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New Rules for Biomass Crop Assistance Program

On October 27, 2010, USDA/FSA published the final rule implementing the Biomass Crop Assistance Program (BCAP) in the Federal Register.  The rule is effective immediately and summarized, below. You can download the final BCAP rule here.

ELPC Reaction to Final BCAP Rule

ELPC welcomes publication of a BCAP rule that will finally and fully implement the entire BCAP program.  However, ELPC is disappointed that the final rule fails to ensure the majority of program resources will support sustainable perennial energy crop production.  No funding limitations are placed on the collection of existing biomass materials and the final rule does not require a competitive review process to give priority consideration to the most environmentally and economically sound BCAP projects.

A scoring or similar system is critical to the long-term success of the BCAP program. ELPC believes that given limited resources and time to implement the BCAP program through 2012, incentives for the most environmentally beneficial projects is necessary to maintain public and Congressional support for BCAP.

Addtionally, the final rule projects that the majority of BCAP funding will continue to support the collection of biomass feedstocks regardless of their environmental impact, rather than establishing new sustainable energy crops. Finally, ELPC is puzzled by USDA’s decision to bias the crop establishment program in favor of biofuels development over other uses like biopower production.  As the very name of the Biomass Crop Assistance Program indicates, USDA/FSA should focus on the feedstock rather than the product.

Bottom line:  the final BCAP rule leaves a lot of detail to be determined or developed during the implementation process. Therefore, ELPC will be actively involved in BCAP implementation going forward and will continue to advocate for the development of an economically and environmentally sound program that is sustainable over the long-term.

BCAP Background

Congress enacted BCAP in 2008 as part of the Farm Bill’s Energy Title.  BCAP provides incentives for bioenergy feedstock development to support the production of advanced biofuels and renewable energy.  To achieve this goal, BCAP provides financial support for the following activities:

  1. The collection, harvest, storage and transportation (CHST) of biomass materials for conversion to heat, power, advanced biofuels or bioproducts; and
  2. The establishment and production of energy crops in project areas for use at facilities that convert biomass to heat, power, advanced biofuels or bioproducts.

Unfortunately, BCAP has been subject to delays and controversy.  In June of 2009, in advance of any rule-making or environmental review, USDA issued a Notice of Funds Availability (NOFA) for CHST, making matching payments available for the delivery of biomass to qualified conversion facilities.  No funds were made available for establishing energy crops.

USDA soon spent more than $200 million under the NOFA, primarily for non-Federal woody biomass that was being collected prior to BCAP.  This vastly outstripped Congressional projections of $70 million for the entire program through 2012 and led to Congressional spending limitations of $500 million in 2010 and $400 million (approx) in 2011.  Few BCAP dollars were spent to develop new biomass feedstocks, despite Congressional intent for the program.

For further background information, you can browse FarmEnergy BCAP stories here.

BCAP Timeline

July of 2009 Programmatic environmental review process begins with issuance of Draft Programmatic Environmental Impact Statement (PEIS).
February of 2009 USDA issues proposed rule for both CHST and crop establishment components of BCAP; suspends the June 2009 NOFA.
October 27, 2010 Record of Decision on Final PEIS selecting Alternative 2, Broad Implementation of BCAP, published in Federal Register.
October 27, 2010 Final BCAP rule published in the Federal Register

Biomass Crop Assistance Program (BCAP) Final Rule

The final BCAP rule makes few substantive changes to the draft rule.  Most changes were made to the CHST provisions to address, in part, concerns raised about adverse impacts of the CHST program on wood markets and the lack of adequate and enforceable sustainability standards for biomass harvest.  Additionally, USDA/FSA secured a waiver of the required 60-day Congressional review period for major rules, allowing the rule to go into effect immediately.

Highlights and Changes From Proposed BCAP Rule

CHST Matching Payments:

  • Restricts materials that will qualify for CHST matching payments to renewable biomass:

1. harvested and collected from the land, and/or separated from a higher-value product before delivery to a Biomass Conversion Facility (BCF);

2.  that does not supply a distinct local market for higher-value products ;

3.  that is harvested in accordance with an approved conservation plan, forest stewardship plan, or equivalent plan;

4.  for wood, only material that is diseased, unsuitable for timber harvest, or removed to reduce fire risk or restore ecosystem health.

Comment on woody biomass:  These restrictions apply to all woody biomass material collected from BOTH federal and non-federal lands (outside of BCAP project areas).  Previously, limitations on qualifying woody biomass applied only to woody biomass (or residues) sourced from federal lands.

  • The rule does not tier CHST matching payments based on energy or environmental considerations, or type of material.  All eligible materials may receive up to $45/dry ton, regardless of environmental impact.

Establishment and Annual Payments:

  • FSA will accept project area applications on a continuous basis (which FSA compares to the continuous sign-up process under the Conservation Reserve Program (CRP)), with no deadlines or competitive selection process.  No changes or additions were made to the selection criteria although “additional selection criteria may be developed.”
  • A project area proposal must identify specific geographic boundaries and must be physically located near a BCF. FSA will decide on a case by case basis an appropriate location for the BCF relative to the proposed project area; the project area proposal must also describe sources of renewable biomass.
  • Small and pilot-scale facilities are eligible for the program.
  • Establishment payments will comprise an actual or average 75% cost-share for the “cost-effective” establishment of an “eligible practice.”  FSA, in accordance with CRP protocols, “will” establish market-based rates for standard practices such as land preparation, seed purchases and chemicals, etc.  Therefore, the actual establishment payment received by a producer may be less than 75% of their total cost.
  • No change was made to the calculation of annual payments, which will be based on CRP regulations and “as determined” by FSA. Specific annual payments will be posted at FSA county offices as FSA still says it would be too complicated to post online.
  • No explicit process was established for setting annual incentive payments (except “as determined by” USDA/FSA). Individual project area sponsors or producers will be responsible for proposing and justifying incentive payments.
  • If a producer harvests and sells an eligible crop while still receiving annual support payments, these payments will be reduced in a tiered fashion depending on whether the crop is sold to produce cellulosic biofuels (payment reduction of 1%); advanced biofuels (payment reduction of 10%); heat, power, or biobased products (payment reduction of 25%); or for any other purpose (payment reduction of 100%).  FSA says the cellulosic biofuels preference is intended to further the goals of the Renewable Fuel Standard.

Conservation and Forest Stewardship plans:

  • Plans are now required for all BCAP participants receiving CHST matching payments and establishment and annual payments.  Definition of conservation plan changed somewhat to include BCAP specific terms.
  • Plans must be implemented and prepared in accordance with BCAP guidelines to be “established and determined” by FSA.  ELPC is monitoring that process.
  • FSA states it will use the Natural Resource Conservation Service and state foresters, or private technical assistance providers, to provide assistance with conservation and stewardship plans.  Individual plans will be “site-specific.”
  • FSA retains the authority to waive conservation district review of individual producer conservation plans, in the event a district declines to review or approve a plan.  This does not mean the requirement for a plan is waived.  However, FSA does not directly address what happens if a district declines to approve a plan saying only that farmers shouldn’t be harmed if a district declines to review a plan.
  • Some site-specific environmental review will be required, both of project area proposals and individual producer contracts.