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Tuesday, October 4, 2011

Biomass Crop Assistance Program (BCAP): Status and Issues

Randy Schnepf
Specialist in Agricultural Policy

The Food, Conservation, and Energy Act of 2008 (P.L. 110-246, 2008 farm bill) created the Biomass Crop Assistance Program (BCAP). BCAP is intended to assist with the bioenergy industry’s hurdle of continuous biomass availability—viewed as a critical deterrent to private sector investment in the cellulosic biofuels industry. To accomplish this, BCAP was charged with two tasks: (1) to support the establishment and production of eligible crops for conversion to bioenergy in selected areas, and (2) to assist agricultural and forest land owners and operators with collection, harvest, storage, and transportation of eligible material for use in a biomass conversion facility.

Under the 2008 farm bill, BCAP was authorized to receive such sums as necessary, meaning that funding is open-ended and depends on program participation. The U.S. Department of Agriculture’s (USDA’s) Farm Service Agency (FSA) implemented one portion of BCAP—the Collection, Harvest, Storage, and Transportation (CHST) matching payment program—on June 11, 2009, through a Notice of Funds Availability in the Federal Register. The partial implementation created a possible unintended consequence of market competition for wood shavings, wood chips, sawdust, and other wood “scraps” between traditional purchasers—namely landscapers and particleboard manufactures—and facilities that convert biomass to energy. The issuance of the BCAP proposed rule on February 8, 2010, suspended CHST program enrollment and proposed rules for the implementation of the remainder of the BCAP program.

USDA issued the BCAP final rule on October 27, 2010, implementing both program components. The two main components of BCAP are split into two forms of payments: annual and establishment payments, which share in the cost of establishing eligible biomass crops and maintaining production; and matching payments, which share in the cost of the collection, harvest, storage, and transportation of biomass to an eligible biomass conversion facility. The payments have different eligibility and sign-up requirements, payment rates, and contract lengths.

Funding for BCAP is mandatory through the Commodity Credit Corporation (CCC) and was originally authorized at a “such sums as necessary” level. Recent congressional actions have capped the program in FY2010 and FY2011. In response to these reductions, USDA has temporarily suspended the matching payment portion of the program through FY2011. The annual and establishment payment portion of BCAP is accepting proposals through September 23, 2011.

While BCAP is in the early stages of implementation, concerns regarding eligibility, sustainability, and funding continue to be discussed. These issues could shape future congressional action on the program in the context of budgetary measures and possible reauthorization in the next farm bill.

In particular, BCAP funding authorization expires in FY2012 with the 2008 farm bill. BCAP does not include “baseline” budget spending beyond 2012. Based on current budgetary requirements, the authorizing committees could potentially need to secure offset funding if BCAP were to be reauthorized in the next farm bill. This could prove difficult given tight budgetary constraints and the more recent and higher projections of the program’s cost compared to its initial cost estimates.

Date of Report: September
19, 2011
Number of Pages:
Order Number: R41
Price: $29.95

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