USDA to accept applications for BCAP matching payments

By Anna Simet and Erin Voegele | June 10, 2014

The USDA has published a notice of funds availability (NOFA) for the Biomass Crop Assistance Program. According to the notice, the USDA will provide $12.5 million in BCAP matching payments this year. No fiscal year (FY) 2014 funds will be available for establishment activities for project areas, except for payments under existing contracts. In addition, no FY 2014 funds will be available for new project areas this year.

In a statement, the USDA said the 2014 Farm Bill requires several regulatory updates to BCAP. As such the resumption of payments for starting and maintaining new sources of biomass (project areas) has been deferred until a later date when the regulatory updates occur. Those components of the BCAP are currently expected to be in place next year.

In the NOFA, the USDA said it will accept applications from energy facilities interested in receiving forest or agricultural residues to generate clean energy under BCAP from June 16 through July 14. According to the NOFA, the 2014 Farm Bill narrowed the definition of eligible materials under BCAP, including the exclusion of bagasse and some other materials. In addition, eligible woody biomass must now be harvested directly from the land. The 2014 Farm Bill also lowered the matching payment cap, giving the USDA authority to provide participants matching payments at a rate of up to $1 for each $1 per ton provided to the biomass conversion facility (BCF), not to exceed $20 per dry ton for a period of two years. The program was previously authorized to make matching payments of up to $45 per dry ton.

Due to time limitations for FY 2014 funding, the notice said the USDA Farm Service Agency is targeting matching payment funding to areas in which agricultural land and public forestland impacts allow BCAP to meet present and future bioenergy production goals while further goals such as forest health.

The 2014 Farm Bill authorized BCAP with $25 million in annual funding, and specifies that between 10 percent and 50 percent of that annual budget must be used for BCAP matching payments. In FY 2014, the USDA will allocate the maximum amount, $12.5 million, to matching payments. The remaining $12.5 million will be expended on technical assistance activities. According to the NOFA, technical assistance will be used form the implementation, operation, compliance, monitoring and maintenance for all components of BCAP, with a portion of the FY 2014 funding used to ensure contract performance and acquire technical expertise for the conservation of natural resources on the land. Technical assistance will also include activities, processes, tools and functions needed to support the delivery of technical services such as resource inventories, training, data, technology, monitoring and effects analyses. The notice also states that the USDA FSA plans to use the technical assistance money to establish either interagency agreements or modify a current contract for the required services.

Within the NOFA, the USDA said there are several factors that lead to the focus on matching payments for FY 2014 funding rather than project areas. “In addition to the short time remaining in the 2014 planting cycle, the process to establish conservation plans for project areas, sign up for two separate contracts, review land eligibility, and submit project area proposals, this proposal evaluation and selection process takes considerable time for both the producer and FSA to be completed this fiscal year,” said the USDA in the notice. “By comparison, the short time remaining before the end of FY 2014 does allow adequate time to qualify BCFs, contract with material owners, collect or harvest the eligible materials, apply for payment, and deliver materials to qualified BCFs.”

According to the notice, eligible BCFs must have feedstock suppliers that will collect or harvest and deliver eligible biomass materials. This includes agricultural or crop residues, including woody residues from orchard waste that do not have an existing higher-value product market. Eligible materials also include woody materials from public forestland that are a byproduct of preventive treatments for hazardous fuel reductions or containment or reduction of disease or insect infestations and do not have an existing market in that region. BCFs must be qualified by FSA before eligible material owners can deliver the eligible material or apply for BCAP matching payments.  

Kyle Althoff, president of Equinox LLC, said BCAP will provide a unique opportunity to enhance the returns of suppliers for bioconversion facilities, such as some of the new cellulosic biofuel plants coming on line. The administration was quick to implement this year’s BCAP program, he pointed out, as the 2014 Farm Bill was just signed a few months ago, and the federal government fiscal year ending in September.  

This BCAP announcement provides matching payments up to $20 per ton for producers delivering to BCFs by Sept. 30.  Given crop harvesting timelines, Althoff said, this first BCAP enrollment will likely provide the most opportunities for producers with woody biomass. “However, BCAP is a five-year program in the Farm Bill, with $25 million annually that includes both matching payments and establishment payments.  The establishment program can provide funding for dedicated energy crops like switchgrass and miscanthus, including cost share on planting as well as annual payments.”

Althoff said he expects that the rules for the 2015 establishment program should be released in the coming months. “Interested bioconversion facilities should be reviewing the previous BCAP requirements now so that they can prepare their application materials, feasibility studies, and conservation plans to improve the chances of approval,” he added.

Additional information is available in the Federal Register filing.