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‘‘(2) INELIGIBILITY.—An eligible producer that
claims a credit allowed under section 40(a)(3),
40(a)(4), or 40A(a)(3) of the Internal Revenue Code
of 1986 shall not be eligible to receive payments under
subsection (d).
‘‘(3) REFINING CAPACITY.—An eligible producer
may not use any funds received under this section for
an advanced biofuel production facility or other fuel
refinery the total refining capacity of which is more
than 150,000,000 gallons per year.
‘‘(g) OTHER REQUIREMENTS.—To receive a payment
under this section, an eligible producer shall meet any other
requirements of Federal and State law (including regula-
tions) applicable to the production of advanced biofuels.
‘‘(h) FUNDING.—Of the funds of the Commodity Credit
Corporation, the Secretary shall use to carry out this sec-
tion $245,000,000 for the period of fiscal years 2008
through 2012, to remain available until expended.
‘‘SEC. 9007. RURAL ENERGY FOR AMERICA PROGRAM.
‘‘(a) ESTABLISHMENT.—The Secretary, in consulta-
tion with the Secretary of Energy, shall establish a Rural
Energy for America Program to promote energy efficiency
and renewable energy development for agricultural pro-
ducers, cooperatives, rural small businesses, and other simi-
lar entities through—
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‘‘(1) grants for energy audits and renewable en-
ergy development assistance;
‘‘(2) financial assistance for energy efficiency
improvements and renewable energy systems; and
‘‘(3) financial assistance for facilities to convert
animal manure to energy.
‘‘(b) ENERGY AUDITS AND RENEWABLE ENERGY DE-
VELOPMENT ASSISTANCE.—
‘‘(1) IN
GENERAL.—The Secretary shall make
competitive grants to eligible entities to provide as-
sistance to agricultural producers and rural small
businesses—
‘‘(A) to become more energy efficient; and
‘‘(B) to use renewable energy technology and
resources.
‘‘(2) ELIGIBLE
ENTITIES.—An eligible entity
under this subsection is—
‘‘(A) a State agency;
‘‘(B) a regional, State-based, or tribal en-
ergy organization;
‘‘(C) a land-grant college or university or
other institution of higher education;
‘‘(D) a rural electric cooperative or public
power entity;
‘‘(E) a nonprofit organization; and
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‘‘(F) any other similar entity, as deter-
mined by the Secretary.
‘‘(3) MERIT REVIEW.—
‘‘(A) MERIT REVIEW PROCESS.—The Sec-
retary shall establish a merit review process to
review applications for grants under paragraph
(1) that uses the expertise of other Federal agen-
cies, industry, and nongovernmental organiza-
tions.
‘‘(B) SELECTION CRITERIA.—In reviewing
applications of eligible entities to receive grants
under paragraph (1), the Secretary shall
consider—
‘‘(i) the ability and expertise of the eli-
gible entity in providing professional energy
audits and renewable energy assessments;
‘‘(ii) the geographic scope of the pro-
gram proposed by the eligible entity in rela-
tion to the identified need;
‘‘(iii) the number of agricultural pro-
ducers and rural small businesses to be as-
sisted by the program;
‘‘(iv) the potential for energy savings
and environmental and public health bene-
fits resulting from the program; and
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‘‘(v) the plan of the eligible entity for
providing information to agricultural pro-
ducers and rural small businesses on the
benefits of energy efficiency and renewable
energy development.
‘‘(4) USE OF GRANT FUNDS.—
‘‘(A) REQUIRED
USES.—A recipient of a
grant under paragraph (1) shall use the grant
funds to conduct and promote energy audits for
agricultural producers and rural small busi-
nesses to provide recommendations on how to im-
prove energy efficiency and use renewable energy
technology and resources.
‘‘(B) PERMITTED USES.—In addition to the
uses described in subparagraph (A), a recipient
of a grant may use the grant funds to make ag-
ricultural producers and rural small businesses
aware of—
‘‘(i) financial assistance under sub-
section (c); and
‘‘(ii) other Federal, State, and local fi-
nancial assistance programs for which the
agricultural producers and rural small
businesses may be eligible.
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‘‘(5) COST
SHARING.—A recipient of a grant
under paragraph (1) that conducts an energy audit
for an agricultural producer or rural small business
under paragraph (4)(A) shall require that, as a con-
dition of the energy audit, the agricultural producer
or rural small business pay at least 25 percent of the
cost of the energy audit, which shall be retained by
the eligible entity for the cost of the energy audit.
‘‘(c) FINANCIAL ASSISTANCE FOR ENERGY EFFICIENCY
IMPROVEMENTS AND RENEWABLE ENERGY SYSTEMS.—
‘‘(1) IN GENERAL.—In addition to any similar
authority, the Secretary shall provide loan guaran-
tees, grants, and production-based incentives to agri-
cultural producers and rural small businesses—
‘‘(A) to purchase renewable energy systems,
including systems that may be used to produce
and sell electricity; and
‘‘(B) to make energy efficiency improve-
ments.
‘‘(2) AWARD CONSIDERATIONS.—In determining
the amount of a grant, loan guarantee, or production-
based incentive provided under this section, the Sec-
retary shall take into consideration, as applicable—
‘‘(A) the type of renewable energy system to
be purchased;
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‘‘(B) the estimated quantity of energy to be
generated by the renewable energy system;
‘‘(C) the expected environmental benefits of
the renewable energy system;
‘‘(D) the quantity of energy savings ex-
pected to be derived from the activity, as dem-
onstrated by an energy audit comparable to an
energy audit under subsection (b);
‘‘(E) the estimated period of time for the en-
ergy savings generated by the activity to equal
the cost of the activity;
‘‘(F) the expected energy efficiency of the re-
newable energy system; and
‘‘(G) other appropriate factors.
‘‘(3) FEASIBILITY STUDIES.—
‘‘(A) IN
GENERAL.—The Secretary may
provide assistance in the form of grants to an
agricultural producer or rural small business to
conduct a feasibility study for a project for
which assistance may be provided under this
subsection.
‘‘(B) LIMITATION.—The Secretary shall use
not more than 10 percent of the funds made
available to carry out this subsection to provide
assistance described in subparagraph (A).
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‘‘(C) AVOIDANCE OF DUPLICATIVE ASSIST-
ANCE.—An entity shall be ineligible to receive
assistance to carry out a feasibility study for a
project under this paragraph if the entity has re-
ceived Federal or State assistance for a feasi-
bility study for the project.
‘‘(4) LIMITS.—
‘‘(A) GRANTS.—The amount of a grant
under this subsection shall not exceed 25 percent
of the cost of the activity carried out using funds
from the grant.
‘‘(B) LOAN GUARANTEES.—
‘‘(i) MAXIMUM AMOUNT.—The amount
of a loan guaranteed under this subsection
shall not exceed $25,000,000.
‘‘(ii) MAXIMUM PERCENTAGE.—A loan
guaranteed under this subsection shall not
exceed 75 percent of the cost of the activity
carried out using funds from the loan.
‘‘(5) PRODUCTION-BASED INCENTIVE PAYMENTS
IN LIEU OF GRANTS.—
‘‘(A) IN GENERAL.—In addition to the au-
thority under subsection (b), to encourage the
production of electricity from renewable energy
systems, the Secretary, on receipt of a request of
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an eligible applicant under this section, shall
make production-based incentive payments to the
applicant in lieu of a grant.
‘‘(B) CONTINGENCY.—A payment under
subparagraph (A) shall be contingent on docu-
mented energy production and sales by the re-
newable energy system of the eligible applicant
to a third party.
‘‘(C) LIMITATION.—The total net present
value of a production-based incentive payment
under this paragraph shall not exceed the lesser
of—
‘‘(i) an amount equal to 25 percent of
the eligible project costs, as determined by
the Secretary; and
‘‘(ii) such other limit as the Secretary
may establish, by rule or guidance.
‘‘(d) FINANCIAL ASSISTANCE FOR FACILITIES TO CON-
VERT ANIMAL MANURE TO ENERGY.—
‘‘(1) DEFINITION OF ANIMAL MANURE.—In this
subsection, the term ‘animal manure’ means agricul-
tural livestock excrement, including litter, wood
shavings, straw, rice hulls, bedding material, and
other materials incidentally collected with the ma-
nure.
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‘‘(2) GRANTS AND LOAN GUARANTEES.—The Sec-
retary shall make grants and loan guarantees to eligi-
ble entities on a competitive basis for the installation,
operation, and evaluation of facilities described in
paragraph (4).
‘‘(3) ELIGIBLE ENTITIES.—To be eligible to re-
ceive a grant or loan guarantee under this subsection,
an entity shall be—
‘‘(A) an agricultural producer;
‘‘(B) a rural small business;
‘‘(C) a rural cooperative; or
‘‘(D) any other similar entity, as deter-
mined by the Secretary.
‘‘(4) ELIGIBLE FACILITIES.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graphs (B) through (E), an eligible entity may
receive a grant or loan guarantee under this sub-
section for the installation, first-year operation,
and evaluation of an on-farm or community fa-
cility (such as a digester or power generator
using manure for fuel) the primary function of
which is to convert animal manure into a useful
form of energy (including gaseous or liquid fuel
or electricity).
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‘‘(B) SUBSYSTEMS INCLUDED.—Funds from
a grant and loan guarantee under subparagraph
(A) may be used for systems that support an on-
farm or community facility described in that
subparagraph, which may include feedstock gath-
ering systems and gas piping systems.
‘‘(C) CONVERSION
OF
RENEWABLE
BIO-
MASS.—An eligible entity may use a grant or
loan guarantee provided under this subsection to
convert renewable biomass other than animal
manure (such as waste materials from food proc-
essing facilities and other green wastes) into en-
ergy at a facility if the majority of materials
converted into energy at the facility is animal
manure.
‘‘(D) DEVELOPMENT AND DEMONSTRATION
OF NEW TECHNOLOGIES.—An eligible entity may
use a grant or loan guarantee provided under
this subsection for the installation, demonstra-
tion, and first 2 years of operation of an on-
farm or community facility that uses manure-to-
energy technologies—
‘‘(i) that are not in commercial use, as
determined by the Secretary; and
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‘‘(ii) for which sufficient research has
been conducted for the Secretary to deter-
mine that the technology is commercially
viable.
‘‘(5) SELECTION OF ELIGIBLE ENTITIES.—In se-
lecting applications for grants and loan guarantees
under this subsection, the Secretary shall consider—
‘‘(A) the quality of energy produced; and
‘‘(B) the projected net energy conversion ef-
ficiency, which shall be equal to the quotient ob-
tained by dividing—
‘‘(i) the energy output of the eligible fa-
cility; by
‘‘(ii) the sum of—
‘‘(I) the energy content of animal
manure at the point of collection; and
‘‘(II) the energy consumed in fa-
cility operations, including feedstock
transportation;
‘‘(C) environmental issues, including poten-
tial positive and negative impacts on water
quality, air quality, odor emissions, pathogens,
and soil quality resulting from—
‘‘(i) the use and conversion of animal
manure into energy;
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‘‘(ii) the installation and operation of
the facility; and
‘‘(iii) the disposal of any waste prod-
ucts (including effluent) from the facility;
‘‘(D) the net impact of the facility and any
waste from the facility on greenhouse gas emis-
sions, based on the estimated emissions from ma-
nure storage systems in use before the installa-
tion of the manure-to-energy facility;
‘‘(E) diversity factors, including diversity
of—
‘‘(i) sizes of projects supported; and
‘‘(ii) geographic locations; and
‘‘(F) the proposed project costs and levels of
grants or loan guarantees requested.
‘‘(6) AMOUNT.—
‘‘(A) GRANTS.—
‘‘(i) SMALLER PROJECTS.—In the case
of a project with a total eligible cost (as de-
scribed in paragraph (4)) of not more than
$500,000, the amount of a grant made
under this subsection shall not exceed 50
percent of the total eligible cost.
‘‘(ii) LARGER PROJECTS.—In the case
of a project with a total eligible cost (as de-