[Federal Register Volume 75, Number 207 (Wednesday, October 27, 2010)]
[Rules and Regulations]
[Pages 66202-66243]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-26871]
[[Page 66201]]
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Part III
Department of Agriculture
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Commodity Credit Corporation
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7 CFR Part 1450
Biomass Crop Assistance Program; Final Rule
Federal Register / Vol. 75 , No. 207 / Wednesday, October 27, 2010 /
Rules and Regulations
[[Page 66202]]
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DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1450
RIN 0560-AH92
Biomass Crop Assistance Program
AGENCY: Commodity Credit Corporation and Farm Service Agency, USDA.
ACTION: Final rule.
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SUMMARY: This rule implements the new Biomass Crop Assistance Program
(BCAP) authorized by the Food, Conservation, and Energy Act of 2008
(the 2008 Farm Bill). BCAP is intended to assist agricultural and
forest land owners and operators with the establishment and production
of eligible crops in selected project areas for conversion to
bioenergy, and the collection, harvest, storage, and transportation of
eligible material for use in a biomass conversion facility. This rule
specifies the requirements for eligible producers and participants,
biomass conversion facilities, and eligible renewable biomass crops and
materials.
DATES: Effective Date: October 27, 2010.
FOR FURTHER INFORMATION CONTACT: Martin Lowenfish, U.S. Department of
Agriculture (USDA), Farm Service Agency (FSA), Conservation and
Environmental Programs Division, Mail Stop 0513, 1400 Independence
Ave., SW., Washington, DC 20250-0513; telephone 202-205-9804; Persons
with disabilities who require alternative means for communication
(Braille, large print, audiotape, etc.) should contact the USDA Target
Center at 202-720-2600 (voice and TDD).
SUPPLEMENTARY INFORMATION:
Background
In 2005, Congress enacted the Renewable Fuel Standard that requires
7.5 billion gallons of corn starch ethanol in the national fuel supply
by 2012. In 2008, Congress revised these goals by requiring 36 billion
gallons of advanced biofuels in our national fuel pool by the year
2022. At present, stakeholders have far exceeded the earlier
Congressional goals, producing approximately 10 billion gallons of corn
starch ethanol at present, but the affordable production of next-
generation advanced biofuels has not yet kept pace with the revised
targets. These next-generation fuels require next-generation crops, and
these unconventional crops typically require several years to become
established. This is the principal goal of BCAP.
BCAP is a primary component of the domestic agriculture, energy,
and environmental strategy to reduce U.S. reliance on foreign oil,
improve domestic energy security, reduce carbon pollution, and spur
rural economic development and job creation. While there are many
complexities in the development of a national strategy for biofuels--
the pursuit of more economical conversion technologies, transportation
infrastructure upgrades, expanded and affordable consumer access,
financial risk mitigation tools--the success of all of these efforts
ultimately must rest upon a foundation of a strong biomass feedstock
source.
The creation of that source, however, faces the classic chicken-
and-egg challenge. An established, large-scale energy crop source must
exist if commercial-scale biomass facilities are to have sufficient
feedstock supplies. Conversely, a strong consumer base to purchase the
crop must exist if profitable feedstock production is to occur. Also
just as many such crop types need several years to become established,
many promising biomass conversion technologies require similar time
before proceeding to commercial scale. BCAP is designed to serve as
catalyst to unite these multiple dynamics. By providing risk mitigation
and production incentives, BCAP will encourage landowners to consider
switching from familiar, revenue-generating crops to new,
unconventional, non-food, non-feed crops that must be ready for a
nascent marketplace.
Because BCAP is a voluntary program, its enrollment requirements
cannot have such hurdles beyond standard practice so that interested
participants would not instead choose to remain in conventional crop
production. While BCAP is fundamentally a crop cultivation program,
other considerations such as wildlife and conservation protection are
nevertheless important parts of BCAP.
As BCAP is implemented, the public debate will continue on what may
be the best approach for meeting our national energy strategy. There
are no perfect solutions in the pursuit of these goals, no single
feedstock that offers the affordability, reliability, regionality, and
sensitivity to the environment, and transportability, in equal ways. It
is not the feedstock, nor the technology, but the ability of both to
meet the standards of our national strategy that is paramount. And as
we pursue the best course of action for energy independence and
environmental improvement, actions must begin today to forge a new path
forward, accompanied by concurrent preparations for second and third
generation choices built upon the experiences of the first-generation
achievements in the cultivation of biomass crops.
Section 9001 of the 2008 Farm Bill (Pub. L. 110-246) authorizes
BCAP to assist agricultural and forest land owners and operators with
the collection, harvest, storage, and transportation of eligible
material for use in a biomass conversion facility and to support the
establishment and production of eligible crops for conversion to
bioenergy in selected project areas. The 2008 Farm Bill authorizes such
sums as are necessary to carry out BCAP. However, the 2010 Supplemental
Appropriations Act (Pub. L. 111-212) limited BCAP funding to $552
million in fiscal year 2010 and $432 million in fiscal year 2011. This
final rule, which implements BCAP, reflects comments received on
previous notices and on a proposed rule, as described below. FSA will
administer this program on behalf of the Commodity Credit Corporation
(CCC).
On May 5, 2009, President Barack Obama issued a Presidential
directive establishing a Biofuels Interagency Working Group, chaired by
the Secretaries of Agriculture and Energy and the Administrator of the
Environmental Protection Agency. Among other goals, the Presidential
directive laid the groundwork for a policy development process that
would aggressively accelerate the development of advanced biofuels
(published in the Federal Register on May 7, 2009 (74 FR 21531-21532)).
One aspect of the larger effort outlined in the directive was the
issuance of guidance and support related to the collection, harvest,
storage, and transportation of eligible materials for use in biomass
conversion facilities--a component of BCAP.
On June 11, 2009 (74 FR 27767-27772), CCC published a BCAP notice
of funds availability (NOFA) in the Federal Register for the
collection, harvest, storage, and transportation of eligible materials.
On February 8, 2010, (75 FR 6264-6288), CCC published the BCAP proposed
rule. The proposed rule terminated the BCAP NOFA.
FSA also held a series of public meetings, as described in the
notice published on May 13, 2009 (74 FR 22510-22511) and solicited
comments, to collect public input needed to prepare an environmental
impact statement (EIS) for BCAP. Specifically, CCC published four
specific National Environmental Policy Act (NEPA)-related notices on
BCAP in the Federal Register. A notice of intent (NOI) to prepare a
programmatic EIS (PEIS) was published on October 1, 2008 (73 FR
[[Page 66203]]
57047-57048) to solicit public input on program implementation
alternatives to be analyzed in the document; approximately 100 comments
were received. CCC published an amended NOI on May 13, 2009 that
identified the alternatives to be analyzed in the PEIS based on the
input received on the previous NOI and announced six public scoping
meetings around the country that began on May 29, 2009, and ended on
June 11, 2009. CCC published a notice of availability of the draft PEIS
on August 10, 2009 (74 FR 39915) or a 30-day public comment period;
over 600 comments were received from environmental groups, Federal
agencies, organizations, and the general public. The Environmental
Protection Agency announced the availability of the final EIS on June
25, 2010 (75 FR 36386-36387) for public comment.
Comments from the public meetings and BCAP environmental notices
were reflected in the BCAP proposed rule and in this final rule.
The BCAP proposed rule and this final rule cover the whole BCAP,
including both the provisions that provide matching payments for
collection, harvest, storage, and transportation of materials and the
provisions that provide payment for the establishment and production of
biomass crops in selected project areas.
The core structure and purposes of BCAP in this final rule are
largely unchanged from those stated in the proposed rule. In response
to comments received on the proposed rule, this final rule makes minor
amendments to BCAP, as it was described in the proposed rule. This rule
clarifies definitions and eligibility requirements and adds new
provisions to enhance program integrity. Specific changes include:
Biomass conversion facilities will be required to certify
that eligible materials that are not crop residues are byproducts of
preventative treatments that are removed to reduce hazardous fuels, to
reduce or contain disease or insect infestation, or to restore
ecosystem health.
Related party transactions may be eligible for matching
payments.
Biomass conversion facilities will be required to treat
all parties equally and pay fair market rates; this is intended to
prevent biomass conversion facilities from paying different prices
based on whether a person is receiving BCAP payments or not.
BCAP requires a conservation plan, forest stewardship
plan, or equivalent plan as an eligibility requirement to receive
matching payments. Equivalent plans were previously included in some
but not all references to plans in the proposed rule. In the proposed
rule, compliance with existing plans was required for matching
payments; however, a plan was not required if one did not already
exist. Now conservation plan, forest stewardship plan, or equivalent
plans are required for all BCAP payments.
As specified in the 2008 Farm Bill, BCAP participants may
receive matching payments for a maximum of 2 years; this rule specifies
that CCC will take into account the NOFA period in an equitable manner
consistent with the 2008 Farm Bill.
Although, the proposed rule provided alternatives for
different payment rates based on type of material, BCAP will provide a
single rate of $1 for each $1 per dry ton provided by the biomass
conversion facility, up to $45 per dry ton, with no ``tiered'' payments
for different types of biomass. Similarly, provisions in the proposed
rule for payments for wood wastes and wood residues converted to heat
or power only above historical usage baselines cannot be implemented.
This rule clarifies that to qualify for payment, that
eligible materials and renewable biomass must be organic materials that
are harvested or collected from the land, which was in the proposed
rule. Specific references to vegetative and woody waste products that
would not meet those requirements are not included. This rule clarifies
the section on eligible materials to include specific requirements that
are also clearly defined in the definitions section.
Reductions to annual payments for sale of eligible crops
and materials will be tiered based on the use for which the material or
crops from the contract acres was sold and matching payments were paid.
Conversion to advanced biofuels will result in the smallest reduction,
while uses for purposes other than conversion to heat, power, biobased
products, or advanced biofuels will result in the highest reduction.
This rule also makes technical corrections and editorial
changes that reflect both comments received and FSA's review of the
rule.
This document describes BCAP in detail, then provides a detailed
discussion of comments received on the proposed rule and FSA's response
to those comments, and then a list of specific section-by-section
changes made to the regulatory provisions in response to the comments
received.
BCAP Overview
BCAP supports two main types of activities. First, it provides
funding for agricultural and forest land owners and operators to
receive matching payments for certain eligible material sold to
qualified biomass conversion facilities for conversion to heat, power,
biobased products, or advanced biofuels. These payments are referred to
as ``matching payments.'' Matching payments will assist producers with
the cost of collection, harvest, storage, and transportation of certain
eligible material to a qualified biomass conversion facility. Such
payments to a particular participant can continue for up to 2 years
after the first payment is issued. Second, BCAP provides funding for
producers of eligible crops of renewable biomass within specified
project areas to receive establishment payments of not more than 75
percent of the cost of establishment of eligible woody and non-woody
perennial crops, and annual payments for up to 5 years for the
production of eligible annual and non-woody perennial renewable biomass
crops and for up to 15 years for the production of eligible woody
perennial renewable biomass crops. These are referred to as
``establishment payments and annual payments,'' respectively. To be
eligible for payment, the establishment and production activities must
take place in designated project areas, which may be proposed to CCC by
biomass conversion facilities or by groups of producers. Producers in
project areas may be eligible for both types of payments; producers
outside the project areas are only eligible for matching payments. A
table is provided later in this document summarizing the major
eligibility requirements for both types of payments.
Definitions and Terms Used in This Rule
As defined in this rule, ``advanced biofuel'' means fuel derived
from renewable biomass other than corn kernel starch, including
biofuels derived from cellulose, hemicellulose, or lignin; biofuels
derived from sugar and starch (other than ethanol derived from corn
kernel starch); biofuel derived from waste material, including crop
residue, other vegetative waste material, animal waste, food waste, and
yard waste; diesel-equivalent fuel derived from renewable biomass
including vegetable oil and animal fat; biogas (including landfill gas
and sewage waste treatment gas) produced through the conversion of
organic matter from renewable biomass; and butanol or other alcohols
produced through the conversion of organic matter from renewable
biomass and other fuel derived from cellulosic biomass. That
definition, which is specified in the 2008 Farm Bill, did not change
from the proposed rule.
[[Page 66204]]
To be considered a qualified biomass conversion facility, one of
the activities that meets the criteria for qualification is converting
eligible renewable biomass material to a biobased product. The 2008
Farm Bill defined biobased products as a product determined by the
Secretary to be a commercial or industrial product (other than food or
feed) that is--``(A) composed, in whole or in significant part, of
biological products, including renewable domestic agricultural
materials and forestry materials; or (B) an intermediate ingredient or
feedstock.'' CCC will administer BCAP consistent with USDA's standards
for biobased products specified in the BioPreferred Procurement
Program, which establishes a minimum biobased content for specific
items and generic groupings of biobased products and excludes certain
biobased products including (1) motor vehicle fuels (biofuels) and
electricity (heat and power); and (2) products with significant
national market penetration as of 1972 (7 CFR 2902.5(c)).
This final rule also adds a definition of ``biofuel'' to mean ``a
fuel derived from renewable biomass.'' Corn ethanol would be included
in the definition of biofuel, but not the definition of advanced
biofuel.
This rule uses the terms ``contract acreage'' and ``contract
acres'' to mean land that is eligible for establishment payments and
annual payments under Subpart C of the regulation. Some eligible
materials only qualify for matching payments under Subpart B if they
are grown on contract acres.
This rule uses the term ``eligible material'' for renewable biomass
that may qualify for the matching payment component of BCAP and
``eligible crop'' for renewable biomass that may be eligible for the
establishment payments and annual payments component of BCAP. The 2008
Farm Bill uses these two terms in this way and defines them as
including different kinds of renewable biomass.
The purpose of this regulation is to provide incentives for the
cultivation of new biomass for new markets rather than divert biomass
from existing markets. This rule clarifies the definition of ``higher-
value product'' as an existing market product that is comprised
principally of an eligible material or materials and, in some distinct
local regions outside of project areas, as determined by CCC, has an
existing market as of the date of publication of this rule in the
Federal Register. Higher-value products may include, but are not
limited to, products such as mulch, fiberboard, nursery media, lumber,
or paper, or a product manufactured from eligible materials from which
eligible materials must be separated in order to be used for heat,
power, biobased products, or advanced biofuels. Eligible materials that
are considered to be used for a higher value product may differ
according to region and may qualify for matching payments if no higher
value product market exists in that region. Higher-value products may
include products such as mulch, fiberboard, nursery media, lumber,
paper, or other materials.
As specified in the 2008 Farm Bill and in this rule, the eligible
material owner may be a person or legal entity who is (1) a producer of
an eligible crop or (2) has the right to collect or harvest eligible
material. A qualified biomass conversion facility that meets those
requirements may be an eligible material owner and receive BCAP
payments under subpart B of the regulation.
The term ``conservation district'' is used as defined in 7 CFR part
1410, the regulations for the Conservation Reserve Program (CRP).
This rule uses the term ``participant'' for the matching payments
component of BCAP and the terms ``producer'' and ``participant'' for
the establishment payments and annual payments component of BCAP. The
distinction is an eligible participant for matching payments is not
necessarily the person or legal entity who produced the material but
may be the person who owns it or has the authority to collect or
harvest and sell it to the biomass conversion facility. However, in all
cases there may only be one BCAP payment made for any base material and
the person claiming the BCAP payment must be the person who was
entitled to receive and negotiate the payment being matched. In other
words, all BCAP producers are participants, but not all BCAP
participants are producers. Participants are those individuals or
entities who have been approved and are bound to perform under a
contract for matching payments, establishment payments, or annual
payments. The term ``producer'' means either an owner or operator of
BCAP project acreage that is physically located in a BCAP project area,
or a producer of an eligible crop produced on that acreage.
This rule uses the term ``contract'' and ``agreement.'' A contract
is between CCC and the participant for BCAP payments. The contract is
legally binding on the participants in BCAP and specifies what the
producer must do and the resulting payments that CCC will make to the
producer or other BCAP participant entitled to receive a payment. An
``agreement'' is between CCC and a qualified biomass conversion
facility or a project area sponsor. The agreement specifies what the
qualified biomass conversion facility or the project area sponsor plans
to do and how it will support the establishment and production of
eligible crops for conversion to bioenergy in the BCAP project areas
including the type of renewable biomass that will be used and the
planned conversion methods of renewable biomass. In addition, there may
be agreements between CCC and a qualified biomass conversion facility
for the matching payments, which include items such as obligations of
the facility to provide a purchase list, receipts and scale tickets for
the eligible material owners and agreement to provide facility address
and contact information to the general public.
Matching Payments
Matching payments will be available for the delivery of certain
eligible material to qualified biomass conversion facilities to a
producer of an eligible crop or a person with the right to collect or
harvest eligible material.
The 2008 Farm Bill provides for matching payments at a rate of $1
for each $1 per dry ton paid by the qualified biomass conversion
facility, in an amount up to $45 per dry ton, for a period of 2 years.
The 2008 Farm Bill also provides that biomass conversion facilities are
those that convert, or propose to convert, renewable biomass into heat,
power biobased products, or advanced biofuels.
For the matching payment calculations, CCC proposed three options.
As discussed in the Summary of Comments section below, after
consideration of comments received, an amended version of the first
option was selected, and is the one specified in this final rule.
CCC will provide matching payments at the rate of $1 for each $1
per dry ton paid by the qualified biomass conversion facility to the
eligible material owner for delivery of eligible material that qualify
for payment to the facility in an amount not to exceed $45 per dry ton.
Participants will be eligible for payments for a period of 2 years
beginning from the date of their first matching payment is made after
the effective date of this rule. CCC will determine how to take into
account participation in the NOFA period. At the least, the 2-year
period will be considered stopped during the period between the end of
matching payments received during the operation of the NOFA and the
beginning of CCC matching payments for new deliveries
[[Page 66205]]
by the participant. If title to the material from a particular farm or
locale is transferred to another party, the rule provides that the
successor is subject to the 2-year requirement applicable to the
previous participation at that locale. Otherwise, the 2-year
requirement could be easily avoided contrary to the 2008 Farm Bill.
Generally, however, the 2-year period is producer specific. If, for
example, the producer changes delivery points after a year, the time
period does not start anew.
Qualified Biomass Conversion Facility
In order for a delivery of eligible materials to a biomass
conversion facility to qualify for a BCAP payment, the receiving
biomass conversion facility must be qualified for BCAP. To become
qualified, the biomass conversion facility must enter into an agreement
with CCC, through the FSA State office in the State where the facility
is physically located.
For BCAP, a biomass conversion facility is a facility that converts
or proposes to convert renewable biomass into heat, power, biobased
products, or advanced biofuels. For the purposes of BCAP, advanced
biofuels do not include ethanol derived from corn kernel starch,
because the 2008 Farm Bill specifically excludes it.
A biomass conversion facility does not have to be a project sponsor
for the establishment payment and annual payment component of BCAP or
be in operation to submit a successful application for qualification.
For any facility, whether or not yet in operation, the entity
requesting that a facility become qualified must provide proof of all
applicable Federal, State, local, and Tribal permits and licenses
required for operation or proof of application completions or letters
of renewal submissions from the applicable governmental entity.
Applicable permits and licenses may include, but are not limited to,
business licenses, air quality permits, water discharge permits, storm
water permits, or Bureau of Alcohol, Tobacco, Firearms and Explosives
registrations.
Each biomass conversion facility must enter into a separate
agreement with CCC regardless of whether a single owner has multiple
facilities. CCC will issue a unique facility identification number to
each qualifying biomass conversion facility. In addition, when a
biomass conversion facility agrees to become ``qualified,'' CCC will
make general contact information available to the public through FSA
county offices and on the FSA Web site.
Eligible Material Owners, Application for Matching Payments
To be eligible for matching payments, the eligible material owner
must apply at an FSA county office and receive approval for that
application before delivering the eligible material to the qualified
biomass conversion facility. The qualified biomass conversion facility
must issue a receipt or invoice on the date of delivery to the eligible
material owner. The receipt will be the basis for the matching payment
calculation.
The material owner will be eligible for the payment if the owner
had the legal title to the material for collection or harvest, such as
the operator or producer conducting farming operations on private land,
or any other person designated by the owner of the private land.
Consistent with the 2008 Farm Bill, the eligible material owner does
not have to own the land where the eligible material was collected or
harvested as a condition of eligibility. The eligible material owner
may be a person with the right to collect or harvest eligible material,
and who has the risk of loss with respect to that material, on certain
Federal lands pursuant to a contract or permit with the U.S. Forest
Service or Bureau of Land Management, such as a timber sale contract.
Eligible material owners must submit the documentation from the
qualified biomass conversion facility to the FSA county office to be
eligible for matching payments. The measure for the eligible material
weight is a ``dry ton,'' the weight at zero percent moisture content.
The facility is required to have the necessary equipment (such as a
moisture meter) to calculate the equivalent dry ton weight of the
delivered material.
Eligible material owners may also be eligible to participate under
the ``establishment payments and annual payments'' component of BCAP;
however, eligible materials may differ from eligible crops and the
annual payment that is received by a participant in that component will
be reduced when a matching payment is issued. The ``establishment
payments and annual payments'' component of BCAP is discussed later in
this rule. If an eligible material owner or producer wishes to avoid
the reduction in annual payment(s), the owner or producer must decline
the matching payment(s).
The NOFA imposed an ``arm's length transaction'' requirement to be
eligible for a matching payment. As discussed below in the Summary of
Comments section, based on comments received, those provisions have
been removed from this final rule. To achieve a fair price for all
participants, provisions have been added requiring biomass conversion
facilities to pay a fair market value to all participants, regardless
of whether the participant is receiving BCAP payments or is a related
party.
An eligible material owner needs to meet the following requirements
to be eligible for a matching payment:
An eligible material owner must be one or more of the following:
A producer within a project area; or
A person or a non-Federal entity that has legal title to
an eligible material, including Indian tribes and tribal members.
An eligible material owner may request a matching payment at the
FSA county office after being approved to participate in the program
and after delivery of eligible material to a qualified biomass
conversion facility and receiving payment for that delivery.
However, eligible material owner(s) who meet the requirements
listed above are not eligible for a matching payment if:
Delivery is made or payment received for delivery before
the biomass conversion facility is qualified by CCC;
The eligible material owner did not receive approval from
CCC to be considered an eligible material owner for matching payment
from the FSA county office before delivery to the biomass conversion
facility;
The delivery contained ineligible material (for deliveries
of otherwise eligible material, none of the eligible material will
qualify for payment if it must be separated from other material which
may be the higher-value product after delivery to the biomass
conversion facility);
The eligible material owner that collects or harvests the
eligible material directly from the land sells the eligible material to
any other entity other than the qualified biomass conversion facility;
The eligible material owner does not present proof of
payment and proof of delivery date for delivery of the eligible
material;
The eligible material was collected or harvested from the
land not in accordance with the conservation plan, forest stewardship
plan, or equivalent plan;
The eligible material produced outside a project area may
be used to produce higher-value products;
The eligible material owner violates Executive Order
13112, ``Invasive Species;''
The eligible material owner knowingly supplied false
information;
[[Page 66206]]
The eligible material owner violated the associated
conservation, forestry, or equivalent plan related to the land that
produced the eligible material for which a matching payment is
requested; or
The formerly qualified biomass conversion facility failed
to comply with the agreement it entered into with CCC and, accordingly,
the agreement was terminated by CCC prior to delivery.
Eligible Materials
In general, eligible material is renewable biomass that qualifies
for the matching payment component of BCAP. For guidance to potential
eligible material owners and biomass conversion facilities, CCC will
provide a chart of eligible materials that qualify for matching
payments. The chart of eligible materials that qualify for matching
payments will be provided to the public via the FSA Web site at http://www.fsa.usda.gov/energy; an example of the chart is included below. The
chart is not exhaustive and will be periodically updated on the FSA Web
site by CCC--in accordance with the parameters established by the 2008
Farm Bill. Because the contents of the eligible material list that
qualify for payments are expected to change periodically, the list is
not included in the BCAP regulations. When there is recommendation for
an addition to the list of eligible materials that qualify for
payments, CCC will review the material to make determinations. The
review may include a site visit and comparison to related materials or
uses. CCC will review the recommendation to ensure that the new
material meets the requirements of the 2008 Farm Bill and the
provisions in this final rule. As described later in this rule,
eligible crops for the establishment payments and annual payment
provisions will include some additional crops not eligible for matching
payments and therefore not considered to be eligible materials.
Conditions Where Eligible Materials Will Qualify for Matching Payments
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Qualifies for matching payment?
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If collected or harvested by
separation from a higher-value
product collected or harvested
directly from the land
Eligible material If collected or harvested -------------------------------
directly from the land before before after
transport and delivery to the transport and transport and
biomass conversion facility delivery to delivery to
the biomass the biomass
conversion conversion
facility facility
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Forest thinnings............................. Y*............................... Y* N
Post-disaster debris......................... Y*............................... Y* N
Hardwood chips............................... Y*............................... Y* N
Softwood chips............................... Y*............................... Y* N
Cutoffs...................................... Y*............................... Y* N
Bark......................................... Y*............................... Y* N
Trees and shrubs without timber, lumber or Y*............................... Y* N
wood pulp value.
Trees and shrubs with timber, lumber or wood Y* non-Federal land (N Federal N N
pulp value. land).
Forbs such as sunflower and clover........... Y*............................... Y* N
Legumes...................................... Y*............................... Y* N
Non yard waste grasses....................... Y*............................... Y* N
Non yard waste vines......................... Y*............................... Y* N
Mosses....................................... Y*............................... Y* N
Crop residues, including Title I crop Y*............................... Y* N
residues.
Corn cobs.................................... Y*............................... Y* N
Corn stover.................................. Y*............................... Y* N
Sugarcane bagasse............................ Y*............................... Y* N
Rice hulls................................... Y*............................... Y* N
Nut hulls.................................... Y*............................... Y* N
Rice straw................................... Y*............................... Y* N
Wheat straw.................................. Y*............................... Y* N
Orchard waste and vineyard waste............. Y*............................... Y* N
Excluded from eligibility:
Title I crops............................
Algae....................................
Animal waste and byproducts (including
fats, oils, greases, and manure).
Food waste...............................
Yard waste...............................
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``Yes'' means material has been collected or harvested directly from the land in compliance with an approved
conservation plan, forest stewardship plan, or equivalent plan, and in compliance with that plan, and, that
eligible materials that are not crop residues are byproducts of preventative treatments that are removed to
reduce hazardous fuels, to reduce or contain disease or insect infestation, or to restore ecosystem health.
* ``Yes'' becomes ``no'' if CCC rules that, within that distinct local market, the product is being diverted
from higher-value (existing) markets.
There has been interest in and discussion about various materials
and whether or not they are considered to be eligible materials and
specifically whether they qualify to receive matching payments for
BCAP. For
[[Page 66207]]
example bagasse, rice hulls, nut hulls, corn cobs, whole trees, bark,
wood chips, sawdust, and black liquor. For some materials there is an
important distinction as to whether they meet the basic definition of
eligible material or whether they are a product versus a feedstock. A
determination about whether a material qualifies for matching payments
requires the item to be an eligible material and to meet the other
requirements of the BCAP regulations, for example the collection,
harvest, storage, transportation, and delivery requirements. Each of
the example materials listed in this paragraph are discussed below.
Bagasse has been discussed above. It is the fibrous residue that
remains after sugarcane stalks are crushed, is an eligible material,
but cannot qualify for matching payments because it is not collected
directly from the land, but rather it is separated from a higher-value
product, such as a Title I crop (sugar extraction) after delivery to
the facility, cannot qualify for a matching payment.
Hulls are eligible materials, but qualify for matching payments
only if it is collected or harvested directly from the land, or
separated from a higher-value product, in accordance with an approved
conservation or equivalent plan, before delivery to a biomass
conversion facility. Hulls separated from whole grain or nuts after
delivery to the processing facility cannot qualify for a matching
payment. Where they have not been separated by the farmer, the delivery
of the hulls is merely incidental to the normal marketing of the crop.
It is not a new collection or harvesting of the biomass at all.
Changing practices to merely separate the hulls, for example, early (at
the farm) will not, however lead to payment as that could itself be a
scheme or device in violation of BCAP if the only purpose was to
generate a BCAP payment.
Corn cobs are crop residues, and are eligible materials, but
qualify for matching payments only if they are collected or harvested
directly from the land, or separated from a higher-value product, in
accordance with an approved conservation plan or equivalent plan,
before delivery to a biomass conversion facility. Cobs collected not
directly from the land, but rather separated from a higher-value
product, such as a Title I crop (corn kernels) after delivery to a
biomass conversion facility, cannot qualify for a matching payment for
the reason we give above.
The same concerns apply with respect to forest matters. Under this
rule, whole trees or logs are eligible materials that qualify for
matching payments only if collected or harvested directly from the
land, in accordance with an approved conservation plan, forest
stewardship plan, or equivalent plan; are diseased, such as trees
infested by the bark beetle; are byproducts of preventative treatments
that are removed to reduce hazardous fuels; are removed to restore
ecosystem health; and have not been determined by the CCC as a higher-
value product in that market. The provisions of the 2008 Farm Bill
provided for the preventative treatment qualification with respect to
government land. However, that qualification is extended to trees or
logs on private land in this rule so as, consistent with the 2008 Farm
Bill, to avoid undue disturbance of forest lands consistent with the
positive environmental intent of BCAP and consistent with other
determinations specified in this final rule. This also reflects the
concept that BCAP is for the use of materials that would otherwise be
waste materials and that would go uncollected or unharvested. It is not
intended to upset existing market relationship. It is for these
reasons, on consideration of the comments, and further consideration of
the operation of the portion of BCAP under the NOFA, that CCC
determined that it is appropriate to apply this qualification to trees
or logs on private lands as well.
Whole trees that CCC has determined have a higher value, such as
for lumber or wood pulp, or have been removed without an approved
forest stewardship plan or equivalent plan, cannot qualify for matching
payments even if part of the tree is separated from the bulk of the
tree and burned or otherwise used for biofuel--see the explanation
given with respect to bagasse.
Accordingly, under this rule, bark is an eligible material that
qualifies for matching payments only if it is (1) collected or
harvested directly from the land, in accordance with an approved
conservation plan, forest stewardship plan, or equivalent plan, before
delivery to a biomass conversion facility, (2) separated from a higher-
value product, and (3) has not been determined by CCC as having a
higher-value product in that local market. The applicable provisions of
the 2008 Farm Bill relative to the third of these qualifications are
designed to generate new activities that will create biomass and not
disturb existing markets that rely on biomass and may have beneficial
effects of their own--such as the use of bark for mulch. This follows
that view to assure a genuine biomass oriented collection and
harvesting (one that would otherwise not occur) and also serves to
assure that BCAP stays within the dollar limits set by Congress. If CCC
determines that in a distinct local market, the bark is used for mulch,
or nursery media, the bark will not qualify for matching payments in
that market. Bark collected from processed trees after the trees are
delivered to pulp and paper facilities cannot qualify for matching
payments.
Wood chips are eligible materials that qualify for matching
payments only if collected or harvested directly from the land, or
separated from a higher-value product, in accordance with an approved
conservation plan, forest stewardship plan, or equivalent plan, before
delivery to a biomass conversion facility, and have not been determined
by CCC as a higher-value product in that local market. If CCC
determines that in distinct local markets, the wood chips are used for
products such as particle board, the chips cannot qualify for matching
payments in that market. Chips collected from delivered and processed
trees after the trees are delivered to pulp and paper facilities cannot
qualify for matching payments. Chips created in the field from diseased
trees for ease of transport of that biomass to a conversion facility
qualify for matching payments.
Sawdust is an eligible material that qualifies for matching
payments only if it is (1) collected or harvested directly from the
land, in accordance with an approved conservation plan, forest
stewardship plan, or equivalent plan, before delivery to a biomass
conversion facility, (2) separated from a higher-value product, and (3)
has not been determined by CCC as having a higher-value product in that
local market. Sawdust collected from processed trees after the trees
are delivered to a wood products facility cannot qualify for matching
payments under this rule. Sawdust collected directly from the
forestland before delivery to a facility may qualify for matching
payments. If CCC determines that in distinct local markets, the sawdust
can be used for higher-value products such as particle board, the
sawdust cannot qualify for matching payments in that market.
Black liquor, or pulp liquor, is an aqueous waste by-product of the
kraft process of pulp manufacturing that is comprised of lignin,
hemicellulose, and inorganic chemicals and used as fuel at these
facilities. Any eligible material used in the manufacturing process
that can be attributed to the creation of black liquor cannot qualify
for matching payment because the eligible materials (non-Federal
pulpwood trees) immediate, principal higher-value purpose is wood pulp
for paper manufacturing and the creation of the
[[Page 66208]]
black liquor is a byproduct of the production process.
Renewable biomass, as specified in the 2008 Farm Bill and in this
rule, includes materials, pre-commercial thinnings, or invasive species
from U.S. National Forest System land and U.S. Bureau of Land
Management (BLM) land that:
Are byproducts of preventive treatments that are removed
to reduce hazardous fuels, to reduce or contain disease or insect
infestation, or to restore ecosystem health;
Would not otherwise be used for higher-value products; and
Are harvested in accordance with applicable law and land
management plans and the requirements for old-growth maintenance,
restoration, and management direction of subsections 102(e)(2), (3),
and (4) of the Healthy Forests Restoration Act of 2003 (16 U.S.C. 6512)
and large-tree retention provisions of subsection (f).
In other words, renewable biomass harvested on National Forest
System and BLM land would be biomass removed for fire prevention
purposes, biomass unsuitable for commercial timber harvest, invasive
plant removal for treatment and control purposes, and diseased,
damaged, or immature biomass culled in accordance with appropriate
forest management practices. As discussed below in the Summary of
Comments section, in response to the comments, this rule requires a
conservation plan, forest stewardship plan, or equivalent plan for all
eligible materials that qualify for payment.
As specified in the 2008 Farm Bill, renewable biomass also includes
organic matter that is available on a renewable or recurring basis from
non-Federal land or land belonging to an Indian or Indian Tribe that is
held in trust by the United States including:
Renewable plant materials such as feed grains, other
agricultural commodities, other plants and trees, and algae; and
Waste material, including crop residue, other vegetative
waste material, including wood waste and wood residues, animal waste
and byproducts, including fats, oils, greases, and manure, food waste,
and yard waste.
However, that definition of renewable biomass from the 2008 Farm
Bill applies to more than one program in Title IX of the 2008 Farm
Bill. For BCAP specifically, the 2008 Farm Bill defines ``eligible
material'' more narrowly, excluding any crop that is eligible to
receive payments under Title I of the 2008 Farm Bill.
Crops that are eligible to receive payments under Title I of the
2008 Farm Bill would therefore not be included as eligible materials or
crops for BCAP. Any crop that is eligible to receive payments under
Title I of the 2008 Farm Bill or an amendment made by that Title
includes a crop of barley, corn, grain sorghum, oats, rice, or wheat;
honey; mohair; certain oilseeds such as canola, crambe, flaxseed,
mustard seed, rapeseed, safflower seed, soybeans, sesame seed, and
sunflower seeds; peanuts, pulse crops such as small chickpeas, lentils,
and dry peas; dairy products; sugar; wool; and cotton boll fiber.
In accordance with the 2008 Farm Bill, crop residue or other
similar byproducts of crop production and harvesting, such as stover,
straw, or hulls, are considered eligible materials that qualify for
payments under subpart B of the regulation provided that they are
collected, harvested, transported, and delivered as required by the
regulation. For such eligible material to qualify for payment,
conservation plans must be updated or created to address the removal of
the material.
The 2008 Farm Bill specifies that material removed from Federal
land is not eligible if it would otherwise be used for higher-value
products. Because the intent of BCAP is to spur new biomass for new
markets rather than divert biomass from existing markets, and in
response to comments, this rule extends the higher-value qualification
to material from all land not under a BCAP contract (including non-
Federal lands). The exemption for the BCAP contracts reflects that
market displacement issues should be taken into account in the BCAP
approval process.
The 2008 Farm Bill does not specifically exclude invasive or
noxious species in the definition of ``eligible material'' which is the
key term for the matching payment part of BCAP. After consideration of
this issue, those materials are eligible materials that qualify for
payment if collected, harvested, stored, transported, and delivered as
specified in all applicable local, State, and Federal requirements on
invasive and noxious species.
Accordingly, this rule includes invasive and noxious species as
eligible materials that qualify for BCAP matching payment purposes;
however, such eligible materials must be collected or harvested
according to a new or amended conservation plan, forest stewardship
plan, or equivalent plan and must not be collected, harvested, or
transported during reproductive or other phases that may propagate the
spread or establishment of those species. Eligible material owners must
contact State and local weed boards or authorities and their local USDA
Service Center staff about collecting, harvesting, storing, or
transporting invasive or noxious species to ensure compliance with
Executive Order 13112 (which addresses noxious weeds), USDA guidelines,
and other requirements. Eligible material owners that violate Executive
Order 13112 while carrying out activities related to receiving a
matching payment will be in violation of the BCAP regulations and will
be required to return all matching payments, as determined by the
Deputy Administrator.
As required by the 2008 Farm Bill, the following materials are
excluded from being considered eligible materials for BCAP, although
they are eligible crops for BCAP establishment payments and annual
payments:
Animal waste and byproducts (including fats, oils,
greases, and manure);
Food waste such as food processing scraps and yard waste
such as debris removal originating from municipal or commercial yard,
lawns, landscaped areas or related sites; and
Algae.
Consistent with the 2008 Farm Bill, this rule specifies that for
eligible materials to qualify for a matching payment, they must be
collected and harvested directly from lands including:
(1) U.S. National Forest System lands;
(2) BLM lands;
(3) All Non-Federal lands in the United States; and
(4) Land belonging to an Indian or Indian Tribe that is held in
trust by the United States or subject to a restriction against
alienation imposed by the United States. In other words, most publicly-
and privately-held land is eligible to produce material for the BCAP
matching payments program, except for certain Federal lands.
In accordance with the 2008 Farm Bill, matching payments may be
made for all eligible materials, including those derived outside BCAP
project areas. Advanced biofuels and intermediate ingredients or
feedstock are not collected or harvested directly from the land,
therefore, they do not qualify to receive matching payments. CCC
recognizes that the production of some advanced biofuels and biobased
products requires intermediate ingredients and intermediate feedstocks,
such as chopped grasses or wood chips. As specified in this rule, the
source material and the intermediate ingredient or feedstock are
considered separate eligible materials; however, only the source
material qualifies for a matching payment because intermediate
[[Page 66209]]
ingredients or feedstock are not collected or harvested directly from
the land. Advanced biofuels and intermediate ingredients or feedstock
are not collected or harvested directly from the land, therefore, they
do not qualify to receive matching payments. The intent of BCAP is to
provide matching payments for actual collections and harvestings not
incidences to normal industrial processes.
Eligibility for Establishment Payments and Annual Payments
BCAP establishment payments and annual payments will be available
for persons and legal entities with eligible land that is located
within a project area designated by CCC. CCC will consider project area
proposals from project sponsors on a continuous basis. Unlike the
matching payments component of BCAP, where any owner of eligible
materials can be eligible for BCAP, under the establishment payments
and annual payments component, only producers in a designated project
area may be eligible for payment. The establishment payments will cover
not more than 75 percent of the cost of establishment of eligible woody
and non-woody perennial crops, and annual payments for up to 5 years
for the production of eligible annual and non-woody perennial renewable
biomass crops and for up to 15 years for the production of eligible
woody perennial renewable biomass crops. In response to comments
received, this rule includes algae specifically as a non-woody
perennial crop. By designating project areas, BCAP will support the
development of renewable biomass production near biomass conversion
facilities.
Proposing Project Areas
Project areas must be proposed by project sponsors, which could be
groups of producers or biomass conversion facilities. There is no
restriction in this rule on who can own or operate a biomass conversion
facility, or sponsor a project area. Various parties may own a biomass
conversion facility such as Federal entities, private entities, State
or local government agencies, schools, or non-government organizations,
provided that these parties have legal title to the facility.
CCC will accept project area proposals on a continuous basis. A
complete proposal must include, at a minimum:
(1) A description of the eligible land and eligible crops of each
producer that will participate in the proposed project area;
(2) A letter of commitment from a biomass conversion facility
stating that the facility will use eligible crops intended to be
produced in the proposed project area; and
(3) Information demonstrating that the biomass conversion facility
has sufficient equity available to operate by the harvest of a crop in
the project area if the facility is not operational at the time the
project area proposal is submitted.
While the 2008 Farm Bill does not require conservation plans or
forest stewardship plans as part of an acceptable proposal, it does
require that all contracts within a project area provide for the
implementation of a conservation plan, forest stewardship plan, or
equivalent plan. As such, project area proposals must also include a
description of the general conservation and forest stewardship measures
that will be implemented in plans under contracts within the area.
For item 1 above, the project sponsor must submit a narrative of
the proposed project and submit maps of the project area delineating
the location of the current or proposed biomass conversion facility.
The maps must show: (1) Current land use, (2) roads, (3) railroads, (4)
rivers and barge access, (5) proposed land use change, and (6) resource
inventory maps including soils and vegetation.
For item 3 above, evidence of sufficient equity must include
documentation of the projected construction, start-up, operation, and
maintenance costs.
The project sponsors must document the estimated cash-flow of the
project (including assumptions on the production outputs and expected
market prices for the products produced). In addition, the project
sponsor must document its existing resources and short term and long
term financing. The information provided to CCC as proof of sufficient
equity will be confidential to the extent allowed by law and CCC will
only use it to determine if sufficient equity is available for the
facility and the project.
The project sponsor must also submit an analysis of the economic
impacts of the proposed project area. At a minimum the analysis must
address the anticipated timing and number for job creation and
retention and likelihood of attracting additional private sector
investment.
At a minimum, projects must demonstrate the ability to support the
development and production of heat, power, biobased products, or
advanced biofuels from renewable biomass production. The facility must
demonstrate long-term economic viability and ability to comply with all
environmental and regulatory requirements for the production of heat,
power, biobased products, or advanced biofuels from renewable biomass.
In addition, the project must demonstrate that sufficient quantity of
eligible crops will be grown within an economically viable distance
from the facility.
A project area must have specific geographic boundaries that are
described in specific terms such as acres, watershed boundaries, mapped
longitude and latitude coordinates, or counties. The project area must
be physically located near a biomass conversion facility or multiple
biomass conversion facilities. What constitutes an appropriate location
will be determined on a case-by-case basis. Whether a project area is
within an economically viable distance from a biomass conversion
facility depends on the eligible crops being established and produced,
as well as other transportation and logistics matters, and therefore
these determinations will be made on a case-by-case basis. The biomass
conversion facility or facilities may be within the geographic boundary
of the project area, or near it. The project area must also include
potential or established producers that would supply a portion or all
of the renewable biomass needed by the biomass conversion facility or
facilities.
Project Area Selection Criteria
CCC will evaluate project area proposals using these criteria:
(1) The volume of the eligible crops proposed to be produced in the
proposed project area and the probability that such crops will be used
for BCAP purposes;
(2) The volume of renewable biomass projected to be available from
sources other than the eligible crops grown on contract acres;
(3) The anticipated economic impact in the proposed project area,
such as the number of jobs created and retained;
(4) The opportunity for producers and local investors to
participate in the ownership of the biomass conversion facility in the
proposed project area;
(5) The participation rate by beginning or socially disadvantaged
farmers or ranchers;
(6) The impact on soil, water, and related resources, such as
effect on nutrient loads, or soil erosion;
(7) The variety in biomass production approaches within a project
area, including agronomic conditions, harvest and postharvest
practices; and monoculture and polyculture crop mixes; and
[[Page 66210]]
(8) The range of eligible crops among project areas.
Project sponsors that are biomass conversion facilities may be any
size of operation including pilot facilities, research units,
experimental or demonstration operations, or commercial operations. A
biomass conversion facility not yet in operation can be a project
sponsor. In that case, the biomass conversion facility must provide
evidence that it has sufficient equity available.
Project Area Eligible Crops
After CCC approves a project area, persons and legal entities
within the specific geographic boundaries of that area may be eligible
for payment for the establishment and production of eligible crops.
An eligible crop is a crop of renewable biomass. Animal wastes,
food and yard wastes, and algae are not excluded from the definition of
eligible crop unlike the definition of eligible material; therefore,
those categories of renewable biomass will be considered eligible
crops. The 2008 Farm Bill specifies certain types of eligible crops
that are excluded, including any crop that is eligible to receive
payments under Title I of the 2008 Farm Bill, noxious weeds, and
invasive species. For the invasive species or noxious weeds exclusion,
the determination of whether a species is either invasive or noxious
varies by State; therefore, if the crop is neither invasive nor noxious
in a State, it would be eligible in that State for BCAP establishment
payments and annual payments. FSA State committees will consult with
the State technical committees for recommendations concerning the
invasive and noxious status for otherwise eligible crops for the
purposes of BCAP. Information on ineligible species will be available
in FSA county offices.
Project sponsors may suggest the exact species and varieties of
eligible crops allowable in a BCAP project area, provided that the
crops are included in the BCAP definition of eligible crop. Project
area proposals may limit the nature and types of eligible crops to be
established within a project area.
Federal- and State-owned land, including land owned by local
governments or municipalities, is excluded from the definition of
eligible land in the 2008 Farm Bill and therefore is not eligible for
the establishment payments and annual payments component of BCAP. The
specification about the exclusion for land owned by local governments
or municipalities is for consistency with other CCC programs; the terms
``State'' and ``State government'' mean any State or local government,
including, but not limited to State, city, town, or county government,
State Universities, and other units of State government.
Project Area Eligible Producers
Within the project area, to be eligible to receive establishment
payments to convert agricultural lands or nonindustrial private forest
lands to the production of eligible crops producers must enter into
BCAP contracts enrolling their land as contract acreage. In addition,
producers may also be eligible for annual payments for the production
of eligible crops used for conversion to renewable energy, including
advanced biofuels, or biobased products. The details for what is
required to qualify for the annual payments will be specified in the
individual contract between CCC and a producer, as discussed further
below, and will include provisions for the implementation of a
conservation plan, forest stewardship plan, or equivalent plan. The
producer must demonstrate compliance with the plan through required
self-certification and FSA will ensure that normal spot check rules and
methods are followed to ensure compliance with the plan. Producers with
previously established eligible crops as of the date this rule is
effective may enter into a contract for annual payments to continue
growing those crops; however, establishment payments will not be
authorized in that case.
Project sponsors, regardless of whether they are a biomass
conversion facility or a group of producers, may also be considered as
a producer and be eligible to receive establishment payments and annual
payments. The sponsor must own or operate eligible land to be eligible
to enroll as a producer under a BCAP contract and be eligible to
receive establishment payments and annual payments. Federal- or State-
owned biomass conversion facilities may be project sponsors, but will
not be eligible to enter into a BCAP contract with CCC because neither
Federal- nor State-owned land is ineligible for establishment payments
and annual payments.
The agreement between the project sponsor and CCC is not a contract
in the sense that in return for some action a payment is made by CCC. A
successful project sponsor is not paid by CCC for being a sponsor; the
producers in the project area, who may also be the sponsor, are
eligible for payment for the establishment and production of eligible
crops. Because this arrangement with sponsors produces no payment as
such, and is not a procurement of a good or service, biomass conversion
facilities that are also project sponsors are not be subject to general
Federal contracting requirements as a condition of a project area
approval.
Project Area Contract Acreage and Terms
A producer within the project area may enter into a contract with
CCC to commit acres, which would then be called contract acreage, to
establish or produce eligible crops.
Contract terms include:
(1) Compliance with highly erodible and wetland conservation
requirements contained in the 2008 Farm Bill and in 7 CFR part 12;
(2) The implementation of conservation plan as defined in 7 CFR
1410.2, a forest stewardship plan as defined in 16 U.S.C. 2103(a), or
an equivalent plan as determined by the FSA Deputy Administrator for
Farm Programs;
(3) A commitment to provide information to promote the production
of eligible crops and the development of biomass conversion technology;
and
(4) Other information deemed appropriate by CCC, such as the
preservation of cropland bases and yield history.
Contract durations may be up to 5 years for annual and non-woody
perennial crops, and up to 15 years for woody perennial crops. CCC will
adjust the terms of the contract length on a per project basis in order
to ensure the most efficient use of Federal government funding. The
establishment time period may vary due to type of crop, agronomic
conditions (such as establishment time frame and winter hardiness), and
other factors. CCC will establish the time frame based on the
recommendations received from the State Technical Committee.
Contracts will take into account an establishment period
appropriate for an existing crop's harvest or for the establishment of
a planned crop. BCAP contracts and plans will be designed to promote
the production of a long-term source of biomass feedstock that can be
collected and harvested in a reasonable period of time. The
expectation, which will be reflected in the contract, is that eligible
crops funded under BCAP will produce at least one harvest for biomass
within the period of the contract.
Contracts are subject to modification and payment reductions if any
of the contract terms are violated. Participants that chose to
voluntarily withdraw from BCAP before the duration of their contract
has ended will be subject to
[[Page 66211]]
early contract termination penalties and may be required to refund
payments.
During the term of the contract, CCC will share not more than 75
percent of the cost with participants for establishing non-woody and
woody perennial crops, pay an annual payment for enrolled land, and
provide for the preservation of cropland base and yield history
applicable for land enrolled in a BCAP contract.
Eligible and Ineligible Land
The contract acreage will consist of only the eligible lands that
are covered under the producer's contract with CCC. A producer may own
land outside the project boundary area, or choose not to sign up all
their acreage for BCAP, in which case the contract provisions will only
apply to the contract acreage. Eligible land for project areas is
agricultural land and nonindustrial private forest land, subject to
certain exclusions.
As specified in this rule, eligible agricultural land includes:
(1) Cropland;
(2) Grassland;
(3) Pastureland;
(4) Rangeland;
(5) Hayland; and
(6) Other lands on which food, fiber, or other agricultural
products are produced or capable of being legally produced for which a
valid conservation plan exists or is implemented.
Land considered ineligible to be enrolled under a BCAP contract
includes:
(1) Federal lands;
(2) State-owned, municipal, or other local government-owned lands;
(3) Native sod; and
(4) Land that is already enrolled in CCC's CRP, Wetlands Reserve
Program, or Grassland Reserve Program.
Agricultural lands with previously established eligible crops or
previously contracted for eligible crops or planned eligible crops are
eligible lands for contract acreage. In other words, as noted earlier,
producers who started growing renewable biomass before BCAP was
implemented may enter into a contract with CCC for annual payments.
There is no intent to exclude ``early adopters'' producing biomass
crops.
``Nonindustrial private forest land'' is defined in this rule as
rural land with existing tree cover, or suitable for growing trees,
owned by any private individual, group, association, corporation,
Indian Tribe, or other private legal entity. This definition allows for
the inclusion of properties such as a privately held tree farm or a
private forest landowners' cooperative. This is consistent with the
definitions of ``landowner'' and ``nonindustrial private forest land''
in the Cooperative Forestry Assistance Act of 1978, as amended (16
U.S.C. 2103a), which includes private legal entities as landowners of
such forest land. Existing nonindustrial private forest land with
existing tree cover can be entered into contract acreage within an
approved project area and be eligible for annual payments, subject to a
forest stewardship plan or equivalent plan. Establishment payments will
only be made for woody perennial crops with a projected initial harvest
time occurring within the length of the contract period.
While land enrolled in other USDA programs may be eligible lands
for contract acreage, the contracting producer may not receive multiple
program benefits for purposes that are the same or substantially
similar to the purposes of BCAP. While there are currently no other
Federal programs incentivizing biomass, if in the future there are,
duplicate payments will be prohibited. A contracting producer must
choose whether to receive BCAP payments or other USDA or Federal
program benefits where those benefits are designed to achieve the same
purposes as BCAP.
BCAP contracts will not restrict uses of contract acres other than
to require the production of eligible crops provided that CCC
determines that the land uses would be consistent with the conservation
plan, forest stewardship plan, or equivalent plan and any other BCAP
conservation requirements.
Making Establishment Payments
Establishment payments of not more than 75 percent of the cost for
establishing a perennial crop, which could include woody biomass, will
include:
(1) The costs of seed and stock for perennials;
(2) The cost of planting the perennial crop;
(3) For non-industrial forest land, the costs of site preparation
and tree planting; and
(4) Other proposed establishment activities that could include, but
would not be limited to, site preparation for non-tree planting and
supplemental or temporary irrigation.
In addition, partial payments may be authorized when identifiable
components of the contract are completed; and supplemental
establishment payments may be authorized if necessary.
Establishment payments will not be authorized for annual crops. In
addition, prior to receiving establishment payments, producers must
have planted their eligible crops and must provide their FSA county
office with copies of receipts and invoices related to the cost of
establishing such crops.
Making Annual Payments
Annual payments will be calculated on a per acre basis using
market-based rental rates, as determined by CCC. The payments are
intended to support the production of eligible crops. Annual payment
rates will be established at levels required to ensure sufficient
participation in a project area.
As specified in the regulations in 7 CFR 1410.42, which set the
rental payment rate procedures for land in CRP, and as determined by
CCC, annual payments will include a payment based on:
(1) A weighted average soil rental rate for cropland;
(2) The applicable marginal pastureland rental rate for all other
agricultural land; and
(3) For forest land, the average county rental rate for cropland as
adjusted for forest land productivity for nonindustrial private forest
land.
This rate information will be posted at FSA county offices (as FSA
posts information for CRP). There are site-specific factors including
type of soil and land use that determine the exact rate. CCC will post
in FSA county offices the county-specific base-line rental rates for
cropland, marginal pastureland, and forest land. In addition, the
applicable additional incentive payments (premiums) will be posted for
the project area or specific crop mixes within the project area. The
large number of factors used to determine the rates for specific crops,
land uses, soil types, counties, and project areas preclude this
information being suitable for posting on the FSA Web site.
In determining the applicability of incentive payments (premiums)
to the annual base-line soil rental rates, the Deputy Administrator
will consider the costs of establishing the crop, and the potential of
specific perennial eligible crops that are not primarily grown for food
or animal feed.
CCC must reduce payments to avoid duplicate benefits, but the
annual payment reduction for delivery to a biomass conversion facility
will be a percentage of the payments received (not dollar-for-dollar)
if the crop is converted to heat, power, biobased products, or advanced
fuels, because the purpose of BCAP is to encourage biomass energy
production. The reduction will be relatively small if the crop is
converted to cellulosic biofuels
[[Page 66212]]
or advanced biofuels, in order to encourage the production of fuels
that meet the National renewable fuel standard. If the harvested
production is sold for any reason other than conversion to heat, power,
biobased products, or advanced biofuel, a dollar-for-dollar reduction
for each dollar received for the sale will apply, not to exceed the
total annual payment.
Specifically, annual payments will be reduced:
(1) By 1 percent if the eligible crop is delivered to a biomass
conversion facility for conversion to cellulosic biofuels as defined in
40 CFR 80.1401;
(2) By 10 percent of the total of the sales price and matching
payment if the eligible crop is delivered to a biomass conversion
facility for conversion to advanced biofuels, as determined by CCC;
(3) By 25 percent of the total of the sales price and matching
payment if the eligible crop is delivered to a biomass conversion
facility for conversion to heat, power, or biobased products, as
determined by CCC;
(4) By 100 percent of the sales price and matching payment if the
eligible crop is used for a purpose other than conversion to heat,
power, biobased products, or advanced biofuels, as determined by CCC;
(4) If the producer violates a term of the contract; or
(5) In other circumstances necessary to carry out BCAP, as
determined by CCC.
Annual payments will be made for agricultural land and
nonindustrial private forest land. CCC will calculate market-based
rental rates for cropland consistent with the CRP regulations in 7 CFR
part 1410; and for all other agricultural land at the rate that would
be paid for pastureland, consistent with CRP.
CCC will calculate the market-based payment rate for nonindustrial
private forest land using the average county rental rate for cropland
developed for CRP and adjusting that rate by comparing the average
productivity of cropland compared to the average productivity of forest
land.
Half of the first year's annual payment will be made, if
practicable, to the producer within 30 days of the date of contract
approval and the balance will be paid on the annual contract enrollment
anniversary. Subsequent annual payments, if practicable, will be made
every year within 30 days after the contract anniversary date. Payments
may cease and producers may be subject to contract termination and
associated penalties for failure to establish eligible crops.
Key Provisions Comparison of BCAP Matching Payment Versus Establishment
Payment and Annual Payment Provisions
This table compares the key provisions of matching payments versus
establishment payments and annual payments:
----------------------------------------------------------------------------------------------------------------
Establishment payments and
Matching payments annual payments
----------------------------------------------------------------------------------------------------------------
Geographic Eligibility....................... Not limited..................... Limited to geographically
designated project area.
Project Sponsor.............................. Not applicable.................. A project sponsor proposes
project areas and may be a:
Biomass conversion
facility, including
facilities owned by Federal
entities, State entities,
local government entities,
or privately or publicly
held entities; or
Group of producers.
Eligible Material Owner or Eligible Producer. An eligible material owner may An eligible producer may be a:
be: Biomass conversion
A producer within a facility that owns or operates
project area;. eligible land and produces an
A biomass conversion eligible crop; or
facility; or. Person or entity with
A person or a non- the legal title to privately
Federal entity that has legal held lands or land held in
title to eligible material, trust by the Federal
including Indian Tribes and government (but only one
Tribal members.. person in any case for any
An eligible material material on any land can
owner cannot be a Federal qualify for the matching
government entity.. payment).
An eligible producer cannot be
a:
Federal government
entity, or
State or local government
entity.
Land Limitations or Eligible Land............ To qualify for payments, Eligible land is certain:
eligible material must be Agricultural land,
collected or harvested directly such as cropland, pastureland,
from certain: rangeland, grassland, or other
U.S. National Forest lands on which food, fiber, or
System and BLM lands,. other agricultural products
Non-government lands are produced or capable of
including non-Federal lands, being produced; or
and State- and locally-held Nonindustrial private
government lands, or. forest lands that are:
Tribal land held in [cir] Rural lands with existing
trust by the Federal tree cover, or are suitable
government.. for growing trees; and
[cir] Owned by any private
individual, group, or
association.
Eligible land
cannot be:
Federal- or State-
owned land;
Land that is native
sod; or
Land enrolled in:
[cir] CRP;
[cir] Wetlands Reserve
Program; or
[cir] Grassland Reserve
Program.
[[Page 66213]]
Eligible Crop or Material.................... To qualify for payments, Eligible crop is:
eligible material is certain: Renewable plant
Materials, pre- materials such as feed grains,
commercial thinnings, or other agricultural
invasive species from National commodities, other plants and
Forest System land and U.S. trees, and algae;
Bureau System land that:. Waste materials
[cir] Are byproducts of including vegetative waste,
preventive treatments that are such as crop residues, other
removed to reduce hazardous vegetative waste materials,
fuels, to reduce or contain such as woods wastes and wood
disease or insect infestation, residues, animal waste and
or to restore ecosystem health;. byproducts, such as fats,
[cir] Would not otherwise be oils, greases, and manure,
used for higher-value products; food waste, and yard waste;
and. Ineligible crops include:
[cir] If from Federal lands, are Any crop that is
harvested in accordance with eligible to receive payments
applicable law and land under Title I of the 2008 Farm
management plans and the Bill.
requirements for old-growth Any plant that is
maintenance, restoration, and invasive or noxious or has the
management direction of section potential to become invasive
102 (e)(2), (3), and (4) of the or noxious.
Healthy Forests Restoration Act
of 2003 (16 U.S.C. 6512) and
large-tree retention of
subsection (f)..
Any organic matter that
is available on a renewable or
recurring basis from non-
Federal land or land belonging
to an Indian or Indian Tribe
that is held in trust by the
United States or subject to a
restriction against alienation
imposed by the United States,
including:.
[cir] Renewable plant materials
such as feed grains, other
agricultural commodities, and
other plants and trees; and.
[cir] Waste materials including
vegetative waste including crop
residues and Title I crop
residues, and other vegetative
waste materials including wood
wastes and wood residues.
Eligible material does not
include:
Any crop that is
eligible to receive payments
under Title I of the 2008 Farm
Bill or an amendment made by
that Title including a crop of
barley, corn, grain sorghum,
oats, rice, or wheat; honey;
mohair; certain oilseeds such
as canola, crambe, flaxseed,
mustard seed, rapeseed,
safflower seed, soybeans,
sesame seed, and sunflower
seeds; peanuts; pulse crops
such as small chickpeas,
lentils, and dry peas; dairy
products; sugar; wool; and
cotton boll fiber Animal waste
and animal waste byproducts
(including fats, oils, greases,
and manure);
Food waste and yard
waste;
Algae
Authorized Payments.......................... A matching payment at a rate of Establishment payments at a
$1 for each $1 per dry ton rate of not more than 75
equivalent paid by the percent of establishment costs
qualified biomass conversion based on:
facility in an amount up to $45 The costs of seed and
per dry ton. stock for perennials;
The cost of planting
the perennial crop; and
For non-industrial
forest land, the costs of site
preparation and tree
planting(s).
Annual payments equal to the
market rate plus any incentive
as provided for in a specific
project area.
Payment Reductions........................... Matching payments must be Annual payments will be reduced
refunded to CCC if an eligible if:
material owner violates the An eligible crop is
terms of their contract with sold for any purpose,
CCC including, but not limited including a matching payment
to: for collection, harvest,
Not adhering to the storage, or transportation; or
provisions in the conservation The producer violates
plan, forest stewardship plan, a term of the contract.
or equivalent plan including Payments may cease and
establishing or spreading producers may be subject to
noxious or invasive species, as contract terminations for
determined by the Deputy failure to establish eligible
Administrator;. crops.
Delivering eligible
material not harvested directly
from the land by the eligible
material owner;
Delivering eligible
material prior to COC
application approval;
Delivering eligible
materials that would otherwise
be used to produce higher-value
products; or
Delivering otherwise
eligible material that must be
separated from materials used
to produce higher-value
products.
[[Page 66214]]
Payment Timing............................... Matching payments are paid Establishment payments are paid
within 30 days after the when the perennial eligible
request for payment by the crop practice or identifiable
eligible material owner is portion of the practice has
submitted at the FSA county been completed according to
office, including submission of the BCAP conservation plan,
sales invoice(s) issued by the forest stewardship plan, or
qualified biomass conversion equivalent plan.
facility. Annual payments are paid:
As an advance
payment in an amount equal
to 50 percent within 30
days of contract approval
with the remaining 50
percent within 30 days of
the first-year contract
anniversary date, and
Within 30 days of
the contract anniversary
beginning with the second-
year contract anniversary.
Duration..................................... Payment duration is 2 years from Contract duration is up to:
the date on which the first 5 years for annual and
matching payment is issued to non-woody perennial crops, and
an eligible person or entity 15 years for woody
taking in account the NOFA perennial crops.
period as determined
appropriate by the Deputy
Administrator.
Project Area Proposals or Matching Payment Applications for matching Project area proposals may be
Applications. payments will be accepted on a submitted at any time. After a
continuous basis. To apply for project area has been
a matching payment an eligible approved, eligible persons and
material owner must submit an legal entities within that
application to the FSA county project area may enroll in a
office prior to the delivery of BCAP contract at the FSA
the eligible material and then county office.
submit the request for payment
at the FSA county office after
delivery of eligible material
is made to the qualified
biomass conversion facility.
----------------------------------------------------------------------------------------------------------------
Summary of Comments
CCC received 24,008 comments on the proposed rule from all States,
the District of Columbia, the Virgin Islands, Puerto Rico, Northern
Mariana Islands, U.S. Minor Islands, and 88 other countries.
We received comments from individuals, trade groups and other
organizations, State and local government entities, Federal entities,
Tribes, and Alaska native corporations. The majority of the comments
were submitted as one of 4 different form letters. One form letter
dominated the comments, although many commenters edited the form letter
for their personal submission. The letters represented the comments of
associations, a corporation, and another interested organization.
This final rule is based on consideration of the comments received
and on CCC's experience in implementing matching payments under the
NOFA. In addition to the substantive comments discussed below, minor
editorial and technical changes have been made to the regulations for
clarity and to facilitate implementation. Comments that addressed
issues outside the scope of BCAP were not addressed in this rule
because CCC does not have the authority to address those issues in this
rule. Similarly, CCC does not have the authority to limit the scope of
BCAP to a smaller or more restrictive program than the 2008 Farm Bill
authorizes, or to expand it beyond our authority except as may be
needed to keep BCAP within spending limits specified in the 2010
Supplemental Appropriations Act.
There were general comments both supporting and opposing BCAP that
did not provide specific suggestions for changes to a specific section
or subpart of the proposed rule. General comments are discussed below
followed by a section-by-section analysis of comments in order by the
section number of the regulations. Out of scope comments, such as those
about solar and wind technology, on-farm storage costs, and other
issues outside of the authority for BCAP are not included in the
discussion and no change was made based on those comments.
Comment: BCAP is necessary beyond 2012.
Response: The 2008 Farm Bill does not authorize this program beyond
2012. Contracts for establishment payments entered into before 2012 may
continue beyond 2012. Accordingly, no change was made to the rule in
response to this comment.
Comment: BCAP project areas should be the top priority for BCAP and
matching payments spending should be significantly reduced to 20-50
percent of BCAP expenditures, perhaps in conjunction with an annual cap
for matching payments above which no additional applications will be
accepted.
Response: The 2008 Farm Bill provides such CCC funds ``as are
necessary'' to carry out BCAP. However, the 2010 Supplemental
Appropriations Act effectively caps BCAP funding at $552,000,000 and
$432,000,000 in FY 2010 and FY 2011, respectively. CCC is required to
administer the program within these limits. No change was made to the
rule in response to this comment.
Comment: More emphasis should be placed on forest land ownership
and more resources should be spent on creating harvesting opportunities
on national forests.
Response: Land devoted to forest and trees may be eligible for
matching payments and for establishment payments to establish trees and
other woody perennials. CCC believes that significant opportunities for
eligible materials exist on private as well as public land and will
administer the program accordingly. No change to the rule was made in
response to this comment.
Comment: The proposed budget is inadequate considering the size of
the renewable biomass markets.
Response: The 2010 Supplemental Appropriations Act establishes the
funding to carry out the program.
Comment: BCAP will create an oversupply of biomass products,
distorting prices for biomass. Biomass conversion facilities are able
to pay less than market value for participants' biomass due to having a
captive market. BCAP distorts markets and costs too much in a time of
deficits.
Response: The purpose of the BCAP program is to encourage the
development of commercial demand and supply where none currently exists
for non-traditional biomass crops used for heat, power, biobased
producers and biofuels. This rule was changed in response to this
comment and requires that biomass conversion facilities pay a fair
market rate for biomass and that they do not have a different rate for
[[Page 66215]]
BCAP participants than for other biomass suppliers.
Comment: Limit payments to foreign-owned companies.
Response: The 2008 Farm Bill does not prohibit enrollment by
otherwise eligible foreign citizens or foreign-owned entities.
Therefore, no change to the rule was made in response to this comment.
Comment: There is a need for intermediate facilities to receive,
process, store, and disburse raw biomass fuel feedstock.
Response: Intermediate facilities may be a critical part of the
biomass feedstock supply chain. However, in order for material to be
eligible for BCAP matching payments, an eligible material owner must
retain beneficial interest in that material until it is delivered to a
qualified biomass conversion facility. No change to the rule was made
in response to this comment.
Comment: Coupling BCAP with other FSA programs, such as CRP, may
support efforts to promote additional tree plantings and may support
acres that need to be thinned to improve their quality for wildlife
habitat.
Response: FSA implements a number of programs that assist farmers
and ranchers in managing risk levels. We agree that producers may want
to enroll in multiple FSA programs, including BCAP and CRP, to meet a
particular farming operation's goals. We are not changing the
regulations to specifically link requirements for the two programs,
because we do not have authority to do so--the 2008 Farm Bill
specifically excludes CRP land from eligible land for BCAP
establishment payments and annual payments. Where possible, efforts
will be made to coordinate FSA and CCC programs with complementary
goals. Although land in CRP is not eligible for BCAP establishment
payments and annual payments, production on such land, if consistent
with the CRP contract, may be eligible for matching payments.
Comment: The structure of other FSA programs prohibits producer
participation in BCAP and imposes hurdles or provides incentives
against producer participation in BCAP. The public needs further
guidance on participation in multiple FSA programs and on how BCAP may
impact base acres.
Response: BCAP is being implemented with the intent to minimize
conflicts between programs. For instance, the 2008 Farm Bill provides
for the preservation of base acres and yield history for land enrolled
under a BCAP contract. Participation in BCAP will not preclude
eligibility for the direct and counter-cyclical payment program (DCP)
or the average crop revenue election program (ACRE). No change to the
rule was made in response to this comment.
Comment: Complete this rulemaking expeditiously and resume payments
under BCAP immediately.
Response: Payments will start after this final rule becomes
effective, which is after the date this rule is published in the
Federal Register. No change to the rule was made in response to this
comment.
Comment: The NOFA stimulated a considerable amount of capital
investments by both eligible material owners and biomass conversion
facilities. The temporary termination of matching payments under the
NOFA and the potential changes in BCAP may result in a loss of their
ability to participate and loss of capital investments.
Response: We are aware of the concerns regarding continuity between
the NOFA and this final rule. We have made adjustments to the final
BCAP rule that are consistent with BCAP purposes, maintain continuity,
and meet the overall program objectives of supporting the long-term
supply of renewable biomass.
Comment: FSA should provide adequate training and support for FSA
State and county staff that will be implementing BCAP.
Response: As we do with other FSA and CCC programs, we will be
providing training to the field staff that will implement BCAP.
Common Provisions in Subpart A
Administration (Sec. 1450.1)
Comment: Provide sufficient personnel to expeditiously support
project area sponsors in developing project area proposals and
quantitatively monitor BCAP's productivity for both matching payments
and establishment payments and annual payments.
Response: FSA has more than 2,200 county offices serving rural
America. FSA county offices are available to assist in the development
of project proposals. Performance indicators will be developed to
document and monitor BCAP's benefits, ultimately enhancing delivery of
BCAP by identifying those practices and locations that provide the
greatest benefits per dollar invested. No change to the rule was made
in response to this comment.
Definitions--General, New Terms (Sec. 1450.2)
Comment: Create a glossary of terms that accurately and clearly
defines terms based on their use in industry and the academic
community.
Response: BCAP definitions are based on the 2008 Farm Bill, where
applicable, or other regulations, as appropriate. In other cases, the
terms are a result of consultation and collaboration with Federal
experts and other stakeholders. Terms not specifically defined in this
rule have their common dictionary meaning and are not used in a
specialized way in this rule. No change to the rule was made in
response to this comment.
Comment: Clearly define ``aggregator of eligible material,''
``algae,'' ``biofuel,'' ``biofuel refinery,'' ``biomass,'' ``biomass
processor,'' ``cellulosic biofuel,'' ``Federal land,'' ``landowner,''
``sustainably managed forest land,'' and ``wood.''
Response: We made changes to the definitions section of the rule in
response to comments. We have added a definition of ``biofuel'',
consistent with Sec. 9001 of the 2008 Farm Bill, to provide clarity to
the related definition of ``advanced biofuel'' The terms
``aggregator,'' ``aggregator of eligible material,'' ``biofuel
refinery,'' ``biomass,'' ``biomass processor,'' ``cellulosic biofuel,''
and ``sustainably managed forest land'' were not included in the
proposed or final rule and, therefore, do not require a definition for
BCAP. The definition of ``landowner'' is synonymous to the definition
of ``owner'' in 7 CFR part 718 that also applies to 7 CFR part 1410.
Finally, the meaning of ``algae,'' ``Federal land,'' and ``wood'' are
commonly understood terms that do not need further definition because
they are not used in a special way in this rule.
Comment: Define ``substantial'' as it relates to the related-party
transaction, ``ownership,'' and ``opportunity'' as they relate to
ownership and levels of biomass conversion facility ownership.
Response: The term substantial does not need to be defined in this
rule because the prohibition on related-party transactions has been
removed from matching payments.
Comment: Define ``invasive species'' and ``noxious weed,'' and
reference definitions in Executive Order 13112 and the Plant Protection
Act, respectively.
Response: The rule does reference Executive Order 13112
specifically. Since these terms are defined in the Executive Order and
the Plant Protection Act, this rule will not re-define them. CCC will
use those
[[Page 66216]]
definitions in determining the list of invasive species and noxious
weeds for each applicable area. As specified in this rule, the list
will be available at the FSA county office.
Comment: Clarify the terms ``eligible persons'' and ``legal
entities.''
Response: We agree the terms ``person'' and ``legal entity'' need
to be defined. For ease of administration and consistency with other
CCC programs, a reference to the definitions in 7 CFR part 1400 was
added to this rule.
Definitions--Advanced Biofuel (Sec. 1450.2)
Comment: Do not include pellets, wood chips, and briquettes as
advanced biofuels.
Response: Although pellets and briquettes would be considered to be
advanced biofuels under the 2008 Farm Bill definition if comprised of
eligible materials under BCAP, as wood chips would be considered an
eligible material, such eligible materials may only qualify for
matching payments if these materials meet other qualifications for
payment as specified in this rule. However, if these materials have a
higher value (existing market) in a distinct region, they would not
qualify for matching payments.
Definitions--Biobased Product (Sec. 1450.2)
Comment: Include pulp and paper as a biobased product.
Response: CCC will use a number of criteria in determining whether
a particular product will be considered a biobased product. Products
that have a mature market, such commercially produced timber, lumber,
wood pulp, paper or other finished wood products, will not be
considered to be biobased products for the purposes of BCAP. This is
consistent with the general intent to stimulate the production of new
biobased products and to energize emerging markets for those products.
In making the determination, we will administer BCAP consistent with
the standards of the BioPreferred Procurement Program, as authorized by
section 9001 of the 2008 Farm Bill.
Comment: The definition of biobased products may cause unintended
issues or may allow products not oriented toward renewable energy to be
included in BCAP.
Response: The definition of ``biobased product'' in the 2008 Farm
Bill gave the Secretary of Agriculture discretion to determine which
products could be considered ``a commercial or industrial product
(other than food or feed) that is composed, in whole or in significant
part, of biological products, including renewable domestic agricultural
materials and forestry materials or an intermediate ingredient or
feedstock.'' In determining whether a commercial or industrial product
will be considered ``biobased'' for BCAP, CCC will use the standards
set by USDA's Biopreferred Procurement Program under the regulations at
7 CFR part 2902.
Definitions--Biomass Conversion Facility (Sec. 1450.2)
Comment: Keep the definition of biomass conversion facility as it
appears in the proposed rule.
Response: In response to other comments (discussed in other
sections), the definition of biomass conversion facility was amended in
this final rule to replace the term ``eligible material'' with
``renewable biomass,'' to clarify that a qualified biomass conversion
facility is not restricted to only using eligible material, but may
also process other types of renewable biomass that are not eligible for
BCAP matching payments.
Definitions--Conservation Plan (Sec. 1450.2)
Comment: Define ``conservation plans,'' ``forest stewardship
plans,'' and ``equivalent plans.'' Make the requirements for all such
plans consistent.
Response: The rule defines ``conservation plan'' and ``forest
stewardship plan.'' The definitions have been amended slightly to be
consistent with the relevant authorizing legislation for each while
also being specific to BCAP. The term ``conservation plan'' is
generally consistent with the definition applicable to Title II
conservation programs in the 2008 Farm Bill, modified slightly to apply
to eligible crops and eligible material, as appropriate. The definition
for ``forest stewardship plan'' is consistent with the Cooperative
Forestry Assistance Act of 1978, as amended (16 U.S.C. 2103a). There
may be land eligible for BCAP with similar plans approved by States or
other agencies that serve the same purpose and have similar goals,
objectives, and terms. A definition for ``equivalent plan'' is included
in the regulation as a result of the comments. Our intention is to
review those situations and determine whether they are consistent and,
if so, permit those equivalent plans to be used. References to
``equivalent plan'' were added throughout the rule.
Definitions--Eligible Crop (Sec. 1450.2)
Comment: Do not consider trees as a form of renewable biomass.
Response: The definition of renewable biomass is specified by the
2008 Farm Bill and includes trees. Therefore, no change to the rule was
made in response to this comment.
Comment: Use the IRS definition of closed-loop biomass for the
definition of eligible crops.
Response: CCC understands that the IRS definition of ``closed loop
biomass'' is inconsistent with the 2008 Farm Bill's definition of
``eligible crop'' that, among other things, permits eligible crops to
be converted to heat, biobased products, and advanced biofuels as well
as electricity. Therefore, no change to the rule was made in response
to this comment.
Comment: Sugarcane should be considered as an eligible crop.
Response: The 2008 Farm Bill specifically excludes from the
definition of eligible crops or eligible materials any crop that is
eligible to receive payments under Title I of the 2008 Farm Bill.
``Payments'' are not made under Title I of the 2008 Farm Bill with
respect to sugarcane, but rather, nonrecourse loans are made to
eligible entities. Therefore sugarcane is not excluded from BCAP. Crops
eligible for Title I payments for which producers have elected not to
enroll those crops in Title I programs remain ineligible for BCAP.
Comment: Exclude all Title I crops and crop residues from being
considered as eligible crops.
Response: Title I crops are explicitly excluded as eligible crops;
however, Title I crop residues may qualify for matching payments so
long as they meet all other requirements for collection, harvest,
storage, and delivery.
Comment: Exclude noxious or invasive species as eligible crops.
Response: Under the 2008 Farm Bill's definition of ``eligible
crop,'' any plant that is noxious or invasive or has the potential to
become noxious or invasive is excluded. Noxious or invasive status is
generally established at the State level. No change to the rule was
made in response to this comment.
Comment: Eligible crops should include giant miscanthus,
pennycress, black locust, guayule, hemp, high-biomass sorghum, and
energy cane.
Response: Project sponsors must specify eligible crops for the
project area; those crops cannot include plants that are considered
noxious or invasive or have the potential to become noxious or invasive
in the State. Therefore these crops may be eligible crops in some
States, but not in others. No change to the rule was made in response
to this comment.
Comment: Expand the definition of eligible crop and renewable
biomass to include crops cultivated on Federal property.
[[Page 66217]]
Response: The 2008 Farm Bill excludes Federal- or State-owned land
from eligibility for the establishment payments and annual payments
portion of BCAP, so crops from that land, including privately owned
biomass, cannot be eligible crops. Privately owned biomass grown on
Federal- or State-owned land is ineligible for BCAP project areas. No
change to the rule was made in response to this comment.
Definitions--Eligible Material (Sec. 1450.2)
Comment: Include Title I grains and oilseeds as eligible for
matching payments if the farmer does not receive Title I subsidies for
these crops. Barley dockage, which may include barley grain, should
also be eligible for matching payments.
Response: As specified in the 2008 Farm Bill, the definition of
``eligible material'' excludes, among other things, any crop eligible
to receive payments under Title I of the 2008 Farm Bill. The definition
in the 2008 Farm Bill does not include an option for a producer to
choose between BCAP matching payments or Title I benefits. Crops
eligible for Title I programs where producers have elected to not
enroll those crops in Title I programs are ineligible under BCAP.
Likewise, any dockage or foreign material from non-contract acreage
would be ineligible if it is comingled with ineligible Title I
commodities. No change to the rule was made in response to this
comment.
Comment: CCC should remove the 20 percent cap on payments for Title
I residues that was in the NOFA.
Response: The rule was changed and the cap is not included in the
regulation.
Definitions--Eligible Material Owner (Sec. 1450.2)
Comment: Clarify the definition of eligible material owner,
particularly with regard to stumpage.
Response: ``Owner'' or ``ownership'' are commonly understood terms
that do not need further definition and are not used in a special way
in this rule. In the case of stumpage, the person who has purchased the
right to harvest timber on the land clearly meets the definition of ``a
person or entity having the right to collect or harvest eligible
material.'' No change to the rule was made in response to this comment.
Definitions--Native Sod (Sec. 1450.2)
Comment: Clarify the definition of ``native sod,'' refer to the
2008 Farm Bill definition, and be explicit in its relation to eligible
lands such as grasslands, rangelands, and pasturelands.
Response: Under BCAP, land that is ``native sod'' as of the date of
the 2008 Farm Bill's enactment is excluded from eligible land. This
rule uses the 2008 Farm Bill's definition of native sod found at
section 12020 of the 2008 Farm Bill, which amends the Federal Crop
Insurance Act (7 U.S.C. 1508) to add that definition. Native sod
determinations must be made on a case-by-case basis because all three
land uses (grasslands, rangelands, and pasturelands) may have been
plowed at some point prior to the date of enactment of the 2008 Farm
Bill; therefore, the rule does not clarify a specific relationship
between native sod and grasslands, rangelands, and pasturelands. No
change to the rule was made in response to this comment.
Comment: Include ``native sod'' as eligible land.
Response: The 2008 Farm Bill explicitly excludes ``native sod''
from the definition of eligible land. Therefore, no change to the rule
was made in response to this comment.
Definitions--Nonindustrial Private Forest Land (Sec. 1450.2)
Comment: Clarify the definition of nonindustrial private forest
land and reference language in the Cooperative Forestry Assistance Act.
Response: We corrected to the definition to refer to section 5(c)
of the Cooperative Forestry Assistance Act of 1978, as amended (16
U.S.C. 2103a), as required by the 2008 Farm Bill definition of eligible
land.
Comment: Replace the ``publicly traded corporations'' exclusion in
the definition of nonindustrial private forest land with a per producer
acreage limit. Include publicly traded land as nonindustrial private
forest land and limit the number of nonindustrial private forest land
acres a producer may enroll in contract acreage.
Response: The definition for nonindustrial private forest land in
the proposed rule incorrectly excluded publicly traded corporations and
accordingly has been revised in this final rule to remove that
exclusion. That is consistent with the 2008 Farm Bill. However,
implementing a contract acreage limit is not consistent with the 2008
Farm Bill. Therefore, that suggestion was not adopted. Project area
applications, however, may propose the geographic boundaries within
which contract acreage may be offered, will limit contract acreage for
some producers.
Definitions--Producer (Sec. 1450.2)
Comment: Be consistent with the use of ``participant'' and
``producer'' throughout the rule.
Response: The terms ``participant'' and ``producer'' are not
synonymous. The term ``producer'' is a generic reference to those
individuals and entities who are owners, operators, and tenants who may
or may not be enrolled in an FSA program. A ``participant'' is an
individual or entity who is an owner, operator, or tenant who is
enrolled in an FSA program. No change to the rule was made in response
to this comment. A ``producer'' is an owner or operator of contract
acreage that is physically located within a BCAP project area so long
as the person or entity has a risk of loss in the crop.
Definitions--Related-Party Transaction (Sec. 1450.2)
Comment: The provisions on related-party transactions are
inappropriate because of the vertically, geographically, and otherwise
integrated nature of the forestry products industry. Add provisions to
the definition of related-party transactions to encourage cooperatives.
Response: We have removed ``related-party transactions'' as a
limitation under the matching payments. However, to ensure fair and
consistent implementation, in becoming ``qualified'' as described under
Sec. 1450.101, a biomass conversion facility must agree, among other
things, that all transactions will be market based regardless of
whether an individual or entity will receive a matching payment. If it
is determined by CCC that a person or business has restructured or
engaged in related party transactions for the purpose of defeating the
intent of BCAP, or to circumvent the provisions of this rule and its
related requirements, or to obtain payment not otherwise entitled, then
any part of any program payment otherwise due or paid to such person
during the applicable period may be required to be refunded with
interest as determined appropriate by CCC. Any eligibility
determination that was based, in whole or part, on a scheme or device
will be rescinded. A scheme or device includes, but is not limited to
coercion, fraud, misrepresentation, depriving any other person of a
payment, or obtaining a payment that otherwise would not be payable.
Definitions--Socially Disadvantaged Farmer or Rancher (Sec. 1450.2)
Comment: Include Native Hawaiians in the definition of socially
disadvantaged.
[[Page 66218]]
Response: The definition has been corrected to include Native
Hawaiians.
Definitions--Yard Waste (Sec. 1450.2)
Comment: For yard waste, include brush and chips, construction and
demolition and municipal solid wastes, and material generated as
planned management or urban forests.
Response: The 2008 Farm Bill does not explicitly define yard waste.
CCC considers yard waste to be any renewable biomass generated from
municipal or residential land, such as urban forestry materials,
construction or demolition materials, trimmings from grasses and trees,
or biomass removed due to invasive species or weather-related disaster,
that can be separated from and has low potential (such as contamination
with plastics, metals, chemicals or other toxic compounds that cannot
be removed) for the generation of toxic byproducts resulting from
conversion, and that otherwise cannot be recycled for other purposes
(such as post-consumer waste paper).
General (Sec. 1450.3)
Comment: There should be stringent guidelines to biomass production
to promote environmental and climate sustainability, including
provisions to prevent over-harvesting, guidelines being developed by
the Council of Sustainable Biomass Production, favoring harvesting
practices that have been recognized as sustainable.
Response: Eligible material owners must obtain conservation plan,
forest stewardship plan, or equivalent plan in order to receive a
matching payment. The establishment payments and annual payments part
of BCAP already required such plans. These plans address natural
resource concerns including the sustainable harvesting of biomass, when
appropriate, by addressing the site-specific needs of the landowner.
Comment: Matching payments should be targeted to certain businesses
(for example, those with less than 60 employees) where local ownership
and local economic benefits are involved, to help small town economies
and encourage investment in infrastructure and equipment, so resources
can be directed to increase plantings of biomass crops.
Response: The 2008 Farm Bill does not authorize limiting payments
to any subset of eligible participants except as might be produced by a
cap on the funding for BCAP or other restrictions that flow from the
2008 Farm Bill. The statute, however, does require the Secretary to
consider the opportunity for producers and local investors to
participate in the ownership of the biomass conversion facility when
selecting BCAP project areas. No change to the rule was made in
response to this comment.
Comment: Target payments to aid the development of new sustainable
biomass used for approved facilities such as for newly emerging biomass
resources that require development of specialized equipment for
harvest.
Response: A project sponsor may propose a project area to develop
new sustainable biomass that will be considered according to Sec.
1450.202. However, BCAP funding is not authorized to develop
specialized harvesting equipment under either the matching or
establishment and annual parts of BCAP. No change to the rule was made
in response to this comment.
Comment: The proposed options for matching payments would penalize
early adopters by tying those payments to a historical baseline of
biomass consumption or biomass conversion facility output.
Response: The options in the proposed rule that required
documentation of a historical baseline, and paid only for the amount
above that baseline, were not adopted in this final rule. Therefore, we
believe that the matching payments provisions in this rule will not
penalize early adopters.
Violations (Sec. 1450.4)
Comment: Strengthen or increase penalties for violations.
Response: This rule has similar violation provisions to other CCC
and FSA programs. The section on violations provides remedies up to
termination of the contract. Other civil and criminal actions may also
apply as they generally apply for other CCC and USDA programs. No
change to the rule was made in response to this comment.
Scheme or Device (Sec. 1450.11)
Comments: Clarify what constitutes a ``scheme or device.''
Response: A ``scheme or device'' is generally an action that tends
to defeat the purpose of a program. As specified in the regulation, ``A
scheme or device includes, but is not limited to, coercion, fraud,
misrepresentation, depriving any other person or legal entity of any
payments, or obtaining a payment that otherwise would not be payable.''
Scheme or device determinations are made on a case-by-case basis due to
the unique nature and circumstances surrounding specific scenarios or
actions. BCAP participants who think that a particular activity might
be considered a ``scheme or device'' should seek an official
clarification from FSA. No change to the rule was made in response to
this comment.
Filing of False Claims (Sec. 1450.12)
Comments: Establish a formal reporting mechanism to report when a
false claim has been filed.
Response: There are established reporting options. Violations of
laws and regulations relating to USDA programs that may include
criminal activity such as bribery, smuggling, theft, fraud,
endangerment of public health or safety; mismanagement or waste of
funds; workplace violence; employee misconduct; and conflict of
interest may be reported by calling (800) 424-9121, (202) 690-1622, or
(202) 690-1202 (TDD), by writing to USDA, Office of Inspector General,
P.O. Box 23399, Washington, DC 20026-3399, or by e-mailing [email protected]. No change to the rule was made in response to
this comment.
Matching Payments in Subpart B
Comment: Matching payments create an uneven playing field for
producers and consumers of renewable biomass by subsidizing existing
renewable biomass in a way that may delay expansions of new biomass
crops.
Response: BCAP provides funding for both existing renewable biomass
and for the establishment of new biomass crops. The BCAP regulation
requires that qualified biomass conversion facilities pay a fair market
price for biomass.
Comment: Biomass conversion facilities should be eligible material
owners.
Response: Biomass conversion facilities may be eligible material
owners if they meet all other requirements.
Comment: Only provide matching payments for eligible materials
converted to advanced biofuels that support the Renewable Fuel Standard
Program of the Energy Independence and Security Act of 2007.
Response: For BCAP, the 2008 Farm Bill includes renewable biomass
to be converted to advanced biofuels as well as to be converted to
heat, power, and biobased products. Where appropriate, BCAP is intended
to work in harmony with other legislation and other Federal government
programs. The programmatic outcomes of BCAP will help ensure that the
goals of the Renewable Fuel Standard Program of the Energy Independence
and Security Act of 2007 are met. No change to the rule was made in
response to this comment.
Comment: There are ways to limit and target the matching payments
portion, including a national approach where all
[[Page 66219]]
eligible material owners would be eligible to receive matching payments
regardless of project area boundaries, a regional approach that
recognizes regional differences in renewable biomass markets, a local
approach that limits matching payments to eligible material owners
within project areas, and an eligible material owner cap approach that
would limit the total amount of matching payment funds an eligible
material owner may receive in order to ensure a fair distribution of
funds among all eligible material owners.
Response: Matching payments are available nation-wide regardless of
project area boundaries. Regional markets will be taken into
consideration when determining if there is the potential for eligible
material to be used to produce a higher-value product. Other than the
2-year duration limit on payment availability for an eligible material
owner, there is no authority under the 2008 Farm Bill to limit BCAP
matching payments as the commenters suggest.
Comment: Base matching payments language on industry standards,
refer to and address the major biofuels currently in production
including ethanol, biodiesel, and biojetfuel, and adopt standard
industry language when discussing advanced biofuels.
Response: The language in this final rule is generally based on the
2008 Farm Bill language and definitions. The purpose of BCAP is to
develop a non-traditional crop base of biomass feedstocks. The
manufacture of biofuels in accordance with industry standards is
outside the scope and authority of this rule. No change to the rule was
made in response to this comment.
With regards to units of measurement, BCAP is a biomass feedstock
supply program, so it is appropriate for the operational units of the
program to be tons rather than gallons as is more common for biofuel
programs. For example, forest trimmings are not conventionally measured
in gallons.
Comment: Is BCAP meeting its stated purpose to assist agricultural
and forest landowners, given the long chain of actors (landowners,
harvesters, aggregators, and facilities) involved in the matching
payments?
Response: This rule clarifies Sec. 1450.103 requiring that the
eligible material must be harvested or collected directly from the land
by the eligible material owner and provides that BCAP participants
receive a fair market price for all eligible material delivered to
qualified biomass conversion facility.
Comment: There is not enough information collected regarding
eligible material point-of-origin. The administrative burden associated
with BCAP should be reduced to the extent practicable.
Response: Our goal is only to collect the information that is
necessary for the proper operation and oversight of BCAP and to ensure
that BCAP payments are proper. Therefore, required information includes
identifying appropriate farm and tract information related to the
source of the eligible material.
Comment: The matching payments should be distributed to all
renewable biomass producers and consumers, maintaining fairness and
competition in the renewable biomass markets, and encouraging long-term
investments.
Response: This rule, which implements the authority in the 2008
Farm Bill, is structured to provide all eligible material owners equal
opportunities to receive matching payments, maintain fairness and
competition, and encourage long-term investments in renewable biomass
markets. No change to the rule was made in response to this comment.
Comment: Redirect the funding for matching payments to biomass
conversion facility equipment investments, tax credits, conversion
processes that show potential in the long run, and for upgrading
existing biomass conversion facilities.
Response: BCAP funding for those activities are not authorized by
the 2008 Farm Bill.
Comment: Matching payments will not be effective in achieving
program purposes unless new or additional activities by existing
biomass conversion facilities are supported. Existing biomass
conversion facilities will be placed at an unfair disadvantage if
matching payments support new or additional activities rather than all
activities equally.
Response: All biomass conversion facilities meeting the
qualification requirements will be approved. No change to the rule was
made in response to this comment.
Comment: There may be adverse environmental impacts of matching
payments because there is not an enforcement mechanism to ensure that
agricultural and forest resources are sustainably harvested on a
renewable or recurring basis.
Response: Under this final rule, eligible material owners will be
required to obtain a conservation plan, forest stewardship plan, or
equivalent plan as a condition of receiving a matching payment. These
plans generally address natural resource concerns including the
sustainable harvesting of biomass, when appropriate, by addressing the
site-specific needs of the landowner. The plan must include the purpose
of the harvest, the volume of eligible materials to be harvested, the
total number of acres harvested, and the name of the eligible material
owner.
Comments: Woody eligible materials should be harvested according to
a plan supported by the American Loggers Council's Certified Master
Logger Program.
Response: Under this final rule, eligible material owners will be
required to obtain a conservation plan, forest stewardship plan, or
equivalent plan as a condition of receiving a matching payment.
Qualified Biomass Conversion Facility (Sec. 1450.101)
Comment: Why are matching payments made to eligible material owners
rather than to qualified biomass conversion facilities?
Response: The 2008 Farm Bill specifies that matching payments be
made to eligible material owners for the collection, harvest, storage,
and transportation of eligible material to a biomass conversion
facility. No change to the rule was made in response to this comment.
Comment: Favor more efficient or advanced conversion processes over
less efficient or advanced conversion processes.
Response: The purpose of BCAP is to develop a non-traditional crop
base of biomass feedstocks. The manufacture of biofuels in accordance
with varying degrees of conversion efficiency is outside the scope and
authority of this rule. No change to the rule was made in response to
this comment.
Comment: Some conversion processes that qualified under the NOFA
should not be allowed to qualify under the final rule. Specifically,
facilities generating power as a byproduct or in support of their
normal operations or facilities that directly convert renewable biomass
into power should not qualify under the final rule.
Response: The definition of biomass conversion facility as
specified in the 2008 Farm Bill specifically includes a facility that
converts renewable biomass into power, so we cannot exclude those
facilities. Any biomass conversion facility that qualified under the
NOFA will be required to enter into a new agreement with CCC that
contains provisions based on this final rule, which reflects changes
made in response to these and other comments. The major changes that
will impact the agreement include clarifications to the collection,
harvest, storage, transportation and delivery
[[Page 66220]]
requirements in Sec. 1450.103 and removal of the ``related-party
transaction.'' Also, biomass conversion facilities will be required to
certify that the eligible material for which BCAP payment was issued
that are not crop residues are byproducts of preventative treatments
that are removed to reduce hazardous fuels, to reduce or contain
disease or insect infestation, or to restore ecosystem health.
Comment: All renewable biomass consuming facilities should qualify
under the final rule, specifically including plant nurseries, sawmills,
anaerobic digesters, particleboard facilities, composting facilities,
and briquette, wood pellet, wood shaving, wood chipping, and charcoal
producing facilities.
Response: Based on the definition specified in the BioPreferred
Procurement Program, which states that products with significant market
penetration as of 1972 are not considered biobased products, then plant
nurseries, sawmills, particleboard, facility, composing facilities, and
charcoal facilities may not qualify as biomass conversion facilities
because these products do not meet the definition. The facilities,
however, can qualify as biomass conversion facilities for purposes of
heat, power or biofuels generation provided that the eligible materials
meet the specifications of Sec. 1450.103. No change to the rule was
made in response to this comment.
Comment: Provide assistance to facilities for marketing biomass
conversion facility products.
Response: The 2008 Farm Bill does not authorize such assistance. No
change to the rule was made in response to this comment.
Comment: Biomass conversion facilities should offer investment
opportunity to local producers to help keep more of the funding within
the community.
Response: There is no requirement in the 2008 Farm Bill, and
therefore no requirement in the rule, to require local investment
opportunities as a condition to become a qualified biomass conversion
facility. The 2008 Farm Bill, however, does require the Secretary to
consider the opportunity for producers and local investors to
participate in the ownership of the biomass conversion facility when
selecting BCAP project areas. Project proposals submitted under Subpart
C for the establishment payments and annual payments must address
criteria that consider the opportunity for producers and local
investors to participate in the ownership of the biomass conversion
facility in the proposed BCAP project area. No change to the rule was
made in response to this comment.
Comment: Legally-binding contracts should be required between
eligible material owners and biomass conversion facilities.
Response: We amended the final rule to require a contract,
agreement, or legally binding letter of intent with an application for
a matching payment.
Comment: Verify biomass conversion facility procurement practices
to ensure that biomass conversion facilities allow all eligible
material owners the opportunity to sell eligible material. There are
concerns due to the ``captive market'' nature of renewable biomass
supply chains.
Response: The final rule adds a provision that requires biomass
conversion facilities to pay fair market value for eligible material
regardless of whether the seller has applied for or receives a BCAP
matching payment.
Comment: Biomass conversion facilities should be allowed to charge
a BCAP administrative or service fee.
Response: Charging an administrative, service, processing or
similar fee because an eligible material owner is a BCAP participant is
not authorized by the 2008 Farm Bill. The payment being matched should
reflect the net output of the facility. A payment by the facility of
$20 with a return of a $5 fee should only produce a $15 match since
that was the actual net outlay to be matched. CCC has no authority over
the private contractual arrangements between an eligible material owner
and a biomass conversion facility. Because the intent of BCAP matching
payments to eligible material owners also provides an indirect
incentive to facilities to consider biomass as an option for heat,
power, biobased products, or biofuels, it is presumed that eligible
material owners would be disinclined to increase the indirect benefit
to the facility by the payment of an administrative fee. Such instances
are encouraged to be reported to the FSA county office for evaluation.
Should any arrangement between the eligible material owner and the
biomass conversion facility, however, comprise any portion of BCAP
matching payment, or its equivalent, as determined by CCC, it may be
considered a scheme or device to circumvent the BCAP program and all
appropriate penalties will ensue.
Comment: Require a chain-of-custody certification using the Forest
Stewardship Council, Sustainable Forestry Initiative Program, or other
mechanism to demonstrate the reliability of the biomass source.
Response: Establishing chain-of-custody that would ensure that the
identity of eligible material would be preserved would be overly
burdensome. Accordingly, this comment was not adopted. However, CCC
will collect farm and tract data through FSA's farm records system to
identify the source of the eligible material for which a matching
payment is requested. No change to the rule was made in response to
this comment.
Comment: Make the biomass conversion facility qualification process
more flexible. For example, reduce permit requirements to allow a
facility to apply for qualification before it is operational and when
permits are only applied for, because feedstock development may require
several years.
Response: A biomass conversion facility may become qualified before
it is operational, but only after it obtains all necessary permits. No
change to the rule was made in response to this comment.
Comment: Biofuel companies may require farmers to sign long-term
contracts to ensure low-cost feedstock supply. Mills may be dropping
payment rates due to BCAP matching payments by as much as 40 percent
while landowners are simultaneously raising stumpage prices.
Response: A producers' decision whether to enter into a long-term
contract with a biofuel company does not involve CCC and is outside the
scope of BCAP. Such a contract between a farmer or landowner and a
biofuel company is a private transaction that is separate and distinct
from the activities and authority of CCC.
Comment: Biomass conversion facilities with gross sales values
exceeding $25 million should be ineligible.
Response: That restriction on eligibility is not authorized by the
2008 Farm Bill. No change to the rule was made in response to this
comment.
Comment: There were many comments about the standards for moisture
content and measurement that did not represent a consensus. Suggested
approaches included adopting industry standards for moisture content,
adopting standard moisture contents of 45-50 percent, real-time
moisture testing, testing of every load, and randomly testing moisture
contents. Recommendations on measuring moisture content included taking
regional, weekly, monthly, quarterly, bi-annual, and annual moisture
averages.
Response: The proposed rule and this final rule include provisions
for matching payments to be adjusted to a ``dry ton'' basis. This
ensures that the many different kinds of eligible material are treated
similarly. Because of the
[[Page 66221]]
significant differences between types of eligible materials, industry
practices, and the potential for technological change, specific
moisture measurement protocols are not specified in the BCAP
regulation. No change was made to the final rule as a result of this
comment. CCC believes that specifying the technology or methods used to
measure dry tons is unnecessarily limiting and not required.
Comment: The exclusion of satellite delivery sites or biomass
conversion operations from BCAP participation creates a competitive
disadvantage for biomass conversion facilities with off-site chipping
facilities.
Response: Satellite delivery sites may be an important component of
certain biomass conversion facilities and we will consider materials
delivered to a satellite facility of a conversion facility as delivered
to the facility. All other eligibility conditions for eligible material
will continue to apply.
Eligible Material Owner (Sec. 1450.102)
Comment: Loggers who are not BCAP participants need a way to
recover lost revenue if the market responds to BCAP by lowering the
cost of biomass feedstock.
Response: The requirements in this section for eligible material
owner are specified in the 2008 Farm Bill. If loggers meet the
definition of eligible material owner, they are eligible for BCAP. The
purpose of BCAP is to develop a non-traditional crop base of biomass
feedstocks. The revenue of participants and non-participants is outside
the scope and authority of this rule.
Comment: The eligibility of eligible material owners should be tied
to the person that can present legal title for harvest and transport of
material.
Response: An eligible material owner is one who has the right to
collect or harvest the eligible material, as specified in this rule
with the risk of loss in the product. As specified further in Sec.
1450.3, ``Eligible Material,'' the material must have been harvested or
collected directly from the land. Language about risk of loss has been
added.
Comment: There should be a definition for ``related-parties.'' The
restrictions on related party transactions are not authorized by the
2008 Farm Bill. Some commenters provided alternative definitions for
``related party'' and ``related party transaction.'' Others suggested
exceptions that should apply to the ``related parties'' provisions.
Response: This rule removes all references to ``related-party
transactions.'' CCC has replaced references to ``related-party
transactions'' with a requirement at Sec. 1450.103 for market-based
transactions to provide that a facility may not pay different rates for
the same product based on whether the seller is participating in BCAP
or pay inflated rates for whatever reason.
Eligible Material (Sec. 1450.103)
Comment: Oppose CCC discretion to modify the definition of eligible
material when determining whether specific materials are eligible for
matching payments and subsequent placement on the eligible materials
list.
Response: Determining whether a specific material is on the
eligible materials list is not a modification of the definition. CCC
does not have the discretion to modify the 2008 Farm Bill definition of
eligible material. The 2008 Farm Bill defines eligible material as
renewable biomass, with a number of exceptions. As we did for the NOFA,
we intend to continue consulting with USDA experts and other
stakeholders when evaluating whether a specific material should be
considered an eligible material, within the 2008 Farm Bill definition.
Comments: Commenters had various suggestions for eligible
materials.
Include Title I crop residues as eligible for matching payments.
Corn stover and sugarcane bagasse should be eligible for matching
payments.
Corn stover, wheat straw, and rice hulls should not be eligible for
matching payments.
Response: The 2008 Farm Bill excludes from eligible material those
crops that are eligible for assistance under Title I; however, this
exclusion applies only to the commodity itself and not to any crop
residue associated with producing that commodity. For example, corn
grain is excluded from receiving matching payments, but, provided that
it is otherwise eligible, other parts of the corn plant may be eligible
for a BCAP matching payment. Title I crop residues that are separated
from the Title I grain, kernel, or oilseed at the point of collection
or harvest are eligible for matching payments; however, crop residues
that are separated from the Title I grain, kernel, or oilseed after the
crop is collected or harvested are not eligible for matching payments.
No change to the rule was made in response to this comment. Bagasse,
corn stover, wheat straw, and rice hulls are eligible if they are
collected, harvested, transported, and delivered as specified in the
BCAP regulations; see the table above for details about when these
materials may be eligible versus ineligible. The separation must have
occurred on the land and not occurred because the material would
normally have been delivered along with the higher valued parts of the
plant.
Comment: CCC should consider non-Title I materials as eligible for
matching payments including dried distillers grains, nut shells, energy
cane, and sweet or high-biomass sorghum.
CCC should propose a formal process for determining which eligible
materials may otherwise be used for higher-value products and the
processes would include consultation with State Foresters.
Response: The 2008 Farm Bill provides the definition for eligible
material. CCC will provide a public list of eligible materials that
meet the 2008 Farm Bill definition of eligible material, specifying
which qualify for BCAP payments, and will make that list available
electronically and through FSA field offices. When new materials are
proposed, such as, nut shells, energy cane, and sweet or high-biomass
sorghum, FSA will consult other USDA and Federal agency experts to
determine whether the new materials are additions to the eligible
materials list and whether or not they qualify for BCAP payment. No
change to the rule was made in response to this comment.
Comment: Materials from urban sources should not be considered yard
waste including: tree trimmings, disaster debris, and pallets.
Response: BCAP's purpose is generally limited to agricultural and
forest land owners and operators for matching payment purposes. No
change to the rule was made in response to this comment, because the
rule already excludes yard waste from any source as an eligible
material.
Comment: Need clarification on eligible materials that may
otherwise be used for higher-value products, such as forest thinning
materials, bark, slash, wood chips (hard and soft), wood waste, and
wood residues (including sawdust), some of which should be eligible to
receive a matching payment.
Response: We expanded and clarified the provisions in Sec.
1450.103 in response to this comment. Otherwise eligible materials that
may be used to produce higher-value products do not qualify for
matching payments under the final rule regardless of whether the
material comes from Federal or non-Federal land. Payments are not
authorized for otherwise eligible materials if they must be separated
from a higher-value product after delivery to the biomass conversion
facility. In many cases, wood waste materials would not be eligible
because they could be used for higher-
[[Page 66222]]
value products or are included with non-organic industrial materials.
Local or regional markets will be used to determine if particular
deliveries will be eligible for BCAP matching payments.
Comment: There should be partial payments for eligible materials
that are comingled with ineligible material. How will partial payments
for comingled loads be verified?
Response: This rule adds a requirement to Sec. 1450.103 that
payments are not authorized for otherwise eligible material that must
be separated from a higher-value product after delivery to a biomass
conversion facility.
Comment: Eligible material owners that violate Executive Order
13112 on Invasive Species should not be responsible for the removal
costs associated with the spread or establishment of noxious or
invasive species as a result of activities related to receiving
matching payments.
Response: As a condition of applying for a matching payment, an
eligible material owner must obtain a conservation plan, forest
stewardship plan, or equivalent plan. Violation of Executive Order
13112 would be considered a violation of the plan. No change to the
rule was made in response to this comment. The issue of removal costs
is outside the scope of BCAP; material owners who violate Executive
Order 13112 may be subject to penalties under State or other Federal
laws.
Comment: The eligible materials list should be published in the
final rule.
Response: We included an example list of how eligible materials
qualify for payment. As discussed above, the up to date list will be
publicly available through the FSA Web site and at FSA county offices.
Instead, this rule provides the criteria upon which decisions will be
made to determine whether a material is an eligible material and
whether or not it qualifies for BCAP payments and the responses to
comments in this final rule clarify examples already determined to be
eligible or ineligible. No change to the rule was made in response to
this comment.
Comments: Include black liquor as an eligible material and as an
advanced biofuel.
Response: Black liquor, an inorganic waste industrial by-product of
the kraft process used in pulp manufacturing, is a product that
historically was discharged into waterways, and today is processed
through recovery boilers to retrieve chemicals for cost-efficiency
purposes, with the process generating heat for power. The establishment
of BCAP in the 2008 Farm Bill was designed to cultivate a new
nationwide crop base of non-food, non-feed biomass for new uses of
energy. Black liquor is not an eligible or ineligible material, it is
not a feedstock, but rather a product of feedstocks. Eligible materials
that can be attributed to the creation of black liquor are materials
that were delivered principally for the manufacture of a higher-value
product that is not heat, power, biobased products, or biofuels, not
for the recovery of chemicals where energy is an ancillary side effect
and therefore do not qualify for matching payments.
Signup (Sec. 1450.104)
Comments: Use qualified biomass conversion facility settlement
sheets to issue matching payments rather than documents provided by the
eligible material owner.
Response: As with other FSA and CCC programs, the recipient of the
payment is responsible for the accuracy and completeness of the
information on the application for payment. As specified in this rule,
a settlement sheet is one of the pieces of documentation that an
eligible material owner must provide to FSA to receive payment.
Qualified biomass conversion facilities are required to retain all
documentation for a period of 3 years from the date of delivery should
it become necessary for auditing or other purposes to validate data. No
change to the rule was made in response to this comment.
Comments: There should be a 2 week signup period each quarter for
matching payments.
Response: Having a continuous signup is more flexible for eligible
material owners accommodates seasonal and geographic differences in the
local marketplace and permits county offices to better manage heavy
workloads. No change to the rule was made in response to this comment.
Payments (Sec. 1450.106)
Comment: Spatial distance should be considered when determining
matching payment rates.
Response: The 2008 Farm Bill requires that payment be made based on
the payment made by the biomass conversion facility, with no provision
for an additional requirement that the material be harvested within a
certain distance of the facility. No change to the rule was made in
response to this comment.
Comment: Allocate funds quarterly to ensure equal distribution of
funds across all quarters. Only approve requests for payments for sales
receipts within one year from the date the receipt was issued.
Extensions should be considered for contracts when delivery was delayed
at no fault of the eligible material owner.
Response: When the final rule becomes effective, FSA intends to
begin regular allocations of funding to meet local needs. When an
application is submitted, the approval will provide a reasonable period
of time for biomass deliveries, after which, the approval may be
withdrawn and the funds de-obligated. Where appropriate, FSA county
offices will consider extension requests to the dates of delivery that
were included in the application. No change to the rule was made in
response to this comment.
Comment: CCC should issue early partial payments for large volume
contracts.
Response: Partial payments will be authorized for discrete,
segregable deliveries that are part of a single application. Payments,
or payment advances, are prohibited before the delivery period starts,
or before proof of payment for delivery is presented to the FSA county
office. No change to the rule was made in response to this comment.
Comments: Commenters had various suggestions related to the 2-year
payment period for matching payments.
CCC should address an eligible material owner's lost time due to
the NOFA termination.
CCC should start the 2-year clock of all eligible material owners,
or at least stop the clock on the date the proposed rule was published
or the last date of performance, whichever was later.
CCC should make the 2-year period shorter. CCC should extend the
time period to 3 to 7 years.
Response: The 2008 Farm Bill requires a payment limit of 2 years,
which is not changing with this rule. Payments will be for a term not
to exceed 2 years beginning from the date that CCC issues the first
payment. New participants will be eligible for payments for a period of
2 years beginning from the date their first matching payment is made
after the effective date of this rule. CCC will determine how to take
into account participants during the NOFA period. At the least, the 2-
year period will be considered stopped during the period between the
end of matching payments received during the NOFA and the beginning of
CCC matching payments for new deliveries by the participant.
Anyone who wants to participate in BCAP, including eligible
material owners and biomass conversion facility owners, will need to
apply under the BCAP regulations, no one will be grandfathered in based
on applications approved under the NOFA.
[[Page 66223]]
The authorizing statute provides for a 2-year limitation on
matching payments; no additional limitations are authorized.
Efforts by BCAP participants to restructure after the 2-year
limitation expires in order to obtain additional matching payments may
be considered a scheme or device and may result in permanent debarment
from BCAP. If it is determined by CCC that a person or business has
restructured or engaged in related party transactions for the purpose
of, or having the effect of, defeating the intent of BCAP (including an
action to defeat the 2-year limit on payments), or to circumvent the
provisions of this rule and its related requirements, or to obtain
payment not otherwise entitled, then any part of any program payment
otherwise due or paid to such person during the applicable period may
be required to be refunded with interest as determined appropriate by
CCC. Any eligibility determination that was based, in whole or part, on
a scheme or device will be rescinded. A scheme or device includes, but
is not limited to coercion, fraud, misrepresentation, depriving any
other person of a payment, or obtaining a payment that otherwise would
not be payable.
Comment: Reduce the $45 per dry ton payment limit to $30 per dry
ton.
Response: The 2008 Farm Bill provides that the upper limit on
matching payments be ``* * * equal to not more than $45 per ton.'' CCC
will issue payments at rates lower than $45 per ton where local market
prices reflect lower rates--hence the term ``matching payments.'' No
change to the rule was made in response to this comment.
Comment: The proposed rule included several options for calculating
payments. Commenters had various suggestions for all three options, as
well as suggestions for alternative rate structures including
structures to favor dedicated energy crops, based on greenhouse gas
reductions, fossil fuel displacement, whether the materials were
derived from land with a conservation plan, forest stewardship plan, or
equivalent plan and based on biomass conversion facility output. Some
commenters suggested giving ``bonus payments'' for eligible materials
that are carbon neutral or negative. Commenters also suggested
implementing a price floor or minimum that biomass conversion
facilities must pay to eligible material owners.
Response: The rule reflects that the 2008 Farm Bill provides for
matching payments to be paid at a rate of $1 for each $1 per dry ton
provided by a qualified biomass conversion facility for the market-
based sale of eligible material in an amount not to exceed up to $45
per dry ton. There are no tiered payments based on type of biomass or
on use above a historical baseline.
Comment: Matching payments should be based on the actual
``collection, harvest, storage and transportation costs'' of eligible
materials rather than the biomass conversion facility gate price of
eligible materials.
Response: The 2008 Farm Bill requires that payments be based on
matching the amount paid by a qualified biomass conversion facility. No
change to the rule was made in response to this comment.
Establishment Payments and Annual Payments in Subpart C
General (Sec. 1450.200)
Comment: Please clarify the time frame in which contract acreage is
expected to become enrolled in BCAP.
Response: Eligible persons may signup eligible land into contract
acreage once a project area is approved. The exact time frame for when
signup will occur will vary based on the amount of time project
sponsors need to submit a project area proposal and the level of
technical and environmental review required for the project area
proposal.
Comment: Clarify whether land enrolled in contract acreage will be
eligible to receive base-acre payments under the Direct and Counter-
Cyclical Payment Program (DCP).
Response: BCAP does not prohibit participation in other programs;
however, requirements of other programs may apply. In the case of DCP,
contract acreage is considered to be an acceptable agricultural use of
DCP cropland.
Comment: CCC should discuss the process for determining the
appropriate number of project areas that will be selected and how that
process relates to the findings of the PEIS.
Response: As indicated in the preamble to the proposed rule, we
indicated that all project proposals would be considered acceptable
provided those proposals met the selection criteria outlined in Sec.
1450.202. The PEIS included an in-depth discussion of the selection
criteria and can be located at this Web address: http://www.fsa.usda.gov/Internet/FSA_File/bcapfinalpeis062510.pdf.
Comment: BCAP project areas should have additional goals, including
providing additional wildlife habitat, increasing resources and
opportunities to small- and mid-sized farms, and encouraging the
establishment of several categories of potential eligible crops
including native grasses and trees, dedicated annual and perennial
energy crops, only dedicated perennial crops, short-rotation woody
crops, and crops that are ecologically appropriate based on the
geographic location of the project area.
Response: These additional goals are largely compatible with the
BCAP as specified in this final rule. Land enrolled under a BCAP
contract may be capable of producing multiple benefits including
additional wildlife habitat and additional resources and opportunities
to agricultural and forest land owners. BCAP, however, is not a
wildlife or conservation program as is CRP, rather BCAP is to promote
the establishment and cultivation of new biomass crops.
Comment: Apply the project area selection criteria to evaluate
offers to enroll land into BCAP contracts.
Response: We expect project areas to cover all or parts of multiple
counties. Applying potentially multi-county project area criteria to
individual offers from the farm level would impose an undue
administrative burden on USDA as well as individual farmers and
ranchers. Therefore, this suggestion was not adopted.
Comment: There are better ways to select project proposals. Some
alternatives include: (1) First-come, first-serve; (2) all eligible
land within 100 miles of a qualified biomass conversion facility; (3) a
regional approach to ensure an even distribution of project areas
across the country; (4) a competitive approach to ensure the best
project areas are selected; and (5) a nation-wide project area that
allows all eligible producers to enter into a BCAP contract.
Response: The first approach, first-come first-serve, is similar to
the approach as described in the proposed rule except that project area
proposals would also be required to meet the requirements of the
selection criteria as provided in Sec. 1450.202.
Requiring a distance-based model arbitrarily limits enrollment even
if there were potential participants beyond that distance who wanted to
participate. It is not clear if the comment intended to address what
seems to be a natural barrier due to the transportation costs involved.
However, setting an arbitrary distance may work well in some regions,
but preclude promising technologies and feedstocks elsewhere.
With respect to the regional approach to ensure an ``even
distribution,'' this would only be an issue if there was a competitive
evaluation comparing merits of all project area proposals.
[[Page 66224]]
It is also important to note that the key criteria for a project
area proposal is having an established or planned biomass conversion
facility in or near the area. It is not clear how having a nation-wide
project is compatible with this criteria. No change to the rule was
made in response to this comment.
Comment: Contract acreage will compete for land that produces food
and feed. It will also compete with land that is native wildlife
habitat, specifically land enrolled or potentially enrolled in CRP (7
CFR part 1410).
Response: While BCAP-eligible land within project areas could
conceivably be used to grow food or used for wildlife habitat, growing
dedicated energy crops instead, is unlikely to have a discernable
adverse impact on food markets or the environment for several reasons.
First, dedicated energy crops are relatively well suited for
cultivation on marginal crop and pasturelands, which, by definition, do
not significantly contribute to food production. Second, recent trends
in grain supplies suggest that they are not being driven primarily by
biomass feedstock production. Third, U.S. food prices are only
marginally impacted by changes in grain prices when they do occur.
Fourth, BCAP may motivate a shift away from fossil fuels, as well as
from corn-based ethanol as a means by which to satisfy the standards
referenced above that will favorably impact environmental quality.
Fifth, it is true that some marginal land that could otherwise be
enrolled in CRP may be enrolled in BCAP instead. However, research has
shown actively managed dedicated energy crops also confer significant
wildlife benefits. Further, the conservation, forest, or equivalent
plans required for BCAP-eligible land will serve to mitigate any
adverse impacts from dedicated energy crop production. Each project
will be reviewed individually to provide maximum consideration of the
costs and effects, including environmental effects, of the project. No
change to the rule was made in response to this comment.
Comment: BCAP may cause shortages of seed stock necessary to
establish dedicated energy crops.
Response: Under CRP, early enrollments created a demand for
vegetative and tree covers that exceeded the available supply. Then,
the seed trade mobilized to develop, market, and sell seed to meet the
demand. We expect a similar response under BCAP.
Comment: There is a difficult, expensive time-lag associated with
establishing and harvesting dedicated energy crops.
Response: Yes, there will be a period of time before eligible crops
can be harvested according to a conservation plan, forest stewardship
plan, or equivalent plan. That is why there are annual payments.
However, fundamentally, establishing a renewable energy crop is as much
subject to conditions beyond farmers' control as establishing any other
vegetative or tree cover; the risks of growing crops are not unique to
BCAP.
Comment: Will matching payments be available to producers with land
enrolled under a BCAP contract at time of harvest?
Response: As provided in this rule, matching payments are available
for eligible materials harvested from land enrolled under a BCAP
contract after the materials have been delivered to the biomass
conversion facility. There will be a reduction to the annual payment
based on a percentage (1 percent to 100 percent) of the matching
payment and sale price received, as specified in this rule. In no case
will the reduction be greater than the annual payment.
Project Area Submission Requirements (Sec. 1450.201)
Comment: We oppose the sufficient equity requirement for project
areas. Provide more clarification about it.
Response: The 2008 Farm Bill states that sufficient equity must be
demonstrated by a biomass conversion facility that is not operational
at the time the project area proposal is submitted, so this rule
includes the provision. Demonstration of sufficient equity can be
included in the project area proposal as part of the business
feasibility description, which may include items such as an outline of
efforts made toward securing financing, facility specifications, or
projected operating costs. For further clarification on specific cases,
please contact your FSA county office.
Comment: An FSA representative should be available to provide
support for groups intending to sponsor a project area because the
proposed language is unclear and would be difficult to consistently
implement.
Response: The commenters did not provide detailed information
describing how the proposed rule was unclear. FSA county office
employees will be available to assist project sponsors in developing
proposals.
Comment: Include the production of eligible material as selection
criteria for project areas.
Response: It is unclear what purpose this would serve, except to
promote only establishment of eligible materials, rather than the wider
group of renewable biomass. The 2008 Farm Bill is clear that one
purpose of the establishment payments part of BCAP is to promote the
establishment of the wider group of renewable biomass.
Comment: There should be a longer plant establishment timeframe.
Response: CCC has extensive experience with establishing vegetative
and tree covers under CRP, which we used in developing BCAP. Under CRP,
as well as BCAP, CCC requires that practices be established within 3
years for longer-term practices. Under BCAP, the establishment time for
annual and non-woody perennial crops is reduced because the contract
duration is significantly less than CRP. In all cases, CCC takes into
consideration the circumstances where cover establishment is delayed
through no fault of the contract participant. No change to the rule was
made in response to this comment.
Comment: Project sponsors should identify other potential local
sources of biomass so that proposals could be evaluated in the context
of local biomass availability and demand.
Response: We amended the regulation in Sec. 1450.201(a)(1) to
clarify that it is required.
Comment: Project sponsors should identify proposed feedstocks
(including crop mixes) they plan to use, what land types biomass will
be sourced from, and expected production.
Response: Under Sec. 1450.201(a), project sponsors must provide a
description of the eligible land and eligible crops with a proposed
project area.
Comment: Only require general information about acres targeted for
planting, such as general region, land history, current use and acres
that will not be planted. Project area boundaries should be used to
document current land use, eligible crops, and cropland and projected
land use change, rather than on a more detailed producer basis.
Response: The 2008 Farm Bill requires a description of the eligible
land and eligible crops ``of each producer'' that will participate in
the proposed project area. However, we recognize that a project
proposal cannot assume future participation. CCC will only require a
generalized assessment of eligible land and eligible crops in project
area proposals.
Further, project sponsors must provide sufficient information for
us to determine whether the requirements of Sec. Sec. 1450.201 and
1450.202 have been met. Incomplete proposals will be returned to the
project sponsor, but may be resubmitted. No change to the rule was made
in response to this comment.
[[Page 66225]]
Comment: Project sponsors should provide information on
conservation plans, forest stewardship plans, or equivalent plans and
should consult with State Forester to determine scope and scale of the
plan needed.
Response: Project sponsors are not required to do so, but all
producers who have a BCAP contract in the project area will be required
to have such a plan. It is not reasonable to require project sponsors
to develop such a plan for the large geographic area covered by the
project area, much of which may not be under BCAP contracts. One of the
criteria used to select project areas, as specified in this rule, is
the impact on soil, water, and related resources.
Comment: Project sponsors should have a business plan and an
economic feasibility study and a summary of where and how the energy
will be marketed. Add a selection criterion to show that the business
plan is sustainable. Project sponsors should consult with State
sustainable biomass planting and harvesting guidelines.
Response: The purpose of BCAP is to develop a non-traditional crop
base of biomass feedstocks. Project area proposals reuqis a business
feasibility description. Requiring project sponsors to submit economic
feasibility studies, marketing plans and business plans does not appear
necessary and could add an undue burden of cost which could discourage
worthwhile participation in BCAP. No change to the rule was made in
response to this comment. Producers in BCAP project areas, however, are
required to have conservation plan, forest stewardship plan, or
equivalent plan, and one of the criteria used to select project areas,
as required by statute, is the impact on soil, water, and related
resources.
Comment: Long-term should be defined as a 7-year minimum, to
support biomass conversion facility viability.
Response: Defining what would be considered ``long term'' with a
specific time would arbitrarily disadvantage some proposals that may
otherwise have promising technological or feedstock viability. The
viability of the conversion facilities will be reviewed on a case-by-
case basis. No change to the rule was made in response to this comment.
Comment: Project sponsors should lead information gathering and
communication with CCC.
Response: After approval of a project area, FSA county offices will
work directly with farmers and ranchers to enter into contracts, make
payments, ensure contract terms are followed, and other duties similar
to the other programs that FSA provides to farmers. No change to the
rule was made in response to this comment.
Comment: Proposals should include protocols to be used by the
facility in verification and audits of plan compliance.
Response: There were no detailed recommendations accompanying this
suggestion; however, biomass conversion facilities that become
qualified under Subpart B and producers enrolling in BCAP contract may
be reviewed or audited by FSA as appropriate. No change to the rule was
made in response to this comment.
Comment: Additional information should be provided to outline and
simplify project area submission requirements. This may include
information regarding acceptable project area sizes, how a proposal may
``demonstrate'' each submission requirement, and requiring a
description of eligible land and eligible crops.
Response: Project area proposals will inherently be unique
depending on what the project sponsor chooses to propose. Providing a
template that applies to all potential issues and variability across
the country will arbitrarily exclude proposals for technologies and
feedstocks that could delay achieving the goals of the renewable fuel
standard. No change to the rule was made in response to this comment.
Comment: Simplify proposal criteria to facilitate a single facility
or group of facilities (with no intention of farming crop), to organize
and submit a proposal, without which such groups may be unable to
submit project area proposals.
Response: The submission requirements in this rule do not prohibit
a proposal submitted by multiple facilities. There is no restriction on
project area proposals by groups or for groups of facilities. FSA
designed the proposal criteria to meet the requirements of the 2008
Farm Bill, for the effective implementation of BCAP, and to minimize
the burden on respondents.
Comment: There should be a ``conditional approval'' status for
potential BCAP project areas that meet the basic requirements for a
project area, with final approval being contingent upon requirements to
fund the projects, obtain contracts, and other provisions.
Response: FSA's intention is to approve project areas that meet the
requirements of Sec. 1450.202 and to provide additional support and
guidance at the FSA county office level so that contracts can be
entered into at the appropriate time. No change to the rule was made in
response to this comment.
Project Area Selection Criteria (Sec. 1450.202)
Comment: All alternative energy programs should target local
ownership.
Response: The establishment payments and annual payments part of
BCAP will target local ownership. Opportunity for local investors to
participate in ownership of the biomass conversion facility will be
considered in evaluating project area proposals. No change to the rule
was made in response to this comment.
Comment: The selection criteria regarding the ``variety of biomass
production approaches within a project area'' may negatively impact
biomass conversion facilities using a single eligible crop for
conversion to bioenergy.
Response: The 2008 Farm Bill specifies this criteria; it requires
consideration of proposals using this criteria, in addition to the
other criteria. A project area proposal that is strong on the other
criteria, but only proposes a single eligible crop should not be
negatively impacted.
Comment: Clarify the weighting and evaluating of the project area
selection criteria.
Response: The 2008 Farm Bill specifies the criteria that will be
used to select project proposals. CCC will evaluate the proposals in
coordination with technical experts based on relevant technical
standards. The weighting of the factors will vary over time as BCAP
matures. No change to the rule was made in response to this comment.
Comment: Clarify how the definition of a BCAP project area is
related to the project area selection criteria and specifically what
distance is considered ``economically viable.''
Response: Delineating the project area is one of the project area
submission requirements under Sec. 1450.202. A geographic delineation
outlines the eligible area for enrollment in a BCAP contract and
provides the basis for performance reporting, monitoring, and
evaluation. The distance for ``economic viability'' will vary depending
on local conditions. Absent geography, the distance is generally set by
transportation costs to move eligible material from the farm to the
biomass conversion facilities. This distance may also vary over time
depending on the relative costs of transportation. Also, natural
formations such as rivers, lakes, and mountains also serve as
geographic barriers. There is no specific distance that will
automatically be considered to represent the limit for economically
[[Page 66226]]
viable. No change to the rule was made in response to this comment. The
project sponsor will propose what will be economically viable based on
their geographic location, their proposal, and the eligible crops.
Comment: Consider the following environmental impacts as project
area selection criteria: positive and negative indirect impacts such as
land-use change and landscape fragmentation, long-term impacts on
natural resources such as water, carbon, and wildlife, agronomic
considerations such as genetic diversity of crops, sustainability of
annual versus perennial crops, and whether or not the crops are native
or are ecologically appropriate to the project area.
Response: The purpose of BCAP is to promote the cultivation of
annual and perennial crops that are not primarily grown for food or
animal feed. The proposed rule and the final PEIS listed the minimum
selection criteria developed for participation in the BCAP project
area. The selection criteria seek to address: (1) The amount of
feedstock available from multiple sources and grown through multiple
techniques to supply a biomass conversion facility; (2) the potential
economic impact within the project area; (3) the potential for local
investment in the biomass conversion facility; and (4) participation by
socially disadvantaged producers. We also must assess the impact on
soil, water, and related resources. We may also take into account other
selection criteria, as appropriate. Additional selection criteria may
be developed, if necessary, at the national level or on a region-by-
region basis, depending on the need and flexibility of specific areas
to change.
The cumulative effects within each project area would be addressed
through the site-specific environmental screening and resulting NEPA
analysis at the appropriate level (that is, categorical exclusion,
environmental assessment, or environmental impact statement). The
appropriate level of NEPA analysis would include an assessment of the
potential effects to wildlife, including landscape or habitat
fragmentation; water quality and quantity; and soil carbon. Some of the
potential impacts cannot be fully assessed due to conflicting
methodologies for the assessment of some areas or lack of sufficient
data to make appropriate determinations, such as indirect land-use
changes and life-cycle analysis of new crop types. The genetic
diversity of crop types is primarily assessed through USDA's Animal and
Plant Health Inspection Service on-going testing, field trials, and
NEPA analyses of new crop varieties and introduced plant species for
commercial uses. Also, local State technical committees, in association
with State-level agencies that regulate invasive species will have
input on the plant species that would be considered invasive or noxious
within each State, limiting the overall pool of potential candidate
species for dedicated energy crop production. Therefore, BCAP as
specified in the final rule addresses this comment. No change to the
rule was made in response to this comment.
Comment: Target local ownership and economic benefits and benefits
to socially disadvantaged and beginning farmers and ranchers as project
selection criteria.
Response: These selection criteria are specifically included in the
rule.
Comment: Allow BCAP project area boundaries to be modified to allow
additional producers to enter into BCAP contracts after a project area
has been selected.
Response: BCAP project area boundaries may be modified by the
project sponsor post-project area approval; however, additional
environmental review may be necessary if such modifications
significantly deviate from the initial scope of the original approved
BCAP project area.
Eligible Persons and Legal Entities (Sec. 1450.203)
Comment: Use the NOFA definition of ``foreign entity.''
Response: The 2008 Farm Bill does not preclude participation in
BCAP by foreign entities. Accordingly, foreign entities may participate
in BCAP provided they are otherwise eligible. No change to the rule was
made in response to this comment.
Comment: Clarify the terms ``eligible persons'' and ``legal
entities.''
Response: The terms ``person'' and ``legal entity'' are defined in
7 CFR part 1400. For ease of administration and consistency with other
CCC programs, a reference to the definitions found at 7 CFR part 1400
was added to this rule in the Definitions section.
Eligible Land (Sec. 1450.204)
Comments: Is native sod ever eligible land?
Response: CCC has offered greater clarification in this rule to
identify native sod as ineligible land for contract acreage in project
areas. ``Native sod'' is defined in this rule as land that has never
been tilled for the production of an annual crop as of June 18, 2008,
which was the date of enactment of the 2008 Farm Bill. This definition
of native sod may affect large portions of rangelands that have never
been tilled and on which the plant cover is composed principally of
native grasses, grasslike plants, forbs, or shrubs suitable for grazing
and browsing. This rule corrects the date for native sod from the
effective date of this rule to the date of the enactment of the 2008
Farm Bill.
Comments: Consider land not in agricultural production to be
eligible land.
Response: For BCAP, the 2008 Farm Bill specifies that nonindustrial
private forests and agricultural lands are considered to be eligible
lands for establishment payments and annual payments. Agricultural
lands include cropland, grassland, pastureland, rangeland, hayland, and
other land on which food, fiber, or other agricultural products are
produced or capable of being produced. ``Or capable of being produced''
would include lands not in current agricultural production, so long as
they are not native sod. However, these lands must meet the
environmental review requirements and, as a condition of enrollment,
must comply with conservation plans, forest stewardship plans, or
equivalent plans. No change to the rule was made in response to this
comment.
Comments: There should be a ``crop history requirement'' for
eligible land.
Response: A crop history requirement is an eligibility requirement
for CRP; the 2008 Farm Bill included no such crop history requirement
for BCAP. FSA will track information of the land use for BCAP
contracts.
Comments: Only marginal cropland should be considered as eligible
land.
Response: The 2008 Farm Bill included a definition of ``eligible
land'' that includes agricultural land and nonindustrial private forest
land. Targeting only marginal land is contrary to the purpose of BCAP,
which includes promoting diversification of dedicated energy feedstock.
One of the purposes of BCAP is to encourage the production of bioenergy
crops on otherwise marginal land that is poorly suited to other
agricultural uses. No change to the rule was made in response to this
comment.
Comments: Nonindustrial private forest land should not be eligible
land due to concerns over converting native forests and savannahs to
commercial-production plantations.
Response: BCAP will not incentivize the conversion of old growth,
other natural forests, or savannahs to biomass plantings. The majority
of old growth forest that exists in the United States is located on
Federal land, managed predominantly as part of the National Forest
System and by the Bureau of Land Management. The laws,
[[Page 66227]]
regulations, and procedures that govern the management of these lands
preclude the liquidation of old growth as well as the establishment of
non-native forests. While the same laws and other restrictions do not
generally apply to privately held land, the BCAP regulation provides
that provisions of the Healthy Forests Restoration Act (16 U.S.C.
6512), must be followed on private land in order for material harvested
from that land to qualify for a BCAP matching payment. Therefore, BCAP
does not provide an incentive to harvest old growth forest for
conversion to energy. Further, under the BCAP regulation, only woody
biomass outside contract acreage that is removed as a preventative
treatment to address fire danger, insect or disease outbreaks, or
ecosystem health, and has no other higher-value purpose, is eligible
for matching payments. In addition to legal restriction, analysis of
forest product markets show that prices of saw logs and other timber is
significantly higher than wood for energy, even with matching payments
up to $45 per dry ton. Little economic reason exists to convert a
forest producing hard or softwood timber to an energy plantation. This
assessment by forestry experts agrees with the BCAP PEIS analysis that
shows that land conversion driven by BCAP would happen primarily on
marginal cropland and pastureland. Also, the 2008 Farm Bill does not
authorize the conversion of savannahs to commercial production
plantations for purposes of BCAP; native sod is explicitly excluded
from eligibility for BCAP project areas.
Comments: Land enrolled in CRP should be eligible to enroll in BCAP
once the CRP contract has expired and the land meets all other eligible
land requirements.
Response: Under CRP, when a contract nears expiration, CCC notifies
the CRP participant of the pending expiration and that the land may be
eligible to be re-enrolled in CRP or enrolled under the Direct and
Counter-Cyclical Program. CCC will add BCAP as a potential use for the
land, too. No change was required to the rule to implement this
comment.
Comments: Abandoned and reclaimed mine land should be considered as
eligible land for establishment payments and annual payments.
Response: The 2008 Farm Bill does not exclude abandoned or
reclaimed mine land from contract acreage under a project area, so it
could be eligible land under this rule. However, the land must meet all
the contractual obligations, including environmental screening and
planning. Establishment payments cannot be used for the cleanup of
contamination and related remediation that are not a part of the BCAP
conservation plan, forest stewardship plan, or equivalent plan. No
change to the rule was made in response to this comment.
Comments: Clarify the eligibility of non-Federal lands including
whether State and other local-government lands are eligible land.
Response: The 2008 Farm Bill does not allow for Federal- or State-
owned lands to be eligible land for contract acreage within project
areas. Local governments are considered a sub-division of the State,
and therefore local government-owned land is ineligible for enrollment
as BCAP contract acreage.
Duration of Contracts (Sec. 1450.205)
Comment: BCAP contracts should be renewable.
Response: The 2008 Farm Bill does not provide authority to renew
contracts after 2012. No change to the rule was made in response to
this comment.
Comment: BCAP contracts should use a delayed effective date in
order to accommodate the time it may take for eligible crops to become
established.
Response: Because BCAP is designed to promote the cultivation of
unconventional biomass crops where a market to purchase those crops
does not yet exist, or is at its earliest stages of development,
providing a delay in BCAP contracts until the non-conventional crops
become established would result in little incentive for landowners to
switch from known, revenue-generating conventional crops; this lead
time is also necessary so that the required base of non-conventional
crops is established to coincide with the operations of biomass
conversion facilities. For more than a quarter of a century, CCC has
managed long-term contracts for CRP; the annual income of CRP contracts
provides a distinct, but equitable incentive to conventional crop
revenues so as to recognize an important value of land unrecognized by
the conventional crop marketplace. By delaying the annual income of the
BCAP contract, it is unlikely the non-conventional BCAP crop would be
established. This comment was not adopted.
Comments: Duration of contract should consider geographic and
environmental factors.
Response: The duration of contracts is limited by the 2008 Farm
Bill to no more than 5 years for herbaceous crops and no more than 15
years for woody crops. No change to the rule was made in response to
this comment.
Comments: Non-woody perennial crops should have contract durations
between 7 to 10 years.
Response: The contract duration for non-woody perennial crops is
specified as up to 5 years in the 2008 Farm Bill. No change to the rule
was made in response to this comment.
Obligations of Participant (Sec. 1450.206)
Comments: Producers should not be required to implement a
conservation plan, forest stewardship plan, or equivalent plan on all
contract acreage regardless of the number of acres enrolled or the
amount of eligible crops produced by the producer(s).
Response: The 2008 Farm Bill requires that any eligible land within
the project area that is enrolled under the contract must include a
conservation plan, forest stewardship plan, or equivalent plan. We do
not have discretion to remove this requirement. In addition, eligible
land within a proposed project area will be included in the
environmental screening and must comply with the prescribed
environmental requirements. No change to the rule was made in response
to this comment.
Comments: While we generally support the requirements for producers
to make information available to CCC or institutions of higher
education concerning the production of eligible crops and the
development of biomass conversion technology, we are concerned about
the release of proprietary information.
Response: The 2008 Farm Bill requires that BCAP contracts include
terms that require participants to make available information to the
Secretary, to institutions of higher education, or any other entity
designated by the Secretary, such information as the Secretary
considers to be appropriate to promote the production of eligible crops
and the development of biomass conversion technology. CCC will comply
with all applicable transparency and privacy laws, regulations, or
Executive Orders, for example, the Freedom of Information Act. No
change to the rule was made in response to this comment.
Conservation Plan, Forest Stewardship Plan, or Equivalent Plan (Sec.
1450.207)
Comments: There were many comments suggesting alternatives and
additions to the requirements for conservation plans and forest
stewardship plans. Commenters made a number of related recommendations
including:
[[Page 66228]]
Do not require anything beyond what may be required for an
annual crop such as wheat or corn;
Following sustainable biomass establishment and harvesting
guidelines including harvesting strategies that allow for the producer
to determine the exact area for harvest each year as a part of the
conservation plan, forest stewardship plan, or equivalent plan;
Expedite the approval of plans for the first fiscal year;
Make plan requirements voluntary;
Make plan requirements consistent;
Propose third-party verification, re-establishment of
grasses or trees post-harvest, harvest timing, residual height, crop
diversity, greenhouse gas life-cycle assessments, standard soil erosion
rates, and considerations for threatened and endangered species,
pollinators, nesting birds, buffers, and pests;
Use the State of Minnesota standards, the Forest
Stewardship Council standards, and standards sets by the respective
State, and National standards;
Use the NRCS Soil Conditioning Index to evaluate the
impacts to soil resources; and
Consider the costs of conservation plan, forest
stewardship plan, or equivalent plans, specifically in relation to the
size of the tract of land.
Response: CCC will use technical assistance providers such as NRCS
and State Foresters to provide assistance with conservation plan,
forest stewardship plan, and equivalent plans. Non-government private
providers of technical assistance may also be used. These technical
assistance providers will use the most appropriate data and standards
for harvesting to conduct the planning for contract acreage within the
context of the applicable geography.
Implementing conservation plans, forest stewardship plans, or
equivalent plans for all land involved in BCAP is a critical factor in
conserving natural resources, regardless of the size of particular
tracts of land.
The BCAP regulations provide general requirements, including the
requirements for the plans. The required plans will be site specific
plans and will vary based on the specific location and eligible crops.
Specific standards suggested by the commenters may make sense in a
specific location, but may not fit for another location. For example,
requiring particular harvesting practices may not be suitable for all
eligible land. Therefore, we will work with technical assistance
providers to ensure that applicable BCAP practices are applied on a
case-by-case basis for contract acreage in the project areas. The
determination regarding harvesting will be executed in compliance with
environmental review and planning. No change to the rule was made in
response to this comment.
Comments: There may be impacts to threatened and endangered species
if potentially noxious and invasive species are considered as eligible
crops.
Response: No species that is noxious or invasive in that State will
be considered as an eligible crop. No change to the rule was made in
response to this comment.
Comments: Do not waive the requirement for a conservation plan if
the conservation district declines to review or approve a conservation
plan.
Response: CCC will not waive the requirement for a conservation
plan, forest stewardship plan, or equivalent plan. However, in the case
where the conservation district declines to review or approve a
conservation plan, then CCC retains the authority to waive the
requirement for conservation district review--this does not waive the
requirement for the plan. If a conservation district declines to review
a conservation plan, farmers and ranchers should not be harmed by
precluding enrollment. No change to the rule was made in response to
this comment.
Comments: Do not use local soil and water conservation districts;
such districts are not funded for work on BCAP.
Response: FSA has a long and valued partnership with the
conservation districts for implementation of CRP, and expects BCAP to
be one of many continued partnership opportunities. No change to the
rule was made in response to this comment.
Comments: Consider the following to be ``equivalent plans:'' the
American Tree Farm Program, the Sustainable Forestry Plan, plans
created by foresters or third-party forester licensed by the State, and
the State Best Management Practices Program.
Response: CCC works with the U.S. Forest Service and State
Foresters to ensure that equivalent plans meet the criteria outlined in
this rule and with applicable State law. The determination of the
applicability of certain plan types for BCAP will be made at a local
level. No change to the rule was required in response to this comment.
Eligible Practices (Sec. 1450.208)
Comments: Provide examples of the eligible practices for annual
crops, non-woody perennial crops, and woody perennial crops.
Response: Eligible practices will be developed in consultation with
the U.S. Forest Service and the Natural Resources Conservation Service.
Actual practice standards may vary by region due to climatic
conditions, moisture, elevation, and other technical considerations. No
change to the rule was made in response to this comment. For more
information on appropriate practices for a particular crop in a
particular area, please contact your FSA county office.
Comments: Land rental payments, equipment purchases, general
maintenance, chemical inputs, weed and pest control, and inter-planting
costs should be considered reimbursable under eligible practices.
Response: Rental payments and equipment will not be reimbursable.
Some of the other items may be reimbursable, depending on the specific
practice. CCC and FSA will draw on our long experience with
establishing practices under CRP, the Emergency Conservation Program,
and other programs to determine eligible costs and the reimbursement
rate for these costs. Generally, the practice standards for those
programs provide funding to establish a practice, which in some cases
may include the suggested items. BCAP does not include funding for land
rental payments as such, but the BCAP annual payments provide a similar
support. Equipment purchases are not authorized by the 2008 Farm Bill.
Generally, weed and pest control, chemical inputs, and inter-planting
costs are authorized under the contract. In summary, many of the
suggested items could be funded if appropriate as part of a particular
establishment practice. No change to the rule was made in response to
this comment.
Comments: Conversion of existing covers including non-native
vegetative cover to eligible crops should be considered eligible for
enrollment.
Response: Where suited for the area, this would be consistent with
BCAP purposes. In general, that would be an acceptable practice so long
as all other eligibility requirements are met.
Comments: Algae production should specifically be included as a
non-woody perennial eligible practice.
Response: Because algae does not have to be established on an
annual basis or shorter time period, CCC anticipates treating it as a
perennial crop. However, because this is an emerging crop, CCC will
make this determination based on project proposals and technical
practices as they become available. No change to the rule was made in
response to this comment.
[[Page 66229]]
Acceptability of Offers (Sec. 1450.210)
Comments: CCC should use the environmental benefits index (EBI)
tool under CRP to score BCAP contract offers and to favor marginally-
productive land.
Response: This is unworkable for BCAP. CRP enrolls land through two
ways: a competitive or ``general'' sign-up and a non-competitive or
``continuous'' sign-up. BCAP is analogous to CRP continuous sign-up,
where all eligible offers will accepted, rather than the competitive
``general'' sign-up. Under CRP general sign-up, offers for CRP are
ranked according to an EBI. FSA collects data for a number of factors
based on the relative environmental benefits for the land offered. EBI
rankings are unique for each piece of ground offered into CRP. Each
offer is assigned a point score based on its relative environmental
factors and competes with all other offers. Offer acceptability is
determined based on the ranking results. Under CRP continuous sign-up,
FSA accepts all offers of certain high priority practices including
grass waterways, riparian buffers, and filter strips. CCC will accept
land to be enrolled under BCAP under a similar ``continuous'' approach
that provides flexibility for farmers and ranchers and biomass
conversion facilities to manage their respective operations. No change
to the rule was made in response to this comment.
BCAP Contract (Sec. 1450.211)
Comments: Producers should retain the right to determine what
section of land to harvest each year.
Response: Contract participants will work closely with technical
service providers to develop a conservation plan, forest stewardship
plan, or equivalent plan that will include harvesting provisions.
Producers will have the right to determine which section of land to
harvest, as long as that is compliant with the plan. No change to the
rule was made in response to this comment.
Comments: Producers should be afforded maximum establishment
payments, but not be required to harvest all eligible crops for BCAP
purposes. Clarify the annual payment reductions when eligible crops are
not harvested or not harvested for BCAP purposes within the contract
period.
Response: For BCAP, the 2008 Farm Bill sets the maximum
establishment payment rate at 75 percent of the costs of establishing
an eligible perennial crop. With respect to annual payment reductions,
one of BCAP's purposes is to support the production of eligible crops
for conversion to energy. However, the 2008 Farm Bill also provides for
instances where an eligible crop may be used for other purposes. As
specified in the rule, annual payments will be reduced by a percentage
of the sale price and matching payments received if an eligible crop is
converted to heat, power, biobased products, or advanced biofuels.
Payments will be reduced on a dollar-for-dollar basis if an eligible
crop is used for a purpose other than conversion to heat, power,
biobased products. No change to the rule was made in response to this
comment.
Comments: The use of eligible crops should be contractually
restricted to producing bioenergy.
Response: BCAP was designed to provide incentives to farmers and
forest landowners to establish a non-traditional biomass crop base that
can be used for heat, power, biobased products, and biofuels. No change
was made to the rule in response to this comment.
Comment: The BCAP contract should include a mutually-agreeable
withdrawal clause that allows producers to terminate their BCAP
contract early.
Response: The BCAP contract will include a provision for contract
termination before the scheduled expiration of the contract if the
participant(s) under the BCAP contract fully refunds CCC for all
payments plus interest from date of disbursement and liquidated damages
equal to 25 percent of one year's annual payment to reflect the
administrative costs associated with a termination and to reflect that
the termination may, even with a full refund, undermine the
accomplishment of the goals of BCAP in a way that may otherwise be
difficult to convert to dollars and cents. This is similar to CCC's CRP
contract. No change to the rule was made in response to this comment,
but the provision for contract termination will be in the contract.
Establishment Payments (Sec. 1450.212)
Comment: The subsidy process for establishment should be expedited
since it can take up to 3 years to achieve a marketable feedstock.
Response: CCC will expedite establishment payments for contract
acreage, following compliance with establishment of BCAP practice
standards and related conservation plans, forest stewardship plans, or
equivalent plans.
Comments: Previously established crops and annual crops should be
eligible for establishment payments.
Response: The 2008 Farm Bill does not provide for making
establishment payments for pre-existing eligible crops or for annual
crops. Accordingly, this comment was not adopted.
Comment: Clarify whether animal waste, food waste, and yard waste
will be eligible for establishment payments.
Response: Animal waste, food waste, and yard waste are all
considered renewable biomass and a crop of any of these waste materials
would by definition be eligible for establishment payments. At this
time, there are no technical standards for establishing these ``crops''
so it is not known what if any establishment costs would be eligible
for an establishment payment.
Levels and Rates for Establishment Payments (Sec. 1450.213)
Comments: Under what circumstances would a producer receive less
than 75 percent of the establishment costs?
Response: Establishment payments may be less than 75 percent of the
producer's costs when, for example, an unapproved component was used or
the producer's actual costs were greater than average costs. CCC will
establish market-based rates for standard components of practices such
as land preparation, seed, and chemicals. No change to the rule was
made in response to this comment.
Comments: CCC should provide higher establishment payments for
native grasses and forbs.
Response: Establishment payment is limited to 75 percent by the
2008 Farm Bill. There may be annual payment incentives for certain
practices.
Comments: There should be per acre limitations for establishment
payments.
Response: CCC intends to adopt its long-standing practice that has
been used for CRP to apply market-based limits to individual practices,
seed varieties, and other components. This approach ensures that
establishment costs meet the needs of BCAP and are not excessive. No
change to the rule was made in response to this comment, but BCAP will
implement such limitations.
Annual Payments (Sec. 1450.214)
Comments: Annual payments based on soil rental rates will create
competition between BCAP and CRP.
Response: CRP and BCAP are more directly competing with other land
uses than with each other. BCAP and CRP must compete in the open market
with other land uses including production of food and feed. The CRP's
soil rental rates are intended to be market-based rates for a
particular area of land that is offered. CRP and BCAP both provide for
making incentive payments to meet targeted goals. No change to the rule
was made in response to this comment.
[[Page 66230]]
Comments: Annual payments based on CRP's soil rental rates, as
proposed, are insufficient.
Response: Where appropriate, CCC will authorize the use of
incentive payments to offset the uncertainty associated with adding
production of renewable biomass to a farming operation. CCC's intent is
to authorize incentive payments only as proposed in a particular
project area and only after the project area proposal includes
sufficient analysis to justify authorizing the additional expense. No
change to the rule was made in response to this comment, but we believe
that the rule already addresses this comment.
Comments: Annual payments should be based on the remaining costs of
establishment and maintenance amortized over the life of the contract.
Response: Not all eligible crops for annual payments will also be
eligible for establishment payments. Only perennial crops can receive
establishment payments, and existing ``early adopter'' biomass crops
cannot receive establishment payments. As a result, implementing
payments with an amortized methodology would not meet BCAP purposes,
unfairly advantage certain crops, and add considerable administrative
burden. Accordingly, this suggestion was not adopted.
Comments: There should be a uniform annual payment rate across the
Nation.
Response: This would only work well if in all markets the national
rate was similar to the otherwise applicable market rate. Where there
are lands with market rates above the national rate, BCAP could not
compete with other purposes and there would be little renewable biomass
crops produced. Accordingly, this comment was not adopted.
Comments: Annual payments should end after the first harvest.
Response: Contract termination after first harvest would not
provide sufficient market certainty or incentivize long-term energy
feedstock supply in a nascent bioenergy market. Therefore, this comment
was not adopted. This alternative is, however, analyzed in the cost
benefit analysis for this final rule. Also, some crops will take the
entire period of the contract to be ready for a single harvest, so in
those cases, the annual payments effectively end after the first
harvest.
Comments: Annual payments should be dependent on geographic and
environmental factors.
Response: There may be such a relationship between the payments and
other factors to the extent that other factors affect local market
conditions given that the soil rental rates may be based on local
market conditions. No change to the rule was made in response to this
comment.
Comments: Annual payments should be tiered based on the type and
variety of crops established.
Response: BCAP will contribute to the local crop mix by providing
opportunities for a nonconventional biomass crop base along with
existing conventional crops. Also, using the CRP soil rental rates will
ensure market-based rental rates. However, a project sponsor may
propose using incentive payments with appropriate justification. No
change to the rule was made in response to this comment.
Comments: Annual payments for nonindustrial private forest land
should be equal to the tax value of the land.
Response: The tax value could approximate the purchase value (or
significant percentage) of the land, which would be inconsistent with
an annual payment based on the annual rental value of the land.
Accordingly, this comment was not adopted.
Comments: Offer incentives on annual payments to encourage certain
crops, management activities, and locations. Offer incentives for the
level of conservation practices established, crops that would receive
higher carbon credits, mixtures of native perennials, leaving
environmentally sensitive areas unharvested, and implementing practices
that improve forest ecosystem health.
Response: CCC will authorize an incentive for annual payments for
certain contract acreage when appropriate and justified to meet
enrollment and feedstock production costs on a project area basis. No
change to the rule was made in response to this comment, but we believe
that the final rule does address this comment.
Comments: Reduce annual payments if any use occurs on contract
acreage during the primary nesting season.
Response: All BCAP participants will be required to adopt a
conservation plan, forest stewardship plan, or equivalent plan as a
condition of enrollment. Use restrictions during primary nesting season
may be addressed in the plan, and failure to comply with such plan will
result in a contract violation, which will reduce annual payments. No
change to the rule was made in response to this comment.
Comments: Do not reduce annual payments beyond a certain level
(suggestions ranged from 20 percent to 100 percent).
Response: CCC has further clarified the terms of reduction in this
final rule. Reductions will be made when biomass is harvested or
collected from contract acreage. Biomass that is converted to heat,
power, biobased products, or advanced biofuels at a biomass conversion
facility will receive a payment reduction of 10 to 25 percent. If the
biomass is used for another purpose the payment reduction will be based
on a dollar-for-dollar reduction from the annual payment. In no case,
except contract violation, in which case liquidated damages may apply,
will the reduction be greater than dollar for dollar.
Comment: Commenters suggested that annual payments should not be
reduced in the cases when: (1) Eligible crops are delivered to an
intermediate biomass conversion facility that delivers the processed
biomass to a project area biomass conversion facility or (2) eligible
crops are harvested for seeds.
Response: Reduction of annual payments will occur when renewable
biomass is harvested and collected from contract acreage and then sold
and delivered to any biomass conversion facility. Annual payments will
be reduced by a percentage of the total of the sale price and matching
payments based on the use of the eligible crop, including harvest for
seed. It is permissible, and would not be a violation of the BCAP
contract, to harvest eligible crops for uses other than conversion to
heat, power, advanced biofuels, or biobased products; however,
producers who do so will forfeit payments as a result. This provision
will adequately address the issue raised in the comment.
Substantive Changes and Corrections in This Final Rule as Versus the
Proposed Rule
This section lists the substantive changes made in this final rule
to the regulatory language in response to comments on the proposed
rule. The list also includes technical corrections that will have
little or no impact on program implementation.
Throughout all three subparts, this rule clarifies the requirement
for conservation plans to include forest stewardship plans or
equivalent plans, as specified in the 2008 Farm Bill.
Substantive changes and technical corrections in subpart A for
common provisions include:
Adding a definition for ``biofuel'' to clarify the
distinction between ``biofuels'' and ``advanced biofuels.'' The
distinction is that biofuels include corn ethanol.
Correcting the definition of ``biomass conversion
facility'' by removing ``eligible material'' and inserting ``renewable
biomass.'' This clarifies that qualified biomass
[[Page 66231]]
conversion facilities may accept for processing renewable biomass that
is not eligible material for BCAP matching payments.
Amending the definition of ``conservation plan'' to remove
general conservation provisions that are relevant to conservation plans
developed for other FSA and CCC programs such as CRP and to add instead
specific references to BCAP eligible crops and eligible material.
Adding a definition of ``legal entity'' that references
the definition in 7 CFR part 1400 used for other FSA and CCC programs.
Correcting the date applicable to the definition of
``native sod'' from the date of publication of the final rule in the
Federal Register to the date of enactment of the 2008 Farm Bill, which
was June 18, 2008.
Correcting the definition of ``nonindustrial private
forest land,'' by replacing a reference to an applicable US Forest
Service regulation that defines that term to the authorizing
legislation for that definition, which is the Cooperative Forestry
Assistance Act of 1978 (16 U.S.C. 2103(a), as amended).
Adding a definition of ``person'' that references the
definition in 7 CFR part 1400 used for other FSA and CCC programs.
Removing the definition of ``related-party transaction''
because this rule also removes all the provisions using that term.
Clarifying the definition of ``renewable biomass'' by
removing the phrase ``that would not otherwise be used for higher-value
products'' from the parenthetical remark describing vegetative waste as
``(including wood waste and wood residues that would not otherwise be
used for higher-value products).'' The higher-value product limitation
on matching payments applies to all woody biomass, not just waste and
residues. In addition, it is a regulatory requirement and was
incorrectly included in the definition. Also, this rule clarifies that
payment is not authorized for otherwise eligible material that must be
separated from higher-value products after delivery to a biomass
conversion facility.
Correcting the definition of socially-disadvantaged farmer
or rancher to conform to section 2501(e) of the Food, Agriculture,
Conservation, and Trade Act of 1990 (7 U.S.C. 2279(e)).
Removing the definition of ``United States'' because no
such definition is required in the BCAP regulations,
In Sec. 1450.3, ``General,'' in the paragraph on the
objectives of BCAP, adding a reference to the establishment of crops
for conversion to biobased products.
Substantive changes in subpart B for matching payments include:
Adding a new Sec. 1451.100 to provide a general
description of subpart B.
Amending Sec. 1450.101(a)(2)(ii) to clarify that a
qualified biomass conversion facility must retain all records for a
period of 3 years after delivery of the eligible material (rather than
3 years after the application).
Amending Sec. 1450.101(a)(2)(vii) to remove provisions
related to vegetative waste and historical baselines, and to add a new
provision requiring that the biomass conversion facility pay fair
market value for the eligible material regardless of whether the seller
has applied for or will receive a BCAP matching payment.
Adding a new Sec. 1450.101(a)(2)(viii) to require a
certification that eligible material will be converted into heat,
power, biobased products, or advanced biofuels.
Removing the reference to ``related-party transaction'' in
Sec. 1450.102.
Revising Sec. 1450.103, ``Eligible Material,'' to remove
references to black liquor, and to clarify that the material owner must
have harvested the material directly from the land in accordance with a
conservation plan, forest stewardship plan, or other equivalent plan.
Revising Sec. 1450.103, ``Eligible Material,'' to remove
the provisions allowing partial payment for comingled materials on non-
contract land. Payment is not authorized for any otherwise eligible
material that must be separated from higher-value product after
delivery to a biomass conversion facility.
Revising Sec. 1450.103, ``Eligible Material,'' to clarify
that in order to qualify for a matching payment, woody biomass
harvested or collected from non-Federal land outside of BCAP contract
acreage (acreage under an establishment payments and annual payments
contract) must be by-products of preventative treatments, must not have
a higher value use, and must meet the other requirements for renewable
biomass obtained from Federal land.
Amending Sec. 1450.104 to require that letters of intent
be binding.
Revising Sec. 1450.106, ``Payments,'' to provide that the
2-year payment period is for BCAP as implemented through the regulation
and to address the BCAP NOFA, and that payments will be paid at a rate
of $1 for each $1 per dry ton provided by a qualified biomass
conversion facility for the market-based sale of eligible material in
an amount up to $45 per dry ton. The ``fair market value'' is a new
requirement that biomass conversion facilities not have a different
payment rate for BCAP participants than for other biomass sellers.
Options discussed in the proposed rule for tiered payment rates and for
biomass production above a historical baseline are not included in this
final rule.
Substantive changes in subpart C for establishment payments and
annual payments include:
Amending Sec. 1450.201 to clarify that a project area
proposal must include a description of the sources of the renewable
biomass within the project area. Adding a provision to Sec. 1450.204
that eligible land must be physically and legally capable of producing
an eligible crop to be considered eligible land.
Removing specific references to types of agricultural land
in Sec. 1450.204 because the list of the types of land included in the
term ``agricultural land'' is specified in the definitions section.
Removing a specific date that eligible land must not be
native sod, because that date is provided in the definitions section.
In Sec. 1450.212, removing a reference to specific
reasons that establishment payments may be authorized for practices
that have previously been paid for, to give CCC more flexibility for
funding replacement or restoration practices.
In Sec. 1450.214, adding a reference to incentive
payments, to give CCC flexibility to implement such payments as needed
for specific priority biomass crops.
In Sec. 1450.214, clarifying the amount of reduction in
payment for delivery of eligible crops to a biomass conversion facility
and for other uses.
Executive Order 12866
This rule has been determined to be economically significant and
was reviewed by the Office of Management and Budget (OMB) under
Executive Order 12866. The Cost Benefit Analysis is summarized below
and is available from the contact information listed above.
Cost Benefit Analysis Summary
BCAP is intended to assist agricultural and forest land owners and
operators with the establishment and production of eligible crops for
conversion to bioenergy in selected project areas and with the
collection, harvest, storage, and transportation of eligible material
for use in a biomass conversion facility.
BCAP is authorized through fiscal year (FY) 2012. The limited time
remaining in the 2008 Farm Bill cycle,
[[Page 66232]]
the specific provisions in the 2008 Farm Bill on materials and crops
eligible to receive payments, and the short time window for developing
and submitting project proposals associated with establishment and
annual payments essentially limits the impact of BCAP to that of a
transfer payment to biomass producers who deliver their materials and
crops to existing biomass conversion facilities. Establishment payments
and annual payments are provided for eligible crops on eligible land
within project areas that satisfy selection criteria. Based on USDA and
Department of Energy data on existing facilities and facilities nearing
operational status, we assume that 32 project areas will be approved.
All of these project areas are assumed to be associated with acreage
that receives annual payments and most of these acres--those growing
perennial energy crops--will also receive support to defray
establishment costs. A small amount of technical assistance will be
provided to assist producers in establishing biomass crops. Matching
payments are provided to assist producers with the collection, harvest,
storage, and transportation costs of biomass feedstock delivered to
qualifying biomass conversion facilities, which may or may not be
associated with project areas. Eligible material that qualifies for
payment is specified in the rule as material that is collected directly
from the land, is harvested and transported solely for bioenergy and
biobased products purposes, and would not otherwise be used to produce
higher-value products. Further, qualified biomass conversion facilities
must pay fair market value for eligible material.
BCAP will help to sustain and accelerate the development of the
renewable energy sector. In conjunction with other Federal and State
government policies, BCAP will facilitate the transition to renewable
energy by helping to produce and supply feedstock for the conversion to
bioenergy and biobased products. In the short term, establishment,
annual, and matching payments can contribute to the financial viability
of BCFs, providing them greater opportunity to innovate and mature
sufficiently so that they might compete with fossil fuels.
Annual and total costs for BCAP are presented in Table 1. Total
outlays are $461 million in constant (2011) dollars and $442 million in
Net Present Value (NPV) terms.\1\ Because BCAP benefits are essentially
transfer payments to BCAP producers and indirectly to BCFs, the costs
to the government (outlays) equal the benefits to those producers and
BCFs.
---------------------------------------------------------------------------
\1\ All NPV calculations assume a 3% discount rate.
Table 1--BCAP Costs and Benefits by Year
[2011 $ millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Establishment Matching Technical
Fiscal Year Cost Share Annual Payments Payments Assistance Annual Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
2011..................................................... 61 4 132 3 199
2012..................................................... 61 6 132 3 201
2013..................................................... ................. 6 - ................. 6
2014..................................................... ................. 5 ................. ................. 5
2015..................................................... ................. 5 ................. ................. 5
2016..................................................... ................. 6 ................. ................. 6
2017..................................................... ................. 4 ................. ................. 4
2018..................................................... ................. 4 ................. ................. 4
2019..................................................... ................. 5 ................. ................. 5
2020..................................................... ................. 3 ................. ................. 3
2021..................................................... ................. 3 ................. ................. 3
2022..................................................... ................. 5 ................. ................. 5
2023..................................................... ................. 4 ................. ................. 4
2024..................................................... ................. 4 ................. ................. 4
2025..................................................... ................. 5 ................. ................. 5
2026..................................................... ................. 3 ................. ................. 3
----------------------------------------------------------------------------------------------
Totals............................................... 122 71 264 5 461
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Due to rounding, the sum of reported figures may not equal totals.
Regulatory Flexibility Act
In accordance with the Regulatory Flexibility Act, 5 U.S.C. 601,
CCC has determined that there will not be a significant economic impact
on a substantial number of small entities. Entities affected by this
rule are producers of eligible crops, eligible biomass material owners,
and biomass conversion facilities. The small business size standards
for these types of entities are no more than:
$750,000 per year gross revenue for crop production
(producers of eligible crops--NIACS 111);
$7 million per year gross revenue for post harvest crop
activities (eligible material owners--NIACS 115114); and
4 million megawatt hours per year for other electric power
generation (biomass conversion facilities--NIACS 221119).
Given these size standards, it is reasonable to assume that many of
businesses involved in BCAP will be small businesses.
We expect that approximately 5,000 producers of eligible crops and
32 biomass conversion facilities may receive establishment payments and
annual payments and approximately 975 eligible material owners (that
are not affiliated with a biomass conversion facility) may deliver
biomass that qualifies for a matching payment and 87 biomass conversion
facilities may be affected (which includes the 32, above) may receive
biomass for which a matching payment was made. However, since the final
rule requires that biomass conversion facilities pay producers for
deliveries of eligible material based on fair market value, producers
of eligible crops and materials and eligible biomass material owners
are not expected to be significantly impacted. And given the scale of
biomass conversion facility
[[Page 66233]]
output, as well as the limited duration of BCAP, biomass conversion
facilities are also not expected to be significantly impacted by BCAP.
Environmental Review
FSA prepared a Final Programmatic Environmental Impact Statement
(PEIS) for BCAP and the NOFA was published in the Federal Register on
June 25, 2010 (75 FR 36386). The Record of Decision (ROD) regarding FSA
implementation of BCAP according to the provisions of the 2008 Farm
Bill is being published in today's Federal Register. The BCAP PEIS is
being completed in accordance with the National Environmental Policy
Act (NEPA, 42 U.S.C. 4321-4347) and FSA regulations (7 CFR part 799).
The decision record summarizes the reasons for FSA selecting the
proposed action alternatives based on the program's expected
environmental and socioeconomic impacts and benefits as documented in
the PEIS, all of which were considered in the decision.
Executive Order 12372
This program is not subject to Executive Order 12372, which
requires consultation with State and local officials. See the notice
related to 7 CFR part 3015, subpart V, published in the Federal
Register on June 24, 1983 (48 FR 29115).
Executive Order 12988
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This final rule is not retroactive and it does
not preempt State or local laws, regulations, or policies unless they
present an irreconcilable conflict with this rule. Before any judicial
action may be brought regarding the provisions of this rule the
administrative appeal provisions of 7 CFR parts 11 and 780 must be
exhausted.
Executive Order 13132
The policies contained in this rule do not have any substantial
direct effect on States, on the relationship between the Federal
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Nor does this
rule impose substantial direct compliance costs on State and local
governments. Therefore, consultation with the States is not required.
Executive Order 13175
The policies contained in this rule do not have Tribal implications
that preempt Tribal law.
FSA conducted two formal consultations with Tribal governments on
BCAP prior to the publication of this final rule. Both of the Tribal
consultations were conducted through teleconferences. All Federally
recognized Tribes were invited to the first consultation, which was
held on July 21, 2010. A transcript of the teleconference call is
available upon request (see FOR FURTHER INFORMATION CONTACT above or
contact Ben Horter, USDA FSA, Federal Preservation Officer, (202) 690-
1164). The Forest County Potawatomi Community requested a separate
government-to-government consultation on BCAP, which was held on July
22, 2010. Each of the Tribal consultations was led by the FSA Deputy
Administrator for Farm Programs with representation from the FSA
Administrator's office as well as the USDA Office of Tribal Relations.
During the Tribal consultations, Tribes commented on aspects of
BCAP that they support and other aspects that they oppose. The full
discussion of the issues presented during the Tribal consultations and
the FSA responses are included above as the issues were also raised by
other commenters and each of the Tribes had submitted in written
comments including the same issues during the comment period for the
proposed rule.
Positions and issues presented during the Tribal consultations
included:
Support for the establishment payment and annual payment
provisions of the proposed rule.
Support for the use of soil rental rates similar to those
used under CRP for determining annual payments.
Support for the proposed rule and the definition of
eligible material owner.
Opposition to the baseline concept in the proposed rule
matching payment options.
Concern about and request for clarification on the
restriction on related-party transactions.
Suggestion that biomass conversion facilities producing
wood chips and wood pellets should be eligible to become a qualified
biomass conversion facility for converting renewable biomass to
advanced biofuels.
Request for confirmation that a biomass conversion
facility may be an eligible material owner.
Request for confirmation that only wood waste and wood
residues could not be used for higher-value products.
Opposition to the matching payment options that favored
advanced biofuels over heat, power, and biobased products.
For the full discussion of these issues, see the comments and
responses sections above for Sec. Sec. 1450.101, 1450.102, 1450.103,
1450.106, 1450.200 and 1450.214.
Unfunded Mandates
Title II of the Unfunded Mandate Reform Act of 1995 (UMRA) (Pub. L.
104-4) establishes requirements for Federal agencies to assess the
effects of their regulatory actions that impose ``Federal Mandates''
that may result in expenditures to State, local, or Tribal governments,
in the aggregate, or the private sector, of $100 million or more in any
one year. This rule contains no Federal mandates as defined by Title II
of UMRA for State, local, or Tribal governments or for the private
sector. Therefore, this rule is not subject to the requirements of
sections 202 and 205 of UMRA.
Small Business Regulatory Enforcement Fairness Act of 1996
This rule has been determined to be Major under the Small Business
Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121) (SBREFA).
SBREFA requires that an agency delay the effective date of a major rule
for 60 days from the date of publication to allow for Congressional
review. CCC finds that it is contrary to the public interest to delay
the effective date of this final rule pending a 60-day Congressional
review period. Because the program is tied to the agricultural
production cycle, a 60-day delay risks deferring the establishment of
biomass crops by an additional crop year, significantly diminishing the
prospects of the public to obtain both critical information for the
reauthorization of this program as well as physical feedstocks for
meeting national energy goals.
The purpose of BCAP is to begin the cultivation of unconventional,
non-food non-feed biomass crops for energy. The planting season for
many promising herbaceous biomass feedstock crops, including
switchgrass and miscanthus, begins in the early spring. Most woody
biomass crops, such as hybrid poplar and willow, are established in the
fall. Because of the new and voluntary nature of BCAP, producers must
know well in advance the details of the final BCAP regulation in order
to evaluate the risk of participating in a BCAP project area, compared
with the revenue security of maintaining conventional practices.
Allowing the rule to become effective immediately provides the
opportunity for FSA to immediately evaluate proposals submitted by the
public and for project sponsors to initiate environmental assessments
that may take from 3 to 6 months to complete. If this is the case,
project
[[Page 66234]]
areas may be approved with sufficient time for producers to establish
biomass crops for the upcoming growing season.
Additionally, with the enactment of the updated Renewable Fuel
Standard Program in 2008, the affordable production of next-generation
advance biofuels has not yet kept pace with the revised Federal
targets. The success of these next-generation fuels requires a
sufficient base of next-generation crops--crops that typically requires
several years to become established. Should the BCAP rule not take
effect in time for the 2011 crop year, insufficient information will
exist for Congress to evaluate this program during its reauthorization
in 2012, further delaying any contributions BCAP can make to national
Renewable Fuel Standard Program targets.
Federal Assistance Programs
The title and number of the Federal assistance program in the
Catalog of Federal Domestic Assistance to which this proposed rule
would apply is 10.087--Biomass Crop Assistance Program.
Paperwork Reduction Act
In general, FSA will use information submitted for BCAP to
determine program eligibility, qualifications for payments, and
calculate the amount of payments. For the matching payments, applicants
will request to become a qualified biomass conversion facility,
applicants will register as an eligible material owner and then, after
delivery of eligible material, provide actual delivery information to
request matching payments for the collection, harvest, storage, and
transportation of eligible material for use in a biomass conversion
facility. For the administration of project areas, FSA will use
proposal information from project sponsors to review project area
criteria for the selection of BCAP project areas. After the selection
of project areas, FSA will use information submitted by producers to
determine eligibility, award contracts for establishment and annual
production payments, and determine the need for an amount of the
payments. Furnishing the data is voluntary; however, the failure to
provide data could result in program benefits being withheld or denied.
In accordance with the Paperwork Reduction Act of 1995, FSA
requested comments from all interested individuals and organizations on
a revision of new information collection activities associated with
BCAP. Several comments included issues concerning information
collection. Detailed discussion of all comments and responses are
provided earlier in this document. Comments specific to the information
collection requirements associated with this rule are highlighted here,
and all of the comments and responses related to information collection
are included in the full information collection request submitted for
OMB approval.
One comment (see Sec. 1450.201 comments and responses above)
suggested that general information rather than producer specific
information should be required as part of the information collected for
project area proposals. FSA had intended to collect general information
in the project area proposal under the proposed rule, but clarified the
language in this rule.
One comment (see Sec. 1450.100 comments and responses above) was
concerned that FSA should collect information concerning the point-of-
origin of eligible materials while minimizing the administrative burden
of participating in the program. FSA modified the forms (BCAP-10A and
BCAP-10B) to record farm and tract data for all land producing eligible
materials.
One comment (see Sec. 1450.201 comments and responses above)
suggested that FSA provide a template project area proposal that
outlines an acceptable proposal. Project area proposals will inherently
be unique depending on what the project sponsor chooses to propose. It
would be administratively infeasible to provide a template that applies
to all potential issues and variability across the country.
BCAP will provide financial assistance for collection, harvest,
storage, and transportation of eligible material nationwide. BCAP will
provide financial assistance in the form of establishment payments for
perennial crops and annual rental payments for perennial and annual
crops in approved BCAP project areas.
Copies of all forms, regulations, and instructions referenced in
this rule may be obtained from FSA. Data furnished by the applicants
will be used to determine eligibility for program benefits. Furnishing
the data is voluntary; however, the failure to provide data could
result in program benefits being withheld or denied.
In addition to requesting comments on the information collection
included in the proposed rule, FSA also had a 60-day comment period for
the BCAP NOFA that was published in the Federal Register on June 11,
2009 (74 FR 27767-27772) to solicit public for the information
collection request for the matching payment funds available for the
collection, harvest, storage, and transportation of eligible material.
The information collection required by this rule has been approved
by OMB under the Paperwork Reduction Act of 1995. The approved burden
hours will be incorporated into the existing approval under OMB control
number 0560-0082, which includes much of the same information for other
conservation programs.
E-Government Act Compliance
CCC is committed to complying with the E-Government Act, to promote
the use of the Internet and other information technologies to provide
increased opportunities for citizen access to Government information
and services, and for other purposes.
List of Subjects in 7 CFR Part 1450
Administrative practice and procedure, Agriculture, Energy,
Environmental protection, Grant programs--agriculture, Natural
resources, Reporting and recordkeeping requirements, Technical
assistance.
0
For the reasons discussed in the preamble, the Commodity Credit
Corporation (USDA) adds 7 CFR part 1450 to read as follows:
PART 1450--BIOMASS CROP ASSISTANCE PROGRAM (BCAP)
Subpart A--Common Provisions
Sec.
1450.1 Administration.
1450.2 Definitions.
1450.3 General.
1450.4 Violations.
1450.5 Performance based on advice or action of USDA.
1450.6 Access to land.
1450.7 Division of payments and provisions about tenants and
sharecroppers.
1450.8 Payments not subject to claims.
1450.9 Assignments.
1450.10 Appeals.
1450.11 Scheme or device.
1450.12 Filing of false claims.
1450.13 Miscellaneous.
Subpart B--Matching Payments
1450.100 General.
1450.101 Qualified biomass conversion facility.
1450.102 Eligible material owner.
1450.103 Eligible material.
1450.104 Signup.
1450.105 Obligations of participant.
1450.106 Payments.
Subpart C--Establishment Payments and Annual Payments
1450.200 General.
1450.201 Project area proposal submission requirements.
1450.202 Project area selection criteria.
[[Page 66235]]
1450.203 Eligible persons and legal entities.
1450.204 Eligible land.
1450.205 Duration of contracts.
1450.206 Obligations of participant.
1450.207 Conservation plan, forest stewardship plan, or equivalent
plan.
1450.208 Eligible practices.
1450.209 Signup.
1450.210 Acceptability of offers.
1450.211 BCAP contract.
1450.212 Establishment payments.
1450.213 Levels and rates for establishment payments.
1450.214 Annual payments.
1450.215 Transfer of land.
Authority: 7 U.S.C. 8111.
Subpart A--Common Provisions
Sec. 1450.1 Administration.
(a) The regulations in this part are administered under the general
supervision and direction of the Executive Vice President, Commodity
Credit Corporation (CCC), or a designee. In the field, the regulations
in this part will be implemented by the Farm Service Agency (FSA) State
and county committees (``State committees'' and ``county committees,''
respectively).
(b) State executive directors, county executive directors, and
State and county committees do not have the authority to modify or
waive any of the provisions in this part unless specifically authorized
by the FSA Deputy Administrator for Farm Program (Deputy
Administrator).
(c) The State committee may take any action authorized or required
by this part to be taken by the county committee, but which has not
been taken by such committee, such as:
(1) Correct or require a county committee to correct any action
taken by such county committee that is not in accordance with this
part; or
(2) Require a county committee to withhold taking any action that
is not in accordance with this part.
(d) No delegation of authority to a State or county committee will
preclude the Executive Vice President, CCC, or a designee, from
determining any question arising under this part or from reversing or
modifying any determination made by a State or county committee.
(e) Data furnished by participants will be used to determine
eligibility for program benefits. Furnishing the data is voluntary;
however, the failure to provide data could result in program benefits
being withheld or denied.
Sec. 1450.2 Definitions.
(a) The definitions in part 718 of this chapter apply to this part
and all documents issued in accordance with this part, except as
otherwise provided in this section.
(b) The following definitions apply to this part:
Advanced biofuel means fuel derived from renewable biomass other
than corn kernel starch, including biofuels derived from cellulose,
hemicellulose, or lignin; biofuels derived from sugar and starch (other
than ethanol derived from corn kernel starch); biofuel derived from
waste material, including crop residue, other vegetative waste
material, animal waste, food waste, and yard waste; diesel-equivalent
fuel derived from renewable biomass including vegetable oil and animal
fat; biogas (including landfill gas and sewage waste treatment gas)
produced through the conversion of organic matter from renewable
biomass; and butanol or other alcohols produced through the conversion
of organic matter from renewable biomass; and other fuel derived from
cellulosic biomass.
Agricultural land means cropland, grassland, pastureland,
rangeland, hayland, and other land on which food, fiber, or other
agricultural products are produced or capable of being produced.
Animal waste means the organic animal waste of animal operations
such as confined beef or dairy, poultry, or swine operations including
manure, contaminated runoff, milking house waste, dead poultry,
bedding, and spilled feed. Depending on the poultry system, animal
waste can also include litter, wash-flush water, and waste feed.
Annual payment means the annual payment specified in the BCAP
contract for BCAP project areas that is issued to a participant for
placing eligible land in BCAP.
Beginning farmer or rancher means, as determined by CCC, a person
or entity who:
(1) Has not been a farm or ranch operator or owner for more than 10
years,
(2) Materially and substantially participates in the operation of
the farm or ranch, and
(3) If an entity, is an entity in which at least 50 percent of the
members or stockholders of the entity meet the first two requirements
of this definition.
Biobased product means a product determined by CCC to be a
commercial or industrial product (other than food or feed) that is:
(1) Composed, in whole or in significant part, of biological
products, including renewable domestic agricultural materials and
forestry materials; or
(2) An intermediate ingredient or feedstock.
Bioenergy means renewable energy produced from organic matter.
Organic matter may be used directly as a fuel, be processed into
liquids and gases, or be a residual of processing and conversion.
Biofuel means a fuel derived from renewable biomass.
Biomass conversion facility means a facility that converts or
proposes to convert renewable biomass into heat, power, biobased
products, or advanced biofuels.
Conservation district is as defined in part 1410 of this chapter.
Conservation plan means a schedule and record of the participant's
decisions and supporting information for treatment of a unit of land or
water, and includes a schedule of operations, activities, and estimated
expenditures for eligible crops and the collection or harvesting of
eligible material, as appropriate, and addresses natural resource
concerns including the sustainable harvesting of biomass, when
appropriate, by addressing the site-specific needs of the landowner.
Contract acreage means eligible land that is covered by a BCAP
contract between the producer and CCC.
Delivery means the point of delivery of an eligible crop or
eligible material, as determined by the CCC.
Deputy Administrator means the FSA Deputy Administrator for Farm
Programs, or a designee.
Dry ton means one U.S. ton measuring 2,000 pounds. One dry ton is
the amount of renewable biomass that would weigh one U.S. ton at zero
percent moisture content.
Eligible crop means a crop of renewable biomass as defined in this
section excluding:
(1) Any crop that is eligible to receive payments under Title I,
``Commodity Programs,'' of the Food, Conservation, and Energy Act of
2008 (Pub. L. 110-246) or an amendment made by that title, including,
but not limited to, barley, corn, grain sorghum, oats, rice, or wheat;
honey; mohair; certain oilseeds such as canola, crambe, flaxseed,
mustard seed, rapeseed, safflower seed, soybeans, sesame seed, and
sunflower seeds; peanuts; pulse crops such as small chickpeas, lentils,
and dry peas; dairy products; sugar; wool; and cotton boll fiber; and
(2) Any plant that CCC has determined to be either a noxious weed
or an invasive species. With respect to noxious weeds and invasive
species, a list of such plants will be available in the FSA county
office.
Eligible material is renewable biomass as defined in this section
excluding:
(1) Material that is whole grain from any crop that is eligible to
receive
[[Page 66236]]
payments under Title I of the Food, Conservation, and Energy Act of
2008 or an amendment made by that title, including, but not limited to,
barley, corn, grain sorghum, oats, rice, or wheat; honey; or material
that is mohair; certain oilseeds such as canola, crambe, flaxseed,
mustard seed, rapeseed, safflower seed, soybeans, sesame seed, and
sunflower seeds; peanuts; pulse crops such as small chickpeas, lentils,
and dry peas; dairy products; sugar; wool; and cotton boll fiber;
(2) Animal waste and by-products of animal waste including fats,
oils, greases, and manure;
(3) Food waste and yard waste; and
(4) Algae.
Eligible material owner, for purposes of the matching payment,
means a person or entity having the right to collect or harvest
eligible material, who has the risk of loss in the material that is
delivered to an eligible facility and who has directly or by agent
delivered or intends to deliver the eligible material to a qualified
biomass conversion facility, including:
(1) For eligible material harvested or collected from private
lands, including cropland, the owner of the land, the operator or
producer conducting farming operations on the land, or any other person
designated by the owner of the land; and
(2) For eligible material harvested or collected from public lands,
a person having the right to harvest or collect eligible material
pursuant to a contract or permit with the US Forest Service or other
appropriate Federal agency, such as a timber sale contract, stewardship
contract or agreement, service contract or permit, or related
applicable Federal land permit or contract, and who has submitted a
copy of the permit or contract authorizing such collection to CCC.
Equivalent plan means a plan approved by a State or other State
agency or government entity that is similar to and serves the same
purpose as a forest stewardship plan and has similar goals, objectives,
and terms. These plans generally address natural resource concerns
including the sustainable harvesting of biomass, when appropriate, by
addressing the site-specific needs of the landowner.
Establishment payment means the payment made by CCC to assist
program participants in establishing the practices required for non-
woody perennial crops and woody perennial crops, as specified in a
producer contract under the project portion of BCAP.
Food waste means, as determined by CCC, a material composed
primarily of food items, or originating from food items, or compounds
from domestic, municipal, food service operations, or commercial
sources, including food processing wastes, residues, or scraps.
Forest stewardship plan means a long-term, comprehensive, multi-
resource forest management plan that is prepared by a professional
resource manager and approved by the State Forester or equivalent State
official. Forest stewardship plans address the following resource
elements wherever present, in a manner that is compatible with
landowner objectives concerning:
(1) Soil and water;
(2) Biological diversity;
(3) Range;
(4) Aesthetic quality;
(5) Recreation;
(6) Timber;
(7) Fish and wildlife;
(8) Threatened and endangered species;
(9) Forest health;
(10) Archeological, cultural and historic sites;
(11) Wetlands;
(12) Fire; and
(13) Carbon cycle.
Higher-value product means an existing market product that is
comprised principally of an eligible material or materials and, in some
distinct local regions, as determined by the CCC, has an existing
market as of October 27, 2010. Higher-value products may include, but
are not limited to, products such as mulch, fiberboard, nursery media,
lumber, or paper.
Highly erodible land means land as determined as specified in part
12 of this title.
Indian tribe has the same meaning as in 25 U.S.C. 450b (section 4
of the Indian Self-Determination and Education Assistance Act).
Institution of higher education has the same meaning as in 20
U.S.C. 1002(a) (section 102(a) of the Higher Education Act of 1965).
Intermediate ingredient or feedstock means an ingredient or
compound made in whole or in significant part from biological products,
including renewable agricultural material (including plant, animal, and
marine material), or forestry material that is subsequently used to
make a more complex compound or product.
Legal entity has the same meaning as in the regulations in Sec.
1400.3 of this chapter.
Matching payments means those CCC payments provided for eligible
material delivered to a qualified biomass conversion facility.
Native sod means land:
(1) On which the plant cover is composed principally of native
grasses, grasslike plants, forbs, or shrubs suitable for grazing and
browsing; and
(2) That had never been tilled for the production of an annual crop
as of June 18, 2008.
Nonindustrial private forest land means, as defined in 16 U.S.C.
2103a (the Cooperative Forestry Assistance Act of 1978, as amended),
rural lands with existing tree cover, or suitable for growing trees,
where the land is owned by any private individual, group, association,
corporation, Indian tribe, or other private legal entity.
Offer means, unless otherwise indicated, the per-acre rental
payment requested by the owner or operator in such owner's or
operator's request to participate in the establishment payment and
annual payment component of BCAP.
Operator means a person who is in general control of the land
enrolled in BCAP, as determined by CCC.
Participant means a person who is participating in BCAP--either as
a person who has applied for and is eligible to receive payments, has a
BCAP contract, or is a project sponsor.
Payment period means a contract period of either up to 5 years for
annual and non-woody perennial crops, or up to 15 years for woody
perennial crops, during which the participant receives an annual
payment under the establishment payment and annual payment component of
BCAP.
Person has the same meaning as in the regulations in Sec. 1400.3
of this chapter. In addition, for BCAP, the term ``producer'' means
either an owner or operator of BCAP project acreage that is physically
located in a BCAP project area, or a producer of an eligible crop
produced on that acreage.
Producer means, with respect to subpart B of this part, a person
who had the risk of loss in the production of the material that is the
subject of the BCAP payment; and with respect to subpart C of this
part, an owner or operator of contract acreage that is physically
located within a BCAP project area or a producer of an eligible crop
produced on that acreage and who has the risk of loss in the relevant
crop at the relevant period of time or who will have the risk of loss
in crops required to be produced.
Project area means a geographic area with specified boundaries
submitted by a project sponsor and approved by CCC under the
establishment payment and annual payment component of BCAP.
Project sponsor means a group of producers or a biomass conversion
facility who proposes a project area.
Qualified biomass conversion facility means a biomass conversion
facility that meets all the requirements for BCAP
[[Page 66237]]
qualification, and whose facility representatives enter into a BCAP
agreement with CCC.
Renewable biomass means:
(1) Appropriate materials, pre-commercial thinnings, or invasive
species from National Forest System land and U.S. Department of the
Interior, Bureau of Land Management land that:
(i) Are by-products of preventive treatments that are removed to
reduce hazardous fuels, to reduce or contain disease or insect
infestation, or to restore ecosystem health;
(ii) Would not otherwise be used for higher-value products; and
(iii) Are harvested in accordance with applicable law and land
management plans and the requirements for old-growth maintenance,
restoration, and management direction of 16 U.S.C. 6512 (specifically,
sections 102(e)(2), (3), and (4) of the Healthy Forests Restoration Act
of 2003 and large-tree retention provisions of subsection (f)); or
(2) Any organic matter that is available on a renewable or
recurring basis from non-Federal land or land belonging to an Indian or
Indian Tribe that is held in trust by the United States or subject to a
restriction against alienation imposed by the United States, including:
(i) Renewable plant material, including:
(A) Feed grains;
(B) Other agricultural commodities;
(C) Other plants and trees; or
(D) Algae;
(ii) Waste material, including:
(A) Crop residue;
(B) Other vegetative waste material (including wood waste and wood
residues);
(C) Animal waste and byproducts (including fats, oils, greases, and
manure); and
(D) Food waste and yard waste.
Socially disadvantaged farmer or rancher means, unless other
classes of persons are approved by CCC in writing, a farmer or rancher
who is a member of a group whose members have been subject to racial or
ethnic prejudice because of their identity as members of a group
without regard to their individual qualities. Groups include:
(1) American Indians or Alaskan Natives;
(2) Asians or Asian Americans;
(3) Blacks or African Americans;
(4) Native Hawaiians or other Pacific Islanders; and
(5) Hispanics.
Technical assistance means assistance in determining the
eligibility of land and practices for BCAP, implementing and certifying
practices, ensuring contract performance, and providing annual rental
rate surveys. The technical assistance provided in connection with BCAP
to owners or operators, as approved by CCC, includes, but is not
limited to: Technical expertise, information, and tools necessary for
the conservation of natural resources on land; technical services
provided directly to farmers, ranchers, and other eligible entities,
such as conservation planning, technical consultation, and assistance
with design and implementation of eligible practices; and technical
infrastructure, including activities, processes, tools, and functions
needed to support delivery of technical services, such as technical
standards, resource inventories, training, data, technology,
monitoring, and effects analyses.
Tribal government means any Indian tribe, band, nation, or other
organized group, or community, including pueblos, rancherias, colonies
and any Alaska Native Village, or regional or village corporation as
defined in or established pursuant to 43 U.S.C. 1601-1629h (the Alaska
Native Claims Settlement Act), that is recognized as eligible for the
special programs and services provided by the United States to Indians
because of their status as Indians.
Violation means an act by the participant, either intentional or
unintentional, that would cause the participant to no longer be
eligible to receive or retain all or a portion of BCAP payments.
Yard waste means any renewable biomass generated from municipal or
residential land, such as urban forestry materials, construction or
demolition materials, trimmings from grasses and trees, or biomass
removed due to invasive species or weather-related disaster, that can
be separated from and has low potential (such as contamination with
plastics, metals, chemicals, or other toxic compounds that cannot be
removed) for the generation of toxic byproducts resulting from
conversion, and that otherwise cannot be recycled for other purposes
(such as post-consumer waste paper).
Sec. 1450.3 General.
(a) The objectives of BCAP are to:
(1) Support the establishment and production of eligible crops for
conversion to bioenergy and biobased products in selected project
areas; and
(2) Assist agricultural and forest landowners and operators with
matching payments to support the collection, harvest, storage, and
transportation costs of eligible material for use in a biomass
conversion facility.
(b) A participant must implement and adhere to a conservation plan,
forest stewardship plan, or equivalent plan prepared in accordance with
BCAP guidelines, as established and determined by CCC. A conservation
plan, forest stewardship plan, or equivalent plan for contract acreage
must be implemented by a participant and must be approved by the
conservation district in which the lands are located, or, in the case
of Federal lands, the appropriate approval authority of jurisdiction.
If the conservation district declines to review the conservation plan,
forest stewardship plan, or equivalent plan, the provider of technical
assistance may take such further action as is needed to account for
lack of such review.
(c) Agricultural and forest landowners and operators must comply
with any applicable existing conservation plan, forest stewardship
plan, or equivalent plan and all other applicable laws, regulations, or
Executive Orders for any removal of eligible material for use in a
biomass conversion facility to receive matching payments.
(d) Except as otherwise provided in this part, a participant may
receive, in addition to any payments under this part, financial
assistance, rental or easement payments, tax benefits, or other
payments from a State or a private organization in return for enrolling
lands in BCAP, without any commensurate reduction in BCAP payments.
Sec. 1450.4 Violations.
(a)(1) If a participant fails to carry out the terms and conditions
of a BCAP contract, CCC may terminate the BCAP contract.
(2) If the BCAP contract is terminated by CCC in accordance with
this paragraph:
(i) The participant will forfeit all rights to further payments
under the contract and must refund all payments previously received,
plus interest; and
(ii) The participant must pay liquidated damages to CCC in an
amount as specified in the contract.
(b) CCC may reduce a demand for a refund under this section to the
extent CCC determines that such relief would be appropriate and would
not deter the accomplishment of the purposes of BCAP.
Sec. 1450.5 Performance based on advice or action of USDA.
(a) The provisions of Sec. 718.303 of this title relating to
performance based on the action or advice of an authorized
representative of USDA applies to this part, and may be considered as a
basis
[[Page 66238]]
to provide relief to persons subject to sanctions under this part to
the extent that relief is otherwise permitted by this part.
(b) [Reserved]
Sec. 1450.6 Access to land.
(a) For purposes related to this program, the participant must upon
request provide any representative of USDA, or designee thereof, with
access to land that is:
(1) The subject of an application for a contract under this part;
or
(2) Under contract or otherwise subject to this part.
(b) For land identified in paragraph (a) of this section, the
participant must provide such representatives or designees with access
to examine records for the land to determine land classification,
eligibility, or for other purposes, and to determine whether the
participant is in compliance with the terms and conditions of the BCAP
contract.
Sec. 1450.7 Division of payments and provisions about tenants and
sharecroppers.
(a) Payments received under this part will be divided as specified
in the applicable contract. CCC may refuse to enter into a contract
when there is a disagreement among persons or legal entities seeking
enrollment as to a person's or legal entity's eligibility to
participate in the contract as a tenant or sharecropper, and there is
insufficient evidence, as determined by CCC, to indicate whether the
person or legal entity seeking participation as a tenant or
sharecropper has an interest in the acreage offered for enrollment in
the BCAP.
(b) CCC may remove an operator or tenant from a BCAP contract when:
(1) The operator or tenant requests in writing to be removed from
the BCAP contract;
(2) The operator or tenant files for bankruptcy and the trustee or
debtor in possession fails to affirm the contract, to the extent
permitted by applicable bankruptcy laws;
(3) The operator or tenant dies during the contract period and the
administrator of the estate fails to succeed to the contract within a
period of time determined appropriate by CCC; or
(4) A court of competent jurisdiction orders the removal of the
operator or tenant from the BCAP contract and such order is received by
CCC.
(c) Tenants who fail to maintain tenancy on the acreage under
contract for any reason may be removed from a contract by CCC.
Sec. 1450.8 Payments not subject to claims.
(a) Subject to part 1403 of this chapter, any payment or portion of
the payment due any person or legal entity under this part will be
allowed without regard to questions of title under State law, and
without regard to any claim or lien in favor of any creditor, except
agencies of the U.S. Government.
(b) [Reserved]
Sec. 1450.9 Assignments.
(a) Participants may assign the right to receive cash payments
under BCAP, in whole or in part, as provided in part 1404 of this
chapter.
(b) [Reserved]
Sec. 1450.10 Appeals.
(a) Except as provided in paragraph (b) of this section, a person
or legal entity applying for participation may appeal or request
reconsideration of an adverse determination in accordance with the
administrative appeal regulations at parts 11 and 780 of this title.
(b) Determinations by the Natural Resources Conservation Service
may be appealed in accordance with procedures established under part
614 of this title or otherwise established by the Natural Resources
Conservation Service.
Sec. 1450.11 Scheme or device.
(a) If CCC determines that a person or legal entity has employed a
scheme or device to defeat the purposes of this part, or any part, of
any USDA program, payment otherwise due or paid such person or legal
entity during the applicable period may be required to be refunded,
with interest calculated from the date of disbursement of the funds by
CCC, as determined appropriate by CCC.
(b) A scheme or device includes, but is not limited to, coercion,
fraud, misrepresentation, depriving any other person or legal entity of
any payments, or obtaining a payment that otherwise would not be
payable.
(c) A new owner or operator or tenant of land subject to this part
who succeeds to the contract responsibilities must report in writing to
CCC any interest of any kind in the land subject to this part that is
retained by a previous participant. Such interest may include a
present, future, or conditional interest, reversionary interest, or any
option, future or present, on such land, and any interest of any lender
in such land where the lender has, will, or can legally obtain, a right
of occupancy to such land or an interest in the equity in such land
other than an interest in the appreciation in the value of such land
occurring after the loan was made. Failure to fully disclose such
interest will be considered a scheme or device under this section.
Sec. 1450.12 Filing of false claims.
(a) If CCC determines that any participant has knowingly supplied
false information or has knowingly filed a false claim, such
participant will be ineligible for payments under this part with
respect to the fiscal year in which the false information or claim was
filed and the contract may be terminated, in which case CCC may demand
a full refund of all prior payments.
(b) False information or false claims include, but are not limited
to, claims for payment for practices that do not comply with the
conservation plan, forest stewardship plan, or equivalent plan. Any
amounts paid under these circumstances must be refunded to CCC,
together with interest as determined by CCC, and any amounts otherwise
due the participant will be withheld.
(c) The remedies provided for in this section will be in addition
to any other remedy available to CCC and in addition to any criminal
penalty or any other remedy available to the United States.
Sec. 1450.13 Miscellaneous.
(a) Except as otherwise provided in this part, in the case of
death, incompetency, or disappearance of any participant, any payments
due under this part may be paid to the participant's successor(s) in
accordance with part 707 of this title.
(b) Unless otherwise specified in this part, payments under this
part will be subject to the compliance requirements of part 12 of this
title concerning highly erodible land and wetland conservation and
payments.
(c) Any remedies permitted CCC under this part will be in addition
to any other remedy, including, but not limited to, criminal remedies
or actions for damages in favor of CCC, or the United States as may be
permitted by law.
(d) Absent a scheme or device to defeat the purposes of BCAP, when
an owner loses control of BCAP acreage enrolled under subpart C of this
part due to foreclosure and the new owner chooses not to continue the
contract in accordance with Sec. 1450.215 refunds will not be required
from any participant on the contract to the extent that the Deputy
Administrator determines that forgiving such repayment is appropriate
in order to provide fair and equitable treatment.
Subpart B--Matching Payments
Sec. 1450.100 General.
(a) A person or legal entity with the right to collect or harvest
eligible
[[Page 66239]]
material for the sale and delivery of such eligible material to a
qualified biomass conversion facility, may be eligible for payment
under the provisions of this subpart.
(b) [Reserved]
Sec. 1450.101 Qualified biomass conversion facility.
(a) To be considered a qualified biomass conversion facility, a
biomass conversion facility must enter into an agreement with CCC and
must:
(1) Meet all applicable regulatory and permitting requirements by
applicable Federal, State, or local authorities;
(2) Agree in writing to:
(i) Maintain accurate records of all eligible material purchases
and related documents regardless of whether matching payments will be
sought by the seller; and
(ii) Make available at one place and at all reasonable times for
examination by representatives of USDA, all books, papers, records,
contracts, scale tickets, settlement sheets, invoices, written price
quotations, or other documents related to BCAP for not less than 3
years after the date that eligible material was delivered to the
qualified biomass conversion facility;
(iii) Clearly indicate the actual tonnage delivered on the scale
ticket or equivalent to be provided to the eligible material owner;
(iv) Calculate a total dry ton weight equivalent of the actual
tonnage delivered and provide that measurement to the eligible material
owner;
(v) Use commercial weight scales that are certified for accuracy by
applicable State or local authorities and accurate moisture measurement
equipment to determine the dry ton weight equivalent of actual tonnage
delivered;
(vi) Pay fair market value for eligible material regardless of
whether the seller has applied for or receives a matching payment
authorized by this subpart.
(b) For a qualified biomass conversion facility, CCC can:
(1) Periodically inform the public that payments may be available
for deliveries of eligible material to such qualified biomass
conversion facility;
(2) Maintain a listing of qualified biomass conversion facilities
for general public access and distribution that may include general
information about the facility and its eligible material needs; and
(3) Suspend, terminate, or take other actions as appropriate when
CCC determines a qualified biomass conversion facility fails to comply
with the agreement.
Sec. 1450.102 Eligible material owner.
(a) In order to be eligible for a payment under this subpart, a
person or legal entity must:
(1) Be a producer of an eligible crop that is produced on contract
acreage authorized by subpart C of this part; or
(2) Have the right to collect or harvest eligible material and such
person may only receive payment if the risk of loss for the material
transferred to that person occurred prior to the time the payment is
made that will be used to determine the matching payment that is
requested under this subpart; and
(3) Certify that the eligible material for which a payment may be
issued according to Sec. 1450.106 has been harvested according to a
conservation plan, forest stewardship plan, or equivalent plan, and, if
not crop residues, are byproducts of preventative treatments that are
removed to reduce hazardous fuels, to reduce or contain disease or
insect infestation, or to restore ecosystem health.
(b) A qualified biomass conversion facility that meets the
requirements of paragraph (a) of this section may be considered an
eligible material owner if it otherwise meets the definition in this
part.
Sec. 1450.103 Eligible material that qualifies for payment.
(a) Except for paragraph (b) of this section, in order to qualify,
as determined by CCC, for a payment under this subpart:
(1) Eligible material must be renewable biomass that, at a minimum,
meets the definition in Sec. 1450.2 and is listed on the official Web
site for BCAP as an eligible material at http://www.fsa.usda.gov/energy;
(2) Eligible material must be collected or harvested by the
eligible material owner:
(i) Directly from:
(A) National Forest System land, Bureau of Land Management land;
(B) Non-Federal land; or
(C) Land belonging to an Indian or Indian tribe that is held in
trust by the United States or subject to a restriction against
alienation imposed by the United States;
(ii) Consistent with a conservation plan, forest stewardship plan,
or plan that CCC determined to be an equivalent plan, that provides the
following:
(A) The purpose of the harvest of the eligible material;
(B) The expected volume of the harvest;
(C) The total number of acres to be harvested;
(D) The name of the eligible material owner(s); and
(E) Any additional information, as determined by CCC; and
(iii) Consistent with Executive Order 13112, ``Invasive Species. ''
(3) Woody eligible material produced on land other than contract
acreage must be:
(i) Byproducts of preventative treatments that are removed to
reduce hazardous fuels, to reduce or contain disease or insect
infestation, or to restore ecosystem health; and
(ii) If harvested from Federal lands then done so in accordance
with the requirements for old-growth maintenance, restoration, and
management direction provided by 16 U.S.C. 6512 for Federal lands; and
(4) Eligible material must be delivered to a qualified biomass
conversion facility (as specified in Sec. 1450.101 and other
provisions of these regulations).
(b) Notwithstanding paragraph (a) of this section, payments under
this subpart are not authorized for:
(1) Any eligible material delivered before October 27, 2010;
(2) Any eligible material for which payment from a biomass
conversion facility was received before the application for payment
under this subpart is received and approved by the FSA county office,
as specified in Sec. 1450.104;
(3) Any woody eligible material collected or harvested outside
contract acreage that would otherwise be used for higher-value
products; or
(4) Any otherwise eligible material collected or harvested outside
contract acreage that, after delivery to a biomass conversion facility,
its campus, or its affiliated facilities, must be separated from an
eligible material used for a higher-value market product in order to be
used for heat, power, biobased products, or advanced biofuels.
Sec. 1450.104 Signup.
(a) Applications for participation and requests for payments under
this subpart will be accepted on a continuous basis.
(b) An eligible material owner must apply to participate in the
matching payments component of BCAP before payment for the eligible
material is received from a qualified biomass conversion facility. The
application must be submitted to the FSA county office and approved by
CCC before any payment is made by the qualified biomass conversion
facility for the eligible material.
(c) Applications must include the following:
(1) Based on information obtained from contracts, agreements, or
binding letters of intent:
[[Page 66240]]
(i) An estimate of the total dry tons of eligible material expected
to be sold to the qualified biomass conversion facility;
(ii) The type(s) of eligible material that is expected to be sold;
(iii) The name of the qualified biomass conversion facility that
will purchase the eligible material;
(iv) The expected, fair market, per dry ton payment rate the owner
plans to receive for the delivery of the eligible material; and
(v) The date or dates the eligible material is expected to be
delivered to the qualified biomass conversion facility.
(2) A new or amended conservation plan, forest stewardship plan, or
equivalent plan, as specified in Sec. 1450.103.
(d) Eligible material owners who deliver eligible material to more
than one qualified biomass conversion facility must submit separate
applications for each facility to which eligible material will be
delivered.
(e) After delivery, eligible material owners must notify CCC and
request the payment. Payments will be disbursed only after delivery is
verified by CCC.
(f) Information that must be submitted to CCC in order to request
payments includes settlement, summary, or other acceptable data that
provide:
(1) Total actual tonnage delivered and a total dry weight tonnage
equivalent amount determined by the qualified biomass conversion
facility using standard moisture determinations applicable to the
eligible material;
(2) Total payment received, including the per dry-ton payment
rate(s) matched with actual and dry weight tonnage delivered; and
(3) The qualified biomass conversion facility's certification as to
the authenticity of the information.
Sec. 1450.105 Obligations of participant.
(a) All participants whose payment application was approved must
agree to:
(1) Carry out and certify compliance with the terms and conditions
of the payment application including adherence to a conservation plan,
forest stewardship plan, or equivalent plan, as appropriate; and
(2) Be jointly and severally responsible, if the participant has a
share of the payment greater than zero, with other contract
participants for compliance with the provisions of such contract and
the provisions of this part, and for any refunds or payment adjustments
that may be required for violations of any of the terms and conditions
of the BCAP contract and this part.
(b) [Reserved]
Sec. 1450.106 Payments.
(a) Payments under this subpart will be for a term not to exceed 2
years beginning the date that CCC issues the first payment, under this
subpart to the participant and for each participant runs from the date
that the participant receives a matching payment from CCC even though
the participant may over time change facilities. The Deputy
Administrator may further limit the period to reflect participation in
BCAP for any time prior to October 27, 2010 as the Deputy Administrator
deems appropriate. In addition, where ownership of a source of material
has changed, or where it is deemed that other circumstances warrant,
the Deputy Administrator may apply the time limit applicable to a
person or entity or to another person or entity to assure that the 2-
year limit is not avoided by private arrangement or other circumstance.
(b) Payments under this subpart will be paid at a rate of $1 for
each $1 per dry ton provided by the qualified biomass conversion
facility for the market-based sale of eligible material in an amount up
to $45 per dry ton.
Subpart C--Establishment Payments and Annual Payments
Sec. 1450.200 General.
(a) As provided in this subpart, establishment payments and annual
payments may be provided by CCC to producers of eligible crops within a
project area.
(b) [Reserved]
Sec. 1450.201 Project area proposal submission requirements.
(a) To be considered for selection as a project area, a project
sponsor must submit a proposal to CCC that includes, at a minimum:
(1) A description of the sources of renewable biomass, eligible
land, and eligible crops that may be enrolled within the proposed
project area;
(2) A letter of commitment from a biomass conversion facility
stating that the facility will use, for BCAP purposes, eligible crops
intended to be produced in the proposed project area;
(3) Information demonstrating that the biomass conversion facility
will have sufficient equity available to operate if the facility is not
operational at the time the project area proposal is submitted; and
(4) Other information that gives CCC a reasonable assurance that
the biomass conversion facility will be in operation in a timely manner
so that it will utilize the eligible crops, as determined by CCC.
(b) The project area description required in paragraph (a) of this
section needs to specify geographic boundaries and be described in
definite terms such as acres, watershed boundaries, mapped longitude
and latitude coordinates, or counties.
(c) The project area needs to be physically located near a biomass
conversion facility or facilities, as determined by CCC.
(d) Project area proposals may limit the nature and types of
eligible crops to be established within a project area.
Sec. 1450.202 Project area selection criteria.
(a) In selecting project areas, CCC will consider:
(1) The dry tons of the eligible crops proposed to be produced in
the proposed project area and the probability that such crops will be
used for BCAP purposes;
(2) The dry tons of renewable biomass projected to be available
from sources other than the eligible crops grown on contract acres;
(3) The anticipated economic impact in the proposed project area;
(4) The opportunity for producers and local investors to
participate in the ownership of the biomass conversion facility in the
proposed project area;
(5) The participation rate by beginning or socially disadvantaged
farmers or ranchers;
(6) The impact on soil, water, and related resources;
(7) The variety in biomass production approaches within a project
area, including agronomic conditions, harvest and postharvest
practices, and monoculture and polyculture crop mixes;
(8) The range of eligible crops among project areas; and
(9) Any other additional criteria, as determined by CCC.
(b) [Reserved]
Sec. 1450.203 Eligible persons and legal entities.
(a) In order to be eligible to enter into a BCAP contract for this
subpart, a person or legal entity must be an owner, operator, or tenant
of eligible land within a project area, as defined in Sec. 1450.204
and be the person or entity with the ability to perform under the terms
of the contract.
(b) [Reserved]
Sec. 1450.204 Eligible land.
(a) For the purposes of this subpart, eligible land must be
physically and legally capable of producing an eligible crop and must
be:
[[Page 66241]]
(1) Agricultural land; or
(2) Nonindustrial private forest land.
(b) For the purposes of this subpart, eligible land is not:
(1) Federal- or State-owned land, including land owned by local
governments or municipalities;
(2) Land that is native sod;
(3) Land enrolled in the Conservation Reserve Program operated
under part 1410 of this chapter;
(4) Land enrolled in the Wetlands Reserve Program operated under
part 1467 of this chapter; or
(5) Land enrolled in the Grassland Reserve Program operated under
part 1415 of this chapter.
Sec. 1450.205 Duration of contracts.
(a) Contracts under this subpart will be for a term of up to:
(1) 5 years for annual and non-woody perennial crops; and
(2) 15 years for woody perennial crops.
(b) The establishment time period may vary due to: Type of crop,
agronomic conditions (for example, establishment time frame, winter
hardiness), and other factors.
Sec. 1450.206 Obligations of participant.
(a) All participants subject to a BCAP contract must:
(1) Carry out the terms and conditions of the contract;
(2) Make available to CCC or to an institution of higher education
or other entity designated by CCC, such information as CCC determines
to be appropriate to promote the production of eligible crops and the
development of renewable biomass conversion technology;
(3) Comply with the highly erodible land and wetland conservation
requirements of part 12 of this chapter;
(4) Implement a:
(i) Conservation plan,
(ii) Forest stewardship plan, or
(iii) Equivalent plan.
(5) Implement the conservation plan, forest stewardship plan, or
equivalent plan which is part of such contract, in accordance with the
schedule of dates included in such conservation plan, forest
stewardship plan, or equivalent plan, unless CCC determines that the
participant cannot fully implement the conservation plan, forest
stewardship plan, or equivalent plan for reasons beyond the producer's
control and CCC and the participant agree to a modified plan.
(6) Demonstrate compliance with the conservation plan, forest
stewardship plan, or equivalent plan through required self-
certification subject to compliance spot checks, as determined by CCC.
(7) Establish temporary vegetative cover either within the
timeframes required by the conservation plan, forest stewardship plan,
or equivalent plan or as determined by the Deputy Administrator, if the
eligible crops cannot be timely established; and
(8) If the participant has a share of the payment greater than
zero, be jointly and severally responsible with the other contract
participants for compliance with the provisions of such contract and
the provisions of this part, and for any refunds or payment adjustments
that may be required for violations of any of the terms and conditions
of the contract and this part.
(b) Payments may cease and producers may be subject to contract
termination for failure to establish eligible crops.
(c) A contract will not be terminated for failure by the
participant to establish an approved cover on the land if, as
determined by CCC:
(1) The failure to plant or establish such cover was due to a
natural disaster such as excessive rainfall, flooding, or drought; and
(2) The participant establishes the approved cover as soon as
practicable after the wet or drought conditions that prevented the
establishment of such cover subside.
Sec. 1450.207 Conservation plan, forest stewardship plan, or
equivalent plan.
(a) The producer must implement a conservation plan, forest
stewardship plan, or equivalent plan that complies with CCC guidelines
and is approved by the appropriate conservation district for the land
to be entered in BCAP. If the conservation district declines to review
the conservation plan, forest stewardship plan, or equivalent plan, or
disapproves the conservation plan, forest stewardship plan, or
equivalent plan, such approval may be waived by CCC.
(b) The practices and management activities included in a
conservation plan, forest stewardship plan, or equivalent plan, and
agreed to by the producer, must be implemented in a cost-effective
manner that meets BCAP purposes as determined by CCC.
(c) If applicable, a tree planting plan must be developed and
included in the conservation plan, forest stewardship plan, or
equivalent plan. Such tree planting plan may allow a reasonable time to
complete plantings, as determined by CCC.
(d) Each conservation plan, forest stewardship plan, or equivalent
plan, and any revision of the plan, will be subject to approval by CCC.
1450.208 Eligible practices.
(a) Eligible practices are those practices specified in the
conservation plan, forest stewardship plan, or equivalent plan that
meet all standards needed to cost-effectively establish:
(1) Annual crops;
(2) Non-woody perennial crops; and
(3) Woody perennial crops.
(b) [Reserved]
Sec. 1450.209 Signup.
(a) Offers for contracts may be submitted on a continuous basis to
CCC as determined by the Deputy Administrator.
(b) [Reserved]
Sec. 1450.210 Acceptability of offers.
(a) Acceptance or rejection of any contract offered will be at the
sole discretion of CCC, and offers may be rejected for any reason as
determined appropriate to accomplish the purposes of BCAP.
(b) An offer to enroll land in BCAP will be irrevocable for such
period as is determined and announced by CCC. The producer will be
liable to CCC for liquidated damages if the applicant revokes an offer
during the period in which the offer is irrevocable as determined by
CCC. CCC may waive payment of such liquidated damages if CCC determines
that the assessment of such damages, in a particular case, is not in
the best interest of CCC and BCAP.
Sec. 1450.211 BCAP contract.
(a) In order to enroll land in BCAP, the participant must enter
into a contract with CCC.
(b) The contract is comprised of:
(1) The terms and conditions for participation in BCAP;
(2) The conservation plan, forest stewardship plan, or equivalent
plan; and
(3) Any other materials or agreements determined necessary by CCC.
(c) In order to enter into a contract, the producer must submit an
offer to participate as specified in Sec. 1450.209;
(d) The contract must, within the dates established by CCC, be
signed by:
(1) The producer; and
(2) The owners of the eligible land to be placed in the BCAP and
other eligible participants, if applicable.
(e) The Deputy Administrator is authorized to approve contracts on
behalf of CCC.
(f) CCC will honor contracts even in the event that a project area
biomass conversion facility does not become fully or partially
operational.
(g) Contracts may be terminated by CCC before the full term of the
contract has expired if:
[[Page 66242]]
(1) The owner loses control of or transfers all or part of the
acreage under contract and the new owner does not wish to continue the
contract;
(2) The participant voluntarily requests in writing to terminate
the contract and obtains the approval of CCC according to terms and
conditions as determined by CCC;
(3) The participant is not in compliance with the terms and
conditions of the contract;
(4) The BCAP practice fails or is not established after a certain
time period, as determined CCC, and the cost of restoring or
establishing the practice outweighs the benefits received from the
restoration or establishment;
(5) The contract was approved based on erroneous eligibility
determinations; or
(6) CCC determines that such a termination is needed in the public
interest.
(h) Except as allowed and approved by CCC where the new owner of
land enrolled in BCAP is a Federal agency that agrees to abide by the
terms and conditions of the terminated contract, the participant in a
contract that has been terminated must refund all or part of the
payments made with respect to the contract plus interest, as determined
by CCC, and must pay liquidated damages as provided for in the contract
and this part. CCC may permit the amount(s) to be repaid to be reduced
to the extent that such a reduction will not impair the purposes of
BCAP. Further, a refund of all payments need not be required from a
participant who is otherwise in full compliance with the contract when
the land is purchased by or for the United States, as determined
appropriate by CCC.
Sec. 1450.212 Establishment payments.
(a) Establishment payments will be made available upon a
determination by CCC that an eligible practice, or an identifiable
portion of a practice, has been established in compliance with the
appropriate standards and specifications.
(b) Except as otherwise provided for in this part, such payments
will be made only for the cost-effective establishment or installation
of an eligible practice, as determined by CCC.
(c) Except as provided in paragraph (d) of this section, such
payments will not be made to the same owner or operator on the same
acreage for any eligible practices that have been previously
established, or for which such owner or operator has received
establishment assistance from any Federal agency.
(d) Establishment payments may be authorized for the replacement or
restoration of practices on land for which assistance has been
previously allowed under BCAP, only if the failure of the original
practice was due to reasons beyond the control of the participant, as
agreed to by CCC.
(e) In addition, CCC may make partial payments when the participant
completes identifiable components of the contract. CCC may make
supplemental establishment payments, if necessary.
Sec. 1450.213 Levels and rates for establishment payments.
(a) CCC will pay not more than 75 percent of the actual or average
cost (whichever is lower) of establishing non-woody perennial crops and
woody perennial crops specified in the conservation plan, forest
stewardship plan, or equivalent plan.
(b) The average cost of performing a practice may be determined by
CCC based on recommendations from the State Technical Committee. Such
cost may be the average cost in a State, a county, or a part of a State
or county, as determined by CCC. This means that the calculated 75
percent of the average cost may represent less than 75 percent of the
actual cost for an individual participant.
(c) Except as otherwise provided for in this part, a participant
may receive, in addition to any payment under this part, establishment
assistance, rental payments, or tax benefits from a State or a private
organization in return for enrolling lands in BCAP without a
commensurate reduction in BCAP establishment payments.
Sec. 1450.214 Annual payments.
(a) Annual payments will be made in such amount and in accordance
with such time schedule as may be agreed upon and specified in the BCAP
contract.
(b) Based on the regulations in Sec. 1410.42 of this chapter and
as determined by CCC, annual payments include a payment based on all or
a percentage of:
(1) A weighted average soil rental rate for cropland;
(2) The applicable marginal pastureland rental rate for all other
land except for nonindustrial private forest land;
(3) For forest land, the average county rental rate for cropland as
adjusted for forest land productivity for nonindustrial private forest
land; and
(4) Any incentive payment as determined by CCC.
(c) The annual payment will be divided among the participants on a
single contract as agreed to in such contract, as determined by CCC.
(d) A participant that has an established eligible crop and is
therefore not eligible for establishment payments under Sec. 1450.212
may be eligible for annual payments under the provisions of this
section.
(e) In the case of a contract succession, annual payments will be
divided between the predecessor and the successor participants as
agreed to among the participants and approved by CCC. If there is no
agreement among the participants, annual payments will be divided in
such manner deemed appropriate by the Deputy Administrator and such
distribution may be prorated based on the actual days of ownership of
the property by each party.
(f) Annual payments will be reduced, as determined by CCC:
(1) By a percentage of the sum of the sale price and payments under
subpart B of this part for the crop collected or harvested from the
contract acreage as follows:
(i) By 1 percent if the eligible crop is delivered to a biomass
conversion facility for conversion to cellulosic biofuels as defined by
40 CFR 80.1401;
(ii) By 10 percent if the eligible crop is delivered to a biomass
conversion facility for conversion to advanced biofuels;
(iii) By 25 percent if the eligible crop is delivered to a biomass
conversion facility for conversion to heat, power, or biobased
products;
(iv) By 100 percent if the eligible crop is used for a purpose
other than conversion to heat, power, biobased products, or advanced
biofuels;
(2) If the producer violates a term of the contract; or
(3) In other circumstances deemed necessary or appropriate to carry
out BCAP.
Sec. 1450.215 Transfer of land.
(a)(1) If a new owner or operator purchases or obtains the right
and interest in, or right to occupancy of, land subject to a BCAP
contract, such new owner or operator, upon the approval of CCC, may
become a participant to a new BCAP contract with CCC for the
transferred land.
(2) For the transferred land, if the new owner or operator becomes
a successor to the existing BCAP contract, the new owner or operator
will assume all obligations of the BCAP contract of the previous
participant.
(3) If the new owner or operator is approved as a successor to a
BCAP contract with CCC, then, except as otherwise determined by the
Deputy Administrator:
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(i) Establishment payments will be made to the past or present
participant who established the practice; and
(ii) Annual payments to be paid during the fiscal year when the
land was transferred will be divided between the new participant and
the previous participant in the manner specified in Sec. 1450.214(c).
(b) If a participant transfers all or part of the right and
interest in, or right to occupancy of, land subject to a BCAP contract
and the new owner or operator does not become a successor to such
contract within 60 days of such transfer, or such other time as CCC
determines to be appropriate, such contract will be terminated with
respect to the affected portion of such land, and the original
participant:
(1) Forfeits all rights to any future payments for that acreage;
(2) Must refund all previous payments received under the contract
by the participant or prior participants, plus interest, except as
otherwise specified by CCC. The provisions of Sec. 1450.211(g) will
apply.
(c) Federal agencies acquiring property, by foreclosure or
otherwise, that contains BCAP contract acreage cannot be a party to the
contract by succession. However, through an addendum to the contract,
if the current operator of the property is one of the contract
participants, the contract may remain in effect and, as permitted by
CCC, such operator may continue to receive payments under such contract
if CCC determines that such allowance is in the public interest and:
(1) The property is maintained in accordance with the terms of the
contract;
(2) Such operator continues to be the operator of the property; and
(3) Ownership of the property remains with such Federal agency.
Signed at Washington, DC, on October 19, 2010.
Jonathan W. Coppess,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 2010-26871 Filed 10-22-10; 11:15 am]
BILLING CODE 3410-05-P