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Updated: BCAP final rule will be published Oct. 27

By | October 21, 2010

U.S. Secretary of Agriculture Tom Vilsack announced yesterday that the Biomass Crop Assistance Program final rule will be published in the Federal Register on Oct. 22.

What he actually meant to say, according to USDA-FSA Chief of Public Affairs Kent Politsch, is that it will be on public display Friday, and published in the register on Wednesday, Oct. 27.

The much-anticipated rule comes nearly eight months after USDA froze the program to close several loopholes that surfaced after the initial implementation.

BCAP is part of the 2008 Farm Bill and was designed to support the establishment and production of eligible crops for conversion to bioenergy in selected areas, and to assist agricultural and forest landowners and operators in supplying eligible material to biomass conversion facilities.

"The Obama Administration is aggressively supporting our nation's farmers, ranchers and producers of biofuels as they work to bring greater energy independence to America," Vilsack said. "BCAP will help the nation's power, biobased product, and advanced biofuel industries produce energy from sustainable rural resources and create jobs that will stimulate rural economies across the nation."

BCAP collection, harvest, storage and transport (CHST) matching payments were initiated following the notice of funding availability, which was issued in June 2009, pursuant to a directive from President Barack Obama in May. The proposed rule to implement the full BCAP was announced in early February, with a 60-day public comment period ending in April.

While crafting the BCAP final rule, Vilsack said, special attention was paid to concerns expressed by industry members and environmentalist about the matching payment qualifications for woody biomass. In the new rule, according to Vilsack, matching payments for woody biomass will only be provided if the material is being removed from a forest for ecosystem restoration and forest health purposes.

Vilsack also mentioned a new funding component to BCAP. “As these new materials arrive at the biorefinery, additional costs may be incurred by processors,” Vilsack said. “To relieve that risk for advanced biofuels production, USDA, under section 9005 of the Farm Bill of 2008, will make payments to impacted processors. Up to $281.5 million remains for this purpose, and I have directed that work on the final rule be completed by the end of this year making these funds available.”

The USDA has released an initial summary of the final rule, which includes the following highlights:

The cost-benefit analysis estimates that total expenditures over 15 years will be $461 million.

BCAP will reduce the financial risk for producers who support emerging biofuels markets—crops including but not limited to switchgrass, miscanthus, fast-growing woody poplar, jatropha, algae, energy cane and pongamia.

Biomass must be certified to have been collected and harvested only with an approved conservation, forest stewardship or similar plan to protect soil and water quality and preserve land productivity into the future.

Eligible materials may not qualify for matching payments if UDSA determines that in those distinct localities that the materials are used for pre-existing markets.

The eligibility of both woody and herbaceous biomass for energy purposes is fully maintained, and the objectives of heat, power, biofuels and biobased products all remain supported by BCAP, as required by statute.

Prior participants are not penalized. Previous participation counts against the "clock," but the clock stopped between the last matching payment received under the notice of funds availability and the next matching payment received after the final rule.

Woody eligible material collected or harvested must come directly from the land and if outside BCAP project areas must be a byproduct of preventive treatments that are removed to reduce hazardous fuels, to reduce or contain disease or insect infestation or to restore ecosystem health.

Requirements on arm's length transactions/related party transactions are replaced with a requirement that eligible material must be purchased at fair market prices regardless of the relationship between buyer and seller. This provision allows BCAP participation for start-up and other vertically integrated operations, but prevents efforts to defeat the purpose of BCAP by inflating biomass prices to gain higher matching payments.

 

Biomass Power & Thermal will provide more information on the BCAP final rule and reaction to the rule as it becomes available.

 

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