The Biomass Crop Assistance Program (BCAP) is intended to assist with some of the feedstock supply challenges facing the cellulosic biofuels industry. One ongoing hurdle for cellulosic biofuels development and manufacturing is the need for a constant supply of available biomass. However, the cellulosic biofuels industry has struggled with the quintessential "chicken and egg" problem—investors are reluctant to invest in processing plants based on a technology (i.e., the conversion of cellulosic biomass to biofuels) that has yet to achieve success at a commercial scale, while producers are unwilling to devote land and resources to planting a dedicated biomass crop without nearby biofuels plants to buy it. In other words, the development of a cellulosic biofuels industry hinges simultaneously on the effective availability and use of new biomass feedstocks. This report provides a description of BCAP's main components—annual & establishment payments, matching payments, and project areas—as outlined in USDA's final rule, along with a discussion of program funding and implementation issues. Annual U.S. ethanol production expanded rapidly between 2001 and 2011, rising from under 2 billion gallons to over 13 billion gallons during that period. To date, most biofuels production in the United States has been from corn starch. As a result, corn use for ethanol grew from a 7% share of the U.S. corn crop in 2001 to an estimated 40% share of the 2011 corn crop. Dedicating an increasing share of the U.S. corn harvest to ethanol production evoked fears of unintended market and environmental consequences. As a result of these and other concerns, policy makers sought to redirect their bioenergy policies to provide incentives for the research and development of new agriculture-based renewable fuels, especially second-generation biofuels (based on non-food crop biomass such as cellulose and algae), and to expand their distribution and use. In particular, through the Energy Independence and Security Act of 2007 (EISA, P.L. 110-140 ), Congress established a goal of 36 billion gallons of biofuel use by 2022, including 16 billion gallons of cellulosic biofuels. Similarly, the 2008 farm bill (the Food, Conservation, and Energy Act of 2008, P.L. 110-246 ) included an energy title, Title IX, with a set of bioenergy programs administered primarily by the U.S. Department of Agriculture (USDA) that focused on non-corn-ethanol biofuels. Among the Title IX bioenergy programs of the 2008 farm bill is BCAP —authorized by Congress to support the establishment and production of eligible biomass crops for conversion to bioenergy in selected areas, and to assist agricultural and forest land owners and operators with collection, harvest, storage, and transportation (CHST) of eligible material for use in a biomass conversion facility. The 2014 farm bill (Agricultural Act of 2014; P.L. 113-79 ) extends BCAP through FY2018 with some modifications to its implementation and with new mandatory funding. Land Eligibility. Enrolled land eligibility is expanded by including land under expiring Conservation Reserve Program (CRP) or ACEP easement contracts. Eligible Material . Residue from crops receiving Title I payments is included as eligible material, while exclusions are extended to any whole grain from a Title I crop, as well as bagasse and algae. One- T ime E stablishment P ayments . These payments are limited to no more than 50% of the cost of establishment (down from 75%), not to exceed $500 per acre or $750/acre for socially disadvantaged farmers or ranchers. CHST M atching P ayments . These payments may not exceed $20 per dry ton (down from $45 per dry ton) and are available for a two-year period. In addition, CHST funding is now available for technical assistance. Not less than 10% or more than 50% of funding may be used for CHST. New BCAP Report . Not later than four years after enactment of the 2014 farm bill, USDA shall submit to the House and Senate Agriculture Committees another report on best practices from participants receiving assistance under BCAP. BCAP is administered by USDA's Farm Service Agency (FSA) and receives mandatory funding through the Commodity Credit Corporation (CCC). BCAP has two main statutory purposes: to support the establishment and production of eligible crops for conversion to bioenergy in selected areas; and to assist agricultural and forest land owners and operators with collection, harvest, storage, and transportation (CHST) of eligible material for use in a biomass conversation facility. To meet the above-stated statutory purposes, BCAP provides financial assistance to owners and operators of agricultural land and non-industrial private forest land who wish to establish, produce, and deliver biomass feedstocks. BCAP provides two categories of financial assistance: 1. establishment and annual payments , including a one-time payment of up to 50% of the cost of establishment for perennial crops, and annual payments (i.e., rental rates based on a set of criteria) of up to 5 years for non-woody and 15 years for woody perennial biomass crops; and 2. CHST matching payments , at a rate of $1 for each $1 per ton provided, up to $20 per ton, for a period of two years, which may be available to help eligible material owners with CHST of eligible material for use in a qualified biomass conversion facility. These two payments types—annual/establishment and matching—include different eligibility and sign-up requirements, payment rates, and contract lengths ( Table 1 ). BCAP's annual and establishment payments are available to certain producers who enter into contracts with USDA to produce eligible biomass crops on contract acres within designated BCAP project areas. They are intended to encourage longer-term investment by producers in dedicated biomass crops for bioenergy production. Producer eligibility under BCAP's establishment and annual payments is limited to approved project areas. BCAP establishment payments may cover up to 50% of the cost of establishing (i.e., clearing, planting, and seeding) a perennial crop, including woody biomass, within a project area. These costs may include the cost of seeds and stock for perennials; the cost of planting the perennial crop; and, for nonindustrial private forestlands, the cost of site preparation and tree planting. Previously established biomass crops, crops established using other federal sources, and annual crops are not eligible for establishment payments but may still be eligible for annual payments. BCAP annual payments would support up to 15 years of eligible woody crop production and 5 years of non-woody crop production. These payments would assist with the additional risk and possible forgone income associated with shifting away from traditional crop production. Annual payments are on a per-acre basis and would use market-based rental rates determined by FSA. Rental rate calculations are similar to those used for the CRP, a land conservation program under which farmers receive annual payments for removing environmentally sensitive land from agricultural production. Annual payments may be reduced by a percentage of the sum of both the value of the harvest/collection and any BCAP matching payments for several reasons, including if an eligible crop is delivered to the biomass conversion facility: for conversion to cellulosic biofuels (payments reduced by 1%); for conversion to advanced biofuels (payments reduced by 10%); or for conversion to heat, power, or biobased products (payments reduced by 25%); if an eligible crop is used for purposes other than conversion to heat, power, biobased products, or advanced biofuels (payments reduced by 100%); if the producer violates a term of the contract; or under other circumstances determined by USDA. As defined in statute, only private agricultural and non-industrial private forest lands are considered eligible under the annual and establishment payment portion of BCAP. Federal and state-owned lands are ineligible. Lands enrolled in existing land retirement programs for conservation purposes—the Conservation Reserve Program (CRP) or the Agricultural Conservation Easement Program (ACEP)—also become eligible during the fiscal year that their land retirement contract expires. To address the concern of native grassland conversion, any land considered "native sod" as of June 18, 2008, (i.e., the date of enactment of the 2008 farm bill) is considered ineligible. Producers within the selected BCAP project area would be eligible to receive annual and establishment payments after entering into a BCAP contract. According to the USDA final rule, producers with already established eligible crops would be unable to collect an establishment payment but would remain eligible for annual payments. The project sponsor would also be eligible to collect annual and establishment payments, so long as the land is eligible and not federal, state, or government owned. The 2008 farm bill defines the term "eligible crop" under the annual and establishment payment portion of BCAP as a crop of renewable biomass (see text box below ). This is different from the matching payment portion of BCAP, which includes a separate definition for "eligible material." Although both eligible crops and eligible material are defined as renewable biomass, exclusions for the two differ. Eligible crops under the annual and establishment payment portion of BCAP may not include crops eligible for payments under Title I of the 2008 farm bill or any plant that is invasive or noxious or has the potential to become invasive or noxious. It is noteworthy that algae is included as an eligible crop, but not as an eligible material; thus, algae may qualify for annual and/or establishment payments but not matching payments, as described below. BCAP contracts for annual and establishment payments vary in length: 5 years for non-woody perennial crops and 15 years for woody perennial crops. All contracts are required to have an active and current conservation plan or forest stewardship plan, depending on the type of crop grown.