A bill to amend the Biomass Research and Development Act of 2000 to encourage production of biobased energy products, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Biobased Energy Incentive Act of 
2002''.

SEC. 2. PRODUCTION OF BIOBASED ENERGY PRODUCTS.

    The Biomass Research and Development Act of 2000 (7 U.S.C. 7624 
note; Public Law 106-224) is amended--
            (1) by redesignating section 310 as section 311; and
            (2) by inserting after section 309 the following:

``SEC. 310. PRODUCTION OF BIOBASED ENERGY PRODUCTS.

    ``(a) Definitions.--In this section:
            ``(1) Biobased energy product.--The term `biobased energy 
        product' means biodiesel or ethanol fuel.
            ``(2) Biodiesel.--The term `biodiesel' means a monoalkyl 
        ester that meets the requirements of ASTM D6751.
            ``(3) Eligible commodity.--The term `eligible commodity' 
        means wheat, corn, grain sorghum, barley, oats, rice, soybeans, 
        sunflower seed, rapeseed, canola, safflower, flaxseed, mustard, 
        crambe, sesame seed, cottonseed, and cellulosic commodities 
        (such as hybrid poplars and switch grass).
            ``(4) Eligible producer.--The term `eligible producer' 
        means a producer that--
                    ``(A) uses an eligible commodity to produce a 
                biobased energy product; and
                    ``(B) enters into a contract with the Secretary 
                under subsection (b)(2).
            ``(5) New producer.--The term `new producer' means an 
        eligible producer that has not used an eligible commodity to 
        produce a biobased energy product during the preceding fiscal 
        year.
    ``(b) Biobased Energy Incentive Program.--
            ``(1) Establishment.--The Secretary shall establish a 
        biobased energy incentive program under which the Secretary 
        shall make payments to eligible producers to promote the use of 
        eligible commodities to produce biobased energy products.
            ``(2) Contracts.--
                    ``(A) In general.--To be eligible to receive a 
                payment, an eligible producer shall enter into a 
                contract with the Secretary under which the producer 
                shall agree to increase the use of eligible commodities 
                to produce biobased energy products during 1 or more 
                fiscal years.
                    ``(B) Quarterly payments.--Under a contract--
                            ``(i) the eligible producer shall agree to 
                        increase the use of eligible commodities to 
                        produce biobased energy products during each 
                        fiscal year covered by the contract; and
                            ``(ii) the Secretary shall make payments to 
                        the eligible producer for each quarter of the 
                        fiscal year.
            ``(3) Amount.--Subject to paragraphs (6) through (8), the 
        amount of a payment made to an eligible producer for a fiscal 
        year under this subsection shall be determined by multiplying--
                    ``(A) the payment quantity for the fiscal year 
                determined under paragraph (4); by
                    ``(B) the payment rate determined under paragraph 
                (5).
            ``(4) Payment quantity.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                payment quantity for payments made to an eligible 
                producer for a fiscal year under this subsection shall 
                equal the difference between--
                            ``(i) the quantity of eligible commodities 
                        that the eligible producer agrees to use, under 
                        the contract entered into with the Secretary, 
                        to produce biobased energy products during the 
                        fiscal year; and
                            ``(ii) the quantity of eligible commodities 
                        that the eligible producer used to produce 
                        biobased energy products during the preceding 
                        fiscal year.
                    ``(B) New producers.--The payment quantity for 
                payments made to a new producer for the first fiscal 
                year of a contract under this subsection shall equal 25 
                percent of the quantity of eligible commodities that 
                the eligible producer uses to produce biobased energy 
                products during the fiscal year.
            ``(5) Payment rate.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                payment rate for payments made to an eligible producer 
                under this subsection for the use of an eligible 
                commodity shall be determined by the Secretary to 
                compensate the eligible producer for the local value 
                of--
                            ``(i) in the case of corn, 1 bushel of corn 
                        for each 3 bushels of additional corn that is 
                        used to produce a biobased energy product; and
                            ``(ii) in the case of each other eligible 
                        commodity, an equivalent quantity determined by 
                        the Secretary.
                    ``(B) Small-scale producers.--The payment rate for 
                payments made to an eligible producer that has an 
                annual capacity of less than 60,000,000 gallons of 
                biobased energy products shall be at least 25 percent 
                higher than the payment rate for other eligible 
                producers, as determined by the Secretary.
            ``(6) Proration.--If the amount made available for a fiscal 
        year under subsection (d)(2)(A) is insufficient to allow the 
        payment of the amount of the payments that eligible producers 
        (that apply for the payments) otherwise would have a right to 
        receive under this subsection, the Secretary shall prorate the 
        amount of the funds among all such eligible producers.
            ``(7) Overpayments.--If the total amount of payments that 
        an eligible producer receives for a fiscal year under this 
        section exceeds the amount the eligible producer should have 
        received under this subsection, the producer shall repay the 
        amount of the overpayment to the Secretary, plus interest (as 
        determined by the Secretary).
            ``(8) Limitation.--No eligible producer shall receive more 
        than 7 percent of the total amount made available for a fiscal 
        year under subsection (d)(2)(A).
            ``(9) Recordkeeping and monitoring.--To be eligible to 
        receive a payment under this subsection, an eligible producer 
        shall--
                    ``(A) maintain for at least 3 years records 
                relating to the production of biobased energy products; 
                and
                    ``(B) make the records available to the Secretary 
                to verify eligibility for the payments.
            ``(10) Other requirements.--To be eligible to receive a 
        payment under this subsection, an eligible producer shall meet 
        other requirements of Federal law (including regulations) 
        applicable to the production of biodiesel or ethanol fuel.
    ``(c) Availability of Biobased Energy Products.--The Secretary 
shall establish a program to encourage wider availability of biobased 
energy products to consumers of gasoline and diesel fuels.
    ``(d) Funding.--
            ``(1) In general.--Subject to paragraph (2), the Secretary 
        shall use the funds, facilities, and authorities of the 
        Commodity Credit Corporation to carry out this section.
            ``(2) Fiscal year limitations.--The amount of funds of the 
        Commodity Credit Corporation used to carry out this section 
        shall not exceed--
                    ``(A) in the case of subsection (b), $150,000,000 
                for fiscal year 2003 and each subsequent fiscal year; 
                and
                    ``(B) in the case of subsection (c), $10,000,000 
                for fiscal year 2003 and each subsequent fiscal 
                year.''.

Summary: Biobased Energy Incentive Act of 2002 - Amends the Biomass Research and Development Act of 2000 to direct the Secretary of Agriculture to establish: (1) a biobased energy incentive program of payments to eligible producers to promote the use of commodities to produce biobased energy products (biodiesel or ethanol fuel); and (2) a program to encourage wider availability of biobased energy products to consumers of gasoline and diesel fuel.