESSION 
H. R. 130
To provide for a Biofuels Feedstocks Energy Reserve, and to authorize 
the Secretary of Agriculture to make and guarantee loans for the produc-
tion, distribution, development, and storage of biofuels. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 7, 2003
Ms. KAPTUR (for herself, Mr. BOSWELL, and Mr. HINCHEY) introduced the 
following bill; which was referred to the Committee on Agriculture 
A BILL 
To provide for a Biofuels Feedstocks Energy Reserve, and 
to authorize the Secretary of Agriculture to make and 
guarantee loans for the production, distribution, develop-
ment, and storage of biofuels.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Biofuels Energy Inde-
pendence Act of 2003’’. 
SEC. 2. FINDINGS. 
The Congress finds as follows:
(1) The over reliance of the United States on 
imported petroleum creates a major strategic vulner-
ability for the Nation, with nearly half of the energy 
supply of the United States dependent on foreign 
sources. 
(2) From the economically damaging Arab oil 
embargoes of 1973–74 and 1979 to the current re-
cession precipitated by rising oil prices which began 
in 1999, the economic stability of the United States 
has too often been shaken by economic forces out-
side its borders. 
(3) This Act would shift America’s dependence 
away from foreign petroleum as an energy source to-
ward alternative, renewable, domestic agricultural 
sources. Its aim is to convert the current petroleum 
trade deficit to a trade balance by replacing foreign 
sources of supply with steady increases of biobased 
fuels through domestic production. 
(4) Today, there are nearly 135,000,000 cars 
and 85,000,000 trucks on our highways. Of this 
amount, approximately 3,300,000 cars and trucks 
already on our highways will run on 85 percent eth-
anol (E–85), and this number is increasing. For the 
2003 model year, there are 20 different models of 
vehicles capable of running on E–85. Yet given this
market, the alternative fuel is used less than 1 per-
cent of the time given that of the more than 
187,000 retail locations selling motor fuel in the US, 
only 151 stations across 22 States sell E–85. 
(5) Currently the United States annually con-
sumes about 7,171,885,000 barrels of petroleum. 
(164,000,000,000 gallons of vehicle fuels and 
5,600,00,000 gallons of heating oil.) In 2001, 55.4 
percent of these fuels were imported, part of a total 
$358,200,000,000 trade deficit with the rest of the 
world. Since 1983, the United States importation of 
petroleum and its derivatives has nearly tripled, ris-
ing from 1,215,225,000 barrels in 1983 to 
3,404,720,000 barrels in 2001. 
(6) Further Strategic Petroleum Reserve policy 
should encourage domestic production to the great-
est extent possible. Currently the Strategic Petro-
leum Reserve holds 598,700,000 barrels (out of a 
potential 700,000,000 barrels), sufficient to cushion 
the United States from wild price swings for a pe-
riod of 53 days. None of the fuel in this Reserve is 
bio-based. In fact, 92.2 percent of the Strategic Pe-
troleum Reserve has been purchased from foreign 
sources—41.9 percent from Mexico, 24 percent from
the United Kingdom, and over 20 percent from 
OPEC nations. 
(7) Strategic Petroleum Reserve policy also 
should encourage the development of alternatives to 
the Nation’s reliance on petroleum such as biomass 
fuels. 
(8) As a first step in diversification, the Stra-
tegic Petroleum Reserve should exchange 2,100,000 
barrels from our current reserves for 32,000,000 
gallons of ethanol and biodiesel, which would com-
prise less than 2 percent of the United States mar-
ket, but yield a doubling of ethanol products. 
(9) The benefits of biofuels are as follows: 
(A) ENERGY SECURITY.—
(i) Biofuels hold potential to address 
our dependence on foreign energy sources 
immediately. With agricultural surpluses, 
commodity prices have reached record 
lows; concurrently world petroleum prices 
have reached record highs and are ex-
pected to continue rising as global petro-
leum reserves are drawn down over the 
next 25 years. It also is clear that eco-
nomic conditions are favorable to utilize
domestic surpluses of biobased oils to en-
hance the Nation’s energy security. 
(ii) In the short term, biofuels can 
supply at least one-fifth of current United 
States fuel demand using existing tech-
nologies and capabilities. Additional plant 
research, newer processing and distribution 
technologies, and placing additional acres 
under cultivation can yield even greater re-
sults. 
(iii) Biofuels can be used with existing 
petroleum infrastructure and conventional 
equipment. 
(B) ECONOMIC SECURITY.—
(i) Continued dependence upon im-
ported sources of oil means our Nation is 
strategically vulnerable to disruptions in 
our oil supply. 
(ii) Renewable biofuels domestically 
produced directly replace imported oil. 
(iii) 
Increased 
use 
of 
renewable 
biofuels would result in significant eco-
nomic benefits to rural and urban areas 
and also reduce the trade deficit.
(iv) According to the Department of 
Agriculture, a sustained annual market of 
100,000,000 gallons of biodiesel alone 
would result in $170,000,000 in increased 
income to farmers. 
(v) Farmer-owned biofuels production 
has already resulted in improved income 
for farmers, as evidenced by the experience 
with State-supported rural development ef-
forts in Minnesota where prices to corn 
producers have been increased by $1.00 
per bushel. 
(C) ENVIRONMENTAL SECURITY.—
(i) The use of grain-based ethanol re-
duces greenhouse gas emissions from 35 to 
46 percent compared with conventional 
gasoline. Biomass ethanol provides an even 
greater reduction. 
(ii) The American Lung Association 
of Metropolitan Chicago credits ethanol-
blended reformulated gasoline with reduc-
ing smog-forming emissions by 25 percent 
since 1990.
(iii) Ethanol reduces tailpipe carbon 
monoxide emissions by as much as 30 per-
cent. 
(iv) Ethanol reduces exhaust volatile 
organic compounds emissions by 12 per-
cent. 
(v) Ethanol reduces toxic emissions by 
30 percent. 
(vi) Ethanol reduces particulate emis-
sions, especially fine-particulates that pose 
a health threat to children, senior citizens, 
and those with respiratory ailments. 
(vii) Biodiesel contains no sulfur of 
aromatics associated with air pollution. 
(viii) The use of biodiesel provides a 
78.5 percent reduction in CO2 emissions 
compared to petroleum diesel and when 
burned in a conventional engine provides a 
substantial reduction of unburned hydro-
carbons, carbon monoxide, and particulate 
matter.
TITLE I—NATIONAL BIOFUELS 
DEVELOPMENT 
SEC. 101. LOANS AND LOAN GUARANTEES. 
(a) IN GENERAL.—The Secretary of Agriculture (in 
this section referred to as the ‘‘Secretary’’) may make and 
guarantee loans for the production, distribution, develop-
ment, and storage of biofuels. 
(b) ELIGIBILITY.—
(1) IN GENERAL.—Except as provided in para-
graph (2), an applicant for a loan or loan guarantee 
under this section shall be eligible to receive such a 
loan or loan guarantee if—
(A) the applicant is a farmer, member of 
an association of farmers, member of a farm co-
operative, municipal entity, nonprofit corpora-
tion, State, or Territory; and 
(B) the applicant is unable to obtain suffi-
cient credit elsewhere to finance the actual 
needs of the applicant at reasonable rates and 
terms, taking into consideration prevailing pri-
vate and cooperative rates and terms in the 
community in or near which the applicant re-
sides for loans for similar purposes and periods 
of time.
(2) LOAN GUARANTEE ELIGIBILITY PRECLUDES 
LOAN ELIGIBILITY.—An applicant who is eligible for 
a loan guarantee under this section shall not be eli-
gible for a loan under this section. 
(c) LOAN TERMS.—
(1) INTEREST RATE.—Interest shall be payable 
on a loan under this section at the rate at which in-
terest is payable on obligations issued by United 
States for a similar period of time. 
(2) REPAYMENT PERIOD.—A loan under this 
section shall be repayable in not less than 5 years 
and not more than 20 years. 
(d) REVOLVING FUND.—
(1) ESTABLISHMENT.—The Secretary shall es-
tablish a revolving fund for the making of loans 
under this section. 
(2) DEPOSITS.—The Secretary shall deposit 
into the revolving fund all amounts received on ac-
count of loans made under this section. 
(3) PAYMENTS.—The Secretary shall make 
loans under this section, and make payments pursu-
ant to loan guarantees provided under this section, 
from amounts in the revolving fund.
(e) REGULATIONS.—The Secretary may prescribe 
such regulations as may be necessary to carry out this 
section. 
(f) LIMITATIONS ON AUTHORIZATION OF APPROPRIA-
TIONS.—For the cost (as defined in section 502(5) of the 
Federal Credit Reform Act of 1990) of loans and loan 
guarantees under this section, there are authorized to be 
appropriated to the revolving fund established under sub-
section (d) of this section such sums as may be necessary 
for fiscal years 2003 through 2010. 
TITLE 
II—BIOFUELS 
FEED-
STOCKS 
ENERGY 
RESERVE 
PROGRAM 
SEC. 201. ESTABLISHMENT. 
The Secretary of Agriculture (in this title referred to 
as the ‘‘Secretary’’) may establish and administer a re-
serve of agricultural commodities (known as the ‘‘Biofuels 
Feedstocks Energy Reserve’’) for the purpose of—
(1) providing feedstocks to support and further 
the production of energy from biofuels; and 
(2) supporting the biofuels energy industry 
when production is at risk of declining due to re-
duced feedstocks or significant commodity price in-
creases.
SEC. 202. PURCHASES. 
(a) IN GENERAL.—The Secretary may purchase agri-
cultural commodities at commercial rates, subject to sub-
section (b), in order to establish, maintain, or enhance the 
Biofuels Feedstocks Energy Reserve when—
(1)(A) the commodities are in abundant supply; 
and 
(B) there is need for adequate carryover stocks 
to ensure a reliable supply of the commodities to 
meet the purposes of the reserve; or 
(2) it is otherwise necessary to fulfill the needs 
and purposes of the biofuels energy reserve program. 
(b) LIMITATION.—The agricultural commodities pur-
chased for the Biofuels Feedstocks Energy Reserve shall 
be—
(1) of the type and quantity necessary to pro-
vide not less than 1-year’s utilization for renewable 
energy purposes; and 
(2) in such additional quantities to provide in-
centives for research and development of new renew-
able fuels and bio-energy initiatives. 
SEC. 203. RELEASE OF STOCKS. 
Whenever the market price of a commodity held in 
the Biofuels Feedstocks Energy Reserve exceeds 100 per-
cent of the economic cost of producing the commodity (as 
determined by the Economic Research Service using the
best available information, and based on a 3-year moving 
average), the Secretary shall release stocks of the com-
modity from the reserve at cost of acquisition, in amounts 
determined appropriate by the Secretary. 
SEC. 204. STORAGE PAYMENTS. 
(a) IN GENERAL.—The Secretary shall provide for 
the storage of agricultural commodities purchased for the 
Biofuels Feedstocks Energy Reserve by making payments 
to producers for the storage of the commodities. The pay-
ments shall—
(1) be in such amounts, under such conditions, 
and at such times as the Secretary determines ap-
propriate to encourage producers to participate in 
the program; and 
(2) reflect local, commercial storage rates, sub-
ject to appropriate conditions concerning quality 
management and other factors. 
(b) ANNOUNCEMENT OF PROGRAM.—
(1) TIME OF ANNOUNCEMENT.—The Secretary 
shall announce the terms and conditions of the stor-
age payments for a crop of a commodity by—
(A) in the case of wheat, December 15 of 
the year in which the crop of wheat was har-
vested;
(B) in the case of feed grains, March 15 
of the year following the year in which the crop 
of corn was harvested; and 
(C) in the case of other commodities, such 
dates as may be determined by the Secretary. 
(2) CONTENT OF ANNOUNCEMENT.—In the an-
nouncement, the Secretary shall specify the max-
imum quantity of a commodity to be stored in the 
Biofuels Feedstocks Energy Reserve that the Sec-
retary determines appropriate to promote the orderly 
marketing of the commodity, and to ensure an ade-
quate supply for the production of biofuels. 
(c) RECONCENTRATION.—The Secretary may, with 
the concurrence of the owner of a commodity stored under 
this program, reconcentrate the commodity stored in com-
mercial warehouses at such points as the Secretary con-
siders to be in the public interest, taking into account such 
factors as transportation and normal marketing patterns. 
The Secretary shall permit rotation of stocks and facilitate 
maintenance of quality under regulations that assure that 
the holding producer or warehouseman shall, at all times, 
have available for delivery at the designated place of stor-
age both the quantity and quality of the commodity cov-
ered by the producer’s or warehouseman’s commitment.
(d) MANAGEMENT.—Whenever a commodity is stored 
under this section, the Secretary may buy and sell at an 
equivalent price, allowing for the customary location and 
grade differentials, substantially equivalent quantities of 
the commodity in different locations or warehouses to the 
extent needed to properly handle, rotate, distribute, and 
locate the commodity that the Commodity Credit Corpora-
tion owns or controls. The purchases to offset sales shall 
be made within 2 market days following the sales. The 
Secretary shall make a daily list available showing the 
price, location, and quantity of the transactions. 
(e) REVIEW.—In announcing the terms and condi-
tions under which storage payments will be made under 
this section, the Secretary shall review standards con-
cerning the quality of a commodity to be stored in the 
Biofuels Feedstocks Energy Reserve, and such standards 
should encourage only quality commodities, as determined 
by the Secretary. The Secretary shall review inspection, 
maintenance, and stock rotation requirements and take 
the necessary steps to maintain the quality of the commod-
ities stored in the reserve. 
SEC. 205. USE OF COMMODITY CREDIT CORPORATION. 
The Secretary shall use the Commodity Credit Cor-
poration, to the extent feasible, to carry out this title. To 
the maximum extent practicable consistent with the effec-
tive and efficient administration of this title, the Secretary 
shall utilize the usual and customary channels, facilities, 
and arrangements of trade and commerce. 
SEC. 206. REGULATIONS. 
Not later than 60 days after the date of the enact-
ment of this Act, the Secretary shall issue such regulations 
as are necessary to carry out this title.
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