Biomass Crop Assistance Program

Program Basics

The Biomass Crop Assistance Program (BCAP) was established by the 2008 Farm Bill as a new Title IX energy program. Congress intended that this program promote the cultivation of bioenergy crops that show exceptional promise for producing highly energy-efficient bioenergy or biofuels, and to develop those new crops and cropping systems in a manner that preserves natural resources. In addition, BCAP is not intended to fund those crops that are primarily grown for food or animal feed.

Farmers participating in a BCAP project will be eligible to enter into a 5-year agreement with USDA to establish annual or perennial crops or a 15-year agreement for woody biomass. BCAP provides:

2008 Farm Bill Changes

This is a new farm bill program established by the 2008 Farm Bill.

Section 9001 of the Food, Conservation and Energy Act of 2008 amends Title IX of the Farm Security and Rural Investment Act of 2002 to include a new section 2011 authorizing the Biomass Crop Assistance Program, to be codified at 7 U.S.C. Section 8111.

Key Aspects of BCAP

Eligible Land — Land within a BCAP project area that is eligible for funding includes agricultural land and non-industrial private forest lands, except:

Eligible Crops – In general, the term ‘eligible crop’ means a crop of renewable biomass, which includes agricultural commodities and renewable plant material from other plants and trees. However, the following crops are not included:

Project Sponsors — A proposal for a BCAP project is submitted to the USDA by a project “sponsor,” defined as either a biomass conversion facility or group of producers who own or operate acreage within a specified project area.

Project Proposal Requirements – A proposal must include the following:

  1. A specified project area with specified geographic boundaries that are within an economically practicable distance from the biomass conversion facility;
  2. A description of the eligible land and eligible crops of each producer that will participate in the project;
  3. A letter of commitment from the biomass conversion facility that the facility will use the eligible crops intended to be produced in the proposed project area;
  4. Evidence that the biomass conversion facility has sufficient equity available if the biomass conversion facility is not operational at the time the proposal is submitted; and
  5. Any other information about the biomass conversion facility or proposed biomass conversion facility that gives USDA a reasonable assurance that the plant will be in operation by the time that the eligible crops are ready for harvest.

Project Selection Criteria – Project selection is a competitive process. The farm bill provides the following set of criteria that USDA must consider in selecting projects:

Volume of Eligible Crops

The volume of the eligible crops proposed to be produced in the proposed project area and the probability that those crops will be used for the purposes of BCAP

Volume of Other Renewable Biomass

The volume of renewable biomass projected to be available from sources other than the eligible crops grown on contract acres

Anticipated Economic Impact

The anticipated economic impact in the proposed project area

Opportunity for Producers and Local Investors

The opportunity for producers and local investors to participate in the ownership of the biomass conversion facility in the proposed area

Beg./Socially Disadvantaged Farmer/Rancher Participation

The participation rate in project by beginning farmers or ranchers or socially disadvantaged farmers or ranchers

Impact on Natural Resource Conservation

The impact on soil, water, and related resources including wildlife-related concerns

Variety of Production Approaches

The variety in biomass production approaches within a project area, including agronomic conditions, harvest and postharvest practices, and monoculture and polyculture crop mixes

Range of Eligible Crops

The range of eligible crops among project areas

Other

Any additional criteria as determined by USDA

Producer Contracts — Eligible producers in a BCAP project area may enter directly into a contract with USDA for payments related to the production of eligible crops. The contracts will run 5 years for annual or perennial crops and up to 15 years for the production of woody biomass.

Participating farmers must also be in compliance with the farm bill’s highly erodible land and wetland conservation requirements and implement a conservation plan or a forest stewardship plan. The nature of the conservation or forest stewardship plan is left up to USDA to determine.

Participating farmers must also agree to make available information gleaned from their participation in the program to USDA to help promote the production of eligible crops and the development of biomass conversion technology.

BCAP Payments for crop establishment and production – Under the contract with USDA, producers participating in a BCAP project are eligible to receive the following payments:

Annual Payments – The intent of the 5-year contract term is to encourage farmers to try out growing new crops that may need a few years to become established before providing any economic return. USDA has been given discretion in setting the annual payment levels, with the Farm Bill Managers Statement expressing the intent that USDA should consider “the costs of the activity being funded and the need for the biomass conversion facility to bear some costs of producing the feed stock.”

Reduction in Annual Payments – USDA has the discretion to reduce an annual payment, if:

Collection, Harvest, Storage and Transportation Payments — USDA has the discretion to make collection, harvest, storage and transportation (CHST) payments to a producer of an eligible crop on land under a BCAP contract or to a person with the right to collect or harvest material eligible for BCAP. The payments are to be provided on a matching basis at a rate of $1 for each $1 per ton provided by the biomass conversion facility, up to an amount not to exceed $45 per ton, for a period of two years.

Report to Congress – By not later than the spring of 2012, USDA is required to submit to Congress a report on best practice data and other information gathered from BCAP projects and participants.

Funding

BCAP received mandatory funding in the Farm Bill in “such sums as are necessary for each of the fiscal years 2008-2012.” The Congressional Budget Office estimated a cost for this program at $70 million over the life of the farm bill, based on its estimation of how many farmers will participate in BCAP each year. The ultimate cost of the program will be determined by how many projects are awarded, how many farmers choose to participate, and what the actual payment levels will be.

Biomass Crop Assistance Program Mandatory Funding Estimate

2008

2009

2010

2011

2012

5 year cost

10 yr cost

0

$14 M

$14 M

$21 M

$21 M

$70 M

$70 M

Based on the Congressional Budget Office’s estimation of how many farmers will participate in BCAP each year.

Implementation Basics

The USDA Secretary has designated the Farm Service Agency (FSA) to administer BCAP. FSA chose to implement the CHST component of BCAP through a Notice of Funding Availability without environmental or economic review based on FSA’s incorrect premise that BCAP is an entitlement program. An estimated 350 timber mills, small power generators and other entities signed up as bioconversion facilities so that suppliers of biomass could receive the CHST subsidy.  By late 2009, the Office of Management and Budget had allocated $514 million to BCAP through March 2010 and in February 2009 the President’s Budget Request for FY2011 estimated that BCAP would cost $742 million for FY2010-2011 alone, far exceeding the Farm Bill estimate of $70 million over the course of five years.

Unlike the CHST portion of the program, FSA chose to implement the bioenergy crop component of the program through a proposed rulemaking. On August 9, 2009, FSA opened a public comment period on a draft Programmatic Environmental Impact Statement for BCAP. That comment period closed on September 24, 2009.

On February 8, 2010, FSA issued a proposed rule for BCAP. The comment period on the BCAP Proposed Rule closes April 9, 2010. With this timeline, it is likely that the first BCAP bioenergy crop projects will not be implemented until 2011.

Due to a growing controversy over the payment projections for the CHST and the diversion of forest biomass from finished products (such as cabinetry) to fuel feedstock, FSA also announced the suspension of the CHST payment program, pending finalization of the BCAP rule. For applications received prior to the suspension of the program on February 8, payments will continue through March 31, 2010. FSA will likely resume CHST payments, with some restrictions, as soon as a BCAP rule is finalized.

USDA Contact Information and Online Resources

The Farm Service Agency has established a BCAP webpage: http://www.fsa.usda.gov/FSA/webapp?area=home&subject=ener&topic=bcap.

Lead contact for BCAP: Robert Stephenson, ; .