Effective date: December 15, 2010
Summary: The final Biomass Crop Assistance Program (BCAP) rule, authorized by the Food, Conservation, and Energy Act of 2008 (the 2008 Farm Bill), is intended to assist agricultural and forest land owners and operators with the establishment and production of eligible crops in selected project areas for conversion to bioenergy, and the collection, harvest, storage, and transportation of eligible material for use in a biomass conversion facility. This rule specifies the requirements for eligible producers and participants, biomass conversion facilities, and eligible renewable biomass crops and materials.
Overview: BCAP supports two main types of activities. First, it provides funding for agricultural and forest land owners and operators to receive matching payments for certain eligible material sold to qualified biomass conversion facilities for conversion to heat, power, biobased products, or advanced biofuels. These payments are referred to as ‘‘matching payments."’ Matching payments will assist producers with the cost of collection, harvest, storage, and transportation of certain eligible material to a qualified biomass conversion facility. Such payments to a particular participant can continue for up to two years after the first payment is issued.
Second, BCAP provides funding for producers of eligible crops of renewable biomass within specified project areas to receive establishment payments of not more than seventy-five percent of the cost of establishment of eligible woody and non-woody perennial crops, and annual payments for up to five years for the production of eligible annual and non-woody perennial renewable biomass crops and for up to fifteen years for the production of eligible woody perennial renewable biomass crops. To be eligible for payment, the establishment and production activities must take place in designated project areas, which may be proposed to the Commodity Credit Corporation (CCC) by biomass conversion facilities or by groups of producers. Producers in project areas may be eligible for both types of payments; producers outside the project areas are only eligible for matching payments.
Applications for Matching, Establishment, and Annual payments are available as of December 15, 2010. The application steps should be read carefully as there are changes from the prior applications issued now that related parties are allowed. Further, each facility or project area will need to be established as separate applications. Facilities that were issued prior ID numbers may need to reapply to USDA pending the state Farm Service Agency (FSA) office determination. All applicants are encouraged to do so as soon as their facility or project information is in place given the expected popularity with the extension of this successful program.
Specific changes include:
Biomass conversion facilities will be required to certify that eligible materials that are not crop residues are byproducts of preventative treatments that are removed to reduce hazardous fuels, to reduce or contain disease or insect infestation, or to restore ecosystem health.
Related party transactions may be eligible for matching payments.
Biomass conversion facilities will be required to treat all parties equally and pay fair market rates; this is intended to prevent biomass conversion facilities from paying different prices based on whether or not a person is receiving BCAP payments.
BCAP requires a conservation plan, forest stewardship plan, or equivalent plan as an eligibility requirement to receive matching payments. Equivalent plans were previously included in some but not all references to plans in the proposed rule. In the proposed rule, compliance with existing plans was required for matching payments; however, a plan was not required if one did not already exist. Now the conservation plan, forest stewardship plan, or equivalent plans are required for all BCAP payments.
As specified in the 2008 Farm Bill, BCAP participants may receive matching payments for a maximum of two years; this rule specifies that the CCC will take into account the Notice of Funds Availability period in an equitable manner consistent with the 2008 Farm Bill.
Although the proposed rule provided alternatives for different payment rates based on type of material, BCAP will provide a single rate of $1 for each $1 per dry ton provided by the biomass conversion facility, up to $45 per dry ton, with no ‘‘tiered" payments for different types of biomass. Similarly, provisions in the proposed rule for payments for wood wastes and wood residues converted to heat or power only above historical usage baselines cannot be implemented.
This rule clarifies that to qualify for payment, eligible materials and renewable biomass must be organic materials that are harvested or collected from the land. Specific references to vegetative and woody waste products that would not meet those requirements are not included. This rule clarifies the section on eligible materials to include specific requirements that are also clearly defined in the definitions section.
Reductions to annual payments for sale of eligible crops and materials will be tiered based on the use for which the material or crops from the contract acres was sold and matching payments were paid. Conversion to advanced biofuels will result in the smallest reduction, while uses for purposes other than conversion to heat, power, biobased products, or advanced biofuels will result in the highest reduction.
This rule also makes technical corrections and editorial changes that reflect both comments received and the FSA's review of the rule.
For more information on the Biomass Crop Assistance Program, email us at renew@bakertilly.com, or contact a Renewable Energy & Sustainable Solutions specialist:
Brad DeNoyer - 608 240 2466
Joel Laubenstein - 608 240 2650
Mike Land - 608 240 2580
Cory Wendt - 608 240 2677
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