Biomass Suppliers and BCAP

From the August 2009 Forest2Fuel newsletter.

While the County FSA Offices will not begin making payments to biomass suppliers until 2010, a few practical steps can be taken by landowners, loggers and other operators in the interim. Our recommendations:

  • Sign up to receive all announcements that have to do with the BCAP program at the FSA’s website. To register, go to www.fsa.usda.gov.
  • Get to know the County FSA Office and its staff.
  • Reconsider your timber sales contracts. Under current sales agreements, loggers, dealers and brokers generally own the biomass after harvest. Sales agreements will need to be specific about ownership rights. Landowners who are aware of the program may want to retain biomass ownership, or landowners and loggers might agree to share the matching payments. How this issue is clarified in contracts will be determined to a degree by each party’s knowledge of the program.

In addition to these practical steps, biomass owners should be aware of several issues that could affect eligibility and timing for payment.

Timing Is Everything, Part 1. The first part of an application for matching payments must be filled out prior to delivering the first load of biomass under any supply agreement. Once the biomass has been delivered, the owner then returns to the County Office to complete the second page of the application. A separate initial application must be filed for every qualified bioenergy facility an owner supplies.

Timing Is Everything, Part 2. While there are no restrictions on the amount an individual owner receives from the program, the program does have a two-year limit. From the day an owner or operator files its first initial application, a two-year clock starts ticking. Exactly two full calendar years after the date of the first application, the program will no longer accept additional initial applications from the owner or operator. To make sure that they get the most value possible out of BCAP opportunities, participants should plan the date of their first application carefully.

Timing Is Everything, Part 3. Because of the nature of forestry supply agreements, the FSA has formulated a process for owners to receive multiple partial payments for a single initial application. Over the course of an entire fiscal year, the County Office can calculate and disburse matching payments for incremental tonnage units on a single initial application. This would allow owners to deliver 20 truckloads of biomass to a bioenergy plant every six weeks, for instance, without waiting until the term of the supply agreement expires to apply for matching funds for the entire contract period.

Once County Offices begin accepting applications from owners, here's how the application process will work. To submit an initial application, an owner needs to bring a supply agreement, purchase commitment agreement or nonbinding letter of intent with a qualifying biomass conversion facility. If the applicant is not the landowner, proof of ownership of the material—via a sales contract—will also need to be shown. In addition, the following details about expected deliveries need to be included in the application: an estimated quantity in tons and an estimated dry-weight tonnage equivalent, types of eligible material to be delivered and sold, names of the qualified bioenergy facility that will purchase the material, agreed upon price per dry ton for each type of material to be delivered, delivery date and location, and the locations from which the biomass is to be harvested.

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