Final Rule

71297

Rules and Regulations

Federal Register
Vol. 84, No. 248
Friday, December 27, 2019

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.

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.

DEPARTMENT OF AGRICULTURE
Rural Business-Cooperative Service
7 CFR Part 4288
RIN 0570–AA75

Advanced Biofuel Payment Program
Rural Business-Cooperative
Service, USDA.
ACTION: Final rule.
AGENCY:

The Rural BusinessCooperative 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:
Anthony.Crooks@usda.gov.
SUPPLEMENTARY INFORMATION:
SUMMARY:

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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

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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.

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)

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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 EGovernment 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.

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Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations
I. Background

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 governmentto-government consultation on this rule,
please contact USDA Rural
Development’s Native American
Coordinator at (720) 544–2911 or
AIAN@usda.gov.
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.

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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.

15:56 Dec 26, 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

Paperwork Reduction Act

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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.

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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

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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
Monitoring

Oversight and

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.

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C. 7 CFR 4288.106
and Instructions

Forms, Regulations,

This section is revised to update the
Rural Development website as, https://
www.rd.usda.gov/.
D. 7 CFR 4288.111
Eligibility

Applicant

7 CFR 4288.111(c)(1) is amended to
replace ‘‘biofuel producer’’ with
‘‘producer’’.

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E. 7 CFR 4288.111

Biofuel Eligibility

Several changes are made to the
biofuel eligibility provisions,
§ 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

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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, § 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
§ 4288.111(b), is reassigned to
§ 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 § 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
Applications

Payment

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,
§ 4288.131.

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(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-a`-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 singletiered 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

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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.

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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

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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 nonproduction 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

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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

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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
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
2. Section 4288.102 is amended by:
a. Revising the defintion of
‘‘Advanced biofuel producer’’;
■ b. Adding the definition ‘‘Bailment’’
in alphabetical order;
■ c. Removing the definition for
‘‘Biofuel facility’’;
■ d. Adding the definitions
‘‘Biorefinery’’, ‘‘Commodity’’, and
‘‘Derived’’ in alphabetical order;
■ e. Revising the definition of ‘‘Eligible
renewable biomass’’;
■ f. Adding the definition ‘‘Final
Product’’ in alphabetical order;
■ g. Removing the definition of ‘‘Forest
biomass’’;
■ h. Adding the definition ‘‘Large
producer’’ in alphabetical order;
■ i. Removing the definition of ‘‘Larger
producer’’;
■ j. Adding the definitions ‘‘Parent
company’’ and ‘‘Sale’’ in alphabetical
order;
■ k. Removing the definition of
‘‘Smaller producer’’;
■ l. Adding the definitions ‘‘Third party
production’’ and ‘‘Toll producer’’ in
alphabetical order.
The revisions and additions read as
follows:
■
■

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§ 4288.102

Definitions.

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Advanced biofuel producer. An
individual, corporation, company,
foundation, governmental entity, school
or other educational facility,
association, labor organization, firm,

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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.
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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 thirdparty production agreement, is
regarded/considered as produced under
bailment and is ineligible for payment;
to either bailor or bailee.
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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.
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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

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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 reclaimedindustrial 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.
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Derived. A process that creates a
physical, and/or chemical, and/or
biological change in renewable biomass/
feedstock.
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Eligible renewable biomass.
Renewable biomass, as defined in this
section, excluding corn kernel starch.
See also commodity.
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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.
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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.
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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.
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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

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Federal Register / Vol. 84, No. 248 / Friday, December 27, 2019 / Rules and Regulations

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 thirdparty production agreement, is
regarded/considered as produced under
bailment and is ineligible for payment.
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■ 3. Amend § 4288.105 by revising
paragraphs (a)(1) and (3) to read as
follows:
§ 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.
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(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.
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■ 4. Revise § 4288.106 to read as
follows:
§ 4288.106 Forms, regulations, and
instructions.

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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/.
§ 4288.110

[Amended]

5. Amend § 4288.110(c)(1) by
removing ‘‘advanced biofuel producer’’
and adding in its place ‘‘producer’’.
■ 6. Amend § 4288.111 by:
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a. Revising the introductory text and
paragraph (a)(3);
■ b. Redesignating paragraph (b) as
paragraph (c); and
■ c. Adding new paragraph (b).
The revisions and addition read as
follows:
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§ 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
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(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.
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■ 7. Amend § 4288.120 by:
■ a. Revising paragraph (a) introductory
text;
■ b. Removing paragraph (a)(4); and
■ c. Redesignating paragraph (a)(5) as
paragraph (a)(4); and
■ 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:

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§ 4288.120

Enrollment.

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(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.
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■ 8. Amend § 4288.130 by revising
paragraph (d) introductory text to read
as follows:
§ 4288.130

Payment applications.

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(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.
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■ 9. Revise § 4288.131 to read as
follows:
§ 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

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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,

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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 § 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 § 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

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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.
§ 4288.190

[Removed and Reserved]

10. Remove the undesiganted center
heading ‘‘Fiscal Year 2010
Applications’’ and remove and reserve
§ 4288.190.

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Bette Brand,
Administrator, Rural Business-Cooperative
Service.
[FR Doc. 2019–27396 Filed 12–26–19; 8:45 am]
BILLING CODE 3410–XY–P

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