Biomass Crop Assistance Program: A Primer

From the August 2009 Forest2Fuel newsletter.

In an effort to encourage the building of a sustainable biomass market, the 2008 Farm Bill created the Biomass Crop Assistance Program (BCAP). BCAP has two provisions, one that establishes project areas and payments to encourage landowners to grow biomass (the Project Areas Program) and one that provides matching payments to eligible material owners for the sale and delivery of biomass to bioenergy plants. The latter program is called the CHST (Collection, Harvest, Storage and Transportation) Matching Payment Program. In May, President Obama signed a Presidential Directive that led Tom Vilsak, the Secretary of Agriculture, to expedite the CHST program.

In late June, the Farm Service Agency (FSA), which is the USDA agency that will implement the CHST Matching Payment Program, published an initial set of policies and processes that will support the aggressive acceleration of the program. While not all of the details about the program’s implementation are yet known, here’s what we do know.

Who will be eligible to receive payment? Any person who has the right to collect or harvest the biomass will be eligible to receive matching payments. That person may be the owner of the land on which the biomass was harvested, or any person designated by the owner of the land as the person with these rights. If the owner of the material is not the landowner, but a logger, dealer or other operator, a timber contract that expressly assigns ownership rights to the operator will need to be included with the application.

What material qualifies as eligible? In general, the following materials from forests are eligible: forest thinnings materials; forest, harvest and post-disaster slash (branches, tops and disaster debris); hardwood chips; softwood chips; cutoffs and bark. On federal lands, these materials are only eligible if they are byproducts of preventive treatments, would not otherwise be used for higher value products (timber, lumber, wood pulp, paper products and black liquor are not eligible), and are harvested following applicable laws and land management plans. For private lands, material must be harvested in accordance with a Forest Stewardship Plan that has been approved by a State forester.

Wood waste and wood residues (such as sawdust) also qualify, as do intermediately processed biomass products. Intermediate products include pellets and briquettes. For instance, if a pellet manufacturer delivered pellets to a bioenergy facility, the manufacturer would be eligible for a CHST payment, as long as payment was not made to the owner or operator of the raw material used to create the pellets. (A complete list of eligible materials is available at http://www.fsa.usda.gov/ ).

In addition to appearing on the eligible materials list, the biomass must also be delivered to a biomass conversion facility (BCF) that the FSA has determined is a qualified facility. (See “Bioenergy Companies and BCAP: Action Required” for more details.)

What determines the amount of the CHST payment? BCAP is a dollar for dollar matching program, though it is paid only on a dry-ton basis. For example, if a bioenergy plant pays $20 per ton for 20 green tons, the total payment by the plant to the supplier would be $400. Based on a moisture content of 50 percent, only 10 dry tons were delivered, however. The matching payment on this 10 dry tons would still be $400, as the payment made by the plant on a per dry-ton basis is $40 per ton. Altogether, the biomass producer would be paid a total of $800, or $40 per green ton.

When can eligible owners expect payment? The exact timeframe is unknown. But here is how the process will work. Once an owner or operator has a supply agreement or letter of intent with a qualified biomass facility to deliver biomass, the owner or operator will go to their county FSA office and fill out an initial application. Once the initial application is approved, material can be delivered to the bioenergy plant. Once material has been delivered, the owner or operator takes the scale ticket and moisture measurements and pricing back to the county FSA office to complete page 2 of the application.

Once the application is completed, the FSA will verify the receipts and other documentation and issue payment via direct deposit. If the payment is for more than $50,000, an on-site review and verification will be necessary, so these payments will take longer. Though the language is not specific on this point, it appears the payments will be made on a rolling basis.

For the FSA office in your county, go to www.fsa.usda.gov , click on your state, click on the County Offices link on the left side of the screen, and then click on your county.

To register and read more about the Forest2Fuel e-Newsletter, click here.