[Federal Register Volume 75, Number 25 (Monday, February 8, 2010)]
[Proposed Rules]
[Pages 6264-6288]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-2556]



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Part II





Department of Agriculture





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Commodity Credit Corporation



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7 CFR Part 1450



Biomass Crop Assistance Program; Proposed Rule

Federal Register / Vol. 75, No. 25 / Monday, February 8, 2010 / 
Proposed Rules

[[Page 6264]]


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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1450

RIN 0560-AH92


Biomass Crop Assistance Program

AGENCY: Commodity Credit Corporation and Farm Service Agency, USDA.

ACTION: Proposed rule.

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SUMMARY: The Commodity Credit Corporation (CCC) proposes regulations to 
implement 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 
including woody biomass 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 participants, biomass 
conversion facilities, and biomass crops and materials. It also 
provides notice of final termination of the existing Notice of Funds 
Availability.

DATES: We will consider comments that we receive by April 9, 2010.

ADDRESSES: We invite you to submit comments on this proposed rule. In 
your comment, include the volume, date, and page number of this issue 
of the Federal Register. You may submit comments by any of the 
following methods:
    <bullet> E-Mail: <a href="/cdn-cgi/l/email-protection#92f1f7e2f6fff3fbfed2e5f6f1bce7e1f6f3bcf5fde4"><span class="__cf_email__" data-cfemail="20434550444d41494c605744430e555344410e474f56">[email protected]</span></a>.
    <bullet> Fax: 202-720-4619.
    <bullet> Mail: Director of CEPD, USDA FSA CEPD, Stop 0513, 1400 
Independence Ave., SW., Washington, DC 20250-0513.
    <bullet> Hand Delivery or Courier: Deliver comments to Director of 
CEPD, Room 4709-S, 1400 Independence Ave., SW., Washington, DC.
    <bullet> Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.
    Comments may be inspected at the mail address listed above between 
8 a.m. and 4:30 p.m., Monday through Friday, except holidays. A copy of 
this rule is available through the Farm Service Agency (FSA) home page 
at http://www.fsa.usda.gov/.

FOR FURTHER INFORMATION CONTACT: Robert Stephenson at USDA, FSA, CEPD, 
STOP 0513, 1400 Independence Ave., SW., Washington, DC 20250-0513; 
telephone 202-720-6221; e-mail: <a href="/cdn-cgi/l/email-protection#d1b2b4a1b5bcb0b8bd91a6b5b2ffa4a2b5b0ffb6bea7"><span class="__cf_email__" data-cfemail="ed8e889d89808c8481ad9a898ec3989e898cc38a829b">[email protected]</span></a>. 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

    Section 9001 of the 2008 Farm Bill authorizes the Biomass Crop 
Assistance Program (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 
also authorizes such sums as are necessary to carry out BCAP.
    On May 5, 2009, the President 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 programmatic specific 
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 
memorandum is 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 the BCAP.
    On June 11, 2009 (74 FR 27767-27772), we published in the Federal 
Register a BCAP notice of funds availability (NOFA) for the collection, 
harvest, storage, and transportation of materials (CHST). This proposed 
rule terminates the NOFA effective on the date the proposed rule is on 
public display at the Office of the Federal Register. On that date, 
USDA will notify the public that the NOFA is terminated and that FSA 
will no longer accept applications for matching payments under the 
NOFA.
    We also held a series of public meetings, as described in a 
different notice published on May 13, 2009 (74 FR 22510-22511), to 
collect public input needed to prepare an environmental impact 
statement (EIS) for BCAP. As outlined in the NOFA, comments from the 
public meetings, other public comments previously submitted in response 
to the NOFA, the full EIS and all comments and lessons learned from the 
three BCAP notices will be incorporated into the rulemaking for the 
entire BCAP program, which will include CHST. As such, this proposed 
rule covers the whole BCAP program, 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. It reflects comments received on the NOFA. CCC believes that the 
full BCAP should be viewed in a broader policy context which promotes 
the Administration's priorities for increasing the production of 
advanced biofuels, renewable energy and biobased products. Within this 
context, this proposed rule, which would implement the full BCAP, 
terminates the NOFA and makes necessary changes to the program in a 
manner that is consistent with the 2008 Farm Bill and encourages the 
development of bioenergy, including advanced biofuels, renewable 
energy, and biobased products.
    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.

Discussion of Comments on NOFA

    Forty-seven comments were received in response to the NOFA. 
Commenters included a Tribe, State government agencies, an Embassy, 
individuals, non-profits, corporations, small businesses, 
entrepreneurs, public interest groups, Federal agencies and 
departments, academics, trade and industry associations, and 
cooperatives. Comments were received from all regions within the U.S. 
and from Canada and the United Kingdom.
    Forty-six percent of the respondents were either a biomass 
conversion facility or represented biomass conversion facilities, the 
largest majority being from the wood pellet manufacturing industry.

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    Twenty-one percent of the respondents commented on the constraints 
that resulted from requiring an ``arm's-length transaction.'' Most of 
those comments requested that the arm's-length transaction requirement 
either be removed or be reconstituted to enhance program flexibility 
and allow for a greater diversity of eligible material owner 
participation. CCC acknowledges the importance of ensuring a broad 
range of eligible materials in pursuing program goals, and is mindful 
of the constraints raised by the commenters. In order to provide 
appropriate safeguards to ensure transactions among disinterested 
parties, CCC proposes to replace the arm's length transaction language 
in the proposed rule with related-party transaction language.
    Related-party transaction restrictions will not make ineligible 
stockholders of a privately or publicly held company who deliver 
eligible material to that company, nor make members of a cooperative 
who deliver eligible material to that cooperative ineligible. CCC 
requests additional comments on related-party transactions.
    None of the parties in a related-party transaction for the purchase 
of eligible material are eligible for CHST matching payments as an 
eligible material owner.
    Twenty percent of respondents opposed the requirement to measure 
biomass deliveries with real-time equipment that accurately records 
moisture levels to meet the dry-ton measurement standard. Most 
indicated that common industry practice is to measure in terms of 
green-tons with the general assumption of a moisture level of 45 to 50 
percent. Based on these comments, CCC proposes to modify its 
requirement for moisture testing and adopt the industry-wide standard 
for measuring moisture. However, in all cases, the dry-ton equivalent 
remains.
    Seventy-six percent of the comments concerned eligible materials, 
with 13 percent of those comments focused on conservation and forest 
stewardship plans related to eligible materials. These comments 
included commentary for and against the 20 percent cap on Title I crop 
agricultural residue. Most of those in favor of the cap remarked that 
it ought to be a complete ban to protect soils from wind and water 
erosion and that no agricultural residue should be removed without a 
conservation plan. Many of those in opposition to the cap stated that 
the cap of 20 percent only would drive up market prices on forest 
residue and allow forest residue to become the central supply for 
biomass conversion facilities. In this proposed rule, there is no 20-
percent cap because it is inconsistent with the 2008 Farm Bill. 
Regarding protecting land from wind and water, CCC proposes in this 
rule that BCAP contract participants will implement conservation plans, 
forest stewardship plans or equivalent plans that take into account 
site-level conservation needs. With regard to matching payment 
eligibility for agricultural and forest landowners and operators 
removing eligible material for use in a biomass conversion facility, 
such removal to receive matching payments must be done in compliance 
with any new, updated or existing conservation plans, forest 
stewardship plans or equivalent plans, as well as any existing 
environmental laws and regulations.
    Other comments concerning the conservation plans included a desire 
to expand the requirement for conservation plans. Suggestions for 
elements of conservation plans included: target erosion rates far below 
``T'' (soil loss tolerance) and compliance with new State ordinances on 
items such as buffers. This standard exceeds the level for highly 
erodible land, which is defined in 7 CFR part 12. Therefore, CCC did 
not adopt this comment and requests public comment on appropriate 
conservation standards for land enrolled in BCAP.
    Comments concerning Forest Stewardship Plans offered alternative 
``equivalent plans'' prescribed in the 2008 Farm Bill, such as plans 
under the American Tree Farm Program, the Sustainable Forestry 
Initiatives Program or State Best Management Programs. This comment is 
consistent with the 2008 Farm Bill and was accepted and reflected in 
this proposed rule.
    Less than 10 percent of the comments urged FSA and CCC to consider 
miscanthus as an eligible material. Miscanthus is an eligible material; 
however, because some States may consider miscanthus a noxious weed, it 
may not be considered an eligible crop in those States.
    Nearly 50 percent of the comments expressed a need for the 
eligibility time period for matching payments to be extended beyond two 
years. Rationale for these requests included the fact that certain 
contracts, such as a timber sale contract, have task orders and options 
that are not necessarily executed within a two-year time period and the 
need for equipment acquisitions or repairs sometimes interrupt 
harvesting. Two suggestions were given to tie the two-year limit to 
land tract instead of the eligible material owner.
    The 2008 Farm Bill specified the two-year period for matching 
payments. However, CCC modified the beginning of the time period from 
the date of pre-delivery approval to the date the first payment is 
issued. From that first date, matching payment obligations may occur 
for two years to an eligible material owner. CCC did not adopt the 
comment to change the two-year period from ``eligible material owner'' 
to ``tract'' because to do so would have been an extraordinary 
administrative burden on FSA that would have required extensive 
geographic-information-system-based software to monitor and control 
payments.
    Nearly 20 percent of the commenting respondents were concerned with 
the economic market impact of BCAP. Comments included concerns that the 
introduction of the matching payment could impact the supply of 
commercial timber. Commenters did not agree on the impact; concerns 
were expressed that the impact would be negative, reducing supply, and 
positive, increasing supply. Similarly, commenters expressed concern 
that supply impacts would result in both favorable and unfavorable 
pricing impacts. Several respondents noted that the drop in the housing 
market has depressed the current supply of biomass and the matching 
payment, from their perspective, might help improve waste wood supply 
levels. Because these comments are of a general nature, CCC took no 
action on these comments.
    Nearly 25 percent of the comments opposed the requirement to 
present scale tickets or a check to qualify the delivery and validate 
eligibility for a matching payment. The commenting parties indicated 
that the burden and cost of recording on each scale ticket was too 
high. CCC generally agrees with the comment and modified the 
requirement in Sec.  1450.104(f) so the required information that must 
be submitted includes total actual tonnage delivered, total dry-weight 
tonnage-equivalent using standard moisture determinations, total 
payment including per ton payment rate(s) matched with actual tonnage, 
and the qualified biomass conversion facility's certification as to the 
authenticity of the information.
    Comments on wildlife and plant life came from 15 percent of the 
respondents. Several comments indicated concern about ensuring 
standards for invasive and noxious species where eligible material was 
concerned. These comments suggested that CCC consult with USDA's Animal 
and Plant Health Inspection Service and the National Council for 
Invasive Species to address geographic-specific issues. ``Eligible 
material'' is a subset of renewable biomass and is specifically defined 
in the 2008 Farm Bill as the

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material that is eligible for a matching payment. The 2008 Farm Bill 
does not restrict invasive and noxious species from eligibility, 
however, as discussed below, CCC will require that existing measures be 
taken and standing guidelines followed for any harvesting, collecting, 
storing or transporting of such material from such species.
    ``Eligible crops,'' however, are another subset of renewable 
biomass that refers to the kind and types of crops that may qualify for 
establishment and annual payments on land enrolled in BCAP. According 
to the 2008 Farm Bill, invasive and noxious species are not ``eligible 
crops'' and CCC will collaborate with other appropriate agencies and 
entities to ensure current listings are available.
    Finally, in issuing the NOFA, we pledged to consider all public 
comments and incorporate relevant evidence from the full EIS as well as 
all lessons learned into the proposed rule that sets forth requirements 
for the overall BCAP. Based upon the Department's experience in 
implementing the component of the program authorized by the NOFA, 
certain changes are necessary to implement the program in a manner that 
is consistent with the 2008 Farm Bill, while also supporting the 
Administration's overall policy objective to encourage the development 
of advanced biofuels, renewable energy, and biobased products within 
the 2008 Farm Bill authority. The proposed rule will specifically seek 
public comment on how to best incentivize the development of advanced 
biofuels, renewable energy and biobased products from renewable 
biomass.

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 eligible material that is sold to 
qualified biomass conversion facilities for the production of heat, 
power, biobased products, or advanced biofuels. In this rule, these 
payments are referred to as ``matching payments.'' The matching payment 
is intended to assist producers with the cost of collection, harvest, 
storage, and transportation of eligible material to the facility. Such 
payments to a particular participant may continue for up to two 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 15 years for the 
production of those crops. In this rule, these are referred to as 
``establishment and annual payments.'' 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. Production activities may 
include, but are not limited to, annual payments for producers who are 
unable to sell crop due to a reduction in the size or scope of a 
biomass conversion facility's operation or if a producer experiences 
crop failure caused by no fault of the producer but by a natural event 
such as drought, flooding or hail, as determined by CCC. Producers in 
project areas can be eligible for both types of payments; producers 
outside the project areas can be eligible for matching payments only. A 
table summarizing the major eligibility requirements for both types of 
payments is provided later in this rule.

Terms Used in This Rule

    This rule uses the term ``eligible material'' for the renewable 
biomass that is eligible for the matching payment component of BCAP and 
``eligible crop'' for renewable biomass that may be eligible for the 
establishment 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 use of the terms in this rule 
is consistent with the way the terms are used in the 2008 Farm Bill. 
With this rule, CCC intends to achieve better consistency between the 
requirements for eligible materials collected and harvested from public 
and private lands. In addition, CCC seeks to avoid diverting any 
materials potentially eligible for BCAP matching payments from existing 
value added production processes already occurring in the marketplace. 
Therefore, CCC proposes that vegetative wastes, such as wood waste and 
wood residues, collected or harvested from both public and private 
lands should be limited to only those that would not otherwise be used 
for a higher-value product. More specifically, for materials collected 
from both public and private lands, CCC is proposing to exclude from 
matching payment eligibility wood wastes and residues derived from mill 
residues (i.e. tailings, etc.) or other production processes that 
create residual byproducts that are typically used as inputs for higher 
value-added production (i.e. particle board, fiberboard, plywood, or 
other wood product markets). However, CCC is proposing to allow as 
eligible for matching payments wood waste and residue derived from 
slash, pre-commercial operations, wet cordwood etc.) that is altered to 
chipped or similar form solely for the purposes of transport and 
delivery to eligible biomass conversion facilities. As specified in the 
2008 Farm Bill and the regulations in 7 CFR part 1450, 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 and (3) a qualified biomass conversion facility that meets 
those requirements and the definition. As discussed in this rule, the 
matching payments will be made for the delivery of the eligible 
material.
    The term ``conservation district'' is used as defined in 7 CFR part 
1410.
    This proposed rule uses the term ``participant'' for the matching 
payments component of BCAP and the terms ``producer'' and 
``participant'' for the establishment 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 
sell it to the biomass conversion facility. 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, or annual payments.
    This proposed rule uses the term ``contract'' and ``agreement.'' A 
contract is between CCC and the participant for BCAP payments. The 
contract is legally binding and specifies what the producer must do and 
the resulting payments that CCC will make to the producer. An agreement 
is with a qualified biomass conversion facility or a project area 
sponsor. As fully described later in this proposed rule, 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, for example, the type of renewable biomass that will be 
used, the planned use of renewable biomass, and the new uses for the 
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

[[Page 6267]]

facility address and contact information to the general public.

Matching Payments

    As proposed in this rule, matching payments would be available for 
the delivery of 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 two 
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 payments to eligible material owners delivering to 
a biomass conversion facility, CCC seeks comments on the following 
three options.
    One option is to provide the matching payments as provided in the 
Notice of Funds Availability. Under this option, CCC would provide 
matching payments at the rate of $1 for each $1 per dry ton paid by the 
CHST-qualified biomass conversion facility to the owner for delivery of 
eligible material to the facility in an amount not to exceed $45 per 
dry ton. Under this option, a limit would be placed on those biomass 
facilities that convert wood wastes or wood residues into heat or power 
for the facility. In those cases, a historical baseline of heat or 
power the facility produces from these materials will be established by 
the Deputy Administrator and payments will be made only for materials 
delivered to those facilities for conversion to heat or power above 
that baseline.
    A second option is to tailor the matching payments through a 
``tiered approach'' designed to encourage advanced biofuels production. 
In this option, CCC would provide matching payments at the rate of $1 
for each $1 per dry ton paid by the CHST-qualified biomass conversion 
facility; however, biomass conversion facilities converting eligible 
material to advanced biofuels would be able to receive matching 
payments at the maximum rate of $45 per ton. Biomass conversion 
facilities converting eligible material to any use other than advanced 
biofuel--such as heat, power, renewable energy or biobased products--
would be able to receive payments at some point below the maximum rate. 
USDA requests comments on how to assess a tiered approach and how such 
an approach might be structured.
    One possible approach would be based on USDA's tentative finding, 
in Regulatory Impact Analysis, that a $9 per green ton subsidy would 
render biomass feedstock broadly appealing to farm operators and 
competitive as an input to the energy sector. This $9 per green ton 
rate equates to approximately $15 to $16 per dry ton. If so, a $16 per 
dry ton payment rate would be sufficient to incentivize the production 
of new biofuel feedstock development and associated production 
processes that would not otherwise occur absent this financial support.
    Another approach would be to develop a payment rate based directly 
on the value of lowering carbon emissions. Such an approach would take 
account of the greenhouse gas benefits associated with the substitution 
of biofuels for other more carbon intensive fuel sources, such as coal. 
USDA has proposed a particular minimum subsidy of $16 per dry ton, and 
it believes that value may ``internalize'' some of the societal benefit 
of the use of biofuel feedstock as an energy sector input, leading to 
significant environmental improvements. USDA specifically requests 
comment on how to better capture this concept and whether a higher or 
lower minimum payment may best reflect the greenhouse gas and other 
environmental benefits of biofuel feedstock energy use.
    USDA specifically requests comment on whether this or another 
similar payment structure might be best, and on how USDA may reflect 
the economic and environmental goals that can be achieved through this 
kind of tiered payment structure.
    Finally, a third option is to vary the matching payments to 
encourage additional biomass production beyond a historical baseline. 
Under this option, CCC would calculate the matching payment at the rate 
of $1 for each $1 per dry ton paid by the CHST-qualified biomass 
conversion facility and then reduce the actual amount paid based on the 
difference from the baseline. For example, full payment could be 
provided for delivery of eligible material to new facilities, certain 
public buildings, facilities, or property (such as schools, 
universities, military facilities or Federal and State buildings) that 
convert from fossil fuel consumption to renewable biomass feedstocks; 
for eligible material showing exceptional promise for producing 
innovative advanced biofuels, renewable energy, or biobased products; 
or for every ton of renewable biomass consumption above a facility's 
established baseline. Payments would be reduced for those facilities 
that do not increase renewable biomass consumption over a historical 
baseline.
    While CCC has not formally considered all of these options, CCC 
seeks comments and suggestions on all three of these options for the 
final rule so as to achieve an expansion and strengthening of the 
production of advanced biofuels, renewable energy, and biobased 
products from non-feed renewable biomass.

Qualified Biomass Conversion Facility

    CCC proposes that in order for a delivery of eligible materials to 
a biomass conversion facility to be eligible for payment, the receiving 
biomass conversion facility would first have to become qualified for 
BCAP. To become qualified, the eligible biomass conversion facility 
would enter into an agreement with CCC, through the FSA State office in 
the State where the facility is physically located.
    A biomass conversion facility, as specified in the 2008 Farm Bill 
and in this proposed rule, would be a facility that converts or 
proposes to convert renewable biomass into heat, power, biobased 
products, advanced biodiesel, or advanced biofuels such as wood 
pellets, grass pellets, wood chips, or briquettes. For the purposes of 
BCAP, advanced biofuels do not include ethanol derived from corn kernel 
starch, because the 2008 Farm Bill specifically excludes it in the 
definition.
    A biomass conversion facility would not have to be a project 
sponsor for the establishment and annual payments component of BCAP or 
be in operation to submit a successful application for qualification. 
If the facility is not yet in operation, CCC proposes that the person 
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.
    CCC proposes that each biomass conversion facility enter into a 
separate agreement with CCC regardless of whether a single owner has 
multiple facilities. CCC would issue unique facility identification 
numbers to each qualifying biomass conversion facility.

[[Page 6268]]

    The proposed agreement between CCC and a qualified facility would 
require the biomass conversion facility to make information about the 
facility available to CCC and institutions of higher education. The 
2008 Farm Bill requires that the information be made available to the 
Secretary or to institutions of higher education so that the 
information can be used to promote the production of biomass crops and 
the development of biomass conversion technology. The 2008 Farm Bill 
also requires a report to Congress on best practice data and other 
information no later than four years after the enactment of the 2008 
Farm Bill, so the agreement would require that such information be 
disclosed, with the understanding that such information would be used 
in the report to Congress. In addition, when a biomass conversion 
facility agrees to become ``qualified'' it will be helpful for CCC to 
make information available to the public that a particular facility has 
become qualified because it is a precursor to being eligible for a 
matching payment.

Eligible Material Owners, Application for Matching Payments

    To be eligible for matching payments, the eligible material owners 
need to visit a county FSA office to sign up for payment approval as an 
eligible material owner. The qualified biomass conversion facility 
would issue a receipt or invoice upon the date of delivery to eligible 
material owners.
    The material owner would 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 could 
be a person(s) with the right to harvest or collect eligible material 
on certain Federal lands pursuant to a contract or permit with the 
United States Forest Service or Bureau of Land Management, such as a 
timber sale contract.
    Eligible material owners would take the receipts from the qualified 
biomass conversion facility and submit them to the county FSA office 
for matching payments. In accordance with the 2008 Farm Bill, CCC 
proposes that the measure for the eligible material weight would be a 
``dry ton,'' the weight at zero percent moisture content. The facility 
would be required to have the necessary equipment (such as a moisture 
meter) to calculate the equivalent dry ton weight of the delivered 
material.
    In addition to weight scaling for roundwood and forest residues 
that have not been chipped, CCC proposes in consultation with the U.S. 
Forest Service to require qualified biomass conversion facilities to 
use a random sampling methodology and historical statistical data to 
determine conversion factors for eligible material. Conversion factors 
would need to be developed quarterly and be based on type of material 
such as hardwood and softwood.
    For wood chips, chipped forest residuals, shavings, sawdust, bark 
or any other eligible intermediate forestry residuals, CCC in 
consultation with the U.S. Forest Service proposes the requirement of 
sampling for individual loads or using rapid electronic meters. 
Quarterly correction factors would be required and be based on monthly 
random samples of the eligible materials.
    CCC proposes that woody biomass sampling methodologies follow 
standard probability sampling of materials and proposes that moisture 
analysis follow standard test methods for wood fuels.
    An eligible owner is able to receive matching payments for a period 
of two years. The two-year period for matching payment eligibility 
would begin on the date of issue of the first matching payment. This 
provision differs from what was provided in the NOFA, which indicated 
that the 2-year time period would begin immediately after initial 
approval by the FSA county office for the CHST matching payment and 
would end 24 months later. Having the ``start date'' coincide with the 
payment date, rather than the approval date, ensures that participants 
would not be unnecessarily penalized if, through no fault of their own, 
for example, adverse weather or other conditions could delay delivery 
of eligible material to a qualified biomass conversion facility.
    Eligible material owners may also be eligible to participate under 
the ``Establishment and Annual Payments'' component of BCAP; however, 
the annual payment that is received by a participant in that component 
would be reduced when a matching payment was issued. The 
``Establishment and Annual Payments'' component is discussed later in 
this rule. If an eligible material owner or producer wishes to avoid 
the reduction in annual payment(s), CCC proposes that the owner or 
producer do so by declining the matching payment(s).
    The NOFA imposed an ``arm's length transaction'' requirement to be 
eligible for a matching payment. CCC acknowledges the importance of 
maintaining flexibility in this new program, as well as ensuring a 
broad range of eligible materials in pursuing program goals, and is 
mindful of the constraints raised by the comments. In order to provide 
appropriate safeguards to ensure transactions among disinterested 
parties, CCC proposes to replace the ``arm's length transaction'' 
language with related-party transaction language. Related-party 
transaction restrictions will not render stockholders of a privately or 
publicly held company who deliver eligible material to that company 
ineligible; nor will members of a cooperative who deliver eligible 
material to that cooperative be considered ineligible. CCC proposes 
that related-party transaction be defined as a transaction between two 
or more ready, willing, and able organizations, trades, or business 
(whether or not incorporated, whether or not organized in the United 
States, and whether or not affiliated) substantially owned or 
controlled, directly or indirectly by the same interests, as determined 
by the Deputy Administrator.
    As otherwise explained throughout this proposed rule, CCC proposes 
that an eligible material owner needs to meet the following to be 
eligible for a matching payment:
    An eligible material owner may be:
    <bullet> A producer within a project area;
    <bullet> A biomass conversion facility;
    <bullet> A person or entity with the legal title to an intermediate 
ingredient or feedstock; or
    <bullet> 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 apply for a matching payment at the 
FSA county office after delivery of eligible material to a qualified 
biomass conversion facility.
    The eligible material must be harvested or collected from certain:
    <bullet> U.S. National Forest System and BLM lands,
    <bullet> Non-Federal lands, including State- and locally-held 
government lands, or
    <bullet> Tribal land held in trust by the Federal government.
    The eligible material must be harvested or collected from certain:
    <bullet> Materials, pre-commercial thinnings, or invasive species 
from National Forest System land and U.S. Bureau of Land Management 
System land that:
    <bullet> 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;
    <bullet> Would not otherwise be used for higher-value products; and
    <bullet> Are harvested in accordance with applicable law and land 
management

[[Page 6269]]

plans and the requirements for old-growth maintenance, restoration, and 
management direction of section 102 (e)(2), (3), and (4) of the Healthy 
Forests Restoration Act of 2003 (16 U.S.C. 6512) and large-tree 
retention of subsection (f).
    <bullet> 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:
    <bullet> Renewable plant materials such as feed grains, other 
agricultural commodities, and other plants and trees; and
    <bullet> Waste materials including vegetative waste comprised of 
crop residues such as corn stover or wood wastes and wood residues that 
would not otherwise be used as inputs for existing value-added 
production.
    CCC also proposes that eligible material owner(s) would not be 
eligible for a matching payment if:
    <bullet> Payment is received before the biomass conversion facility 
is qualified by CCC;
    <bullet> The eligible material owner did not receive approval for 
matching payment from the county FSA office before receiving payment;
    <bullet> The delivery did not consist of eligible material (For 
deliveries of comingled eligible and ineligible material, only the 
eligible material will be eligible for payment);
    <bullet> The eligible material owner knowingly supplied false 
information;
    <bullet> The eligible material owner violated the associated 
conservation or forestry plan related to the land that produced the 
eligible material for which a matching payment is requested; or
    <bullet> 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.
    Comments received on the CHST NOFA encourage CCC to ensure that 
conservation or forest stewardship plans appropriately address soil, 
water, wildlife and other natural resource concerns, so that biomass 
production is balanced with natural resource conservation. For matching 
payments, CCC intends to apply existing conservation plan requirements 
as required by Title XII of the Food Security Act of 1985 and is 
requesting additional comments in this proposed rule to ensure that 
adequate guidance is received to determine the scope of these 
requirements. CCC invites further comment on specific, additional 
conservation and stewardship measures that could be included or that 
could be contained within the matching payment options discussed 
previously.

Eligible Materials

    For guidance to potential eligible material owners and biomass 
conversion facilities, CCC proposes to provide a list of eligible 
materials deemed acceptable to receive a matching payment in accordance 
with the 2008 Farm Bill's definitions of renewable biomass and eligible 
material. The list of eligible material would be provided to the public 
via the FSA Web site at http://www.fsa.usda.gov/energy. CCC proposes 
the list of materials be utilized for guidance with the understanding 
that the list is not exhaustive and would be amendable and periodically 
updated by the CCC--in accordance with the parameters established by 
the 2008 Farm Bill--as biomass energy technology evolves. When there is 
recommendation for an addition to the list of eligible material, CCC 
will review the material to make determinations--the review could 
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 regulations. CCC 
requests comments for additional suggestions on considerations in the 
process to amend the list of eligible materials. As described later in 
this rule, a list of eligible crops for the establishment and annual 
payment provisions would include some additional crops not eligible for 
matching payments.
    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:
    <bullet> 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;
    <bullet> Would not otherwise be used for higher-value products; and
    <bullet> 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 typically be trees and brush removed for fire 
prevention purposes, trees unsuitable for commercial timber harvest, 
invasive plant removal for treatment and control purposes, and 
diseased, damaged, or immature trees culled in accordance with 
appropriate forest management practices. Additionally, CCC seeks 
comment on additional conservation or stewardship measures that should 
be considered for inclusion in the final rule for the eligible 
materials described above.
    As specified in the 2008 Farm Bill, renewable biomass also includes 
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 including:
    <bullet> Renewable plant materials such as feed grains, other 
agricultural commodities, other plants and trees, and algae;
    <bullet> Waste materials including vegetative waste comprised of 
crop residues such as corn stover, wood wastes, and wood residues;
    <bullet> Animal waste and byproducts; and
    <bullet> 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. For BCAP 
specifically, the 2008 Farm Bill defines ``eligible material'' more 
narrowly, so that renewable biomass excludes the whole grain derived 
from any crop that is eligible to receive payments under Title I of the 
2008 Farm Bill.
    Those crops that are subject to the provisions of Title I of the 
2008 Farm Bill would therefore not be included as eligible materials or 
crops for either component of BCAP. These crops include the whole grain 
derived from a crop of barley, corn, grain sorghum, oats, rice, and 
wheat; 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, CCC proposes that crop 
residue or other similar byproducts of crop production and harvesting, 
such as corn stover, corn silage, straw, hulls, or sugar bagasse, 
remain eligible materials for matching payments without further 
limitation or restriction. CCC proposes that for such eligible material 
conservation plans should be updated or initiated to address the 
removal of the material as needed. Additionally, CCC invites comments 
and suggestions with regard to specific, additional conservation and 
stewardship measures

[[Page 6270]]

that should be considered for the collection, harvest, transportation 
or storage of these eligible materials.
    The 2008 Farm Bill is silent as to whether, for the purposes of 
BCAP matching payment eligible material requirements, vegetative waste 
materials, such as wood waste and wood residue, available from non-
Federal land should be limited only to those that would not otherwise 
be used for higher-value products. Based on its experience with the 
NOFA, CCC proposes in this rule to apply that limitation to vegetative 
waste materials such as wood wastes and residues so that those 
materials are excluded if they would otherwise be used for higher-value 
products. CCC invites comments and suggestions with regard to the 
addition of this provision.
    The 2008 Farm Bill does not specifically exclude invasive or 
noxious species in the definition of ``eligible material.'' Renewable 
biomass derived from invasive or noxious species must be handled in 
accordance with Executive Order (E.O.) 13112 of February 3, 1999. E.O. 
13122 requires that Federal agencies ``not authorize, fund, or carry 
out actions that it believes are likely to cause or promote the 
introduction or spread of invasive species in the United States or 
elsewhere unless, pursuant to guidelines that it has prescribed, the 
agency has determined and made public its determination that the 
benefits of such actions clearly outweigh the potential harm caused by 
invasive species; and that all feasible and prudent measures to 
minimize risk of harm will be taken in conjunction with the actions.''
    CCC consulted with APHIS and the National Invasive Species Council 
experts to determine the feasible and prudent measures necessary to 
minimize the risk of harm related to the inclusion of invasive or 
noxious species for the purposes of BCAP matching payments. Based on 
the consultation, CCC proposes to include invasive and noxious species 
as eligible materials for BCAP matching payment purposes; however, such 
eligible materials 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 should contact 
State and local weed boards or authorities and their local USDA Service 
Center staff about collecting, harvesting, or transporting invasive or 
noxious species to ensure compliance with E.O. 13112, USDA guidelines, 
and other requirements.
    The likely benefits of including invasive and noxious species as 
eligible materials, which would incentivize their removal, 
significantly outweighs the potential negative impacts that may result 
from not including them as eligible materials, specifically scenarios 
where removing native species from a tract of land would occur and not 
removing the invasive or noxious species would encourage invasive and 
noxious species propagation.
    CCC requests comment on whether or not eligible material owners 
violating E.O. 13112 should be financially responsible for any or all 
removal costs associated with the spread or establishment of invasive 
or noxious species if it determined that an eligible material owner 
contributed to the spread or establishment of an invasive or noxious 
species while carrying out activities related to receiving a matching 
payment.
    As required by the 2008 Farm Bill, the following renewable biomass 
materials would also be excluded from BCAP matching payments, although 
they would be eligible crops for BCAP establishment and annual 
payments:
    <bullet> Animal waste and byproducts (including fats, oils, 
greases, and manure);
    <bullet> 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
    <bullet> Algae.
    Additionally, CCC proposes that materials that are wastes or by-
products of industrial or similar processes that contain inorganic 
materials, such as black or pulp liquor that is a by-product of the 
pulp and kraft paper manufacturing process, remain excluded from the 
definition eligible materials. While such products may have 
historically been used to generate heat, power, steam and electricity 
to operate facilities, these products are not within the parameters set 
by the 2008 Farm Bill because they are, among other things, not organic 
materials collected or harvested from land. As such, these materials, 
as well as otherwise eligible materials delivered and used for the 
generation or production of these materials, would continue to not be 
eligible for matching payments under this program.
    Consistent with the 2008 Farm Bill, CCC proposes that eligible 
materials, for a matching payment, would be collected and harvested 
from eligible lands that would include:
    (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 for the BCAP matching payments 
program, except for some Federal lands.
    In accordance with the 2008 Farm Bill, CCC proposes that matching 
payments would be made for all eligible materials, including those 
derived outside BCAP project areas. CCC invites comments pertaining to 
the previously discussed options for structuring matching payments to 
provide incentives for the collection, harvest, storage and 
transportation of eligible materials near project areas.
    Eligible materials that are considered an advanced biofuel or an 
intermediate ingredient or feedstock of a biobased product must be 
derived from an otherwise eligible material.
    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. CCC proposes that 
the source material and the intermediate ingredient or feedstock be 
considered separate eligible materials; however, only one matching 
payment will be issued for either the source material or the 
intermediate ingredient or feedstock, but not both.

Eligibility for Establishment and Annual Payments

    Establishment and annual payments are proposed to be available for 
persons and legal entities with eligible land that is located within a 
project area designated by CCC. CCC proposes to accept project area 
proposals from a project sponsor on a continuous basis. Unlike the 
matching payments component of BCAP, where any owner of eligible 
materials can be eligible for the program, for the establishment and 
annual payments component, only producers in a designated project area 
will be eligible for payment. The payments will cover not more than 75 
percent of costs of eligible practices to establish non-woody and woody 
perennial biomass crops, and annual payments to support up to 15 years 
of crop production. By designating project areas, the BCAP program can 
support the development of renewable biomass production near biomass 
production facilities.

[[Page 6271]]

Proposing Project Areas

    Project areas would be proposed by project sponsors, which could be 
either groups of producers or biomass conversion facilities.
    There is no restriction in this proposed rule on who can own or 
operate an eligible facility, or sponsor a project area. Various 
parties could 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 proposes to accept project area proposals on a continuous 
basis. In accordance with the 2008 Farm Bill, a complete proposal would 
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) Evidence that the biomass conversion facility has sufficient 
equity available to operate in the future 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 to be 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 will also include a description of the 
general conservation and forest stewardship measures that will be 
implemented in plans under contracts within the area. CCC seeks 
specific comment as to further conservation or stewardship requirements 
that should be included in a proposal for a project area.
    For item 1 above, the project sponsor would 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 would show: (1) Current land use, (2) roads, (3) railroad, (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 will document the 
projected construction, start-up, operation, and maintenance costs over 
the projected life-span of the project. The project sponsors would 
document the estimated cash-flow of the project during its life-span 
(including assumptions on the production outputs and expected market 
prices for the products produced). In addition, the project sponsor 
would document its existing resources and short term and long term 
financing. The information provided to CCC will be confidential and CCC 
will use it to determine if sufficient equity is available for the 
facility and the project.
    The project sponsor will also submit the economic impacts of the 
proposed project area. At a minimum the proposal will 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 product, 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 product, 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 and that the crops can be grown in an environmentally 
acceptable manner as determined by CCC.
    CCC requests comments on other types of information that should be 
required from project sponsors, including, but not limited, to a draft 
proposal. Proposed project area information that a sponsor considers 
appropriate or sufficient, may be included in a comment to this rule. 
We will review the information and use the analysis to make any 
required changes in the final rule. Information submitted as a proposal 
for a project area cannot be approved until implementation of the final 
rule. As with any comment, proposed project area information will 
become part of the public record and the public will be able to review 
it and comment on it. Because BCAP is a new program, information based 
on specific examples, projects, and situations will help improve the 
implementation and effectiveness of the program.
    CCC proposes that a project area have specific geographic 
boundaries and be described in definite terms such as acres, watershed 
boundaries, mapped longitude and latitude coordinates, or counties. The 
project area would be physically located near a biomass conversion 
facility or facilities. Whether a project area is within an 
economically viable distance from a biomass conversion facility will 
depend upon the eligible crops being established and produced, as well 
as other transportation and logistics matters, and thus must 
necessarily be determined on a case-by-case basis. The biomass 
conversion facility can 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 either a portion or all of 
the renewable biomass needed by the biomass conversion facility.

Project Area Selection Criteria

    Consistent with the 2008 Farm Bill, CCC proposes to evaluate 
project area proposals that are submitted, according to 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
    (8) The range of eligible crops among project areas.
    CCC proposes that all project proposals meeting these criteria 
would be considered acceptable for BCAP. The 2008 Farm Bill provides 
discretion for the Secretary to consider other information in 
evaluating project proposals. Given this discretion, CCC proposes that, 
in addition to the above criteria, proposals will also be evaluated 
based upon their ability to promote the cultivation of perennial 
bioenergy crops and annual bioenergy crops that show exceptional 
promise for producing highly energy-efficient renewable energy, 
advanced biofuels or biobased products, that preserve natural 
resources, and that are not primarily grown for food or animal feed. 
CCC

[[Page 6272]]

requests comments on whether additional criteria should be included for 
evaluating the capacity of the land in a project area to sustainably 
produce the proposed quantity of biomass. CCC requests comments on what 
other criteria or information we should use to evaluate project 
proposals.
    Project sponsors that are biomass conversion facilities could be 
any size of operation including pilot facilities, research units, 
experimental or demonstration operations, or commercial operations. As 
proposed in this rule, a biomass conversion facility not yet in 
operation could be a project sponsor. In that case, the biomass 
conversion facility would have to provide evidence that it has 
sufficient equity available.

Project Area Eligible Crops

    As proposed in this rule, after CCC approves a project area, 
persons and legal entities within the specific geographic boundaries of 
that area could be eligible for payment for the establishment and 
production of eligible crops. To be eligible for payment, participants 
would need to enroll the land under BCAP contracts.
    The 2008 Farm Bill defines an eligible crop as a crop of renewable 
biomass. The 2008 Farm Bill also includes a list of certain types of 
renewable biomass that are ineligible. Animal wastes, food and yard 
wastes, and algae are included in the definition of eligible crop in 
the 2008 Farm Bill and are therefore included in the definition in this 
proposed rule.
    CCC proposes that biomass conversion facilities 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 planted within a project area.
    The 2008 Farm Bill specifically excludes Title 1 crops and noxious 
or invasive plants as eligible crops. 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.
    As specified in the 2008 Farm Bill, Federal or State-owned lands 
are not considered to be eligible lands for establishment and annual 
payments; therefore, CCC proposes to exclude all Federal and State-
owned land from the establishment and annual payments component of 
BCAP.

Project Area Eligible Producers

    CCC proposes that within the project area, producers would enter 
into BCAP contracts and be eligible to receive establishment payments, 
as a form of cost-share, to convert agricultural lands or nonindustrial 
private forest lands to the production of eligible crops. In addition, 
producers could also be eligible for annual payments for the production 
of eligible crops used for conversion to renewable energy, advanced 
biofuels or biobased products. The details for what is required to 
qualify for the annual payments would be specified in the individual 
contract between CCC and a producer, as discussed further below, and 
would include provisions for the implementation of a conservation plan, 
forest stewardship plan, or equivalent plan, where required. The 
producer will demonstrate compliance with the conservation or forest 
stewardship plan through required self certification and FSA will 
ensure that normal spot check rules and methods are followed to ensure 
compliance with the plans. Producers that already have established BCAP 
eligible crops when this program starts may enter into a contract for 
annual payments to continue growing those crops; however, establishment 
payments would not be authorized.
    CCC also proposes that project sponsors, regardless of whether they 
are a biomass conversion facility or a group of producers, could also 
be considered as a producer and be eligible to receive establishment 
and annual payments. However, the sponsor would have to own or operate 
eligible land to be eligible to enroll as a producer under a BCAP 
contract and be eligible to receive establishment and annual payments. 
State-owned biomass conversion facilities would not be eligible to be 
considered a producer for a BCAP contract because the 2008 Farm Bill 
specifies that State-owned land is ineligible for establishment and 
annual payments.
    The agreement between the project sponsor and CCC is not a 
contract. 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. Therefore, biomass conversion facilities that act as 
project sponsors would not be subject to general Federal contracting 
requirements as a condition of a project area approval.

Project Area Contract Acreage and Terms

    CCC proposes that a producer within the project area would enter 
into a contract with CCC to commit acres, which would then be called 
contract acreage, to establish or produce eligible crops.
    In accordance with the 2008 Farm Bill, CCC proposes that 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 Deputy Administrator;
    (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.
    CCC invites comments on additional conservation or stewardship 
measures that could be included in a contract to provide incentives or 
otherwise encourage conservation, stewardship wildlife habitat or 
sustainability practices above the statutory requirements.
    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 
proposes flexibility to adjust the terms of the contract length on a 
per project basis in order to ensure the most efficient use of 
government funding. The establishment time period may vary due to: type 
of crop, agronomic conditions (establishment time frame, winter 
hardiness, etc), and other factors. CCC would establish the time frame 
based on the recommendations received from the State Technical 
Committee.
    CCC proposes that the contracts would take into account an 
establishment period appropriate for an existing crop's harvest or for 
the planting of a planned crop. BCAP contracts and conservation plans 
would be designed in an effort to promote the production of a long-term 
source of biomass feedstock that can be harvested and collected 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 would be subject to modification and payment reductions 
if

[[Page 6273]]

any of the contract terms are violated. Participants that choose to 
voluntarily withdraw from BCAP before the duration of their contract 
has ended would be subject to early contract termination penalties and 
payment refunds.
    In exchange for signing BCAP contracts, CCC will share not more 
than 75 percent of the cost with participants of 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 to the land enrolled in the BCAP contract.

Eligible and Ineligible Land

    The contract acreage would consist of only the eligible lands that 
are covered under the producer's contract with the CCC. The 2008 Farm 
Bill defines eligible land for project areas as agricultural land and 
nonindustrial private forest land, subject to certain exclusions.
    CCC proposes, in accordance with exclusions in the 2008 Farm Bill, 
that land considered ineligible to be enrolled under a BCAP contract 
includes:
    (1) Federal lands;
    (2) State-owned, municipal, or other locally-owned lands;
    (3) Native sod; and
    (4) Land that is already enrolled in CCC's Conservation Reserve 
Program, Wetlands Reserve Program, or Grassland Reserve Program.
    CCC proposes that 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 produced for which a valid 
conservation plan exists or is implemented.
    CCC proposes that agricultural lands with already established 
energy crops or already contracted for energy crops or planned energy 
crops would be 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. We do not intend to exclude ``early adopters'' of biomass 
crops.
    Nonindustrial private forest land is defined in this rule, in 
accordance with the 2008 Farm Bill, 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. CCC proposes that 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 36 CFR 230.2 
(the relevant Forest Service regulation), which includes private legal 
entities as landowners of such forest land but excludes corporations 
whose stocks are publicly traded or legal entities principally engaged 
in the production of wood products. CCC proposes that existing 
nonindustrial private forest land with existing tree cover can enter 
into contract acreage with an approved biomass conversion facility and 
be eligible for annual payments, subject to a forest stewardship 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.
    As discussed earlier, contract acreage will be subject to minimum 
contract terms which include, but are not limited to, the 
implementation of a required conservation plan or forest stewardship 
plan (or the equivalent); and compliance with highly erodible and 
wetland conservation requirements of 7 CFR part 12. While land enrolled 
in other USDA programs could be eligible lands for contract acreage, 
the contracting producer could not receive multiple program benefits 
for purposes that are the same or substantially similar to the purposes 
of BCAP. 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.
    Land use restrictions would not apply to contract acreage provided 
that CCC determines that the land uses would be consistent with the 
conservation plans or forest stewardship plans (or the equivalent) and 
any other BCAP conservation requirements. CCC requests comments on 
other applicable contract terms concerning conservation requirements 
along with a justification for the contract term. For example, 
contracts may also contain biomass delivery or sale expectations or 
requirements to ensure the crops are not sold off into hay markets, or 
other non-BCAP uses.

Making Establishment Payments

    Consistent with the 2008 Farm Bill, establishment payments of not 
more than 75 percent of the cost for establishing a perennial crop, 
which could include woody biomass, would 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;
    (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 could be authorized when identifiable 
components of the contract are completed; and supplemental 
establishment payments may be authorized if necessary.
    Consistent with the 2008 Farm Bill, CCC proposes that establishment 
payments would not be authorized for annual crops. In addition, prior 
to receiving establishment payments, producers must have planted their 
crops and must provide their FSA county office with copies of receipts 
and invoices related to the cost of establishing their crops.

Making Annual Payments

    CCC proposes to calculate annual payments on a per acre basis and 
would use market-based rental rates, as determined by CCC. The payments 
are intended to support 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 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 
land except for non-industrial private forest land; and
    (3) For forest land, the average county rental rate for cropland as 
adjusted for forestland productivity for non-industrial private forest 
land.
    This rate information is being posted at FSA county offices (as FSA 
posts information for CRP). There are site-specific factors including 
type of soil and land use. There is too much information to post it all 
on the Web. FSA can provide general information about rates.
    CCC will post in FSA county offices the county specific base-line 
rental rates for cropland, marginal pastureland and forestland. In 
addition, the applicable additional incentive rates (premiums) will be 
posted for specific project area or specific crop mixes within the 
project area.

[[Page 6274]]

    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 to 
establish perennial biomass crops that show exceptional promise to 
produce highly energy efficient bioenergy or biofuels, that preserve 
natural resources and are not primarily grown for food or animal feed 
or that also address specific resource conservation needs.
    Annual payments would be reduced if:
    (1) An eligible crop is used for purposes other than the production 
of energy, then a dollar-for-dollar reduction would apply, not to 
exceed the total payment amount;
    (2) An eligible crop is delivered to the biomass conversion 
facility that is not within the project area;
    (3) The producer receives a matching payment;
    (4) The producer violates a term of the contract; or
    (5) Other circumstances as determined by CCC.
    We must reduce payments to avoid duplicate benefits, but as 
described below, the annual payment reduction for delivery to a biomass 
facility or for matching payments will likely be less than a full, 
dollar-for-dollar reduction, because the purpose of BCAP is to 
encourage biomass energy production.
    The 2008 Farm Bill authorizes agricultural land and non-industrial 
private forest land for annual payments. Agricultural land consists of 
cropland, pastureland, rangeland, and grassland. CCC proposes to 
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 proposes to calculate the market-based payment rate for non-
industrial 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 forestland.
    If the crop is delivered to a biomass conversion facility, payment 
reductions would be applied in an amount equal to at least 25 percent 
of the authorized annual payment, but not a full dollar-for-dollar 
reduction, for each contract acre. If the harvested production is sold 
for any other reason, a dollar-for-dollar reduction would apply, not to 
exceed the total annual payment.
    CCC proposes that half of the first year's annual payment would be 
made within 30 days of the date of contract approval and the balance 
paid on the annual contract enrollment anniversary. Subsequent annual 
payments would be made every year within 30 days after the contract 
anniversary date. Under the proposed rule, payments may cease and 
producers may be subject to contract termination for failure to plant 
eligible crops.
    To be considered a biomass conversion facility, one of the criteria 
that may be met is whether the facility converts or proposes to convert 
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.'' The NOFA excluded commercially-
produced timber, lumber, wood pulp, or other finished wood products 
that otherwise could be used for higher-value products. CCC proposes to 
continue the exclusion of commercially-produced timber, lumber, wood or 
other finished products that otherwise would be used for higher value 
products. Additionally, CCC proposes to clarify that industrial or 
other process wastes or by-products, such as black liquor or pulp 
liquor that is a waste by-product of the pulp and kraft paper 
manufacturing process, are not included within the definition of 
biobased products because they are not significantly composed of 
organic or biological products collected or harvested from land.

Key Provisions Comparison

    This table compares key provisions of matching payments versus 
establishment and annual payments:

------------------------------------------------------------------------
                                                      Establishment 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:
                                                       <bullet> Biomass
                                                        conversion
                                                        facility,
                                                        including
                                                        facilities owned
                                                        by Federal
                                                        entities, State
                                                        entities, local
                                                        government
                                                        entities, or
                                                        privately or
                                                        publicly held
                                                        entities; or
                                                       <bullet> Group of
                                                        producers.
------------------------------------------------------------------------
Eligible Material Owner or    An eligible material  An eligible producer
 Eligible Producer.            owner may be:.        may be a:
                              <bullet> A producer   <bullet> Biomass
                               within a project      conversion facility
                               area;.                that owns or
                              <bullet> A biomass     operates eligible
                               conversion            land or
                               facility;.           <bullet> Person or
                              <bullet> A person or   entity with the
                               entity with the       legal title to
                               legal title to an     privately held
                               intermediate          lands or land held
                               ingredient or         in trust by the
                               feedstock; or.        Federal government.
                              <bullet> A person or  An eligible producer
                               a non-Federal         cannot be a:
                               entity that has      <bullet> Federal
                               legal title to an     government entity,
                               eligible material,    or
                               including Indian
                               Tribes and Tribal
                               members.
                              An Eligible Material     <bullet> State or
                               Owner cannot be a        local government
                               Federal government       entity.
                               entity.
------------------------------------------------------------------------

[[Page 6275]]

 
Land Limitations or Eligible  Eligible material     Eligible land is
 Land.                         must be harvested     certain:
                               or collected from    <bullet>
                               certain:              Agricultural land,
                              <bullet> U.S.          such as cropland,
                               National Forest       pastureland,
                               System and BLM        rangeland,
                               lands,.               grassland, or other
                              <bullet> Non-Federal   lands on which
                               lands, including      food, fiber, or
                               State- and locally-   other agricultural
                               held government       products are
                               lands, or.            produced or capable
                              <bullet> Tribal land   of being produced;
                               held in trust by      or
                               the Federal          <bullet>
                               government.           Nonindustrial
                                                     private forest
                                                     lands that are:
                                                    [cir] Rural lands
                                                     with existing tree
                                                     cover, or are
                                                     suitable for
                                                     growing trees; and
                                                    [cir] Owned by any
                                                     private individual,
                                                     group, or
                                                     association.
                                                    Eligible land cannot
                                                     be:
                                                    <bullet> Federal- or
                                                     State-owned land;
                                                    <bullet> Land that
                                                     is native sod; or
                                                    <bullet> Land
                                                     enrolled in the:
                                                    [cir] CRP;
                                                    [cir] Wetlands
                                                     Reserve Program; or
                                                    [cir] Grassland
                                                     Reserve Program.
------------------------------------------------------------------------
Eligible Crop or Material...  Eligible material is  Eligible crop is:
                               certain:
                              <bullet> Materials,   <bullet> Renewable
                               pre-commercial        plant materials
                               thinnings, or         such as feed
                               invasive species      grains, other
                               from National         agricultural
                               Forest System land    commodities, other
                               and U.S. Bureau       plants and trees,
                               System land that:     and algae;
                              [cir] Are byproducts  <bullet> Waste
                               of preventive         materials including
                               treatments that are   vegetative waste
                               removed to reduce     comprised of crop
                               hazardous fuels, to   residues such as
                               reduce or contain     corn stover, woods
                               disease or insect     wastes, and wood
                               infestation, or to    residues;
                               restore ecosystem    <bullet> Animal
                               health;.              waste and
                              [cir] Would not        byproducts,
                               otherwise be used    <bullet> Food Waste;
                               for higher-value      and
                               products; and.       <bullet> Yard waste.
                              [cir] Are harvested   Ineligible crops
                               in accordance with    include:
                               applicable law and   <bullet> Any crops
                               land management       that is eligible to
                               plans and the         receive payments
                               requirements for      under Title I of
                               old-growth            the 2008 Farm Bill.
                               maintenance,         <bullet> Any plant
                               restoration, and      that is invasive or
                               management            noxious or has the
                               direction of          potential to become
                               section 102 (e)(2),   invasive or
                               (3), and (4) of the   noxious.
                               Healthy Forests
                               Restoration Act of
                               2003 (16 U.S.C.
                               6512) and large-
                               tree retention of
                               subsection (f).
                              <bullet> 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
                               comprised of crop
                               residues such as
                               corn stover or wood
                               wastes and wood
                               residues that would
                               not otherwise be
                               used for higher-
                               value products
                              Eligible material
                               does not include:
                              <bullet> Whole grain
                               derived from any
                               crop that is
                               eligible to receive
                               payments under
                               Title I of the 2008
                               Farm Bill
                              <bullet> Animal
                               waste and
                               byproducts
                               (including fats,
                               oils, greases, and
                               manure);
                              <bullet> Food waste
                               and yard waste;
                              <bullet> Algae.
------------------------------------------------------------------------
Authorized Payments.........  A matching Payment    Establishment
                               at a rate of $1 for   payments at a rate
                               each $1 per dry ton   of not more than 75
                               equivalent paid by    percent of
                               the qualified         establishment costs
                               biomass conversion    based on:
                               facility:            <bullet> The costs
                              <bullet> In an         of seed and stock
                               amount up to $45      for perennials;
                               per dry ton but      <bullet> The cost of
                               only for on-site      planting the
                               heat or power         perennial crop; and
                               production from      <bullet> For non-
                               wood wastes and       industrial forest
                               residues above an     land, the costs of
                               historical            site preparation
                               baseline;.            and tree
                              <bullet> In an         planting(s).
                               amount up to $45     Annual payments
                               per dry ton for       equal to the market
                               materials used to     rate plus any
                               produce advanced      incentive as
                               biofuels and in an    provided for in a
                               amount up to $16      specific project
                               per dry ton for       area.
                               material used for
                               renewable energy or
                               biobased products;
                               or.
                              <bullet> In an
                               amount to be
                               reduced in relation
                               to increases in
                               biofuel, renewable
                               energy or biobased
                               product production
                               above a historical
                               baseline
------------------------------------------------------------------------

[[Page 6276]]

 
Payment Reductions..........  There are no          Annual payments will
                               comparable payment    be reduced if:
                               reductions.          <bullet> An eligible
                              If eligible and        crop is used for a
                               ineligible            purpose other than
                               materials are         the production of
                               comingled in the      energy at the
                               load, payment will    biomass conversion
                               only be made for      facility;
                               eligible materials.
                                                       <bullet> An
                                                        eligible crop is
                                                        delivered to the
                                                        biomass
                                                        conversion
                                                        facility outside
                                                        of the project
                                                        area;
                                                       <bullet> The
                                                        producer
                                                        receives a
                                                        payment for
                                                        collection,
                                                        harvest,
                                                        storage, or
                                                        transportation;
                                                        or
                                                       <bullet> The
                                                        producer
                                                        violates a term
                                                        of the contract.
                                                       <bullet> Under
                                                        the proposed
                                                        rule, payments
                                                        may cease and
                                                        producers may be
                                                        subject to
                                                        contract
                                                        terminations for
                                                        failure to
                                                        establish
                                                        eligible crops.
------------------------------------------------------------------------
Payment Timing..............  Matching payments     Establishment
                               are paid within 30    payments are paid
                               days after            when the perennial
                               submission of sales   or tree crop
                               invoice(s) from the   practice or
                               qualified biomass     identifiable
                               conversion facility   portion of the
                               and completion of     practice has been
                               application for       completed according
                               payment.              to the BCAP
                                                     conservation or
                                                     forestry plan.
                                                    Annual payments are
                                                     paid:
                                                       <bullet> 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
                                                       <bullet> Within
                                                        30 days of the
                                                        contract
                                                        anniversary
                                                        beginning with
                                                        the second-year
                                                        contract
                                                        anniversary.
------------------------------------------------------------------------
Duration....................  Payment duration is   Contract duration is
                               two years from the    up to:
                               date on which the    <bullet> Five years
                               first matching        for annual and non-
                               payment is issued     woody perennial
                               to an eligible        crops, and
                               person or entity.    <bullet> 15 years
                                                     for woody perennial
                                                     crops.
------------------------------------------------------------------------
Project Area Proposals or     An eligible material  Project area
 Matching Payment              owner must apply      proposals may be
 Applications.                 for a matching        submitted under a
                               payment at the FSA    continuous signup.
                               county office after  After a project area
                               delivery of           has been approved,
                               eligible material     eligible persons
                               to a qualified        and legal entities
                               biomass conversion    within that project
                               facility.             area may enroll in
                                                     a BCAP contract on
                                                     a continuous basis
                                                     at the FSA county
                                                     office.
------------------------------------------------------------------------

Discussion of Transition From BCAP NOFA to BCAP Final Rule

    Under the NOFA, FSA is making CHST matching payments for eligible 
material delivered to qualified biomass conversion facilities.
    When the final rule is published, conforming changes will be made 
to the matching payment component based on the proposed rule, public 
comments received, and input from the Programmatic Environmental Impact 
Statement and other sources. FSA will also implement the establishment 
and annual payments component by receiving project area proposals and 
entering into BCAP contracts with producers for the production of 
appropriate renewable biomass.

Final Determination

    The Notice of Funds Notice of Funds Availability (NOFA) for the 
Collection, Harvest, Storage, and Transportation of Eligible Material 
published on June 11, 2009 (74 FR 27767-27772), is hereby terminated 
and rescinded, effective February 8, 2010. No additional payments will 
be made pursuant to the NOFA except as specifically approved by the 
Executive Vice President, Commodity Credit Corporation.

Notice and Comment

    The Administrative Procedures Act (5 U.S.C. 553) provides generally 
that before rules are issued by Government agencies, a proposed rule 
must be published in the Federal Register, and interested persons must 
be given an opportunity to participate in the rulemaking through 
submission of data, views, or arguments. The law exempts from this 
requirement rules, such as this one, relating to public property, 
loans, grants, benefits, and contracts. However, the Secretary of 
Agriculture published in the Federal Register on July 24, 1971 (36 FR 
13804), a Statement of Policy that USDA would publish a notice of 
proposed rulemaking for such rules. USDA is committed to providing the 
public reasonable opportunity to participate in rulemaking. Therefore, 
this rule has a 60-day comment period.

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 collection, harvest, storage, and transportation 
(CHST) of eligible material for use in a biomass conversion facility 
and to support the establishment and production of eligible crops 
including woody biomass for conversion to bioenergy in selected project 
areas.
    Establishment and Annual Payments are provided for eligible crops 
on eligible land within project areas that satisfy selection criteria. 
The strongest project proposals will be those associated with biomass 
conversion facilities already in operation or that are economically 
viable before the creation of BCAP. While early projects are not 
dependent solely on BCAP support, certainly BCAP may hasten early 
projects.
    Matching payments will tend to go to eligible material owners 
experienced in the collection, harvest, storage and delivery of biomass 
feedstock. While matching payments are provided for

[[Page 6277]]

eligible materials delivered to qualifying biomass conversion 
facilities, opportunities to stimulate additional demand in this Farm 
Bill cycle, either in terms of increasing the construction of 
qualifying biomass conversion facilities or increasing the planting of 
biomass feedstock that qualifying biomass conversion facilities demand. 
Qualifying biomass conversion facilities are expected to be those in 
operation by 2012 because it would be difficult for a biomass 
conversion facility to get on line by 2012 that is not already in the 
pipeline. Given the substantial capital costs associated with energy 
generation and fuel production, qualifying biomass conversion 
facilities in operation by 2012 are assumed to operate at capacity with 
or without BCAP.
    Annual costs for the two parts of the program are presented in the 
following table. Establishment and annual payments total $536 million, 
including technical assistance (TA),\1\ and matching payments amount to 
$2.1 billion.
---------------------------------------------------------------------------

    \1\ All NPV calculations assume a 3% discount rate.

                                                               Table 1--BCAP Costs by Year
                                                                    [2009 $ millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Establishment                           Technical           Matching
                           Year                                cost share      Annual payments       assistance          payments         Annual total
--------------------------------------------------------------------------------------------------------------------------------------------------------
2010.....................................................                 78                  4                  3                392                435
2011.....................................................                107                 11                  4                783                822
2012.....................................................                121                 17                  5                783                844
2013.....................................................  .................                 17  .................                392                367
2014.....................................................  .................                 17  .................  .................  .................
2015.....................................................  .................                 16  .................  .................  .................
2016.....................................................  .................                 16  .................  .................  .................
2017.....................................................  .................                 15  .................  .................  .................
2018.....................................................  .................                 14  .................  .................  .................
2019.....................................................  .................                 13  .................  .................  .................
2020.....................................................  .................                 13  .................  .................  .................
2021.....................................................  .................                 12  .................  .................  .................
2022.....................................................  .................                 13  .................  .................  .................
2023.....................................................  .................                 13  .................  .................  .................
2024.....................................................  .................                 13  .................  .................  .................
2025.....................................................  .................                  9  .................  .................  .................
2026.....................................................  .................                  5  .................  .................  .................
                                                          ----------------------------------------------------------------------------------------------
Subtotals................................................                306                219                 11  .................  .................
                                                          ----------------------------------------------------------------------------------------------
                                                           .................  .................                536              2,100  .................
                                                          ----------------------------------------------------------------------------------------------
    Total................................................  .................  .................  .................              2,636  .................
--------------------------------------------------------------------------------------------------------------------------------------------------------


    Note: Due to rounding, the subtotals may not exactly match 
calculated estimates shown later in the CBA.

    As explained in the analysis, the majority of BCAP matching 
payments are expected to go those eligible material owners who are 
delivering material predominantly to existing biomass conversion 
facilities that use woody biomass.

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 them are no more than:
    <bullet> $750,000 per year gross revenue for crop production 
(producers of eligible crops);
    <bullet> $7 million per year gross revenue for post harvest crop 
activities (eligible material owners); and
    <bullet> 4 million megawatt hours per year for other electric power 
generation (biomass conversion facilities).
    Given these size standards, it is reasonable to assume that many of 
businesses involved in BCAP will be small businesses.
    We expect that approximately 7,500 producers of eligible crops and 
50 biomass conversion facilities may receive establishment and annual 
payments and approximately 9,936 eligible material owners (that are not 
affiliated with a biomass conversion facility) and 701 biomass 
conversion facilities may be affected (which includes the 50, above) 
may receive matching payments.
    However, in light of the ability of biomass conversion facilities 
to determine prices and receive program payments, producers of eligible 
crops and eligible biomass material owners are not expected to be 
significantly impacted. And given the scale of BCF output, as well as 
the limited duration of the BCAP, biomass conversion facilities are 
also not expected to be significantly impacted by the program.

Environmental Review

    Under the National Environmental Policy Act (NEPA), the 
Environmental Impact Statement (EIS) process provides a means for the 
public to provide input on program implementation, alternatives, and 
environmental concerns. CCC provided an amended notice of intent to 
prepare a programmatic EIS on BCAP in the Federal Register on May 13, 
2009 (74 FR 22510-22511) and solicited public comment on the proposed 
alternatives to be examined in the programmatic EIS for BCAP. Six 
public scoping meetings were held in May and June 2009 to solicit 
comments for the development of alternatives and identify possible 
environmental concerns.
    On August 10, 2009, a Notice of Availability was published in the

[[Page 6278]]

Federal Register (74 FR 39915) announcing the availability of a Draft 
Programmatic EIS (PEIS) for the administration and implementation of 
the BCAP. Comments on the Draft Programmatic EIS may be submitted until 
September 24, 2009.
    The Draft PEIS has taken into consideration comments gathered 
during the scoping meetings to develop the alternatives proposed for 
the administration and implementation of BCAP. The Draft PEIS assesses 
the potential environmental impacts associated with the following three 
alternatives:
    (1) No Action Alternative--Addresses the potential effects from not 
implementing BCAP. (This is considered the environmental baseline by 
which to compare the other alternatives against and is required by 
law.)
    (2) Action Alternative 1--Addresses a targeted implementation of 
BCAP to specific areas or regions of the United States.
    (3) Action Alternative 2--Addresses a broad national implementation 
of BCAP.

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 proposed 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 national 
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 impose substantial 
unreimbursed direct compliance costs on Indian Tribal governments or 
have Tribal implications that preempt Tribal law.

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.

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 accordance with the Paperwork Reduction Act of 1995, FSA is 
requesting comments from all interested individuals and organizations 
on a revision of new information collection activities associated with 
BCAP. FSA also included additional burden for the Emergency 
Conservation Program (ECP) in this proposed rule as described further 
below.
    The approved burden hours will be eventually incorporated into the 
existing approval under OMB control number 0560-0082, which includes 
much of the same information for other conservation programs.
    BCAP continues to provide financial assistance for collection, 
harvest, storage, and transportation of eligible material nationwide. 
BCAP also provides financial assistance establishment payments for 
perennial crops and annual production payments for perennial and annual 
crops in approved BCAP project areas. Support for both eligible 
material and eligible crops are intended to establish a long term 
feedstock for use in a biomass conversion facility in accordance with 
the 2008 Farm Bill.
    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.
    Additionally, the information collection request for the matching 
payment funds available for the collection, harvest, storage, and 
transportation of eligible material was approved under the OMB control 
number 0560-0263 under the emergency procedure in accordance with the 
Paperwork Reduction Act of 1995. That information collection was 
incorporated into the existing OMB control number 0560-0082. The 60-day 
comment period was also published in the NOFA Federal Register on June 
11, 2009 (74 FR 27767-27772) to solicit public comments. The comment 
period ended on August 10, 2009. One comment was received on requesting 
to extend comment period on the information collection to implement 
BCAP. This proposed rule provides a 60-day comment period.
    Title: BCAP.
    OMB Control Number: 0560-NEW.
    Type of Request: New.
    Abstract: This information collection is needed to comply with 
section 9011 (b)(2) of Title IX of the Farm Security and Rural 
Investment Act of 2002 (U.S.C. 8101-8113), which was added by the 2008 
Farm Bill.
    For the administration of matching payments to be continued and 
expanded to more respondents in this information collection, FSA 
employees will enter the application information from completed paper 
forms into a Web based system that collects information categories 
similar to the electronic AD-245 application for cost-share form, which 
is currently approved under OMB control number 0560-0082 for other 
conservation programs. The Web based matching payment form, BCAP-5 
form, will collect information about the owners of eligible material 
and estimated and actual biomass material sold and delivered to a 
qualified biomass conversion facility in order to approve applications 
for BCAP matching payments and to calculate matching payments after 
sale and delivery. BCAP will also have eligible material owners 
complete the CCC-901 form concerning members' information or ownership. 
This form will enable the adherence to the arm's length transaction 
requirement and the two year limit for eligibility to receive matching 
payments. BCAP will also use the existing AD-1047 certification 
regarding debarment, suspension, and other responsibility matters 
(primary covered transactions form). The AD-1047 form will help ensure 
that only

[[Page 6279]]

those owners and managers of qualified biomass conversion facilities 
and those owners of eligible material who have not been disbarred, 
suspended, or otherwise made ineligible for Federal transactions are 
qualified or determined eligible for BCAP. The AD-1047 form will 
require the owners to certify that they are in compliance and not 
subject to disbarment or suspension. The information collection 
activities for matching payments will include the following:
    (1) Applicants will request to become a qualified biomass 
conversion facility or
    (2) Applicants will register as an eligible material owner and 
then, after delivery of eligible material, request matching payments 
for the collection, harvest, storage, and transportation of eligible 
material for use in a biomass conversion facility.
    Specific descriptions of the information requirements were 
discussed in the NOFA under the application sections. Matching payments 
applicants submit estimates to register as eligible material owners and 
actual delivery information to request matching payments and biomass 
conversion facilities enter into an agreement giving a conversion 
facility overview. If the Deputy Administrator determines that 
additional information is necessary from an eligible material owner or 
a biomass conversion facility, it will be related information required 
to determine eligibility, ensure the ability to make proper payments, 
or to otherwise legally provide benefits to an eligible material owner, 
such as the FSA-211 form which provides power of attorney assignment.
    For the administration of project areas, FSA employees will enter 
proposal information from project sponsors into an electronic format. 
The BCAP-4 form will be used to provide a summary of the project area 
proposal. The BCAP-4 form will provide project sponsors the ability to 
provide information overview for a variety of application factors which 
include: Documentation of sufficient equity for start-up biomass 
conversion facilities committed to the project area, land description 
in GIS shape file coordinates, transportation modes, distance of the 
biomass conversion facility in relation to eligible lands, job 
development and retention factors, and biomass conversion facility's 
production potentials or history. The information collection will be 
used to review project area criteria outlined by the 2008 Farm Bill. 
Categories expected on the proposals, consistent with the 2008 Farm 
Bill will include, but not be limited to, volume of eligible crops, 
volume of renewable biomass, job creation projections, number of 
producers, number of biomass conversion facilities, projected 
participation rates for beginning and socially disadvantaged farmers or 
ranchers, projected environmental impacts, agronomic conditions, and 
range of crops. A BCAP worksheet will be required for environmental 
screening, similar to the existing FSA-850 form. This information will 
help facilitate the selection of BCAP project areas and allow producers 
in those BCAP project areas the opportunity to apply for establishment 
and annual production payments.
    For the administration of BCAP project area establishment and 
annual production payments, FSA employees will first enter producer 
information into a Web based BCAP-2 producer worksheet and then, if 
eligible, may enter into a contract for annual production payments 
using the BCAP-3 form with appendix and continuation sheet for annual 
production payments. The BCAP producer forms and worksheets will be 
used for sign up, determining the offer soil rental rate, and 
contracting. The BCAP producer forms will capture the terms and 
conditions of the contract into electronic form, as well as be used to 
determine eligibility of the producer and the producer's contract 
acreage. The BCAP producer contract will also use the existing AD-1026 
and BCAP-817U form. The AD-1026 form ensures that before producers 
clear, plow, or otherwise prepare areas not presently under crop 
production for planting, they certify that production will not violate 
either Highly Erodible Land Compliance (HELC) or wetland conservation 
provisions. Most producers will already have existing AD-1026 forms. In 
addition we will also require producers to complete and submit the 
BCAP-817U form annually for the certification of compliance with BCAP. 
Annual payments to producers will be administered using a BCAP-3 
contract, which is Web based and provides a payment calculation method 
that is similar to the existing AD-245 form. Other forms will be used 
as needed to facilitate payments for special circumstances, such as 
assignment of payment (CCC-36 form), joint payment authority (CCC-37 
form), applicant's agreement to complete an uncompleted practice (FSA-
18 form), application for payment of amounts due to persons who have 
died or disappeared (FSA-325 form), power of attorney (FSA-211); 
member's information (CCC-901); report of acreage (FSA-578); and 
voluntary permanent direct and counter-cyclical program base reduction 
(CCC-505 form).
    For establishment payments, FSA employees in addition to the BCAP 
producer form and worksheet and AD-1026 form, will use the new Web 
based conservation cost share forms (FSA-848, FSA-848A, FSA-848B, FSA-
848-1, FSA-848A-1, and FSA-848B-1 forms). The FSA-848 form is a cost-
share application used to document the producer's request for 
conservation cost share and the needs determination, which is completed 
to determine the actual amount of cost share that is needed, and to 
estimate and calculate the establishment costs for agricultural and 
nonindustrial private forest landowners that enter into BCAP and 
propose to convert land to renewable crops or establish renewable 
crops. The FSA-848A form is used to record the approval of a 
conservation cost share agreement (which when approved is a contract), 
the amount of cost share approved, and the producer's acknowledgement 
of the approval. FSA-848B form is used to record performance of 
conservation practices agreed to in the conservation cost share 
contract and cost share payments associated with that performance. The 
FSA-848, FSA-848A, and FSA-848B forms each include a continuation form 
(FSA-848-1, FSA-848A-1, and FSA-848B-1, respectively). Producers will 
be required to provide an annual report of acreage using the existing 
Web based FSA-578 form.
    FSA is also adding burden for the use of some of the same forms for 
ECP into this proposed rule for public comment. ECP is one of the other 
conservation programs covered under OMB control number 0560-0082. ECP 
provides cost-share assistance to farmers and ranchers to rehabilitate 
farmland damaged by wind erosion, floods, hurricanes, or other natural 
disasters, and for carrying out emergency water conservation measures 
during periods of severe drought. ECP will use the FSA-848, FSA-848A, 
FSA-848B, FSA-848-1, FSA-848A-1 and FSA-848B-1 forms. These forms will 
be used to more efficiently collect information when Web-based 
conservation cost share software is fully implemented. The ECP burden 
in this proposed rule will also be rolled into the existing approval 
under the OMB control number 0560-0082.
    Estimate of Burden: Public reporting burden for the collection of 
information is estimated to average 1 hour. The average travel time, 
which is included

[[Page 6280]]

below in the total burden, is estimated to be 1 hour per respondent.
    Respondents: Individuals, Indian Tribes, units of State or local 
government, partnerships, corporations, farm cooperatives, farmer 
cooperative organizations, associations of agricultural producers, 
national laboratories, institutions of higher education, rural electric 
cooperatives, public power entities, consortia of any of these 
entities, biomass conversion facilities that own or operate eligible 
land, and any other legal entities.
    Estimated Number of Respondents: 336,900.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Responses: 681,900.
    Estimated Total Annual Burden on Respondents: 265,233.
    We are requesting comments on all aspects of the information 
collection to help us to:
    (1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden, 
including the validity of the methodology and assumptions used;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology.

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.

    For the reasons discussed in the preamble, the Commodity Credit 
Corporation (USDA) proposes to add 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 description.
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
1450.101 Qualified biomass conversion facility.
1450.102 Eligible material owner.
1450.103 Eligible material.
1450.104 Signup.
1450.105 Obligations of participant.
1450.106 Payments.
1450.107-1450.199 [Reserved]
Subpart C--Establishment and Annual Payments
1450.200 General description.
1450.201 Project area submission requirements.
1450.202 Project area selection criteria.
1450.203 Eligible persons and legal entities.
1450.204 Eligible land.
1450.205 Duration of contracts.
1450.206 Obligations of participant.
1450.207 Conservation plans and forest stewardship plans.
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 cost-share payments.
1450.214 Annual payments.
1450.215 Transfer of land.

    Authority: 7 U.S.C. 8111; 15 U.S.C. 714b and 714c.

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, or the Deputy Administrator, 
Farm Programs, Farm Service Agency (FSA), (Deputy Administrator). In 
the field, the regulations in this part will be implemented by the 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 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 herein to a State or county 
committee will preclude the Executive Vice President, CCC, or a 
designee, or the Deputy Administrator 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 will 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 waste associated with animal operations such as 
confined beef or dairy, poultry, or swine operations including manure,

[[Page 6281]]

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 that is made to a participant to compensate a participant for 
placing eligible land in BCAP.
    Beginning farmer or rancher means, as determined by CCC, an 
individual or entity who:
    (1) Has not operated a farm or ranch 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 all members or stockholders 
of the entity meet the provisions in paragraphs (1) and (2) 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.
    Biomass conversion facility means a facility that converts or 
proposes to convert eligible material into heat, power, biobased 
products, or advanced biofuels.
    Conservation district is as defined in part 1410 of this chapter.
    Conservation plan means a 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 needed to solve identified natural resource problems by 
devoting eligible land to permanent vegetative cover, trees, water, or 
other comparable measures.
    Contract acreage means eligible land that is covered by a BCAP 
contract between the producer and CCC.
    Deputy Administrator means the Deputy Administrator for Farm 
Programs, FSA, or a designee.
    Dry ton means one U.S. ton measuring 2,000 pounds. One dry ton 
(ODT, sometimes termed as oven- or bone-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) Whole grain derived from a crop of barley, corn, grain sorghum, 
oats, rice, or wheat; honey; mohair; 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) Whole grain derived from a crop of barley, corn, grain sorghum, 
oats, rice, and wheat; 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 byproducts 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 and who has 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 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.
    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.
    Food waste means 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.
    Highly erodible land means land 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).
    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.
    Institution of higher education has the same meaning as in section 
102(a) of the Higher Education Act of 1965 (20 U.S.C. 1002(a)).
    Matching payments means those CCC payments provided to the owner of 
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 has never been tilled for the production of an annual crop 
as of [DATE OF PUBLICATION OF THE FINAL RULE IN THE FEDERAL REGISTER].
    Nonindustrial private forest land means rural lands with existing 
tree cover, or that are suitable for growing trees, which are owned by 
any private individual, group, association, corporation, Indian Tribe, 
or other

[[Page 6282]]

private legal entity, consistent with the definitions of nonindustrial 
private forest land and landowner in 36 CFR 230.2, and the regulations 
in 36 CFR 230. 31.
    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 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.
    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 and annual payment component of BCAP.
    Producer means an owner or operator of contract acreage that is 
physically located within a project area under the establishment and 
annual payment component of BCAP.
    Project area means a geographic area with specified boundaries 
submitted by a project sponsor and approved by CCC under the 
establishment 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 qualification, and 
whose facility representatives enter into a BCAP agreement with CCC.
    Related-party transaction means a transaction between two or more 
ready, willing, and able organizations, trades, or business (whether or 
not incorporated, whether or not organized in the United States, and 
whether or not affiliated) substantially owned or controlled directly 
or indirectly by the same interests, as determined by the Deputy 
Administrator.
    Renewable biomass means the following:
    (1) 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 byproducts 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 sections 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); 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 feed grains, other 
agricultural commodities, other plants and trees, or algae);
    (ii) Waste material, including
    (A) Crop residue;
    (B) Other vegetative waste material (including wood waste and wood 
residues that would not otherwise be used for higher-value products);
    (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 the Deputy Administrator in writing, 
persons who are:
    (1) American Indians or Alaska Natives (that is, persons who are 
members of that class of persons who originally settled Alaska);
    (2) Asian-Americans;
    (3) African-Americans; or
    (4) Hispanic-Americans.
    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 conservation 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 the Alaska Native Claims 
Settlement Act (43 U.S.C. 1601-1629h), which is recognized as eligible 
for the special programs and services provided by the United States to 
Indians because of their status as Indians.
    United States means all fifty States of the United States, the 
Commonwealth of Puerto Rico, the Virgin Islands, Guam, and the District 
of Columbia.
    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 a waste material derived from the urban 
environment including construction and demolition debris and municipal 
solid waste.


Sec.  1450.3  General description.

    (a) The objectives of BCAP are to:
    (1) Support the establishment and production of eligible crops for 
conversion to bioenergy 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 
prepared in accordance with BCAP guidelines, as established and 
determined by CCC. A conservation plan for contract acreage must be 
implemented by a participant and must be approved by the conservation 
district in which the lands are located. If the conservation district 
declines to review the 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 existing conservation plans, forest stewardship plans and any 
other applicable laws for any removal of eligible material for use in a 
biomass conversion facility to receive matching payments.
    (d) Except as otherwise provided, a participant may receive, in 
addition to any payments under this part, cost-share 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

[[Page 6283]]

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 such 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 goals of the program.


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 to provide relief to persons subject to sanctions under this part 
to the extent that relief is otherwise required by this part.
    (b) [Reserved]


Sec.  1450.6  Access to land.

    (a) For purposes related to this program, any representative of the 
U.S. Department of Agriculture, or designee thereof, must be provided 
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 the Deputy Administrator; 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 cost-share or annual 
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 such cash 
payments, 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, 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 
cost-share assistance or annual 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. 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.


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 will 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

[[Page 6284]]

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. The Deputy Administrator may add to the contract such 
additional terms as are needed to enforce these regulations, which will 
be binding on the parties and may be enforced to the same degree as the 
other provisions of these regulations.
    (d) Absent a scheme or device to defeat the purposes of the 
program, 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.  1450.101  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; 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 the program for not less than 
3 years from the date of application as a qualified biomass conversion 
facility;
    (iii) Make information available to USDA and institutes of higher 
education and to allow general information about the facility and its 
eligible material to be made public by USDA and other entities after 
qualification is determined;
    (iv) Clearly indicate on the scale ticket or equivalent the actual 
tonnage delivered, provide a copy of the scale ticket(s) or equivalent, 
and provide it to the eligible material owner;
    (v) Calculate a total dry ton weight equivalent to the actual 
tonnage delivered and provide that measurement to the eligible material 
owner;
    (vi) 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; and
    (vii) For those facilities that convert vegetative waste materials 
such as wood wastes and wood residues into heat or power for 
consumption at the facility, provide the Deputy Administrator with such 
information as needed to establish the historical baseline for heat or 
power production from wood wastes or residues.
    (b) For a qualified biomass conversion facility, CCC will 
periodically inform the public that matching payments may be available 
for deliveries of eligible material to such qualified biomass 
conversion facility. CCC will 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.


Sec.  1450.102  Eligible material owner.

    (a) In order to be eligible for a BCAP matching payment, a person 
or legal entity must:
    (1) Be a producer of an eligible crop that is produced on BCAP 
contract acreage authorized by this subpart.
    (2) Have the right to collect or harvest eligible material.
    (3) Not be a party to a related-party transaction.
    (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.

    (a) In order to be eligible for a matching payment, an eligible 
material owner must have harvested or collected eligible material that 
was delivered to a qualified biomass conversion facility.
    (b) Eligible material must be a renewable biomass that, at a 
minimum, meets the definition in Sec.  1450.3 or is listed as an 
eligible material on http://www.fsa.usda.gov/energy.
    (c) Matching payments are not authorized for:
    (1) Any eligible material delivered before [DATE OF PUBLICATION OF 
THE FINAL RULE IN THE FEDERAL REGISTER].
    (2) Any eligible material for which payment is received before the 
application for payment is received and approved by the county FSA 
office, in accordance with Sec.  1450.104 of this part.
    (3) Eligible material delivered to a qualified Biomass Conversion 
facility used to produce black liquor, an industrial waste by-product 
of the pulp and kraft paper manufacturing process which consists 
primarily of inorganic chemicals used in the pulping process, lignin, 
hemicellulose, and cellulose. In addition, black liquor is not an 
eligible material.


Sec.  1450.104  Signup.

    (a) Applications for matching payments will be accepted on a 
continuous basis.
    (b) An eligible material owner must apply for matching payments at 
the FSA county office before payment for the eligible material from a 
qualified biomass conversion facility is received. ``The request must 
be submitted and approved by CCC before any payment is made by the 
facility for the eligible material.''
    (c) Applications must include the following estimates based on 
information obtained from contracts, agreements, or letters of intent:
    (1) An estimate of the total dry tons of eligible material expected 
to be sold to a qualified biomass conversion facility;
    (2) The type(s) of eligible material that is expected to be sold;
    (3) The name of the qualified biomass conversion facility that will 
purchase the eligible material;
    (4) The expected per dry ton price the owner plans to receive for 
the delivery of the eligible material; and
    (5) The date or dates the eligible material is expected to be 
delivered to the facility.
    (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 matching payment. Matching payments will be disbursed only 
after delivery is verified by FSA.
    (f) Other information that must be submitted to FSA in order to 
receive matching payments includes settlement, summary, or other 
acceptable data that provide the:
    (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-ton payment rate(s) 
matched with actual and dry weight tonnage delivered; and
    (3) Qualified biomass conversion facility's certification as to the 
authenticity of the information.

[[Page 6285]]

Sec.  1450.105  Obligations of participant.

    (a) All participants whose BCAP matching payment application was 
approved must agree to:
    (1) Carry out the terms and conditions of such BCAP matching 
payment application; and
    (2) Be jointly and severally responsible, if the participant has a 
share of the payment greater than zero, 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 BCAP contract and this part.
    (b) [Reserved]


Sec.  1450.106  Payments.

Option 1 for Sec.  1450.106

    (a) Payments under this subpart will be for a term not to exceed 
two years beginning the date that the first matching payment to a 
person or entity is issued by CCC.
    (b) Payments under this subpart will be paid at a rate of $1 for 
each $1 per ton received from a qualified biomass conversion facility 
for the commercial sale of eligible materials used to produce anything 
other than cellulosic ethanol (heat, power, or biobased products) in an 
amount up to $16 per ton.
    (c) Payments under this subpart will be paid at a rate of $1 for 
each $1 per ton received from a qualified biomass conversion facility 
for the commercial sale of materials used to produce cellulosic ethanol 
in an amount up to $45 per ton.

Option 2 for Sec.  1450.106

    (a) Payments under this subpart will be for a term not to exceed 
two years beginning the date that the first matching payment to a 
person or entity is issued by CCC.
    (b) Payments under this subpart will be paid at a rate of $1 for 
each $1 per ton received from a qualified biomass conversion facility 
for the commercial sale of eligible material in an amount up to $45 per 
ton.
    (c) For those biomass conversion facilities converting vegetative 
waste materials, such as wood waste and wood residues, to heat or power 
consumed by the facility, no payments may be made under this subpart 
for material unless the material is converted to heat or power above 
that facility's historical baseline for heat or power production from 
renewable biomass as established by the Deputy Administrator.

Option 3 for Sec.  1450.106

    (a) Payments under this subpart will be for a term not to exceed 
two years beginning the date that the first matching payment to a 
person or entity is issued by CCC.
    (b) Payments under this subpart will be paid at a rate of $1 for 
each $1 per ton received from a qualified biomass conversion facility 
for the commercial sale of eligible material in an amount up to $45 per 
ton to facilities that:
    (1) Fully convert from fossil fuel consumption to renewable biomass 
feedstocks;
    (2) For eligible material showing exceptional promise for producing 
innovative advanced biofuels, renewable energy, or biobased products; 
or
    (3) For every ton of renewable biomass consumption above a 
facility's established historical baseline.
    (c) Payments under this subpart will be paid at a rate of $1 for 
each $1 per ton received from a qualified biomass conversion facility 
for the commercial sale of eligible material in an amount up to $16 per 
ton for those facilities that do not increase renewable biomass 
consumption over a historical baseline.


Sec. Sec.  1450.107-1450.199  [Reserved]

Subpart C--Establishment and Annual Payments


Sec.  1450.200  General description.

    As provided in this subpart, ``establishment and annual payments'' 
may be provided by CCC to producers of eligible crops in a project 
area.


Sec.  1450.201  Project area 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 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, for BCAP purposes, eligible crops 
intended to be produced in the proposed project area;
    (3) Evidence that the biomass conversion facility has 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 by the time that 
the eligible crops are ready for harvest.
    (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.
    (d) Project area proposals may limit the nature and types of 
eligible crops to be planted within a project area.


Sec.  1450.202  Project area selection criteria.

    In selecting project areas, CCC will consider:
    (a) 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;
    (b) The dry tons of renewable biomass projected to be available 
from sources other than the eligible crops grown on contract acres;
    (c) The anticipated economic impact in the proposed project area;
    (d) The opportunity for producers and local investors to 
participate in the ownership of the biomass conversion facility in the 
proposed project area;
    (e) The participation rate by beginning or socially disadvantaged 
farmers or ranchers;
    (f) The impact on soil, water, and related resources;
    (g) The variety in biomass production approaches within a project 
area, including agronomic conditions, harvest and postharvest 
practices, and monoculture and polyculture crop mixes;
    (h) The range of eligible crops among project areas; and
    (i) Any other additional criteria, as determined by CCC.


Sec.  1450.203  Eligible persons and legal entities.

    (a) In order to be eligible to enter into a BCAP contract in 
accordance with this subpart, a person or legal entity must be an 
owner, operator, or tenant of eligible land, as defined in Sec.  
1450.204.
    (b) [Reserved]


Sec.  1450.204  Eligible land.

    (a) For the purposes of this subpart, eligible land means 
agricultural land including cropland, grassland, pastureland, 
rangeland, hayland, or other lands on which food, fiber, or other 
agricultural products are produced or capable of being produced, or 
nonindustrial private forest lands.
    (b) For the purposes of this subpart, eligible land is not:
    (1) Federal- or State-owned land;
    (2) Land that is native sod as of [DATE OF PUBLICATION OF THE

[[Page 6286]]

FINAL RULE IN THE FEDERAL REGISTER];
    (3) Land enrolled in the conservation reserve program authorized 
under the regulations at part 1410 of this chapter;
    (4) Land enrolled in the wetlands reserve program authorized under 
the regulations at part 1467 of this chapter; or
    (5) Land enrolled in the grassland reserve program authorized under 
the regulations at 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 (establishment time frame, winter hardiness, etc), 
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 such BCAP 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 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 or
    (ii) Forest stewardship plan or an equivalent plan.
    (5) Implement the conservation plan, which is part of such 
contract, in accordance with the schedule of dates included in such 
conservation plan, unless both:
    (i) The Deputy Administrator determines that the participant cannot 
fully implement the conservation plan for reasons beyond the producer's 
control, and
    (ii) CCC agrees to a modified plan.
    (6) The producer will demonstrate compliance with the conservation 
or forest stewardship plan through required self certification and FSA 
will spot check compliance with the plans.
    (7) Establish temporary vegetative cover either within the 
timeframes required by the conservation plan or as determined by the 
Deputy Administrator, if the permanent vegetative cover 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 BCAP contract and this part.
    (b) Under the proposed rule, payments may cease and producers may 
be subject to contract termination for failure to plant 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 the Deputy Administrator:
    (1) The failure to plant or establish such cover was due to 
excessive rainfall, flooding, or drought; and
    (2) The land on which the participant was unable to plant or 
establish such cover is planted or established to such cover as soon as 
practicable after the wet or drought conditions that prevented the 
planting or establishment subside.


Sec.  1450.207  Conservation plans and forest stewardship plans.

    (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, or disapproves the conservation 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 goals and purposes.
    (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) All conservation plans, forest stewardship plans or equivalent 
plans, and revisions of such plans, will be subject to approval by CCC.


Sec.  1450.208  Eligible practices.

    Eligible practices are those practices specified in the 
conservation or forestry plan that meet all standards needed to cost-
effectively establish:
    (a) Annual crops;
    (b) Non-woody perennial crops; and
    (c) Woody perennial crops.


Sec.  1450.209  Signup.

    (a) Offers for contracts may be submitted on a continuous basis to 
FSA 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 to accomplish the goals of the program.
    (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 
the Deputy Administrator. 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 the program.


Sec.  1450.211  BCAP contract.

    (a) In order to enroll land in BCAP, the participant must enter 
into a contract with CCC.
    (b) The BCAP 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 BCAP contract, the producer must 
submit an offer to participate as specified in Sec.  1450.209;
    (d) The BCAP 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 BCAP 
contracts on behalf of CCC.
    (f) CCC will honor BCAP contracts even in the event that a project 
area biomass conversion facility does not become fully or partially 
operational.
    (g) BCAP contracts may be terminated by CCC before the full term of 
the contract has expired if:
    (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

[[Page 6287]]

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 by the Deputy Administrator, and the cost of 
restoring the practice outweighs the benefits received from the 
restoration;
    (5) The BCAP 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 the 
program. Further, a refund of all payments need not be required from a 
participant who is otherwise in full compliance with the BCAP 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 cost-
share 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:
    (1) Replacement or restoration of the practice is needed to achieve 
adequate erosion control, enhance water quality, wildlife habitat, or 
increase protection of public wellheads; and
    (2) The failure of the original practice was due to reasons beyond 
the control of the participant, as determined by the CCC.
    (e) In addition, CCC may make partial payments when the producer 
completes identifiable components of the contract. CCC may make 
supplemental establishment payments, if necessary.


Sec.  1450.213  Levels and rates for cost-share 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 BCAP conservation or forestry 
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 the Deputy Administrator. 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, cost-share 
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 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 at Sec.  1410.42 of this chapter and 
as determined by CCC, annual payments include a payment based on:
    (i) A weighted average soil rental rate for cropland;
    (ii) The applicable marginal pastureland rental rate for all other 
land except for non-industrial private forest land; and
    (iii) For forest land, the average county rental rate for cropland 
as adjusted for forestland productivity for non-industrial private 
forest land.
    (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.  1450.213 
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:
    (1) By 25 percent if an eligible crop is delivered to the biomass 
conversion facility; or
    (2) On a dollar-for-dollar basis if:
    (i) An eligible crop is used for a purpose other than the 
production of energy at the biomass conversion facility;
    (ii) The producer receives a matching payment under subpart B of 
this part;
    (iii) The producer violates a term of the contract; or
    (iv) Other circumstances necessary to carry out BCAP, as determined 
by CCC.


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, the 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:
    (i) Cost-share 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 the 
Deputy Administrator determines to be appropriate, such contract will 
be

[[Page 6288]]

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 the Deputy Administrator. 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 BCAP 
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:
    (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 February 2, 2010.
Jonathan W. Coppess,
Executive Vice President, Commodity Credit Corporation, and 
Administrator, Farm Service Agency.
[FR Doc. 2010-2556 Filed 2-3-10; 4:15 pm]
BILLING CODE 3410-05-P


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