USDA to tweak BCAP

By Anna Austin
Posted February 18, 2010, at 9:13 a.m. CST

The Biomass Crop Assistance Program proposed rule is finally out, and seems to have revived some interest and enthusiasm in the program. At the same time, however, many are anxious for the proposed changes to be finalized, for further clarifications and for the current freeze on the program to cease.

Without warning, as of Feb. 8, the USDA terminated collection, harvest, storage and transport (CHST) payments and indicated new applications for the payments would not be accepted until the final rule is in place.

Among several new provisions of the rule is a possible prohibition on wood waste and residue on federal and nonfederal land that otherwise might be used for higher value products. Kent Politsch, public affairs branch chief for USDA-Farm Service Agency, said the prohibition proposal resulted because of concerns raised by segments of the wood industry, specifically the pulp and pressboard/fiberboard manufacturers. "They said that the BCAP collection, harvest, storage and transport matching funds were paying for forest items-chips, bark, excess wood, stumps and limbs that were knocked down in the forest and were generally cleaned up afterward-and therefore directly increasing prices and competition for a market that was already established, mostly the fiberboard industry," he said.

CHST funds allow matching payments to eligible material owners of $1 per $1 paid per ton by the biomass conversion facility (BCF) to the producer, up to $45 per dry ton for a time limit of two years after the first payment is made. In the case of particleboard makers, CHST funds could essentially double the usual price paid for materials they utilize in order to maintain their material streams.

Politsch said the original intent of Congress allowing wood waste and residue to qualify for CHST funds was to appeal to the wood supply industry to clean up unwanted debris that they assumed had no or little market value. "The fiberboard industry responded by saying that was an incorrect assertion, and that there was already a market value for that stuff," he said.

"We support BCAP; it's a great idea-but not if all that is really going to happen is that you'll pay companies double for the materials they're already selling to somebody," said Composite Panel Association President Tom Julia. "There'd be no incentives to go out and develop a new fuel source when someone can get double what they're getting now by selling it to somebody else."

Julia would also like to see a more specific list of eligible materials. "We're concerned that there are still, even though it's generally supportive of concepts we've enunciated, some that aren't specific enough," he said. "There should be some very bright lines for what materials are eligible for subsidy, and what are not. If the draft has too much ambiguity and subjectivity soon you'll have people trying to take advantage of the system in a way they shouldn't. Vagueness is a prescription for mischief. We don't want to come back in three or six months and fight this battle again because someone has discovered a back door to access our materials."

Aside from a prohibition on certain wood materials, another proposed change in the rule is to increase the acceptable moisture content of materials received. The USDA reported that many respondents didn't agree with measuring biomass deliveries moisture levels to meet the dry-ton measurement standard, a common industry practice is to measure in terms of green tons, which are generally assumed to possess a moisture level of 45 percent to 50 percent. In the rule, it is proposed to modify the requirement for moisture testing and adopt the industry standard.

Although not definitive, BCAP does have an estimated spending cap. The USDA reported it intends to cap the cost of the BCAP program at $2.6 billion, including $2.1 billion for matching payments for biomass materials over the next four years, $306 million for crop establishment over the next three years, and $219 million for annual payments over the next 17 years.

The public comment period for the proposed ruling ends at the beginning of April, and the USDA is confident the kinks will be worked out in the long term. "It will take some time, there will be some hills, valleys and bumps in the road," Politsch said. "People are going to get upset along the way, but it will settle down be a very successful program."