article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Rural Energy for America Act of 2006''. SEC. 2. FINDINGS. Congress finds that-- (1) rising energy costs and uncertain long term energy supplies threaten to undermine the growth of the United States economy; (2) since 2003, fuel and fertilizer costs have nearly doubled for agricultural producers; (3) there are continuing and increasing risks to the energy security of the United States; (4) having an affordable, reliable, and plentiful energy supply will strengthen the United States economy and improve domestic energy security; (5) the agricultural sector can provide a significant source of clean, sustainable energy for the United States that can reduce the dependence of the United States on imported energy and lower energy costs for all people of the United States; (6) agriculture-based energy-- (A) boosts rural economic development; (B) increases farm-based income; (C) creates manufacturing, construction, and service jobs; (D) expands economic opportunity for all people; and (E) improves environmental quality; (7) it is a goal of this Act to help the agricultural sector to provide at least 25 percent of the energy consumed in the United States by calendar year 2025; (8) expanding agriculture-based renewable energy resources (including wind, solar, and geothermal energy, ethanol, and biodiesel) and improving energy efficiency will help to achieve that goal; (9) section 9006 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 8106) established the renewable energy systems and energy efficiency improvements program, which is the first agricultural program to catalyze broad renewable energy and energy efficiency measures for the agricultural and rural business sectors; (10) since establishment, the program has been a strong success, providing during the first 3 years of the program nearly $64,000,000 in grants and loan guarantees for 412 renewable energy and energy efficiency projects in 37 States, which leveraged approximately $699,000,000 in additional investments in farms and rural communities; (11) projects assisted by the grants and loan guarantees will-- (A) produce or save more than 17,000,000,000,000 British thermal units of energy each year in the form of fuel, electricity, thermal energy, and energy efficiency; (B) produce 124,000,000 gallons of ethanol and biodiesel fuel annually; and (C) reduce carbon dioxide emissions by more than 4,000,000 tons annually; and (12) applications for assistance under the program-- (A) in 2003, nearly matched the available funding for the program; (B) in 2004, were nearly twice the available funding for the program; and (C) in 2005 and 2006, were nearly triple the available funding for the program. SEC. 3. RURAL ENERGY FOR AMERICA PROGRAM. Section 9006 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 8106) is amended-- (1) by striking the section designation and heading and inserting the following: ``SEC. 9006. RURAL ENERGY FOR AMERICA PROGRAM.''; (2) in subsection (a)-- (A) by inserting ``, and issue rebates,'' after ``grants''; and (B) by inserting ``rural school districts,'' after ``ranchers,''. (3) by striking subsection (f); (4) by redesignating subsection (e) as subsection (h); (5) by inserting after subsection (d) the following: ``(e) Production-Based Incentive in Lieu of Grant.-- ``(1) In general.--In addition to the authority under subsection (a), to encourage the production of electricity from renewable energy systems, the Secretary shall, on the request of an eligible applicant under this section, make production- based payments to the applicant in lieu of a grant. ``(2) Contingency.--Payments under paragraph (1) shall be contingent on documented energy production and sales from the renewable energy system to a third party. ``(3) Limitation.--The total net present value of a production-based incentive may not exceed the lower of-- ``(A) 25 percent of the eligible project costs; and ``(B) any other limits that the Secretary establishes by rule or guidance. ``(f) Feasibility Studies.-- ``(1) In general.--The Secretary may provide assistance to eligible applicants to conduct feasibility studies of projects for which assistance may be provided under this section. ``(2) Limitation.--The Secretary shall use not more than 10 percent of funds made available to carry out this section to provide assistance described in paragraph (1). ``(3) Criteria.--The Secretary shall, by regulation, establish criteria for the receipt of assistance under this subsection. ``(4) Avoidance of duplicative assistance.--An applicant that receives assistance to carry out a feasibility study for a project under this subsection shall not be eligible for assistance to carry out a feasibility study for the project under any other provision of Federal law. ``(5) Matching funds.--A recipient of funds under this subsection shall contribute an amount of non-Federal funds that is at least equal to 75 percent of the amount of Federal funds received. ``(g) Rebate Program.-- ``(1) In general.--The Secretary shall make competitive grants to eligible entities to provide rebates for farmers, ranchers, rural school districts, and rural small businesses to purchase renewable energy systems and make energy efficiency improvements. ``(2) Eligible entities.--To be eligible to receive a grant under paragraph (1), an entity shall be-- ``(A) a State energy or agriculture office; ``(B) a nonprofit State-based energy efficiency or renewable energy organization that uses public funds provided directly or under contract with a State agency; ``(C) any other nonprofit organization with a demonstrated ability to administer a State-wide energy efficiency or renewable energy rebate program; or ``(D) a consortium of entities described in subparagraphs (A) through (C). ``(3) Merit review.-- ``(A) In general.--The Secretary shall establish a merit review process to review applications for grants under paragraph (1) that uses the expertise of the Department of Agriculture, other Federal and State agencies, and non-governmental organizations. ``(B) Requirements.--In reviewing the application of an eligible entity to receive a grant under paragraph (1), the Secretary shall consider-- ``(i) the experience and expertise of the entity in establishing and administering a State-wide clean energy rebate program; ``(ii) the annual projected energy savings or production increases resulting from the proposed program; ``(iii) the environmental benefits resulting from the proposed program; and ``(iv) other appropriate factors, as determined by the Secretary. ``(4) Maintenance of effort.--An entity that receives a grant under paragraph (1) shall provide assurances to the Secretary that funds provided to the entity under this subsection will be used to supplement, not to supplant, the amount of Federal, State, and local funds otherwise expended for rebate programs. ``(5) Rebate amount.--The amount of a rebate provided from a grant under this subsection shall not exceed the lower of-- ``(A) $10,000; or ``(B) 50 percent of the cost incurred to purchase a renewable energy system or an energy efficiency improvement.''; and (6) by adding at the end the following: ``(i) Funding.--Of the funds of the Commodity Credit Corporation, the Secretary shall make available to carry out this section-- ``(1) $60,000,000 for fiscal year 2008, to remain available until expended, of which not more than $12,000,000 shall be used to carry out subsection (g); ``(2) $90,000,000 for fiscal year 2009, to remain available until expended, of which not more than $18,000,000 shall be used to carry out subsection (g); ``(3) $130,000,000 for fiscal year 2010, to remain available until expended, of which not more than $26,000,000 shall be used to carry out subsection (g); ``(4) $180,000,000 for fiscal year 2011, to remain available until expended, of which not more than $36,000,000 shall be used to carry out subsection (g); and ``(5) $250,000,000 for fiscal year 2012, to remain available until expended, of which not more than $50,000,000 shall be used to carry out subsection (g).''. SEC. 4. SENSE OF THE SENATE ON A DIRECT LOAN PROGRAM IN SECTION 9006. It is the sense of the Senate that-- (1) as authorized by section 9006 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 8106), the Secretary of Agriculture should implement a direct loan program to complement the grants provided under that section; and (2) as appropriate, the Secretary should model the direct loan program on the loan program established under section 503 of the Small Business Investment Act of 1958 (15 U.S.C. 697).
summary: Rural Energy for America Act of 2006 - Amends the Farm Security and Rural Investment Act of 2002 to rename the renewable energy systems and energy efficiency improvements program as the rural energy for America program (REAP). Makes rural school districts eligible for REAP. Authorizes: (1) production-based incentives in lieu of grants for electricity production from renewable energy systems contingent upon third-party sales; and (2) matching assistance for feasibility studies. Directs the Secretary of Agriculture to make grants to eligible entities to provide rebates for farmers, ranchers, rural school districts, and rural small businesses to purchase renewable energy systems and make energy efficiency improvements. Defines eligible entities as: (1) a state energy or agriculture office; (2) a nonprofit state-based energy efficiency or renewable energy organization that uses public funds provided directly or under contract with a state agency; (3) any other nonprofit organization with a demonstrated ability to administer a statewide energy efficiency or renewable energy rebate program; or (4) a consortium of such entities. Limits rebates to the lower of $10,000 or 50% of the cost to purchase a renewable energy system or an energy efficiency improvement. Extends REAP funding through FY 2012 with set-asides for the rebate program. Expresses the sense of the Senate that the Secretary should implement a direct loan program to complement REAP grants.