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

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

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 `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.'.