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Tuesday, February 19, 2013

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) 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.

BCAP is administered by the U.S. Department of Agriculture’s (USDA’s) Farm Service Agency (FSA). BCAP provides two categories of financial assistance: 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. BCAP assistance for establishing and producing biomass crops is available within designated project areas. BCAP project areas are specific geographic areas where producers may enroll land into BCAP contracts and produce specified biomass crops. As of June 2012, eleven BCAP project areas had been approved.

On June 11, 2009, FSA implemented one portion of BCAP—the Collection, Harvest, Storage, and Transportation (CHST) matching payment program—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.

Under the 2008 farm bill, BCAP was authorized to receive such sums as necessary, meaning that funding for BCAP is both mandatory through the Commodity Credit Corporation and open-ended since it depends on program participation. However, recent congressional actions (as part of the annual appropriations process) have capped program funding in FY2010, FY2011, and FY2012. In response to funding reductions, USDA temporarily suspended the CHST matching payment portion of the program through FY2011, and re-prioritized future program funds in favor of uses that emphasize annual and establishment payments, especially under existing contracts, over CHST matching payments.

While BCAP is in the early stages of implementation, concerns regarding eligibility, funding, and sustainability 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 does not include “baseline” budget spending beyond FY2012. 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: January 29, 2013
Number of Pages: 24
Order Number: R41296
Price: $29.95

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