Renewable Energy from Agricultural Products (REAP) Act (Introduced in the House)

HR 2000 IH

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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the `Renewable Energy from Agricultural Products (REAP) Act'.

SEC. 2. CREDIT FOR ELECTRICITY PRODUCED FROM BIOMASS.

    (a) EXTENSION AND MODIFICATION OF PLACED-IN-SERVICE RULES- Paragraph (3) of section 45(c) of the Internal Revenue Code of 1986 is amended--
      (1) by striking subparagraph (B) and inserting the following new subparagraph:
        `(B) CLOSED-LOOP BIOMASS FACILITY- In the case of a facility using closed-loop biomass to produce electricity, the term `qualified facility' means any facility--
          `(i) owned by the taxpayer which is originally placed in service after December 31, 1992, and before January 1, 2007, or
          `(ii) owned by the taxpayer which is originally placed in service on or before December 31, 1992, and modified to use closed-loop biomass to co-fire with coal before January 1, 2007.',
      (2) by striking `2002' in subparagraph (C) and inserting `2007', and
      (3) by adding at the end the following new subparagraphs:
        `(D) BIOMASS FACILITIES- In the case of a facility using biomass (other than closed-loop biomass) to produce electricity, the term `qualified facility' means any facility owned by the taxpayer which is originally placed in service before January 1, 2007.
        `(E) SPECIAL RULES- In the case of a qualified facility described in subparagraph (B)(ii) or (D)--
          `(i) the 10-year period referred to in subsection (a) shall be treated as beginning no earlier than the date of the enactment of this subparagraph,
          `(ii) subsection (b)(3) shall not apply to any such facility originally placed in service before January 1, 1997, and
          `(iii) if such a facility is leased and the operator thereof is the lessee, such lessee (and not the owner) shall be treated for purposes of this section as owning such facility.'.
    (b) BIOMASS FACILITIES-
      (1) IN GENERAL- Section 45(c)(1) of such Act (defining qualified energy resources) is amended--
        (A) by striking `and' at the end of subparagraph (B),
        (B) by striking the period at the end of subparagraph (C) and inserting `, and', and
        (C) by adding at the end the following new subparagraph:
        `(D) biomass (other than closed-loop biomass).'.
      (2) BIOMASS DEFINED- Section 45(c) of such Code (relating to definitions) is amended by adding at the end the following new paragraph:
      `(5) BIOMASS- The term `biomass' means any solid, nonhazardous, cellulosic waste material which is segregated from other waste materials and which is derived from--
        `(A) any of the following forest-related resources: mill residues, precommercial thinnings, slash, and brush, but not including old-growth timber,
        `(B) solid wood waste materials, including waste pallets, crates, dunnage, manufacturing and construction wood wastes (other than pressure-treated, chemically treated, or painted wood wastes), and landscape or right-of-way tree trimmings, but not including municipal solid waste (garbage), gas derived from the biodegradation of solid waste, or paper that is commonly recycled, or
        `(C) agriculture sources, including orchard tree crops, vineyard, grain, legumes, sugar, and other crop by-products or residues.'.
    (c) EFFECTIVE DATE- The amendments made by this section shall apply to electricity sold after the date of the enactment of this Act.

SEC. 3. CREDIT FOR ELECTRICITY PRODUCED FROM AGRICULTURAL AND ANIMAL WASTE.

    (a) IN GENERAL- Paragraph (1) of section 45(c) of the Internal Revenue Code of 1986, as amended by section 2, is amended by striking `and' at the end of subparagraph (C), by striking the period at the end of subparagraph (D) and inserting `, and', and by adding at the end the following new subparagraph:
        `(E) agricultural and animal waste.'.
    (b) AGRICULTURAL AND ANIMAL WASTE- Section 45(c) of such Code (relating to definitions) is amended by adding at the end the following new paragraph:
      `(6) AGRICULTURAL AND ANIMAL WASTE- The term `agricultural and animal waste' means all waste heat, steam, and fuels produced from the conversion of agricultural and animal wastes, including byproducts, packaging, and any materials associated with the processing, feeding, selling, transporting, and disposal of agricultural and animal products or
wastes, including wood shavings, straw, rice hulls, and other bedding for the disposition of manure.'.
    (c) AGRICULTURAL AND ANIMAL WASTE FACILITIES- Paragraph (3) of section 45(c) of such Code is amended by adding at the end the following new subparagraph:
        `(F) AGRICULTURAL AND ANIMAL WASTE FACILITIES- In the case of a facility using agricultural and animal waste to produce electricity, the term `qualified facility' means any facility owned by the taxpayer which is originally placed in service after December 31, 1992, and before January 1, 2005.'.
    (d) EFFECTIVE DATE- The amendments made by this section shall apply to electricity sold after the date of the enactment of this Act.

SEC. 4. REDUCTION OF MOTOR FUEL EXCISE TAX ON BIODIESEL MIXTURES.

    (a) IN GENERAL- Section 4081 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
    `(f) BIODIESEL MIXTURES- Under regulations prescribed by the Secretary--
      `(1) IN GENERAL- The rate of tax under subsection (a) shall be 3 cents per gallon less than the otherwise applicable rate in the case of the removal or entry of a qualified biodiesel mixture.
      `(2) TAX PRIOR TO MIXING- In the case of the removal or entry of diesel fuel for use in producing at the time of such removal or entry a qualified biodiesel mixture, the rate of tax under subsection (a) shall be the 3.06 cents per gallon less than the otherwise applicable rate.
      `(3) QUALIFIED BIODIESEL MIXTURE- For purposes of this subsection, the term `qualified biodiesel mixture' means any mixture of diesel fuel and biodiesel (as defined in section 312(f) of the Energy Policy Act of 1992) if at least 2 percent of such mixture is biodiesel (as so defined).
      `(5) CERTAIN RULES TO APPLY- Rules similar to the rules of paragraphs (6) and (7) of subsection (c) shall apply for purposes of this subsection.'.
    (b) CONFORMING AMENDMENTS-
      (1) Section 4041 of such Code is amended by adding at the end the following new subsection:
    `(n) BIODIESEL MIXTURES- Under regulations prescribed by the Secretary, in the case of the sale or use of a qualified biodiesel mixture (as defined in section 4081(f)), the rates under paragraphs (1) and (2) of subsection (a) shall be 3 cents per gallon less than the otherwise applicable rates.'.
      (2) Section 6427 of such Code is amended by redesignating subsection (p) as subsection (q) and by inserting after subsection (o) the following new subsection:
    `(p) BIODIESEL MIXTURES- Except as provided in subsection (k), if any diesel fuel on which tax was imposed by section 4081 at a rate not determined under section 4081(f) is used by any person in producing a qualified biodiesel mixture (as defined in section 4081(f)) which is sold or used in such person's trade or business, the Secretary shall pay (without interest) to such person an amount equal to 3.06 cents per gallon with respect to such fuel.'.
    (c) EFFECTIVE DATE- The amendments made by this section shall take effect on January 1, 2002.
    (d) HIGHWAY TRUST FUND HELD HARMLESS- There are hereby transferred (from time to time) from the funds of the Commodity Credit Corporation amounts equivalent to the reductions that would occur (but for this subsection) in the receipts of the Highway Trust Fund by reason of the amendments made by this section.

SEC. 5. HARVESTING OF SWITCH GRASS ON CONSERVATION RESERVE ACREAGE FOR USE IN ENERGY PRODUCTION.

    Section 1232(a)(7)(A) of the Food Security Act of 1985 (16 U.S.C. 3832(a)(7)(A)) is amended--
      (1) by striking `and' at the end of clause (i); and
      (2) by inserting after clause (ii) the following new clause:
          `(iii) harvesting of switch grass on such land when the purpose of the harvesting is to provide biomass for energy production, and such commercial use of the harvested grass shall be permitted without reduction in rental payments under the contact; and'.

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

    Federal agencies shall use biodiesel fuel to operate any Federal vehicle that uses diesel fuel, unless the cost of doing so is prohibitive.