On Wednesday, February 3, 2010, the USDA Farm Service Agency issued the long-awaited proposed rule for the Biomass Crop Assistance Program (BCAP), intended to spur the expansion of dedicated non-food crops for renewable energy and bio-fuel production. The proposal was published in the Federal Register on Monday, February 8, with announcement of a 60 day public comment period before a final rule is published.  With release of this proposal, the BCAP program was also suspended until a final rule is in place.  The Composite Panel Association (CPA) had urged a suspension of further BCAP subsidy payments until all stakeholders are heard and the rulemaking process is completed.

Key provisions in the proposed rule included a prohibition on wood materials that might otherwise be used for higher-value purposes. This action stemmed from concerns expressed by the composite panel industry and others about the diversion of such material from existing manufacturing sectors and end use markets.

“This initiative action by the Obama Administration is an important first step towards making sure BCAP accomplishes its worthwhile objectives and resolves the legitimate problems our industry has identified with the program,” said Tom Julia, CPA president.  He pointed specifically to the inclusion on the list of materials eligible for federal subsidies those core materials used by the US composite panel industry, and the immediate risk this poses to composite panel manufacturers and their customers.  The association believes that a subsidy for these materials, as much as a doubling of their value, would divert them for use as fuel rather than allowing them to remain in the free market stream of commerce for higher value purposes such as the manufacture of composite panels, furniture and cabinets. 

The CPA’s formal comments on the proposal included the recommendation of a clear definition of the prohibition, noting that the terms “wood waste” and “wood residue” were not defined in the proposed rule. The CPA suggested that the final rule should clearly state that eligible wood waste and wood residues not include scraps, sawdust chips or the the shavings from saw mills in the definition of renewable biomass.

The proposed rule ultimately drew more than 20,000 submissions during the comment period, according to USDA Deputy Secretary Kathleen Merrigan. Announcement of a final rule is expected later this year.