[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
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 This section of the FEDERAL REGISTER contains regulatory 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