$1 billion Available for Partnerships for Climate-Smart Commodities

Earlier this month, the US Department of Agriculture (USDA) announced it will provide $1 billion in funds from the Commodity Credit Corporation (CCC) (15 U.S.C. 714 et seq.) to fund pilot projects aimed at “creat[ing] market opportunities for commodities produced using climate-smart practices.”

Long anticipated, the Partnership for Climate-Smart Commodities (PCSC) is the fulfillment of a goal of senior USDA leadership and a potential centerpiece of the Administration’s efforts to help farmers and ranchers address climate change. Given Congressional reluctance to create new programs – demonstrated by the current stalling out of the Build Back Better Act – USDA has had to be creative in developing climate solutions to meet the mandate from President Biden in Executive Order on Tackling the Climate Crisis at Home and Abroad. The PCSC program provides a market-based pathway toward on-farm mitigation of greenhouse gas (GHG) emissions and adaptation to climate change through USDA’s use of its existing authority under the CCC Charter Act, Section 5(e), to expand markets for agricultural commodities.

Grant Overview

The PCSC grants will be offered in two different funding pools. The first, due May 6, 2022, by 11:59pm ET, is for larger grants, ranging from $5 million to $100 million. For this pool, USDA seeks proposals that focus on GHG benefits from the production of “climate-smart commodities.” Pilot projects seeking this funding must also “include direct, meaningful benefits to a representative cross-section of agriculture, including small and/or historically underserved producers.”

The second funding round will close June 10, 2022, by 11:59pm ET. This pool will accept proposals from $250,000 to $4,999,999. These pilot projects must be “particularly innovative.” The funding pool has two foci: 1) Small-scale and underserved producers must be included in the project and/or 2) the monitoring, reporting, and verification activities for the project must be developed at minority-serving institutions.

In line with the White House’s Justice40 initiative, those developing proposals will want to consider how they can ensure that the benefits of a project flow to “disadvantaged” communities. The Justice40 initiative aims for 40% of overall benefits from climate and clean energy projects to flow to historically underserved communities. Given the emphasis in the second funding round on small-scale and underserved producers, those developing proposals may want to consider an even higher participation rate of historically underserved populations than the 40 percent baseline.

Climate-friendly practices

The climate-friendly practices that USDA will support with the grants include many that will be familiar to farmers and ranchers engaging in agricultural conservation. They include cover crops, low/no-till, nutrient management, and manure management, for example. In addition, solutions more focused on recent technological changes, like enhanced efficiency fertilizers and feed management that reduces enteric emissions are among listed practices. Perennial options include buffers, wetland, grassland management, and tree planting on working lands; agroforestry and afforestation on working lands; and afforestation, reforestation and sustainable forest management. The list also includes pasture practices like prescribed grazing and legume interseeding. Other practices that provide GHG benefits or carbon sequestration are permitted as well, including biochar and alternate wet/dry cycles on rice fields.

Is this a conservation program or a marketing program?

Despite the emphasis on climate-friendly production practices, the program’s core goal is marketing. Grant materials emphasize that all projects must develop markets and promote “climate-smart commodities.” Examples given of potential markets include companies looking to source climate-friendly products or to meet internal supply chain goals. USDA suggests that opportunities that could create a premium for producers and land-owners based on verifiable climate benefits are among the program’s intended benefits. Note that anything grown on a farm counts as a commodity in the program.

Are we eligible?

Owing to the size of the grants and the focus on market development, the PCSC grant program is limited to organizations rather than individuals. Government (including Tribal government), for-profit organizations, non-profits, and institutions of higher education are all eligible to apply. Individuals are eligible as sub-recipients.

Many proposals are likely to involve partnerships. The primary applicant must demonstrate an existing relationship or prior experience working with the producers or land-owners to be involved in the project. At least one project partner must have existing experience working with underserved producers or land-owners.

Producers or land-owners who receive payments from PCSC must meet eligibility requirements under 7 CFR Part 12, which governs highly erodible land, and 7 CFR Part 1400, which governs payment limits and eligibility.

Note that USDA reserves the right to renew or supplement awards under the program in the future without further competition.

Applying

Note that USDA recommends that those applying complete the free Grants 101 Training if they have not done so before. Because the steps required in Grants.gov can take some time, USDA suggests planning well in advance for application submissions. The steps are outlined and can be completed here. Note that SAM registrations can take several weeks.

Steps to be completed:

  1. Obtain a DUNS Number (Data Universal Numbering System) from Dun & Bradstreet or UEI issued by Sam.gov
  2. Register with SAM, System for Award Management: includes designating an Electronic Business Point of Contact (EBiz POC), EBiz POC must be able to make legally binding commitments on behalf of the organization. (Note that SAM.govwill be unavailable for about a week at the beginning of April, so applicants not already registered should apply soon)
  3. Create a Grants.gov account
  4. Add an organization applicant profile
  5. Establish EBiz POC roles: EBiz Point of Contact and Authorized Organizational Representative (AOR) must be different people & EBiz POC must approve the AOR when the system initiates the request
  6. Electronic signature by AOR, who must be authorized by the EBiz POC as able to make legally binding commitments on behalf of the organization
  7. Create a workspace for each Notice of Funding Opportunity (e.g., a single workspace for applications for PCSC)
  8. Use Workspace to apply

Entities may submit more than one application for different projects.

For technical help, go to support@grants.gov or call 1-800-518-4726. You can also ask  questions about the program by emailing climate-smart-commodities@usda.gov, although questions about the merits of a specific proposal will not be addressed because of the competitive nature of the program.

Technical assistance

USDA will be responsible for oversight and reporting requirements of grants, but will not provide technical assistance for projects. So, recipients of grants will be expected to provide needed technical assistance for farmers and ranchers engaged in their projects. The only exception is for compliance determinations for Highly Erodible Land (HEL) and Wetland Compliance (WC), with which USDA will provide assistance.

However, USDA is providing support for a USDA Partnerships for Climate-Smart Commodities Learning Network (a.k.a. Partnerships Network). Each awarded project must designate a member to participate in the partnership, including two virtual meetings and two in-person meetings per year.

Evaluation of proposals

USDA anticipates making project selections by summer 2022.

Proposals will be evaluated based on three broad criteria. 1) Projects should pilot “climate-smart” practices on a large scale while involving small or historically underserved producers. 2) Each project must in some way track and verify how its practices result in useful climate outcomes. 3) And, in line with the authorization USDA believes comes from the CCC Charter Act, Section 5(e), projects must develop markets and promote “climate-smart” commodities generated by the pilot ventures.

Applications for the larger funding pool require that proposals list the following:

underserved project partners, ways to reduce transaction costs of project activities, ways to reduce producer barriers to “climate-smart” practices, and existing relationships with partners. Applicants must also lay out a clear plan to provide technical assistance, outreach, and training to producers and land-owners. That should be accompanied by a plan to provide financial assistance to producers implementing practices, as well as a plan to enroll underserved and small-scale producers.

In addition, projects in the larger funding pool must quantify and verify benefits. USDA encourages applicants to make use of COMET and COMET-Planner in their quantification efforts, but USDA also seeks “proposals that include innovative, rigorous, and cost-effective approaches.” The agency states that new approaches that are carefully documented, based in peer-reviewed literature, and can be replicated by others, will be an important element of scaling up climate-friendly approaches.

Projects may be between one and five years in duration, with up to two-years of no-cost extensions considered on a case-by-case basis. USDA expects to make award decisions by the summer. They note that they expect on-the-ground results within one year of the project start date.

There is no specific matching funds requirement for applications. However, projects will be evaluated in part on their relative contribution of non-Federal funds. 

According to the notice of funding opportunity, the most important criterion on which proposals will be evaluated depends on the funding pool.

For the first funding round, the most heavily weighted criterion is the projected benefits from GHG mitigation and carbon sequestration from ongoing or new on-farm practices associated with the production of climate-smart commodities.

For the second funding round, the most heavily weighted criterion is equity and environmental justice. Among equity considerations are the economic benefits for producers, including underserved producers, the proposed number of underserved producers to be enrolled, and partnerships with organizations. Organizations in the last category include environmental justice organizations, minority-serving institutions of higher education, and organizations that serve equity goals or that represent small farmers.

Although equity is the key weighting criteria only for the second round of funding, it applies to both rounds as an evaluative factor.

Other criteria on which proposals will be evaluated include climate benefits such as the GHG reduction benefits per farm, per project, per commodity produced, and per dollar expended. The longevity of the GHG benefits will also be a factor. In addition, projects will be evaluated for their environmental co-benefits including water quality, soil quality, reductions in localized air pollution, and wildlife habitat. Benefits to climate adaptation will also be part of the suite of climate criteria.

Regarding their market development aspects, projects will be evaluated on their scalability, likelihood of long-term viability after the project, ability to inform USDA actions to encourage “climate-smart” commodities, and the ability of the project to help producers realize greater market returns by overcoming barriers to adopting climate-friendly practices.

Aspects of the technical proposal will also be important, including the measuring, monitoring, and reporting plan. Such a plan will be evaluated on how the project will advance supply chain tracing and incentive structures; the completeness and credibility of its measurement, monitoring, tracking, and verification approach; its innovation in quantification, monitoring, and verification; and its benefits to producers, especially small and historically underserved producers.

Additional important elements of the technical proposal include the approach to reducing transaction costs, the technical assistance plan, the producer reach/number of producers targeted to be enrolled, and consideration of how the proposal fits into the broad portfolio of funding opportunities in terms of equity, type of commodity, and other key project criteria.

USDA will seek broad diversity making award decisions, including in geography and in scale of projects. The program will seek to carry out the Biden-Harris EO 14036 on “Promoting Competition in the American Economy” by ensuring that the marketplace that emerges from the pilot projects starts out with robust competition and options for producers. The Justice40 principles charge USDA with ensuring direct meaningful benefits to a broad cross-section of production agriculture.

If proposals are selected in the initial merit/technical evaluation, they will undergo a further administrative and risk review process by the FPAC business Center Grants and Agreements Division staff. Applicants may be asked to provide further documentation at that time. To pass muster in this second review process, applicants must demonstrate financial stability in the form of adequate financial resources or cash flow to meet its financial obligations on a routine basis and complete award responsibilities. They must also demonstrate that they have a financial management system sufficient to segregate and track Federal funds, in compliance with standards outlined in 2 CFR 200 Subpart Dfor procurement, property, records management, and required financial and performance reporting. In addition, the review will check whether the applicant has previously obtained a Federal award and did not comply with Federal award terms.

For awards with a total Federal share greater than the simplified acquisition threshold ($250,000), the agency will review submitted information accessible through SAM’s Federal Awardee Performance Integrity Information System (FAPIIS). Applicants can review information about themselves in FAPIIS.

Implementation of projects

For those projects using accepted climate-friendly methods incorporated into NRCS practice lists, including those already listed above, approval of on-farm methods should be relatively straightforward. For those projects proposing the use of on-farm mitigation and adaptation that are not already part of approved NRCS practices, more oversight will occur and the project may be subject to the National Environmental Policy Act.

Before undertaking any on-the-ground activities, awardees must work with NRCS to complete an Environmental Evaluation (EE) related to each individual producer’s activities under the project. The project may proceed as planned, with an alternative design to avoid adverse impacts, or awardees may need to pay for preparation of an Environmental Assessment (EA) or an Environmental Impact Statement (EIS) if the EE finds that an EA or EIS is required.

In addition, if the EE finds a need for it, a National Historic Preservation Act, Section 106 review must be completed in consultation by an NRCS state or area office with consulting parties. Review in accordance with 36 CFR Part 800 may require applicants to pay for any cultural resource surveys.

Projects that may affect listed or proposed species or destroy or modify critical habitat must  consult with the US Fish and Wildlife Service and/or the National Marine Fisheries Service under Section 7 of the Endangered Species Act (ESA). ESA consultation must be carried out with NRCS (50 CFR Part 402) before project activities are implemented.

Rights to patents, inventions, and copyrights should comply with 2 CFR Part 200. Typically, small businesses may retain the principal worldwide patent rights to any invention developed with USDA support. The provision will also apply to commercial organizations for the purposes of this funding opportunity. USDA receives a royalty-free license for Federal use. USDA may also require the patentee to license others in certain circumstances. Those licensed to sell the invention in the US must normally manufacture it domestically. Copyright is similarly permitted, with USDA again reserving a royalty-free, nonexclusive, and irrevocable right to reproduce, publish, or otherwise use the work for Federal purposes and to authorize others to do so.

Tools produced must meet the accessibility requirements of Section 508 of the Rehabilitation Act of 1973 (29 USC 794d) as amended by the Workforce Investment Act of 1998 (P.S. 105-220). In brief, those with disabilities must have comparable access to information and data as those without disabilities. For questions on this provision, email Crystal Blackburn, Grants Management Specialist, FPAC Business Center, at FPAC.BC.GAD@USDA.GOV with a copy to Climate-Smart-Commodities@usda.gov.

All questions regarding the award opportunity can be directed to Crystal Blackburn, as above, making sure to include the NFO number in the subject line.

Reporting

Reporting on grants should follow the guidelines at this Farm Production and Conservation Business Center website. If the Federal share of an award includes more than $500,000, grantees must also comply with reporting requirements in Appendix XII of 2 CFR Part 200, which includes keeping information about your award up to date in the System for Award Management (SAM). In addition, reporting by both applicants and sub-awardees must comply with the reporting requirements at 2 CFR Part 170, which covers reporting on subawards and executive compensation.

Awardees must report progress after the first quarter and at least biannually after that. Reporting should include lists of producers and land-owners participating, demonstrations of equitable enrollment including of small and underserved producers; practices applied; outreach and training; financial assistance for producers and/or land-owners to implement “climate-smart” practices; GHG and carbon sequestration benefits accrued and verified along with environmental co-benefits; marketing and outreach related to the “climate-smart” commodities; technical assistance and resource provided; partnerships developed; the “climate-smart” commodity supply chain impacts and other economic impacts; and implementation of quantification, monitoring, reporting, and verification traceability systems.

Freedom of Information Act (FOIA)

Applications are considered confidential information and are not shared with individuals or entities seeking public disclosure through the Freedom of Information Act (FOIA) without the consent of the applicant. Executive Order 12600 and 7CFR Part 1, Subpart A require that applicants receive notice if a third party has requested copies of their business information.

NSAC concerns

In general, NSAC is pleased to see USDA working to address equity concerns in the design and implementation of programs like the PCSC. USDA’s funding of conservation practices that have already been proven effective in existing programs, such as the Conservation Stewardship Program, and emphasis on evaluation of the real world GHG reductions and climate mitigation potential of these conservation practices is essential.

It was disappointing, however, to note the focus on marketing commodities over building the systems, infrastructure, and purchasing systems that would more effectively support the farmers that are already engaging in highly diversified production. Solely using authority 5(e) of the Commodity Credit Charter Act, rather than also including other authorities that allow for procurement/purchasing and the provision of materials and facilities (e.g., authorities 5(a), (b)) means that newer “commodities” from diversified systems may not receive the assistance they need to make the diversified systems viable.

Farmers who have built effective resource conserving crop rotations, perennialized systems, integrated crop livestock systems, and agroforestry systems, for example, are often finding that their crops are more difficult to market simply because the existing infrastructure for their crops in places like the Midwest does not exist. Most harvest, storage, drying, and processing infrastructure is focused on the big commodity crops like corn and soybeans. That makes it difficult to connect markets and farmers for crops from these diversified systems, such as alternative small grains and legumes.

In addition, highly climate-friendly systems like composting could be better supported. Even though composting often requires relatively minor investment to establish, support for farmers would help spur practice adoption at the landscape level. The implementation of highly integrated agroforestry systems, with tree crops carefully bred for specific regions, will also require more development and concentrated effort to ensure the necessary rootstock and scion material is available to make such systems profitable and climate resilient.

NSAC members also expressed some concerns regarding equity as well. The relatively quick turnaround from the February announcement to the May 27, 2022, due date for the smaller grants may leave many smaller organizations scrambling to find partners and identify the grower communities with whom they will work. Since our hope was that a second round of funding would allow for the careful building of new relationships, expansion of networks, and uplifting of Black, Indigenous, and people of color (BIPOC) growers and climate solutions, we are concerned that four months may not be enough time to develop the robust partnerships that will be most beneficial to BIPOC growers and land grant institutions.

The focus on quantification and verification, while important, could prove difficult for some projects. Fortunately, USDA is offering a little more latitude on this aspect when it comes to the projects at the lower funding level. However, since the science on carbon verification is most robust around monocultural growing systems, members are concerned that it may be difficult for projects to identify effective measures of the most climate-friendly systems, especially with the relatively short turnaround time for project development.

Additionally, the PSCS funded programs are intended to be pilots that demonstrate effective agricultural practices that could mitigate climate change impacts and this will inevitably inform future USDA conservation program policies. The potential for very large grants that will be targeted towards monocrop commodity production systems may mean that the best data collected from PSCS inherently favors those intensive, high input monoculture practices rather than practices used by diversified, resource conserving production systems that are known to be more effective but more challenging to measure at scale.

Finally, NSAC is concerned by the focus on technical assistance that is almost exclusively from project partners rather than from USDA. Although we acknowledge the continuing needs for more personnel at USDA, we are concerned that this may result in inequitable access to technical assistance for different applicants. We are also concerned that technical assistance offered by corporate applicants may incentivize use of corporate products or market systems in preference to offering farmers the lowest-cost solutions that can reduce GHG emissions by reducing the need for external inputs.

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