I
107TH CONGRESS
1ST SESSION
H. R. 3099
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
OCTOBER 11, 2001
Ms. KAPTUR 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 2001’’.
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) Currently the United States annually con-
sumes about 164,000,000,000 gallons of vehicle
fuels and 5,600,00,000 gallons of heating oil. In
2000, 52.9 percent of these fuels were imported,
yielding a $109,000,000,000 trade deficit with the
rest of the world. Since 1983, the United States im-
portation of petroleum and its derivatives has nearly
tripled, rising from 1,215,225,000 barrels in 1983 to
3,319,816,000 barrels in 2000.
(5) Further Strategic Petroleum Reserve policy
should encourage domestic production to the great-
est extent possible. Currently the Strategic Petro-
leum Reserve holds 545,000,000 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
biobased. 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.
(6) Strategic Petroleum Reserve policy also
should encourage the development of alternatives to
the Nation’s reliance on petroleum such as biomass
fuels.
(7) 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.
(8) 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—BIOFUELS 
FEED-
STOCKS 
ENERGY 
RESERVE
PROGRAM
SEC. 101. 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. 102. 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. 103. 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. 104. 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. 105. 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. 106. REGULATIONS.
Not later than 60 days after November 28, 2001, the
Secretary shall issue such regulations as are necessary to
carry out this title.
TITLE II—BIOFUELS FINANCIAL
ASSISTANCE
SEC. 201. 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 2002 through 2009.
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