Advanced Biofuel Payment Program

 
CONTENT
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]
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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.
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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