2008 Farm Bill - Key Provisions

`(2) a rate that is equal to 128.5 percent of the loan rate per pound of raw cane sugar for the applicable crop year under subsection (a) for each of the 2009 through 2012 crop years.

`(c) Term of Loans-

`(1) IN GENERAL- A loan under this section during any fiscal year shall be made available not earlier than the beginning of the fiscal year and shall mature at the earlier of--

`(A) the end of the 9-month period beginning on the first day of the first month after the month in which the loan is made; or

`(B) the end of the fiscal year in which the loan is made.

`(2) SUPPLEMENTAL LOANS- In the case of a loan made under this section in the last 3 months of a fiscal year, the processor may repledge the sugar as collateral for a second loan in the subsequent fiscal year, except that the second loan shall--

`(A) be made at the loan rate in effect at the time the first loan was made; and

`(B) mature in 9 months less the quantity of time that the first loan was in effect.

`(d) Loan Type; Processor Assurances-

`(1) NONRECOURSE LOANS- The Secretary shall carry out this section through the use of nonrecourse loans.

`(2) PROCESSOR ASSURANCES-

`(A) IN GENERAL- The Secretary shall obtain from each processor that receives a loan under this section such assurances as the Secretary considers adequate to ensure that the processor will provide payments to producers that are proportional to the value of the loan received by the processor for the sugar beets and sugarcane delivered by producers to the processor.

`(B) MINIMUM PAYMENTS-

`(i) IN GENERAL- Subject to clause (ii), the Secretary may establish appropriate minimum payments for purposes of this paragraph.

`(ii) LIMITATION- In the case of sugar beets, the minimum payment established under clause (i) shall not exceed the rate of payment provided for under the applicable contract between a sugar beet producer and a sugar beet processor.

`(3) ADMINISTRATION- The Secretary may not impose or enforce any prenotification requirement, or similar administrative requirement not otherwise in effect on May 13, 2002, that has the effect of preventing a processor from electing to forfeit the loan collateral (of an acceptable grade and quality) on the maturity of the loan.

`(e) Loans for In-Process Sugar-

`(1) DEFINITION OF IN-PROCESS SUGARS AND SYRUPS- In this subsection, the term `in-process sugars and syrups' does not include raw sugar, liquid sugar, invert sugar, invert syrup, or other finished product that is otherwise eligible for a loan under subsection (a) or (b).

`(2) AVAILABILITY- The Secretary shall make nonrecourse loans available to processors of a crop of domestically grown sugarcane and sugar beets for in-process sugars and syrups derived from the crop.

`(3) LOAN RATE- The loan rate shall be equal to 80 percent of the loan rate applicable to raw cane sugar or refined beet sugar, as determined by the Secretary on the basis of the source material for the in-process sugars and syrups.

`(4) FURTHER PROCESSING ON FORFEITURE-

`(A) IN GENERAL- As a condition of the forfeiture of in-process sugars and syrups serving as collateral for a loan under paragraph (2), the processor shall, within such reasonable time period as the Secretary may prescribe and at no cost to the Commodity Credit Corporation, convert the in-process sugars and syrups into raw cane sugar or refined beet sugar of acceptable grade and quality for sugars eligible for loans under subsection (a) or (b).

`(B) TRANSFER TO CORPORATION- Once the in-process sugars and syrups are fully processed into raw cane sugar or refined beet sugar, the processor shall transfer the sugar to the Commodity Credit Corporation.

`(C) PAYMENT TO PROCESSOR- On transfer of the sugar, the Secretary shall make a payment to the processor in an amount equal to the amount obtained by multiplying--

`(i) the difference between--

`(I) the loan rate for raw cane sugar or refined beet sugar, as appropriate; and

`(II) the loan rate the processor received under paragraph (3); by

`(ii) the quantity of sugar transferred to the Secretary.

`(5) LOAN CONVERSION- If the processor does not forfeit the collateral as described in paragraph (4), but instead further processes the in-process sugars and syrups into raw cane sugar or refined beet sugar and repays the loan on the in-process sugars and syrups, the processor may obtain a loan under subsection (a) or (b) for the raw cane sugar or refined beet sugar, as appropriate.

`(6) TERM OF LOAN- The term of a loan made under this subsection for a quantity of in-process sugars and syrups, when combined with the term of a loan made with respect to the raw cane sugar or refined beet sugar derived from the in-process sugars and syrups, may not exceed 9 months, consistent with subsection (c).

`(f) Avoiding Forfeitures; Corporation Inventory Disposition-

`(1) IN GENERAL- Subject to subsection (d)(3), to the maximum extent practicable, the Secretary shall operate the program established under this section at no cost to the Federal Government by avoiding the forfeiture of sugar to the Commodity Credit Corporation.

`(2) INVENTORY DISPOSITION-

`(A) IN GENERAL- To carry out paragraph (1), the Commodity Credit Corporation may accept bids to obtain raw cane sugar or refined beet sugar in the inventory of the Commodity Credit Corporation from (or otherwise make available such commodities, on appropriate terms and conditions, to) processors of sugarcane and processors of sugar beets (acting in conjunction with the producers of the sugarcane or sugar beets processed by the processors) in return for the reduction of production of raw cane sugar or refined beet sugar, as appropriate.

`(B) BIOENERGY FEEDSTOCK- If a reduction in the quantity of production accepted under subparagraph (A) involves sugar beets or sugarcane that has already been planted, the sugar beets or sugarcane so planted may not be used for any commercial purpose other than as a bioenergy feedstock.

`(C) ADDITIONAL AUTHORITY- The authority provided under this paragraph is in addition to any authority of the Commodity Credit Corporation under any other law.

`(g) Information Reporting-

`(1) DUTY OF PROCESSORS AND REFINERS TO REPORT- A sugarcane processor, cane sugar refiner, and sugar beet processor shall furnish the Secretary, on a monthly basis, such information as the Secretary may require to administer sugar programs, including the quantity of purchases of sugarcane, sugar beets, and sugar, and production, importation, distribution, and stock levels of sugar.

`(2) DUTY OF PRODUCERS TO REPORT-

`(A) PROPORTIONATE SHARE STATES- As a condition of a loan made to a processor for the benefit of a producer, the Secretary shall require each producer of sugarcane located in a State (other than the Commonwealth of Puerto Rico) in which there are in excess of 250 producers of sugarcane to report, in the manner prescribed by the Secretary, the sugarcane yields and acres planted to sugarcane of the producer.

`(B) OTHER STATES- The Secretary may require each producer of sugarcane or sugar beets not covered by subparagraph (A) to report, in a manner prescribed by the Secretary, the yields of, and acres planted to, sugarcane or sugar beets, respectively, of the producer.

`(3) DUTY OF IMPORTERS TO REPORT-

`(A) IN GENERAL- Except as provided in subparagraph (B), the Secretary shall require an importer of sugars, syrups, or molasses to be used for human consumption or to be used for the extraction of sugar for human consumption to report, in the manner prescribed by the Secretary, the quantities of the products imported by the importer and the sugar content or equivalent of the products.

`(B) TARIFF-RATE QUOTAS- Subparagraph (A) shall not apply to sugars, syrups, or molasses that are within the quantities of tariff-rate quotas that are subject to the lower rate of duties.

`(4) COLLECTION OF INFORMATION ON MEXICO-

`(A) COLLECTION- The Secretary shall collect--

`(i) information on the production, consumption, stocks, and trade of sugar in Mexico, including United States exports of sugar to Mexico; and

`(ii) publicly available information on Mexican production, consumption, and trade of high fructose corn syrups.

`(B) PUBLICATION- The data collected under subparagraph (A) shall be published in each edition of the World Agricultural Supply and Demand Estimates.

`(5) PENALTY- Any person willfully failing or refusing to furnish the information required to be reported by paragraph (1), (2), or (3), or furnishing willfully false information, shall be subject to a civil penalty of not more than $10,000 for each such violation.

`(6) MONTHLY REPORTS- Taking into consideration the information received under this subsection, the Secretary shall publish on a monthly basis composite data on production, imports, distribution, and stock levels of sugar.

`(h) Substitution of Refined Sugar- For purposes of Additional U.S. Note 6 to chapter 17 of the Harmonized Tariff Schedule of the United States and the reexport programs and polyhydric alcohol program administered by the Secretary, all refined sugars (whether derived from sugar beets or sugarcane) produced by cane sugar refineries and beet sugar processors shall be fully substitutable for the export of sugar and sugar-containing products under those programs.

`(i) Effective Period- This section shall be effective only for the 2008 through 2012 crops of sugar beets and sugarcane.'.

(b) Transition- The Secretary shall make loans for raw cane sugar and refined beet sugar available for the 2007 crop year on the terms and conditions provided in section 156 of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7272), as in effect on the day before the date of enactment of this Act.

SEC. 1402. UNITED STATES MEMBERSHIP IN THE INTERNATIONAL SUGAR ORGANIZATION.

The Secretary shall work with the Secretary of State to restore United States membership in the International Sugar Organization not later than 1 year after the date of enactment of this Act.

SEC. 1403. FLEXIBLE MARKETING ALLOTMENTS FOR SUGAR.

(a) Definitions- Section 359a of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359aa) is amended--

(1) by redesignating paragraphs (1), (2), (3), and (4) as paragraphs (2), (4), (5), and (6), respectively;

(2) by inserting before paragraph (2) (as so redesignated) the following:

`(1) HUMAN CONSUMPTION- The term `human consumption', when used in the context of a reference to sugar (whether in the form of sugar, in-process sugar, syrup, molasses, or in some other form) for human consumption, includes sugar for use in human food, beverages, or similar products.'; and

(3) by inserting after paragraph (2) (as so redesignated) the following:

`(3) MARKET-

`(A) IN GENERAL- The term `market' means to sell or otherwise dispose of in commerce in the United States.

`(B) INCLUSIONS- The term `market' includes--

`(i) the forfeiture of sugar under the loan program for sugar established under section 156 of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7272);

`(ii) with respect to any integrated processor and refiner, the movement of raw cane sugar into the refining process; and

`(iii) the sale of sugar for the production of ethanol or other bioenergy product, if the disposition of the sugar is administered by the Secretary under section 9010 of the Farm Security and Rural Investment Act of 2002.

`(C) MARKETING YEAR- Forfeited sugar described in subparagraph (B)(i) shall be considered to have been marketed during the crop year for which a loan is made under the loan program described in that subparagraph.'.

(b) Flexible Marketing Allotments for Sugar- Section 359b of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359bb) is amended to read as follows:

`SEC. 359b. FLEXIBLE MARKETING ALLOTMENTS FOR SUGAR.

`(a) Sugar Estimates-

`(1) IN GENERAL- Not later than August 1 before the beginning of each of the 2008 through 2012 crop years for sugarcane and sugar beets, the Secretary shall estimate--

`(A) the quantity of sugar that will be subject to human consumption in the United States during the crop year;

`(B) the quantity of sugar that would provide for reasonable carryover stocks;

`(C) the quantity of sugar that will be available from carry-in stocks for human consumption in the United States during the crop year;

`(D) the quantity of sugar that will be available from the domestic processing of sugarcane, sugar beets, and in-process beet sugar; and

`(E) the quantity of sugars, syrups, and molasses that will be imported for human consumption or to be used for the extraction of sugar for human consumption in the United States during the crop year, whether the articles are under a tariff-rate quota or are in excess or outside of a tariff-rate quota.

`(2) EXCLUSION- The estimates under this subsection shall not apply to sugar imported for the production of polyhydric alcohol or to any sugar refined and reexported in refined form or in products containing sugar.

`(3) REESTIMATES- The Secretary shall make reestimates of sugar consumption, stocks, production, and imports for a crop year as necessary, but not later than the beginning of each of the second through fourth quarters of the crop year.

`(b) Sugar Allotments-

`(1) ESTABLISHMENT- By the beginning of each crop year, the Secretary shall establish for that crop year appropriate allotments under section 359c for the marketing by processors of sugar processed from sugar cane or sugar beets or in-process beet sugar (whether the sugar beets or in-process beet sugar was produced domestically or imported) at a level that is--

`(A) sufficient to maintain raw and refined sugar prices above forfeiture levels so that there will be no forfeitures of sugar to the Commodity Credit Corporation under the loan program for sugar established under section 156 of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7272); but

`(B) not less than 85 percent of the estimated quantity of sugar for domestic human consumption for the crop year.

`(2) PRODUCTS- The Secretary may include sugar products, the majority content of which is sucrose for human consumption, derived from sugar cane, sugar beets, molasses, or sugar in the allotments established under paragraph (1) if the Secretary determines it to be appropriate for purposes of this part.

`(c) Coverage of Allotments-

`(1) IN GENERAL- The marketing allotments under this part shall apply to the marketing by processors of sugar intended for domestic human consumption that has been processed from sugar cane, sugar beets, or in-process beet sugar, whether such sugar beets or in-process beet sugar was produced domestically or imported.

`(2) EXCEPTIONS- Consistent with the administration of marketing allotments for each of the 2002 through 2007 crop years, the marketing allotments shall not apply to sugar sold--

`(A) to facilitate the exportation of the sugar to a foreign country, except that the exports of sugar shall not be eligible to receive credits under reexport programs for refined sugar or sugar containing products administered by the Secretary;

`(B) to enable another processor to fulfill an allocation established for that processor; or

`(C) for uses other than domestic human consumption, except for the sale of sugar for the production of ethanol or other bioenergy if the disposition of the sugar is administered by the Secretary under section 9010 of the Farm Security and Rural Investment Act of 2002.

`(3) REQUIREMENT- The sale of sugar described in paragraph (2)(B) shall be--

`(A) made prior to May 1; and

`(B) reported to the Secretary.

`(d) Prohibitions-

`(1) IN GENERAL- During all or part of any crop year for which marketing allotments have been established, no processor of sugar beets or sugarcane shall market for domestic human consumption a quantity of sugar in excess of the allocation established for the processor, except--

`(A) to enable another processor to fulfill an allocation established for that other processor; or

`(B) to facilitate the exportation of the sugar.

`(2) CIVIL PENALTY- Any processor who knowingly violates paragraph (1) shall be liable to the Commodity Credit Corporation for a civil penalty in an amount equal to 3 times the United States market value, at the time of the commission of the violation, of that quantity of sugar involved in the violation.'.

(c) Establishment of Flexible Marketing Allotments- Section 359c of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359cc) is amended--

(1) by striking subsection (b) and inserting the following:

`(b) Overall Allotment Quantity-

`(1) IN GENERAL- The Secretary shall establish the overall quantity of sugar to be allotted for the crop year (referred to in this part as the `overall allotment quantity') at a level that is--

`(A) sufficient to maintain raw and refined sugar prices above forfeiture levels to avoid forfeiture of sugar to the Commodity Credit Corporation; but

`(B) not less than a quantity equal to 85 percent of the estimated quantity of sugar for domestic human consumption for the crop year.

`(2) ADJUSTMENT- Subject to paragraph (1), the Secretary shall adjust the overall allotment quantity to maintain--

`(A) raw and refined sugar prices above forfeiture levels to avoid the forfeiture of sugar to the Commodity Credit Corporation; and

`(B) adequate supplies of raw and refined sugar in the domestic market.';

(2) in subsection (d)(2), by inserting `or in-process beet sugar' before the period at the end;

(3) in subsection (g)(1)--

(A) by striking `(1) IN GENERAL- The Secretary' and inserting the following:

`(1) ADJUSTMENTS-

`(A) IN GENERAL- Subject to subparagraph (B), the Secretary'; and

(B) by adding at the end the following:

`(B) LIMITATION- In carrying out subparagraph (A), the Secretary may not reduce the overall allotment quantity to a quantity of less than 85 percent of the estimated quantity of sugar for domestic human consumption for the crop year.'; and

(4) by striking subsection (h).

(d) Allocation of Marketing Allotments- Section 359d(b) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359dd(b)) is amended--

(1) in paragraph (1)(F), by striking `Except as otherwise provided in section 359f(c)(8), if' and inserting `If'; and

(2) in paragraph (2), by striking subparagraphs (G), (H), and (I) and inserting the following:

`(G) SALE OF FACTORIES OF A PROCESSOR TO ANOTHER PROCESSOR-

`(i) EFFECT OF SALE- Subject to subparagraphs (E) and (F), if 1 or more factories of a processor of beet sugar (but not all of the assets of the processor) are sold to another processor of beet sugar during a crop year, the Secretary shall assign a pro rata portion of the allocation of the seller to the allocation of the buyer to reflect the historical contribution of the production of the sold 1 or more factories to the total allocation of the seller, unless the buyer and the seller have agreed upon the transfer of a different portion of the allocation of the seller, in which case, the Secretary shall transfer that portion agreed upon by the buyer and seller.

`(ii) APPLICATION OF ALLOCATION- The assignment of the allocation under clause (i) shall apply--

`(I) during the remainder of the crop year for which the sale described in clause (i) occurs; and

`(II) during each subsequent crop year.

`(iii) USE OF OTHER FACTORIES TO FILL ALLOCATION- If the assignment of the allocation under clause (i) to the buyer for the 1 or more purchased factories cannot be filled by the production of the 1 or more purchased factories, the remainder of the allocation may be filled by beet sugar produced by the buyer from other factories of the buyer.

`(H) NEW ENTRANTS STARTING PRODUCTION, REOPENING, OR ACQUIRING AN EXISTING FACTORY WITH PRODUCTION HISTORY-

`(i) DEFINITION OF NEW ENTRANT-

`(I) IN GENERAL- In this subparagraph, the term `new entrant' means an individual, corporation, or other entity that--

`(aa) does not have an allocation of the beet sugar allotment under this part;

`(bb) is not affiliated with any other individual, corporation, or entity that has an allocation of beet sugar under this part (referred to in this clause as a `third party'); and

`(cc) will process sugar beets produced by sugar beet growers under contract with the new entrant for the production of sugar at the new or re-opened factory that is the basis for the new entrant allocation.

`(II) AFFILIATION- For purposes of subclause (I)(bb), a new entrant and a third party shall be considered to be affiliated if--

`(aa) the third party has an ownership interest in the new entrant;

`(bb) the new entrant and the third party have owners in common;

`(cc) the third party has the ability to exercise control over the new entrant by organizational rights, contractual rights, or any other means;

`(dd) the third party has a contractual relationship with the new entrant by which the new entrant will make use of the facilities or assets of the third party; or

`(ee) there are any other similar circumstances by which the Secretary determines that the new entrant and the third party are affiliated.

`(ii) ALLOCATION FOR A NEW ENTRANT THAT HAS CONSTRUCTED A NEW FACTORY OR REOPENED A FACTORY THAT WAS NOT OPERATED SINCE BEFORE 1998- If a new entrant constructs a new sugar beet processing factory, or acquires and reopens a sugar beet processing factory that last processed sugar beets prior to the 1998 crop year and there is no allocation currently associated with the factory, the Secretary shall--

`(I) assign an allocation for beet sugar to the new entrant that provides a fair and equitable distribution of the allocations for beet sugar so as to enable the new entrant to achieve a factory utilization rate comparable to the factory utilization rates of other similarly-situated processors; and

`(II) reduce the allocations for beet sugar of all other processors on a pro rata basis to reflect the allocation to the new entrant.

`(iii) ALLOCATION FOR A NEW ENTRANT THAT HAS ACQUIRED AN EXISTING FACTORY WITH A PRODUCTION HISTORY-

`(I) IN GENERAL- If a new entrant acquires an existing factory that has processed sugar beets from the 1998 or subsequent crop year and has a production history, on the mutual agreement of the new entrant and the company currently holding the allocation associated with the factory, the Secretary shall transfer to the new entrant a portion of the allocation of the current allocation holder to reflect the historical contribution of the production of the 1 or more sold factories to the total allocation of the current allocation holder, unless the new entrant and current allocation holder have agreed upon the transfer of a different portion of the allocation of the current allocation holder, in which case, the Secretary shall transfer that portion agreed upon by the new entrant and the current allocation holder.

`(II) PROHIBITION- In the absence of a mutual agreement described in subclause (I), the new entrant shall be ineligible for a beet sugar allocation.

`(iv) APPEALS- Any decision made under this subsection may be appealed to the Secretary in accordance with section 359i.'.

(e) Reassignment of Deficits- Section 359e(b) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359ee(b)) is amended in paragraphs (1)(D) and (2)(C), by inserting `of raw cane sugar' after `imports' each place it appears.

(f) Provisions Applicable to Producers- Section 359f(c) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359ff(c)) is amended--

(1) by striking paragraph (8);

(2) by redesignating paragraphs (1) through (7) as paragraphs (2) through (8), respectively;

(3) by inserting before paragraph (2) (as so redesignated) the following:

`(1) DEFINITION OF SEED-

`(A) IN GENERAL- In this subsection, the term `seed' means only those varieties of seed that are dedicated to the production of sugarcane from which is produced sugar for human consumption.

`(B) EXCLUSION- The term `seed' does not include seed of a high-fiber cane variety dedicated to other uses, as determined by the Secretary';

(4) in paragraph (3) (as so redesignated)--

(A) in the first sentence--

(i) by striking `paragraph (1)' and inserting `paragraph (2)'; and

(ii) by inserting `sugar produced from' after `quantity of'; and

(B) in the second sentence, by striking `paragraph (7)' and inserting `paragraph (8)';

(5) in the first sentence of paragraph (6)(C) (as so redesignated), by inserting `for sugar' before `in excess of the farm's proportionate share'; and

(6) in paragraph (8) (as so redesignated), by inserting `sugar from' after `the amount of'.

(g) Special Rules- Section 359g of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359gg) is amended--

(1) by striking subsection (a) and inserting the following:

`(a) Transfer of Acreage Base History-

`(1) TRANSFER AUTHORIZED- For the purpose of establishing proportionate shares for sugarcane farms under section 359f(c), the Secretary, on application of any producer, with the written consent of all owners of a farm, may transfer the acreage base history of the farm to any other parcels of land of the applicant.

`(2) CONVERTED ACREAGE BASE-

`(A) IN GENERAL- Sugarcane acreage base established under section 359f(c) that has been or is converted to nonagricultural use on or after May 13, 2002, may be transferred to other land suitable for the production of sugarcane that can be delivered to a processor in a proportionate share State in accordance with this paragraph.

`(B) NOTIFICATION- Not later than 90 days after the Secretary becomes aware of a conversion of any sugarcane acreage base to a nonagricultural use, the Secretary shall notify the 1 or more affected landowners of the transferability of the applicable sugarcane acreage base.

`(C) INITIAL TRANSFER PERIOD- The owner of the base attributable to the acreage at the time of the conversion shall be afforded 90 days from the date of the receipt of the notification under subparagraph (B) to transfer the base to 1 or more farms owned by the owner.

`(D) GROWER OF RECORD- If a transfer under subparagraph (C) cannot be accomplished during the period specified in that subparagraph, the grower of record with regard to the acreage base on the date on which the acreage was converted to nonagricultural use shall--

`(i) be notified; and

`(ii) have 90 days from the date of the receipt of the notification to transfer the base to 1 or more farms operated by the grower.

`(E) POOL DISTRIBUTION-

`(i) IN GENERAL- If transfers under subparagraphs (B) and (C) cannot be accomplished during the periods specified in those subparagraphs, the county committee of the Farm Service Agency for the applicable county shall place the acreage base in a pool for possible assignment to other farms.

`(ii) ACCEPTANCE OF REQUESTS- After providing reasonable notice to farm owners, operators, and growers of record in the county, the county committee shall accept requests from owners, operators, and growers of record in the county.

`(iii) ASSIGNMENT- The county committee shall assign the acreage base to other farms in the county that are eligible and capable of accepting the acreage base, based on a random drawing from among the requests received under clause (ii).

`(F) STATEWIDE REALLOCATION-

`(i) IN GENERAL- Any acreage base remaining unassigned after the transfers and processes described in subparagraphs (A) through (E) shall be made available to the State committee of the Farm Service Agency for allocation among the remaining county committees in the State representing counties with farms eligible for assignment of the base, based on a random drawing.

`(ii) ALLOCATION- Any county committee receiving acreage base under this subparagraph shall allocate the acreage base to eligible farms using the process described in subparagraph (E).

`(G) STATUS OF REASSIGNED BASE- After acreage base has been reassigned in accordance with this subparagraph, the acreage base shall--

`(i) remain on the farm; and

`(ii) be subject to the transfer provisions of paragraph (1).'; and

(2) in subsection (d)--

(A) in paragraph (1)--

(i) by inserting `affected' before `crop-share owners' each place it appears; and

(ii) by striking `, and from the processing company holding the applicable allocation for such shares,'; and

(B) in paragraph (2), by striking `based on' and all that follows through the end of subparagraph (B) and inserting `based on--

`(A) the number of acres of sugarcane base being transferred; and

`(B) the pro rata amount of allocation at the processing company holding the applicable allocation that equals the contribution of the grower to allocation of the processing company for the sugarcane acreage base being transferred.'.

(h) Appeals- Section 359i of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359ii) is amended--

(1) in subsection (a), by inserting `or 359g(d)' after `359f'; and

(2) by striking subsection (c).

(i) Reallocating Sugar Quota Import Shortfalls- Section 359k of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359kk) is repealed.

(j) Administration of Tariff Rate Quotas- Part VII of subtitle B of title III of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359aa) (as amended by subsection (i)) is amended by adding at the end the following:

`SEC. 359k. ADMINISTRATION OF TARIFF RATE QUOTAS.

`(a) Establishment-

`(1) IN GENERAL- Except as provided in paragraph (2) and notwithstanding any other provision of law, at the beginning of the quota year, the Secretary shall establish the tariff-rate quotas for raw cane sugar and refined sugars at the minimum level necessary to comply with obligations under international trade agreements that have been approved by Congress.

`(2) EXCEPTION- Paragraph (1) shall not apply to specialty sugar.

`(b) Adjustment-

`(1) BEFORE APRIL 1- Before April 1 of each fiscal year, if there is an emergency shortage of sugar in the United States market that is caused by a war, flood, hurricane, or other natural disaster, or other similar event as determined by the Secretary--

`(A) the Secretary shall take action to increase the supply of sugar in accordance with sections 359c(b)(2) and 359e(b), including an increase in the tariff-rate quota for raw cane sugar to accommodate the reassignment to imports; and

`(B) if there is still a shortage of sugar in the United States market, and marketing of domestic sugar has been maximized, and domestic raw cane sugar refining capacity has been maximized, the Secretary may increase the tariff-rate quota for refined sugars sufficient to accommodate the supply increase, if the further increase will not threaten to result in the forfeiture of sugar pledged as collateral for a loan under section 156 of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7272).

`(2) ON OR AFTER APRIL 1- On or after April 1 of each fiscal year--

`(A) the Secretary may take action to increase the supply of sugar in accordance with sections 359c(b)(2) and 359e(b), including an increase in the tariff-rate quota for raw cane sugar to accommodate the reassignment to imports; and

`(B) if there is still a shortage of sugar in the United States market, and marketing of domestic sugar has been maximized, the Secretary may increase the tariff-rate quota for raw cane sugar if the further increase will not threaten to result in the forfeiture of sugar pledged as collateral for a loan under section 156 of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7272).'.

(k) Period of Effectiveness- Part VII of subtitle B of title III of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359aa) (as amended by subsection (j)) is amended by adding at the end the following:

`SEC. 359l. PERIOD OF EFFECTIVENESS.

`(a) In General- This part shall be effective only for the 2008 through 2012 crop years for sugar.

`(b) Transition- The Secretary shall administer flexible marketing allotments for sugar for the 2007 crop year for sugar on the terms and conditions provided in this part as in effect on the day before the date of enactment of this section.'.

SEC. 1404. STORAGE FACILITY LOANS.

Section 1402(c) of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7971(c)) is amended--

(1) in paragraph (1), by striking `and' at the end;

(2) by redesignating paragraph (2) as paragraph (3);

(3) by inserting after paragraph (1) the following:

`(2) not include any penalty for prepayment; and'; and

(4) in paragraph (3) (as redesignated by paragraph (2)), by inserting `other' after `on such'.

SEC. 1405. COMMODITY CREDIT CORPORATION STORAGE PAYMENTS.

Subtitle E of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7281 et seq.) is amended by adding at the end the following:

`SEC. 167. COMMODITY CREDIT CORPORATION STORAGE PAYMENTS.

`(a) Initial Crop Years- Notwithstanding any other provision of law, for each of the 2008 through 2011 crop years, the Commodity Credit Corporation shall establish rates for the storage of forfeited sugar in an amount that is not less than--

`(1) in the case of refined sugar, 15 cents per hundredweight of refined sugar per month; and

`(2) in the case of raw cane sugar, 10 cents per hundredweight of raw cane sugar per month.

`(b) Subsequent Crop Years- For each of the 2012 and subsequent crop years, the Commodity Credit Corporation shall establish rates for the storage of forfeited sugar in the same manner as was used on the day before the date of enactment of this section.'.

Subtitle F--Administration

SEC. 1603. PAYMENT LIMITATIONS.

(a) Extension of Limitations- Sections 1001 and 1001C(a) of the Food Security Act of 1985 (7 U.S.C. 1308, 1308-3(a)) are amended by striking `Farm Security and Rural Investment Act of 2002' each place it appears and inserting `Food, Conservation, and Energy Act of 2008'.

(b) Revision of Limitations-

(1) DEFINITIONS- Section 1001(a) of the Food Security Act of 1985 (7 U.S.C. 1308(a)) is amended--

(A) in the matter preceding paragraph (1), by inserting `through section 1001F'after `section';

(B) by striking paragraph (2) and redesignating paragraph (3) as paragraph (5); and

`(2) FAMILY MEMBER- The term `family member' means a person to whom a member in the farming operation is related as lineal ancestor, lineal descendant, sibling, spouse, or otherwise by marriage.

`(3) LEGAL ENTITY- The term `legal entity' means an entity that is created under Federal or State law and that--

`(A) owns land or an agricultural commodity; or

`(B) produces an agricultural commodity.

`(4) PERSON- The term `person' means a natural person, and does not include a legal entity.'.

(2) LIMITATION ON DIRECT PAYMENTS AND COUNTER-CYCLICAL PAYMENTS- Section 1001 of the Food Security Act of 1985 (7 U.S.C. 1308) is amended by striking subsections (b), (c), and (d) and inserting the following:

`(b) Limitation on Direct Payments, Counter-Cyclical Payments, and ACRE Payments for Covered Commodities (other Than Peanuts)-

`(1) DIRECT PAYMENTS- The total amount of direct payments received, directly or indirectly, by a person or legal entity (except a joint venture or a general partnership) for any crop year under subtitle A of title I of the Food, Conservation, and Energy Act of 2008 for 1 or more covered commodities (except for peanuts) may not exceed--

`(A) in the case of a person or legal entity that does not participate in the average crop revenue election program under section 1105 of that Act, $40,000; or

`(B) in the case of a person or legal entity that participates in the average crop revenue election program under section 1105 of that Act, an amount equal to--

`(i) the payment limit specified in subparagraph (A); less

`(ii) the amount of the reduction in direct payments under section 1105(a)(1) of that Act.

`(2) COUNTER-CYCLICAL PAYMENTS- In the case of a person or legal entity (except a joint venture or a general partnership) that does not participate in the average crop revenue election program under section 1105 of the Food, Conservation, and Energy Act of 2008, the total amount of counter-cyclical payments received, directly or indirectly, by the person or legal entity for any crop year under subtitle A of title I of that Act for 1 or more covered commodities (except for peanuts) may not exceed $65,000.

`(3) ACRE AND COUNTER-CYCLICAL PAYMENTS- In the case of a person or legal entity (except a joint venture or a general partnership) that participates in the average crop revenue election program under section 1105 of the Food, Conservation, and Energy Act of 2008, the total amount of average crop revenue election payments and counter-cyclical payments received, directly or indirectly, by the person or legal entity for any crop year for 1 or more covered commodities (except for peanuts) may not exceed the sum of--

`(A) $65,000; and

`(B) the amount by which the direct payment limitation is reduced under paragraph (1)(B).

`(c) Limitation on Direct Payments, Counter-Cyclical Payments, and ACRE Payments for Peanuts-

`(1) DIRECT PAYMENTS- The total amount of direct payments received, directly or indirectly, by a person or legal entity (except a joint venture or a general partnership) for any crop year under subtitle C of title I of the Food, Conservation, and Energy Act of 2008 for peanuts may not exceed--

`(A) in the case of a person or legal entity that does not participate in the average crop revenue election program under section 1105 of that Act, $40,000; or

`(B) in the case of a person or legal entity that participates in the average crop revenue election program under section 1105 of that Act, an amount equal to--

`(i) the payment limit specified in subparagraph (A); less

`(ii) the amount of the reduction in direct payments under section 1105(a)(1) of that Act.

`(2) COUNTER-CYCLICAL PAYMENTS- In the case of a person or legal entity (except a joint venture or a general partnership) that does not participate in the average crop revenue election program under section 1105 of the Food, Conservation, and Energy Act of 2008, the total amount of counter-cyclical payments received, directly or indirectly, by the person or legal entity for any crop year under subtitle C of title I of that Act for peanuts may not exceed $65,000.

`(3) ACRE AND COUNTER-CYCLICAL PAYMENTS- In the case of a person or legal entity (except a joint venture or a general partnership) that participates in the average crop revenue election program under section 1105 of the Food, Conservation, and Energy Act of 2008, the total amount of average crop revenue election payments received, directly or indirectly, by the person or legal entity for any crop year for peanuts may not exceed the sum of--

`(A) $65,000; and

`(B) the amount by which the direct payment limitation is reduced under paragraph (1)(B).

`(d) Limitation on Applicability- Nothing in this section authorizes any limitation on any benefit associated with the marketing assistance loan program or the loan deficiency payment program under title I of the Food, Conservation, and Energy Act of 2008.'.

(3) DIRECT ATTRIBUTION- Section 1001 of the Food Security Act of 1985 (7 U.S.C. 1308) is amended--

(A) by striking subsections (e) and (f) and redesignating subsection (g) as subsection (h); and

(B) by inserting after subsection (d) the following:

`(e) Attribution of Payments-

`(1) IN GENERAL- In implementing subsections (b) and (c) and a program described in paragraphs (1)(C) and (2)(B) of section 1001D(b), the Secretary shall issue such regulations as are necessary to ensure that the total amount of payments are attributed to a person by taking into account the direct and indirect ownership interests of the person in a legal entity that is eligible to receive the payments.

`(2) PAYMENTS TO A PERSON- Each payment made directly to a person shall be combined with the pro rata interest of the person in payments received by a legal entity in which the person has a direct or indirect ownership interest unless the payments of the legal entity have been reduced by the pro rata share of the person.

`(3) PAYMENTS TO A LEGAL ENTITY-

`(A) IN GENERAL- Each payment made to a legal entity shall be attributed to those persons who have a direct or indirect ownership interest in the legal entity unless the payment to the legal entity has been reduced by the pro rata share of the person.

`(B) ATTRIBUTION OF PAYMENTS-

`(i) PAYMENT LIMITS- Except as provided in clause (ii), payments made to a legal entity shall not exceed the amounts specified in subsections (b) and (c).

`(ii) EXCEPTION FOR JOINT VENTURES AND GENERAL PARTNERSHIPS- Payments made to a joint venture or a general partnership shall not exceed, for each payment specified in subsections (b) and (c), the amount determined by multiplying the maximum payment amount specified in subsections (b) and (c) by the number of persons and legal entities (other than joint ventures and general partnerships) that comprise the ownership of the joint venture or general partnership.

`(iii) REDUCTION- Payments made to a legal entity shall be reduced proportionately by an amount that represents the direct or indirect ownership in the legal entity by any person or legal entity that has otherwise exceeded the applicable maximum payment limitation.

`(4) 4 LEVELS OF ATTRIBUTION FOR EMBEDDED LEGAL ENTITIES-

`(A) IN GENERAL- Attribution of payments made to legal entities shall be traced through 4 levels of ownership in legal entities.

`(B) FIRST LEVEL- Any payments made to a legal entity (a first-tier legal entity) that is owned in whole or in part by a person shall be attributed to the person in an amount that represents the direct ownership in the first-tier legal entity by the person.

`(C) SECOND LEVEL-

`(i) IN GENERAL- Any payments made to a first-tier legal entity that is owned (in whole or in part) by another legal entity (a second-tier legal entity) shall be attributed to the second-tier legal entity in proportion to the ownership of the second-tier legal entity in the first-tier legal entity.

`(ii) OWNERSHIP BY A PERSON- If the second-tier legal entity is owned (in whole or in part) by a person, the amount of the payment made to the first-tier legal entity shall be attributed to the person in the amount that represents the indirect ownership in the first-tier legal entity by the person.

`(D) THIRD AND FOURTH LEVELS-

`(i) IN GENERAL- Except as provided in clause (ii), the Secretary shall attribute payments at the third and fourth tiers of ownership in the same manner as specified in subparagraph (C).

`(ii) FOURTH-TIER OWNERSHIP- If the fourth-tier of ownership is that of a fourth-tier legal entity and not that of a person, the Secretary shall reduce the amount of the payment to be made to the first-tier legal entity in the amount that represents the indirect ownership in the first-tier legal entity by the fourth-tier legal entity.

`(f) Special Rules-

`(1) MINOR CHILDREN-

`(A) IN GENERAL- Except as provided in subparagraph (B), payments received by a child under the age of 18 shall be attributed to the parents of the child.

`(B) REGULATIONS- The Secretary shall issue regulations specifying the conditions under which payments received by a child under the age of 18 will not be attributed to the parents of the child.

`(2) MARKETING COOPERATIVES- Subsections (b) and (c) shall not apply to a cooperative association of producers with respect to commodities produced by the members of the association that are marketed by the association on behalf of the members of the association but shall apply to the producers as persons.

`(3) TRUSTS AND ESTATES-

`(A) IN GENERAL- With respect to irrevocable trusts and estates, the Secretary shall administer this section through section 1001F in such manner as the Secretary determines will ensure the fair and equitable treatment of the beneficiaries of the trusts and estates.

`(B) IRREVOCABLE TRUST-

`(i) IN GENERAL- In order for a trust to be considered an irrevocable trust, the terms of the trust agreement shall not--

`(I) allow for modification or termination of the trust by the grantor;

`(II) allow for the grantor to have any future, contingent, or remainder interest in the corpus of the trust; or

`(III) except as provided in clause (ii), provide for the transfer of the corpus of the trust to the remainder beneficiary in less than 20 years beginning on the date the trust is established.

`(ii) EXCEPTION- Clause (i)(III) shall not apply in a case in which the transfer is--

`(I) contingent on the remainder beneficiary achieving at least the age of majority; or

`(II) contingent on the death of the grantor or income beneficiary.

`(C) REVOCABLE TRUST- For the purposes of this section through section 1001F, a revocable trust shall be considered to be the same person as the grantor of the trust.

`(4) CASH RENT TENANTS-

`(A) DEFINITION- In this paragraph, the term `cash rent tenant' means a person or legal entity that rents land--

`(i) for cash; or

`(ii) for a crop share guaranteed as to the amount of the commodity to be paid in rent.

`(B) RESTRICTION- A cash rent tenant who makes a significant contribution of active personal management, but not of personal labor, with respect to a farming operation shall be eligible to receive a payment described in subsection (b) or (c) only if the tenant makes a significant contribution of equipment to the farming operation.

`(5) FEDERAL AGENCIES-

`(A) IN GENERAL- Notwithstanding subsection (d), a Federal agency shall not be eligible to receive any payment, benefit, or loan under title I of the Food, Conservation, and Energy Act of 2008 or title XII of this Act.

`(B) LAND RENTAL- A lessee of land owned by a Federal agency may receive a payment described in subsection (b), (c), or (d) if the lessee otherwise meets all applicable criteria.

`(6) STATE AND LOCAL GOVERNMENTS-

`(A) IN GENERAL- Notwithstanding subsection (d), except as provided in subsection (g), a State or local government, or political subdivision or agency of the government, shall not be eligible to receive any payment, benefit, or loan under title I of the Food, Conservation, and Energy Act of 2008 or title XII of this Act.

`(B) TENANTS- A lessee of land owned by a State or local government, or political subdivision or agency of the government, may receive payments described in subsections (b), (c), and (d) if the lessee otherwise meets all applicable criteria.

`(7) CHANGES IN FARMING OPERATIONS-

`(A) IN GENERAL- In the administration of this section through section 1001F, the Secretary may not approve any change in a farming operation that otherwise will increase the number of persons to which the limitations under this section are applied unless the Secretary determines that the change is bona fide and substantive.

`(B) FAMILY MEMBERS- The addition of a family member to a farming operation under the criteria set out in section 1001A shall be considered a bona fide and substantive change in the farming operation.

`(8) DEATH OF OWNER-

`(A) IN GENERAL- If any ownership interest in land or a commodity is transferred as the result of the death of a program participant, the new owner of the land or commodity may, if the person is otherwise eligible to participate in the applicable program, succeed to the contract of the prior owner and receive payments subject to this section without regard to the amount of payments received by the new owner.

`(B) LIMITATIONS ON PRIOR OWNER- Payments made under this paragraph shall not exceed the amount to which the previous owner was entitled to receive under the terms of the contract at the time of the death of the prior owner.

`(g) Public Schools-

`(1) IN GENERAL- Notwithstanding subsection (f)(6)(A), a State or local government, or political subdivision or agency of the government, shall be eligible, subject to the limitation in paragraph (2), to receive a payment described in subsection (b) or (c) for land owned by the State or local government, or political subdivision or agency of the government, that is used to maintain a public school.

`(2) LIMITATION-

`(A) IN GENERAL- For each State, the total amount of payments described in subsections (b) and (c) that are received collectively by the State and local government and all political subdivisions or agencies of those governments shall not exceed $500,000.

`(B) EXCEPTION- The limitation in subparagraph (A) shall not apply to States with a population of less than 1,500,000.'.

(1) in the section heading, by striking `prevention of creation of entities to qualify as separate persons' and inserting `notification of interests'; and

(2) by striking subsection (a) and inserting the following:

`(a) Notification of Interests- To facilitate administration of section 1001 and this section, each person or legal entity receiving payments described in subsections (b) and (c) of section 1001 as a separate person or legal entity shall separately provide to the Secretary, at such times and in such manner as prescribed by the Secretary--

`(1) the name and social security number of each person, or the name and taxpayer identification number of each legal entity, that holds or acquires an ownership interest in the separate person or legal entity; and

`(2) the name and taxpayer identification number of each legal entity in which the person or legal entity holds an ownership interest.'.

(d) Amendment for Consistency- Section 1001A of the Food Security Act of 1985 (7 U.S.C. 1308-1) is amended by striking subsection (b) and inserting the following:

`(b) Actively Engaged-

`(1) IN GENERAL- To be eligible to receive a payment described in subsection (b) or (c) of section 1001, a person or legal entity shall be actively engaged in farming with respect to a farming operation as provided in this subsection or subsection (c).

`(2) CLASSES ACTIVELY ENGAGED- Except as provided in subsections (c) and (d)--

`(A) a person (including a person participating in a farming operation as a partner in a general partnership, a participant in a joint venture, a grantor of a revocable trust, or a participant in a similar entity, as determined by the Secretary) shall be considered to be actively engaged in farming with respect to a farming operation if--

`(i) the person makes a significant contribution (based on the total value of the farming operation) to the farming operation of--

`(I) capital, equipment, or land; and

`(II) personal labor or active personal management;

`(ii) the person's share of the profits or losses from the farming operation is commensurate with the contributions of the person to the farming operation; and

`(iii) the contributions of the person are at risk;

`(B) a legal entity that is a corporation, joint stock company, association, limited partnership, charitable organization, or other similar entity determined by the Secretary (including any such legal entity participating in the farming operation as a partner in a general partnership, a participant in a joint venture, a grantor of a revocable trust, or as a participant in a similar legal entity as determined by the Secretary) shall be considered as actively engaged in farming with respect to a farming operation if--

`(i) the legal entity separately makes a significant contribution (based on the total value of the farming operation) of capital, equipment, or land;

`(ii) the stockholders or members collectively make a significant contribution of personal labor or active personal management to the operation; and

`(iii) the standards provided in clauses (ii) and (iii) of subparagraph (A), as applied to the legal entity, are met by the legal entity;

`(C) if a legal entity that is a general partnership, joint venture, or similar entity, as determined by the Secretary, separately makes a significant contribution (based on the total value of the farming operation involved) of capital, equipment, or land, and the standards provided in clauses (ii) and (iii) of subparagraph (A), as applied to the legal entity, are met by the legal entity, the partners or members making a significant contribution of personal labor or active personal management shall be considered to be actively engaged in farming with respect to the farming operation involved; and

`(D) in making determinations under this subsection regarding equipment and personal labor, the Secretary shall take into consideration the equipment and personal labor normally and customarily provided by farm operators in the area involved to produce program crops.

`(c) Special Classes Actively Engaged-

`(1) LANDOWNER- A person or legal entity that is a landowner contributing the owned land to a farming operation shall be considered to be actively engaged in farming with respect to the farming operation if--

`(A) the landowner receives rent or income for the use of the land based on the production on the land or the operating results of the operation; and

`(B) the person or legal entity meets the standards provided in clauses (ii) and (iii) of subsection (b)(2)(A).

`(2) ADULT FAMILY MEMBER- If a majority of the participants in a farming operation are family members, an adult family member shall be considered to be actively engaged in farming with respect to the farming operation if the person--

`(A) makes a significant contribution, based on the total value of the farming operation, of active personal management or personal labor; and

`(B) with respect to such contribution, meets the standards provided in clauses (ii) and (iii) of subsection (b)(2)(A).

`(3) SHARECROPPER- A sharecropper who makes a significant contribution of personal labor to a farming operation shall be considered to be actively engaged in farming with respect to the farming operation if the contribution meets the standards provided in clauses (ii) and (iii) of subsection (b)(2)(A).

`(4) GROWERS OF HYBRID SEED- In determining whether a person or legal entity growing hybrid seed under contract shall be considered to be actively engaged in farming, the Secretary shall not take into consideration the existence of a hybrid seed contract.

`(5) CUSTOM FARMING SERVICES-

`(A) IN GENERAL- A person or legal entity receiving custom farming services shall be considered separately eligible for payment limitation purposes if the person or legal entity is actively engaged in farming based on subsection (b)(2) or paragraphs (1) through (4) of this subsection.

`(B) PROHIBITION- No other rules with respect to custom farming shall apply.

`(6) SPOUSE- If 1 spouse (or estate of a deceased spouse) is determined to be actively engaged, the other spouse shall be determined to have met the requirements of subsection (b)(2)(A)(i)(II).

`(d) Classes Not Actively Engaged-

`(1) CASH RENT LANDLORD- A landlord contributing land to a farming operation shall not be considered to be actively engaged in farming with respect to the farming operation if the landlord receives cash rent, or a crop share guaranteed as to the amount of the commodity to be paid in rent, for the use of the land.

`(2) OTHER PERSONS AND LEGAL ENTITIES- Any other person or legal entity that the Secretary determines does not meet the standards described in subsections (b)(2) and (c) shall not be considered to be actively engaged in farming with respect to a farming operation.'.

(e) Denial of Program Benefits- Section 1001B of the Food Security Act of 1985 (7 U.S.C. 1308-2) is amended to read as follows:

`SEC. 1001B. DENIAL OF PROGRAM BENEFITS.

`(a) 2-Year Denial of Program Benefits- A person or legal entity shall be ineligible to receive payments specified in subsections (b) and (c) of section 1001 for the crop year, and the succeeding crop year, in which the Secretary determines that the person or legal entity--

`(1) failed to comply with section 1001A(b) and adopted or participated in adopting a scheme or device to evade the application of section 1001, 1001A, or 1001C; or

`(2) intentionally concealed the interest of the person or legal entity in any farm or legal entity engaged in farming.

`(b) Extended Ineligibility- If the Secretary determines that a person or legal entity, for the benefit of the person or legal entity or the benefit of any other person or legal entity, has knowingly engaged in, or aided in the creation of a fraudulent document, failed to disclose material information relevant to the administration of sections 1001 through 1001F, or committed other equally serious actions (as identified in regulations issued by the Secretary), the Secretary may for a period not to exceed 5 crop years deny the issuance of payments to the person or legal entity.

`(c) Pro Rata Denial-

`(1) IN GENERAL- Payments otherwise owed to a person or legal entity described in subsections (a) or (b) shall be denied in a pro rata manner based on the ownership interest of the person or legal entity in a farm.

`(2) CASH RENT TENANT- Payments otherwise payable to a person or legal entity shall be denied in a pro rata manner if the person or legal entity is a cash rent tenant on a farm owned or under the control of a person or legal entity with respect to which a determination has been made under subsection (a) or (b).

`(d) Joint and Several Liability- Any legal entity (including partnerships and joint ventures) and any member of any legal entity determined to have knowingly participated in a scheme or device to evade, or that has the purpose of evading, sections 1001, 1001A, or 1001C shall be jointly and severally liable for any amounts that are payable to the Secretary as the result of the scheme or device (including amounts necessary to recover those amounts).

`(e) Release- The Secretary may partially or fully release from liability any person or legal entity who cooperates with the Secretary in enforcing sections 1001, 1001A, and 1001C, and this section.'.

(f) Conforming Amendment to Apply Direct Attribution to NAP-

(1) IN GENERAL- Section 196(i) of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7333(i)) is amended--

(A) by striking paragraphs (1) and (2) and inserting the following:

`(1) DEFINITIONS- In this subsection, the terms `legal entity' and `person' have the meanings given those terms in section 1001(a) of the Food Security Act of 1985 (7 U.S.C. 1308(a)).

`(2) PAYMENT LIMITATION- The total amount of payments received, directly or indirectly, by a person or legal entity (excluding a joint venture or general partnership) for any crop year may not exceed $100,000.';

(B) by striking paragraph (4) and inserting the following:

`(4) ADJUSTED GROSS INCOME LIMITATION- A person or legal entity that has an average adjusted gross income in excess of the average adjusted gross income limitation applicable under section 1001D(b)(1)(A) of the Food Security Act of 1985 (7 U.S.C. 1308-3a(b)(1)(A)), or a successor provision, shall not be eligible to receive noninsured crop disaster assistance under this section.'; and

(i) by striking `necessary to ensure' and inserting `necessary--

`(A) to ensure'; and

(ii) by striking `this subsection.' and inserting the following: `this subsection; and

`(B) to ensure that payments under this section are attributed to a person or legal entity (excluding a joint venture or general partnership) in accordance with the terms and conditions of sections 1001 through 1001D of the Food Security Act of 1985 (7 U.S.C. 1308 et seq.), as determined by the Secretary.'.

(2) TRANSITION- Section 196(i) of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7333(i)), as in effect on September 30, 2007, shall apply with respect to the 2007 and 2008 crops of any eligible crop.

(g) Conforming Amendments-

(1) Section 1009(e) of the Food Security Act of 1985 (7 U.S.C. 1308a(e)) is amended in the second sentence by striking `of $50,000'.

(2) Section 609(b)(1) of the Emergency Livestock Feed Assistance Act of 1988 (7 U.S.C. 1471g(b)(1)) is amended by inserting `(before the amendment made by section 1703(a) of the Food, Conservation, and Energy Act of 2008)' after `1985'.

(3) Section 524(b)(3) of the Federal Crop Insurance Act (7 U.S.C. 1524(b)(3)) is amended by inserting `(before the amendment made by section 1703(a) of the Food, Conservation, and Energy Act of 2008)' after `1308(5)))'.

(4) Section 10204(c)(1) of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 8204(c)(1)) is amended by inserting `(before the amendment made by section 1703(a) of the Food, Conservation, and Energy Act of 2008)' after `1308)'.

(5) Section 1271(c)(3)(A) of the Food, Agriculture, Conservation, and Trade Act of 1990 (16 U.S.C. 2106a(c)(3)(A)) is amended by inserting `(before the amendment made by section 1703(a) of the Food, Conservation, and Energy Act of 2008)' after `1308)'.

(6) Section 291(2) of the Trade Act of 1974 (19 U.S.C. 2401(2)) is amended by inserting `(before the amendment made by section 1703(a) of the Food, Conservation, and Energy Act of 2008)' before the period at the end.

(h) Transition- Section 1001, 1001A, and 1001B of the Food Security Act of 1985 (7 U.S.C. 1308, 1308-1, 1308-2), as in effect on September 30, 2007, shall continue to apply with respect to the 2007 and 2008 crops of any covered commodity or peanuts.

SEC. 1604. ADJUSTED GROSS INCOME LIMITATION.

(a) In General- Section 1001D of the Food Security Act of 1985 (7 U.S.C. 1308-3a(e)) is amended to read as follows:

`SEC. 1001D. ADJUSTED GROSS INCOME LIMITATION.

`(a) Definitions-

`(1) IN GENERAL- In this section:

`(A) AVERAGE ADJUSTED GROSS INCOME- The term `average adjusted gross income', with respect to a person or legal entity, means the average of the adjusted gross income or comparable measure of the person or legal entity over the 3 taxable years preceding the most immediately preceding complete taxable year, as determined by the Secretary.

`(B) AVERAGE ADJUSTED GROSS FARM INCOME- The term `average adjusted gross farm income', with respect to a person or legal entity, means the average of the portion of adjusted gross income of the person or legal entity that is attributable to activities related to farming, ranching, or forestry for the 3 taxable years described in subparagraph (A), as determined by the Secretary in accordance with subsection (c).

`(C) AVERAGE ADJUSTED GROSS NONFARM INCOME- The term `average adjusted gross nonfarm income', with respect to a person or legal entity, means the difference between--

`(i) the average adjusted gross income of the person or legal entity; and

`(ii) the average adjusted gross farm income of the person or legal entity.

`(2) SPECIAL RULES FOR CERTAIN PERSONS AND LEGAL ENTITIES- In the case of a legal entity that is not required to file a Federal income tax return or a person or legal entity that did not have taxable income in 1 or more of the taxable years used to determine the average under subparagraph (A) or (B) of paragraph (1), the Secretary shall provide, by regulation, a method for determining the average adjusted gross income, the average adjusted gross farm income, and the average adjusted gross nonfarm income of the person or legal entity for purposes of this section.

`(3) ALLOCATION OF INCOME- On the request of any person filing a joint tax return, the Secretary shall provide for the allocation of average adjusted gross income, average adjusted gross farm income, and average adjusted gross nonfarm income among the persons filing the return if--

`(A) the person provides a certified statement by a certified public accountant or attorney that specifies the method by which the average adjusted gross income, average adjusted gross farm income, and average adjusted gross nonfarm income would have been declared and reported had the persons filed 2 separate returns; and

`(B) the Secretary determines that the method described in the statement is consistent with the information supporting the filed joint tax return.

`(b) Limitations-

`(1) COMMODITY PROGRAMS-

`(A) NONFARM LIMITATION- Notwithstanding any other provision of law, a person or legal entity shall not be eligible to receive any benefit described in subparagraph (C) during a crop, fiscal, or program year, as appropriate, if the average adjusted gross nonfarm income of the person or legal entity exceeds $500,000.

`(B) FARM LIMITATION- Notwithstanding any other provision of law, a person or legal entity shall not be eligible to receive a direct payment under subtitle A or C of title I of the Food, Conservation, and Energy Act of 2008 during a crop year, if the average adjusted gross farm income of the person or legal entity exceeds $750,000.

`(C) COVERED BENEFITS- Subparagraph (A) applies with respect to the following:

`(i) A direct payment or counter-cyclical payment under subtitle A or C of title I of the Food, Conservation, and Energy Act of 2008 or an average crop revenue election payment under subtitle A of title I of that Act.

`(ii) A marketing loan gain or loan deficiency payment under subtitle B or C of title I of the Food, Conservation, and Energy Act of 2008.

`(iii) A payment or benefit under section 196 of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7333).

`(iv) A payment or benefit under section 1506 of the Food, Conservation, and Energy Act of 2008.

`(v) A payment or benefit under title IX of the Trade Act of 1974 or subtitle B of the Federal Crop Insurance Act.

`(2) CONSERVATION PROGRAMS-

`(A) LIMITS-

`(i) IN GENERAL- Notwithstanding any other provision of law, except as provided in clause (ii), a person or legal entity shall not be eligible to receive any benefit described in subparagraph (B) during a crop, fiscal, or program year, as appropriate, if the average adjusted gross nonfarm income of the person or legal entity exceeds $1,000,000, unless not less than 66.66 percent of the average adjusted gross income of the person or legal entity is average adjusted gross farm income.

`(ii) EXCEPTION- The Secretary may waive the limitation established under clause (i) on a case-by-case basis if the Secretary determines that environmentally sensitive land of special significance would be protected.

`(B) COVERED BENEFITS- Subparagraph (A) applies with respect to the following:

`(i) A payment or benefit under title XII of this Act.

`(ii) A payment or benefit under title II of the Farm Security and Rural Investment Act of 2002 (Public Law 107-171; 116 Stat. 223) or title II of the Food, Conservation, and Energy Act of 2008.

`(iii) A payment or benefit under section 524(b) of the Federal Crop Insurance Act (7 U.S.C. 1524(b)).

`(c) Income Determination-

`(1) IN GENERAL- In determining the average adjusted gross farm income of a person or legal entity, the Secretary shall include income or benefits derived from or related to--

`(A) the production of crops, including specialty crops (as defined in section 3 of the Specialty Crops Competitiveness Act of 2004 (7 U.S.C. 1621 note; Public Law 108-465)) and unfinished raw forestry products;

`(B) the production of livestock (including cattle, elk, reindeer, bison, horses, deer, sheep, goats, swine, poultry, fish, and other aquacultural products used for food, honeybees, and other animals designated by the Secretary) and products produced by, or derived from, livestock;

`(C) the production of farm-based renewable energy (as defined in section 9001 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 8101));

`(D) the sale, including the sale of easements and development rights, of farm, ranch, or forestry land, water or hunting rights, or environmental benefits;

`(E) the rental or lease of land or equipment used for farming, ranching, or forestry operations, including water or hunting rights;

`(F) the processing (including packing), storing (including shedding), and transporting of farm, ranch, and forestry commodities, including renewable energy;

`(G) the feeding, rearing, or finishing of livestock;

`(H) the sale of land that has been used for agriculture;

`(I) payments or other benefits received under any program authorized under title I of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7901 et seq.) or title I of the Food, Conservation, and Energy Act of 2008;

`(J) payments or other benefits received under any program authorized under title XII of this Act, title II of the Farm Security and Rural Investment Act of 2002 (Public Law 107-171; 116 Stat. 223), or title II of the Food, Conservation, and Energy Act of 2008;

`(K) payments or other benefits received under section 196 of the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7333);

`(L) payments or other benefits received under title IX of the Trade Act of 1974 or subtitle B of the Federal Crop Insurance Act;

`(M) risk management practices, including benefits received under a program authorized under the Federal Crop Insurance Act (7 U.S.C. 1501 et seq.) (including a catastrophic risk protection plan offered under section 508(b) of that Act (7 U.S.C. 1508(b))); and

`(N) any other activity related to farming, ranching, or forestry, as determined by the Secretary.

`(2) INCOME DERIVED FROM FARMING, RANCHING, OR FORESTRY- In determining the average adjusted gross farm income of a person or legal entity, in addition to the inclusions described in paragraph (1), the Secretary shall include any income reported on the Schedule F or other schedule used by the person or legal entity to report income from farming, ranching, or forestry operations to the Internal Revenue Service, to the extent such income is not already included under paragraph (1).

`(3) SPECIAL RULE- If not less than 66.66 percent of the average adjusted gross income of a person or legal entity is derived from farming, ranching, or forestry operations described in paragraphs (1) and (2), in determining the average adjusted gross farm income of the person or legal entity, the Secretary shall also include--

`(A) the sale of equipment to conduct farm, ranch, or forestry operations; and

`(B) the provision of production inputs and services to farmers, ranchers, foresters, and farm operations.

`(d) Enforcement-

`(1) IN GENERAL- To comply with subsection (b), at least once every 3 years a person or legal entity shall provide to the Secretary--

`(A) a certification by a certified public accountant or another third party that is acceptable to the Secretary that the average adjusted gross income, average adjusted gross farm income, and average adjusted gross nonfarm income of the person or legal entity does not exceed the applicable limitation specified in that subsection; or

`(B) information and documentation regarding the average adjusted gross income, average adjusted gross farm income, and average adjusted gross nonfarm income of the person or legal entity through other procedures established by the Secretary.

`(2) DENIAL OF PROGRAM BENEFITS- If the Secretary determines that a person or legal entity has failed to comply with this section, the Secretary shall deny the issuance of applicable payments and benefits specified in paragraphs (1)(C) and (2)(B) of subsection (b) to the person or legal entity, under similar terms and conditions as described in section 1001B.

`(3) AUDIT- The Secretary shall establish statistically valid procedures under which the Secretary shall conduct targeted audits of such persons or legal entities as the Secretary determines are most likely to exceed the limitations under subsection (b).

`(e) Commensurate Reduction- In the case of a payment or benefit described in paragraphs (1)(C) and (2)(B) of subsection (b) made in a crop, program, or fiscal year, as appropriate, to an entity, general partnership, or joint venture, the amount of the payment or benefit shall be reduced by an amount that is commensurate with the direct and indirect ownership interest in the entity, general partnership, or joint venture of each person who has an average adjusted gross income, average adjusted gross farm income, or average adjusted gross nonfarm income in excess of the applicable limitation specified in subsection (b).

`(f) Effective Period- This section shall apply only during the 2009 through 2012 crop, program, or fiscal years, as appropriate.'.

(b) Transition- Section 1001D of the Food Security Act of 1985 (7 U.S.C. 1308-3a), as in effect on September 30, 2007, shall apply with respect to the 2007 and 2008 crop, fiscal, or program year, as appropriate, for each program described in paragraphs (1)(C) and (2)(B) of subsection (b) of that section (as amended by subsection (a)).

TITLE II--CONSERVATION

Subtitle C--Wetlands Reserve Program

SEC. 2201. ESTABLISHMENT AND PURPOSE OF WETLANDS RESERVE PROGRAM.

Subsection (a) of section 1237 of the Food Security Act of 1985 (16 U.S.C. 3837) is amended to read as follows:

`(a) Establishment and Purposes-

`(1) ESTABLISHMENT- The Secretary shall establish a wetlands reserve program to assist owners of eligible lands in restoring and protecting wetlands.

`(2) PURPOSES- The purposes of the wetlands reserve program are to restore, protect, or enhance wetlands on private or tribal lands that are eligible under subsections (c) and (d).'.

SEC. 2202. MAXIMUM ENROLLMENT AND ENROLLMENT METHODS.

Section 1237(b) of the Food Security Act of 1985 (16 U.S.C. 3837(b)) is amended--

(1) by striking paragraph (1) and inserting the following new paragraph:

`(1) MAXIMUM ENROLLMENT- The total number of acres enrolled in the wetlands reserve program shall not exceed 3,041,200 acres.';

(2) in paragraph (2), by striking `The Secretary' and inserting `Subject to paragraph (3), the Secretary'; and

(3) by adding at the end the following new paragraph:

`(3) ACREAGE OWNED BY INDIAN TRIBES- In the case of acreage owned by an Indian tribe, the Secretary shall enroll acreage into the wetlands reserve program through the use of--

`(A) a 30-year contract (the value of which shall be equivalent to the value of a 30-year easement);

`(B) restoration cost-share agreements; or

`(C) any combination of the options described in subparagraphs (A) and (B).'.

SEC. 2203. DURATION OF WETLANDS RESERVE PROGRAM AND LANDS ELIGIBLE FOR ENROLLMENT.

(a) In General- Section 1237(c) of the Food Security Act of 1985 (16 U.S.C. 3837(c)) is amended--

(1) in the matter preceding paragraph (1)--

(A) by striking `2007 calendar' and inserting `2012 fiscal'; and

(B) by inserting `private or tribal' before `land' the second place it appears;

(2) by striking paragraph (2) and inserting the following new paragraph:

`(2) such land is--

`(A) farmed wetland or converted wetland, together with the adjacent land that is functionally dependent on the wetlands, except that converted wetland with respect to which the conversion was not commenced prior to December 23, 1985, shall not be eligible to be enrolled in the program under this section; or

`(B) cropland or grassland that was used for agricultural production prior to flooding from the natural overflow of a closed basin lake or pothole, as determined by the Secretary, together (where practicable) with the adjacent land that is functionally dependent on the cropland or grassland; and'.

(b) Change of Ownership- Section 1237E(a) of the Food Security Act of 1985 (16 U.S.C. 3837e(a)) is amended by striking `in the preceding 12 months' and inserting `during the preceding 7-year period'.

(c) Annual Survey and Reallocation- Section 1237F of the Food Security Act of 1985 (16 U.S.C. 3837f) is amended by adding at the end the following new subsection:

`(c) Prairie Pothole Region Survey and Reallocation-

`(1) SURVEY- The Secretary shall conduct a survey during fiscal year 2008 and each subsequent fiscal year for the purpose of determining interest and allocations for the Prairie Pothole Region to enroll eligible land described in section 1237(c)(2)(B).

`(2) ANNUAL ADJUSTMENT- The Secretary shall make an adjustment to the allocation for an interested State for a fiscal year, based on the results of the survey conducted under paragraph (1) for the State during the previous fiscal year.'.

SEC. 2204. TERMS OF WETLANDS RESERVE PROGRAM EASEMENTS.

Section 1237A(b)(2)(B) of the Food Security Act of 1985 (16 U.S.C. 3837a(b)(2)(B)) is amended--

(1) in clause (i), by striking `or' at the end;

(2) in clause (ii), by striking `; and' and inserting `; or'; and

(3) by adding at the end the following new clause:

`(iii) to meet habitat needs of specific wildlife species; and'.

SEC. 2205. COMPENSATION FOR EASEMENTS UNDER WETLANDS RESERVE PROGRAM.

Subsection (f) of section 1237A of the Food Security Act of 1985 (16 U.S.C. 3837a) is amended to read as follows:

`(f) Compensation-

`(1) DETERMINATION- Effective on the date of the enactment of the Food, Conservation, and Energy Act of 2008, the Secretary shall pay as compensation for a conservation easement acquired under this subchapter the lowest of--

`(A) the fair market value of the land, as determined by the Secretary, using the Uniform Standards of Professional Appraisal Practices or an area-wide market analysis or survey;

`(B) the amount corresponding to a geographical cap, as determined by the Secretary in regulations; or

`(C) the offer made by the landowner.

`(2) FORM OF PAYMENT- Compensation for an easement shall be provided by the Secretary in the form of a cash payment, in an amount determined under paragraph (1) and specified in the easement agreement.

`(3) PAYMENT SCHEDULE FOR EASEMENTS-

`(A) EASEMENTS VALUED AT $500,000 OR LESS- For easements valued at $500,000 or less, the Secretary may provide easement payments in not more than 30 annual payments.

`(B) EASEMENTS IN EXCESS OF $500,000- For easements valued at more than $500,000, the Secretary may provide easement payments in at least 5, but not more than 30 annual payments, except that, if the Secretary determines it would further the purposes of the program, the Secretary may make a lump sum payment for such an easement.

`(4) RESTORATION AGREEMENT PAYMENT LIMITATION- Payments made to a person or legal entity, directly or indirectly, pursuant to a restoration cost-share agreement under this subchapter may not exceed, in the aggregate, $50,000 per year.

`(5) ENROLLMENT PROCEDURE- Lands may be enrolled under this subchapter through the submission of bids under a procedure established by the Secretary.'.

SEC. 2206. WETLANDS RESERVE ENHANCEMENT PROGRAM AND RESERVED RIGHTS PILOT PROGRAM.

Section 1237A of the Food Security Act of 1985 (16 U.S.C. 3837a) is amended by adding at the end the following new subsection:

`(h) Wetlands Reserve Enhancement Program-

`(1) PROGRAM AUTHORIZED- The Secretary may enter into 1 or more agreements with a State (including a political subdivision or agency of a State), nongovernmental organization, or Indian tribe to carry out a special wetlands reserve enhancement program that the Secretary determines would advance the purposes of this subchapter.

`(2) RESERVED RIGHTS PILOT PROGRAM-

`(A) RESERVATION OF GRAZING RIGHTS- As part of the wetlands reserve enhancement program, the Secretary shall carry out a pilot program for land in which a landowner may reserve grazing rights in the warranty easement deed restriction if the Secretary determines that the reservation and use of the grazing rights--

`(i) is compatible with the land subject to the easement;

`(ii) is consistent with the long-term wetland protection and enhancement goals for which the easement was established; and

`(iii) complies with a conservation plan.

`(B) DURATION- The pilot program established under this paragraph shall terminate on September 30, 2012.'.

SEC. 2207. DUTIES OF SECRETARY OF AGRICULTURE UNDER WETLANDS RESERVE PROGRAM.

Section 1237C of the Food Security Act of 1985 (16 U.S.C. 3837c) is amended--

(1) in subsection (a)(1), by inserting `including necessary maintenance activities,' after `values,'; and

(2) by striking subsection (c) and inserting the following new subsection:

`(c) Ranking of Offers-

`(1) CONSERVATION BENEFITS AND FUNDING CONSIDERATIONS- When evaluating offers from landowners, the Secretary may consider--

`(A) the conservation benefits of obtaining an easement or other interest in the land;

`(B) the cost-effectiveness of each easement or other interest in eligible land, so as to maximize the environmental benefits per dollar expended; and

`(C) whether the landowner or another person is offering to contribute financially to the cost of the easement or other interest in the land to leverage Federal funds.

`(2) ADDITIONAL CONSIDERATIONS- In determining the acceptability of easement offers, the Secretary may take into consideration--

`(A) the extent to which the purposes of the easement program would be achieved on the land;

`(B) the productivity of the land; and

`(C) the on-farm and off-farm environmental threats if the land is used for the production of agricultural commodities.'.

SEC. 2208. PAYMENT LIMITATIONS UNDER WETLANDS RESERVE CONTRACTS AND AGREEMENTS.

Section 1237D(c)(1) of the Food Security Act of 1985 (16 U.S.C. 3837d(c)(1)) is amended--

(1) by striking `The total amount of easement payments made to a person' and inserting `The total amount of payments that a person or legal entity may receive, directly or indirectly,'; and

(2) by inserting `or under 30-year contracts' before the period at the end.

SEC. 2209. REPEAL OF PAYMENT LIMITATIONS EXCEPTION FOR STATE AGREEMENTS FOR WETLANDS RESERVE ENHANCEMENT.

Section 1237D(c) of the Food Security Act of 1985 (16 U.S.C. 3837d(c)) is amended by striking paragraph (4).

SEC. 2210. REPORT ON IMPLICATIONS OF LONG-TERM NATURE OF CONSERVATION EASEMENTS.

(a) Report Required- Not later than January 1, 2010, the Secretary of Agriculture shall submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a report that evaluates the implications of the long-term nature of conservation easements granted under section 1237A of the Food Security Act of 1985 (16 U.S.C. 3837a) on resources of the Department of Agriculture.

(b) Inclusions- The report required by subsection (a) shall include the following:

(1) Data relating to the number and location of conservation easements granted under that section that the Secretary holds or has a significant role in monitoring or managing.

(2) An assessment of the extent to which the oversight of the conservation easement agreements impacts the availability of resources, including technical assistance.

(3) An assessment of the uses and value of agreements with partner organizations.

(4) Any other relevant information relating to costs or other effects that would be helpful to the Committees referred to in subsection (a).

Subtitle D--Conservation Stewardship Program

SEC. 2301. CONSERVATION STEWARDSHIP PROGRAM.

(a) Establishment of Program- Chapter 2 of subtitle D of title XII of the Food Security Act of 1985 is amended--

(1) by redesignating subchapters B (farmland protection program) and C (grassland reserve program) as subchapters C and D, respectively; and

(2) by inserting after subchapter A the following new subchapter:

`Subchapter B--Conservation Stewardship Program

`SEC. 1238D. DEFINITIONS.

`In this subchapter:

`(1) CONSERVATION ACTIVITIES-

`(A) IN GENERAL- The term `conservation activities' means conservation systems, practices, or management measures that are designed to address a resource concern.

`(B) INCLUSIONS- The term `conservation activities' includes--

`(i) structural measures, vegetative measures, and land management measures, including agriculture drainage management systems, as determined by the Secretary; and

`(ii) planning needed to address a resource concern.

`(2) CONSERVATION MEASUREMENT TOOLS- The term `conservation measurement tools' means procedures to estimate the level of environmental benefit to be achieved by a producer in implementing conservation activities, including indices or other measures developed by the Secretary.

`(3) CONSERVATION STEWARDSHIP PLAN- The term `conservation stewardship plan' means a plan that--

`(A) identifies and inventories resource concerns;

`(B) establishes benchmark data and conservation objectives;

`(C) describes conservation activities to be implemented, managed, or improved; and

`(D) includes a schedule and evaluation plan for the planning, installation, and management of the new and existing conservation activities.

`(4) PRIORITY RESOURCE CONCERN- The term `priority resource concern' means a resource concern that is identified at the State level, in consultation with the State Technical Committee, as a priority for a particular watershed or area of the State.

`(5) PROGRAM- The term `program' means the conservation stewardship program established by this subchapter.

`(6) RESOURCE CONCERN- The term `resource concern' means a specific natural resource impairment or problem, as determined by the Secretary, that--

`(A) represents a significant concern in a State or region; and

`(B) is likely to be addressed successfully through the implementation of conservation activities by producers on land eligible for enrollment in the program.

`(7) STEWARDSHIP THRESHOLD- The term `stewardship threshold' means the level of natural resource conservation and environmental management required, as determined by the Secretary using conservation measurement tools, to improve and conserve the quality and condition of a resource concern.

`SEC. 1238E. CONSERVATION STEWARDSHIP PROGRAM.

`(a) Establishment and Purpose- During each of fiscal years 2009 through 2012, the Secretary shall carry out a conservation stewardship program to encourage producers to address resource concerns in a comprehensive manner--

`(1) by undertaking additional conservation activities; and

`(2) by improving, maintaining and managing existing conservation activities.

`(b) Eligible Land-

`(1) IN GENERAL- Except as provided in subsection (c), the following land is eligible for enrollment in the program:

`(A) Private agricultural land (including cropland, grassland, prairie land, improved pastureland, rangeland, and land used for agro-forestry).

`(B) Agricultural land under the jurisdiction of an Indian tribe.

`(C) Forested land that is an incidental part of an agricultural operation.

`(D) Other private agricultural land (including cropped woodland, marshes, and agricultural land used for the production of livestock) on which resource concerns related to agricultural production could be addressed by enrolling the land in the program, as determined by the Secretary.

`(2) SPECIAL RULE FOR NONINDUSTRIAL PRIVATE FOREST LAND- Nonindustrial private forest land is eligible for enrollment in the program, except that not more than 10 percent of the annual acres enrolled nationally in any fiscal year may be nonindustrial private forest land.

`(3) AGRICULTURAL OPERATION- Eligible land shall include all acres of an agricultural operation of a producer, whether or not contiguous, that are under the effective control of the producer at the time the producer enters into a stewardship contract, and is operated by the producer with equipment, labor, management, and production or cultivation practices that are substantially separate from other agricultural operations, as determined by the Secretary.

`(c) Exclusions-

`(1) LAND ENROLLED IN OTHER CONSERVATION PROGRAMS- Subject to paragraph (2), the following land is not be eligible for enrollment in the program:

`(A) Land enrolled in the conservation reserve program.

`(B) Land enrolled in the wetlands reserve program.

`(C) Land enrolled in the grassland reserve program.

`(2) CONVERSION TO CROPLAND- Land used for crop production after the date of enactment of the Food, Conservation, and Energy Act of 2008 that had not been planted, considered to be planted, or devoted to crop production for at least 4 of the 6 years preceding that date shall not be the basis for any payment under the program, unless the land does not meet the requirement because--

`(A) the land had previously been enrolled in the conservation reserve program;

`(B) the land has been maintained using long-term crop rotation practices, as determined by the Secretary; or

`(C) the land is incidental land needed for efficient operation of the farm or ranch, as determined by the Secretary.

`SEC. 1238F. STEWARDSHIP CONTRACTS.

`(a) Submission of Contract Offers- To be eligible to participate in the conservation stewardship program, a producer shall submit to the Secretary for approval a contract offer that--

`(1) demonstrates to the satisfaction of the Secretary that the producer, at the time of the contract offer, is meeting the stewardship threshold for at least one resource concern; and

`(2) would, at a minimum, meet or exceed the stewardship threshold for at least 1 priority resource concern by the end of the stewardship contract by--

`(A) installing and adopting additional conservation activities; and

`(B) improving, maintaining, and managing conservation activities in place at the operation of the producer at the time the contract offer is accepted by the Secretary.

`(b) Evaluation of Contract Offers-

`(1) RANKING OF APPLICATIONS- In evaluating contract offers made by producers to enter into contracts under the program, the Secretary shall rank applications based on--

`(A) the level of conservation treatment on all applicable priority resource concerns at the time of application, based to the maximum extent practicable on conservation measurement tools;

`(B) the degree to which the proposed conservation treatment on applicable priority resource concerns effectively increases conservation performance, based to the maximum extent possible on conservation measurement tools;

`(C) the number of applicable priority resource concerns proposed to be treated to meet or exceed the stewardship threshold by the end of the contract;

`(D) the extent to which other resource concerns, in addition to priority resource concerns, will be addressed to meet or exceed the stewardship threshold by the end of the contract period; and

`(E) the extent to which the actual and anticipated environmental benefits from the contract are provided at the least cost relative to other similarly beneficial contract offers.

`(2) PROHIBITION- The Secretary may not assign a higher priority to any application because the applicant is willing to accept a lower payment than the applicant would otherwise be eligible to receive.

`(3) ADDITIONAL CRITERIA- The Secretary may develop and use such additional criteria for evaluating applications to enroll in the program that the Secretary determines are necessary to ensure that national, State, and local conservation priorities are effectively addressed.

`(c) Entering Into Contracts- After a determination that a producer is eligible for the program under subsection (a), and a determination that the contract offer ranks sufficiently high under the evaluation criteria under subsection (b), the Secretary shall enter into a conservation stewardship contract with the producer to enroll the land to be covered by the contract.

`(d) Contract Provisions-

`(1) TERM- A conservation stewardship contract shall be for a term of 5 years.

`(2) PROVISIONS- The conservation stewardship contract of a producer shall--

`(A) state the amount of the payment the Secretary agrees to make to the producer for each year of the conservation stewardship contract under section 1238G(e);

`(B) require the producer--

`(i) to implement during the term of the conservation stewardship contract the conservation stewardship plan approved by the Secretary;

`(ii) to maintain, and make available to the Secretary at such times as the Secretary may request, appropriate records showing the effective and timely implementation of the conservation stewardship contract; and

`(iii) not to engage in any activity during the term of the conservation stewardship contract on the eligible land covered by the contract that would interfere with the purposes of the conservation stewardship contract;

`(C) permit all economic uses of the land that--

`(i) maintain the agricultural nature of the land; and

`(ii) are consistent with the conservation purposes of the conservation stewardship contract;

`(D) include a provision to ensure that a producer shall not be considered in violation of the contract for failure to comply with the contract due to circumstances beyond the control of the producer, including a disaster or related condition, as determined by the Secretary; and

`(E) include such other provisions as the Secretary determines necessary to ensure the purposes of the program are achieved.

`(e) Contract Renewal- At the end of an initial conservation stewardship contract of a producer, the Secretary may allow the producer to renew the contract for one additional five-year period if the producer--

`(1) demonstrates compliance with the terms of the existing contract; and

`(2) agrees to adopt new conservation activities, as determined by the Secretary.

`(f) Modification- The Secretary may allow a producer to modify a stewardship contract if the Secretary determines that the modification is consistent with achieving the purposes of the program.

`(g) Contract Termination-

`(1) VOLUNTARY TERMINATION- A producer may terminate a conservation stewardship contract if the Secretary determines that termination would not defeat the purposes of the program.

`(2) INVOLUNTARY TERMINATION- The Secretary may terminate a contract under this subchapter if the Secretary determines that the producer violated the contract.

`(3) REPAYMENT- If a contract is terminated, the Secretary may, consistent with the purposes of the program--

`(A) allow the producer to retain payments already received under the contract; or

`(B) require repayment, in whole or in part, of payments already received and assess liquidated damages.

`(4) CHANGE OF INTEREST IN LAND SUBJECT TO A CONTRACT-

`(A) IN GENERAL- Except as provided in paragraph (B), a change in the interest of a producer in land covered by a contract under this chapter shall result in the termination of the contract with regard to that land.

`(B) TRANSFER OF DUTIES AND RIGHTS- Subparagraph (A) shall not apply if--

`(i) within a reasonable period of time (as determined by the Secretary) after the date of the change in the interest in land covered by a contract under the program, the transferee of the land provides written notice to the Secretary that all duties and rights under the contract have been transferred to, and assumed by, the transferee; and

`(ii) the transferee meets the eligibility requirements of the program.

`(h) Coordination With Organic Certification- The Secretary shall establish a transparent means by which producers may initiate organic certification under the Organic Foods Production Act of 1990 (7 U.S.C. 6501 et. seq.) while participating in a contract under this subchapter.

`(i) On-Farm Research and Demonstration or Pilot Testing- The Secretary may approve a contract offer under this subchapter that includes--

`(1) on-farm conservation research and demonstration activities; and

`(2) pilot testing of new technologies or innovative conservation practices.

`SEC. 1238G. DUTIES OF THE SECRETARY.

`(a) In General- To achieve the conservation goals of a contract under the conservation stewardship program, the Secretary shall--

`(1) make the program available to eligible producers on a continuous enrollment basis with 1 or more ranking periods, one of which shall occur in the first quarter of each fiscal year;

`(2) identify not less than 3 nor more than 5 priority resource concerns in a particular watershed or other appropriate region or area within a State; and

`(3) develop reliable conservation measurement tools for purposes of carrying out the program.

`(b) Allocation to States- The Secretary shall allocate acres to States for enrollment, based--

`(1) primarily on each State's proportion of eligible acres under section 1238E(b)(1) to the total number of eligible acres in all States; and

`(2) also on consideration of--

`(A) the extent and magnitude of the conservation needs associated with agricultural production in each State;

`(B) the degree to which implementation of the program in the State is, or will be, effective in helping producers address those needs; and

`(C) other considerations to achieve equitable geographic distribution of funds, as determined by the Secretary.

`(c) Specialty Crop and Organic Producers- The Secretary shall ensure that outreach and technical assistance are available, and program specifications are appropriate to enable specialty crop and organic producers to participate in the program.

`(d) Acreage Enrollment Limitation- During the period beginning on October 1, 2008, and ending on September 30, 2017, the Secretary shall, to the maximum extent practicable--

`(1) enroll in the program an additional 12,769,000 acres for each fiscal year; and

`(2) manage the program to achieve a national average rate of $18 per acre, which shall include the costs of all financial assistance, technical assistance, and any other expenses associated with enrollment or participation in the program.

`(e) Conservation Stewardship Payments-

`(1) AVAILABILITY OF PAYMENTS- The Secretary shall provide a payment under the program to compensate the producer for--

`(A) installing and adopting additional conservation activities; and

`(B) improving, maintaining, and managing conservation activities in place at the operation of the producer at the time the contract offer is accepted by the Secretary.

`(2) PAYMENT AMOUNT- The amount of the conservation stewardship payment shall be determined by the Secretary and based, to the maximum extent practicable, on the following factors:

`(A) Costs incurred by the producer associated with planning, design, materials, installation, labor, management, maintenance, or training.

`(B) Income forgone by the producer.

`(C) Expected environmental benefits as determined by conservation measurement tools.

`(3) EXCLUSIONS- A payment to a producer under this subsection shall not be provided for--

`(A) the design, construction, or maintenance of animal waste storage or treatment facilities or associated waste transport or transfer devices for animal feeding operations; or

`(B) conservation activities for which there is no cost incurred or income forgone to the producer.

`(4) TIMING OF PAYMENTS-

`(A) IN GENERAL- The Secretary shall make payments as soon as practicable after October 1 of each fiscal year for activities carried out in the previous fiscal year.

`(B) ADDITIONAL ACTIVITIES- The Secretary shall make payments to compensate producers for installation of additional practices at the time at which the practices are installed and adopted.

`(f) Supplemental Payments for Resource-Conserving Crop Rotations-

`(1) AVAILABILITY OF PAYMENTS- The Secretary shall provide additional payments to producers that, in participating in the program, agree to adopt resource-conserving crop rotations to achieve beneficial crop rotations as appropriate for the land of the producers.

`(2) BENEFICIAL CROP ROTATIONS- The Secretary shall determine whether a resource-conserving crop rotation is a beneficial crop rotation eligible for additional payments under paragraph (1), based on whether the resource-conserving crop rotation is designed to provide natural resource conservation and production benefits.

`(3) ELIGIBILITY- To be eligible to receive a payment described in paragraph (1), a producer shall agree to adopt and maintain beneficial resource-conserving crop rotations for the term of the contract.

`(4) RESOURCE-CONSERVING CROP ROTATION- In this subsection, the term `resource-conserving crop rotation' means a crop rotation that--

`(A) includes at least 1 resource conserving crop (as defined by the Secretary);

`(B) reduces erosion;

`(C) improves soil fertility and tilth;

`(D) interrupts pest cycles; and

`(E) in applicable areas, reduces depletion of soil moisture or otherwise reduces the need for irrigation.

`(g) Payment Limitations- A person or legal entity may not receive, directly or indirectly, payments under this subchapter that, in the aggregate, exceed $200,000 for all contracts entered into during any 5-year period, excluding funding arrangements with federally recognized Indian tribes or Alaska Native corporations, regardless of the number of contracts entered into under the program by the person or entity.

`(h) Regulations- The Secretary shall promulgate regulations that--

`(1) prescribe such other rules as the Secretary determines to be necessary to ensure a fair and reasonable application of the limitations established under subsection (g); and

`(2) otherwise enable the Secretary to carry out the program.

`(i) Data- The Secretary shall maintain detailed and segmented data on contracts and payments under the program to allow for quantification of the amount of payments made for--

`(1) the installation and adoption of additional conservation activities and improvements to conservation activities in place on the operation of a producer at the time the conservation stewardship offer is accepted by the Secretary;

`(2) participation in research, demonstration, and pilot projects; and

`(3) the development and periodic assessment and evaluation of conservation plans developed under this subchapter.'.

(b) Termination of Conservation Security Program Authority; Effect on Existing Contracts- Section 1238A of the Food Security Act of 1985 (16 U.S.C. 3838a) is amended by adding at the end the following new subsection:

`(g) Prohibition on Conservation Security Program Contracts; Effect on Existing Contracts-

`(1) PROHIBITION- A conservation security contract may not be entered into or renewed under this subchapter after September 30, 2008.

`(2) EXCEPTION- This subchapter, and the terms and conditions of the conservation security program, shall continue to apply to--

`(A) conservation security contracts entered into on or before September 30, 2008; and

`(B) any conservation security contract entered into after that date, but for which the application for the contract was received during the 2008 sign-up period.

`(3) EFFECT ON PAYMENTS- The Secretary shall make payments under this subchapter with respect to conservation security contracts described in paragraph (2) during the remaining term of the contracts.

`(4) REGULATIONS- A contract described in paragraph (2) may not be administered under the regulations issued to carry out the conservation stewardship program.'.

(c) Reference to Redesignated Subchapter- Section 1238A(b)(3)(C) of title XII of the Food Security Act of 1985 (16 U.S.C. 3838a(b)(3)(C)) is amended by striking `subchapter C' and inserting `subchapter D'.

Subtitle E--Farmland Protection and Grassland Reserve

SEC. 2401. FARMLAND PROTECTION PROGRAM.

(a) Definitions- Section 1238H of the Food Security Act of 1985 (16 U.S.C. 3838h) is amended--

(1) by striking paragraph (1) and inserting the following new paragraph:

`(1) ELIGIBLE ENTITY- The term `eligible entity' means--

`(A) any agency of any State or local government or an Indian tribe (including a farmland protection board or land resource council established under State law); or

`(B) any organization that--

`(i) is organized for, and at all times since the formation of the organization has been operated principally for, 1 or more of the conservation purposes specified in clause (i), (ii), (iii), or (iv) of section 170(h)(4)(A) of the Internal Revenue Code of 1986;

`(ii) is an organization described in section 501(c)(3) of that Code that is exempt from taxation under section 501(a) of that Code; and

`(iii) is--

`(I) described in paragraph (1) or (2) of section 509(a) of that Code; or

`(II) described in section 509(a)(3), and is controlled by an organization described in section 509(a)(2), of that Code.'; and

(2) in paragraph (2)--

(A) in subparagraph (A)--

(i) by striking `that--' and inserting `that is subject to a pending offer for purchase from an eligible entity and--'; and

(ii) by striking clauses (i) and (ii) and inserting the following new clauses:

`(i) has prime, unique, or other productive soil;

`(ii) contains historical or archaeological resources; or

`(iii) the protection of which will further a State or local policy consistent with the purposes of the program.'; and

(B) in subparagraph (B)--

(i) in clause (iv), by striking `and' at the end; and

(ii) by striking clause (v) and inserting the following new clauses:

`(v) forest land that--

`(I) contributes to the economic viability of an agricultural operation; or

`(II) serves as a buffer to protect an agricultural operation from development; and

`(vi) land that is incidental to land described in clauses (i) through (v), if such land is necessary for the efficient administration of a conservation easement, as determined by the Secretary.'.

(b) Farmland Protection- Section 1238I of the Food Security Act of 1985 (16 U.S.C. 3838i) is amended to read as follows:

`SEC. 1238I. FARMLAND PROTECTION PROGRAM.

`(a) Establishment- The Secretary shall establish and carry out a farmland protection program under which the Secretary shall facilitate and provide funding for the purchase of conservation easements or other interests in eligible land.

`(b) Purpose- The purpose of the program is to protect the agricultural use and related conservation values of eligible land by limiting nonagricultural uses of that land.

`(c) Cost-Share Assistance-

`(1) PROVISION OF ASSISTANCE- The Secretary shall provide cost-share assistance to eligible entities for purchasing a conservation easement or other interest in eligible land.

`(2) FEDERAL SHARE- The share of the cost provided by the Secretary for purchasing a conservation easement or other interest in eligible land shall not exceed 50 percent of the appraised fair market value of the conservation easement or other interest in eligible land.

`(3) NON-FEDERAL SHARE-

`(A) SHARE PROVIDED BY ELIGIBLE ENTITY- The eligible entity shall provide a share of the cost of purchasing a conservation easement or other interest in eligible land in an amount that is not less than 25 percent of the acquisition purchase price.

`(B) LANDOWNER CONTRIBUTION- As part of the non-Federal share of the cost of purchasing a conservation easement or other interest in eligible land, an eligible entity may include a charitable donation or qualified conservation contribution (as defined by section 170(h) of the Internal Revenue Code of 1986) from the private landowner from which the conservation easement or other interest in land will be purchased.

`(d) Determination of Fair Market Value- Effective on the date of enactment of the Food, Conservation, and Energy Act of 2008, the fair market value of the conservation easement or other interest in eligible land shall be determined on the basis of an appraisal using an industry approved method, selected by the eligible entity and approved by the Secretary.

`(e) Bidding Down Prohibited- If the Secretary determines that 2 or more applications for cost-share assistance are comparable in achieving the purpose of the program, the Secretary shall not assign a higher priority to any 1 of those applications solely on the basis of lesser cost to the program.

`(f) Condition on Assistance-

`(1) CONSERVATION PLAN- Any highly erodible cropland for which a conservation easement or other interest is purchased using cost-share assistance provided under the program shall be subject to a conservation plan that requires, at the option of the Secretary, the conversion of the cropland to less intensive uses.

`(2) CONTINGENT RIGHT OF ENFORCEMENT- The Secretary shall require the inclusion of a contingent right of enforcement for the Secretary in the terms of a conservation easement or other interest in eligible land that is purchased using cost-share assistance provided under the program.

`(g) Agreements With Eligible Entities-

`(1) IN GENERAL- The Secretary shall enter into agreements with eligible entities to stipulate the terms and conditions under which the eligible entity is permitted to use cost-share assistance provided under subsection (c).

`(2) LENGTH OF AGREEMENTS- An agreement under this subsection shall be for a term that is--

`(A) in the case of an eligible entity certified under the process described in subsection (h), a minimum of five years; and

`(B) for all other eligible entities, at least three, but not more than five years.

`(3) SUBSTITUTION OF QUALIFIED PROJECTS- An agreement shall allow, upon mutual agreement of the parties, substitution of qualified projects that are identified at the time of the proposed substitution.

`(4) MINIMUM REQUIREMENTS- An eligible entity shall be authorized to use its own terms and conditions, as approved by the Secretary, for conservation easements and other purchases of interests in land, so long as such terms and conditions--

`(A) are consistent with the purposes of the program;

`(B) permit effective enforcement of the conservation purposes of such easements or other interests; and

`(C) include a limit on the impervious surfaces to be allowed that is consistent with the agricultural activities to be conducted.

`(5) EFFECT OF VIOLATION- If a violation occurs of a term or condition of an agreement entered into under this subsection--

`(A) the agreement shall remain in force; and

`(B) the Secretary may require the eligible entity to refund all or part of any payments received by the entity under the program, with interest on the payments as determined appropriate by the Secretary.

`(h) Certification of Eligible Entities-

`(1) CERTIFICATION PROCESS- The Secretary shall establish a process under which the Secretary may--

`(A) directly certify eligible entities that meet established criteria;

`(B) enter into long-term agreements with certified entities, as authorized by subsection (g)(2)(A); and

`(C) accept proposals for cost-share assistance to certified entities for the purchase of conservation easements or other interests in eligible land throughout the duration of such agreements.

`(2) CERTIFICATION CRITERIA- In order to be certified, an eligible entity shall demonstrate to the Secretary that the entity will maintain, at a minimum, for the duration of the agreement--

`(A) a plan for administering easements that is consistent with the purpose of this subchapter;

`(B) the capacity and resources to monitor and enforce conservation easements or other interests in land; and

`(C) policies and procedures to ensure--

`(i) the long-term integrity of conservation easements or other interests in eligible land;

`(ii) timely completion of acquisitions of easements or other interests in eligible land; and

`(iii) timely and complete evaluation and reporting to the Secretary on the use of funds provided by the Secretary under the program.

`(3) REVIEW AND REVISION-

`(A) REVIEW- The Secretary shall conduct a review of eligible entities certified under paragraph (1) every three years to ensure that such entities are meeting the criteria established under paragraph (2).

`(B) REVOCATION- If the Secretary finds that the certified entity no longer meets the criteria established under paragraph (2), the Secretary may--

`(i) allow the certified entity a specified period of time, at a minimum 180 days, in which to take such actions as may be necessary to meet the criteria; and

`(ii) revoke the certification of the entity, if after the specified period of time, the certified entity does not meet the criteria established in paragraph (2).'.

SEC. 2402. FARM VIABILITY PROGRAM.

Section 1238J(b) of the Food Security Act of 1985 (16 U.S.C. 3838j(b)) is amended by striking `2007' and inserting `2012'.

SEC. 2403. GRASSLAND RESERVE PROGRAM.

Subchapter D of chapter 2 of subtitle D of title XII of the Food Security Act of 1985 (16 U.S.C. 3838n et seq.), as redesignated by section 2301(a)(1), is amended to read as follows:

`Subchapter D--Grassland Reserve Program

`SEC. 1238N. GRASSLAND RESERVE PROGRAM.

`(a) Establishment and Purpose- The Secretary shall establish a grassland reserve program (referred to in this subchapter as the `program') for the purpose of assisting owners and operators in protecting grazing uses and related conservation values by restoring and conserving eligible land through rental contracts, easements, and restoration agreements.

`(b) Enrollment of Acreage-

`(1) ACREAGE ENROLLED- The Secretary shall enroll an additional 1,220,000 acres of eligible land in the program during fiscal years 2009 through 2012.

`(2) METHODS OF ENROLLMENT- The Secretary shall enroll eligible land in the program through the use of;

`(A) a 10-year, 15-year, or 20-year rental contract;

`(B) a permanent easement; or

`(C) in a State that imposes a maximum duration for easements, an easement for the maximum duration allowed under the law of that State.

`(3) LIMITATION- Of the total amount of funds expended under the program to acquire rental contracts and easements described in paragraph (2), the Secretary shall use, to the extent practicable--

`(A) 40 percent for rental contacts; and

`(B) 60 percent for easements.

`(4) ENROLLMENT OF CONSERVATION RESERVE LAND-

`(A) PRIORITY- Upon expiration of a contract under subchapter B of chapter 1 of this subtitle, the Secretary shall give priority for enrollment in the program to land previously enrolled in the conservation reserve program if--

`(i) the land is eligible land, as defined in subsection (c); and

`(ii) the Secretary determines that the land is of high ecological value and under significant threat of conversion to uses other than grazing.

`(B) MAXIMUM ENROLLMENT- The number of acres of land enrolled under the priority described in subparagraph (A) in a calendar year shall not exceed 10 percent of the total number of acres enrolled in the program in that calendar year.

`(c) Eligible Land Defined- For purposes of the program, the term `eligible land' means private or tribal land that--

`(1) is grassland, land that contains forbs, or shrubland (including improved rangeland and pastureland) for which grazing is the predominant use;

`(2) is located in an area that has been historically dominated by grassland, forbs, or shrubland, and the land--

`(A) could provide habitat for animal or plant populations of significant ecological value if the land--

`(i) is retained in its current use; or

`(ii) is restored to a natural condition;

`(B) contains historical or archaeological resources; or

`(C) would address issues raised by State, regional, and national conservation priorities; or

`(3) is incidental to land described in paragraph (1) or (2), if the incidental land is determined by the Secretary to be necessary for the efficient administration of a rental contract or easement under the program.

`SEC. 1238O. DUTIES OF OWNERS AND OPERATORS.

`(a) Rental Contracts- To be eligible to enroll eligible land in the program under a rental contract, the owner or operator of the land shall agree--

`(1) to comply with the terms of the contract and, when applicable, a restoration agreement;

`(2) to suspend any existing cropland base and allotment history for the land under another program administered by the Secretary; and

`(3) to implement a grazing management plan, as approved by the Secretary, which may be modified upon mutual agreement of the parties.

`(b) Easements- To be eligible to enroll eligible land in the program through an easement, the owner of the land shall agree--

`(1) to grant an easement to the Secretary or to an eligible entity described in section 1238Q;

`(2) to create and record an appropriate deed restriction in accordance with applicable State law to reflect the easement;

`(3) to provide a written statement of consent to the easement signed by persons holding a security interest or any vested interest in the land;

`(4) to provide proof of unencumbered title to the underlying fee interest in the land that is the subject of the easement;

`(5) to comply with the terms of the easement and, when applicable, a restoration agreement;

`(6) to implement a grazing management plan, as approved by the Secretary, which may be modified upon mutual agreement of the parties; and

`(7) to eliminate any existing cropland base and allotment history for the land under another program administered by the Secretary.

`(c) Restoration Agreements-

`(1) WHEN APPLICABLE- To be eligible for cost-share assistance to restore eligible land subject to a rental contract or an easement under the program, the owner or operator of the land shall agree to comply with the terms of a restoration agreement.

`(2) TERMS AND CONDITIONS- The Secretary shall prescribe the terms and conditions of a restoration agreement by which eligible land that is subject to a rental contract or easement under the program shall be restored.

`(3) DUTIES- The restoration agreement shall describe the respective duties of the owner or operator and the Secretary, including the Federal share of restoration payments and technical assistance.

`(d) Terms and Conditions Applicable to Rental Contracts and Easements-

`(1) PERMISSIBLE ACTIVITIES- The terms and conditions of a rental contract or easement under the program shall permit--

`(A) common grazing practices, including maintenance and necessary cultural practices, on the land in a manner that is consistent with maintaining the viability of grassland, forb, and shrub species appropriate to that locality;

`(B) haying, mowing, or harvesting for seed production, subject to appropriate restrictions during the nesting season for birds in the local area that are in significant decline or are conserved in accordance with Federal or State law, as determined by the State Conservationist;

`(C) fire presuppression, rehabilitation, and construction of fire breaks; and

`(D) grazing related activities, such as fencing and livestock watering.

`(2) PROHIBITIONS- The terms and conditions of a rental contract or easement under the program shall prohibit--

`(A) the production of crops (other than hay), fruit trees, vineyards, or any other agricultural commodity that is inconsistent with maintaining grazing land; and

`(B) except as permitted under a restoration plan, the conduct of any other activity that would be inconsistent with maintaining grazing land enrolled in the program.

`(3) ADDITIONAL TERMS AND CONDITIONS- A rental contract or easement under the program shall include such additional provisions as the Secretary determines are appropriate to carry out or facilitate the purposes and administration of the program.

`(e) Violations- On a violation of the terms or conditions of a rental contract, easement, or restoration agreement entered into under this section--

`(1) the contract or easement shall remain in force; and

`(2) the Secretary may require the owner or operator to refund all or part of any payments received under the program, with interest on the payments as determined appropriate by the Secretary.

`SEC. 1238P. DUTIES OF SECRETARY.

`(a) Evaluation and Ranking of Applications-

`(1) CRITERIA- The Secretary shall establish criteria to evaluate and rank applications for rental contracts and easements under the program .

`(2) CONSIDERATIONS- In establishing the criteria, the Secretary shall emphasize support for--

`(A) grazing operations;

`(B) plant and animal biodiversity; and

`(C) grassland, land that contains forbs, and shrubland under the greatest threat of conversion to uses other than grazing.

`(b) Payments-

`(1) IN GENERAL- In return for the execution of a rental contract or the granting of an easement by an owner or operator under the program, the Secretary shall--

`(A) make rental contract or easement payments to the owner or operator in accordance with paragraphs (2) and (3); and

`(B) make payments to the owner or operator under a restoration agreement for the Federal share of the cost of restoration in accordance with paragraph (4).

`(2) RENTAL CONTRACT PAYMENTS-

`(A) PERCENTAGE OF GRAZING VALUE OF LAND- In return for the execution of a rental contract by an owner or operator under the program, the Secretary shall make annual payments during the term of the contract in an amount, subject to subparagraph (B), that is not more than 75 percent of the grazing value of the land covered by the contract.

`(B) PAYMENT LIMITATION- Payments made under 1 or more rental contracts to a person or legal entity, directly or indirectly, may not exceed, in the aggregate, $50,000 per year.

`(3) EASEMENT PAYMENTS-

`(A) IN GENERAL- Subject to subparagraph (B), in return for the granting of an easement by an owner under the program, the Secretary shall make easement payments in an amount not to exceed the fair market value of the land less the grazing value of the land encumbered by the easement.

`(B) METHOD FOR DETERMINATION OF COMPENSATION- In making a determination under subparagraph (A), the Secretary shall pay as compensation for a easement acquired under the program the lowest of--

`(i) the fair market value of the land encumbered by the easement, as determined by the Secretary, using--

`(I) the Uniform Standards of Professional Appraisal Practices; or

`(II) an area-wide market analysis or survey;

`(ii) the amount corresponding to a geographical cap, as determined by the Secretary in regulations; or

`(iii) the offer made by the landowner.

`(C) SCHEDULE- Easement payments may be provided in up to 10 annual payments of equal or unequal amount, as agreed to by the Secretary and the owner.

`(4) RESTORATION AGREEMENT PAYMENTS-

`(A) FEDERAL SHARE OF RESTORATION- The Secretary shall make payments to an owner or operator under a restoration agreement of not more than 50 percent of the costs of carrying out measures and practices necessary to restore functions and values of that land.

`(B) PAYMENT LIMITATION- Payments made under 1 or more restoration agreements to a person or legal entity, directly or indirectly, may not exceed, in the aggregate, $50,000 per year.

`(5) PAYMENTS TO OTHERS- If an owner or operator who is entitled to a payment under the program dies, becomes incompetent, is otherwise unable to receive the payment, or is succeeded by another person who renders or completes the required performance, the Secretary shall make the payment, in accordance with regulations promulgated by the Secretary and without regard to any other provision of law, in such manner as the Secretary determines is fair and reasonable in light of all the circumstances.

`SEC. 1238Q. DELEGATION OF DUTY.

`(a) Authority to Delegate- The Secretary may delegate a duty under the program--

`(1) by transferring title of ownership to an easement to an eligible entity to hold and enforce; or

`(2) by entering into a cooperative agreement with an eligible entity for the eligible entity to own, write, and enforce an easement.

`(b) Eligible Entity Defined- In this section, the term `eligible entity' means--

`(1) an agency of State or local government or an Indian tribe; or

`(2) an organization that--

`(A) is organized for, and at all times since the formation of the organization has been operated principally for, one or more of the conservation purposes specified in clause (i), (ii), (iii), or (iv) of section 170(h)(4)(A) of the Internal Revenue Code of 1986;

`(B) is an organization described in section 501(c)(3) of that Code that is exempt from taxation under section 501(a) of that Code; and

`(C) is described in--

`(i) paragraph (1) or (2) of section 509(a) of that Code; or

`(ii) in section 509(a)(3) of that Code, and is controlled by an organization described in section 509(a)(2) of that Code.

`(c) Transfer of Title of Ownership-

`(1) TRANSFER- The Secretary may transfer title of ownership to an easement to an eligible entity to hold and enforce, in lieu of the Secretary, subject to the right of the Secretary to conduct periodic inspections and enforce the easement, if--

`(A) the Secretary determines that the transfer will promote protection of grassland, land that contains forbs, or shrubland;

`(B) the owner authorizes the eligible entity to hold or enforce the easement; and

`(C) the eligible entity agrees to assume the costs incurred in administering and enforcing the easement, including the costs of restoration or rehabilitation of the land as specified by the owner and the eligible entity.

`(2) APPLICATION- An eligible entity that seeks to hold and enforce an easement shall apply to the Secretary for approval.

`(3) APPROVAL BY SECRETARY- The Secretary may approve an application described in paragraph (2) if the eligible entity--

`(A) has the relevant experience necessary, as appropriate for the application, to administer an easement on grassland, land that contains forbs, or shrubland;

`(B) has a charter that describes a commitment to conserving ranchland, agricultural land, or grassland for grazing and conservation purposes; and

`(C) has the resources necessary to effectuate the purposes of the charter.

`(d) Cooperative Agreements-

`(1) AUTHORIZED; TERMS AND CONDITIONS- The Secretary shall establish the terms and conditions of a cooperative agreement under which an eligible entity shall use funds provided by the Secretary to own, write, and enforce an easement, in lieu of the Secretary.

`(2) MINIMUM REQUIREMENTS- At a minimum, the cooperative agreement shall--

`(A) specify the qualification of the eligible entity to carry out the entity's responsibilities under the program, including acquisition, monitoring, enforcement, and implementation of management policies and procedures that ensure the long-term integrity of the easement protections;

`(B) require the eligible entity to assume the costs incurred in administering and enforcing the easement, including the costs of restoration or rehabilitation of the land as specified by the owner and the eligible entity;

`(C) specify the right of the Secretary to conduct periodic inspections to verify the eligible entity's enforcement of the easement;

`(D) subject to subparagraph (E), identify a specific project or a range of projects to be funded under the agreement;

`(E) allow, upon mutual agreement of the parties, substitution of qualified projects that are identified at the time of substitution;

`(F) specify the manner in which the eligible entity will evaluate and report the use of funds to the Secretary;

`(G) allow the eligible entity flexibility to develop and use terms and conditions for easements, if the Secretary finds the terms and conditions consistent with the purposes of the program and adequate to enable effective enforcement of the easements;

`(H) if applicable, allow an eligible entity to include a charitable donation or qualified conservation contribution (as defined by section 170(h) of the Internal Revenue Code of 1986) from the landowner from which the easement will be purchased as part of the entity's share of the cost to purchase an easement; and

`(I) provide for a schedule of payments to an eligible entity, as agreed to by the Secretary and the eligible entity.

`(3) COST SHARING-

`(A) IN GENERAL- As part of a cooperative agreement with an eligible entity under this subsection, the Secretary may provide a share of the purchase price of an easement under the program.

`(B) MINIMUM SHARE BY ELIGIBLE ENTITY- The eligible entity shall be required to provide a share of the purchase price at least equivalent to that provided by the Secretary.

`(C) PRIORITY- The Secretary may accord a higher priority to proposals from eligible entities that leverage a greater share of the purchase price of the easement.

`(4) VIOLATION- If an eligible entity violates the terms or conditions of a cooperative agreement entered into under this subsection--

`(A) the cooperative agreement shall remain in force; and

`(B) the Secretary may require the eligible entity to refund all or part of any payments received by the eligible entity under the program, with interest on the payments as determined appropriate by the Secretary.

`(e) Protection of Federal Investment- When delegating a duty under this section, the Secretary shall ensure that the terms of an easement include a contingent right of enforcement for the Department.'.

Subtitle F--Environmental Quality Incentives Program

SEC. 2501. PURPOSES OF ENVIRONMENTAL QUALITY INCENTIVES PROGRAM.

(a) Revised Purposes- Section 1240 of the Food Security Act of 1985 (16 U.S.C. 3839aa) is amended--

(1) in the matter preceding paragraph (1), by inserting `, forest management,' after `agricultural production'; and

(2) by striking paragraphs (3) and (4) and inserting the following new paragraphs:

`(3) providing flexible assistance to producers to install and maintain conservation practices that sustain food and fiber production while--

`(A) enhancing soil, water, and related natural resources, including grazing land, forestland, wetland, and wildlife; and

`(B) conserving energy;

`(4) assisting producers to make beneficial, cost effective changes to production systems (including conservation practices related to organic production), grazing management, fuels management, forest management, nutrient management associated with livestock, pest or irrigation management, or other practices on agricultural and forested land; and'.

(b) Technical Correction- The Food Security Act of 1985 is amended by inserting immediately before section 1240 (16 U.S.C. 3839aa) the following:

`CHAPTER 4--ENVIRONMENTAL QUALITY INCENTIVES PROGRAM'.

SEC. 2502. DEFINITIONS.

Section 1240A of the Food Security Act of 1985 (16 U.S.C. 3839aa-1) is amended to read as follows:

`SEC. 1240A. DEFINITIONS.

`In this chapter:

`(1) ELIGIBLE LAND-

`(A) IN GENERAL- The term `eligible land' means land on which agricultural commodities, livestock, or forest-related products are produced.

`(B) INCLUSIONS- The term `eligible land' includes the following:

`(i) Cropland.

`(ii) Grassland.

`(iii) Rangeland.

`(iv) Pasture land.

`(v) Nonindustrial private forest land.

`(vi) Other agricultural land (including cropped woodland, marshes, and agricultural land used for the production of livestock) on which resource concerns related to agricultural production could be addressed through a contract under the program, as determined by the Secretary.

`(2) NATIONAL ORGANIC PROGRAM- The term `national organic program' means the national organic program established under the Organic Foods Production Act of 1990 (7 U.S.C. 6501 et. seq.).

`(3) ORGANIC SYSTEM PLAN- The term `organic system plan' means an organic plan approved under the national organic program.

`(4) PAYMENT- The term `payment' means financial assistance provided to a producer for performing practices under this chapter, including compensation for--

`(A) incurred costs associated with planning, design, materials, equipment, installation, labor, management, maintenance, or training; and

`(B) income forgone by the producer.

`(5) PRACTICE- The term `practice' means 1 or more improvements and conservation activities that are consistent with the purposes of the program under this chapter, as determined by the Secretary, including--

`(A) improvements to eligible land of the producer, including--

`(i) structural practices;

`(ii) land management practices;

`(iii) vegetative practices;

`(iv) forest management; and

`(v) other practices that the Secretary determines would further the purposes of the program; and

`(B) conservation activities involving the development of plans appropriate for the eligible land of the producer, including--

`(i) comprehensive nutrient management planning; and

`(ii) other plans that the Secretary determines would further the purposes of the program under this chapter.

`(6) PROGRAM- The term `program' means the environmental quality incentives program established by this chapter.'.

SEC. 2503. ESTABLISHMENT AND ADMINISTRATION OF ENVIRONMENTAL QUALITY INCENTIVES PROGRAM.

Section 1240B of the Food Security Act of 1985 (16 U.S.C. 3839aa-2) is amended to read as follows:

`SEC. 1240B. ESTABLISHMENT AND ADMINISTRATION.

`(a) Establishment- During each of the 2002 through 2012 fiscal years, the Secretary shall provide payments to producers that enter into contracts with the Secretary under the program.

`(b) Practices and Term-

`(1) PRACTICES- A contract under the program may apply to the performance of one or more practices.

`(2) TERM- A contract under the program shall have a term that--

`(A) at a minimum, is equal to the period beginning on the date on which the contract is entered into and ending on the date that is one year after the date on which all practices under the contract have been implemented; but

`(B) not to exceed 10 years.

`(c) Bidding Down- If the Secretary determines that the environmental values of two or more applications for payments are comparable, the Secretary shall not assign a higher priority to the application only because it would present the least cost to the program.

`(d) Payments-

`(1) AVAILABILITY OF PAYMENTS- Payments are provided to a producer to implement one or more practices under the program.

`(2) LIMITATION ON PAYMENT AMOUNTS- A payment to a producer for performing a practice may not exceed, as determined by the Secretary--

`(A) 75 percent of the costs associated with planning, design, materials, equipment, installation, labor, management, maintenance, or training;

`(B) 100 percent of income foregone by the producer; or

`(C) in the case of a practice consisting of elements covered under subparagraphs (A) and (B)--

`(i) 75 percent of the costs incurred for those elements covered under subparagraph (A); and

`(ii) 100 percent of income foregone for those elements covered under subparagraph (B).

`(3) SPECIAL RULE INVOLVING PAYMENTS FOR FOREGONE INCOME- In determining the amount and rate of payments under paragraph (2)(B), the Secretary may accord great significance to a practice that, as determined by the Secretary, promotes--

`(A) residue management;

`(B) nutrient management;

`(C) air quality management;

`(D) invasive species management;

`(E) pollinator habitat;

`(F) animal carcass management technology; or

`(G) pest management.

`(4) INCREASED PAYMENTS FOR CERTAIN PRODUCERS-

`(A) IN GENERAL- Notwithstanding paragraph (2), in the case of a producer that is a limited resource, socially disadvantaged farmer or rancher or a beginning farmer or rancher, the Secretary shall increase the amount that would otherwise be provided to a producer under this subsection--

`(i) to not more than 90 percent of the costs associated with planning, design, materials, equipment, installation, labor, management, maintenance, or training; and

`(ii) to not less than 25 percent above the otherwise applicable rate.

`(B) ADVANCE PAYMENTS- Not more than 30 percent of the amount determined under subparagraph (A) may be provided in advance for the purpose of purchasing materials or contracting.

`(5) FINANCIAL ASSISTANCE FROM OTHER SOURCES- Except as provided in paragraph (6), any payments received by a producer from a State or private organization or person for the implementation of one or more practices on eligible land of the producer shall be in addition to the payments provided to the producer under this subsection.

`(6) OTHER PAYMENTS- A producer shall not be eligible for payments for practices on eligible land under the program if the producer receives payments or other benefits for the same practice on the same land under another program under this subtitle.

`(e) Modification or Termination of Contracts-

`(1) VOLUNTARY MODIFICATION OR TERMINATION- The Secretary may modify or terminate a contract entered into with a producer under the program if--

`(A) the producer agrees to the modification or termination; and

`(B) the Secretary determines that the modification or termination is in the public interest.

`(2) INVOLUNTARY TERMINATION- The Secretary may terminate a contract under the program if the Secretary determines that the producer violated the contract.

`(f) Allocation of Funding- For each of fiscal years 2002 through 2012, 60 percent of the funds made available for payments under the program shall be targeted at practices relating to livestock production.

`(g) Funding for Federally Recognized Native American Indian Tribes and Alaska Native Corporations- The Secretary may enter into alternative funding arrangements with federally recognized Native American Indian Tribes and Alaska Native Corporations (including their affiliated membership organizations) if the Secretary determines that the goals and objectives of the program will be met by such arrangements, and that statutory limitations regarding contracts with individual producers will not be exceeded by any Tribal or Native Corporation member.

`(h) Water Conservation or Irrigation Efficiency Practice-

`(1) AVAILABILITY OF PAYMENTS- The Secretary may provide payments under this subsection to a producer for a water conservation or irrigation practice.

`(2) PRIORITY- In providing payments to a producer for a water conservation or irrigation practice, the Secretary shall give priority to applications in which--

`(A) consistent with the law of the State in which the eligible land of the producer is located, there is a reduction in water use in the operation of the producer; or

`(B) the producer agrees not to use any associated water savings to bring new land, other than incidental land needed for efficient operations, under irrigated production, unless the producer is participating in a watershed-wide project that will effectively conserve water, as determined by the Secretary.

`(i) Payments for Conservation Practices Related to Organic Production-

`(1) PAYMENTS AUTHORIZED- The Secretary shall provide payments under this subsection for conservation practices, on some or all of the operations of a producer, related--

`(A) to organic production; and

`(B) to the transition to organic production.

`(2) ELIGIBILITY REQUIREMENTS- As a condition for receiving payments under this subsection, a producer shall agree--

`(A) to develop and carry out an organic system plan; or

`(B) to develop and implement conservation practices for certified organic production that are consistent with an organic system plan and the purposes of this chapter.

`(3) PAYMENT LIMITATIONS- Payments under this subsection to a person or legal entity, directly or indirectly, may not exceed, in the aggregate, $20,000 per year or $80,000 during any 6-year period. In applying these limitations, the Secretary shall not take into account payments received for technical assistance.

`(4) EXCLUSION OF CERTAIN ORGANIC CERTIFICATION COSTS- Payments may not be made under this subsection to cover the costs associated with organic certification that are eligible for cost-share payments under section 10606 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 6523).

`(5) TERMINATION OF CONTRACTS- The Secretary may cancel or otherwise nullify a contract to provide payments under this subsection if the Secretary determines that the producer--

`(A) is not pursuing organic certification; or

`(B) is not in compliance with the Organic Foods Production Act of 1990 (7 U.S.C. 6501 et seq).'.

SEC. 2504. EVALUATION OF APPLICATIONS.

Section 1240C of the Food Security Act of 1985 (16 U.S.C. 3839aa-3) is amended to read as follows:

`SEC. 1240C. EVALUATION OF APPLICATIONS.

`(a) Evaluation Criteria- The Secretary shall develop criteria for evaluating applications that will ensure that national, State, and local conservation priorities are effectively addressed.

`(b) Prioritization of Applications- In evaluating applications under this chapter, the Secretary shall prioritize applications--

`(1) based on their overall level of cost-effectiveness to ensure that the conservation practices and approaches proposed are the most efficient means of achieving the anticipated environmental benefits of the project;

`(2) based on how effectively and comprehensively the project addresses the designated resource concern or resource concerns;

`(3) that best fulfill the purpose of the environmental quality incentives program specified in section 1240(1); and

`(4) that improve conservation practices or systems in place on the operation at the time the contract offer is accepted or that will complete a conservation system.

`(c) Grouping of Applications- To the greatest extent practicable, the Secretary shall group applications of similar crop or livestock operations for evaluation purposes or otherwise evaluate applications relative to other applications for similar farming operations.'.

SEC. 2505. DUTIES OF PRODUCERS UNDER ENVIRONMENTAL QUALITY INCENTIVES PROGRAM.

Section 1240D of the Food Security Act of 1985 (16 U.S.C. 3839aa-4) is amended--

(1) in the matter preceding paragraph (1), by striking `technical assistance, cost-share payments, or incentive';

(2) in paragraph (2), by striking `farm or ranch' and inserting `farm, ranch, or forest land'; and

(3) in paragraph (4), by striking `cost-share payments and incentive'.

SEC. 2506. ENVIRONMENTAL QUALITY INCENTIVES PROGRAM PLAN.

(a) Plan of Operations- Section 1240E(a) of the Food Security Act of 1985 (16 U.S.C. 3839aa-5(a)) is amended--

(1) in the subsection heading, by striking `In General' and inserting `Plan of Operations';

(2) in matter preceding paragraph (1), by striking `cost-share payments or incentive';

(3) in paragraph (2), by striking `and' after the semicolon at the end;

(4) in paragraph (3), by striking the period at the end and inserting `; and'; and

(5) by adding at the end the following new paragraph:

`(4) in the case of forest land, is consistent with the provisions of a forest management plan that is approved by the Secretary, which may include--

`(A) a forest stewardship plan described in section 5 of the Cooperative Forestry Assistance Act of 1978 (16 U.S.C. 2103a);

`(B) another practice plan approved by the State forester; or

`(C) another plan determined appropriate by the Secretary.'.

(b) Avoidance of Duplication- Subsection (b) of section 1240E of the Food Security Act of 1985 (16 U.S.C. 3839aa-5) is amended to read as follows:

`(b) Avoidance of Duplication- The Secretary shall--

`(1) consider a plan developed in order to acquire a permit under a water or air quality regulatory program as the equivalent of a plan of operations under subsection (a), if the plan contains elements equivalent to those elements required by a plan of operations; and

`(2) to the maximum extent practicable, eliminate duplication of planning activities under the program under this chapter and comparable conservation programs.'.

SEC. 2507. DUTIES OF THE SECRETARY.

Section 1240F(1) of the Food Security Act of 1985 (16 U.S.C. 3839aa-6(1)) is amended by striking `cost-share payments or incentive'.

SEC. 2508. LIMITATION ON ENVIRONMENTAL QUALITY INCENTIVES PROGRAM PAYMENTS.

Section 1240G of the Food Security Act of 1985 (16 U.S.C. 3839aa-7) is amended--

(1) by striking `An individual or entity' and inserting `(a) limitation- Subject to subsection (b), a person or legal entity';

(2) by striking `$450,000' and inserting `$300,000';

(3) by striking `the individual' both places it appears and inserting `the person'; and

(4) by adding at the end the following new subsection:

`(b) Waiver Authority- In the case of contracts under this chapter for projects of special environmental significance (including projects involving methane digesters), as determined by the Secretary, the Secretary may--

`(1) waive the limitation otherwise applicable under subsection (a); and

`(2) raise the limitation to not more than $450,000 during any six-year period.'.

SEC. 2509. CONSERVATION INNOVATION GRANTS AND PAYMENTS.

Section 1240H of the Food Security Act of 1985 (16 U.S.C. 3839aa-8) is amended to read as follows:

`SEC. 1240H. CONSERVATION INNOVATION GRANTS AND PAYMENTS.

`(a) Competitive Grants for Innovative Conservation Approaches-

`(1) GRANTS- Out of the funds made available to carry out this chapter, the Secretary may pay the cost of competitive grants that are intended to stimulate innovative approaches to leveraging the Federal investment in environmental enhancement and protection, in conjunction with agricultural production or forest resource management, through the program.

`(2) USE- The Secretary may provide grants under this subsection to governmental and non-governmental organizations and persons, on a competitive basis, to carry out projects that--

`(A) involve producers who are eligible for payments or technical assistance under the program;

`(B) leverage Federal funds made available to carry out the program under this chapter with matching funds provided by State and local governments and private organizations to promote environmental enhancement and protection in conjunction with agricultural production;

`(C) ensure efficient and effective transfer of innovative technologies and approaches demonstrated through projects that receive funding under this section, such as market systems for pollution reduction and practices for the storage of carbon in soil; and

`(D) provide environmental and resource conservation benefits through increased participation by producers of specialty crops.

`(b) Air Quality Concerns From Agricultural Operations-

`(1) IMPLEMENTATION ASSISTANCE- The Secretary shall provide payments under this subsection to producers to implement practices to address air quality concerns from agricultural operations and to meet Federal, State, and local regulatory requirements. The funds shall be made available on the basis of air quality concerns in a State and shall be used to provide payments to producers that are cost effective and reflect innovative technologies.

`(2) FUNDING- Of the funds made available to carry out this chapter, the Secretary shall carry out this subsection using $37,500,000 for each of fiscal years 2009 through 2012.'.

SEC. 2510. AGRICULTURAL WATER ENHANCEMENT PROGRAM.

Section 1240I of the Food Security Act of 1985 (16 U.S.C. 3839aa-9) is amended to read as follows:

`SEC. 1240I. AGRICULTURAL WATER ENHANCEMENT PROGRAM.

`(a) Definitions- In this section:

`(1) AGRICULTURAL WATER ENHANCEMENT ACTIVITY- The term `agricultural water enhancement activity' includes the following activities carried out with respect to agricultural land:

`(A) Water quality or water conservation plan development, including resource condition assessment and modeling.

`(B) Water conservation restoration or enhancement projects, including conversion to the production of less water-intensive agricultural commodities or dryland farming.

`(C) Water quality or quantity restoration or enhancement projects.

`(D) Irrigation system improvement and irrigation efficiency enhancement.

`(E) Activities designed to mitigate the effects of drought.

`(F) Related activities that the Secretary determines will help achieve water quality or water conservation benefits on agricultural land.

`(2) PARTNER- The term `partner' means an entity that enters into a partnership agreement with the Secretary to carry out agricultural water enhancement activities on a regional basis, including--

`(A) an agricultural or silvicultural producer association or other group of such producers;

`(B) a State or unit of local government; or

`(C) a federally recognized Indian tribe.

`(3) PARTNERSHIP AGREEMENT- The term `partnership agreement' means an agreement between the Secretary and a partner.

`(4) PROGRAM- The term `program' means the agricultural water enhancement program established under subsection (b).

`(b) Establishment of Program- Beginning in fiscal year 2009, the Secretary shall carry out, in accordance with this section and using such procedures as the Secretary determines to be appropriate, an agricultural water enhancement program as part of the environmental quality incentives program to promote ground and surface water conservation and improve water quality on agricultural lands--

`(1) by entering into contracts with, and making payments to, producers to carry out agricultural water enhancement activities; or

`(2) by entering into partnership agreements with partners, in accordance with subsection (c), on a regional level to benefit working agricultural land.

`(c) Partnership Agreements-

`(1) AGREEMENTS AUTHORIZED- The Secretary may enter into partnership agreements to meet the objectives of the program described in subsection (b).

`(2) APPLICATIONS- An application to the Secretary to enter into a partnership agreement under paragraph (1) shall include the following:

`(A) A description of the geographical area to be covered by the partnership agreement.

`(B) A description of the agricultural water quality or water conservation issues to be addressed by the partnership agreement.

`(C) A description of the agricultural water enhancement objectives to be achieved through the partnership.

`(D) A description of the partners collaborating to achieve the project objectives and the roles, responsibilities, and capabilities of each partner.

`(E) A description of the program resources, including payments the Secretary is requested to make.

`(F) Such other such elements as the Secretary considers necessary to adequately evaluate and competitively select applications for partnership agreements.

`(3) DUTIES OF PARTNERS- A partner under a partnership agreement shall--

`(A) identify producers participating in the project and act on their behalf in applying for the program;

`(B) leverage funds provided by the Secretary with additional funds to help achieve project objectives;

`(C) conduct monitoring and evaluation of project effects; and

`(D) at the conclusion of the project, report to the Secretary on project results.

`(d) Agricultural Water Enhancement Activities by Producers- The Secretary shall select agricultural water enhancement activities proposed by producers according to applicable requirements under the environmental quality incentives program.

`(e) Agricultural Water Enhancement Activities by Partners-

`(1) COMPETITIVE PROCESS- The Secretary shall conduct a competitive process to select partners. In carrying out the process, the Secretary shall make public the criteria used in evaluating applications.

`(2) AUTHORITY TO GIVE PRIORITY TO CERTAIN PROPOSALS- The Secretary may give a higher priority to proposals from partners that--

`(A) include high percentages of agricultural land and producers in a region or other appropriate area;

`(B) result in high levels of applied agricultural water quality and water conservation activities;

`(C) significantly enhance agricultural activity;

`(D) allow for monitoring and evaluation; and

`(E) assist producers in meeting a regulatory requirement that reduces the economic scope of the producer's operation.

`(3) PRIORITY TO PROPOSALS FROM STATES WITH WATER QUANTITY CONCERNS- The Secretary shall give a higher priority to proposals from partners that--

`(A) include the conversion of agricultural land from irrigated farming to dryland farming;

`(B) leverage Federal funds provided under the program with funds provided by partners; and

`(C) assist producers in States with water quantity concerns, as determined by the Secretary.

`(4) ADMINISTRATION- In carrying out this subsection, the Secretary shall--

`(A) accept qualified applications--

`(i) directly from partners applying on behalf of producers; or

`(ii) from producers applying through a partner as part of a regional agricultural water enhancement project; and

`(B) ensure that resources made available for regional agricultural water enhancement activities are delivered in accordance with applicable program rules.

`(f) Areas Experiencing Exceptional Drought- Notwithstanding the purposes described in section 1240, the Secretary shall consider as an eligible agricultural water enhancement activity the use of a water impoundment to capture surface water runoff on agricultural land if the agricultural water enhancement activity--

`(1) is located in an area that is experiencing or has experienced exceptional drought conditions during the previous two calendar years; and

`(2) will capture surface water runoff through the construction, improvement, or maintenance of irrigation ponds or small, on-farm reservoirs.

`(g) Waiver Authority- To assist in the implementation of agricultural water enhancement activities under the program, the Secretary shall waive the applicability of the limitation in section 1001D(b)(2)(B) of this Act for participating producers if the Secretary determines that the waiver is necessary to fulfill the objectives of the program.

`(h) Payments Under Program-

`(1) IN GENERAL- The Secretary shall provide appropriate payments to producers participating in agricultural water enhancement activities in an amount determined by the secretary to be necessary to achieve the purposes of the program described in subsection (b).

`(2) PAYMENTS TO PRODUCERS IN STATES WITH WATER QUANTITY CONCERNS- The Secretary shall provide payments for a period of five years to producers participating in agricultural water enhancement activities under proposals described in subsection (e)(3) in an amount sufficient to encourage producers to convert from irrigated farming to dryland farming.

`(i) Consistency With State Law- Any agricultural water enhancement activity conducted under the program shall be conducted in a manner consistent with State water law.

`(j) Funding-

`(1) AVAILABILITY OF FUNDS- In addition to funds made available to carry out this chapter under section 1241(a), the Secretary shall carry out the program using, of the funds of the Commodity Credit Corporation--

`(A) $73,000,000 for each of fiscal years 2009 and 2010;

`(B) $74,000,000 for fiscal year 2011; and

`(C) $60,000,000 for fiscal year 2012 and each fiscal year thereafter.

`(2) LIMITATION ON ADMINISTRATIVE EXPENSES- None of the funds made available for regional agricultural water conservation activities under the program may be used to pay for the administrative expenses of partners.'.

Subtitle G--Other Conservation Programs of the Food Security Act of 1985

SEC. 2601. CONSERVATION OF PRIVATE GRAZING LAND.

Section 1240M(e) of the Food Security Act of 1985 (16 U.S.C. 3839bb(e)) is amended by striking `2007' and inserting `2012'.

SEC. 2602. WILDLIFE HABITAT INCENTIVE PROGRAM.

(a) Eligibility- Section 1240N of the Food Security Act of 1985 (16 U.S.C. 3839bb-1) is amended--

(1) in subsection (a), by inserting before the period at the end the following: `for the development of wildlife habitat on private agricultural land, nonindustrial private forest land, and tribal lands'.

(2) in subsection (b)(1), by striking `landowners' and inserting `owners of lands referred to in subsection (a)'.

(b) Inclusion of Pivot Corners and Irregular Areas- Section 1240N(b)(1)(E) of the Food Security Act of 1985 (16 U.S.C. 3839bb-1(b)(1)(E)) is amended by inserting before the period at the end the following: `, including habitat developed on pivot corners and irregular areas'.

(c) Cost Share for Long-Term Agreements- Section 1240N(b)(2)(B) of the Food Security Act of 1985 (16 U.S.C. 3839bb-1(b)(2)(B)) is amended by striking `15 percent' and inserting `25 percent'.

(d) Priority for Certain Conservation Initiatives; Payment Limitation- Section 1240N of the Food Security Act of 1985 (16 U.S.C. 3839bb-1) is amended by adding at the end the following new subsections:

`(d) Priority for Certain Conservation Initiatives- In carrying out this section, the Secretary may give priority to projects that would address issues raised by State, regional, and national conservation initiatives.

`(e) Payment Limitation- Payments made to a person or legal entity, directly or indirectly, under the program may not exceed, in the aggregate, $50,000 per year.'.

SEC. 2606. VOLUNTARY PUBLIC ACCESS AND HABITAT INCENTIVE PROGRAM.

Chapter 5 of subtitle D of title XII of the Food Security Act of 1985 (16 U.S.C. 3839bb et seq.) is amended by inserting after section 1240Q, as added by section 2605, the following new section:

`SEC. 1240R. VOLUNTARY PUBLIC ACCESS AND HABITAT INCENTIVE PROGRAM.

`(a) Establishment- The Secretary shall establish a voluntary public access program under which States and tribal governments may apply for grants to encourage owners and operators of privately-held farm, ranch, and forest land to voluntarily make that land available for access by the public for wildlife-dependent recreation, including hunting or fishing under programs administered by the States and tribal governments.

`(b) Applications- In submitting applications for a grant under the program, a State or tribal government shall describe--

`(1) the benefits that the State or tribal government intends to achieve by encouraging public access to private farm and ranch land for--

`(A) hunting and fishing; and

`(B) to the maximum extent practicable, other recreational purposes; and

`(2) the methods that will be used to achieve those benefits.

`(c) Priority- In approving applications and awarding grants under the program, the Secretary shall give priority to States and tribal governments that propose--

`(1) to maximize participation by offering a program the terms of which are likely to meet with widespread acceptance among landowners;

`(2) to ensure that land enrolled under the State or tribal government program has appropriate wildlife habitat;

`(3) to strengthen wildlife habitat improvement efforts on land enrolled in a special conservation reserve enhancement program described in section 1234(f)(4) by providing incentives to increase public hunting and other recreational access on that land;

`(4) to use additional Federal, State, tribal government, or private resources in carrying out the program; and

`(5) to make available to the public the location of land enrolled.

`(d) Relationship to Other Laws-

`(1) NO PREEMPTION- Nothing in this section preempts a State or tribal government law, including any State or tribal government liability law.

`(2) EFFECT OF INCONSISTENT OPENING DATES FOR MIGRATORY BIRD HUNTING- The Secretary shall reduce by 25 percent the amount of a grant otherwise determined for a State under the program if the opening dates for migratory bird hunting in the State are not consistent for residents and non-residents.

`(e) Regulations- The Secretary shall promulgate such regulations as are necessary to carry out this section.

`(f) Funding- Of the funds of the Commodity Credit Corporation, the Secretary shall use, to the maximum extent practicable, $50,000,000 for the period of fiscal years 2009 through 2012.'.

Subtitle H--Funding and Administration of Conservation Programs

SEC. 2701. FUNDING OF CONSERVATION PROGRAMS UNDER FOOD SECURITY ACT OF 1985.

(a) In General- Section 1241(a) of the Food Security Act of 1985 (16 U.S.C. 3841(a)) is amended in the matter preceding paragraph (1), by striking `2007' and inserting `2012'.

(b) Conservation Reserve Program- Paragraph (1) of section 1241(a) of the Food Security Act of 1985 (16 U.S.C. 3841(a)) is amended by striking the period at the end and inserting the following: `, including to the maximum extent practicable--

`(A) $100,000,000 for the period of fiscal years 2009 through 2012 to provide cost share payments under paragraph (3) of section 1234(b) in connection with thinning activities conducted on land described in subparagraph (A)(iii) of such paragraph; and

`(B) $25,000,000 for the period of fiscal years 2009 through 2012 to carry out section 1235(f) to facilitate the transfer of land subject to contracts from retired or retiring owners and operators to beginning farmers or ranchers and socially disadvantaged farmers or ranchers.'.

(c) Conservation Security and Conservation Stewardship Programs- Paragraph (3) of section 1241(a) of the Food Security Act of 1985 (16 U.S.C. 3841(a)) is amended to read as follows:

`(3)(A) CONSERVATION SECURITY PROGRAM- The conservation security program under subchapter A of chapter 2, using such sums as are necessary to administer contracts entered into before September 30, 2008.

`(B) CONSERVATION STEWARDSHIP PROGRAM- The conservation stewardship program under subchapter B of chapter 2.'.

(d) Farmland Protection Program- Paragraph (4) of section 1241(a) of the Food Security Act of 1985 (16 U.S.C. 3841(a)) is amended to read as follows:

`(4) The farmland protection program under subchapter C of chapter 2, using, to the maximum extent practicable--

`(A) $97,000,000 in fiscal year 2008;

`(B) $121,000,000 in fiscal year 2009;

`(C) $150,000,000 in fiscal year 2010;

`(D) $175,000,000 in fiscal year 2011; and

`(E) $200,000,000 in fiscal year 2012.'.

(e) Grassland Reserve Program- Paragraph (5) of section 1241(a) of the Food Security Act of 1985 (16 U.S.C. 3841(a)) is amended to read as follows:

`(5) The grassland reserve program under subchapter D of chapter 2.'.

(f) Environmental Quality Incentives Program- Paragraph (6) of section 1241(a) of the Food Security Act of 1985 (16 U.S.C. 3841(a)) is amended to read as follows:

`(6) The environmental quality incentives program under chapter 4, using, to the maximum extent practicable--

`(A) $1,200,000,000 in fiscal year 2008;

`(B) $1,337,000,000 in fiscal year 2009;

`(C) $1,450,000,000 in fiscal year 2010;

`(D) $1,588,000,000 in fiscal year 2011; and

`(E) $1,750,000,000 in fiscal year 2012.'.

(g) Wildlife Habitat Incentives Program- Paragraph (7)(D) of section 1241(a) of the Food Security Act of 1985 (16 U.S.C. 3841(a)) is amended by striking `2007' and inserting `2012'.

SEC. 2706. DELIVERY OF CONSERVATION TECHNICAL ASSISTANCE.

Section 1242 of the Food Security Act of 1985 (16 U.S.C. 3842) is amended to read as follows:

`SEC. 1242. DELIVERY OF TECHNICAL ASSISTANCE.

`(a) Definition of Eligible Participant- In this section, the term `eligible participant' means a producer, landowner, or entity that is participating in, or seeking to participate in, programs for which the producer, landowner, or entity is otherwise eligible to participate in under this title or the agricultural management assistance program under section 524 of the Federal Crop Insurance Act (7 U.S.C. 1524).

`(b) Purpose of Technical Assistance- The purpose of technical assistance authorized by this section is to provide eligible participants with consistent, science-based, site-specific practices designed to achieve conservation objectives on land active in agricultural, forestry, or related uses.

`(c) Provision of Technical Assistance- The Secretary shall provide technical assistance under this title to an eligible participant--

`(1) directly;

`(2) through an agreement with a third-party provider; or

`(3) at the option of the eligible participant, through a payment, as determined by the Secretary, to the eligible participant for an approved third-party provider, if available.

`(d) Non-Federal Assistance- The Secretary may request the services of, and enter into cooperative agreements or contracts with, other agencies within the Department or non-Federal entities to assist the Secretary in providing technical assistance necessary to assist in implementing conservation programs under this title.

`(e) Certification of Third-Party Providers-

`(1) PURPOSE- The purpose of the third-party provider program is to increase the availability and range of technical expertise available to eligible participants to plan and implement conservation measures.

`(2) REGULATIONS- Not later than 180 days after the date of the enactment of the Food, Conservation, and Energy Act of 2008, the Secretary shall promulgate such regulations as are necessary to carry out this section.

`(3) EXPERTISE- In promulgating such regulations, the Secretary, to the maximum extent practicable, shall--

`(A) ensure that persons with expertise in the technical aspects of conservation planning, watershed planning, and environmental engineering, including commercial entities, nonprofit entities, State or local governments or agencies, and other Federal agencies, are eligible to become approved providers of the technical assistance;

`(B) provide national criteria for the certification of third party providers; and

`(C) approve any unique certification standards established at the State level.

`(f) Administration-

`(1) FUNDING- Effective for fiscal year 2008 and each subsequent fiscal year, funds of the Commodity Credit Corporation made available to carry out technical assistance for each of the programs specified in section 1241 shall be available for the provision of technical assistance from third-party providers under this section.

`(2) TERM OF AGREEMENT- An agreement with a third-party provider under this section shall have a term that--

`(A) at a minimum, is equal to the period beginning on the date on which the agreement is entered into and ending on the date that is 1 year after the date on which all activities performed pursuant to the agreement have been completed;

`(B) does not exceed 3 years; and

`(C) can be renewed, as determined by the Secretary.

`(3) REVIEW OF CERTIFICATION REQUIREMENTS- Not later than 1 year after the date of enactment of the Food, Conservation, and Energy Act of 2008, the Secretary shall--

`(A) review certification requirements for third-party providers; and

`(B) make any adjustments considered necessary by the Secretary to improve participation.

`(4) ELIGIBLE ACTIVITIES-

`(A) INCLUSION OF ACTIVITIES- The Secretary may include as activities eligible for payments to a third party provider--

`(i) technical services provided directly to eligible participants, such as conservation planning, education and outreach, and assistance with design and implementation of conservation practices; and

`(ii) related technical assistance services that accelerate conservation program delivery.

`(B) EXCLUSIONS- The Secretary shall not designate as an activity eligible for payments to a third party provider any service that is provided by a business, or equivalent, in connection with conducting business and that is customarily provided at no cost.

`(5) PAYMENT AMOUNTS- The Secretary shall establish fair and reasonable amounts of payments for technical services provided by third-party providers.

`(g) Availability of Technical Services-

`(1) IN GENERAL- In carrying out the programs under this title and the agricultural management assistance program under section 524 of the Federal Crop Insurance Act (7 U.S.C. 1524), the Secretary shall make technical services available to all eligible participants who are installing an eligible practice.

`(2) TECHNICAL SERVICE CONTRACTS- In any case in which financial assistance is not provided under a program referred to in paragraph (1), the Secretary may enter into a technical service contract with the eligible participant for the purposes of assisting in the planning, design, or installation of an eligible practice.

`(h) Review of Conservation Practice Standards-

`(1) REVIEW REQUIRED- The Secretary shall--

`(A) review conservation practice standards, including engineering design specifications, in effect on the date of the enactment of the Food, Conservation, and Energy Act of 2008;

`(B) ensure, to the maximum extent practicable, the completeness and relevance of the standards to local agricultural, forestry, and natural resource needs, including specialty crops, native and managed pollinators, bioenergy crop production, forestry, and such other needs as are determined by the Secretary; and

`(C) ensure that the standards provide for the optimal balance between meeting site-specific conservation needs and minimizing risks of design failure and associated costs of construction and installation.

`(2) CONSULTATION- In conducting the review under paragraph (1), the Secretary shall consult with eligible participants, crop consultants, cooperative extension and land grant universities, nongovernmental organizations, and other qualified entities.

`(3) EXPEDITED REVISION OF STANDARDS- If the Secretary determines under paragraph (1) that revisions to the conservation practice standards, including engineering design specifications, are necessary, the Secretary shall establish an administrative process for expediting the revisions.

`(i) Addressing Concerns of Speciality Crop, Organic, and Precision Agriculture Producers-

`(1) IN GENERAL- The Secretary shall--

`(A) to the maximum extent practicable, fully incorporate specialty crop production, organic crop production, and precision agriculture into the conservation practice standards; and

`(B) provide for the appropriate range of conservation practices and resource mitigation measures available to producers involved with organic or specialty crop production or precision agriculture.

`(2) AVAILABILITY OF ADEQUATE TECHNICAL ASSISTANCE-

`(A) IN GENERAL- The Secretary shall ensure that adequate technical assistance is available for the implementation of conservation practices by producers involved with organic, specialty crop production, or precision agriculture through Federal conservation programs.

`(B) REQUIREMENTS- In carrying out subparagraph (A), the Secretary shall develop--

`(i) programs that meet specific needs of producers involved with organic, specialty crop production or precision agriculture through cooperative agreements with other agencies and nongovernmental organizations; and

`(ii) program specifications that allow for innovative approaches to engage local resources in providing technical assistance for planning and implementation of conservation practices.'.

SEC. 2707. COOPERATIVE CONSERVATION PARTNERSHIP INITIATIVE.

(a) Transfer of Existing Provisions- Subsections (a), (c), and (d) of section 1243 of the Food Security Act of 1985 (16 U.S.C. 3843) are--

(1) redesignated as subsections (c), (d), and (e), respectively; and

(2) transferred to appear at the end of section 1244 of such Act (16 U.S.C. 3844).

(b) Establishment of Partnership Initiative- Section 1243 of the Food Security Act of 1985 (16 U.S.C. 3843), as amended by subsection (a), is amended to read as follows:

`SEC. 1243. COOPERATIVE CONSERVATION PARTNERSHIP INITIATIVE.

`(a) Establishment of Initiative- The Secretary shall establish a cooperative conservation partnership initiative (in this section referred to as the `Initiative') to work with eligible partners to provide assistance to producers enrolled in a program described in subsection (c)(1) that will enhance conservation outcomes on agricultural and nonindustrial private forest land.

`(b) Purposes- The purposes of a partnership entered into under the Initiative shall be--

`(1) to address conservation priorities involving agriculture and nonindustrial private forest land on a local, State, multi-State, or regional level;

`(2) to encourage producers to cooperate in meeting applicable Federal, State, and local regulatory requirements related to production involving agriculture and nonindustrial private forest land;

`(3) to encourage producers to cooperate in the installation and maintenance of conservation practices that affect multiple agricultural or nonindustrial private forest operations; or

`(4) to promote the development and demonstration of innovative conservation practices and delivery methods, including those for specialty crop and organic production and precision agriculture producers.

`(c) Initiative Programs-

`(1) COVERED PROGRAMS- Except as provided in paragraph (2), the Initiative applies to all conservation programs under subtitle D.

`(2) EXCLUDED PROGRAMS- The Initiative shall not include the following programs:

`(A) Conservation reserve program.

`(B) Wetlands reserve program.

`(C) Farmland protection program

`(D) Grassland reserve program.

`(d) Eligible Partners- The Secretary may enter into a partnership under the Initiative with one or more of the following:

`(1) States and local governments.

`(2) Indian tribes.

`(3) Producer associations.

`(4) Farmer cooperatives.

`(5) Institutions of higher education.

`(6) Nongovernmental organizations with a history of working cooperatively with producers to effectively address conservation priorities related to agricultural production and nonindustrial private forest land.

`(e) Implementation Agreements- The Secretary shall carry out the Initiative--

`(1) by selecting, through a competitive process, eligible partners from among applications submitted under subsection (f); and

`(2) by entering into multi-year agreements with eligible partners so selected for a period not to exceed 5 years.

`(f) Applications-

`(1) REQUIRED INFORMATION- An application to enter into a partnership agreement under the Initiative shall include the following:

`(A) A description of the area covered by the agreement, conservation priorities in the area, conservation objectives to be achieved, and the expected level of participation by agricultural producers and nonindustrial private forest landowners.

`(B) A description of the partner, or partners, collaborating to achieve the objectives of the agreement, and the roles, responsibilities, and capabilities of the partner.

`(C) A description of the resources that are requested from the Secretary, and the non-Federal resources that will be leveraged by the Federal contribution.

`(D) A description of the plan for monitoring, evaluating, and reporting on progress made towards achieving the objectives of the agreement.

`(E) Such other information that may be required by the Secretary.

`(2) PRIORITIES- The Secretary shall give priority to applications for agreements that--

`(A) have a high percentage of producers involved and working agricultural or nonindustrial private forest land included in the area covered by the agreement;

`(B) significantly leverage non-Federal financial and technical resources and coordinate with other local, State, or Federal efforts;

`(C) deliver high percentages of applied conservation to address water quality, water conservation, or State, regional, or national conservation initiatives;

`(D) provide innovation in conservation methods and delivery, including outcome-based performance measures and methods; or

`(E) meet other factors, as determined by the Secretary.

`(g) Relationship to Covered Programs-

`(1) COMPLIANCE WITH PROGRAM RULES- Except as provided in paragraph (2), the Secretary shall ensure that resources made available under the Initiative are delivered in accordance with the applicable rules of programs specified in subsection (c)(1) through normal program mechanisms relating to program functions, including rules governing appeals, payment limitations, and conservation compliance.

`(2) ADJUSTMENT- The Secretary may adjust the elements of any program specified in subsection (c)(1)--

`(A) to better reflect unique local circumstances and purposes if the Secretary determines such adjustments are necessary to achieve the purposes of the Initiative; and

`(B) to provide preferential enrollment to producers who are eligible for the applicable program and to participate in the Initiative.

`(h) Technical and Financial Assistance- The Secretary shall provide appropriate technical and financial assistance to producers participating in the Initiative in an amount determined to be necessary to achieve the purposes of the Initiative.

`(i) Funding-

`(1) RESERVATION- Of the funds and acres made available for each of fiscal years 2009 through 2012 to implement the programs described in subsection (c)(1), the Secretary shall reserve 6 percent of the funds and acres to ensure an adequate source of funds and acres for the Initiative.

`(2) ALLOCATION REQUIREMENTS- Of the funds and acres reserved for the Initiative for a fiscal year, the Secretary shall allocate--

`(A) 90 percent of the funds and acres to projects based on the direction of State conservationists, with the advice of State technical committees; and

`(B) 10 percent of the funds and acres to projects based on a national competitive process established by the Secretary.

`(3) UNUSED FUNDING- Any funds and acres reserved for a fiscal year under paragraph (1) that are not obligated by April 1 of that fiscal year may be used to carry out other activities under the program that is the source of the funds or acres during the remainder of that fiscal year.

`(4) ADMINISTRATIVE COSTS OF PARTNERS- Overhead or administrative costs of partners may not be covered by funds provided through the Initiative.'.

SEC. 2709. ENVIRONMENTAL SERVICES MARKETS.

Subtitle E of title XII of the Food Security Act of 1985 is amended by inserting after section 1244 (16 U.S.C. 3844) the following new section:

`SEC. 1245. ENVIRONMENTAL SERVICES MARKETS.

`(a) Technical Guidelines Required- The Secretary shall establish technical guidelines that outline science-based methods to measure the environmental services benefits from conservation and land management activities in order to facilitate the participation of farmers, ranchers, and forest landowners in emerging environmental services markets. The Secretary shall give priority to the establishment of guidelines related to farmer, rancher, and forest landowner participation in carbon markets.

`(b) Establishment- The Secretary shall establish guidelines under subsection (a) for use in developing the following:

`(1) A procedure to measure environmental services benefits.

`(2) A protocol to report environmental services benefits.

`(3) A registry to collect, record and maintain the benefits measured.

`(c) Verification Requirements-

`(1) VERIFICATION OF REPORTS- The Secretary shall establish guidelines for a process to verify that a farmer, rancher, or forest landowner who reports an environmental services benefit pursuant to the protocol required by paragraph (2) of subsection (b) for inclusion in the registry required by paragraph (3) of such subsection has implemented the conservation or land management activity covered by the report.

`(2) ROLE OF THIRD PARTIES- In establishing the verification guidelines required by paragraph (1), the Secretary shall consider the role of third-parties in conducting independent verification of benefits produced for environmental services markets and other functions, as determined by the Secretary.

`(d) Use of Existing Information- In carrying out subsection (b), the Secretary shall build on activities or information in existence on the date of the enactment of the Food, Conservation, and Energy Act of 2008 regarding environmental services markets.

`(e) Consultation- In carrying out this section, the Secretary shall consult with the following:

`(1) Federal and State government agencies.

`(2) Nongovernmental interests including--

`(A) farm, ranch, and forestry producers;

`(B) financial institutions involved in environmental services trading;

`(C) institutions of higher education with relevant expertise or experience;

`(D) nongovernmental organizations with relevant expertise or experience; and

`(E) private sector representatives with relevant expertise or experience.

`(3) Other interested persons, as determined by the Secretary.'.

TITLE III--TRADE

Subtitle C--Miscellaneous

SEC. 3203. TECHNICAL ASSISTANCE FOR SPECIALTY CROPS.

Section 3205 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 5680) is amended by striking subsection (d) and inserting the following:

`(d) Annual Report- Not later than 180 days after the date of enactment of the Food, Conservation, and Energy Act of 2008 and annually thereafter, the Secretary shall submit to the appropriate committees of Congress a report that contains, for the period covered by the report, a description of each factor that affects the export of specialty crops, including each factor relating to any--

`(1) significant sanitary or phytosanitary issue; or

`(2) trade barrier.

`(e) Funding-

`(1) COMMODITY CREDIT CORPORATION- The Secretary shall use the funds, facilities, and authorities of the Commodity Credit Corporation to carry out this section.

`(2) FUNDING AMOUNTS- Of the funds of the Commodity Credit Corporation, the Secretary shall use to carry out this section--

`(A) $4,000,000 for fiscal year 2008;

`(B) $7,000,000 for fiscal year 2009;

`(C) $8,000,000 for fiscal year 2010;

`(D) $9,000,000 for fiscal year 2011; and

`(E) $9,000,000 for fiscal year 2012.'.

TITLE VI--RURAL DEVELOPMENT

Subtitle A--Consolidated Farm and Rural Development Act

SEC. 6028. RURAL COLLABORATIVE INVESTMENT PROGRAM.

Subtitle I of the Consolidated Farm and Rural Development Act (7 U.S.C. 2009dd et seq.) is amended to read as follows:

`Subtitle I--Rural Collaborative Investment Program

`SEC. 385A. PURPOSE.

`The purpose of this subtitle is to establish a regional rural collaborative investment program--

`(1) to provide rural regions with a flexible investment vehicle, allowing for local control with Federal oversight, assistance, and accountability;

`(2) to provide rural regions with incentives and resources to develop and implement comprehensive strategies for achieving regional competitiveness, innovation, and prosperity;

`(3) to foster multisector community and economic development collaborations that will optimize the asset-based competitive advantages of rural regions with particular emphasis on innovation, entrepreneurship, and the creation of quality jobs;

`(4) to foster collaborations necessary to provide the professional technical expertise, institutional capacity, and economies of scale that are essential for the long-term competitiveness of rural regions; and

`(5) to better use Department of Agriculture and other Federal, State, and local governmental resources, and to leverage those resources with private, nonprofit, and philanthropic investments, in order to achieve measurable community and economic prosperity, growth, and sustainability.

`SEC. 385B. DEFINITIONS.

`In this subtitle:

`(1) BENCHMARK- The term `benchmark' means an annual set of goals and performance measures established for the purpose of assessing performance in meeting a regional investment strategy of a Regional Board.

`(2) INDIAN TRIBE- The term `Indian tribe' has the meaning given the term in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b).

`(3) NATIONAL BOARD- The term `National Board' means the National Rural Investment Board established under section 385C(c).

`(4) NATIONAL INSTITUTE- The term `National Institute' means the National Institute on Regional Rural Competitiveness and Entrepreneurship established under section 385C(b)(2).

`(5) REGIONAL BOARD- The term `Regional Board' means a Regional Rural Investment Board described in section 385D(a).

`(6) REGIONAL INNOVATION GRANT- The term `regional innovation grant' means a grant made by the Secretary to a certified Regional Board under section 385F.

`(7) REGIONAL INVESTMENT STRATEGY GRANT- The term `regional investment strategy grant' means a grant made by the Secretary to a certified Regional Board under section 385E.

`(8) RURAL HERITAGE-

`(A) IN GENERAL- The term `rural heritage' means historic sites, structures, and districts.

`(B) INCLUSIONS- The term `rural heritage' includes historic rural downtown areas and main streets, neighborhoods, farmsteads, scenic and historic trails, heritage areas, and historic landscapes.

`SEC. 385C. ESTABLISHMENT AND ADMINISTRATION OF RURAL COLLABORATIVE INVESTMENT PROGRAM.

`(a) Establishment- The Secretary shall establish a Rural Collaborative Investment Program to support comprehensive regional investment strategies for achieving rural competitiveness.

`(b) Duties of Secretary- In carrying out this subtitle, the Secretary shall--

`(1) appoint and provide administrative and program support to the National Board;

`(2) establish a national institute, to be known as the `National Institute on Regional Rural Competitiveness and Entrepreneurship', to provide technical assistance to the Secretary and the National Board regarding regional competitiveness and rural entrepreneurship, including technical assistance for--

`(A) the development of rigorous analytic programs to assist Regional Boards in determining the challenges and opportunities that need to be addressed to receive the greatest regional competitive advantage;

`(B) the provision of support for best practices developed by the Regional Boards;

`(C) the establishment of programs to support the development of appropriate governance and leadership skills in the applicable regions; and

`(D) the evaluation of the progress and performance of the Regional Boards in achieving benchmarks established in a regional investment strategy;

`(3) work with the National Board to develop a national rural investment plan that shall--

`(A) create a framework to encourage and support a more collaborative and targeted rural investment portfolio in the United States;

`(B) establish a Rural Philanthropic Initiative, to work with rural communities to create and enhance the pool of permanent philanthropic resources committed to rural community and economic development;

`(C) cooperate with the Regional Boards and State and local governments, organizations, and entities to ensure investment strategies are developed that take into consideration existing rural assets; and

`(D) encourage the organization of Regional Boards;

`(4) certify the eligibility of Regional Boards to receive regional investment strategy grants and regional innovation grants;

`(5) provide grants for Regional Boards to develop and implement regional investment strategies;

`(6) provide technical assistance to Regional Boards on issues, best practices, and emerging trends relating to rural development, in cooperation with the National Rural Investment Board; and

`(7) provide analytic and programmatic support for regional rural competitiveness through the National Institute, including--

`(A) programs to assist Regional Boards in determining the challenges and opportunities that must be addressed to receive the greatest regional competitive advantage;

`(B) support for best practices development by the regional investment boards;

`(C) programs to support the development of appropriate governance and leadership skills in the region; and

`(D) a review and evaluation of the performance of the Regional Boards (including progress in achieving benchmarks established in a regional investment strategy) in an annual report submitted to--

`(i) the Committee on Agriculture of the House of Representatives; and

`(ii) the Committee on Agriculture, Nutrition, and Forestry of the Senate.

`(c) National Rural Investment Board- The Secretary shall establish within the Department of Agriculture a board to be known as the `National Rural Investment Board'.

`(d) Duties of National Board- The National Board shall--

`(1) not later than 180 days after the date of establishment of the National Board, develop rules relating to the operation of the National Board; and

`(2) provide advice to--

`(A) the Secretary and subsequently review the design, development, and execution of the National Rural Investment Plan;

`(B) Regional Boards on issues, best practices, and emerging trends relating to rural development; and

`(C) the Secretary and the National Institute on the development and execution of the program under this subtitle.

`(e) Membership-

`(1) IN GENERAL- The National Board shall consist of 14 members appointed by the Secretary not later than 180 days after the date of enactment of the Food, Conservation, and Energy Act of 2008.

`(2) SUPERVISION- The National Board shall be subject to the general supervision and direction of the Secretary.

`(3) SECTORS REPRESENTED- The National Board shall consist of representatives from each of--

`(A) nationally recognized entrepreneurship organizations;

`(B) regional strategy and development organizations;

`(C) community-based organizations;

`(D) elected members of local governments;

`(E) members of State legislatures;

`(F) primary, secondary, and higher education, job skills training, and workforce development institutions;

`(G) the rural philanthropic community;

`(H) financial, lending, venture capital, entrepreneurship, and other related institutions;

`(I) private sector business organizations, including chambers of commerce and other for-profit business interests;

`(J) Indian tribes; and

`(K) cooperative organizations.

`(4) SELECTION OF MEMBERS-

`(A) IN GENERAL- In selecting members of the National Board, the Secretary shall consider recommendations made by--

`(i) the chairman and ranking member of each of the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate;

`(ii) the Majority Leader and Minority Leader of the Senate; and

`(iii) the Speaker and Minority Leader of the House of Representatives.

`(B) EX-OFFICIO MEMBERS- In consultation with the chairman and ranking member of each of the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate, the Secretary may appoint not more than 3 other officers or employees of the Executive Branch to serve as ex-officio, nonvoting members of the National Board.

`(5) TERM OF OFFICE-

`(A) IN GENERAL- Subject to subparagraph (B), the term of office of a member of the National Board appointed under paragraph (1)(A) shall be for a period of not more than 4 years.

`(B) STAGGERED TERMS- The members of the National Board shall be appointed to serve staggered terms.

`(6) INITIAL APPOINTMENTS- Not later than 1 year after the date of enactment of the Food, Conservation, and Energy Act of 2008, the Secretary shall appoint the initial members of the National Board.

`(7) VACANCIES- A vacancy on the National Board shall be filled in the same manner as the original appointment.

`(8) COMPENSATION- A member of the National Board shall receive no compensation for service on the National Board, but shall be reimbursed for related travel and other expenses incurred in carrying out the duties of the member of the National Board in accordance with section 5702 and 5703 of title 5, United States Code.

`(9) CHAIRPERSON- The National Board shall select a chairperson from among the members of the National Board.

`(10) FEDERAL STATUS- For purposes of Federal law, a member of the National Board shall be considered a special Government employee (as defined in section 202(a) of title 18, United States Code).

`(f) Administrative Support- The Secretary, on a reimbursable basis from funds made available under section 385H, may provide such administrative support to the National Board as the Secretary determines is necessary.

`SEC. 385D. REGIONAL RURAL INVESTMENT BOARDS.

`(a) In General- A Regional Rural Investment Board shall be a multijurisdictional and multisectoral group that--

`(1) represents the long-term economic, community, and cultural interests of a region;

`(2) is certified by the Secretary to establish a rural investment strategy and compete for regional innovation grants;

`(3) is composed of residents of a region that are broadly representative of diverse public, nonprofit, and private sector interests in investment in the region, including (to the maximum extent practicable) representatives of--

`(A) units of local, multijurisdictional, or State government, including not more than 1 representative from each State in the region;

`(B) nonprofit community-based development organizations, including community development financial institutions and community development corporations;

`(C) agricultural, natural resource, and other asset-based related industries;

`(D) in the case of regions with federally recognized Indian tribes, Indian tribes;

`(E) regional development organizations;

`(F) private business organizations, including chambers of commerce;

`(G)(i) institutions of higher education (as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)));

`(ii) tribally controlled colleges or universities (as defined in section 2(a) of Tribally Controlled College or University Assistance Act of 1978 (25 U.S.C. 1801(a))); and

`(iii) tribal technical institutions;

`(H) workforce and job training organizations;

`(I) other entities and organizations, as determined by the Regional Board;

`(J) cooperatives; and

`(K) consortia of entities and organizations described in subparagraphs (A) through (J);

`(4) represents a region inhabited by--

`(A) more than 25,000 individuals, as determined in the latest available decennial census conducted under section 141(a) of title 13, United States Code; or

`(B) in the case of a region with a population density of less than 2 individuals per square mile, at least 10,000 individuals, as determined in that latest available decennial census;

`(5) has a membership of which not less than 25 percent, nor more than 40 percent, represents--

`(A) units of local government and Indian tribes described in subparagraphs (A) and (D) of paragraph (3);

`(B) nonprofit community and economic development organizations and institutions of higher education described in subparagraphs (B) and (G) of paragraph (3); or

`(C) private business (including chambers of commerce and cooperatives) and agricultural, natural resource, and other asset-based related industries described in subparagraphs (C) and (F) of paragraph (3);

`(6) has a membership that may include an officer or employee of a Federal agency, serving as an ex-officio, nonvoting member of the Regional Board to represent the agency; and

`(7) has organizational documents that demonstrate that the Regional Board will--

`(A) create a collaborative public-private strategy process;

`(B) develop, and submit to the Secretary for approval, a regional investment strategy that meets the requirements of section 385E, with benchmarks--

`(i) to promote investment in rural areas through the use of grants made available under this subtitle; and

`(ii) to provide financial and technical assistance to promote a broad-based regional development program aimed at increasing and diversifying economic growth, improved community facilities, and improved quality of life;

`(C) implement the approved regional investment strategy;

`(D) provide annual reports to the Secretary and the National Board on progress made in achieving the benchmarks of the regional investment strategy, including an annual financial statement; and

`(E) select a non-Federal organization (such as a regional development organization) in the local area served by the Regional Board that has previous experience in the management of Federal funds to serve as fiscal manager of any funds of the Regional Board.

`(b) Urban Areas- A resident of an urban area may serve as an ex-officio member of a Regional Board.

`(c) Duties- A Regional Board shall--

`(1) create a collaborative planning process for public-private investment within a region;

`(2) develop, and submit to the Secretary for approval, a regional investment strategy;

`(3) develop approaches that will create permanent resources for philanthropic giving in the region, to the maximum extent practicable;

`(4) implement an approved strategy; and

`(5) provide annual reports to the Secretary and the National Board on progress made in achieving the strategy, including an annual financial statement.

`SEC. 385E. REGIONAL INVESTMENT STRATEGY GRANTS.

`(a) In General- The Secretary shall make regional investment strategy grants available to Regional Boards for use in developing, implementing, and maintaining regional investment strategies.

`(b) Regional Investment Strategy- A regional investment strategy shall provide--

`(1) an assessment of the competitive advantage of a region, including--

`(A) an analysis of the economic conditions of the region;

`(B) an assessment of the current economic performance of the region;

`(C) an overview of the population, geography, workforce, transportation system, resources, environment, and infrastructure needs of the region; and

`(D) such other pertinent information as the Secretary may request;

`(2) an analysis of regional economic and community development challenges and opportunities, including--

`(A) incorporation of relevant material from other government-sponsored or supported plans and consistency with applicable State, regional, and local workforce investment strategies or comprehensive economic development plans; and

`(B) an identification of past, present, and projected Federal and State economic and community development investments in the region;

`(3) a section describing goals and objectives necessary to solve regional competitiveness challenges and meet the potential of the region;

`(4) an overview of resources available in the region for use in--

`(A) establishing regional goals and objectives;

`(B) developing and implementing a regional action strategy;

`(C) identifying investment priorities and funding sources; and

`(D) identifying lead organizations to execute portions of the strategy;

`(5) an analysis of the current state of collaborative public, private, and nonprofit participation and investment, and of the strategic roles of public, private, and nonprofit entities in the development and implementation of the regional investment strategy;

`(6) a section identifying and prioritizing vital projects, programs, and activities for consideration by the Secretary, including--

`(A) other potential funding sources; and

`(B) recommendations for leveraging past and potential investments;

`(7) a plan of action to implement the goals and objectives of the regional investment strategy;

`(8) a list of performance measures to be used to evaluate implementation of the regional investment strategy, including--

`(A) the number and quality of jobs, including self-employment, created during implementation of the regional rural investment strategy;

`(B) the number and types of investments made in the region;

`(C) the growth in public, private, and nonprofit investment in the human, community, and economic assets of the region;

`(D) changes in per capita income and the rate of unemployment; and

`(E) other changes in the economic environment of the region;

`(9) a section outlining the methodology for use in integrating the regional investment strategy with the economic priorities of the State; and

`(10) such other information as the Secretary determines to be appropriate.

`(c) Maximum Amount of Grant- A regional investment strategy grant shall not exceed $150,000.

`(d) Cost Sharing-

`(1) IN GENERAL- Subject to paragraph (2), of the share of the costs of developing, maintaining, evaluating, implementing, and reporting with respect to a regional investment strategy funded by a grant under this section--

`(A) not more than 40 percent may be paid using funds from the grant; and

`(B) the remaining share shall be provided by the applicable Regional Board or other eligible grantee.

`(2) FORM- A Regional Board or other eligible grantee shall pay the share described in paragraph (1)(B) in the form of cash, services, materials, or other in-kind contributions, on the condition that not more than 50 percent of that share is provided in the form of services, materials, and other in-kind contributions.

`SEC. 385F. REGIONAL INNOVATION GRANTS PROGRAM.

`(a) Grants-

`(1) IN GENERAL- The Secretary shall provide, on a competitive basis, regional innovation grants to Regional Boards for use in implementing projects and initiatives that are identified in a regional rural investment strategy approved under section 385E.

`(2) TIMING- After October 1, 2008, the Secretary shall provide awards under this section on a quarterly funding cycle.

`(b) Eligibility- To be eligible to receive a regional innovation grant, a Regional Board shall demonstrate to the Secretary that--

`(1) the regional rural investment strategy of a Regional Board has been reviewed by the National Board prior to approval by the Secretary;

`(2) the management and organizational structure of the Regional Board is sufficient to oversee grant projects, including management of Federal funds; and

`(3) the Regional Board has a plan to achieve, to the maximum extent practicable, the performance-based benchmarks of the project in the regional rural investment strategy.

`(c) Limitations-

`(1) AMOUNT RECEIVED- A Regional Board may not receive more than $6,000,000 in regional innovation grants under this section during any 5-year period.

`(2) DETERMINATION OF AMOUNT- The Secretary shall determine the amount of a regional innovation grant based on--

`(A) the needs of the region being addressed by the applicable regional rural investment strategy consistent with the purposes described in subsection (f)(2); and

`(B) the size of the geographical area of the region.

`(3) GEOGRAPHIC DIVERSITY- The Secretary shall ensure that not more than 10 percent of funding made available under this section is provided to Regional Boards in any State.

`(d) Cost-Sharing-

`(1) LIMITATION- Subject to paragraph (2), the amount of a grant made under this section shall not exceed 50 percent of the cost of the project.

`(2) WAIVER OF GRANTEE SHARE- The Secretary may waive the limitation in paragraph (1) under special circumstances, as determined by the Secretary, including--

`(A) a sudden or severe economic dislocation;

`(B) significant chronic unemployment or poverty;

`(C) a natural disaster; or

`(D) other severe economic, social, or cultural duress.

`(3) OTHER FEDERAL ASSISTANCE- For the purpose of determining cost-share limitations for any other Federal program, funds provided under this section shall be considered to be non-Federal funds.

`(e) Preferences- In providing regional innovation grants under this section, the Secretary shall give--

`(1) a high priority to strategies that demonstrate significant leverage of capital and quality job creation; and

`(2) a preference to an application proposing projects and initiatives that would--

`(A) advance the overall regional competitiveness of a region;

`(B) address the priorities of a regional rural investment strategy, including priorities that--

`(i) promote cross-sector collaboration, public-private partnerships, or the provision of interim financing or seed capital for program implementation;

`(ii) exhibit collaborative innovation and entrepreneurship, particularly within a public-private partnership; and

`(iii) represent a broad coalition of interests described in section 385D(a);

`(C) include a strategy to leverage public non-Federal and private funds and existing assets, including agricultural, natural resource, and public infrastructure assets, with substantial emphasis placed on the existence of real financial commitments to leverage available funds;

`(D) create quality jobs;

`(E) enhance the role, relevance, and leveraging potential of community and regional foundations in support of regional investment strategies;

`(F) demonstrate a history, or involve organizations with a history, of successful leveraging of capital for economic development and public purposes;

`(G) address gaps in existing basic services, including technology, within a region;

`(H) address economic diversification, including agricultural and non-agriculturally based economies, within a regional framework;

`(I) improve the overall quality of life in the region;

`(J) enhance the potential to expand economic development successes across diverse stakeholder groups within the region;

`(K) include an effective working relationship with 1 or more institutions of higher education, tribally controlled colleges or universities, or tribal technical institutions;

`(L) help to meet the other regional competitiveness needs identified by a Regional Board; or

`(M) protect and promote rural heritage.

`(f) Uses-

`(1) LEVERAGE- A Regional Board shall prioritize projects and initiatives carried out using funds from a regional innovation grant provided under this section, based in part on the degree to which members of the Regional Board are able to leverage additional funds for the implementation of the projects.

`(2) PURPOSES- A Regional Board may use a regional innovation grant--

`(A) to support the development of critical infrastructure (including technology deployment and services) necessary to facilitate the competitiveness of a region;

`(B) to provide assistance to entities within the region that provide essential public and community services;

`(C) to enhance the value-added production, marketing, and use of agricultural and natural resources within the region, including activities relating to renewable and alternative energy production and usage;

`(D) to assist with entrepreneurship, job training, workforce development, housing, educational, or other quality of life services or needs, relating to the development and maintenance of strong local and regional economies;

`(E) to assist in the development of unique new collaborations that link public, private, and philanthropic resources, including community foundations;

`(F) to provide support for business and entrepreneurial investment, strategy, expansion, and development, including feasibility strategies, technical assistance, peer networks, business development funds, and other activities to strengthen the economic competitiveness of the region;

`(G) to provide matching funds to enable community foundations located within the region to build endowments which provide permanent philanthropic resources to implement a regional investment strategy; and

`(H) to preserve and promote rural heritage.

`(3) AVAILABILITY OF FUNDS- The funds made available to a Regional Board or any other eligible grantee through a regional innovation grant shall remain available for the 7-year period beginning on the date on which the award is provided, on the condition that the Regional Board or other grantee continues to be certified by the Secretary as making adequate progress toward achieving established benchmarks.

`(g) Cost Sharing-

`(1) WAIVER OF GRANTEE SHARE- The Secretary may waive the share of a grantee of the costs of a project funded by a regional innovation grant under this section if the Secretary determines that such a waiver is appropriate, including with respect to special circumstances within tribal regions, in the event an area experiences--

`(A) a sudden or severe economic dislocation;

`(B) significant chronic unemployment or poverty;

`(C) a natural disaster; or

`(D) other severe economic, social, or cultural duress.

`(2) OTHER FEDERAL PROGRAMS- For the purpose of determining cost-sharing requirements for any other Federal program, funds provided as a regional innovation grant under this section shall be considered to be non-Federal funds.

`(h) Noncompliance- If a Regional Board or other eligible grantee fails to comply with any requirement relating to the use of funds provided under this section, the Secretary may--

`(1) take such actions as are necessary to obtain reimbursement of unused grant funds; and

`(2) reprogram the recaptured funds for purposes relating to implementation of this subtitle.

`(i) Priority to Areas With Awards and Approved Strategies-

`(1) IN GENERAL- Subject to paragraph (3), in providing rural development assistance under other programs, the Secretary shall give a high priority to areas that receive innovation grants under this section.

`(2) CONSULTATION- The Secretary shall consult with the heads of other Federal agencies to promote the development of priorities similar to those described in paragraph (1).

`(3) EXCLUSION OF CERTAIN PROGRAMS- Paragraph (1) shall not apply to the provision of rural development assistance under any program relating to basic health, safety, or infrastructure, including broadband deployment or minimum environmental needs.

`SEC. 385G. RURAL ENDOWMENT LOANS PROGRAM.

`(a) In General- The Secretary may provide long-term loans to eligible community foundations to assist in the implementation of regional investment strategies.

`(b) Eligible Community Foundations- To be eligible to receive a loan under this section, a community foundation shall--

`(1) be located in an area that is covered by a regional investment strategy;

`(2) match the amount of the loan with an amount that is at least 250 percent of the amount of the loan; and

`(3) use the loan and the matching amount to carry out the regional investment strategy in a manner that is targeted to community and economic development, including through the development of community foundation endowments.

`(c) Terms- A loan made under this section shall--

`(1) have a term of not less than 10, nor more than 20, years;

`(2) bear an interest rate of 1 percent per annum; and

`(3) be subject to such other terms and conditions as are determined appropriate by the Secretary.

`SEC. 385H. AUTHORIZATION OF APPROPRIATIONS.

`There are authorized to be appropriated to carry out this subtitle $135,000,000 for the period of fiscal years 2009 through 2012.'.

Subtitle B--Rural Electrification Act of 1936

SEC. 6113. STUDY ON RURAL ELECTRIC POWER GENERATION.

(a) In General- The Secretary shall conduct a study on the electric power generation needs in rural areas of the United States.

(b) Components- The study shall include an examination of--

(1) generation in various areas in rural areas of the United States, particularly by rural electric cooperatives;;

(2) financing available for capacity, including financing available through programs authorized under the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.);

(3) the impact of electricity costs on consumers and local economic development;

(4) the ability of fuel feedstock technology to meet regulatory requirements, such as carbon capture and sequestration; and

(5) any other factors that the Secretary considers appropriate.

(c) Report- Not later than 60 days after the date of enactment of this Act, the Secretary shall submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a report containing the findings of the study under this section.

TITLE VII--RESEARCH AND RELATED MATTERS

Subtitle B--Food, Agriculture, Conservation, and Trade Act of 1990

SEC. 7204. HIGH-PRIORITY RESEARCH AND EXTENSION AREAS.

(a) In General- Section 1672 of the Food, Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 5925) is amended--

(1) in subsection (e)--

(A) in paragraph (3), by striking `and controlling aflatoxin in the food and feed chains.' and inserting `, improving, and eventually commercializing, alfatoxin controls in corn and other affected agricultural products and crops.';

(B) by striking paragraphs (1), (4), (7), (8), (15), (17), (21), (23), (26), (27), (32), (34), (41), (42), (43), and (45);

(C) by redesignating paragraphs (2), (3), (5), (6), (9) through (14), (16), (18) through (20), (22), (24), (25), (28) through (31), (33), (35) through (40), and (44) as paragraphs (1) through (29), respectively; and

(D) by adding at the end the following:

`(30) AIR EMISSIONS FROM LIVESTOCK OPERATIONS- Research and extension grants may be made under this section for the purpose of conducting field verification tests and developing mitigation options for air emissions from animal feeding operations.

`(32) CATTLE FEVER TICK PROGRAM- Research and extension grants may be made under this section to study cattle fever ticks to facilitate understanding of the role of wildlife in the persistence and spread of cattle fever ticks, to develop advanced methods for eradication of cattle fever ticks, and to improve management of diseases relating to cattle fever ticks that are associated with wildlife, livestock, and human health.

`(37) TURFGRASS RESEARCH INITIATIVE- Research and extension grants may be made under this section to study the production of turfgrass (including the use of water, fertilizer, pesticides, fossil fuels, and machinery for turf establishment and maintenance) and environmental protection and enhancement relating to turfgrass production.

`(41) PASTURE-BASED BEEF SYSTEMS RESEARCH INITIATIVE- Research and extension grants may be made under this section to study the development of forage sequences and combinations for cow-calf, heifer development, stocker, and finishing systems, to deliver optimal nutritive value for efficient production of cattle for pasture finishing, to optimize forage systems to improve marketability of pasture-finished beef, and to assess the effect of forage quality on reproductive fitness.

`(42) AGRICULTURAL PRACTICES RELATING TO CLIMATE CHANGE- Research and extension grants may be made under this section for field and laboratory studies that examine the ecosystem from gross to minute scales and for projects that explore the relationship of agricultural practices to climate change.

`(48) FARM AND RANCH SAFETY- Research and extension grants may be made under this section to carry out projects to decrease the incidence of injury and death on farms and ranches, including--

`(A) on-site farm or ranch safety reviews;

`(B) outreach and dissemination of farm safety research and interventions to agricultural employers, employees, youth, farm and ranch families, seasonal workers, or other individuals; and

`(C) agricultural safety education and training.

`(52) BIOCHAR RESEARCH- Grants may be made under this section for research, extension, and integrated activities relating to the study of biochar production and use, including considerations of agronomic and economic impacts, synergies of coproduction with bioenergy, and the value of soil enhancements and soil carbon sequestration.';

SEC. 7207. AGRICULTURAL BIOENERGY FEEDSTOCK AND ENERGY EFFICIENCY RESEARCH AND EXTENSION INITIATIVE.

Title XVI of the Food, Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 5801 et seq.) is amended by inserting after section 1672B (7 U.S.C. 5925b) the following:

`SEC. 1672C. AGRICULTURAL BIOENERGY FEEDSTOCK AND ENERGY EFFICIENCY RESEARCH AND EXTENSION INITIATIVE.

`(a) Establishment and Purpose- There is established within the Department of Agriculture an agricultural bioenergy feedstock and energy efficiency research and extension initiative (referred to in this section as the `Initiative') for the purpose of enhancing the production of biomass energy crops and the energy efficiency of agricultural operations.

`(b) Competitive Research and Extension Grants Authorized- In carrying out this section, the Secretary shall make competitive grants to support research and extension activities specified in subsections (c) and (d).

`(c) Agricultural Bioenergy Feedstock Research and Extension Areas-

`(1) IN GENERAL- Agricultural bioenergy feedstock research and extension activities funded under the Initiative shall focus on improving agricultural biomass production, biomass conversion in biorefineries, and biomass use by--

`(A) supporting on-farm research on crop species, nutrient requirements, management practices, environmental impacts, and economics;

`(B) supporting the development and operation of on-farm, integrated biomass feedstock production systems;

`(C) leveraging the broad scientific capabilities of the Department of Agriculture and other entities in--

`(i) plant genetics and breeding;

`(ii) crop production;

`(iii) soil and water science;

`(iv) use of agricultural waste; and

`(v) carbohydrate, lipid, protein, and lignin chemistry, enzyme development, and biochemistry; and

`(D) supporting the dissemination of any of the research conducted under this subsection that will assist in achieving the goals of this section.

`(2) SELECTION CRITERIA- In selecting grant recipients for projects under paragraph (1), the Secretary shall consider--

`(A) the capabilities and experiences of the applicant, including--

`(i) research in actual field conditions; and

`(ii) engineering and research knowledge relating to biofuels or the production of inputs for biofuel production;

`(B) the range of species types and cropping practices proposed for study (including species types and practices studied using side-by-side comparisons of those types and practices);

`(C) the need for regional diversity among feedstocks;

`(D) the importance of developing multiyear data relevant to the production of biomass feedstock crops;

`(E) the extent to which the project involves direct participation of agricultural producers;

`(F) the extent to which the project proposal includes a plan or commitment to use the biomass produced as part of the project in commercial channels; and

`(G) such other factors as the Secretary may determine.

`(d) Energy-Efficiency Research and Extension Areas- On-farm energy-efficiency research and extension activities funded under the Initiative shall focus on developing and demonstrating technologies and production practices relating to--

`(1) improving on-farm renewable energy production;

`(2) encouraging efficient on-farm energy use;

`(3) promoting on-farm energy conservation;

`(4) making a farm or ranch energy-neutral; and

`(5) enhancing on-farm usage of advanced technologies to promote energy efficiency.

`(e) Best Practices Database- The Secretary shall develop a best-practices database that includes information, to be available to the public, on--

`(1) the production potential of a variety of biomass crops; and

`(2) best practices for production, collection, harvesting, storage, and transportation of biomass crops to be used as a source of bioenergy.

`(f) Administration-

`(1) IN GENERAL- Paragraphs (4), (7), (8), and (11)(B) of subsection (b) of the Competitive, Special, and Facilities Research Grant Act (7 U.S.C. 450i(b)) shall apply with respect to making grants under this section.

`(2) CONSULTATION AND COORDINATION- The Secretary shall--

`(A) make the grants in consultation with the National Agricultural Research, Extension, Education, and Economics Advisory Board; and

`(B) coordinate projects and activities carried out under the Initiative with projects and activities under section 9008 of the Farm Security and Rural Investment Act of 2002 to ensure, to the maximum extent practicable, that--

`(i) unnecessary duplication of effort is eliminated or minimized; and

`(ii) the respective strengths of the Department of Agriculture and the Department of Energy are appropriately used.

`(3) GRANT PRIORITY- The Secretary shall give priority to grant applications that integrate research and extension activities established under subsections (c) and (d), respectively.

`(4) MATCHING FUNDS REQUIRED- As a condition of receiving a grant under this section, the Secretary shall require the recipient of the grant to provide funds or in-kind support from non-Federal sources in an amount that is at least equal to the amount provided by the Federal Government.

`(5) PARTNERSHIPS ENCOURAGED- Following the completion of a peer review process for grant proposals received under this section, the Secretary may provide a priority to those grant proposals found as a result of the peer review process--

`(A) to be scientifically meritorious; and

`(B) that involve cooperation--

`(i) among multiple entities; and

`(ii) with agricultural producers.

`(g) Authorization of Appropriations- There is authorized to be appropriated to carry out this section $50,000,000 for each of fiscal years 2008 through 2012.'.

Subtitle C--Agricultural Research, Extension, and Education Reform Act of 1998

SEC. 7311. SPECIALTY CROP RESEARCH INITIATIVE.

(a) In General- Title IV of the Agricultural Research, Extension, and Education Reform Act of 1998 (7 U.S.C. 7621 et seq.) is amended by adding at the end the following:

`SEC. 412. SPECIALTY CROP RESEARCH INITIATIVE.

`(a) Definitions- In this section:

`(1) INITIATIVE- The term `Initiative' means the specialty crop research and extension initiative established by subsection (b).

`(2) SPECIALTY CROP- The term `specialty crop' has the meaning given that term in section 3 of the Specialty Crops Competitiveness Act of 2004 (7 U.S.C. 1621 note; Public Law 108-465).

`(b) Establishment- There is established within the Department a specialty crop research and extension initiative to address the critical needs of the specialty crop industry by developing and disseminating science-based tools to address needs of specific crops and their regions, including--

`(1) research in plant breeding, genetics, and genomics to improve crop characteristics, such as--

`(A) product, taste, quality, and appearance;

`(B) environmental responses and tolerances;

`(C) nutrient management, including plant nutrient uptake efficiency;

`(D) pest and disease management, including resistance to pests and diseases resulting in reduced application management strategies; and

`(E) enhanced phytonutrient content;

`(2) efforts to identify and address threats from pests and diseases, including threats to specialty crop pollinators;

`(3) efforts to improve production efficiency, productivity, and profitability over the long term (including specialty crop policy and marketing);

`(4) new innovations and technology, including improved mechanization and technologies that delay or inhibit ripening; and

`(5) methods to prevent, detect, monitor, control, and respond to potential food safety hazards in the production and processing of specialty crops, including fresh produce.

`(c) Eligible Entities- The Secretary may carry out the Initiative through--

`(1) Federal agencies;

`(2) national laboratories;

`(3) colleges and universities;

`(4) research institutions and organizations;

`(5) private organizations or corporations;

`(6) State agricultural experiment stations;

`(7) individuals; or

`(8) groups consisting of 2 or more entities described in paragraphs (1) through (7).

`(d) Research Projects- In carrying out this section, the Secretary shall award grants on a competitive basis.

`(e) Administration-

`(1) IN GENERAL- With respect to grants awarded under subsection (d), the Secretary shall--

`(A) seek and accept proposals for grants;

`(B) determine the relevance and merit of proposals through a system of peer and merit review in accordance with section 103; and

`(C) award grants on the basis of merit, quality, and relevance.

`(2) TERM- The term of a grant under this section may not exceed 10 years.

`(3) MATCHING FUNDS REQUIRED- The Secretary shall require the recipient of a grant under this section to provide funds or in-kind support from non-Federal sources in an amount that is at least equal to the amount provided by the Federal Government.

`(4) OTHER CONDITIONS- The Secretary may set such other conditions on the award of a grant under this section as the Secretary determines to be appropriate.

`(f) Priorities- In making grants under this section, the Secretary shall provide a higher priority to projects that--

`(1) are multistate, multi-institutional, or multidisciplinary; and

`(2) include explicit mechanisms to communicate results to producers and the public.

`(g) Buildings and Facilities- Funds made available under this section shall not be used for the construction of a new building or facility or the acquisition, expansion, remodeling, or alteration of an existing building or facility (including site grading and improvement, and architect fees).

`(h) Funding-

`(1) IN GENERAL- Of the funds of the Commodity Credit Corporation, the Secretary shall make available to carry out this section $30,000,000 for fiscal year 2008 and $50,000,000 for each of fiscal years 2009 through 2012, from which activities under each of paragraphs (1) through (5) of subsection (b) shall be allocated not less than 10 percent.

`(2) AUTHORIZATION OF APPROPRIATIONS- In addition to funds made available under paragraph (1), there is authorized to be appropriated to carry out this section $100,000,000 for each of fiscal years 2008 through 2012.

`(3) TRANSFER- Of the funds made available to the Secretary under paragraph (1) for fiscal year 2008 and authorized for use for payment of administrative expenses under section 1469(a)(3) of the National Agricultural Research, Extension, and Teaching Policy Act of 1977 (7 U.S.C. 3315(a)(3)), the Secretary shall transfer, upon the date of enactment of this section, $200,000 to the Office of Prevention, Pesticides, and Toxic Substances of the Environmental Protection Agency for use in conducting a meta-analysis relating to methyl bromide.

`(4) AVAILABILITY- Funds made available pursuant to this subsection for a fiscal year shall remain available until expended to pay for obligations incurred in that fiscal year.'.

(b) Coordination- In carrying out the amendment made by this section, the Secretary shall ensure that the Division Chief of the applicable Research, Education, and Extension Office established under section 251 of the Department of Agriculture Reorganization Act of 1994 (7 U.S.C. 6971) coordinates projects and activities under this section to ensure, to the maximum extent practicable, that unnecessary duplication of effort is eliminated or minimized.

TITLE IX--ENERGY

`SEC. 9001. DEFINITIONS.

`Except as otherwise provided, in this title:

`(1) ADMINISTRATOR- The term `Administrator' means the Administrator of the Environmental Protection Agency.

`(2) ADVISORY COMMITTEE- The term `Advisory Committee' means the Biomass Research and Development Technical Advisory Committee established by section 9008(d)(1).

`(3) ADVANCED BIOFUEL-

`(A) IN GENERAL- The term `advanced biofuel' means fuel derived from renewable biomass other than corn kernel starch.

`(B) INCLUSIONS- Subject to subparagraph (A), the term `advanced biofuel' includes--

`(i) biofuel derived from cellulose, hemicellulose, or lignin;

`(ii) biofuel derived from sugar and starch (other than ethanol derived from corn kernel starch);

`(iii) biofuel derived from waste material, including crop residue, other vegetative waste material, animal waste, food waste, and yard waste;

`(iv) diesel-equivalent fuel derived from renewable biomass, including vegetable oil and animal fat;

`(v) biogas (including landfill gas and sewage waste treatment gas) produced through the conversion of organic matter from renewable biomass;

`(vi) butanol or other alcohols produced through the conversion of organic matter from renewable biomass; and

`(vii) other fuel derived from cellulosic biomass.

`(4) BIOBASED PRODUCT- The term `biobased product' means a product determined by the Secretary to be a commercial or industrial product (other than food or feed) that is--

`(A) composed, in whole or in significant part, of biological products, including renewable domestic agricultural materials and forestry materials; or

`(B) an intermediate ingredient or feedstock.

`(5) BIOFUEL- The term `biofuel' means a fuel derived from renewable biomass.

`(6) BIOMASS CONVERSION FACILITY- The term `biomass conversion facility' means a facility that converts or proposes to convert renewable biomass into--

`(A) heat;

`(B) power;

`(C) biobased products; or

`(D) advanced biofuels.

`(7) BIOREFINERY- The term `biorefinery' means a facility (including equipment and processes) that--

`(A) converts renewable biomass into biofuels and biobased products; and

`(B) may produce electricity.

`(8) BOARD- The term `Board' means the Biomass Research and Development Board established by section 9008(c).

`(9) INDIAN TRIBE- The term `Indian tribe' has the meaning given the term in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b).

`(10) INSTITUTION OF HIGHER EDUCATION- The term `institution of higher education' has the meaning given the term in section 102(a) of the Higher Education Act of 1965 (20 U.S.C. 1002(a)).

`(11) INTERMEDIATE INGREDIENT OR FEEDSTOCK- The term `intermediate ingredient or feedstock' means a material or compound made in whole or in significant part from biological products, including renewable agricultural materials (including plant, animal, and marine materials) or forestry materials, that are subsequently used to make a more complex compound or product.

`(12) RENEWABLE BIOMASS- The term `renewable biomass' means--

`(A) materials, pre-commercial thinnings, or invasive species from National Forest System land and public lands (as defined in section 103 of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1702)) that--

`(i) are byproducts of preventive treatments that are removed--

`(I) to reduce hazardous fuels;

`(II) to reduce or contain disease or insect infestation; or

`(III) to restore ecosystem health;

`(ii) would not otherwise be used for higher-value products; and

`(iii) are harvested in accordance with--

`(I) applicable law and land management plans; and

`(II) the requirements for--

`(aa) old-growth maintenance, restoration, and management direction of paragraphs (2), (3), and (4) of subsection (e) of section 102 of the Healthy Forests Restoration Act of 2003 (16 U.S.C. 6512); and

`(bb) large-tree retention of subsection (f) of that section; or

`(B) any organic matter that is available on a renewable or recurring basis from non-Federal land or land belonging to an Indian or Indian tribe that is held in trust by the United States or subject to a restriction against alienation imposed by the United States, including--

`(i) renewable plant material, including--

`(I) feed grains;

`(II) other agricultural commodities;

`(III) other plants and trees; and

`(IV) algae; and

`(ii) waste material, including--

`(I) crop residue;

`(II) other vegetative waste material (including wood waste and wood residues);

`(III) animal waste and byproducts (including fats, oils, greases, and manure); and

`(IV) food waste and yard waste.

`(13) RENEWABLE ENERGY- The term `renewable energy' means energy derived from--

`(A) a wind, solar, renewable biomass, ocean (including tidal, wave, current, and thermal), geothermal, or hydroelectric source; or

`(B) hydrogen derived from renewable biomass or water using an energy source described in subparagraph (A).

`(14) SECRETARY- The term `Secretary' means the Secretary of Agriculture.

`SEC. 9002. BIOBASED MARKETS PROGRAM.

`(a) Federal Procurement of Biobased Products-

`(1) DEFINITION OF PROCURING AGENCY- In this subsection, the term `procuring agency' means--

`(A) any Federal agency that is using Federal funds for procurement; or

`(B) a person that is a party to a contract with any Federal agency, with respect to work performed under such a contract.

`(2) PROCUREMENT PREFERENCE-

`(A) IN GENERAL-

`(i) PROCURING AGENCY DUTIES- Except as provided in clause (ii) and subparagraph (B), after the date specified in applicable guidelines prepared pursuant to paragraph (3), each procuring agency shall--

`(I) establish a procurement program, develop procurement specifications, and procure biobased products identified under the guidelines described in paragraph (3) in accordance with this section; and

`(II) with respect to items described in the guidelines, give a procurement preference to those items that--

`(aa) are composed of the highest percentage of biobased products practicable; or

`(bb) comply with the regulations issued under section 103 of Public Law 100-556 (42 U.S.C. 6914b-1).

`(ii) EXCEPTION- The requirements of clause (i)(I) to establish a procurement program and develop procurement specifications shall not apply to a person described in paragraph (1)(B).

`(B) FLEXIBILITY- Notwithstanding subparagraph (A), a procuring agency may decide not to procure items described in that subparagraph if the procuring agency determines that the items--

`(i) are not reasonably available within a reasonable period of time;

`(ii) fail to meet--

`(I) the performance standards set forth in the applicable specifications; or

`(II) the reasonable performance standards of the procuring agencies; or

`(iii) are available only at an unreasonable price.

`(C) MINIMUM REQUIREMENTS- Each procurement program required under this subsection shall, at a minimum--

`(i) be consistent with applicable provisions of Federal procurement law;

`(ii) ensure that items composed of biobased products will be purchased to the maximum extent practicable;

`(iii) include a component to promote the procurement program;

`(iv) provide for an annual review and monitoring of the effectiveness of the procurement program; and

`(v) adopt 1 of the 2 polices described in subparagraph (D) or (E), or a policy substantially equivalent to either of those policies.

`(D) CASE-BY-CASE POLICY-

`(i) IN GENERAL- Subject to subparagraph (B) and except as provided in clause (ii), a procuring agency adopting the case-by-case policy shall award a contract to the vendor offering an item composed of the highest percentage of biobased products practicable.

`(ii) EXCEPTION- Subject to subparagraph (B), an agency adopting the policy described in clause (i) may make an award to a vendor offering items with less than the maximum biobased products content.

`(E) MINIMUM CONTENT STANDARDS- Subject to subparagraph (B), a procuring agency adopting the minimum content standards policy shall establish minimum biobased products content specifications for awarding contracts in a manner that ensures that the biobased products content required is consistent with this subsection.

`(F) CERTIFICATION- After the date specified in any applicable guidelines prepared pursuant to paragraph (3), contracting offices shall require that vendors certify that the biobased products to be used in the performance of the contract will comply with the applicable specifications or other contractual requirements.

`(3) GUIDELINES-

`(A) IN GENERAL- The Secretary, after consultation with the Administrator, the Administrator of General Services, and the Secretary of Commerce (acting through the Director of the National Institute of Standards and Technology), shall prepare, and from time to time revise, guidelines for the use of procuring agencies in complying with the requirements of this subsection.

`(B) REQUIREMENTS- The guidelines under this paragraph shall--

`(i) designate those items (including finished products) that are or can be produced with biobased products (including biobased products for which there is only a single product or manufacturer in the category) that will be subject to the preference described in paragraph (2);

`(ii) designate those intermediate ingredients and feedstocks that are or can be used to produce items that will be subject to the preference described in paragraph (2);

`(iii) automatically designate items composed of intermediate ingredients and feedstocks designated under clause (ii), if the content of the designated intermediate ingredients and feedstocks exceeds 50 percent of the item (unless the Secretary determines a different composition percentage is appropriate);

`(iv) set forth recommended practices with respect to the procurement of biobased products and items containing such materials;

`(v) provide information as to the availability, relative price, performance, and environmental and public health benefits of such materials and items; and

`(vi) take effect on the date established in the guidelines, which may not exceed 1 year after publication.

`(C) INFORMATION PROVIDED- Information provided pursuant to subparagraph (B)(v) with respect to a material or item shall be considered to be provided for another item made with the same material or item.

`(D) PROHIBITION- Guidelines issued under this paragraph may not require a manufacturer or vendor of biobased products, as a condition of the purchase of biobased products from the manufacturer or vendor, to provide to procuring agencies more data than would be required to be provided by other manufacturers or vendors offering products for sale to a procuring agency, other than data confirming the biobased content of a product.

`(E) QUALIFYING PURCHASES- The guidelines shall apply with respect to any purchase or acquisition of a procurement item for which--

`(i) the purchase price of the item exceeds $10,000; or

`(ii) the quantity of the items or of functionally-equivalent items purchased or acquired during the preceding fiscal year was at least $10,000.

`(4) ADMINISTRATION-

`(A) OFFICE OF FEDERAL PROCUREMENT POLICY- The Office of Federal Procurement Policy, in cooperation with the Secretary, shall--

`(i) coordinate the implementation of this subsection with other policies for Federal procurement;

`(ii) annually collect the information required to be reported under subparagraph (B) and make the information publicly available;

`(iii) take a leading role in informing Federal agencies concerning, and promoting the adoption of and compliance with, procurement requirements for biobased products by Federal agencies; and

`(iv) not less than once every 2 years, submit to Congress a report that--

`(I) describes the progress made in carrying out this subsection; and

`(II) contains a summary of the information reported pursuant to subparagraph (B).

`(B) OTHER AGENCIES- To assist the Office of Federal Procurement Policy in carrying out subparagraph (A)--

`(i) each procuring agency shall submit each year to the Office of Federal Procurement Policy, to the maximum extent practicable, information concerning--

`(I) actions taken to implement paragraph (2);

`(II) the results of the annual review and monitoring program established under paragraph (2)(C)(iv);

`(III) the number and dollar value of contracts entered into during the year that include the direct procurement of biobased products;

`(IV) the number of service and construction (including renovations) contracts entered into during the year that include language on the use of biobased products; and

`(V) the types and dollar value of biobased products actually used by contractors in carrying out service and construction (including renovations) contracts during the previous year; and

`(ii) the General Services Administration and the Defense Logistics Agency shall submit each year to the Office of Federal Procurement Policy information concerning, to the maximum extent practicable, the types and dollar value of biobased products purchased by procuring agencies.

`(C) PROCUREMENT SUBJECT TO OTHER LAW- Any procurement by any Federal agency that is subject to regulations of the Administrator under section 6002 of the Solid Waste Disposal Act (42 U.S.C. 6962) shall not be subject to the requirements of this section to the extent that the requirements are inconsistent with the regulations.

`(b) Labeling-

`(1) IN GENERAL- The Secretary, in consultation with the Administrator, shall establish a voluntary program under which the Secretary authorizes producers of biobased products to use the label `USDA Certified Biobased Product'.

`(2) ELIGIBILITY CRITERIA-

`(A) CRITERIA-

`(i) IN GENERAL- Not later than 90 days after the date of the enactment of the Food, Conservation, and Energy Act of 2008 and except as provided in clause (ii), the Secretary, in consultation with the Administrator and representatives from small and large businesses, academia, other Federal agencies, and such other persons as the Secretary considers appropriate, shall issue criteria (as of the date of enactment of that Act) for determining which products may qualify to receive the label under paragraph (1).

`(ii) EXCEPTION- Clause (i) shall not apply to final criteria that have been issued (as of the date of enactment of that Act) by the Secretary.

`(B) REQUIREMENTS- Criteria issued under subparagraph (A) shall--

`(i) encourage the purchase of products with the maximum biobased content;

`(ii) provide that the Secretary may designate as biobased for the purposes of the voluntary program established under this subsection finished products that contain significant portions of biobased materials or components; and

`(iii) to the maximum extent practicable, be consistent with the guidelines issued under subsection (a)(3).

`(3) USE OF LABEL- The Secretary shall ensure that the label referred to in paragraph (1) is used only on products that meet the criteria issued pursuant to paragraph (2).

`(c) Recognition- The Secretary shall--

`(1) establish a program to recognize Federal agencies and private entities that use a substantial amount of biobased products; and

`(2) encourage Federal agencies to establish incentives programs to recognize Federal employees or contractors that make exceptional contributions to the expanded use of biobased products.

`(d) Limitation- Nothing in this section shall apply to the procurement of motor vehicle fuels, heating oil, or electricity.

`(e) Inclusion- Effective beginning on the date that is 90 days after the date of enactment of the Food, Conservation, and Energy Act of 2008, the Architect of the Capitol, the Sergeant at Arms of the Senate, and the Chief Administrative Officer of the House of Representatives shall consider the biobased product designations made under this section in making procurement decisions for the Capitol Complex.

`(f) National Testing Center Registry- The Secretary shall establish a national registry of testing centers for biobased products that will serve biobased product manufacturers.

`(g) Reports-

`(1) IN GENERAL- Not later than 180 days after the date of enactment of the Food, Conservation, and Energy Act of 2008 and each year thereafter, the Secretary shall submit to Congress a report on the implementation of this section.