Advanced Biofuel Payment Program

Citation84 FR 71297
Record Number2019-27396
Published date27 December 2019
SectionRules and Regulations
CourtRural Business-cooperative Service
Federal Register, Volume 84 Issue 248 (Friday, December 27, 2019)
[Federal Register Volume 84, Number 248 (Friday, December 27, 2019)]
                [Rules and Regulations]
                [Pages 71297-71303]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2019-27396]
                ========================================================================
                Rules and Regulations
                 Federal Register
                ________________________________________________________________________
                This section of the FEDERAL REGISTER contains regulatory documents
                having general applicability and legal effect, most of which are keyed
                to and codified in the Code of Federal Regulations, which is published
                under 50 titles pursuant to 44 U.S.C. 1510.
                The Code of Federal Regulations is sold by the Superintendent of Documents.
                ========================================================================
                Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 /
                Rules and Regulations
                [[Page 71297]]
                DEPARTMENT OF AGRICULTURE
                Rural Business-Cooperative Service
                7 CFR Part 4288
                RIN 0570-AA75
                Advanced Biofuel Payment Program
                AGENCY: Rural Business-Cooperative Service, USDA.
                ACTION: Final rule.
                -----------------------------------------------------------------------
                SUMMARY: The Rural Business-Cooperative Service (Agency or RBS)
                published an interim rule in the Federal Register on February 11, 2011.
                Through this action, RBS finalizes the rule based on public comments
                and new program requirements established in the Agricultural
                Improvement Act of 2018 (2018 Farm Bill).
                DATES: Effective December 27, 2019.
                FOR FURTHER INFORMATION CONTACT: For the Advanced Biofuel Payment
                Program, contact Anthony Crooks, USDA Rural Development, 1400
                Independence Avenue SW, STOP 3225, Washington, DC 20250-3225.
                Telephone: (202) 205-9322. Fax: (202) 720-2213. Email:
                [email protected].
                SUPPLEMENTARY INFORMATION:
                Executive Order 12866
                 This final rule has been determined to be non-significant for
                purposes of Executive Order (E.O.) 12866 and therefore has not been
                reviewed by the Office of Management and Budget (OMB).
                Congressional Review Act
                 Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
                the Office of Information and Regulatory Affairs designated this rule
                as not a major rule, as defined by 5 U.S.C. 804(2).
                Executive Order 12988
                 This final rule has been reviewed under Executive Order 12988,
                Civil Justice Reform. In accordance with this final rule: (1) All State
                and local laws and regulations that are in direct conflict with this
                rule will be preempted; (2) No retroactive effect will be given to this
                rule; and (3) Adminstrative proceedings of the National Appeals
                Division (7 CFR part 11) must be exhausted before bringing suit in
                court challenging action taken under this rule.
                Executive Order 12372
                 This rule is excluded from the scope of Executive Order 12372,
                Intergovernmental Consultation, which may require a consultation with
                State and local officials. See the final rule related document
                entitled, ``Department Programs and Activities Excluded from Executive
                Order 12372'' (50 FR 47034) advising that RBS payment programs, loans
                and loan guarantees were not covered by Executive Order 12372.
                Regulatory Flexibility Act
                 In compliance with the Regulatory Flexibility Act (5 U.S.C. 601 et
                seq.) the undersigned has determined and certified by signature of this
                document that this rule, while affecting small entities, will not have
                an adverse economic impact on small entities. This rule does not impose
                any significant new requirements on program recipients nor does it
                adversely impact proposed real estate transactions involving program
                recipients as the buyers.
                National Environmental Policy Act/Environmental Impact Statement
                 This document has been reviewed in accordance with 7 CFR part 1970,
                subpart A, ``Environmental Policies.'' It is the determination of the
                Agency that this action does not constitute a major Federal action
                significantly affecting the quality of the human environment, and, in
                accordance with the National Environmental Policy Act of 1969, Public
                Law 91-190, neither an Environmental Assessment nor an Environmental
                Impact Statement is required.
                Catalog of Federal Domestic Assistance
                 The affected programs are listed in the Catalog of Federal Domestic
                Assistance (CFDA) Program under 10.865, Biorefinery Assistance. This
                catalog is available electronically through the free CFDA website on
                the internet at https://www.cfda.gov/. The print edition may be
                purchased by calling the Superintendent of Documents at (202) 512-1800
                or toll free at (866) 512-1800, or by ordering online at https://bookstore.gpo.gov/.
                Unfunded Mandates Reform Act
                 Title II of the Unfunded Mandates Reform Act 1995 (UMRA) of Public
                Law 104-4 establishes requirements for Federal agencies to assess the
                effects of their regulatory actions on State, local, and tribal
                governments and the private sector. Under section 202 of the UMRA,
                Rural Development generally must prepare a written statement, including
                a cost-benefit analysis, for proposed and final rules with ``Federal
                mandates'' that may result in expenditures to State, local, or tribal
                governments, in the aggregate, or to the private sector of $100 million
                or more in any one year. When such a statement is needed for a rule,
                section 205 of UMRA generally requires Rural Development to identify
                and consider a reasonable number of regulatory alternatives and adopt
                the least costly, more cost-effective, or least burdensome alternative
                that achieves the objectives of the rule.
                 This final rule contains no Federal mandates (under the regulatory
                provisions of Title II of the UMRA) for State, local, and tribal
                governments or the private sector. Thus, the rule is not subject to the
                requirements of sections 202 and 205 of the UMRA.
                E-Government Act Compliance
                 RBS is committed to the E-Government Act, which requires Government
                agencies in general to provide the public the option of submitting
                information or transacting business electronically to the maximum
                extent possible.
                Executive Order 13132, Federalism
                 The policies contained in this rule do not have any substantial
                direct effect on States, on the relationship between the National
                Government and States, or on the distribution of power and
                responsibilities among the various levels of government. Nor does this
                rule impose substantial direct compliance costs on State and local
                governments. Therefore, consultation with the States is not required.
                [[Page 71298]]
                Executive Order 13211, Actions Concerning Regulations That
                Significantly Affect Energy Supply, Distribution, or Use
                 This final rule has been designated as Non-Significant by OMB under
                Executive Order 12866. The promulgation of this regulation will not
                have a significant affect on energy supply, distribution, or use.
                Executive Order 13175, Consultation and Coordination With Indian Tribal
                Governments
                 The Agency has determined that the final rule does not have a
                substantial direct effect on one or more Indian tribe(s) or on either
                the relationship or the distribution of powers and responsibilities
                between the Federal Government and the Indian tribes. Thus, this final
                rule is not subject to the requirements of Executive Order 13175.
                Consequently, the Agency will not conduct tribal consultation sessions.
                If a Tribe determines that this rule has implications of which RBS is
                not aware and would like to requires government-to-government
                consultation on this rule, please contact USDA Rural Development's
                Native American Coordinator at (720) 544-2911 or [email protected].
                Civil Rights Impact Analysis
                 Rural Development has reviewed this rule in accordance with USDA
                Regulation 4300-4, Civil Rights Impact Analysis, to identify any major
                civil rights impacts the rule might have on program participants on the
                basis of age, race, color, national origin, sex or disability. After
                review and analysis of the rule and available data, it has been
                determined that based on the analysis of the program purpose,
                application submission and eligibility criteria, issuance of this final
                rule will neither adversely nor disproportionately impact very low, low
                and moderate-income populations, minority populations, women, Indian
                tribes or persons with disability, by virtue of their race, color,
                national origin, sex, age, disability, or marital or familiar status.
                Paperwork Reduction Act
                 In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
                3501 et seq.), the information collection activities associated with
                this rule are covered under OMB Number: 0570-0063. This final rule
                contains no new reporting or recordkeeping requirements that would
                require approval under the Paperwork Reduction Act of 1995.
                I. Background
                 The Advanced Biofuel Payment Program is authorized by Section 9005
                of the Farm Security and Rural Investment Act of 2002 as amended by the
                Agricultural Improvement Act of 2018 (Pub. L. 115-334). Section 9005
                authorizes the Secretary of Agriculture to ``make payments to eligible
                producers to support and ensure an expanding production of advanced
                biofuels'' by entering into contracts for the production of advanced
                biofuels to both support existing advanced biofuel production and
                encourage new production. To be eligible for payments, advanced
                biofuels produced must be derived from renewable biomass, excluding
                corn kernel starch, in a biorefinery located in the United States.
                 On February 11, 2011, the Agency published an interim rule with
                request for comment for the Advanced Biofuel Payment Program at 7 CFR
                part 4288, subpart B, at 76 FR 7936. Comments that were received in
                response to publication of the Advanced Biofuel Payment Program
                proposed rule, published April 16, 2010 [75 FR 20085], were addressed
                in the preamble of the interim rule. After publication of a proposed
                rule and an interim rule, the Agency is now publishing this final rule
                for the Advanced Biofuel Payment Program. All changes made from the
                interim rule will be addressed in Section II.
                 Final Rule. USDA Rural Development is issuing this regulation as a
                final rule, effective December 27, 2019.
                II. Summary of Changes to the Interim Rule
                 This section presents changes to the interim rule for the Advanced
                Biofuel Payment Program, as published on, February 11, 2011 [76 FR
                7936]. Changes are a result of Agency experiences and lessons learned
                from administering the program, the need to bring the program into
                statutory compliance, a need to clarify earlier provisions, and the
                Agency's consideration of public comments. Unless otherwise indicated,
                rule citations refer to those in this final rule.
                A. 7 CFR 4288.102 Definitions
                 This section is being amended in part. To conform with changes made
                to 7 CFR 4288.111, Biofuel eligibility, the definitions--``Final
                Product'', ``bailment'', ``derived'', ``sale'', ``third party
                production'', and ``toll producer'' have been added.
                 The definition of ``eligible advanced biofuel producer'' is revised
                to include governmental entities, schools, and other types of
                educational facilities. The definition ``biofuel facility'', is
                rescinded and replaced with the definition ``biorefinery'' in
                conformance with the statute.
                 To conform with changes made to 7 CFR 4288.131:
                 The definitions--``forest biomass'', ``incremental production'',
                ''larger producer'', and ``smaller producer'', are rescinded.
                 The definitions ``large producer'' and ``parent company'' are added
                to ensure compliance with the statutory funding limitation for
                producers of a certain size. The refining capacity equivalence for
                biogas and solid eligible advanced biofuels of 15,900,000 Million
                British Thermal Units (MMBTU) of biogas and/or solid advanced biofuel
                per year as established in the interim rule is continued in this final
                rule. The Agency is moving away from the use of ``refining capacity''
                however, and instead is using ``production in the prior fiscal year''
                in relation to the 150,000,000 gallons or equivalents. Experience led
                us to conclude that ``refining capacity'' is insufficiently specific to
                its purpose of imposing a funding limitation upon producers of a
                certain size. Therefore, the Agency determined instead to use the
                producer's reported advanced biofuel production in the previous year as
                a measurable proxy for refining capacity. Included also in this
                measure, is the prior year advanced biofuel production of any company/
                corporation in which the reporting producer has a controlling interest.
                The definition of ``parent company'' is added to ensure that all
                related biorefineries are being considered in the size threshold.
                 The definition of commodity is added to assist with program
                compliance of the statutory equitable distribution limitation that
                governs eligible feedstock, which provides that the total amount of
                payments made in a fiscal year under 7 U.S.C 8105 to producers for a
                single commodity shall not exceed one-third of the funds made
                available. ``Eligible renewable biomass'' is amended to refer to
                commodity in conformance with this change.
                B. 7 CFR 4288.105 Oversight and Monitoring
                 7 CFR 4288.105(a)(1) Production and feedstock verification, is
                amended to refer to commodity.
                 7 CFR 4288.105(a)(3) Is amended to allow a Certificate of Analysis
                to be issued by an Agency-approved qualified entity, which may include
                the blender only if the blender is not associated with the biorefinery.
                [[Page 71299]]
                C. 7 CFR 4288.106 Forms, Regulations, and Instructions
                 This section is revised to update the Rural Development website as,
                https://www.rd.usda.gov/.
                D. 7 CFR 4288.111 Applicant Eligibility
                 7 CFR 4288.111(c)(1) is amended to replace ``biofuel producer''
                with ``producer''.
                E. 7 CFR 4288.111 Biofuel Eligibility
                 Several changes are made to the biofuel eligibility provisions,
                Sec. 4288.111.
                 (1) Section 4288.111(a)(3) is amended to provide that the advanced
                biofuel must be a Final Product. The definition of Final Product is
                being added based on Agency experience in administering the program.
                The definition will help ensure that payments are not being made for
                products that are used as feedstocks for advanced biofuels.
                 (2) Section 4288.111(b), is amended to state explicitly that
                certain biofuels are ineligible for payment. The Agency determined that
                flared gases are not a Final Product. The Agency also determined that
                waste stream products derived from paper milling and other processes
                commonly ascribed to wood products manufacturing and generically
                referred to as ``liquor'' (e.g., black liquor, red liquor, brown
                liquor, white liquor, green liquor, etc.), which typically are blended
                with diesel and burned as boiler fuel are not products of an advanced
                biofuel Biorefinery. The Agency also determined that the production of
                advanced biofuel ``derived'' from eligible renewable biomass involves a
                conversion process that creates a physical, and/or chemical, and/or
                biological change in the Renewable Biomass/feedstock. An example of
                change in physical state includes processing energy grasses and/or
                woody biomass through a hammermill and pellet die at pressures
                sufficient to cause the feedstock to heat up and release natural
                lignins that bind the material together into pellets. An example of a
                biological change is the anaerobic digestion of livestock manure and
                food processing waste into biogas. Examples of chemical changes include
                the fatty acid methyl ester processing of fats, oils, and greases into
                biodiesel; the enzymatic hydrolysis of cellulosic material into fuel
                ethanol; and the torrefaction (a thermal process) of woody biomass into
                solid fuel. For purposes of this program, to be derived from eligible
                renewable biomass and so qualify as an advanced biofuel as defined in
                this subpart, a minimum of one change (physical, chemical, or
                biological) must occur in the feedstock. The activities of collection,
                baling, bundling, chopping, or chipping, are not considered advanced
                biofuel production. Baled/rolled energy grasses, screened/chipped/
                chunked woody biomass, and chopped firewood are not eligible advanced
                biofuels because in these examples no conversion process is evident.
                Payments will be made for the production of advanced biofuels in which
                the renewable biomass/feedstock (other than corn kernel starch), has
                undergone a conversion process, as described.
                 Lastly, Sec. 4288.111(b)(4), incorporates the added definitions--
                bailment, derived, sale, third party production, and toll producer, and
                makes ineligible, ``biofuels produced under bailment.'' This Agency-
                determined prohibition is based upon numerable and significant concerns
                regarding: A disproportionately large amount of available funds paid to
                biofuels produced under bailment, coupled with the risks of duplicative
                or improper payments, and the overwhelming amount of administrative
                staff time and resources required to police this activity.
                 (3) Eligibility determination, formerly Sec. 4288.111(b), is
                reassigned to Sec. 4288.111(c).
                F. 7 CFR 4288.120 Enrollment
                 This section is amended to include the requirement for applicants
                to be registered in the System for Award Management (SAM) prior to
                submitting an enrollment application and to rescind Sec.
                4288.120(a)(4), Supporting documentation. Additionally, this section is
                amended to renumber paragraph (a)(5) as paragraph (a)(4).
                G. 7 CFR 4288.130 Payment Applications
                 Section 4288.130(d), Submittal information, is amended to provide
                that unless otherwise specified in a notice published in the Federal
                Register, eligible advanced biofuel producers must submit payment
                applications for this program no later than 4:30 p.m. local time on the
                last day of the calendar month following the quarter for which payment
                is being requested.
                H. 7 CFR 4288.131 Payment Provisions
                 To bring the program into statutory compliance, improve program
                delivery, customer service, and administrative processes for
                participants and Agency staff, a number of fundamental changes are made
                to the payment provisions, Sec. 4288.131.
                 (1) The two-tiered (actual and incremental) payment approach
                formerly outlined in 7 CFR 4288.131(a) is rescinded and replaced with a
                single tier based on actual production.
                 The two tiered approach was established originally to assist the
                advanced biofuels industry in maintaining its production capacity while
                the economy recovered (from the economic downturn). As the economy
                improved and as the demand for energy increased, the Agency believed it
                appropriate to focus the program on encouraging new production. The
                Agency also believed at the time that incremental payments would
                encourage production increases among producers that are likely to
                sustain such increases over time vis-[agrave]-vis producers who
                ``wildly'' vary production from year to year based on short term market
                conditions. What was not understood at the time was that the
                uncertainty surrounding incremental payments was chief among the causes
                of that ``wildly'' varying production.
                 The Agency now believes this single-tiered approach is best to
                encourage both existing and new advanced biofuel production for two
                reasons.
                 First, the single tiered scheme provides greater payment certainty
                to all eligible participants. Under the two tiered scheme, how much a
                producer could expect to receive from actual payment production and
                from incremental production was uncertain due to a number indeterminant
                factors that affected payments--the number of eligible participants,
                volumes of fuel produced, and most importantly, the portion of
                production eligible for incremental production payments. The single
                tiered approach eliminates altogether the incremental payment
                calculation.
                 Second, the single tiered payment system distributes equitably
                among all producers, what was the incremental payments portion, which
                amounted to one-half of available funds under the interim rule, and
                would otherwise have been awarded to a disproportionately few number of
                producers.
                 Under the single tiered system, payments are made for actual
                production during the fiscal year and on a quarterly basis for actual
                production during the quarter for which payments are sought. Payment
                rate calculations are based on available funds and on the amount of
                eligible advanced biofuel produced. Participating producers are
                required to submit payment request applications each quarter. Should a
                producer fail to submit a payment request by the submission deadline,
                the producer will not receive payment for
                [[Page 71300]]
                that quarter. No payment is made for incremental production.
                 To conform with these changes, the bonus and discount rates applied
                to various types of biofuels and the incremental payment provision that
                a facility have no more than 20 days of nonproduction, formerly found
                in 7 CFR 4288.131(a) and (c), respectively, are rescinded.
                 A payment provision is also added in compliance with the statutory
                ``equitable distribution amount'' requirement to, ``limit the amount of
                payments that may be received by a single eligible producer under this
                section in order to distribute the total amount of funding available in
                an equitable manner.'' This limitation amounts to eight percent of
                available funds per year and applies to any individual producer that is
                not a large producer.
                 A procedure is also provided to explain how payments are made to
                large producers and eligible advanced biofuel producers that are not
                large producers, subject to each payment provision.
                I. 7 CFR 4288.190 Fisal Year 2010 Applications
                 Section 4288.190 is removed in its entirety as it is no longer
                applicable and is now reserved.
                III. Summary of Comments and Responses
                 On February 11, 2011, Rural Business Cooperatives Service (RBS)
                published an interim rule in the Federal Register (76 FR 7935) for a
                payment program for producers of advanced biofuels to support existing
                advanced biofuel production and to encourage production of new advanced
                biofuels. The Agency enters into contracts with advanced biofuel
                producers to pay such producers to produce eligible advanced biofuels.
                To be eligible for payments, advanced biofuels must be derived from
                renewable biomass, excluding corn kernel starch, in a biorefinery
                located in the United States.
                 Four commenters--1 from Industry, 2 from Sponsoring organizations,
                and 1 from an individual not identified with an organization, provided
                a total of 22 comments in response to the interim rule. Ten of the
                comments were supportive of the changes to the interim rule.
                 Comments on rural area: Three comments supported the removal of the
                requirement that a facility had to be in a rural area and one comment
                did not support the removal of the rural area.
                 Response: The Agency disagrees with the comment that does not
                support the rescinded requirement that a facility be located in a rural
                area. Beneficial impacts of the program accrue generally to rural areas
                even if various biofuel facilities are not located there. Renewable
                biomass production occurs largely in rural areas. Rural economies
                benefit substantially from biofuel facilities' procurement and use of
                the renewable biomass in the production of advanced biofuels.
                 Domestic Ownership: Two comments supported the removal of the
                domestic ownership requirement. One comment did not support the removal
                of the domestic ownership requirement.
                 Reponse: The Agency disagrees with the comment that does not
                support the removal of the domestic ownership requirement. The program
                will have beneficial impacts, such as increased production of advanced
                biofuels and improved economic stability at the local level regardless
                of ownership, so long as the biorefinery is physically located in a
                State; which is why the domestic ownership requirement was removed from
                the interim rule.
                 Twelve of the 22 comments were averse to certain changes in the
                interim rule.
                 Incremental payment provision: Three comments did not support the
                incremental production payment provision, recommended the elimination
                of the disparity between the actual and incremental payments, and
                proposed a single level payment for all eligible fuels.
                 Response. The Agency agrees that there is a disparity between the
                base and incremental payments and is replacing the two tiered, actual
                and incremental payment provision with a single payment system based on
                actual production.
                 Non-production days. Two comments did not support the requirement
                that a facility can only have 20 days of non-production to be eligible
                for incremental payment.
                 Response. The incremental payment provision that a facility have no
                more than 20 days of nonproduction is rescinded as a conforming change
                with the replacement of the two tiered, actual and incremental payment
                provision with a single payment system based on actual production. Also
                rescinded are the use of terms--base production, base payments,
                incremental production, and incremental payments.
                 Bonus and discount rates. Two comments recommended payments be
                augmented with bonus BTUs for those fuels that meet a Renewable Fuel
                Standard identified by the EPA.
                 Response. The Agency disagrees with the comment. The two-tiered
                (actual and incremental) payment approach is rescinded and replaced
                with a single tier based on actual production. The Agency believes this
                single-tiered approach is best to encourage both existing and new
                advanced biofuel production for two reasons: It provides greater
                payment certainty to all eligible participants and it distributes
                equitably among all producers, the incremental payments portion, which
                amounted to one-half of available funds under the interim rule, and
                would otherwise be awarded to a disproportionate few number of
                producers. These payments are made for actual production during the
                fiscal year and on a quarterly basis for actual production during the
                quarter for which payments are sought. Payment rate calculations are
                based on available funds and on the amount of eligible advanced biofuel
                produced. To conform with these changes, the bonus and discount rates
                applied to various types of biofuels as well as the incremental payment
                provision that a facility have no more than 20 days of nonproduction,
                formerly outlined at 7 CFR 4288.131(c) and (a), respectively, are
                rescinded.
                 Third-party certification. Two comments indicated concern that the
                provision in the interim rule on independent third-party certification
                of analysis could be interpreted that it is required for every eligible
                gallon of biodiesel.
                 Response. The Agency agrees that third-party certification is not
                required for every gallon of Advanced Biofuel produced.
                 Two comments supported the removal of the BQ9000 certification
                requirement. One comment supported how the Agency defined large
                producers by the refining capacity if the producer owns more than 50%
                of the facility.
                 Response. The Agency acknowledges the supportive comments. The
                Agency is moving away from the use of ``refining capacity'' however,
                and instead is using ``production in the prior fiscal year'' in
                relation to the 150,000,000 gallons or equivalents. Experience led us
                to conclude that ``refining capacity'' is insufficiently specific to
                its purpose of imposing a funding limitation upon producers of a
                certain size. Therefore, the Agency determined instead to use the
                producer's reported advanced biofuel production in the previous year as
                a measurable proxy for refining capacity. Included also in this
                measure, is the prior year advanced biofuel production of any company/
                corporation in which the reporting producer has a controlling interest.
                The definition of ``parent company'' is added to ensure that all
                [[Page 71301]]
                related biorefineries are being considered in the size threshold.
                IV. Advanced Biofuel Payment Program Applications
                 A Notice of Contract Proposals (NOCP) will be published separately
                from this rule and for each fiscal year, as necessary.
                List of Subjects in 7 CFR Part 4288
                 Administrative practice and procedure, Biobased products, Energy,
                Reporting and recordkeeping requirements.
                 For the reasons discussed in the preamble, the Agency adopts the
                interim rule amending 7 CFR part 4288 which was published at 76 FR 7936
                on February 11, 2011, is adopted as final with the following changes:
                PART 4288--PAYMENT PROGRAMS
                0
                1. The authority citation for part 4288 continues to read as follows:
                 Authority: 5 U.S.C. 301; 7 U.S.C. 1989.
                Subpart B--Advance Biofuel Payment Program General Provisions
                0
                2. Section 4288.102 is amended by:
                0
                a. Revising the defintion of ``Advanced biofuel producer'';
                0
                b. Adding the definition ``Bailment'' in alphabetical order;
                0
                c. Removing the definition for ``Biofuel facility'';
                0
                d. Adding the definitions ``Biorefinery'', ``Commodity'', and
                ``Derived'' in alphabetical order;
                0
                e. Revising the definition of ``Eligible renewable biomass'';
                0
                f. Adding the definition ``Final Product'' in alphabetical order;
                0
                g. Removing the definition of ``Forest biomass'';
                0
                h. Adding the definition ``Large producer'' in alphabetical order;
                0
                i. Removing the definition of ``Larger producer'';
                0
                j. Adding the definitions ``Parent company'' and ``Sale'' in
                alphabetical order;
                0
                k. Removing the definition of ``Smaller producer'';
                0
                l. Adding the definitions ``Third party production'' and ``Toll
                producer'' in alphabetical order.
                 The revisions and additions read as follows:
                Sec. 4288.102 Definitions.
                * * * * *
                 Advanced biofuel producer. An individual, corporation, company,
                foundation, governmental entity, school or other educational facility,
                association, labor organization, firm, partnership, society, joint
                stock company, group of organizations, or non-profit entity that
                produces advanced biofuel. An entity that blends or otherwise combines
                advanced biofuels into a blended biofuel is not considered an advanced
                biofuel producer under this subpart. An entity that produces biofuel
                exclusively under a toll/bailment arrangement/third part production
                contract is not considered an advanced biofuel producer under this
                subpart.
                * * * * *
                 Bailment. The temporary placement of control over, or possession of
                property by an individual or entity, the bailor, into the hands of
                another, the bailee, for a designated purpose upon which the parties
                have agreed. For purposes of this Program any advanced biofuel produced
                by a toll producer of any form, or under any form of third-party
                production agreement, is regarded/considered as produced under bailment
                and is ineligible for payment; to either bailor or bailee.
                * * * * *
                 Biorefinery. The term ``biorefinery'' means a facility (including
                equipment and processes) that--
                 (1) Converts renewable biomass or an intermediate ingredient or
                feedstock of renewable biomass into any 1 or more, or a combination,
                of--
                 (i) Biofuels;
                 (ii) Renewable chemicals; or
                 (iii) Biobased products; and
                 (2) May produce electricity.
                * * * * *
                 Commodity. Renewable biomass, other than corn kernel starch, used
                primarily for the purposes of this Program, by advanced biofuel
                producers as feedstock from which to produce/derive advanced biofuel.
                Eligible renewable biomass is organized into the following commodity
                categories:
                 (1) Title I grains and oilseeds including: Wheat, corn, grain
                sorghum, barley, oats, and rice; sugars, and starches (other than corn
                kernel starch); Soybeans, sunflower seed, rapeseed, canola, safflower,
                flaxseed, mustard, crambe, sesame, and peanuts; as identified under
                Title I, Public Law 115-334, and as determined by the Secretary;
                 (2) Other oilseeds and nuts including cottonseed, palm, camelina,
                coconut, and olive; and algae;
                 (3) A cellulosic commodity grown for energy purposes, such as,
                hybrid poplar and other energy trees, switch grass and other energy
                grasses; cellulose, hemicellulose, or lignin;
                 (4) Waste material, including crop residue/Stover, other vegetative
                waste material/orchard waste, animal waste/manure, food waste/food
                processing waste, and yard waste/biodegradable solid waste/organic
                matter;
                 (5) Fats, oils, and greases, derived from an agricultural product,
                including: Recycled fats, oils, and greases, such as used cooking oil
                and reclaimed-industrial grade-distillers' corn/sorghum oil; tallow,
                white grease, yellow grease, and other livestock renderings; and
                 (6) Any animal byproduct (in addition to oils, fats, and greases)
                that may be used to produce bioenergy, as determined by the Secretary.
                * * * * *
                 Derived. A process that creates a physical, and/or chemical, and/or
                biological change in renewable biomass/feedstock.
                * * * * *
                 Eligible renewable biomass. Renewable biomass, as defined in this
                section, excluding corn kernel starch. See also commodity.
                * * * * *
                 Final Product. A product of a biorefinery that is ready for sale/
                distribution without further processing. For purposes of this Program,
                an advanced biofuel is a Final Product eligible for payment if it is
                ready for distribution and sale as a fuel.
                * * * * **
                 Large producer. (1) An advanced biofuel producer which in the prior
                fiscal year, produced more than:
                 (i) 150,000,000 gallons of liquid advanced biofuel per year; or
                 (ii) 15,900,000 Million British Thermal Units (MMBTU) of biogas
                and/or solid advanced biofuel per year.
                 (2) The amount of gallons and MMBTUs listed in paragraphs (1)(i)
                and (ii) of this definition include the advanced biofuel production at
                all facilities, in the United States, in which the producer and/or its
                parent company(ies) have a 50-percent or greater ownership.
                 Parent company. A company/corporation that has a controlling
                interest in another company/corporation, giving it control of its
                operations. The company is deemed a subsidiary of the parent company.
                * * * * *
                 Sale. A transaction between two or more parties, typically a buyer
                and a seller, in which goods or services are exchanged for money or
                other assets.
                * * * * *
                 Third party production. Third party production involves outsourcing
                production processes to a third-party company whereby the third-party
                company, hired to produce, is supplying
                [[Page 71302]]
                the manufacturing process as well as sourcing the raw materials/
                commodity feedstock. The contract producer is responsible for
                manufacturing the product to specification and disposition/delivery
                requirements. For purposes of this Program, any advanced biofuel
                produced under a contractual third-party production agreement is
                ineligible for payment. A producer that is strictly a third-party
                contractor produces no eligible advanced biofuel.
                 Toll producer. See also bailment. Toll production/manufacturing is
                an arrangement, where a company with specialised equipment processes
                raw materials or unfinished goods for a different company. A toll
                producer of advanced biofuels produces advanced biofuels for another
                company. For purposes of this Program, any advanced biofuel produced by
                a toll producer of any form, or under any form of third-party
                production agreement, is regarded/considered as produced under bailment
                and is ineligible for payment.
                * * * * *
                0
                3. Amend Sec. 4288.105 by revising paragraphs (a)(1) and (3) to read
                as follows:
                Sec. 4288.105 Oversight and monitoring.
                 (a) * * *
                 (1) Production and feedstock verification. The Agency will review
                producer records to verify the type and amount of biofuel produced and
                the type and amount of commodity/eligible renewable biomass used.
                * * * * *
                 (3) Certificate of Analysis. The Agency will review the producer
                records for quarterly payments to ensure that each Certificate of
                Analysis has been issued by an Agency-approved qualified entity, which
                may include the blender only if the blender is not associated with the
                biorefinery.
                * * * * *
                0
                4. Revise Sec. 4288.106 to read as follows:
                Sec. 4288.106 Forms, regulations, and instructions.
                 Copies of all forms, regulations, instructions, and other materials
                related to this Program may be obtained from the USDA Rural Development
                State Office, Rural Energy Coordinator and the USDA Rural Development
                website at https://www.rd.usda.gov/.
                Sec. 4288.110 [Amended]
                0
                5. Amend Sec. 4288.110(c)(1) by removing ``advanced biofuel producer''
                and adding in its place ``producer''.
                0
                6. Amend Sec. 4288.111 by:
                0
                a. Revising the introductory text and paragraph (a)(3);
                0
                b. Redesignating paragraph (b) as paragraph (c); and
                0
                c. Adding new paragraph (b).
                 The revisions and addition read as follows:
                Sec. 4288.111 Biofuel elibility.
                 To be eligible for this Program, a biofuel must meet the
                requirements specified in paragraph (a) of this section, and must not
                be listed in paragraph (b) of this section, and the biofuel's producer
                must provide additional information as may be requested by the Agency
                under paragraph (c) of this section.
                 (a) * * *
                 (3) The advanced biofuel must be a Final Product; and
                * * * * *
                 (b) Ineligible fuels. Notwithstanding the provisions of paragraph
                (a) of this section, for the purposes of this Program, the following
                fuels, and as may be supplemented by the Agency through the publication
                of documents in the Federal Register, are not eligible for payment:
                 (1) Flared gases;
                 (2) Fuels derived from paper milling and other processes commonly
                ascribed to wood products manufacturing and generically referred to as
                ``liquor'' (e.g., black liquor, red liquor, brown liquor, white liquor,
                green liquor, etc.), which typically are blended with diesel and burned
                as boiler fuel;
                 (3) Biofuels produced from solid eligible renewable biomass
                primarily by mechanical means, whether by hand or by machine, such as
                collecting, baling, bundling, chopping, screening, and chipping of the
                renewable biomass. Examples of ineligible biofuels that are not
                eligible advanced biofuels for the purposes of this subpart include,
                but are not limited to, baled energy grasses, chipped or chunked woody
                biomass, and chopped or split firewood; and
                 (4) Any advanced biofuel produced under bailment or third-party
                production contract and/or any variation thereof.
                * * * * *
                0
                7. Amend Sec. 4288.120 by:
                0
                a. Revising paragraph (a) introductory text;
                0
                b. Removing paragraph (a)(4); and
                0
                c. Redesignating paragraph (a)(5) as paragraph (a)(4); and
                0
                d. In newly redesignated paragraph (a)(4), removing the paragraph
                heading and removing ``this paragraph'' and adding ``this paragraph
                (a)(4)'' in its place.
                 The revision reads as follows:
                Sec. 4288.120 Enrollment.
                * * * * *
                 (a) Enrollment. To enroll in the Program, an advanced biofuel
                producer must submit to the Agency a completed enrollment application
                during the applicable sign-up period, as specified in paragraph (b) of
                this section. Applicants must be registered in the System for Award
                Management (SAM) prior to submitting an application; which can be
                obtained at no cost via a toll-free request line at (866) 705-5711 or
                online at www.sam.gov/SAM. Registration of a new entity in SAM requires
                an original, signed, and notarized letter stating that the applicant is
                the authorized Entity Administrator, before the registration will be
                activated.
                * * * * *
                0
                8. Amend Sec. 4288.130 by revising paragraph (d) introductory text to
                read as follows:
                Sec. 4288.130 Payment applications.
                * * * * *
                 (d) Submittal information. Unless otherwise specified in a notice
                published in the Federal Register, eligible advanced biofuel producers
                must submit payment applications for this Program no later than 4:30
                p.m. local time on the last day of the calendar month following the
                quarter for which payment is being requested. No payment applications
                received after the specified date and time will be considered,
                regardless of the postmark on the application.
                * * * * *
                0
                9. Revise Sec. 4288.131 to read as follows:
                Sec. 4288.131 Payment provisions.
                 Payments to advanced biofuel producers for eligible advanced
                biofuel production will be determined in accordance with the provisions
                of this section.
                 (a) Actual production. Participating producers will be paid on a
                quarterly basis for the actual quantity of eligible advanced biofuel
                produced during the quarter. Payment for actual production will be
                determined according to paragraph (d) of this section.
                 (b) Amount of payment funds available. Based on the amount of funds
                made available to this Program each fiscal year, the Agency will
                allocate available program funds according to paragraphs (c), (d), and
                (e) of this section.
                 (c) Quarterly allocations. For each fiscal year, the Agency will
                allocate in each quarter one-fourth of the funds identified in
                paragraph (b) of this
                [[Page 71303]]
                section allocated for the entire fiscal year.
                 (d) Determination of payment rate. Each quarter, the Agency will
                establish an actual production payment rate using the procedures
                specified in paragraphs (d)(1) through (4) of this section. This rate
                will be applied to the actual quantity of eligible advanced biofuel
                produced to determine payments to eligible advanced biofuel producers.
                 (1) Based on the information provided in each payment application,
                the Agency will determine the eligible advanced biofuel production. If
                the Agency determines that the amount of advanced biofuel production
                reported in a payment application is not supported by the documentation
                submitted with the payment application, the Agency may revise the
                reported production to an amount that is commensurate with the
                submitted documentation.
                 (2) For each producer, the Agency will convert the production
                determined to be eligible under paragraph (c) of this section into
                British Thermal Unit (BTU) equivalent using factors published by the
                Energy Information Administration (EIA) (or successor organization). If
                the Energy Information Administration does not publish such conversion
                factor for a specific type of advanced biofuel, the Agency will use a
                conversion factor developed by another appropriate entity. If no such
                conversion factor exists, the Agency, in consultation with other
                Federal agencies, will establish and use a conversion formula as
                appropriate, until the Energy Information Administration or other
                appropriate entity publishes a conversion factor for said advanced
                biofuel. The Agency will then calculate the total eligible BTUs across
                all eligible applications.
                 (3) For each quarter, the Agency will determine the actual
                production payment rate ($/BTU) based on paragraphs (b), (c), and (d)
                of this section. The rate will be calculated such that all quarterly
                funds for actual production will be distributed, subject to the payment
                provisions specified in paragraph (e) of this section.
                 (4) Using the actual production payment rate determined and the
                actual production for each type of advanced biofuel produced at a
                biorefinery, the Agency will calculate each quarter payment for each
                eligible advanced biofuel producer for that quarter.
                 (e) Other payment provisions. The following provisions apply:
                 (1) Notwithstanding any other provisions in this section, the
                Agency will provide payments to one or more eligible advanced biofuel
                producers from a single eligible Commodity, including intermediate
                ingredients of that single Commodity or use of that single Commodity
                and its intermediate ingredients in combination with another Commodity,
                of not more than one-third of available program funds in each quarter.
                 (i) Payments to producers for advanced biofuel derived from a
                commodity listed in Title I grains and oilseeds (as defined paragraph
                (1) of the defintion of commodity in Sec. 4288.102), are subject to
                the one-third limitation as tracked individually for each commodity.
                For example, with respect to the Title I grains and oilseeds
                commodity--grain sorghum, all payments for the quarter to producers of
                advanced biofuel derived from grain sorghum are tabulated and subject
                to the one-third payment limitation. This is similarly true for each
                commodity listed under Title I grains and oilseeds--barley, oats, rice,
                soybeans, etc.
                 (ii) Payments to producers for advanced biofuel derived from a
                commodity listed in paragraphs (2) through (6) of the defintion of
                commodity in Sec. 4288.102, inclusively, are subject to the one-third
                limitation as tracked cumulatively with each commodity group. For
                example, with respect to the commodity in paragraph (2) of the
                definition of commodity (other oilseeds and nuts including cottonseed,
                palm, camelina, coconut, and olive and algae), all payments for the
                quarter to producers of fuel derived from ``other oilseeds, nuts and
                algae'' are tabulated cumulatively (all are tracked as ``other
                oilseeds, nuts, and algae'' whether olive, or coconut, or camelina,
                etc.) and subject cumulatively to the one-third payment limitation.
                This is similarly true for the commodity in paragraphs (3) through (6)
                of the definition of commodity.
                 (2) Notwithstanding any other provision of this section, the Agency
                will provide payments to large producers of not more than five (5)
                percent of available program funds in any fiscal year. At any time
                during the year, if the limit on payments to large producers would be
                reached, the Agency will pro-rate payments to large producers based on
                the BTU content of their eligible advanced biofuel production so as not
                to exceed the limit.
                 (3) Notwithstanding any other provision of this section, the Agency
                will provide payments to any eligible advanced biofuel producer, that
                is not a large producer, of not more than eight (8) percent of
                available funds in any fiscal year. At any time during the year, if the
                eight percent to the advanced biofuel producer would be reached, the
                Agency will pro-rate payments based on the BTU content of the eligible
                advanced biofuel production so as not to exceed the limit.
                 (4) Advanced biofuel producers will be paid based on the amount of
                eligible renewable energy content of the advanced biofuels only if the
                producer provides sufficient documentation, including a Certificate of
                Analysis, for the Agency to determine the eligible renewable energy
                content for which payment is being requested, and quantity produced
                through such documentation as, but not limited to, records of sale and
                calibrated flow meter records.
                 (5) Payment will be made to only one eligible advanced biofuel
                producer per biorefinery. If a producer owns more than one facility,
                the Agency's tracking system will add all actual BTUs and calculate one
                payment amount. For facilities owned by more than one producer, only
                one payment will be issued per facility.
                 (6) Subject to other provisions of this section, advanced biofuel
                producers shall be paid any sum due.
                 (7) A producer will be paid only for the advanced biofuels
                identified in the enrollment application submitted during the sign-up
                period and which are produced during the fiscal year. If the producer
                starts producing a new advanced biofuel or changes the type of advanced
                biofuel during the fiscal year, the producer will not receive any
                payments for those new advanced biofuels. However, during each sign-up
                period, a producer may identify new advanced biofuels and production
                levels compared to the previous year.
                 (8) When determining the quantity of eligible advanced biofuel, if
                an applicant is blending its advanced biofuel using ineligible
                feedstocks (e.g., fossil gasoline or methanol, corn kernel starch),
                only the quantity of advanced biofuel being produced from Renewable
                Biomass, other than corn kernel starch, will be used in determining the
                payment rates and for which payments will be made.
                Sec. 4288.190 [Removed and Reserved]
                0
                10. Remove the undesiganted center heading ``Fiscal Year 2010
                Applications'' and remove and reserve Sec. 4288.190.
                Bette Brand,
                Administrator, Rural Business-Cooperative Service.
                [FR Doc. 2019-27396 Filed 12-26-19; 8:45 am]
                 BILLING CODE 3410-XY-P
                

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