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Biomass Crop Assistance Program Final Rule Major Disappointment

October 26, 2010

The final rule for the Biomass Crop Assistance Program is scheduled for official publication in the Federal Register on October 27.  The final rule was addressed by USDA Secretary Tom Vilsack last Thursday as part of a set of bioenergy policies.

NSAC submitted comments to USDA on the BCAP proposed rule back in April of this year.  Our general assessment of the final rule?  It includes several important positive steps forward, but overall it is very disappointing.

The 2008 Farm Bill provision for the Biomass Crop Assistance Program (BCAP) and the accompanying Manager’s Statement of congressional intent for BCAP clearly spelled out that BCAP’s primary focus should be –

“ To promote the cultivation of perennial bioenergy crops that:

(a) show exceptional promise for producing highly energy-efficient bioenergy or biofuels;
(b) preserve natural resources; and
(c) are not primarily grown for food or animal feed.”

The farm bill did not dictate which agency would administer the program.  Once at USDA, the job was given to the Farm Service Agency (FSA).  FSA’s first action, without a regulation and without an environmental impact study and without seeming concern for federal spending controls, was to turn a secondary provision in BCAP for the collection, harvest, storage, and transportation (CHST) of biomass into an unlimited “cash cow” for matching payments for the delivery of just about anything taken out off forest and agricultural land that could be used as fuel.

In just three months, FSA obligated $250 million in subsidies, and the proposed rule projected payments of over $2 billion, a staggering sum for a program estimated to cost $70 million over five years when Congress approved the 2008 Farm Bill.

The result was an outcry from the forest products sector as the BCAP subsidy diverted for burning bark, mulch, timber and other feedstocks for existing products.  There was a similar outcry by the nursery industry.  There was also an outcry from the environmental sector, fearing forest destruction from lack of oversight of forest stewardship plans and complete omission of the provision from FSA’s environmental review.

In addition, earlier this year Congress made a $50 million cut to the BCAP budget, using the money saved to offset the cost of emergency farm loans.

Meanwhile, while all this was going on and more than two years after the Farm Bill’s enactment, FSA had not yet implement the provision in BCAP that was the main thrust of the program: to provide support for projects assisting farmers to establish the next generation of perennial bioenergy crops.

In the final rule,  FSA does give lip service to the potential importance of BCAP as measure that “ . . . could encourage landowners to consider switching from familiar revenue-generating crops to new, unconventional, non-food, non-feed crops.”   These crops should be developed if the U.S. is going to draw on our agricultural and natural resource base for energy feedstocks.   But the final rule does little to ensure achievement of that goal.

To be sure, the final rule includes a few improvements over the proposed rule.  CHST participants will now need to have a conservation or forest stewardship plan covering sustainable harvesting of biomass, though there are no criteria for approval and certification the plan was followed is the responsibility of industry, not USDA.  CHST payments will no longer be made for biomass that has existing higher value local markets – with specific mention of mulch, fiberboard, nursery media, lumber and paper.  Payments for biomass collected from private forestlands will now be limited to materials that are byproducts of preventative treatments to reduce hazardous fuels, disease or insect infestations, or to restore ecosystem health.

Despite these steps forward, the major focus of the final rule and BCAP funding is still on subsidizing the removal of biomass from agricultural lands and forestland with minimal conservation requirements.  FSA appears to have determined that it must make a 2-year matching payment up to the maximum payment allowed of $45 per ton for any eligible material delivered to a biomass conversion facility.   This despite the fact the farm bill makes the payment rate discretionary.

In addition, the final rule subsidizes the removal of corn stover and many other crop residues from agricultural land, despite farm bill language excluding commodity crops.  Residue removal is approved with no clear or effective measures to assess and control increases in soil erosion, decreases in soil quality, the loss of soil carbon, or the potential increase in water pollution.  FSA calls for a minimal conservation plan for each participant but provides no information in the rule that the agency has any criteria for approving the plans or that it will ensure that even these minimal requirements are being implemented.

As for BCAP projects to grow energy crops, the final rule gives no priority for perennial crop projects.  Annual crops that may have no particular environmental advantage are welcome to take BCAP funding.  In fact, there will be no competitive process at all, and FSA intends to approve any project on a first come, first served basis.  That non-competitive process also seems to suggest that there is no particular floor or ceiling to federal spending on the projects.

The final rule recommends that the Conservation Reserve Program conservation plan be used as the “model” for BCAP project conservation plans, even though CRP is a program that removes land from agricultural production, not jump start new production and new production systems.

In an absurd provision, FSA includes algae as a “non-woody perennial crop” and then goes even further by designating animal wastes, food and yard wastes, and demolition and construction debris as “eligible crops” for BCAP projects.  “Crops” evidently now must be defined in the farm bill from here on out, lest manure becomes commonly understood to be a crop.

FSA also announced that it will set annual payments to producers for BCAP projects based on the soil rental rates for agricultural land and applicable marginal pasture rental rate for all other agricultural lands, as well as providing an open-ended set of “incentive” payments or premiums that are not specified in the final rule.

In addition to weak or missing environmental criteria, the final rule also does nothing to prioritize local ownership as a means of enhancing the farm and rural development payoff from the program, as called for in the farm bill.

In the final analysis, despite some positives, the final rule is a major disappointment.  The end result of this rule could be increased pollution and loss of natural resources with little net gain to the nation’s energy budget.  We hope not, and indeed improvements at the more detailed implementation level may still be possible and intended.  But the rule unfortunately makes such an effort an uphill struggle.

Categories: Conservation, Energy & Environment, Grants and Programs

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