```

[Federal Register: October 27, 2010 (Volume 75, Number 207)]
[Rules and Regulations]               
[Page 66201-66243]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27oc10-9]                         

[[Page 66201]]

-----------------------------------------------------------------------

Part III

Department of Agriculture

-----------------------------------------------------------------------

Commodity Credit Corporation

-----------------------------------------------------------------------

7 CFR Part 1450

Biomass Crop Assistance Program; Final Rule

[[Page 66202]]

-----------------------------------------------------------------------

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.

-----------------------------------------------------------------------

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
----------------------------------------------------------------------------------------------------------------
                                                                Qualifies for matching payment?
                                              ------------------------------------------------------------------
                                                                                   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
----------------------------------------------------------------------------------------------------------------
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...............................
----------------------------------------------------------------------------------------------------------------
``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 usda-hotline@oil.usda.gov. 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:

[[Page 66243]]

    (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
```