USDA sets May 27 deadline for BCAP Project Area Applications, Delays matching payments for woody biomass

Delivering biomass to the Show Me Energy Cooperative (Missouri)

(April 20, 2011) USDA issued a notice yesterday setting a deadline of May 27, 2011 for submission of Biomass Crop Assistance Program (BCAP) project area proposals for Fiscal Year 2011.  State-level USDA teams are required to complete their review of submitted applications by June 10. The deadline for a final, national-level review of applications sent up by state offices is June 24. This is a change from the final BCAP rule published last October, which anticipated USDA accepting applications on a rolling or on-going basis with no deadlines.

This new, compressed schedule follows the recent enactment of the full year federal budget bill for 2011 that caps total federal spending on BCAP at $112 million through the end of this fiscal year.  This cap reduces BCAP funding by $84 million from USDA’s projected needs of $196 million for BCAP in 2011.  Clearly, the US will see far less progress on sustainable energy crops due to this reduction.

USDA did not indicate in the notice, or in other documents published by the Farm Service Agency (FSA), how it will weigh or evaluate project area applications against each other in awarding funding. USDA will also make a determination whether to require further environmental review by June 24.

Reminder:  The BCAP project area program is intended to encourage the establishment of new, sustainable energy crops by paying producers who are part of an approved project area, up to 75% of reasonable costs to establish dedicated energy crops along with annual support payments. More discussion on the rules is available here.

Interested project area sponsors are encouraged to complete and submit their applications as soon as possible.  You can access and download all necessary instructions and notices from FSA’s BCAP website, namely BCAP-20, 21 and 22 and accompanying notices.  Applicants are also encouraged to contact their state FSA offices for information and support.  At least one participating biomass conversion facility with all necessary permits is required for all project area applications.

BCAP matching payment delay for woody biomass through summer 2011

USDA also announced yesterday that it would not make BCAP matching payments available for woody biomass until this summer. At the same time, USDA made it clear these payments would be subject to certain limitations, including identified needs, environmental concerns and limited funds.  Establishment and annual payments under the project area program would still be available for woody biomass (presumably short rotation woody biomass crops) in approved project areas.

Priority for project area proposals positive step forward for BCAP program

ELPC has long advocated that USDA and FSA target the majority of BCAP program funds for project areas and new energy crop development. A tight budget cap has forced the agency to take this sensible policy approach and prioritize approval and funding of project areas before depleting program resources to make matching payments for woody biomass resources.

This is a real concern, because USDA’s previous implementation of BCAP resulted in hundreds of millions of federal dollars spent to support existing uses of woody biomass, with minimal development of new supply chains or new biomass resources. This mistake nearly de-railed the program, creating distortions in the wood products market and generating significant public and Congressional backlash against BCAP.  It also delayed the implementation of the project area program, which is the only part of BCAP that actually supports the production of new energy crops.

Because of the outcry over USDA’s implementation of the matching payment program in 2009 and 2010, USDA decided to restrict the types of woody biomass that could qualify for matching payments in the final BCAP rule.  However, USDA did not cap the amount of BCAP funds allocated to the matching payment program, which means that limited program funds could still be diverted to support primarily existing sources of woody biomass – even under the new restrictions — and not the development of new energy crops (including short rotation woody biomass crops) and new biomass supply chains.  Therefore, ELPC was pleased that USDA decided to prioritize funding for 2011 project areas, hopefully avoiding the pitfalls that previously plagued the program.