Biomass Crop Assistance Program, 6264-6288 [2010-2556]

Agencies

• DEPARTMENT OF AGRICULTURE
• Commodity Credit Corporation

[Federal Register Volume 75, Number 25 (Monday, February 8, 2010)]
[Proposed Rules]
[Pages 6264-6288]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-2556]



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Part II





Department of Agriculture





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Commodity Credit Corporation



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7 CFR Part 1450



Biomass Crop Assistance Program; Proposed Rule

Federal Register / Vol. 75, No. 25 / Monday, February 8, 2010 / 
Proposed Rules

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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1450

RIN 0560-AH92


Biomass Crop Assistance Program

AGENCY: Commodity Credit Corporation and Farm Service Agency, USDA.

ACTION: Proposed rule.

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SUMMARY: The Commodity Credit Corporation (CCC) proposes regulations to 
implement the new Biomass Crop Assistance Program (BCAP) authorized by 
the Food, Conservation, and Energy Act of 2008 (the 2008 Farm Bill). 
BCAP is intended to assist agricultural and forest land owners and 
operators with the establishment and production of eligible crops 
including woody biomass in selected project areas for conversion to 
bioenergy, and the collection, harvest, storage, and transportation of 
eligible material for use in a biomass conversion facility. This rule 
specifies the requirements for eligible participants, biomass 
conversion facilities, and biomass crops and materials. It also 
provides notice of final termination of the existing Notice of Funds 
Availability.

DATES: We will consider comments that we receive by April 9, 2010.

ADDRESSES: We invite you to submit comments on this proposed rule. In 
your comment, include the volume, date, and page number of this issue 
of the Federal Register. You may submit comments by any of the 
following methods:
     E-Mail: cepdmail@wdc.usda.gov.
     Fax: 202-720-4619.
     Mail: Director of CEPD, USDA FSA CEPD, Stop 0513, 1400 
Independence Ave., SW., Washington, DC 20250-0513.
     Hand Delivery or Courier: Deliver comments to Director of 
CEPD, Room 4709-S, 1400 Independence Ave., SW., Washington, DC.
     Federal eRulemaking Portal: Go to https://www.regulations.gov. Follow the online instructions for submitting 
comments.
    Comments may be inspected at the mail address listed above between 
8 a.m. and 4:30 p.m., Monday through Friday, except holidays. A copy of 
this rule is available through the Farm Service Agency (FSA) home page 
at https://www.fsa.usda.gov/.

FOR FURTHER INFORMATION CONTACT: Robert Stephenson at USDA, FSA, CEPD, 
STOP 0513, 1400 Independence Ave., SW., Washington, DC 20250-0513; 
telephone 202-720-6221; e-mail: cepdmail@wdc.usda.gov. Persons with 
disabilities who require alternative means for communication (Braille, 
large print, audiotape, etc.) should contact the USDA Target Center at 
202-720-2600 (voice and TDD).

SUPPLEMENTARY INFORMATION: 

Background

    Section 9001 of the 2008 Farm Bill authorizes the Biomass Crop 
Assistance Program (BCAP) to assist agricultural and forest land owners 
and operators with the collection, harvest, storage, and transportation 
of eligible material for use in a biomass conversion facility and to 
support the establishment and production of eligible crops for 
conversion to bioenergy in selected project areas. The 2008 Farm Bill 
also authorizes such sums as are necessary to carry out BCAP.
    On May 5, 2009, the President issued a Presidential directive 
establishing a Biofuels Interagency Working Group (chaired by the 
Secretaries of Agriculture and Energy and the Administrator of the 
Environmental Protection Agency). Among other programmatic specific 
goals, the Presidential directive laid the groundwork for a policy 
development process that would aggressively accelerate the development 
of advanced biofuels (published in the Federal Register on May 7, 2009 
(74 FR 21531-21532)). One aspect of the larger effort outlined in the 
memorandum is the issuance of guidance and support related to the 
collection, harvest, storage, and transportation of eligible materials 
for use in biomass conversion facilities--a component of the BCAP.
    On June 11, 2009 (74 FR 27767-27772), we published in the Federal 
Register a BCAP notice of funds availability (NOFA) for the collection, 
harvest, storage, and transportation of materials (CHST). This proposed 
rule terminates the NOFA effective on the date the proposed rule is on 
public display at the Office of the Federal Register. On that date, 
USDA will notify the public that the NOFA is terminated and that FSA 
will no longer accept applications for matching payments under the 
NOFA.
    We also held a series of public meetings, as described in a 
different notice published on May 13, 2009 (74 FR 22510-22511), to 
collect public input needed to prepare an environmental impact 
statement (EIS) for BCAP. As outlined in the NOFA, comments from the 
public meetings, other public comments previously submitted in response 
to the NOFA, the full EIS and all comments and lessons learned from the 
three BCAP notices will be incorporated into the rulemaking for the 
entire BCAP program, which will include CHST. As such, this proposed 
rule covers the whole BCAP program, including both the provisions that 
provide matching payments for collection, harvest, storage, and 
transportation of materials and the provisions that provide payment for 
the establishment and production of biomass crops in selected project 
areas. It reflects comments received on the NOFA. CCC believes that the 
full BCAP should be viewed in a broader policy context which promotes 
the Administration's priorities for increasing the production of 
advanced biofuels, renewable energy and biobased products. Within this 
context, this proposed rule, which would implement the full BCAP, 
terminates the NOFA and makes necessary changes to the program in a 
manner that is consistent with the 2008 Farm Bill and encourages the 
development of bioenergy, including advanced biofuels, renewable 
energy, and biobased products.
    As defined in this rule, ``advanced biofuel'' means fuel derived 
from renewable biomass other than corn kernel starch, including 
biofuels derived from cellulose, hemicellulose, or lignin; biofuels 
derived from sugar and starch (other than ethanol derived from corn 
kernel starch); biofuel derived from waste material, including crop 
residue, other vegetative waste material, animal waste, food waste, and 
yard waste; diesel-equivalent fuel derived from renewable biomass 
including vegetable oil and animal fat; biogas (including landfill gas 
and sewage waste treatment gas) produced through the conversion of 
organic matter from renewable biomass; and butanol or other alcohols 
produced through the conversion of organic matter from renewable 
biomass and other fuel derived from cellulosic biomass.

Discussion of Comments on NOFA

    Forty-seven comments were received in response to the NOFA. 
Commenters included a Tribe, State government agencies, an Embassy, 
individuals, non-profits, corporations, small businesses, 
entrepreneurs, public interest groups, Federal agencies and 
departments, academics, trade and industry associations, and 
cooperatives. Comments were received from all regions within the U.S. 
and from Canada and the United Kingdom.
    Forty-six percent of the respondents were either a biomass 
conversion facility or represented biomass conversion facilities, the 
largest majority being from the wood pellet manufacturing industry.

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    Twenty-one percent of the respondents commented on the constraints 
that resulted from requiring an ``arm's-length transaction.'' Most of 
those comments requested that the arm's-length transaction requirement 
either be removed or be reconstituted to enhance program flexibility 
and allow for a greater diversity of eligible material owner 
participation. CCC acknowledges the importance of ensuring a broad 
range of eligible materials in pursuing program goals, and is mindful 
of the constraints raised by the commenters. In order to provide 
appropriate safeguards to ensure transactions among disinterested 
parties, CCC proposes to replace the arm's length transaction language 
in the proposed rule with related-party transaction language.
    Related-party transaction restrictions will not make ineligible 
stockholders of a privately or publicly held company who deliver 
eligible material to that company, nor make members of a cooperative 
who deliver eligible material to that cooperative ineligible. CCC 
requests additional comments on related-party transactions.
    None of the parties in a related-party transaction for the purchase 
of eligible material are eligible for CHST matching payments as an 
eligible material owner.
    Twenty percent of respondents opposed the requirement to measure 
biomass deliveries with real-time equipment that accurately records 
moisture levels to meet the dry-ton measurement standard. Most 
indicated that common industry practice is to measure in terms of 
green-tons with the general assumption of a moisture level of 45 to 50 
percent. Based on these comments, CCC proposes to modify its 
requirement for moisture testing and adopt the industry-wide standard 
for measuring moisture. However, in all cases, the dry-ton equivalent 
remains.
    Seventy-six percent of the comments concerned eligible materials, 
with 13 percent of those comments focused on conservation and forest 
stewardship plans related to eligible materials. These comments 
included commentary for and against the 20 percent cap on Title I crop 
agricultural residue. Most of those in favor of the cap remarked that 
it ought to be a complete ban to protect soils from wind and water 
erosion and that no agricultural residue should be removed without a 
conservation plan. Many of those in opposition to the cap stated that 
the cap of 20 percent only would drive up market prices on forest 
residue and allow forest residue to become the central supply for 
biomass conversion facilities. In this proposed rule, there is no 20-
percent cap because it is inconsistent with the 2008 Farm Bill. 
Regarding protecting land from wind and water, CCC proposes in this 
rule that BCAP contract participants will implement conservation plans, 
forest stewardship plans or equivalent plans that take into account 
site-level conservation needs. With regard to matching payment 
eligibility for agricultural and forest landowners and operators 
removing eligible material for use in a biomass conversion facility, 
such removal to receive matching payments must be done in compliance 
with any new, updated or existing conservation plans, forest 
stewardship plans or equivalent plans, as well as any existing 
environmental laws and regulations.
    Other comments concerning the conservation plans included a desire 
to expand the requirement for conservation plans. Suggestions for 
elements of conservation plans included: target erosion rates far below 
``T'' (soil loss tolerance) and compliance with new State ordinances on 
items such as buffers. This standard exceeds the level for highly 
erodible land, which is defined in 7 CFR part 12. Therefore, CCC did 
not adopt this comment and requests public comment on appropriate 
conservation standards for land enrolled in BCAP.
    Comments concerning Forest Stewardship Plans offered alternative 
``equivalent plans'' prescribed in the 2008 Farm Bill, such as plans 
under the American Tree Farm Program, the Sustainable Forestry 
Initiatives Program or State Best Management Programs. This comment is 
consistent with the 2008 Farm Bill and was accepted and reflected in 
this proposed rule.
    Less than 10 percent of the comments urged FSA and CCC to consider 
miscanthus as an eligible material. Miscanthus is an eligible material; 
however, because some States may consider miscanthus a noxious weed, it 
may not be considered an eligible crop in those States.
    Nearly 50 percent of the comments expressed a need for the 
eligibility time period for matching payments to be extended beyond two 
years. Rationale for these requests included the fact that certain 
contracts, such as a timber sale contract, have task orders and options 
that are not necessarily executed within a two-year time period and the 
need for equipment acquisitions or repairs sometimes interrupt 
harvesting. Two suggestions were given to tie the two-year limit to 
land tract instead of the eligible material owner.
    The 2008 Farm Bill specified the two-year period for matching 
payments. However, CCC modified the beginning of the time period from 
the date of pre-delivery approval to the date the first payment is 
issued. From that first date, matching payment obligations may occur 
for two years to an eligible material owner. CCC did not adopt the 
comment to change the two-year period from ``eligible material owner'' 
to ``tract'' because to do so would have been an extraordinary 
administrative burden on FSA that would have required extensive 
geographic-information-system-based software to monitor and control 
payments.
    Nearly 20 percent of the commenting respondents were concerned with 
the economic market impact of BCAP. Comments included concerns that the 
introduction of the matching payment could impact the supply of 
commercial timber. Commenters did not agree on the impact; concerns 
were expressed that the impact would be negative, reducing supply, and 
positive, increasing supply. Similarly, commenters expressed concern 
that supply impacts would result in both favorable and unfavorable 
pricing impacts. Several respondents noted that the drop in the housing 
market has depressed the current supply of biomass and the matching 
payment, from their perspective, might help improve waste wood supply 
levels. Because these comments are of a general nature, CCC took no 
action on these comments.
    Nearly 25 percent of the comments opposed the requirement to 
present scale tickets or a check to qualify the delivery and validate 
eligibility for a matching payment. The commenting parties indicated 
that the burden and cost of recording on each scale ticket was too 
high. CCC generally agrees with the comment and modified the 
requirement in Sec.  1450.104(f) so the required information that must 
be submitted includes total actual tonnage delivered, total dry-weight 
tonnage-equivalent using standard moisture determinations, total 
payment including per ton payment rate(s) matched with actual tonnage, 
and the qualified biomass conversion facility's certification as to the 
authenticity of the information.
    Comments on wildlife and plant life came from 15 percent of the 
respondents. Several comments indicated concern about ensuring 
standards for invasive and noxious species where eligible material was 
concerned. These comments suggested that CCC consult with USDA's Animal 
and Plant Health Inspection Service and the National Council for 
Invasive Species to address geographic-specific issues. ``Eligible 
material'' is a subset of renewable biomass and is specifically defined 
in the 2008 Farm Bill as the

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material that is eligible for a matching payment. The 2008 Farm Bill 
does not restrict invasive and noxious species from eligibility, 
however, as discussed below, CCC will require that existing measures be 
taken and standing guidelines followed for any harvesting, collecting, 
storing or transporting of such material from such species.
    ``Eligible crops,'' however, are another subset of renewable 
biomass that refers to the kind and types of crops that may qualify for 
establishment and annual payments on land enrolled in BCAP. According 
to the 2008 Farm Bill, invasive and noxious species are not ``eligible 
crops'' and CCC will collaborate with other appropriate agencies and 
entities to ensure current listings are available.
    Finally, in issuing the NOFA, we pledged to consider all public 
comments and incorporate relevant evidence from the full EIS as well as 
all lessons learned into the proposed rule that sets forth requirements 
for the overall BCAP. Based upon the Department's experience in 
implementing the component of the program authorized by the NOFA, 
certain changes are necessary to implement the program in a manner that 
is consistent with the 2008 Farm Bill, while also supporting the 
Administration's overall policy objective to encourage the development 
of advanced biofuels, renewable energy, and biobased products within 
the 2008 Farm Bill authority. The proposed rule will specifically seek 
public comment on how to best incentivize the development of advanced 
biofuels, renewable energy and biobased products from renewable 
biomass.

BCAP Overview

    BCAP supports two main types of activities. First, it provides 
funding for agricultural and forest land owners and operators to 
receive matching payments for eligible material that is sold to 
qualified biomass conversion facilities for the production of heat, 
power, biobased products, or advanced biofuels. In this rule, these 
payments are referred to as ``matching payments.'' The matching payment 
is intended to assist producers with the cost of collection, harvest, 
storage, and transportation of eligible material to the facility. Such 
payments to a particular participant may continue for up to two years 
after the first payment is issued. Second, BCAP provides funding for 
producers of eligible crops of renewable biomass within specified 
project areas to receive establishment payments of not more than 75 
percent of the cost of establishment of eligible woody and non-woody 
perennial crops, and annual payments for up to 15 years for the 
production of those crops. In this rule, these are referred to as 
``establishment and annual payments.'' To be eligible for payment, the 
establishment and production activities must take place in designated 
project areas, which may be proposed to CCC by biomass conversion 
facilities or by groups of producers. Production activities may 
include, but are not limited to, annual payments for producers who are 
unable to sell crop due to a reduction in the size or scope of a 
biomass conversion facility's operation or if a producer experiences 
crop failure caused by no fault of the producer but by a natural event 
such as drought, flooding or hail, as determined by CCC. Producers in 
project areas can be eligible for both types of payments; producers 
outside the project areas can be eligible for matching payments only. A 
table summarizing the major eligibility requirements for both types of 
payments is provided later in this rule.

Terms Used in This Rule

    This rule uses the term ``eligible material'' for the renewable 
biomass that is eligible for the matching payment component of BCAP and 
``eligible crop'' for renewable biomass that may be eligible for the 
establishment and annual payments component of BCAP. The 2008 Farm Bill 
uses these two terms in this way and defines them as including 
different kinds of renewable biomass. The use of the terms in this rule 
is consistent with the way the terms are used in the 2008 Farm Bill. 
With this rule, CCC intends to achieve better consistency between the 
requirements for eligible materials collected and harvested from public 
and private lands. In addition, CCC seeks to avoid diverting any 
materials potentially eligible for BCAP matching payments from existing 
value added production processes already occurring in the marketplace. 
Therefore, CCC proposes that vegetative wastes, such as wood waste and 
wood residues, collected or harvested from both public and private 
lands should be limited to only those that would not otherwise be used 
for a higher-value product. More specifically, for materials collected 
from both public and private lands, CCC is proposing to exclude from 
matching payment eligibility wood wastes and residues derived from mill 
residues (i.e. tailings, etc.) or other production processes that 
create residual byproducts that are typically used as inputs for higher 
value-added production (i.e. particle board, fiberboard, plywood, or 
other wood product markets). However, CCC is proposing to allow as 
eligible for matching payments wood waste and residue derived from 
slash, pre-commercial operations, wet cordwood etc.) that is altered to 
chipped or similar form solely for the purposes of transport and 
delivery to eligible biomass conversion facilities. As specified in the 
2008 Farm Bill and the regulations in 7 CFR part 1450, the eligible 
material owner may be a person or legal entity who is (1) a producer of 
an eligible crop or (2) has the right to collect or harvest eligible 
material and (3) a qualified biomass conversion facility that meets 
those requirements and the definition. As discussed in this rule, the 
matching payments will be made for the delivery of the eligible 
material.
    The term ``conservation district'' is used as defined in 7 CFR part 
1410.
    This proposed rule uses the term ``participant'' for the matching 
payments component of BCAP and the terms ``producer'' and 
``participant'' for the establishment and annual payments component of 
BCAP. The distinction is, an eligible participant for matching payments 
is not necessarily the person or legal entity who produced the 
material, but may be the person who owns it or has the authority to 
sell it to the biomass conversion facility. In other words, all BCAP 
producers are participants, but not all BCAP participants are 
producers. Participants are those individuals or entities who have been 
approved and are bound to perform under a contract for matching 
payments, establishment, or annual payments.
    This proposed rule uses the term ``contract'' and ``agreement.'' A 
contract is between CCC and the participant for BCAP payments. The 
contract is legally binding and specifies what the producer must do and 
the resulting payments that CCC will make to the producer. An agreement 
is with a qualified biomass conversion facility or a project area 
sponsor. As fully described later in this proposed rule, the agreement 
specifies what the qualified biomass conversion facility or the project 
area sponsor plans to do and how it will support the establishment and 
production of eligible crops for conversion to bioenergy in the BCAP 
project areas, for example, the type of renewable biomass that will be 
used, the planned use of renewable biomass, and the new uses for the 
renewable biomass. In addition, there may be agreements between CCC and 
a qualified biomass conversion facility for the matching payments, 
which include items such as obligations of the facility to provide a 
purchase list, receipts and scale tickets for the eligible material 
owners and agreement to provide

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facility address and contact information to the general public.

Matching Payments

    As proposed in this rule, matching payments would be available for 
the delivery of eligible material to qualified biomass conversion 
facilities to a producer of an eligible crop or a person with the right 
to collect or harvest eligible material.
    The 2008 Farm Bill provides for matching payments at a rate of $1 
for each $1 per dry ton paid by the qualified biomass conversion 
facility, in an amount up to $45 per dry ton, for a period of two 
years. The 2008 Farm Bill also provides that biomass conversion 
facilities are those that convert, or propose to convert renewable 
biomass into heat, power biobased products, or advanced biofuels.
    For the matching payments to eligible material owners delivering to 
a biomass conversion facility, CCC seeks comments on the following 
three options.
    One option is to provide the matching payments as provided in the 
Notice of Funds Availability. Under this option, CCC would provide 
matching payments at the rate of $1 for each $1 per dry ton paid by the 
CHST-qualified biomass conversion facility to the owner for delivery of 
eligible material to the facility in an amount not to exceed $45 per 
dry ton. Under this option, a limit would be placed on those biomass 
facilities that convert wood wastes or wood residues into heat or power 
for the facility. In those cases, a historical baseline of heat or 
power the facility produces from these materials will be established by 
the Deputy Administrator and payments will be made only for materials 
delivered to those facilities for conversion to heat or power above 
that baseline.
    A second option is to tailor the matching payments through a 
``tiered approach'' designed to encourage advanced biofuels production. 
In this option, CCC would provide matching payments at the rate of $1 
for each $1 per dry ton paid by the CHST-qualified biomass conversion 
facility; however, biomass conversion facilities converting eligible 
material to advanced biofuels would be able to receive matching 
payments at the maximum rate of $45 per ton. Biomass conversion 
facilities converting eligible material to any use other than advanced 
biofuel--such as heat, power, renewable energy or biobased products--
would be able to receive payments at some point below the maximum rate. 
USDA requests comments on how to assess a tiered approach and how such 
an approach might be structured.
    One possible approach would be based on USDA's tentative finding, 
in Regulatory Impact Analysis, that a $9 per green ton subsidy would 
render biomass feedstock broadly appealing to farm operators and 
competitive as an input to the energy sector. This $9 per green ton 
rate equates to approximately $15 to $16 per dry ton. If so, a $16 per 
dry ton payment rate would be sufficient to incentivize the production 
of new biofuel feedstock development and associated production 
processes that would not otherwise occur absent this financial support.
    Another approach would be to develop a payment rate based directly 
on the value of lowering carbon emissions. Such an approach would take 
account of the greenhouse gas benefits associated with the substitution 
of biofuels for other more carbon intensive fuel sources, such as coal. 
USDA has proposed a particular minimum subsidy of $16 per dry ton, and 
it believes that value may ``internalize'' some of the societal benefit 
of the use of biofuel feedstock as an energy sector input, leading to 
significant environmental improvements. USDA specifically requests 
comment on how to better capture this concept and whether a higher or 
lower minimum payment may best reflect the greenhouse gas and other 
environmental benefits of biofuel feedstock energy use.
    USDA specifically requests comment on whether this or another 
similar payment structure might be best, and on how USDA may reflect 
the economic and environmental goals that can be achieved through this 
kind of tiered payment structure.
    Finally, a third option is to vary the matching payments to 
encourage additional biomass production beyond a historical baseline. 
Under this option, CCC would calculate the matching payment at the rate 
of $1 for each $1 per dry ton paid by the CHST-qualified biomass 
conversion facility and then reduce the actual amount paid based on the 
difference from the baseline. For example, full payment could be 
provided for delivery of eligible material to new facilities, certain 
public buildings, facilities, or property (such as schools, 
universities, military facilities or Federal and State buildings) that 
convert from fossil fuel consumption to renewable biomass feedstocks; 
for eligible material showing exceptional promise for producing 
innovative advanced biofuels, renewable energy, or biobased products; 
or for every ton of renewable biomass consumption above a facility's 
established baseline. Payments would be reduced for those facilities 
that do not increase renewable biomass consumption over a historical 
baseline.
    While CCC has not formally considered all of these options, CCC 
seeks comments and suggestions on all three of these options for the 
final rule so as to achieve an expansion and strengthening of the 
production of advanced biofuels, renewable energy, and biobased 
products from non-feed renewable biomass.

Qualified Biomass Conversion Facility

    CCC proposes that in order for a delivery of eligible materials to 
a biomass conversion facility to be eligible for payment, the receiving 
biomass conversion facility would first have to become qualified for 
BCAP. To become qualified, the eligible biomass conversion facility 
would enter into an agreement with CCC, through the FSA State office in 
the State where the facility is physically located.
    A biomass conversion facility, as specified in the 2008 Farm Bill 
and in this proposed rule, would be a facility that converts or 
proposes to convert renewable biomass into heat, power, biobased 
products, advanced biodiesel, or advanced biofuels such as wood 
pellets, grass pellets, wood chips, or briquettes. For the purposes of 
BCAP, advanced biofuels do not include ethanol derived from corn kernel 
starch, because the 2008 Farm Bill specifically excludes it in the 
definition.
    A biomass conversion facility would not have to be a project 
sponsor for the establishment and annual payments component of BCAP or 
be in operation to submit a successful application for qualification. 
If the facility is not yet in operation, CCC proposes that the person 
requesting that a facility become qualified must provide proof of all 
applicable Federal, State, local, and Tribal permits and licenses 
required for operation or proof of application completions or letters 
of renewal submissions from the applicable governmental entity. 
Applicable permits and licenses may include, but are not limited to, 
business licenses, air quality permits, water discharge permits, storm 
water permits, or Bureau of Alcohol, Tobacco, Firearms and Explosives 
registrations.
    CCC proposes that each biomass conversion facility enter into a 
separate agreement with CCC regardless of whether a single owner has 
multiple facilities. CCC would issue unique facility identification 
numbers to each qualifying biomass conversion facility.

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    The proposed agreement between CCC and a qualified facility would 
require the biomass conversion facility to make information about the 
facility available to CCC and institutions of higher education. The 
2008 Farm Bill requires that the information be made available to the 
Secretary or to institutions of higher education so that the 
information can be used to promote the production of biomass crops and 
the development of biomass conversion technology. The 2008 Farm Bill 
also requires a report to Congress on best practice data and other 
information no later than four years after the enactment of the 2008 
Farm Bill, so the agreement would require that such information be 
disclosed, with the understanding that such information would be used 
in the report to Congress. In addition, when a biomass conversion 
facility agrees to become ``qualified'' it will be helpful for CCC to 
make information available to the public that a particular facility has 
become qualified because it is a precursor to being eligible for a 
matching payment.

Eligible Material Owners, Application for Matching Payments

    To be eligible for matching payments, the eligible material owners 
need to visit a county FSA office to sign up for payment approval as an 
eligible material owner. The qualified biomass conversion facility 
would issue a receipt or invoice upon the date of delivery to eligible 
material owners.
    The material owner would be eligible for the payment if the owner 
had the legal title to the material for collection or harvest, such as 
the operator or producer conducting farming operations on private land, 
or any other person designated by the owner of the private land. 
Consistent with the 2008 Farm Bill, the eligible material owner could 
be a person(s) with the right to harvest or collect eligible material 
on certain Federal lands pursuant to a contract or permit with the 
United States Forest Service or Bureau of Land Management, such as a 
timber sale contract.
    Eligible material owners would take the receipts from the qualified 
biomass conversion facility and submit them to the county FSA office 
for matching payments. In accordance with the 2008 Farm Bill, CCC 
proposes that the measure for the eligible material weight would be a 
``dry ton,'' the weight at zero percent moisture content. The facility 
would be required to have the necessary equipment (such as a moisture 
meter) to calculate the equivalent dry ton weight of the delivered 
material.
    In addition to weight scaling for roundwood and forest residues 
that have not been chipped, CCC proposes in consultation with the U.S. 
Forest Service to require qualified biomass conversion facilities to 
use a random sampling methodology and historical statistical data to 
determine conversion factors for eligible material. Conversion factors 
would need to be developed quarterly and be based on type of material 
such as hardwood and softwood.
    For wood chips, chipped forest residuals, shavings, sawdust, bark 
or any other eligible intermediate forestry residuals, CCC in 
consultation with the U.S. Forest Service proposes the requirement of 
sampling for individual loads or using rapid electronic meters. 
Quarterly correction factors would be required and be based on monthly 
random samples of the eligible materials.
    CCC proposes that woody biomass sampling methodologies follow 
standard probability sampling of materials and proposes that moisture 
analysis follow standard test methods for wood fuels.
    An eligible owner is able to receive matching payments for a period 
of two years. The two-year period for matching payment eligibility 
would begin on the date of issue of the first matching payment. This 
provision differs from what was provided in the NOFA, which indicated 
that the 2-year time period would begin immediately after initial 
approval by the FSA county office for the CHST matching payment and 
would end 24 months later. Having the ``start date'' coincide with the 
payment date, rather than the approval date, ensures that participants 
would not be unnecessarily penalized if, through no fault of their own, 
for example, adverse weather or other conditions could delay delivery 
of eligible material to a qualified biomass conversion facility.
    Eligible material owners may also be eligible to participate under 
the ``Establishment and Annual Payments'' component of BCAP; however, 
the annual payment that is received by a participant in that component 
would be reduced when a matching payment was issued. The 
``Establishment and Annual Payments'' component is discussed later in 
this rule. If an eligible material owner or producer wishes to avoid 
the reduction in annual payment(s), CCC proposes that the owner or 
producer do so by declining the matching payment(s).
    The NOFA imposed an ``arm's length transaction'' requirement to be 
eligible for a matching payment. CCC acknowledges the importance of 
maintaining flexibility in this new program, as well as ensuring a 
broad range of eligible materials in pursuing program goals, and is 
mindful of the constraints raised by the comments. In order to provide 
appropriate safeguards to ensure transactions among disinterested 
parties, CCC proposes to replace the ``arm's length transaction'' 
language with related-party transaction language. Related-party 
transaction restrictions will not render stockholders of a privately or 
publicly held company who deliver eligible material to that company 
ineligible; nor will members of a cooperative who deliver eligible 
material to that cooperative be considered ineligible. CCC proposes 
that related-party transaction be defined as a transaction between two 
or more ready, willing, and able organizations, trades, or business 
(whether or not incorporated, whether or not organized in the United 
States, and whether or not affiliated) substantially owned or 
controlled, directly or indirectly by the same interests, as determined 
by the Deputy Administrator.
    As otherwise explained throughout this proposed rule, CCC proposes 
that an eligible material owner needs to meet the following to be 
eligible for a matching payment:
    An eligible material owner may be:
     A producer within a project area;
     A biomass conversion facility;
     A person or entity with the legal title to an intermediate 
ingredient or feedstock; or
     A person or a non-Federal entity that has legal title to 
an eligible material, including Indian Tribes and Tribal members.
    An eligible material owner may apply for a matching payment at the 
FSA county office after delivery of eligible material to a qualified 
biomass conversion facility.
    The eligible material must be harvested or collected from certain:
     U.S. National Forest System and BLM lands,
     Non-Federal lands, including State- and locally-held 
government lands, or
     Tribal land held in trust by the Federal government.
    The eligible material must be harvested or collected from certain:
     Materials, pre-commercial thinnings, or invasive species 
from National Forest System land and U.S. Bureau of Land Management 
System land that:
     Are byproducts of preventive treatments that are removed 
to reduce hazardous fuels, to reduce or contain disease or insect 
infestation, or to restore ecosystem health;
     Would not otherwise be used for higher-value products; and
     Are harvested in accordance with applicable law and land 
management

[[Page 6269]]

plans and the requirements for old-growth maintenance, restoration, and 
management direction of section 102 (e)(2), (3), and (4) of the Healthy 
Forests Restoration Act of 2003 (16 U.S.C. 6512) and large-tree 
retention of subsection (f).
     Any organic matter that is available on a renewable or 
recurring basis from non-Federal land or land belonging to an Indian or 
Indian Tribe that is held in trust by the United States or subject to a 
restriction against alienation imposed by the United States, including:
     Renewable plant materials such as feed grains, other 
agricultural commodities, and other plants and trees; and
     Waste materials including vegetative waste comprised of 
crop residues such as corn stover or wood wastes and wood residues that 
would not otherwise be used as inputs for existing value-added 
production.
    CCC also proposes that eligible material owner(s) would not be 
eligible for a matching payment if:
     Payment is received before the biomass conversion facility 
is qualified by CCC;
     The eligible material owner did not receive approval for 
matching payment from the county FSA office before receiving payment;
     The delivery did not consist of eligible material (For 
deliveries of comingled eligible and ineligible material, only the 
eligible material will be eligible for payment);
     The eligible material owner knowingly supplied false 
information;
     The eligible material owner violated the associated 
conservation or forestry plan related to the land that produced the 
eligible material for which a matching payment is requested; or
     The formerly qualified biomass conversion facility failed 
to comply with the agreement it entered into with CCC and, accordingly, 
the agreement was terminated by CCC prior to delivery.
    Comments received on the CHST NOFA encourage CCC to ensure that 
conservation or forest stewardship plans appropriately address soil, 
water, wildlife and other natural resource concerns, so that biomass 
production is balanced with natural resource conservation. For matching 
payments, CCC intends to apply existing conservation plan requirements 
as required by Title XII of the Food Security Act of 1985 and is 
requesting additional comments in this proposed rule to ensure that 
adequate guidance is received to determine the scope of these 
requirements. CCC invites further comment on specific, additional 
conservation and stewardship measures that could be included or that 
could be contained within the matching payment options discussed 
previously.

Eligible Materials

    For guidance to potential eligible material owners and biomass 
conversion facilities, CCC proposes to provide a list of eligible 
materials deemed acceptable to receive a matching payment in accordance 
with the 2008 Farm Bill's definitions of renewable biomass and eligible 
material. The list of eligible material would be provided to the public 
via the FSA Web site at https://www.fsa.usda.gov/energy. CCC proposes 
the list of materials be utilized for guidance with the understanding 
that the list is not exhaustive and would be amendable and periodically 
updated by the CCC--in accordance with the parameters established by 
the 2008 Farm Bill--as biomass energy technology evolves. When there is 
recommendation for an addition to the list of eligible material, CCC 
will review the material to make determinations--the review could 
include a site visit and comparison to related materials or uses. CCC 
will review the recommendation to ensure that the new material meets 
the requirements of the 2008 Farm Bill and the regulations. CCC 
requests comments for additional suggestions on considerations in the 
process to amend the list of eligible materials. As described later in 
this rule, a list of eligible crops for the establishment and annual 
payment provisions would include some additional crops not eligible for 
matching payments.
    Renewable biomass, as specified in the 2008 Farm Bill and in this 
rule, includes materials, pre-commercial thinnings, or invasive species 
from U.S. National Forest System land and U.S. Bureau of Land 
Management (BLM) land that:
     Are byproducts of preventive treatments that are removed 
to reduce hazardous fuels, to reduce or contain disease or insect 
infestation, or to restore ecosystem health;
     Would not otherwise be used for higher-value products; and
     Are harvested in accordance with applicable law and land 
management plans and the requirements for old-growth maintenance, 
restoration, and management direction of subsections 102(e)(2), (3), 
and (4) of the Healthy Forests Restoration Act of 2003 (16 U.S.C. 6512) 
and large-tree retention provisions of subsection (f).
    In other words, renewable biomass harvested on National Forest 
System and BLM land would typically be trees and brush removed for fire 
prevention purposes, trees unsuitable for commercial timber harvest, 
invasive plant removal for treatment and control purposes, and 
diseased, damaged, or immature trees culled in accordance with 
appropriate forest management practices. Additionally, CCC seeks 
comment on additional conservation or stewardship measures that should 
be considered for inclusion in the final rule for the eligible 
materials described above.
    As specified in the 2008 Farm Bill, renewable biomass also includes 
any organic matter that is available on a renewable or recurring basis 
from non-Federal land or land belonging to an Indian or Indian Tribe 
that is held in trust by the United States including:
     Renewable plant materials such as feed grains, other 
agricultural commodities, other plants and trees, and algae;
     Waste materials including vegetative waste comprised of 
crop residues such as corn stover, wood wastes, and wood residues;
     Animal waste and byproducts; and
     Food waste and yard waste.
    However, that definition of renewable biomass from the 2008 Farm 
Bill applies to more than one program in Title IX. For BCAP 
specifically, the 2008 Farm Bill defines ``eligible material'' more 
narrowly, so that renewable biomass excludes the whole grain derived 
from any crop that is eligible to receive payments under Title I of the 
2008 Farm Bill.
    Those crops that are subject to the provisions of Title I of the 
2008 Farm Bill would therefore not be included as eligible materials or 
crops for either component of BCAP. These crops include the whole grain 
derived from a crop of barley, corn, grain sorghum, oats, rice, and 
wheat; oilseeds such as canola, crambe, flaxseed, mustard seed, 
rapeseed, safflower seed, soybeans, sesame seed, and sunflower seeds; 
peanuts, pulse crops such as small chickpeas, lentils, and dry peas; 
dairy products; sugar; wool; and, cotton boll fiber.
    In accordance with the 2008 Farm Bill, CCC proposes that crop 
residue or other similar byproducts of crop production and harvesting, 
such as corn stover, corn silage, straw, hulls, or sugar bagasse, 
remain eligible materials for matching payments without further 
limitation or restriction. CCC proposes that for such eligible material 
conservation plans should be updated or initiated to address the 
removal of the material as needed. Additionally, CCC invites comments 
and suggestions with regard to specific, additional conservation and 
stewardship measures

[[Page 6270]]

that should be considered for the collection, harvest, transportation 
or storage of these eligible materials.
    The 2008 Farm Bill is silent as to whether, for the purposes of 
BCAP matching payment eligible material requirements, vegetative waste 
materials, such as wood waste and wood residue, available from non-
Federal land should be limited only to those that would not otherwise 
be used for higher-value products. Based on its experience with the 
NOFA, CCC proposes in this rule to apply that limitation to vegetative 
waste materials such as wood wastes and residues so that those 
materials are excluded if they would otherwise be used for higher-value 
products. CCC invites comments and suggestions with regard to the 
addition of this provision.
    The 2008 Farm Bill does not specifically exclude invasive or 
noxious species in the definition of ``eligible material.'' Renewable 
biomass derived from invasive or noxious species must be handled in 
accordance with Executive Order (E.O.) 13112 of February 3, 1999. E.O. 
13122 requires that Federal agencies ``not authorize, fund, or carry 
out actions that it believes are likely to cause or promote the 
introduction or spread of invasive species in the United States or 
elsewhere unless, pursuant to guidelines that it has prescribed, the 
agency has determined and made public its determination that the 
benefits of such actions clearly outweigh the potential harm caused by 
invasive species; and that all feasible and prudent measures to 
minimize risk of harm will be taken in conjunction with the actions.''
    CCC consulted with APHIS and the National Invasive Species Council 
experts to determine the feasible and prudent measures necessary to 
minimize the risk of harm related to the inclusion of invasive or 
noxious species for the purposes of BCAP matching payments. Based on 
the consultation, CCC proposes to include invasive and noxious species 
as eligible materials for BCAP matching payment purposes; however, such 
eligible materials must not be collected, harvested, or transported 
during reproductive or other phases that may propagate the spread or 
establishment of those species. Eligible material owners should contact 
State and local weed boards or authorities and their local USDA Service 
Center staff about collecting, harvesting, or transporting invasive or 
noxious species to ensure compliance with E.O. 13112, USDA guidelines, 
and other requirements.
    The likely benefits of including invasive and noxious species as 
eligible materials, which would incentivize their removal, 
significantly outweighs the potential negative impacts that may result 
from not including them as eligible materials, specifically scenarios 
where removing native species from a tract of land would occur and not 
removing the invasive or noxious species would encourage invasive and 
noxious species propagation.
    CCC requests comment on whether or not eligible material owners 
violating E.O. 13112 should be financially responsible for any or all 
removal costs associated with the spread or establishment of invasive 
or noxious species if it determined that an eligible material owner 
contributed to the spread or establishment of an invasive or noxious 
species while carrying out activities related to receiving a matching 
payment.
    As required by the 2008 Farm Bill, the following renewable biomass 
materials would also be excluded from BCAP matching payments, although 
they would be eligible crops for BCAP establishment and annual 
payments:
     Animal waste and byproducts (including fats, oils, 
greases, and manure);
     Food waste such as food processing scraps and yard waste 
such as debris removal originating from municipal or commercial yard, 
lawns, landscaped areas or related sites; and
     Algae.
    Additionally, CCC proposes that materials that are wastes or by-
products of industrial or similar processes that contain inorganic 
materials, such as black or pulp liquor that is a by-product of the 
pulp and kraft paper manufacturing process, remain excluded from the 
definition eligible materials. While such products may have 
historically been used to generate heat, power, steam and electricity 
to operate facilities, these products are not within the parameters set 
by the 2008 Farm Bill because they are, among other things, not organic 
materials collected or harvested from land. As such, these materials, 
as well as otherwise eligible materials delivered and used for the 
generation or production of these materials, would continue to not be 
eligible for matching payments under this program.
    Consistent with the 2008 Farm Bill, CCC proposes that eligible 
materials, for a matching payment, would be collected and harvested 
from eligible lands that would include:
    (1) U.S. National Forest System lands;
    (2) BLM lands;
    (3) All Non-Federal lands in the United States; and
    (4) Land belonging to an Indian or Indian Tribe that is held in 
trust by the United States or subject to a restriction against 
alienation imposed by the United States. In other words, most publicly- 
and privately-held land is eligible for the BCAP matching payments 
program, except for some Federal lands.
    In accordance with the 2008 Farm Bill, CCC proposes that matching 
payments would be made for all eligible materials, including those 
derived outside BCAP project areas. CCC invites comments pertaining to 
the previously discussed options for structuring matching payments to 
provide incentives for the collection, harvest, storage and 
transportation of eligible materials near project areas.
    Eligible materials that are considered an advanced biofuel or an 
intermediate ingredient or feedstock of a biobased product must be 
derived from an otherwise eligible material.
    CCC recognizes that the production of some advanced biofuels and 
biobased products requires intermediate ingredients and intermediate 
feedstocks, such as chopped grasses or wood chips. CCC proposes that 
the source material and the intermediate ingredient or feedstock be 
considered separate eligible materials; however, only one matching 
payment will be issued for either the source material or the 
intermediate ingredient or feedstock, but not both.

Eligibility for Establishment and Annual Payments

    Establishment and annual payments are proposed to be available for 
persons and legal entities with eligible land that is located within a 
project area designated by CCC. CCC proposes to accept project area 
proposals from a project sponsor on a continuous basis. Unlike the 
matching payments component of BCAP, where any owner of eligible 
materials can be eligible for the program, for the establishment and 
annual payments component, only producers in a designated project area 
will be eligible for payment. The payments will cover not more than 75 
percent of costs of eligible practices to establish non-woody and woody 
perennial biomass crops, and annual payments to support up to 15 years 
of crop production. By designating project areas, the BCAP program can 
support the development of renewable biomass production near biomass 
production facilities.

[[Page 6271]]

Proposing Project Areas

    Project areas would be proposed by project sponsors, which could be 
either groups of producers or biomass conversion facilities.
    There is no restriction in this proposed rule on who can own or 
operate an eligible facility, or sponsor a project area. Various 
parties could own a biomass conversion facility such as Federal 
entities, private entities, State or local government agencies, 
schools, or non-government organizations, provided that these parties 
have legal title to the facility.
    CCC proposes to accept project area proposals on a continuous 
basis. In accordance with the 2008 Farm Bill, a complete proposal would 
include, at a minimum:
    (1) A description of the eligible land and eligible crops of each 
producer that will participate in the proposed project area;
    (2) A letter of commitment from a biomass conversion facility 
stating that the facility will use eligible crops intended to be 
produced in the proposed project area; and
    (3) Evidence that the biomass conversion facility has sufficient 
equity available to operate in the future if the facility is not 
operational at the time the project area proposal is submitted.
    While the 2008 Farm Bill does not require conservation plans or 
forest stewardship plans to be an acceptable proposal, it does require 
that all contracts within a project area provide for the implementation 
of a conservation plan, forest stewardship plan or equivalent plan. As 
such, project area proposals will also include a description of the 
general conservation and forest stewardship measures that will be 
implemented in plans under contracts within the area. CCC seeks 
specific comment as to further conservation or stewardship requirements 
that should be included in a proposal for a project area.
    For item 1 above, the project sponsor would submit a narrative of 
the proposed project and submit maps of the project area delineating 
the location of the current or proposed biomass conversion facility. 
The maps would show: (1) Current land use, (2) roads, (3) railroad, (4) 
rivers and barge access, (5) proposed land use change, and (6) resource 
inventory maps including soils and vegetation.
    For item 3 above, evidence of sufficient equity will document the 
projected construction, start-up, operation, and maintenance costs over 
the projected life-span of the project. The project sponsors would 
document the estimated cash-flow of the project during its life-span 
(including assumptions on the production outputs and expected market 
prices for the products produced). In addition, the project sponsor 
would document its existing resources and short term and long term 
financing. The information provided to CCC will be confidential and CCC 
will use it to determine if sufficient equity is available for the 
facility and the project.
    The project sponsor will also submit the economic impacts of the 
proposed project area. At a minimum the proposal will address the 
anticipated timing and number for job creation and retention and 
likelihood of attracting additional private sector investment.
    At a minimum, projects must demonstrate the ability to support the 
development and production of heat, power, biobased product, or 
advanced biofuels from renewable biomass production. The facility must 
demonstrate long-term economic viability and ability to comply with all 
environmental and regulatory requirements for the production of heat, 
power, biobased product, or advanced biofuels from renewable biomass. 
In addition, the project must demonstrate that sufficient quantity of 
eligible crops will be grown within an economically viable distance 
from the facility and that the crops can be grown in an environmentally 
acceptable manner as determined by CCC.
    CCC requests comments on other types of information that should be 
required from project sponsors, including, but not limited, to a draft 
proposal. Proposed project area information that a sponsor considers 
appropriate or sufficient, may be included in a comment to this rule. 
We will review the information and use the analysis to make any 
required changes in the final rule. Information submitted as a proposal 
for a project area cannot be approved until implementation of the final 
rule. As with any comment, proposed project area information will 
become part of the public record and the public will be able to review 
it and comment on it. Because BCAP is a new program, information based 
on specific examples, projects, and situations will help improve the 
implementation and effectiveness of the program.
    CCC proposes that a project area have specific geographic 
boundaries and be described in definite terms such as acres, watershed 
boundaries, mapped longitude and latitude coordinates, or counties. The 
project area would be physically located near a biomass conversion 
facility or facilities. Whether a project area is within an 
economically viable distance from a biomass conversion facility will 
depend upon the eligible crops being established and produced, as well 
as other transportation and logistics matters, and thus must 
necessarily be determined on a case-by-case basis. The biomass 
conversion facility can be within the geographic boundary of the 
project area, or near it. The project area must also include potential 
or established producers that would supply either a portion or all of 
the renewable biomass needed by the biomass conversion facility.

Project Area Selection Criteria

    Consistent with the 2008 Farm Bill, CCC proposes to evaluate 
project area proposals that are submitted, according to these criteria:
    (1) The volume of the eligible crops proposed to be produced in the 
proposed project area and the probability that such crops will be used 
for BCAP purposes;
    (2) The volume of renewable biomass projected to be available from 
sources other than the eligible crops grown on contract acres;
    (3) The anticipated economic impact in the proposed project area, 
such as the number of jobs created and retained;
    (4) The opportunity for producers and local investors to 
participate in the ownership of the biomass conversion facility in the 
proposed project area;
    (5) The participation rate by beginning or socially disadvantaged 
farmers or ranchers;
    (6) The impact on soil, water, and related resources, such as 
effect on nutrient loads, or soil erosion;
    (7) The variety in biomass production approaches within a project 
area, including agronomic conditions, harvest and postharvest 
practices; and monoculture and polyculture crop mixes; and
    (8) The range of eligible crops among project areas.
    CCC proposes that all project proposals meeting these criteria 
would be considered acceptable for BCAP. The 2008 Farm Bill provides 
discretion for the Secretary to consider other information in 
evaluating project proposals. Given this discretion, CCC proposes that, 
in addition to the above criteria, proposals will also be evaluated 
based upon their ability to promote the cultivation of perennial 
bioenergy crops and annual bioenergy crops that show exceptional 
promise for producing highly energy-efficient renewable energy, 
advanced biofuels or biobased products, that preserve natural 
resources, and that are not primarily grown for food or animal feed. 
CCC

[[Page 6272]]

requests comments on whether additional criteria should be included for 
evaluating the capacity of the land in a project area to sustainably 
produce the proposed quantity of biomass. CCC requests comments on what 
other criteria or information we should use to evaluate project 
proposals.
    Project sponsors that are biomass conversion facilities could be 
any size of operation including pilot facilities, research units, 
experimental or demonstration operations, or commercial operations. As 
proposed in this rule, a biomass conversion facility not yet in 
operation could be a project sponsor. In that case, the biomass 
conversion facility would have to provide evidence that it has 
sufficient equity available.

Project Area Eligible Crops

    As proposed in this rule, after CCC approves a project area, 
persons and legal entities within the specific geographic boundaries of 
that area could be eligible for payment for the establishment and 
production of eligible crops. To be eligible for payment, participants 
would need to enroll the land under BCAP contracts.
    The 2008 Farm Bill defines an eligible crop as a crop of renewable 
biomass. The 2008 Farm Bill also includes a list of certain types of 
renewable biomass that are ineligible. Animal wastes, food and yard 
wastes, and algae are included in the definition of eligible crop in 
the 2008 Farm Bill and are therefore included in the definition in this 
proposed rule.
    CCC proposes that biomass conversion facilities may suggest the 
exact species and varieties of eligible crops allowable in a BCAP 
project area, provided that the crops are included in the BCAP 
definition of eligible crop. Project area proposals may limit the 
nature and types of eligible crops to be planted within a project area.
    The 2008 Farm Bill specifically excludes Title 1 crops and noxious 
or invasive plants as eligible crops. FSA State Committees will consult 
with the State Technical Committees for recommendations concerning the 
invasive and noxious status for otherwise eligible crops for the 
purposes of BCAP.
    As specified in the 2008 Farm Bill, Federal or State-owned lands 
are not considered to be eligible lands for establishment and annual 
payments; therefore, CCC proposes to exclude all Federal and State-
owned land from the establishment and annual payments component of 
BCAP.

Project Area Eligible Producers

    CCC proposes that within the project area, producers would enter 
into BCAP contracts and be eligible to receive establishment payments, 
as a form of cost-share, to convert agricultural lands or nonindustrial 
private forest lands to the production of eligible crops. In addition, 
producers could also be eligible for annual payments for the production 
of eligible crops used for conversion to renewable energy, advanced 
biofuels or biobased products. The details for what is required to 
qualify for the annual payments would be specified in the individual 
contract between CCC and a producer, as discussed further below, and 
would include provisions for the implementation of a conservation plan, 
forest stewardship plan, or equivalent plan, where required. The 
producer will demonstrate compliance with the conservation or forest 
stewardship plan through required self certification and FSA will 
ensure that normal spot check rules and methods are followed to ensure 
compliance with the plans. Producers that already have established BCAP 
eligible crops when this program starts may enter into a contract for 
annual payments to continue growing those crops; however, establishment 
payments would not be authorized.
    CCC also proposes that project sponsors, regardless of whether they 
are a biomass conversion facility or a group of producers, could also 
be considered as a producer and be eligible to receive establishment 
and annual payments. However, the sponsor would have to own or operate 
eligible land to be eligible to enroll as a producer under a BCAP 
contract and be eligible to receive establishment and annual payments. 
State-owned biomass conversion facilities would not be eligible to be 
considered a producer for a BCAP contract because the 2008 Farm Bill 
specifies that State-owned land is ineligible for establishment and 
annual payments.
    The agreement between the project sponsor and CCC is not a 
contract. A successful project sponsor is not paid by CCC for being a 
sponsor; the producers in the project area, who may also be the 
sponsor, are eligible for payment for the establishment and production 
of eligible crops. Therefore, biomass conversion facilities th