§ 8814. Loan guarantees

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1980

   Energy Security Act

   Pub. L. 96–294 title II · 94 Stat. 611

   Enacted · 42 U.S.C. § 8814

   (Pub. L. 96–294, title II § 214, June 30, 1980, 94 Stat. 690.)

   Source evidence

   Code source credit
   (Pub. L. 96–294, title II § 214, June 30, 1980, 94 Stat. 690.)

   Enacted provision · exact public law
   TITLE II— BIOMASS ENERGY AND ALCOHOL FUELS Sec. 201. short title This title may be cited as the “Biomass Energy and 42 USC 8801 note. Alcohol Fuels Act of 1980”. Sec. 202. findings The Congress finds that— (1) the dependence of the United States on imported petroleum and natural gas must be reduced by all economically and environmentally feasible means, including the use of biomass energy resources; and (2) a national program for increased production and use of biomass energy that does not impair the Nation’s ability to produce food and fiber on a sustainable basis for domestic and export use must be formulated and implemented within a multiple-use framework. Sec. 203. definitions As used in this title— (1) The term “alcohol” means alcohol (including methanol and ethanol) which is produced from biomass and which is suitable for use by itself or in combination with other substances as a fuel or as a substitute for petroleum or petrochemical feedstocks. (2) (A) The term “biomass” means any organic matter which is available on a renewable basis, including agricultural crops and agricultural wastes and residues, wood and wood wastes and residues, animal wastes, municipal wastes, and aquatic plants. (B) For purposes of subtitle A, such term does not include municipal wastes; and for purposes of subtitle C, such term does not include aquatic plants and municipal wastes. (3) The term “biomass fuel” means any gaseous, liquid, or solid fuel produced by conversion of biomass. (4) The term “biomass energy” means— (A) biomass fuel; or (B) energy or steam derived from the direct combustion of biomass for the generation of electricity, mechanical power, or industrial process heat. (5) The term “biomass energy project” means any facility (or portion of a facility) located in the United States which is primarily for— (A) the production of biomass fuel (and byproducts); or (B) the combustion of biomass for the purpose of generating industrial process heat, mechanical power, or electricity (including cogeneration). (6) The term “Btu” means British thermal unit. (7) The term “cogeneration” means the combined generation by any facility of— (A) electrical or mechanical power, and (B) steam or forms of useful energy (such as heat) which are used for industrial, commercial, heating, or cooling purposes. (8) The term “cooperative” means any agricultural association, as that term is defined in section 15(a) of the Act of June 15, 1929, as amended (46 Stat. 18; 12 U.S.C. 1141j), commonly known as the Agricultural Marketing Act. (9) (A) The term “construction” means— (i) the construction or acquisition of any biomass energy project; (ii) the conversion of any facility to a biomass energy project; or (iii) the expansion or improvement of any biomass energy project which increases the capacity or efficiency of that facility to produce biomass energy. (B) Such term includes— (i) the acquisition of equipment and machinery for use in or at the site of a biomass energy project; and (ii) the acquisition of land and improvements thereon for the construction, expansion, or improvement of such a project, or the conversion of a facility to such a project. (C) Such term does not include the acquisition of any facility which was operated as a biomass energy project before the acquisition. (10) The term “Federal agency” means any Executive agency, as defined in section 105 of title 5, United States Code. (11) (A) The term “financial assistance” means any of the following forms of financial assistance provided under this title, or any combination of such forms: (i) loans, (ii) loan guarantees, (iii) price guarantees, and (iv) purchase agreements. (B) Such term includes any commitment to provide such assistance. (12) The term “Indian tribe” means any Indian tribe, band, nation, or other organized group or community, including any Alaska Native village or regional or village corporation as defined in or established pursuant to the Alaska Native Claims Settlement Act which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians. (13) The term “motor fuel” means gasoline, kerosene, and middle distillates (including diesel fuel). (14) (A) The term “municipal waste” means any organic matter, including sewage, sewage sludge, and industrial or commercial waste, and mixtures of such matter and inorganic refuse— (i) from any publicly or privately operated municipal waste collection or similar disposal system, or (ii) from similar waste flows (other than such flows which constitute agricultural wastes or residues, or wood wastes or residues from wood harvesting activities or production of forest products). (B) Such term does not include any hazardous waste, as determined by the Secretary of Energy for purposes of this title. (15) (A) The term “municipal waste energy project” means any facility (or portion of a facility) located in the United States primarily for— (i) the production of biomass fuel (and byproducts) from municipal waste; or (ii) the combustion of municipal waste for the purpose of generating steam or forms of useful energy, including industrial process heat, mechanical power, or electricity (including cogeneration). (B) Such term includes any necessary transportation, preparation, and disposal equipment and machinery for use in or at the site of the facility involved. (16) The term “Office of Alcohol Fuels” means the Office of Alcohol Fuels established under section 220. (17) The term “person” means any individual, company, cooperative, partnership, corporation, association, consortium, unincorporated organization, trust, estate, or any entity organized for a common business purpose, any State or local government (including any special purpose district or similar governmental unit) or any agency or instrumentality thereof, or any Indian tribe or tribal organization. (18) The term “State” means any of the fifty States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands of the United States, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and the Trust Territory of the Pacific Islands. (19) The term “small scale biomass energy project” means a biomass energy project with an anticipated annual production capacity of not more than 1,000,000 gallons of ethanol per year, or its energy equivalent of other forms of biomass energy. Sec. 204. funding for subtitles a and b (a) To the extent provided in advance in appropriation Appropriation authorization. 42 USC 8803. Acts, for the two year period beginning October 1, 1980, there is authorized to be appropriated and transferred $1,450,000,000 from the Energy Security Reserve established in the Treasury of the United States under title II of the Act entitled “An Act making appropriations for the Department of the Interior and related agencies for the fiscal year ending September 30, 1980, and for other purposes” (Public Law 96–126; 93 Stat. 970) and made available for obligation by such Act only to the extent provided in advance in appropriation Acts, as follows: (1) $600,000,000 to the Secretary of Agriculture for carrying out activities under subtitle A, except of the amount of the financial assistance provided by the Secretary of Agriculture under subtitle A, up to one-third shall be for small-scale biomass energy projects; (2) $600,000,000 to the Secretary of Energy for carrying out biomass energy activities under subtitle A, of which at least $500,000,000 shall be available to the Office of Alcohol Fuels for carrying out its activities, and any amount not made available to the Office of Alcohol Fuels shall be available to the Secretary to carry out the purposes of subtitle A under available authorities of the Secretary, including authorities under subtitle A; and (3) $250,000,000 shall be available to the Secretary of Energy for carrying out activities under subtitle B. (b) Funds made available under subsection (a) shall remain available until expended. (c) (1) For purposes of determining the amount of such appropriations which remain available for purposes of this title— (A) loans shall be counted at the initial face value of the loan; (B) loan guarantees shall be counted at the initial face value of such loan guarantee; (C) price guarantees and purchase agreements shall be counted at the value determined by the Secretary concerned as of the date of each such contract based upon the Secretary’s determination of the maximum potential liability of the United States under the contract; and (D) any increase in the liability of the United States pursuant to any amendment or other modification to a contract for a loan, loan guarantee, price guarantee, or purchase agreement, shall be counted to the extent of such increase. (2) Determinations under paragraph (1) shall be made in accordance with generally accepted accounting principles, consistently applied. (3) If more than one form of financial assistance is to be provided to any one project, the obligations and commitments thereunder shall be counted at the maximum potential exposure of the United States on such project at any time during the life of such project. (4) Any commitment to provide financial assistance shall be treated the same as such assistance for purposes of this subsection; except that any such commitment which is nullified or voided for any reason shall not be considered for purposes of this subsection. (d) Financial assistance may be provided under this title only to the extent provided in advance in appropriation Acts. Sec. 205. coordination with other authorities and programs The authorities in this title are in addition to and do not modify (except to the extent expressly provided for in this title) authorities and programs of the Department of Energy and of the Department of Agriculture under other provisions of law. Subtitle A— General Biomass Energy Development Sec. 211. biomass energy development plans (a) Not later than 180 days after the date of the enactment of this Act, the Secretary of Agriculture and the Secretary of Energy shall jointly prepare, and transmit to the President and the Congress, a plan for maximizing in accordance with this subtitle biomass energy production and use. Such plan shall be designed to achieve a total level of alcohol production and use within the United States of at least 60,000 barrels per day of alcohol by December 31, 1982. (b) (1) Not later than January 1, 1982, the Secretary of Agriculture Transmittal to President and Congress. and the Secretary of Energy shall jointly prepare, and transmit to the President and the Congress, a comprehensive plan for maximizing in accordance with this subtitle biomass energy production and use, for the period beginning January 1, 1983, and ending December 31, 1990. Such plan shall be designed to achieve a level of alcohol production within the United States equal to at least 10 percent of the level of gasoline consumption within the United States as estimated by the Secretary of Energy for the calendar year 1990. (2) The plan prepared under this subsection shall evaluate the Evaluation. feasibility of reaching the goals set forth in such subsection. (c) The plans prepared under subsections (a) and (b) shall each Guidelines for financial assistance. include guidelines for use in awarding financial assistance under this subtitle which are designed to increase, during the period covered by the plan, the amount of motor fuel displaced by biomass energy. Sec. 212. program respinsibility and administrationl effect on other programs (a) (1) Except as provided in paragraph (2), in the case of 42 USC 8812. any financial assistance under this subtitle for a biomass energy project, the Secretary concerned shall be— (A) the Secretary of Agriculture, in the case of any biomass energy project which will have an anticipated annual production capacity of less than 15,000,000 gallons of ethanol (or the energy equivalent of other forms of biomass energy) and which will use feedstocks other than aquatic plants; and (B) the Secretary of Energy, in the case of any biomass energy project which will use aquatic plants as feedstocks or which will nave an anticipated annual production capacity of 15,000,000 gallons or more of ethanol (or the energy equivalent of other forms of biomass energy). (2) (A) Either the Secretary of Agriculture or the Secretary of Energy may be the Secretary concerned in the case of any biomass energy project which will have an anticipated annual production capacity of 15,000,000 gallons or more of ethanol (or the energy equivalent of other forms of biomass energy) and— (i) which will use wood or wood wastes or residue, or (ii) which is owned and operated by a cooperative and will use feedstocks other than aquatic plants. (B) Financial assistance may not be provided by either Secretary under subparagraph (A) without the written concurrence of the other Secretary. Such concurrence shall be granted or denied by such Secretary in accordance with subparagraph (C) and on the same standards as that Secretary applies in making his own awards of financial assistance under this paragraph. (C) (i) In the case of a project described in subparagraph (A), the Review of project. Secretaiy concerned shall provide the other Secretary a copy of the application and such supporting information as may be material, and shall provide the other Secretary at least 15 days to review the project. If during such 15-day period the reviewing Secretary provides written notification to the Secretary concerned specifying reasons why such project should not proceed, the Secretary concerned shall defer the fined decision on the application for an additional 30 days. During such 30-day period, both Secretaries shall attempt to reach agreement regarding all issues raised in the written notice. Before the end of the 30-day period, the reviewing Secretary shall notify the Secretary concerned of his decision regarding concurrence. If the reviewing Secretary fails to provide such notice before the end of such period, concurrence shall be deemed to have been given. (ii) The project applicant may reapply for financial assistance for such project, after making such modifications to the project as may be necessary to address issues raised by the reviewing Secretary in the original notice of objection. The subsequent review of such project by the reviewing Secretary shall be limited to the issues originally raised by the reviewing Secretary and any issues raised by changed circumstances. (D) Both Secretaries may jointly act as the Secretary concerned in accordance with such procedures as the Secretaries may jointly prescribe, in which case— (i) subparagraphs (B) and (C) and subsection (c) shall not apply, and (ii) the proportion of financial assistance provided by each Secretary shall be determined in accordance with the procedures jointly prescribed. (b) (1) Each Secretary shall take such action as may be necessary to assure that— (A) guidelines for soliciting and receiving applications for financial assistance are established within 90 days after the date of the enactment of this Act; (B) applications for financial assistance for biomass energy projects are initially solicited within 30 days after such guidelines are established; (C) additional applications for financial assistance are solicited within 1 year after the date of the initial solicitation; (D) any application is evaluated and a decision made on such application within 120 days after the receipt of the application, including review under subsections (a)(2)(C), (a)(2)(D), or (c); and (E) all interested persons are provided the easiest possible access to the application process, including procedures which assure that— (i) information concerning financial assistance from either Secretary is available through all appropriate offices of the Department of Agriculture and the Department of Energy, and other regional and local offices of the Federal Government, as may be appropriate; (ii) all such locations where such information is available will be able to accept and file applications, and will forward them to the Secretary concerned; and (iii) the procedures established for accepting, evaluating, and awarding financial assistance will provide for categories of biomass energy projects, according to size and provide to the maximum extent practicable the simplest procedures for small producers. (2) The procedural requirements of subparagraphs (A) through (D) of paragraph (1) shall not apply to either Secretary to the extent that the Secretary finds that other procedures are adopted for the solicitation, evaluation, and awarding of financial assistance which will result in applications being processed more expeditiously. (c) (1) After evaluating any application and before awarding any financial assistance on the basis of that application, the Secretary concerned shall provide the other Secretary with— (A) a copy of the application and such supporting material as may be appropriate, and (B) an opportunity of not less than 15 days to review the application. This subsection shall not apply in the case of a project subject to review under subsection (a)(2)(C). (2) If the reviewing Secretary provides written notice specifying any issues regarding matters subject to the Secretary’s review to the Secretary concerned before the end of the 15-day review period, the Secretary concerned shall defer a final decision on the application for an additional 30 days to provide an opportunity for both Secretaries to answer and resolve such issues. At the expiration of the 30-day period, the Secretary concerned may make a final decision with respect to the application, using the best judgment of the Secretary concerned to resolve any remaining issues. (3) Reviews of projects under the provisions of subsection (a)(2)(C) or paragraph (1)(B) by the Secretary of Agriculture shall be for the purpose of considering the national, regional, and local agricultural policy impacts of such project on agricultural supply, production, and use, and reviews by the Secretary of Energy under such provisions shall be for the purpose of considering national energy policy impacts and the technical feasibility of the project. (4) The Secretary of Agriculture and the Secretary of Energy may jointly establish categories of projects to which paragraphs (1) and (2) shall not apply. Within 90 days after the date of the enactment of this Act, the Secretaries shall identify potential categories and make an initial determination of exempted categories. (d) If any application for financial assistance under this subtitle is Notice of disapproval. disapproved, the applicant shall be provided written notice of the reasons for the disapproval. (e) (1) The functions assigned under this subtitle to the Secretary of Administrative entities. Agriculture may be carried out by any of the administrative entities in the Department of Agriculture which the Secretary of Agriculture may designate. Within 30 days after the date of the enactment of this Notification to Congress. Act, the Secretary of Agriculture shall make such designations and notify the Congress of the administrative entity or entities so designated and the officials in such administrative entity or entities who are to be responsible for such functions. (2) The Secretary of Agriculture may Issue such regulations as are Regulations. necessary to carry out functions assigned to the Secretary of Agriculture under this subtitle. (3) The entities or entity designated under paragraph (1) shall coordinate the administration of functions assigned to it under this subsection with any other biomass energy programs within the Department of Agriculture established under other provisions of law. (f) The functions under this subtitle which are assigned to the Secretary of Energy and which relate to alcohol production shall be carried out by the Office of Alcohol Fuels. (g) For purposes of this subtitle, the quantity of any biomass energy which is the energy equivalent to 15,000,000 gallons of ethanol shall be prescribed jointly by the Secretary of Agriculture and the Secretary of Energy within 30 days after the date of the enactment of this Act. Sec. 213. insured loans (a) Subject to sections 212 and 217, the Secretary of Agriculture may commit to make, and make, insured loans in amounts not to exceed $1,000,000 per project for the construction of small-scale biomass energy projects. (b) (1) Any insured loan under this section— (A) may not exceed 90 per centum of the total estimated cost of construction of the biomass energy project involved, and (B) shall bear interest at rates determined by the Secretary of Agriculture, taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans, plus not to exceed one per centum, as determined by the Secretary of Agriculture, and adjusted to the nearest one-eighth of one per centum. (2) In the event the total estimated costs of construction of the project thereafter exceed the total estimated costs initially determined by the Secretary of Agriculture, the Secretary may in addition, upon application therefor, make an insured loan for so much of the additional estimated total costs as does not exceed 10 per centum of the total costs initially estimated. (c) (1) The Secretary of Agriculture shall make insured loans under this section using, to the extent provided in advance in appropriations Acts, the Agricultural Credit Insurance Fund in section 309 of 7 USC 1929. 7 USC 1929a. the Consolidated Farm and Rural Development Act or the Rural Development Insurance Fund in section 309A of such Act (hereinafter in this section referred to as the “Funds”). The Secretary of Agriculture may not use an aggregate amount of funds to make or commit to make insured loans under this section in excess of the aggregate amount for insured loans and administrative costs appropriated Terms and conditions. and transferred under section 204. The terms, conditions, and requirements applicable to such insured loans shall be in accordance with this subtitle. (2) There shall be reimbursed to the Funds, from appropriations made under section 204, amounts equal to the operating and administrative costs incurred by the Secretary of Agriculture in insuring loans under this section. (3) Notwithstanding any provision of the Consolidated Farm and 7 USC 1921 note. Rural Development Act, no funds made available to the Secretary of Agriculture under this section for insured loans shall be used for any other purpose. (4) For purposes of this section, the term “insured loan” means a loan which is made, sold, and insured. (d) An insured loan may not be made under this section unless the applicant for such loan has established to the satisfaction of the Secretary that the applicant is unable without such a loan to obtain sufficient credit elsewhere at reasonable rates and terms, taking into consideration prevailing private and cooperative rates and terms for loans for similar purposes and periods of time, to finance the construction of the biomass energy project for which such loan is sought. Sec. 214. loan guarantees (a) Subject to sections 212 and 217, the Secretary concerned may commit to guarantee, and guarantee, against loss of principal and interest, loans which are made to provide funds for the construction of biomass energy projects. (b) (1) Any guarantee of a loan under this section may not exceed 90 per centum of the cost of the construction of the biomass energy project involved, as estimated by the Secretary on the date of the guarantee or commitment to guarantee. (2) In the event the construction costs of the project are thereafter estimated by the Secretary concerned to exceed the construction costs initially estimated by the Secretary, the Secretary may in addition, upon application therefor, guarantee, against loss of principal and interest, a loan for up to 60 per centum of the difference between the construction costs then estimated and the construction costs initially estimated. (c) Notwithstanding the provisions of the Federal Financing Bank Act of 1973 (12 U.S.C. 2281 et seq.) or any other provision of law (except as may be specifically provided by reference to this subsection in any Act enacted after the date of the enactment of this Act), no debt obligation which is guaranteed or committed to be guaranteed by the Secretary of Agriculture or the Secretary of Energy under this section shall be eligible for purchase by, or commitment to purchase by, or sale or issuance to, the Federal Financing Bank or any Federal agency. (d) The terms and conditions of loan guarantees under this section Terms and conditions. shall provide that, if the Secretary concerned makes a payment of principal or interest upon the default by a borrower, the Secretary shall be subrogated to the rights of the recipient of such payment (and such subrogation shall be expressly set forth in the loan guarantee or related agreements). (e) Any loan guarantee under this section shall not be terminated, canceled, or otherwise revoked, except in accordance with the terms thereof and shall be conclusive evidence that such guarantee complies fully with the provisions of this title and of the approval and legality of the principal amount, interest rate, and all other terms of the securities, obligations, or loans and of the guarantee. (f) If the Secretary concerned determines that— (1) the borrower is unable to meet payments and is not in default, (2) it is in the public interest to permit the borrower to continue with such project, and (3) the probable net benefit to the United States in paying the principal and interest due under the loan will be greater than that which would result in the event of a default, then the Secretary may pay to the lender under a loan guarantee agreement an amount not greater than the principal and interest which the borrower is obligated to pay to such lender, if the borrower agrees to reimburse the Secretary for such payment on terms and conditions, including interest, which the Secretary determines are sufficient to protect the financial interests of the United States. (g) (1) A loan may not be guaranteed under this section unless the applicant for such loan has established to the satisfaction of the Secretary concerned that the lender is not willing without such a guarantee to extend credit to the applicant at reasonable rates and terms, taking into consideration prevailing rates and terms for loans for similar purposes and periods of time, to finance the construction of the biomass energy project for which such loan is sought. (2) The Secretary concerned shall ensure that the lender bears a reasonable degree of risk in the financing of such project. Sec. 215. price guarantees (a) Subject to sections 212 and 217, the Secretary concerned may commit to guarantee, and guarantee, that the price that the owner or operator of any biomass energy project will receive for all or part of the production from that project shall not be less than a specified sales price determined as of the date of execution of the price guarantee or commitment to guarantee. (b) (1) No price guarantee under this section may be based upon a cost-plus arrangement, or variant thereof, which guarantees a profit to the owner or operator involved. (2) The use of a cost-of-service pricing mechanism by a person pursuant to law, or by a regulatory body establishing rates for a regulated person, shall not be deemed to be a cost-plus arrangement, or variant thereof, for purposes of paragraph (1). (c) Each price guarantee, or commitment to guarantee, which is made under this section shall specify the maximum dollar amount of liability of the United States under that guarantee. (d) If the Secretary determines, in the discretion of the Secretary, that— (1) a biomass energy project would not otherwise be satisfactorily completed or continued, and (2) completion or continuation of such project would be necessary to achieve the purposes of this title, the sales price set forth in the price guarantee, and maximum liability under such guarantee, may be renegotiated. Sec. 216. purchase agreements (a) Subject to sections 212 and 217, the Secretary concerned may commit to make, and make, purchase agreements for all or part of the biomass energy production of any biomass energy project, if the Secretary determines— (1) that such biomass energy is of a type, quantity, and quality that can be used by Federal agencies; and (2) that the quantity of such biomass energy, if delivery is accepted, would not exceed the likely needs of Federal agencies. Each Secretary concerned shall consult with the other Secretary before making any determination under paragraph (2). (b) The sales price specified in a purchase agreement under this section may not exceed the estimated prevailing market price as of the date of delivery, as determined by the Secretary of Energy, unless the Secretary concerned determines that such sales price must exceed the estimated prevailing market price in order to ensure the production of biomass energy to achieve the purposes of this title. (c) The Secretary concerned in entering into, or committing to enter into, a purchase agreement under this section shall require— (1) assurances that the quality of the biomass energy purchased will meet standards for the use for which such energy is purchased; (2) assurances that the ordered quantities of such energy will be delivered on a timely basis; and (3) such other assurances as may reasonably be required. (d) The Secretary concerned may take delivery of biomass energy pursuant to a purchase agreement under this section if appropriate arrangements nave been made for its distribution to and use by one or more Federal agencies. Any Federal agency receiving such energy shall be charged (in accordance with otherwise applicable law), from sums appropriated to such Federal agency, for the prevailing market price as of the date of delivery, as determined by the Secretary of Energy, for the product which the biomass energy is replacing. (e) The Secretary concerned shall consult with the Secretary of Consultation. Defense and the Administrator of the General Services Administration in carrying out this section. (f) Each purchase agreement, and commitment to enter into a Terms and conditions. purchase agreement, under this section shall provide that the Secretary concerned retains the right to refuse delivery of the biomass energy involved upon such terms and conditions as shall be specified in the purchase agreement. (g) Each purchase agreement, or commitment to enter into a purchase agreement, which is made under this section shall specify the maximum dollar amount of liability of the United States under that agreement. (h) If the Secretary concerned determines, in the discretion of the Secretary, that— (1) a biomass energy project would not otherwise be satisfactorily completed or continued, and (2) completion or continuation of such project would be necessary to achieve the purposes of this title, the sales price set forth in the purchase agreement, and maximum liability under such agreement, may be renegotiated. Sec. 217. general requirements regarding financial assistance (a) (1) Priority for financial assistance under this subtitle, 42 USC 8817. and the most favorable financial terms available, shall be provided to a person for any biomass energy project that— (A) uses a primary fuel other than petroleum or natural gas in the production of biomass fuel, such as geothermal energy resources, solar energy resources, or waste heat; or (B) applies new technologies which expand the possible feed-stocks, produces new forms of biomass energy, or produces biomass fuel using improved or new technologies. Nothing in this paragraph shall be construed to exclude financial assistance for any project which does not use such a fuel or apply such a technology. (2) (A) Financial assistance under this subtitle shall be available for a biomass energy project only if the Secretary concerned finds that the Btu content of the motor fuels to be used in the facility involved to produce the biomass fuel will not exceed the Btu content of the biomass fuel produced in the facility. (B) In making the determination under subparagraph (A), the Secretary concerned shall take into account any displacement of motor fuel or other petroleum products which the applicant has demonstrated to the satisfaction of the Secretary would result from the use of the biomass fuel produced in the facility involved. (3) No financial assistance may be provided under this subtitle to any person for any biomass energy project if the Secretary concerned finds that the process to be used by the project will not extract the protein content of the feedstock for utilization as food or feed for readily available markets in any case in which to do so would be technically and economically practicable. (4) Financial assistance may not be provided under this subtitle to any person unless the Secretary concerned— (A) finds that necessary feedstocks are available and it is reasonable to expect they will continue to be available in the future, and, for biomass energy projects using wood or wood wastes or residues from the National Forest System, there shall be taken into account current levels of use by then existing facilities; (B) has obtained assurance that the person receiving such financial assistance will bear a reasonable degree of risk in the construction and operation of the project; and (C) has determined that the amount of financial assistance provided for the project is not greater than is necessary to achieve the purposes of this title. (5) In providing financial assistance under this subtitle, the Secretary concerned shall give due consideration to promoting competition. (6) In determining the amount of financial assistance for any biomass energy project which will yield byproducts in addition to biomass energy, the Secretary shall consider the potential value of such byproducts and the costs attributable to their production. (b) An insured loan may not be made, and a loan guarantee may not be issued, under this subtitle unless the Secretary concerned determines that the terms, conditions, maturity, security, and schedule and amounts of repayments with respect to such loan are reasonable and meet such standards as the Secretary determines are sufficient to protect the financial interests of the United States. (c) (1) No financial assistance may be provided to any person under this subtitle unless an application therefor— (A) has been submitted to the Secretary concerned by that person in such form and under such procedures as the Secretary shall prescribe, consistent with the requirements of this subtitle, and (B) has been approved by the Secretary in accordance with such procedures. (2) Each such application shall include information regarding the construction costs of the biomass energy project involved, and estimates of operating costs and income relating to that project (including the sale of any byproducts from that project). In addition, each applicant shall provide— (A) access at reasonable times to such other information, and (B) such assurances, as the Secretary concerned may require. (d) (1) Every recipient of financial assistance under this subtitle shall, as a condition precedent thereto, consent to such examinations and reports regarding the biomass energy project involved as the Secretary concerned may require. (2) With respect to each biomass energy project for which financial assistance is provided under this subtitle, the Secretary shall— (A) require from the recipient of financial assistance such reports and records relating to that project as the Secretary deems necessary; (B) prescribe the manner in which such recipient shall keep such records; and (C) have access to such records at reasonable times for the purpose of ensuring compliance with the terms and conditions upon which financial assistance is provided. (e) All contracts and instruments of the Secretary concerned to provide, or providing, for financial assistance shall be general obligations of the United States backed by its full faith and credit. (f) Subject to the conditions of any contract for financial assistance, such contract shall be incontestable in the hands of the holder, except as to fraud or material misrepresentation on the part of the holder. (g) (1) A fee or fees may be charged and collected by the Secretary Fees. concerned for any loan guarantee, price guarantee, or purchase agreement provided under this subtitle. (2) The amount of such fee shall be based on the estimated administrative costs and risk of loss, except that such fee may not exceed 1 per centum of the amount of the financial assistance provided. (h) All amounts received by the Secretary of Agriculture or the Secretary of Energy as fees, interest, repayment of principal, and any other moneys received by either Secretary from activities under this subtitle shall be deposited in the Treasury of the United States as miscellaneous receipts. The preceding sentence shall not apply to insured loans made under section 213. Sec. 218. reports (a) The Secretary of Agriculture and the Secretary of Submittal to Congress. 42 USC 8818. List of loans or grants for alcohol production. Energy shall each prepare and submit to the President and the Congress quarterly reports on their activities under this subtitle. (b) Within 120 days after the date of enactment of this Act, the Secretary of Energy and the Secretary of Agriculture shall submit to the Congress a comprehensive list of all the types of loans, grants, incentives, rebates, or any other such private, State, or Federal economic or financial benefits now in effect or proposed which can be or have been used for production of alcohol to be used as a motor fuel or petroleum substitute. (c) (1) (A) The Office of Alcohol Fuels shall submit to the Congress and the President annual reports containing a general description of the Office’s operations during the year and a description and evaluation of each biomass energy project for which financial assistance by the Office is then in effect. (B) Each annual report shall describe progress made toward meeting the goals of this subtitle and contain specific recommendations on what actions the Congress could take in order to facilitate the work of the Office in achieving such goals. (C) Each annual report under this subsection shall contain financial statements prepared by the Office. (2) On or before September 30, 1990, the Office shall submit to the Congress and the President a report evaluating the overall impact made by the Office and describing the status of each biomass energy project which has received financial assistance under this subtitle from the Office. Such report shall contain a plan for the termination Termination plan. of the work of the Office. Sec. 219. review; reorganization (a) The President shall review periodically the progress of 42 USC 8819. the Secretary of Agriculture and the Secretary of Energy in carrying out the purposes of this subtitle. (b) If the President determines it necessary in order to achieve such purposes the President may, in accordance with the provisions of 5 USC 901 et seq. chapter 9 of title 5, United States Code, provide for a reorganization, including any required realignment of the respective programs of the Secretaries under this subtitle. Sec. 220. establishment of office of alcohol fuels in department of energy (a) There is hereby established within the Department of Energy an Office of Alcohol Fuels (hereinafter in this section referred to as the “Office”) to be headed by a Director, who shall be appointed by the President, by and with the advice and consent of the Senate, and who shall be compensated at the rate provided for level IV of the 44 FR 58678. Functions. Executive Schedule under section 5315 of title 5, United States Code. (b) (1) The Director shall be responsible for carrying out the functions of the Secretary of Energy under this subtitle which relate to alcohol, including the terms and conditions of financial assistance and the selection of recipients for that assistance, subject to the general supervision of the Secretary of Energy. (2) The Director shall be responsible directly to the Secretary of Energy. (c) In each annual authorization and appropriation request, the Secretary shall identify the portion thereof intended for the support of the Office and include a statement by the Office (1) showing the amount requested by the Office in its budgetary presentation to the Secretary and the Office of Management and Budget and (2) an Legislative recommendation or testimony, transmittal to congressional committes. assessment of the budgetary needs of the Office. Whenever the Office submits to the Secretary, the President, or the Office of Management and Budget, any formal legislative recommendation or testimony, or comments on legislation, prepared for submission to Congress, the Office shall concurrently transmit a copy thereof to the appropriate committees of Congress. (d) The Secretary of Energy, after consultation with the Director, shall consult with the Secretary of the Treasury, the Secretary of Agriculture, the Secretary of Transportation, the Secretary of Commerce, the Administrator of the Community Services Administration, the Administrator of the Environmental Protection Agency, or their appointed representatives, in order to coordinate the programs under the Director’s responsibility with other programs within the Department of Energy and in such Federal agencies, which are related to the production of alcohol. Sec. 221. termination No insured loan, loan guarantee, price guarantee, or purchase agreement may be committed to or made under this subtitle after September 30, 1984. This section shall not be construed to affect the authority of the Secretary concerned to spend funds after such date pursuant to any contract for financial assistance made on or before that date under this subtitle. Subtitle B— Municipal Waste Biomass Energy Sec. 231. municipal waste energy development plan (a) The Secretary of Energy shall prepare a comprehensive plan for carrying out this subtitle. In the preparation of such plan, the Secretary shall consult with the Administrator of the Environmental Protection Agency, the Secretary of Commerce, and the head of such other Federal agencies as the Secretary deems appropriate. (b) Not later than 90 days after the date of the enactment of this Transmittal to President and Congress. Act, the Secretary shall transmit the comprehensive plan to the President and the Congress. (c) The comprehensive plan under this section shall include a Statement. statement setting forth— (1) the anticipated research, development, demonstration, and commercialization objectives to be achieved; (2) the management structure and approach to be adopted to carry out such plan; (3) the program strategies, including detailed milestone goals to be achieved; (4) the specific funding requirements for individual program elements and activities, including the total estimated construction costs of proposed projects; and (5) the estimated relative financial contributions of the Federal Government and non-Federal participants in the program. (d) Not later than January 1, 1982, the Secretary shall prepare and Report to President and Congress. submit to the President and the Congress a report containing a complete description of any financial, institutional, environmental, and social barriers to the development and application of technologies for the recovery of energy from municipal wastes. Sec. 232. construction loans (a) Subject to sections 235 and 236, the Secretary of Energy 42 USC 8832. may commit to make, and make, loans for the construction of municipal waste energy projects. (b) (1) Any loan under this section— (A) may not exceed 80 per centum of the total estimated cost of the construction of the municipal waste energy project involved, and (B) shall bear interest at a rate determined by the Secretary of Energy (taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans) plus not to exceed one per centum, as determined by the Secretary of Energy, and adjusted to the nearest one-eighth of one per centum. (2) In the event the total estimated costs of construction of the project thereafter exceed the total estimated costs initially determined by the Secretary of Energy, the Secretary may in addition, upon application therefor, make a loan for so much of the additional estimated costs as does not exceed 10 per centum of the initial total estimated costs of construction. (c) A loan may not be made under this section unless the person applying for such loan has established to the satisfaction of the Secretary of Energy that the applicant is unable without such a loan to obtain sufficient credit elsewhere at reasonable rates and terms, taking into consideration prevailing market rates and terms for loans for similar periods of time, to finance the construction of the project for which such loan is sought. Sec. 233. guaranteed construction loans (a) Subject to sections 235 and 236, the Secretary of Energy may commit to guarantee, and guarantee, against loss on up to 90 per centum of the principal and interest, any loan which is made solely to provide funds for the construction of a municipal waste energy project and which does not exceed 90 per centum of the cost of the construction of the project involved, as estimated by the Secretary on the date of the guarantee or commitment to guarantee. (b) In the event the total estimated costs of construction of the project thereafter exceed the total estimated costs initially determined by the Secretary of Energy, the Secretary may in addition, upon application therefor, guarantee, against loss on up to 90 per centum of the principal and interest, a loan for so much of the additional estimated total costs as does not exceed 10 per centum of the total estimated costs. (c) The terms and conditions of loan guarantees under this section shall provide that, if the Secretary of Energy makes a payment of principal or interest upon the default by a borrower, the Secretary shall be subrogated to the rights of the recipient of such payment (and such subrogation shall be expressly set forth in the loan guarantee or related agreements). (d) Any loan guarantee under this section shall not be terminated, canceled, or otherwise revoked, except in accordance with the terms thereof and shall be conclusive evidence that such guarantee complies fully with the provisions of this title and of the approval and legality of the principal amount, interest rate, and all other terms of the securities, obligations, or loans and of the guarantee. (e) If the Secretary of Energy determines that— (1) the borrower is unable to meet payments and is not in default, (2) it is in the public interest to permit the borrower to continue to pursue the purposes of such project, and (3) the probable net benefit to the United States in paying the principal and interest due under a loan guarantee agreement will be greater than that which would result in the event of a default, then the Secretary may pay to the lender under a loan guarantee agreement an amount not greater than the principal and interest which the borrower is obligated to pay to such lender, if the borrower agrees to reimburse the Secretary for such payment on terms and conditions, including interest, which the Secretary determines are sufficient to protect the financial interests of the United States. (f) A loan may not be guaranteed under this section unless the applicant for such loan has established to the satisfaction of the Secretary of Energy that the lender is not willing without such a guarantee to extend credit to the applicant at reasonable rates and terms, taking into consideration prevailing market rates and terms for loans for similar periods of time, to finance the construction of the project for which such loan is sought. (g) (1) With respect to any loan or debt obligation which is— (A) issued after the date of the enactment of this Act by, or on behalf of, any State or any political subdivision or governmental entity thereof, (B) guaranteed by the Secretary of Energy under this section, and (C) not supported by the full faith and credit of the issuer as a general obligation of the issuer, the interest paid on such obligation and received by the purchaser thereof (or the purchaser’s successors in interest) shall be included in gross income for the purposes of chapter 1 of the Internal Revenue Code of 1954. 26 USC 1 et seq. (2) With respect to the amount of obligations described in paragraph (1) that the issuer would have been able to issue as tax exempt obligations (other than obligations secured by the full faith and credit of the issuer as a general obligation of the issuer), the Secretary of Energy is authorized to pay only to the issuer any portion of the interest on such obligations, as determined by the Secretary of the Treasury after taking into account the interest rate which would have been paid on the obligations had they been issued as tax exempt obligations without being so guaranteed by the Secretary of Energy and the interest rate actually paid on the obligations when issued as taxable obligations. Such payments shall be made in amounts determined by the Secretary of Energy, and in accordance with such terms and conditions as the Secretary of the Treasury shall require. (h) (1) A fee or fees may be charged and collected by the Secretary of Fee charge. Energy for any loan guarantee under this section. (2) The amount of such fee shall be based on the estimated administrative costs and risk of loss, except that such fee may not exceed 1 per centum of the maximum of the guarantee. Sec. 234. price support loans and price guarantees (a) (1) In the case of any existing municipal waste energy 42 USC 8834. project which produces and sells biomass energy, the Secretary of Energy may commit to make, and make, a price support loan in amounts determined under paragraph (3) for the operation of such project. Payments under any such loan shall be disbursed on an annual basis, as determined (in accordance with paragraph (3)) on the basis of the amount of biomass energy produced and sold by that project during the 12-month period involved and the type and cost of fuel displaced by the biomass energy sold. (2) (A) In the case of any support loan under this section for an existing municipal waste energy project— (i) disbursements under such loan may not be made for more than 5 consecutive 12-month periods; (ii) the amount of the disbursement for the second and any subsequent 12-month period for which disbursements are to be made under the support loan shall be reduced by an amount determined by multiplying the amount calculated under paragraph (3) by a factor determined by dividing the number of 12-month periods for which disbursements are made under the support loan into the number of such periods which have elapsed; (iii) commencing at the end of the last of such 12-month periods, the support loan shall be repayable over a period equal to the then remaining useful life of the project (as determined by the Secretary) or 10 years, whichever is shorter; and (iv) commencing at the end of such last 12-month period, such loan shall bear interest at a rate determined by the Secretary of Energy (taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans) plus not to exceed one per centum, as determined by the Secretary of Energy, and adjusted to the nearest one-eighth of one per centum. (3) The amount of the loan payment to be disbursed under this subsection for any year with respect to each type of biomass energy produced and sold by an existing municipal waste energy project shall be equal to— (A) (i) the standard support price reduced by the cost of the fuel displaced by the biomass energy sold, or (ii) $2.00, whichever is lower, multiplied by (B) the amount of such biomass energy sold (in millions of Btu’s). (b) (1) In the case of any new municipal waste energy project which produces and sells biomass energy, the Secretary of Energy may commit to make, and make, a price support loan in amounts determined in accordance with the provisions of subsection (a), except as provided in paragraph (2). (2) In the case of any loan under this subsection for a new municipal waste energy project— (A) disbursements under such loan may not be made for more than 7 consecutive 12-month periods (with reductions as provided in subsection (a)(2)(A)(ii)); (B) such loan shall bear interest at a rate not in excess of the rate prescribed under subsection (a); and (C) the principal of or interest on such loan shall, in accordance with the support loan agreement, be repayable, commencing at the end of the last 12-month period covered by the support loan, over a period not in excess of the period equal to the then remaining useful life of the project (as determined by the Secretary) or 15 years, whichever is shorter. (c) (1) In the case of any new municipal waste energy project which produces and sells biomass energy, the Secretary of Energy may commit to make, and make, a price guarantee for the operation of such project which guarantees that the price the owner or operator will receive for all or part of the production from that project shall not be less than a specified sales price determined as of the date of execution of the guarantee agreement. (2) (A) No price guarantee under this section may be based upon a cost-plus arrangement, or variant thereof, which guarantees a profit to the owner or operator involved. (B) The use of a cost-of-service pricing mechanism by a person pursuant to law, or by a regulatory body establishing rates for a regulated person, shall not be deemed to be a cost-plus arrangement, or variant thereof, for purposes of subparagraph (A). (3) In the case of any price guarantee under this subsection for a new municipal waste energy project— (A) disbursements under such guarantee may not be made for more than 7 consecutive 12-month periods; and (B) amounts paid under this subsection may be required to be repaid to the Secretary of Energy under such terms and conditions as the Secretary may prescribe, including interest at a rate not in excess of the rate prescribed under subsection (a). (d) For purposes of this section— (1) The term “new municipal waste energy project” means any municipal waste energy project which— (A) is initially placed in service after the date of the enactment of this Act; or (B) if initially placed in service before such date, has an increased capacity by reason of additional construction, and as such is placed in service after such date. (2) The term “existing municipal waste energy project” means any municipal waste energy project which is not a new municipal waste project. (3) The term “placed in sendee” means operated at more than 50 percent of the estimated operational capacity. (4) (A) Except as provided in subparagraphs (B) and (C), the term “standard support price” means the average price (per million Btu’s) for No. 6 fuel oil imported into the United States on the date of the enactment of this Act, as determined, by rule, by the Secretary of Energy not later than 90 days after the date of the enactment of this Act. (B) In any case in which the fuel displaced is No. 6 fuel oil or any higher grade of petroleum (as determined by the Secretary of Energy), the term “standard support price’ means 125 per centum of the price determined by rule under subparagraph (A). (C) In any case in which biomass energy produced and sold by a project is steam or electricity, the term “standard support price” means the price determined by rule under subparagraph (A), subject to such adjustments as the Secretary of Energy may authorize by rule. (5) The term “cost of the fuel displaced” means the cost of the fuel (per million Btu’s) which the purchaser of biomass energy would have purchased if the biomass energy had not been available for sale to that purchaser. (6) Any biomass energy produced by a municipal waste energy project which may be retained for use by the owner or operator of such project shall be considered to be sold at such price as the Secretary of Energy determines. (7) Not later than 90 days after the date of the enactment of this Act, the Secretary of Energy shall prescribe, by rule, the manner of determining the fuel displaced by the sale of any biomass energy, and the price of the fuel displaced. Sec. 235. general requirements regarding financial assistance (a) (1) Priority for financial assistance under the provisions 42 USC 8835. of sections 232, 233, and 234, and the most favorable financial terms available, shall be provided for any municipal waste energy project that will— (A) produce a liquid fuel from municipal waste; or (B) will displace petroleum or natural gas as a fuel. (2) (A) With respect to projects producing biomass energy other than Biomass energy projects. biomass fuel, financial assistance under the provisions of sections 232, 233, and 234 shall be available only if the Secretary of Energy finds that the project does not use petroleum or natural gas except for flame stabilization or start-up. (B) With respect to projects producing biomass fuel, financial Btu content. assistance under such provisions shall be available to such project only if the Secretary of Energy finds that the Btu content of the biomass fuel produced substantially exceeds the Btu content of any petroleum or natural gas used in the project to produce the biomass (3) Financial assistance may not be provided under section 232, 233, or 234 unless the Secretary of Energy finds that necessary municipal waste feedstocks are available and it is reasonable to expect they will continue to be available for the expected economic life of the project. (4) In providing financial assistance under section 232, 233, or 234, the Secretary of Energy shall give due consideration to promoting competition. (5) In determining the amount of financial assistance for any municipal waste energy project which will yield byproducts in addition to biomass energy, the Secretary shall consider the value of such byproducts and the costs attributable to their production. (6) The Secretary of Energy shall not provide financial assistance under section 232, 233, or 234 for any municipal waste energy unless the Secretary determines— (A) the project will be technically and economically viable; (B) the financial assistance provided encourages and supplements, but does not compete with nor supplant, any private capital investment which otherwise would be available to the proposed municipal waste energy project on reasonable terms and conditions which would permit such project to be undertaken; (C) assurances are provided that the project will not use, in any substantial quantities, waste paper which would otherwise be recycled for a use other than as a fuel and will not substantially compete with facilities in existence on the date of the financial assistance which are engaged in the separation or recovery of reuseable materials from municipal waste; and (D) that the amount of financial assistance provided for the project is not greater than is necessary to achieve the purposes of this title. (b) Financial assistance may not be provided under section 232,233, or 234 unless the Secretary of Energy determines that— (1) the terms, conditions, maturity, security and schedule and amounts of repayments with respect to such assistance are reasonable and meet such standards as the Secretary determines are sufficient to protect the financial interests of the United States; and (2) the person receiving such financial assistance will bear a reasonable degree of risk with respect to the project. (c) (1) No financial assistance may be provided to any person under section 232,233, or 234 unless an application therefor— (A) has been submitted to the Secretary of Energy by such person in such form and under such procedures as the Secretary shall prescribe, consistent with the requirements of this subtitle, and (B) has been approved by the Secretary in accordance with such procedures. (2) Each such application shall include information regarding the construction costs of the municipal waste energy project involved (if appropriate), and estimates of operating costs and income relating to that project (including the sale of any byproducts from that project). In addition, each applicant shall provide— (A) access at reasonable times to such other information, and (B) such assurances, as the Secretary of Energy may require. (d) (1) Every person receiving financial assistance under section 232, 233, or 234 shall, as a condition precedent thereto, consent to such examinations and reports thereon regarding the municipal waste energy project involved as the Secretary of Energy may require. (2) With respect to each municipal waste energy project for which financial assistance is provided under section 232, 233, or 234, the Secretary shall— (A) require from the recipient of financial assistance such reports and records relating to that project as the Secretary deems necessary; (B) prescribe the manner in which such recipient shall keep such records; and (C) have access to such records at reasonable times for the purpose of ensuring compliance with the terms and conditions upon which financial assistance is provided. (e) All amounts received by the Secretary of Energy as fees, interest, repayment of principal, and any other moneys received by the Secretary from operations under section 232, 233, or 234 shall be deposited in the general fund of Treasury of the United States as miscellaneous receipts. (f) All contracts and instruments of the Secretary of Energy to provide, or providing, for financial assistance shall be general obligations of the United States backed by its full faith and credit. (g) Subject to the conditions of any contract for financial assistance, such contract shall be incontestable in the hands of the holder, except as to fraud or material misrepresentation on the part of the holder. (h) Notwithstanding the provisions of the Federal Financing Bank Act of 1973 (12 U.S.C. 2281 et seq.) or any other provision of law (except as may be specifically provided by reference to this subsection in any Act enacted after the date of the enactment of this Act), no debt obligation which is made or committed to be made, or which is guaranteed or committed to be guaranteed by the Secretary of Energy under section 232, 233, or 234 shall be eligible for purchase by, or commitment to purchase by, or sale or issuance to, the Federal Financing Bank or any Federal agency. Sec. 236. financial assistance program administration The Secretary of Energy shall establish procedures and 42 USC 8836. take such other actions as may be necessary regarding the solicitation, review, and evaluation of applications, and awarding of financial assistance under section 232, 233, or 234 as may be necessary to carry out the plan established under section 231. Sec. 237. commercialization demonstration program pursuant to federal nonnuclear energy research and development act of 1974 (a) (1) The Secretary of Energy shall establish and conduct, 42 USC 8837. pursuant to the authorities contained in the Federal Nonnuclear Energy Research and Development Act of 1974, an accelerated 42 USC 5901 note. research, development, and demonstration program for promoting the commercial viability of processes for the recovery of energy from municipal wastes. (2) The provisions of subsections (d), (m), and (x)(2) of section 19 of such Act shall not apply with respect to the program established 42 USC 5919. under this section. (3) As part of the program established under this section, the Secretary, after consulting with the Administrator of the Environmental Protection Agency and the Secretary of Commerce, shall undertake— (A) the research, development, and demonstration of technologies to recover energy from municipal wastes; (B) the development and application of new municipal waste-to-energy recovery technologies; (C) the assessment, evaluation, demonstration, and improvement of the performance of existing municipal waste-to-energy recovery technologies with respect to capital costs, operating and maintenance costs, total project financing, recovery efficiency, and the quality of recovered energy and energy intensive materials; (D) the evaluation of municipal waste energy projects for the purpose of developing a base of engineering data that can be used in the design of future municipal waste energy projects to recover energy from municipal wastes; and (E) research studies on the size and other significant characteristics of potential markets for municipal waste-to-energy recovery technologies, and recovered energy, and energy intensive materials. (b) Under such program, the Secretary of Energy may provide financial assistance consisting of price supports, loans, and loan guarantees, for the cost of planning, designing, constructing, operating, and maintaining demonstration facilities, and, in the case of existing facilities, modifications of such facilities solely for demonstration purposes, for the conversion of municipal wastes into energy or the recovery of materials. (c) Priority for funding of activities under subsection (a) and financial assistance under subsection (b) shall be provided for any activity or project for the demonstration of technologies for the production of liquid fuels or biomass energy which substitute for petroleum or natural gas. (d) The Secretary of Energy may not obligate or expend any funds authorized under this title in carrying out subsection (b) of this section until the plan required under section 231(a) has been prepared and submitted to the Congress. (e) All amounts received by the Secretary of Energy as fees, interest, repayment of principal, and any other moneys received by the Secretary from operations under this section shall be deposited in the general fund of the Treasury of the United States as miscellaneous receipts. Sec. 238. jurisdiction of department of energy and environmental protection agency The provisions of section 20(c) of the Federal Nonnuclear Research and Development Act of 1974, relating to the responsibilities of the Environmental Protection Agency and the Department of Energy, shall apply with respect to actions under this subtitle to the same extent and in the same manner as such provisions apply to actions under section 20 of such Act. Sec. 239. establishment of office of energy from municipal waste in department of energy (a) There is hereby established within the Department of Energy an Office of Energy from Municipal Waste (hereinafter in this section referred to as the “Office”) to be headed by a Director, who shall be appointed by the Secretary of Energy. (b) It shall be the function of the Office to perform— (1) the research, development, demonstration, and commercialization activities authorized under this subtitle (including those authorized under section 237), and (2) such other duties relating to the production of energy from municipal waste as the Secretary of Energy may assign to the Office. (c) In carrying out functions tranferred or assigned to the Office, Consultation with Federal agencies. the Secretary of Energy shall consult with the Administrator of the Environmental Protection Agency, the Secretary of Commerce, and the heads of such other Federal agencies, as appropriate. (d) The Secretary shall provide for the transfer to the Office of the functions relating to, and personnel of the Department who are responsible for the administration of, programs in existence on the date of the enactment of this Act which relate to the research, development, demonstration, and commercialization of technologies for the recovery of energy from municipal waste. Sec. 240. termination No financial assistance may be committed to or made 42 USC 8840. under this subtitle after September 30, 1984. This section shall not be construed to affect the authority of the Secretary of Energy to spend funds after such date pursuant to any award of financial assistance made on or before that date. Subtitle C— Rural, Agricultural, and Forestry Biomass Energy Sec. 251. model demonstration biomass energy facilities (a) The Secretary of Agriculture shall establish not more 42 USC 8851. than ten model demonstration biomass energy facilities for purposes of exhibiting the most advanced technology available for producing biomass energy. Such facilities and information regarding the operation Public inspection, availability. of such facilities shall be available for public inspection, and, to the extent practicable, such facilities shall be established in Cooperation with State and Federal agencies. various regions in the United States. Such facilities may be established in cooperation with appropriate departments or agencies of the States, or appropriate departments, agencies, or other instrumentalities of the United States. (b) For purposes of carrying out subsection (a), there is authorized Appropriation authorization. to be appropriated $5,000,000 for each of the fiscal years 1981, 1982, 1983, and 1984. Sec. 252. biomass energy research and demonstration projects Section 1419 of the National Agricultural Research, Extension, and Teaching Policy Act of 1977 (7 U.S.C. 3154) is amended— (1) by striking out “colleges and universities” the first place it appears and inserting in lieu thereof “colleges, universities, and Government corporations”; (2) by striking out “(2) alcohol made from agricultural commodities and forest products as a substitute for alcohol made from petroleum products,” and inserting in lieu thereof the following new paragraph: “(2) alcohol and other forms of biomass energy as substitutes for petroleum or natural gas,”; (3) by inserting after the first sentence thereof the following: “The authority to conduct research under paragraph (2) does not include authority to conduct research with respect to technology demonstrations of integrated systems for commercialization of technologies for applications other than agricultural or uniquely Grants for research. rural applications. The Secretary may make grants under this subsection to such colleges, universities, and Government corporations for the purpose of conducting research relating to the development of the most economical and commercially feasible means of collecting and transporting wastes, residues, and by-products for use as feedstocks for the production of alcohol and other forms of biomass energy. At least 25 per centum of the amount appropriated in any fiscal year for research under paragraph (2) shall be made available for grants under this subsection for research, relating to the production of alcohol, to identify and develop agricultural commodities, including alfalfa, sweet sorghum, black locust, and cheese whey, which may be suitable for such production. At least 25 per centum of the amount appropriated in any fiscal year for research under paragraph (2) shall be made available for grants under this subsection for research relating to the development of technologies for increasing the energy efficiency and commercial feasibility of alcohol production, including processes of cellulose conversion and cell membrane technology.”; (4) by striking out “section” each place it appears and inserting in lieu thereof “subsection”; (5) by inserting “(a)” after “Sec. 1419.”; (6) by adding at the end of subsection (a), as so designated, the following new sentence: “In addition to the authorization of appropriations provided in the preceding sentence, there is authorized to be appropriated for grants to conduct research described in paragraph (2) and in the third sentence of this subsection $12,000,000 for each of the fiscal years ending September 30, 1981; September 30, 1982; September 30, 1983; and September 30, 1984.”; and (7) by adding at the end thereof the following new subsection: “(b) For purposes of subsection (a)— “(1) the term ‘biomass’ means any organic matter which is available on a renewable basis, including agricultural crops and agricultural wastes and residues, wood and wood wastes and residues, and animal wastes, except that such term does not include aquatic plants and municipal wastes; “(2) the term ‘biomass energy’ means any gaseous, liquid, or solid fuel produced by conversion of biomass, and energy or steam derived from the direct combustion of biomass for the generation of electricity, mechanical power, or industrial process heat; and “(3) the term ‘municipal wastes’ means any organic matter, including sewage, sewage sludge, and industrial or commercial waste, and mixtures of such matter and inorganic refuse— “(i) from any publicly or privately operated municipal waste collection or similar disposal system; or “(ii) from similar waste flows (other than such flows which constitute agricultural wastes or residues, or wood wastes or residues from wood harvesting activities or production of forest products).”. Sec. 253. applied research regarding enerhy conservation and biomass energy production and use The third sentence of section 1 of the Act of June 29, 1935 (49 Stat. 436; 7 U.S.C. 427), commonly known as the Bankhead-Jones Act, is amended by inserting “applied research to develop agricultural, forestry, and rural energy conservation and biomass energy production and use;” after “irrigation);”. Sec. 254. forestry enerhy research Section 3(a) of the Forest and Rangeland Renewable Resources Research Act of 1978 (16 U.S.C. 1642(a)) is amended— (1) in paragraph (1) by inserting “energy production, activities related to energy conservation,” after “wilderness,”; and (2) in paragraph (4) by inserting “producing and conserving energy;” after “wood fiber;”. Sec. 255. biomass energy educational and technical assistance (a) Subtitle B of the National Agricultural Research, Extension, and Teaching Policy Act of 1977 (7 U.S.C. 3121–3128) is amended by adding at the end thereof the following new section: “Sec. 1413A. “biomass energy educational and technical assistance programs (a) The Secretary, in cooperation with State directors 7 USC 3129. of cooperative extension, administrators of extension for land-grant colleges and universities, State foresters or equivalent State officials, and the heads of other Federal departments and agencies, shall provide educational programs for producers of agricultural commodities, wood, and wood products to— “(1) inform such producers of the feasibility of using biomass for energy; “(2) disseminate to such producers information regarding the results of research regarding the use of biomass for energy; “(3) inform such producers of the best available technology for the use of biomass for energy; “(4) provide technical assistance to such producers to improve their ability to efficiently use biomass for energy; and “(5) disseminate to such producers the results of research on energy conservation techniques and encourage such producers to adopt such techniques. “(b) All appropriate educational methods, including meetings, short courses, workshops, tours, demonstrations, publications, news releases, and radio and television programs, may be used to carry out subsection (a). “(c) The State director of cooperative extension in each State shall State plan. develop a single, comprehensive, and coordinated plan which includes every biomass energy educational and technical assistance program in effect or proposed in such State, except that in those States which contain more than one land-grant college or university, such plan shall be jointly developed by the administrative heads of extension of such institutions. Such plan shall be developed with the full participation of the State forester or the equivalent State official of such State. Each State’s plan shall be submitted to the Secretary Review. annually for approval. The Advisory Board shall review and make recommendations to the Secretary pertaining to programs conducted Annual report. under this section. Each State shall submit an annual progress report on the operation of its plan to the Secretary before January 1 following the fiscal year for which such report is made. “(d) Funds made available under this section shall be provided to the State director of cooperative extension and the administrators of extension for land-grant colleges and universities in each State in a manner consistent with the effective implementation of this section. “(e) For purposes of this section— “(1) the term ‘biomass’ means any organic matter which is available on a renewable basis, including agricultural crops and agricultural wastes and residues, wood and wood wastes and residues, and animal wastes, except that such term does not include aquatic plants and municipal wastes; “(2) the term ‘biomass energy’ means any gaseous, liquid, or solid fuel produced by conversion of biomass, and energy or steam derived from the direct combustion of biomass for the generation of electricity, mechanical power, or industrial process neat; and “(3) the term ‘municipal wastes’ means any organic matter, including sewage, sewage sludge, and industrial or commercial waste, and mixtures of such matter and inorganic refuse— “(i) from any publicly or privately operated municipal waste collection or similar disposal system; or “(ii) from similar waste flows (other than such flows which constitute agricultural wastes or residues, or wood wastes or residues from wood harvesting activities or production of forest products). “(f) There is authorized to be appropriated to carry out this section $10,000,000 for each of the fiscal years 1981, 1982, 1983, and 1984.”. (b) The table of contents of the Food and Agriculture Act of 1977 (91 Stat. 913) is amended by inserting after the item relating to section 1413 the following new item: “Sec. 1413A. Biomass energy educational and technical assistance programs.”. Sec. 256. rural energy extension work The Act of May 14, 1914 (38 Stat. 372; 7 U.S.C. 341–349), commonly known as the Smith-Lever Act, is amended— (1) in section 1 by striking out “and home economics,” and inserting in lieu thereof “, home economics, and rural energy,”; and (2) in section 2 by striking out “and home economics” and inserting in lieu thereof “;, home economics, and rural energy”. Sec. 257. coordination of research and extension activities (a) The Secretary of Agriculture shall coordinate the applied research and extension programs conducted under this subtitle and under the amendments made by this subtitle to section 1419 and subtitle B of the National Agricultural Research, Extension, and 7 USC 3154, 3121–3128, 427. Teaching Policy Act of 1977, section 1 of the Bankhead-Jones Act, section 3 of the Forest and Rangeland Renewable Resources Research Act of 1978, and sections 1 and 2 of the Smith-Lever Act with the 16 USC 1642. 7 USC 341, 342. programs of the Department of Energy. (b) In carrying out this subtitle and the amendments made by this subtitle, the Secretary of Agriculture shall consult on a continuing basis with— (1) the Subcommittee on Food and Renewable Resources of the Federal Coordinating Council for Science, Engineering, and Technology; (2) the Joint Council on Food and Agricultural Sciences; and (3) the National Agricultural Research and Extension Users Advisory Board; for the purpose of coordinating research and extension activities. Sec. 258. lending for enerhu production and conservation projects by production credit associations, federal land banks, and banks for cooperatives The Farm Credit Administration shall encourage production 42 USC 8853. credit associations, Federal land banks, and banks for cooperatives to use existing authorities to make loans to eligible persons for commercially feasible biomass energy projects. Sec. 259. agricultural conservation programl energy conservation cost sharing Section 8(b) of the Soil Conservation and Domestic Allotment Act (16 U.S.C. 590h(b)) is amended— (1) in the first sentence by inserting “(including energy conservation)” after “conservation”; and (2) by inserting after the first undesignated paragraph the following new undesignated paragraph: “The Secretary may provide financial assistance to agricultural producers for the purpose of encouraging energy conservation by sharing the costs of and providing technical assistance for (1) the establishment, restoration, and better use of shelter belts to conserve energy on farmsteads and feed lots, (2) the establishment and use of minimum tillage systems, (3) the efficient storage and application of manure and other suitable wastes to the land for land fertility and soil improvement, (4) the use of integrated pest management, (5) the use of energy-efficient irrigation water management, and (6) such other land, water, and related resource management practices as the Secretary may determine to have significant energy-conserving effects.”. Sec. 260. production of commodities on set-aside acreage (a) The Food and Agriculture Act of 1977 (91 Stat. 913) is amended by adding at the end thereof the following new title: “TITLE XX— PRODUCTION OF COMMODITIES ON SET-ASIDE ACREAGE “Sec. 2001. (a) The Secretary of Agriculture shall permit, subject to 7 USC 1435. such terms and conditions as the Secretary shall prescribe, all or any ?art of the acreage set aside or diverted under the Agricultural Act of 949 from the production of a commodity for any crop year to be devoted to the production of any commodity for conversion into alcohol or hydrocarbons for use as motor fuel or other fuel, if the Secretary of Agriculture determines that such production is desirable in order to provide an adequate supply of commodities for such conversion, is not likely to increase the cost of price support programs, and will not adversely affect farm income. “(b) (1) During any year in which no set-aside or diversion of acreage is in effect under the Agricultural Act of 1949, the Secretary of Agriculture may formulate and administer a program for the production, subject to such terms and conditions as he may prescribe, of commodities for conversion into alcohol or hydrocarbons for use as motor fuel or other fuel. Under such program, producers of wheat, feed grains, upland cotton, and rice shall be paid incentive payments to devote a portion of their acreage to such production. “(2) The payments under this subsection shall be made at such rate or rates as the Secretary of Agriculture determines to be fair and reasonable, taking into consideration the participation necessary to ensure an adequate supply of commodities for such conversion. “(3) The Secretary may issue any regulations necessary to carry out the provisions of this subsection. “(4) There are authorized to be appropriated such sums as may be necessary to carry out the provisions of this subsection.”. (b) The table of contents of the Food and Agriculture Act of 1977 (91 Stat. 913) is amended by adding at the end thereof the following new items: “TITLE XX— PRODUCTION OF COMMODITIES ON SET-ASIDE ACREAGE “Sec. 2001. Production of commodities on set-aside acreage.”. Sec. 261. utilization of national forest system in wood energy development projects The Secretary of Agriculture may make available the timber resources of the National Forest System, in accordance with appropriate timber appraisal and sale procedures, for use by biomass energy projects. Sec. 262. forest service leases and permits It is the intent of the Congress that the Secretary of Agriculture shall process applications for leases of National Forest System lands and for permits to explore, drill, and develop resources on land leased from the Forest Service, notwithstanding the current status of any plan being prepared under section 6 of the Forest and Rangeland Renewable Resources Planning Act of 1974 (16 U.S.C. 1604). Subtitle D— Miscellaneous Biomass Provisions Sec. 271. use of gasohol in federal motor vehicles (a) The President shall, by executive order, require that motor vehicles which are owned or leased by Federal agencies and are capable of operating on gasohol shall use gasohol where available at reasonable prices and in reasonable quantities. (b) The President may provide for exceptions to the requirement of subsection (a) where necessary, including to protect the national security. (c) Such executive order shall specify the alcohol-gasoline mixture Gasohol. or mixtures which shall constitute “gasohol” for purposes of such order, as well as specifications for its use. Sec. 272. motor vehicle alcohol usage study The Secretary of Energy shall, in consultation with the Report to Congress. Secretary of Transportation, submit to the Congress within 9 months after the date of the enactment of this Act a report on— (1) the need for, and practicality of, mandating through legislation that any new motor vehicle sold in the United States shall be capable of using alcohol as a motor fuel in specified alcohol-gasoline mixtures, or using alcohol as the only fuel; (2) the need for any other legislation to address technical or institutional barriers to the widespread marketing of alcohol, including requirements that would mandate specified proportions of alcohol in all motor gasoline sold; and (3) any other aspects of the use of alcohol as a motor fuel, as the Secretary considers appropriate. Sec. 273. natural gas priorities For the purposes of section 401 of the Natural Gas Policy Essential agricultural use. 15 USC 3391a. 15 USC 3391. Act of 1978 (Public Law 95–621), the term “essential agricultural use shall— (1) include use of natural gas in sugar refining for production of alcohol; (2) include use of natural gas for agricultural production on set-aside acreage or acreage diverted from the production of a commodity (as provided under the Agricultural Act of 1949) to be 7 USC 1421 note. devoted to the production of any commodity for conversion into alcohol or hydrocarbons for use as motor fuel or other fuels; and (3) for the 5-year period beginning on the date of the enactment of this Act, include use of natural gas in the distillation of fuel-grade alcohol from food grains or other biomass by facilities in existence on the date of the enactment of this Act which do not have the installed capability to burn coal lawfully. Sec. 274. standby authority for allocation of alcohol fuel Section 4 of the Emergency Petroleum Allocation Act of 1973 is amended by adding at the end thereof the following new 15 USC 753. subsection: “(f) (1) If the President finds that there are significant quantities of alcohol available for use in motor fuel that are not being used for that purpose because of an unavailability of crude oil with respect to a refiner or unavailability of gasoline with respect to persons engaged in marketing of petroleum products, the President shall, to the extent practicable and subject to the provisions of this Act, use the authorities under subsection (a) to provide for the allocation of— “(A) crude oil to refineries engaged in the production of refined petroleum products to be mixed with alcohol, and “(B) refined petroleum products to persons engaged in the marketing of petroleum products, so as to result in the use of such quantities of alcohol in motor fuel. “(2) In exercising such authorities pursuant to this subsection, the President shall— “(A) seek to avoid disruption of crude oil and refined petroleum product markets and to avoid causing unreasonable increases in the price of alcohol, and “(B) give due consideration to the adequacy of quality control in any refinery operations related to the receipt of an allocation of crude oil. “(3) For the purposes of this subsection, ‘alcohol’ means methanol, ethanol, or any other alcohol which is produced from any source and which is suitable for use in combination with other fuels as a motor fuel. “(4) Nothing in this subsection shall limit the allocation authorities under subsection (a).”.

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