[Federal Register Volume 75, Number 73 (Friday, April 16, 2010)]
[Proposed Rules]
[Pages 20073-20085]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-8283]


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DEPARTMENT OF AGRICULTURE

Rural Business-Cooperative Service

7 CFR Part 4288

RIN 0570-AA74


Repowering Assistance Payments to Eligible Biorefineries

AGENCY: Rural Business-Cooperative Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Rural Business-Cooperative Service, an agency of the U.S. 
Department of Agriculture, proposes a program to make payments to 
eligible biorefineries. These payments would be to encourage the use of 
renewable biomass as a replacement fuel source for fossil fuels used to 
provide process heat or power in the operation of these eligible 
biorefineries. This program is authorized under Title IX, Section 9001, 
of the Food, Conservation, and Energy Act of 2008 (Pub. L. 110-246).

DATES: Comments on the proposed rule must be received on or before June 
15, 2010. The comment period for the information collection under the 
Paperwork Reduction Act of 1995 continues through June 15, 2010.

ADDRESSES: You may submit comments to this proposed rule by any of the 
following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: For paper, disk, or CD-ROM submissions, mail 
comments via the U.S. Postal Service to the Branch Chief, Regulations 
and Paperwork Management Branch, U.S. Department of Agriculture, Stop 
0742, 1400 Independence Avenue, SW., Washington, DC 20250-0742.
     Hand Delivery/Courier: Submit your comments via Federal 
Express mail, or other courier service requiring a street address, to 
the Branch Chief, Regulations and Paperwork Management Branch, U.S. 
Department of Agriculture, 300 7th Street, SW., 7th Floor, Washington, 
DC 20024.
    Instructions: All submissions received must include the agency name 
and the docket number or Regulatory Information Number (RIN) for this 
rulemaking. All comments received will be posted without change to 
http://www.regulations.gov, including any personal information 
provided. For detailed instructions on submitting comments and 
additional information on the rulemaking process, see the ``Public 
Comments'' heading of the

[[Page 20074]]

SUPPLEMENTARY INFORMATION section of this document.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov, and/or Branch 
Chief, Regulations and Paperwork Management Branch, U.S. Department of 
Agriculture, 300 7th Street, SW., 7th Floor, Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: USDA, Rural Development-Energy 
Division, Program Branch, Attention: Frederick Petok, Stop 3225, Room 
6870, 1400 Independence Avenue, SW., Washington, DC 20250-3225. 
Telephone: (202) 690-0784.

SUPPLEMENTARY INFORMATION: The information presented in this preamble 
is organized as follows:

I. Administrative Requirements
    A. Executive Order 12866: Regulatory Planning and Review
    B. Unfunded Mandates Reform Act
    C. Environmental Impact Statement
    D. Executive Order 13132: Federalism
    E. Regulatory Flexibility Act
    F. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use
    G. Executive Order 12372: Intergovernmental Review of Federal 
Programs
    H. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    I. Executive Order 12988, Civil Justice Reform
    J. Programs Affected
    K. Paperwork Reduction Act
    L. E-Government Act Compliance
II. Background
III. Discussion of the Proposed Rule
    A. Purpose and Scope
    B. Definitions
    C. Review or Appeal Rights
    D. Compliance With Other Laws and Regulations
    E. Oversight and Monitoring
    F. Forms, Regulations, and Instructions
    G. Exception Authority
    H. Applicant Eligibility
    I. Eligible Project Costs
    J. Ineligible Project Costs
    K. Payment Information
    L. Submittal of Applications
    M. Application Review and Scoring
    N. Ranking of Applications
    O. Program Payment Provisions
    P. Succession and Control of Facilities and Production
IV. Request for Comments

I. Administrative Requirements

A. Executive Order 12866: Regulatory Planning and Review

    This proposed rule has been reviewed under Executive Order (EO) 
12866 and has been determined to be economically significant by the 
Office of Management and Budget. The EO defines a ``significant 
regulatory action'' as one that is likely to result in a rule that may: 
(1) Have an annual effect on the economy of $100 million or more or 
adversely affect, in a material way, the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or Tribal governments or 
communities; (2) create a serious inconsistency or otherwise interfere 
with an action taken or planned by another agency; (3) materially alter 
the budgetary impact of entitlements, grants, user fees, or loan 
programs or the rights and obligations of recipients thereof; or (4) 
Raise novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in this EO.
    The Agency conducted a benefit-cost analysis to fulfill the 
requirements of Executive Order 12866. While unable to quantify any 
costs or benefits associated with this rulemaking, the Agency believes 
that the overall effect of the rule may be beneficial.

B. 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 proposed 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, this proposed rule is 
not subject to the requirements of sections 202 and 205 of the UMRA.

C. Environmental Impact Statement

    This renewable energy program under Title IX of the 2008 Farm Bill 
has been operated on an interim basis through the issuance of a Notice 
of Funds Availability (NOFA). During this initial round of 
applications, the Agency conducted National Environmental Policy Act 
(NEPA) reviews on each individual application for funding. No 
significant environmental impacts were reported, and Findings of No 
Significant Impact (FONSI) were issued for each approved application. 
Taken collectively, the applications show no potential for significant 
adverse cumulative effects.
    The Agency is preparing a programmatic environmental assessment 
(PEA), pursuant to 7 CFR subpart 1940-G, to analyze the environmental 
effects to air, water, and biotic resources; land use; historic and 
cultural resources, and greenhouse gas emissions affected by the 
Section 9004 proposed rule. The purpose of the PEA is to assess the 
overall environmental impacts of the programs related to the goals of 
the Administration for advancing biofuels production for the purposes 
of energy independence and green house gas emission reductions. The 
environmental analyses will be national in scope and will be supported 
by site by site analysis per each application to the program. Site-
specific NEPA documents prepared for those facilities funded under 
Sections 9003 and 9004 in FY 2008 and/or 2009 will be utilized, to 
forecast likely environmental impacts under the proposed rules. The 
draft PEA will be made available to the public for comment on the USDA 
Rural Business Service's Web site by May 3, 2010, and all comments will 
be addressed as part of any revision of the PEA, or prior to the 
publication of any Finding of No Significant Impact (FONSI).

D. Executive Order 13132: Federalism

    It has been determined, under Executive Order 13132, Federalism, 
that this proposed rule does not have sufficient federalism 
implications to warrant the preparation of a Federalism Assessment. The 
provisions contained in the proposed rule will not have a substantial 
direct effect on States or their political subdivisions or on the 
distribution of power and responsibilities among the various government 
levels.

E. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-602) (RFA) generally 
requires an agency to prepare a regulatory flexibility analysis of any 
rule subject to notice and comment rulemaking requirements under the 
Administrative Procedure Act or any other statute unless the agency 
certifies that the rule will not have an economically significant 
impact on a substantial number of small entities. Small entities 
include small businesses,

[[Page 20075]]

small organizations, and small governmental jurisdictions.
    In accordance with the RFA, Rural Development has determined that 
this action will not have an economically significant impact on a 
substantial number of small entities for the reasons discussed below. 
Regardless of whether the participating biorefinery is a small or large 
business, the average cost to a biorefinery to participate is estimated 
to be approximately $16,400. Because the major factor in determining 
whether a biorefinery, small or large, will participate in this program 
is likely to be whether the biorefinery has the capital, or access to 
the capital, for the repowering project, the Agency does not believe 
that the cost of applying and participating will dissuade a small 
business from seeking to participate in this program. For example, this 
average cost represents less than 0.5 percent of the maximum $5 million 
that a biorefinery could receive under this program. Further, 
biorefineries are expected to realize a reduction in the costs to power 
their operations once the repowering project is in place. Thus, 
participating biorefineries will be able to recoup this expense, 
although small biorefineries are likely to take longer to recoup the 
expense because they are likely to have smaller power usage than large 
biorefineries. Finally, this regulation only affects biorefineries that 
choose to participate in the program.

F. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    The regulatory impact analysis conducted for this proposed rule 
meets the requirements for Actions Concerning Regulations That 
Significantly Affect Energy Supply Distribution and Use, Executive 
Order No. 13211, which states that an agency undertaking regulatory 
actions related to energy supply, distribution, or use is to prepare a 
Statement of Energy Effects. This analysis does not find that this 
proposed rule will have any adverse impacts on energy supply, 
distribution, or use.

G. Executive Order 12372: Intergovernmental Review of Federal Programs

    This Program is not subject to Executive Order 12372, 
Intergovernmental Review of Federal Programs, because the Program is 
not listed as a covered program on the Intergovernmental Consultation 
list.

H. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    This executive order imposes requirements on Rural Development in 
the development of regulatory policies that have Tribal implications or 
preempt Tribal laws. Rural Development has determined that the proposed 
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, the proposed rule is not subject to the requirements of 
Executive Order 13175.

I. Executive Order 12988: Civil Justice Reform

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. In accordance with this rule: (1) All State and 
local laws and regulations that are in conflict with this rule will be 
preempted; (2) no retroactive effect will be given this rule; and (3) 
administrative proceedings in accordance with the regulations of the 
Department of Agriculture's National Appeals Division (7 CFR part 11) 
must be exhausted before bringing suit in court challenging action 
taken under this rule unless those regulations specifically allow 
bringing suit at an earlier time.

J. Programs Affected

    This Program is listed in the Catalog of Federal Domestic 
Assistance under Number 10.866.

K. Paperwork Reduction Act

    The information collection requirements contained in the Notice of 
Funding Availability (NOFA) for the Section 9004 Repowering Assistance 
Payments to Eligible Biorefineries program published on June 12, 2009, 
were approved by the Office of Management and Budget (OMB) under 
emergency clearance procedures and assigned OMB Control Number 0570-
0058. As discussed in the associated ``Request for Emergency Review and 
Approval for a New Information Collection Request,'' expedited 
publication of the NOFA was mandated by Congress under the 2008 Farm 
Bill. Further, the Agency has made the 9004 program and the other Farm 
Bill energy titles a top priority for implementation as soon as 
possible, in order to implement all of the similar biorefinery programs 
at or very near the same time. Therefore, Rural Development requested 
emergency approval of the information collection so that the Agency 
could begin accepting applications and making payments. In accordance 
with the Paperwork Reduction Act of 1995, the Agency is now seeking 
standard OMB approval of the reporting requirements contained in this 
proposed rule and hereby opens a 60-day public comment period.
    Title: Repowering Assistance.
    Type of Request: New collection.
    Abstract: Under this proposed rule, the Agency is providing 
payments to eligible biorefineries to support and encourage the use of 
renewable biomass to replace fossil fuels in the production of heat or 
power that fuel the energy requirements of these biorefineries.
    The collection of information is vital to the Agency to make 
decisions regarding the eligibility of biorefineries to participate in 
this program, to ensure compliance with the provisions of this proposed 
rule and to ensure that the payments are made to eligible 
biorefineries.
    Biorefineries seeking funding under this program will have to 
submit applications that include specified information, certifications, 
and agreements. This information will be used to determine applicant 
eligibility, to prioritize applications for award, and to determine the 
amount of payments for which the applicants are eligible.
    Applicants must submit an application that includes relevant data 
to allow for technical analysis of the existing facility to demonstrate 
replacement of fossil fuel by renewable biomass with reasonable costs 
and maximum efficiencies. Applicants must also submit evidence that the 
biorefinery was in existence on or before June 18, 2008. In addition to 
the information specified on the standard application form, applicants 
must submit a feasibility study, performed by an independent qualified 
consultant, that demonstrates that the renewable biomass system of the 
biorefinery is feasible, taking into account the economic, technical 
and environmental aspects of the system.
    Once a biorefinery has been accepted into the repowering program 
and the repowering project has been completed, the biorefinery must 
submit a request for initial payment. Subsequent payments will be made 
on a semiannual basis and each will require a request for payment 
supported by data documenting the actual displacement of fossil fuel 
use from the conversion to renewable biomass.
    Participating biorefineries must keep records, and make them 
available to USDA upon request, documenting the ongoing displacement of 
fossil fuel usage resulting from the repowering project. The 
biorefinery must provide

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for the metering of all power and heat producing boilers, containment 
vessels, generators and any other equipment related to the production 
of heat or power required to displace fossil fuel loads with renewable 
biomass.
    In summary, the collection of information is necessary in order to 
implement this program.
    The following estimates are based on the average over the first 
three years the program is in place.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 18.4 hours per response.
    Respondents: Liquid transportation biofuel producers.
    Estimated Number of Respondents: 15.
    Estimated Number of Responses per Respondent: 15.9.
    Estimated Number of Responses: 238.
    Estimated Total Annual Burden (hours) on Respondents: 4,390.
    Copies of this information collection can be obtained from Cheryl 
Thompson, Regulations and Paperwork Management Branch, at (202) 692-
0043.
Comments
    Comments are invited regarding: (a) Whether the proposed collection 
of information is necessary for the proper performance of the functions 
of Rural Development, including whether the information will have 
practical utility; (b) the accuracy of Rural Development's estimate of 
the burden of the proposed collection of information including the 
validity of the methodology and assumptions used; (c) ways to enhance 
the quality, utility and clarity of the information to be collected; 
and (d) ways to minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology. Comments may be 
sent to Cheryl Thompson, Regulations and Paperwork Management Branch, 
Support Services Division, USDA, Rural Development, Stop 0742, 1400 
Independence Ave., SW., Washington, DC 20250-0742. All responses to 
this proposed rule will be summarized and included in the request for 
OMB approval. All comments will also become a matter of public record.

L. E-Government Act Compliance

    Rural Development is committed to complying with the E-Government 
Act, to promote the use of the Internet and other information 
technologies to provide increased opportunities for citizen access to 
Government information and services, and for other purposes.

II. Background

    Rural Development administers a multitude of programs, ranging from 
housing and community facilities to infrastructure and business 
development. Its mission is to increase economic opportunity and 
improve the quality of life in rural communities by providing 
leadership, infrastructure, venture capital, and technical support that 
can support rural communities, helping them to prosper.
    To achieve its mission, Rural Development provides financial 
support (including direct loans, grants, loan guarantees, and direct 
payments) and technical assistance to help enhance the quality of life 
and provide support for economic development in rural areas. The Food, 
Conservation, and Energy Act of 2008 (2008 Farm Bill) contains several 
sections under which Rural Development provides financial assistance 
for the production and use of biofuels. This proposed rule addresses 
Section 9004 of the 2008 Farm Bill, which authorizes the Secretary of 
Agriculture to ``carry out a program to encourage biorefineries in 
existence on the date of enactment of the Food, Conservation, and 
Energy Act of 2008 to replace fossil fuels used to produce heat or 
power to operate the biorefineries'' by making payments to assist in 
the installation of new systems that use renewable biomass.
    Section 9004 of the Farm Security and Rural Investment Act of 2002, 
as added by the Food Conservation and Energy Act of 2008, authorizes 
the Secretary of Agriculture to carry out the Repowering Assistance 
Payments to Eligible Biorefineries Program to encourage biorefineries 
to replace fossil fuels used to produce heat or power to operate the 
biorefineries with new systems that use renewable biomass or the new 
production of energy from renewable biomass.
    Under the proposed rule, the Agency will establish an annual sign-
up period for biorefineries. Under this program a biorefinery will be 
eligible to receive a payment equal to 50 percent of the costs of 
installing eligible systems up to $5 million. The first payment to a 
biorefinery awardee will be equal to 20 percent of the total amount of 
the award. The remainder of the award will be paid to the awardee at a 
rate of $0.50 per million British thermal units of energy produced from 
renewable biomass.
    Consistent with the authorizing legislation, the primary goal of 
this program is to replace fossil fuels with energy derived from 
renewable biomass for the operation of biorefineries. To help meet this 
goal, the program proposes to provide awardees with an incentive to use 
their own renewable biomass energy systems by tying the payment of 80 
percent of the award to the actual production of energy from renewable 
biomass. The more energy from renewable biomass the awardee produces 
for use in the biorefinery, the faster the awardee will receive the 
remaining 80 percent of the award. With respect to all of these points, 
the Agency welcomes feedback from the public during the comment period.
    The Agency views this program in conjunction with its other 
renewable energy programs in the context of an overall Federal 
renewable energy strategy. The goal of this strategy is to foster the 
development of a strong, expanding, and economically sustainable group 
of renewable energy industries in the United States to supply an 
increasing share of the country's energy needs. The success of these 
industries will depend on their ability to produce energy sources that 
meet the demands of the country's energy markets. These markets are 
driven by a number of factors including the price of oil and other 
fossil fuels, developments in technologies, the acceptance of the 
public, the capacity of distribution systems, and the impact of 
government regulation such as the renewable fuels standard.
    The Repowering Assistance Payments to Eligible Biorefineries 
Program is one part of Rural Development's contribution to the 
Department of Agriculture's renewable energy efforts that support the 
overall Federal renewable energy strategy. This program will encourage 
biorefineries to reduce their reliance on fossil fuels in their 
operations. This will help these biorefineries by reducing the carbon 
attributed to the bioenergy and biobased products they produce. Such 
reductions could improve the marketability of their bioenergy and 
biobased products. This program will help the overall development of 
bioenergy industries in the United States by encouraging the use of 
development of biomass energy systems. The Agency believes that systems 
designed for biorefineries could be easily adapted for use by a wide 
variety of other industries and thus could further encourage the 
replacement of fossil fuels for renewable energy across the U.S. 
economy.
    The development of the renewable energy industries will take a 
strong partnership between the Federal government and the private 
sector to generate the capital needed. This

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program provides incentives for more carbon efficient biorefineries and 
for the development of more effective renewable biomass based energy 
systems that could be adapted for use in a wide variety of industries.

III. Discussion of the Proposed Rule

    On June 12, 2009, the Agency published a Notice of Funding 
Availability (NOFA) for Repowering Assistance Payments to Eligible 
Biorefineries (74 FR 28009). (This Notice is referred to in this 
preamble as the Section 9004 NOFA.) While the Section 9004 NOFA 
provided requirements for participation in Fiscal Year 2009, most of 
its provisions are applicable to fiscal year 2010 and beyond and, thus, 
have been carried forward into this proposed rule.
    This section of this preamble discusses the proposed Repowering 
Assistance payment program in detail. This discussion follows the order 
of the proposed rule. Where needed, the Agency discusses the provision 
of each paragraph and why it is being proposed.

A. Purpose and Scope (Sec.  4288.1)

    This section describes the purpose, scope and applicability of the 
program and includes a brief description of the criteria to be used to 
select biorefineries for assistance and the limits of the assistance 
that USDA will provide under the program.

B. Definitions (Sec.  4288.2)

    This section presents the definitions specific to the Repowering 
Assistance program as they are being used in the proposed rule in order 
to implement the program more clearly. Definitions are provided for the 
following terms:
     Application period.
     Base energy use.
     Biobased products.
     Biofuel.
     Biorefinery.
     Eligible biorefinery.
     Eligible renewable biomass.
     Energy Information Agency.
     Feasibility study.
     Feedstock unit.
     Financial interest.
     Fiscal year.
     Fossil fuel.
     Renewable biomass.
     Rural or rural area.

C. Review or Appeal Rights (Sec.  4288.3)

    This paragraph provides the legal basis by which an unsuccessful 
applicant may request an Agency review or file an appeal with the USDA 
National Appeals Division, in accordance with 7 CFR part 11.

D. Compliance With Other Laws and Regulations (Sec.  4288.4)

    This section states that applicants must comply with other 
applicable Federal laws including, but not limited to, Equal Employment 
Opportunities, Equal Credit Opportunity Act, and the Civil Rights Act 
of 1964.

E. Oversight and Monitoring (Sec.  4288.5)

    This section states that the Agency reserves the right to verify 
all payment requests and subsequent payments made under this program, 
including conducting field visits, as frequently as necessary to ensure 
the integrity of the program. The documentation required to verify, 
reconcile, and enforce the payment terms of the agreement along with 
any potential refunds that the recipient will be required to make 
should they fail to adequately document their request is presented in 
this section.
    Additionally, reporting requirements and supporting documentation 
which each biorefinery must make available and provide to the Agency is 
explained in this section. Records must be held and made available for 
Agency examination for a period of not less than three years from each 
payment date.

F. Forms, Regulations, and Instructions (Sec.  4288.6)

    This section describes how copies of all forms, regulations, 
instructions, and other materials related to this program may be 
obtained.

G. Exception Authority (Sec.  4288.7)

    This section identifies that condition under which the 
Administrator may make, on a case-by-case basis, exceptions to any 
requirement or provision of this subpart. The proposed provisions are 
the same as found in 7 CFR 4280, subpart B, for the renewable energy 
systems and energy efficiency improvements program.

H. Applicant Eligibility (Sec.  4288.10)

    This section states the eligibility requirements that an applicant 
must meet to participate in the program. All applicants must be an 
eligible biorefinery, as defined in Sec.  4288.2 of this subpart, and 
must meet the citizenship requirements specified in this section, which 
are:
     If the applicant is an individual, the applicant must be a 
citizen or national of the United States (U.S.), the Republic of Palau, 
the Federated States of Micronesia, the Republic of the Marshall 
Islands, or American Samoa, or must reside in the U.S. after legal 
admittance for permanent residence.
     If the applicant is an entity other than an individual, 
the applicant must be at least 51 percent owned by persons who are 
either citizens or nationals of the U.S., the Republic of Palau, the 
Federated States of Micronesia, the Republic of the Marshall Islands, 
or American Samoa, or legally admitted permanent residents residing in 
the U.S. However, this requirement is not applicable if the entity is 
composed solely of members of an immediate family. In such instances, 
if at least one of the immediate family members is a citizen or 
national as described above, then the entity is eligible to participate 
in this program. Immediate family is being defined as: Individuals who 
are closely related by blood, marriage, or adoption, or live within the 
same household, such as a spouse, domestic partner, parent, child, 
brother, sister, aunt, uncle, grandparent, grandchild, niece, or 
nephew.
    If an applicant does not meet the citizenship requirement, the 
applicant is not eligible for this program. While this citizenship 
requirement is not required by statute, it is consistent with the 
Agency's other programs. As found in Section IV of this preamble, the 
Agency is seeking comment on this requirement.
    In addition, to be eligible for program payments, a biorefinery 
must be located in a rural area. If the biorefinery is not located in a 
rural area, such biorefinery is not eligible for this program. While 
not statutorily required, the Agency is proposing this rural area 
requirement for consistency with its other programs and its mission to 
improve the economic conditions of rural America. Lastly, as found in 
Section IV of this preamble, the Agency is seeking comment on this 
requirement.
    Corporations and entities with more than one biorefinery location 
may not submit multiple applications. However, a project that serves 
multiple biorefineries located at the same location is an eligible 
project provided the heat and power are centrally produced.

I. Eligible Project Costs (Sec.  4288.11)

    This section describes eligible project costs. Eligible project 
costs are only those incurred in the construction of program repowering 
improvements associated with the equipment, installation, engineering, 
design, site plans, associated professional fees, permits and financing 
fees.

J. Ineligible Project Costs (Sec.  4288.12)

    This section states that project costs not directly associated with 
the repowering project and system incurred by the applicant prior to 
application for payment assistance under this program will be 
ineligible for payment

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assistance. Project costs for projects for repowering using feedstocks 
that are feed grain commodities that received benefits under Title I of 
the Food, Conservation, and Energy Act of 2008, are not eligible. For 
example, gas that was produced from the waste product from corn milling 
fermentation would be eligible under section 9004 as it is also a 
secondary product and not the underlying commodity that received a 
benefit under Title I.

K. Payment Information (Sec.  4288.13)

    This section describes the number and amount of payments that will 
be made to eligible applicants. Payments will be based on the number of 
applicants selected for award in the program in addition to other award 
criteria. These criteria will include the amount of fossil fuel 
replaced, the cost-effectiveness of the system, and the percentage 
reduction in fossil fuel use. The maximum payment an applicant may 
receive will be 50 percent of total eligible project costs up to $5 
million. As proposed, there is no minimum payment that an applicant may 
receive.

L. Submittal of Applications (Sec.  4288.20)

    This section describes where and how to make application for the 
Repowering Assistance program. The applicant must furnish the Agency 
the required forms and documentation identified in this section. 
Applicants are required to have a Dun and Bradstreet Universal 
Numbering System (DUNS) number (unless the applicant is an individual). 
In addition to a feasibility study, applicants must submit to the 
Agency the documents specified in this section and furnish the Agency 
all required certifications before acceptance into the program, and 
furnish access to records required by the Agency to verify compliance 
with program provisions.
    Applicants are required to provide relevant data to allow for 
technical analysis of their facilities to demonstrate replacement of 
fossil fuel by renewable biomass with reasonable costs and maximum 
efficiencies and, where applicable, to document that woody biomass 
feedstock cannot be used as a higher value wood-based product. 
Applicants in existence on or before June 18, 2008 with more than 24 
months of actual operating data must provide data for the most recent 
24-month period. Applicants in existence on or before June 18, 2008 
with less than 24 months of actual operating data must provide 12 
months of data supported by engineering and design calculations, and 
site plans, prepared by the construction engineering firm.

M. Application Review and Scoring (Sec.  4288.21)

    This section describes the Application review process and presents 
the scoring criteria and point values assigned to each of the criteria. 
The Agency will evaluate projects based on the cost-effectiveness, 
capacity of projects to reduce fossil fuel usage, and whether the 
biorefinery primarily produces liquid transportation fuels. The focus 
of this program on liquid transportation fuels is a reflection of the 
intent of Congress as stated in the Managers Report for this program. 
The cost of the project will be taken into consideration in the context 
of each project's ability to economically produce energy from renewable 
biomass to replace its dependence on fossil fuels. Projects with higher 
costs that are less efficient will not score well. The scoring criteria 
are designed to evaluate projects on simple payback as well as the 
percentage of fossil fuel reduction.
    Submission of an application neither reserves payments nor ensures 
payments. The Agency will evaluate each application and make a 
determination as to whether the applicant is eligible, whether the 
proposed project is eligible, and whether the proposed payment request 
complies with all applicable statutes and regulations. This evaluation 
will be based on the information provided by the applicant and on other 
sources of information, such as recognized industry experts. The Agency 
will score each application in order to prioritize each proposed 
project. The maximum number of points awardable to any applicant will 
be 100. The evaluation criteria that the Agency will use to score these 
projects are cost, cost-effectiveness, reduction of fossil fuel use, 
type of fossil fuel displaced, renewable biomass factors, and technical 
review factors.

N. Ranking of Applications (Sec.  4288.22)

    This section describes the process by which the Agency will rank 
scored applications for determination of eligibility and consideration 
for payment. The Agency will consider the score an application has 
received compared to the scores of other applications in the priority 
list, with higher scoring applications receiving first consideration 
for payments. The Agency will notify all applicants of their decision 
on each application. It is possible that a lower scoring application 
may receive funding before a higher scoring application if insufficient 
funds remain to pay the higher scoring application and the higher 
scoring application chooses not to accept the lower funding level. The 
higher scoring applicant will have the opportunity to reduce the amount 
of its payment request to the amount of funds available. If the 
applicant agrees to lower its payment request, it must certify that the 
purposes of the project can be met, and the Agency must determine the 
project is feasible at the lower amount.

O. Program Payment Provisions (Sec.  4288.23)

    This section describes the procedure the Agency will use to make 
payments to eligible biorefineries. To request payments under this 
program during a FY, an eligible biorefinery must submit the required 
application form. Upon completion of the project or project 
improvements, the first payment will not exceed 20 percent of the 
project award. Subsequent semiannual payments will be paid based on 
actual measured renewable biomass energy production at a rate of 50 
cents per million British thermal units (MMBTUs), up to the limit of 
the award.
    In developing the proposed payment rate of 50 cents per MMBTUs, the 
Agency considered what payment rate should be used to pay out the 
remaining funds once the upfront payment was made. In general, a lower 
payout rate means that it would take longer for the total award to be 
paid, which would be less attractive to the facility. A higher payout 
rate means that a biorefinery would receive the total award amount 
sooner, which could put Agency funding more at risk. That is, if a 
biorefinery received a large award, collected all of the money within a 
short period of time, and then the repowering project was discontinued 
(e.g., the biorefinery closed), Agency funds were much less 
productively used than intended. Spreading these payments out over a 
reasonably long period should help ensure that facilities continue to 
operate and to use biomass to replace fossil fuels. Given these 
considerations, the Agency is proposing a payment rate of $0.50 per 
MMBTU of fossil fuel energy use that is replaced with biomass derived 
energy. Based on what it expects to be the average total payout, the 
Agency believes that this rate is reasonable in that a typical 
biorefinery should be able to collect all of the payment within 3 to 5 
years.
    Biorefineries will be required to furnish the Agency such 
certifications and access to records that verify compliance with 
program provisions and provide documentation, as requested by the 
Agency, regarding the production of usable energy at the

[[Page 20079]]

biorefinery during the relevant payment period. After semiannual 
payment applications are submitted, eligible biorefineries may be 
required to submit additional supporting clarification if their 
original submittal is not sufficient to verify eligibility for payment. 
Biorefineries will be notified in writing whenever the Agency 
determines that a payment application is ineligible and why the 
application was determined ineligible. Adjustments to payments 
otherwise payable to the biorefinery will be made if the Agency finds 
there is a difference between the quantity of fossil fuel actually 
replaced by renewable biomass and the quantity certified to in a 
payment application. An eligible biorefinery that has received a 
payment under this program may be required to refund such payment if 
the Agency determines the producer has made any material fraudulent 
representation; or misrepresented any material fact affecting a program 
determination. Late payment interest will be assessed on each refund in 
accordance with provisions and rates as determined by the Agency. 
Interest will accrue from the date payments were received by the 
biorefinery to the date of repayment, or the date of an interest 
increase, as determined in accordance with applicable regulations. 
However, the Agency may waive the accrual of interest and/or damages if 
the Agency determines that the cause of the erroneous determination was 
not due to any improper action of the biorefinery. Any biorefinery or 
person receiving payment under this program will be jointly and 
severally liable for any refund or related charges due under this 
program.

P. Succession and Control of Facilities and Production (Sec.  4288.24)

    In this section, the Agency states the conditions under which any 
party obtaining a biorefinery that is under this program must request 
permission to participate in this program as a successor. The Agency 
may grant such request if it determines that the party is eligible and 
permitting such succession would serve the purposes of the program. The 
Agency may require the consent of the previous party to such 
succession. Additionally, the Agency may terminate payments and demand 
full refund of payments made if a party loses control of a biorefinery 
whose production of heat or power from renewable biomass is the basis 
of a program payment, or otherwise fails to retain the ability to 
assure that all program obligations and requirements will be met.

IV. Request for Comments

    The Agency is requesting comments on the overall program being 
proposed. The Agency is especially interested in comments on the 
following areas:
    1. Whether the proposed eligibility requirements are reasonable and 
appropriate.
    2. Ways in which the application process could be simplified or 
streamlined.
    3. Whether the proposed scoring criteria will result in fair and 
equitable distribution of funds.
    4. The appropriateness of the proposed payment rate and term.
    5. Whether the payment amount is aligned with the estimated fossil 
fuel reduction in terms of incentives and enforcement mechanisms.
    6. Should the program allow entities that do not meet the proposed 
citizenship requirement (Sec.  4288.10(a)) of at least 51 percent 
domestic ownership to participate, including those entities owned 
entirely by immediate family members where only one of the family 
members meets citizenship requirements? Please be sure to provide 
rationale for your position.
    7. As proposed, only biorefineries located in rural areas will be 
eligible for payments. The Agency is requesting comment on whether 
biorefineries located in non-rural areas should also be eligible for a 
payment under this program. Please be sure to provide rationale for 
your position.
    8. As proposed, the scoring criterion on renewable biomass requires 
an applicant to demonstrate control of the feedstock for the repowering 
project for at least 3 years in order to receive points. The Agency is 
requesting comment on the appropriate timeframe that the applicant must 
demonstrate access to the feedstock for the project. Please be sure to 
provide rationale for your position.
    9. The Agency is requesting comment on whether a scoring criterion 
should be developed to give preference to biorefineries that have 
closed systems or that can use their own waste streams in the 
repowering project. Please be sure to provide rationale for your 
position.
    10. The Agency is considering an approach to score applications on 
not only the percentage, but also the type of fossil fuel displaced. 
Under this approach, applicants would receive a higher score if they 
reduce a larger amount of fossil fuels. They would also receive a 
higher score for reducing the amount of higher GHG emitting fuels. The 
agency requests comment on this or other approaches to incentivize GHG 
reductions within the scope of this program.
    The Agency is particularly interested in the views of program 
applicants and interested stakeholders.
    Submit comments as indicated in the DATES and ADDRESSES sections 
above.

List of Subjects in 7 CFR Part 4288

    Administrative practice and procedure, Energy--biofuel, Renewable 
biomass, Reporting and recordkeeping.

    For the reasons set forth in the preamble, under the authority at 5 
U.S.C. 301 and 7 U.S.C. 8105, Chapter XLII is proposed to be amended by 
adding a new part 4288 to read as follows:

CHAPTER XLII--RURAL BUSINESS-COOPERATIVE SERVICE AND RURAL UTILITIES 
SERVICE, DEPARTMENT OF AGRICULTURE

PART 4288--PAYMENT PROGRAMS

Subpart A--Repowering Assistance Payments to Eligible Biorefineries
Sec.
4288.1 Purpose and scope.
4288.2 Definitions.
4288.3 Review or appeal rights.
4288.4 Compliance with other laws and regulations.
4288.5 Oversight and monitoring.
4288.6 Forms, regulations, and instructions.
4288.7 Exception authority.
4288.8-4288.9 [Reserved]
4288.10 Applicant eligibility.
4288.11 Eligible project costs.
4288.12 Ineligible project costs.
4288.13 Payment information.
4288.14-4288.19 [Reserved]
4288.20 Submittal of applications.
4288.21 Application review and scoring.
4288.22 Ranking of applications.
4288.23 Program payment provisions.
4288.24 Succession and control of facilities and production.
4288.25-4288.100 [Reserved]

    Authority: 7 U.S.C. 1989.

Subpart A--Repowering Assistance Payments to Eligible Biorefineries


Sec.  4288.1  Purpose and scope.

    (a) Purpose. The purpose of this program is to provide financial 
incentives to biorefineries in existence on June 18, 2008, the date of 
the enactment of the Food, Conservation, and Energy Act of 2008 (the 
2008 Farm Bill) (Pub. L. 110-246), to replace the use of fossil fuels 
used to produce heat or power at their facilities by installing new 
systems that use renewable biomass, or to produce new energy from 
renewable biomass.
    (b) Scope. The Agency may make payments under this program to any 
biorefinery that meets the requirements of the program up to the limits 
established for the program. Based on our research and survey of 
medium-

[[Page 20080]]

sized project costs, the Agency has determined that the dollar amount 
identified will provide adequate incentive for biorefineries to apply.
    (1) The Agency will determine the amount of payments to be made to 
a biorefinery based on the quantity of fossil fuel a renewable biomass 
system is replacing, the percentage reduction in fossil fuel used by 
the biorefinery, and the cost and cost-effectiveness of the renewable 
biomass system.
    (2) The Agency will determine who receives payment under this 
program based on the percentage reduction in fossil fuel used by the 
biorefinery that will result from the installation of the renewable 
biomass system; the cost and cost-effectiveness of the renewable 
biomass system; and other scoring criteria identified in Sec.  4288.21 
``Application review and scoring.'' The above criteria will be used to 
determine priority for awards of 50 percent of total eligible project 
costs up to $5 million.


Sec.  4288.2  Definitions.

    The definitions set forth in this section are applicable for all 
purposes of program administration under this subpart.
    Agency means the USDA Rural Development, Rural Business-Cooperative 
Service or its successor organization.
    Application period means the time period announced by the Agency 
during which the Agency will accept applications.
    Base energy use means the amount of documented fossil fuel energy 
use over an extended operating period.
    (1) The extended operating period must be at least 24 months of 
recorded usage, and requires metered utility records for electric 
energy, natural gas consumption, fuel oil, coal shipments and propane 
use, as applicable for providing heat or power for the operation of the 
biorefinery.
    (2) Utility billing, oil and coal shipments must be actual bills, 
with meter readings, applicable rates and tariffs, costs and usage. 
Billing must be complete, without gaps and arranged in chronological 
order. Drop shipments of coal or oil can be substituted for metered 
readings, provided the biorefinery documents the usage and its 
relationship to providing heat or power to the biorefinery.
    (3) A biorefinery in existence on or before June 18, 2008 with less 
than 24 months of actual operating data must provide at least 12 months 
of data supported by engineering and design calculations, and site 
plans, prepared by the construction engineering firm.
    Biobased products means products determined by the Secretary to be 
commercial or industrial products (other than food or feed) that are:
    (1) Composed, in whole or in significant part, of biological 
products, including renewable domestic agricultural materials and 
forestry materials; or
    (2) Intermediate ingredients or feedstocks.
    Biofuel means fuel derived from renewable biomass.
    Biorefinery means a facility (including equipment and processes) 
that converts renewable biomass into biofuels and biobased products, 
and may produce electricity.
    Eligible biorefinery means a biorefinery that has been in existence 
on or before June 18, 2008.
    Eligible renewable biomass means renewable biomass as defined in 
this proposed rule.
    Energy Information Agency (EIA) means the statistical agency of the 
Department of Energy and source of official energy statistics from the 
U.S. Government.
    Feasibility study means an Agency-acceptable analysis of the 
economic, environmental, technical, financial, and management 
capabilities of a proposed project or business in terms of its expected 
success. A list of items that must be included in a feasibility study 
is presented in Sec.  4288.20(c)(9) of this subpart.
    Feedstock unit means a bushel, hundredweight, pound, or other unit 
of measure, as applicable, for the renewable biomass feedstock used in 
liquid transportation biofuel production.
    Financial interest means, for the purposes of this notice, any 
ownership, creditor, or management interest in the biorefinery.
    Fiscal year means the 12-month period beginning each October 1 and 
ending September 30 of the following calendar year.
    Fossil fuel means fuels derived from coal, oil, propane, and 
natural gas.
    Immediate family. Individuals who are closely related by blood, 
marriage, or adoption, or live within the same household, such as a 
spouse, domestic partner, parent, child, brother, sister, aunt, uncle, 
grandparent, grandchild, niece, or nephew.
    Renewable biomass means:
    (1) Materials, pre-commercial thinnings, or invasive species from 
National Forest System land and public lands (as defined in section 103 
of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1702)) 
that:
    (i) Are byproducts of preventive treatments that are removed to 
reduce hazardous fuels; to reduce or contain disease or insect 
infestation; or to restore ecosystem health; and
    (ii) Would not otherwise be used for higher value products; and
    (iii) Are harvested in accordance with applicable law and land 
management plans and the requirements for old growth maintenance, 
restoration, and management direction as per paragraphs (e)(2), (e)(3), 
and (e)(4), and large tree retention as per paragraph (f), of section 
102 of the Healthy Forests Restoration Act of 2003 (16 U.S.C. 6512); or
    (2) Any organic matter that is available on a renewable or 
recurring basis from non-Federal land or land belonging to an Indian or 
Indian Tribe that is held in trust by the United States or subject to a 
restriction against alienation imposed by the United States, including:
    (i) Renewable plant material, including feed grains; other 
agricultural commodities; other plants and trees; and algae; and
    (ii) Waste material, including crop residue; other vegetative waste 
material (including wood waste and wood residues); animal waste and 
byproducts (including fats, oils, greases, and manure); and food waste 
and yard waste.
    Rural or rural area means any area of a State not in a city or town 
that has a population of more than 50,000 inhabitants, according to the 
latest decennial census of the United States, and the contiguous and 
adjacent urbanized area, and any area that has been determined to be 
``rural in character'' by the Under Secretary for Rural Development, or 
as otherwise identified in this definition. In determining which census 
blocks in an urbanized area are not in a rural area, the Agency will 
exclude any cluster of census blocks that would otherwise be considered 
not in a Rural Area only because the cluster is adjacent to not more 
than two census blocks that are otherwise considered not in a rural 
area under this definition.
    (1) For the purposes of this definition, cities and towns are 
incorporated population centers with definite boundaries, local self 
government, and legal powers set forth in a charter granted by the 
State.
    (2) For the Commonwealth of Puerto Rico, the island is considered 
rural and eligible for Business Programs assistance, except for the San 
Juan Census Designated Place (CDP) and any other CDP with greater than 
50,000 inhabitants. CDPs with greater than 50,000 inhabitants, other 
than the San Juan CDP, may be determined to be eligible if they are 
``not urban in

[[Page 20081]]

character.'' Any such requests must be forwarded to the National 
Office, Business and Industry Division, with supporting documentation 
as to why the area is ``not urban in character'' for review, analysis, 
and decision by the Rural Development Under Secretary.
    (3) For the State of Hawaii, all areas within the State are 
considered rural and eligible for Business Programs assistance, except 
for the Honolulu CDP within the County of Honolulu.
    (4) For the purpose of defining a rural area in the Republic of 
Palau, the Federated States of Micronesia, and the Republic of the 
Marshall Islands, the Agency shall determine what constitutes rural and 
rural area based on available population data.
    (5) The determination that an area is ``rural in character'' under 
this definition will be to areas that are within:
    (i) An urbanized area that has two points on its boundary that are 
at least 40 miles apart, which is not contiguous or adjacent to a city 
or town that has a population of greater than 150,000 inhabitants or 
the urbanized area of such a city town; or
    (ii) An urbanized area contiguous and adjacent to a city or town of 
greater than 50,000 population that is within one-quarter mile of a 
rural area.


Sec.  4288.3  Review or appeal rights.

    A person may seek a review of an Agency decision under this subpart 
from the appropriate Agency official that oversees the program in 
question or appeal to the National Appeals Division in accordance with 
7 CFR part 11 of this title.


Sec.  4288.4  Compliance with other laws and regulations.

    Participating biorefineries must comply with other applicable 
Federal, State, and local laws, including, but not limited to, the 
Equal Employment Opportunities Act, the Equal Credit Opportunity Act, 
Title VI of the Civil Rights Act of 1964, 7 CFR Part 1901 Subpart E, 
Section 504 of the Rehabilitation Act of 1973, and the Age 
Discrimination Act of 1975. Applicants must submit and will be subject 
to pre-award and post award compliance reviews with the terms and 
conditions set forth in RD Form 400-1, ``Equal Opportunity Agreement'' 
and RD Form 400-4,'' Assurance Agreement.''


Sec.  4288.5  Oversight and monitoring.

    (a) Verification. The Agency reserves the right to verify all 
payment requests and subsequent payments made under this program, 
including field visits, as frequently as necessary to ensure the 
integrity of the program. Documentation provided will be used to 
verify, reconcile, and enforce the payment terms of the agreement along 
with any potential refunds that the recipient will be required to make 
should they fail to adequately document their request. The required 
documentation is given in RD Form 4288-6, the Repowering Program 
Payment Request, which details and provides that the requester 
demonstrate a reduction in fossil fuel use by providing concurrent 
readings from their previously metered usage, along with the readings 
from the metered, measured, and verifiable production of renewable 
energy from renewable biomass.
    (b) Records. For the purpose of verifying compliance with the 
requirements of this proposed rule, each biorefinery must make 
available and provide for the metering of all power and heat producing 
boilers, containment vessels, generators and any other equipment 
related to the production of heat or power required to displace fossil 
fuel loads with renewable biomass. These records must be held in one 
place and be available at all reasonable times for examination by the 
Agency. Such records include all books, papers, contracts, scale 
tickets, settlement sheets, invoices, written price quotations, and any 
other documents related to the program that are within the control of 
the biorefinery. These records must be held and made available for 
Agency examination for a period of not less than three years from each 
payment date.


Sec.  4288.6  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, Renewable Energy Coordinator and the USDA Rural 
Development Web site at http://www.rurdev.usda.gov/regs/formstoc.html#9.


Sec.  4288.7  Exception authority.

    The Administrator may, on a case-by-case basis, make an exception 
to any requirement or provision of this subpart that is not 
inconsistent with any authorizing statute or applicable law, if the 
Administrator determines that application of the requirement or 
provision would adversely affect the USDA's interest.


Sec. Sec.  4288.8-4288.9   [Reserved]


Sec.  4288.10  Applicant eligibility.

    To be eligible for this program, the applicant must be an eligible 
biorefinery, as defined in Sec.  4288.2 of this subpart, and must meet 
the requirements specified in paragraphs (a) through (d) of this 
section.
    (a) Citizenship requirement. The applicant must meet the 
requirements in paragraphs (a)(1) or (2), as applicable, of this 
section.
    (1) If the applicant is an individual, the applicant must be a 
citizen or national of the United States (U.S.), the Republic of Palau, 
the Federated States of Micronesia, the Republic of the Marshall 
Islands, or American Samoa, or must reside in the U.S. after legal 
admittance for permanent residence.
    (2) If the applicant is an entity other than an individual, the 
applicant must be at least 51 percent owned by persons who are either 
citizens or nationals of the U.S., the Republic of Palau, the Federated 
States of Micronesia, the Republic of the Marshall Islands, or American 
Samoa, or legally admitted permanent residents residing in the U.S. 
This paragraph is not applicable if the entity is owned solely by 
members of an immediate family. In such instance, if at least one of 
the immediate family members is a citizen or national, as defined in 
paragraph (a)(1) of this section, then the entity is eligible.
    (b) Rural area requirement. To be eligible for program payments, 
biorefinery must be located in a rural area.
    (c) Multiple submissions. Only one application from corporations 
and entities with more than one biorefinery location will be eligible. 
A project that serves multiple biorefineries located at the same 
location is an eligible project provided the heat and power are 
centrally produced.
    (d) Payment eligibility. To be eligible for program payments, an 
applicant must submit a complete application for consideration of 
payment. Payments will be made based on ranking of applicants in 
relation to project cost, cost-effectiveness, the quantity of fossil 
fuels the renewable biomass system is replacing, and the reduction of 
fossil fuel usage resulting from the installation of a renewable 
biomass system.


Sec.  4288.11  Eligible project costs.

    Eligible project costs will be only for project related 
construction costs for repowering improvements associated with the 
equipment, installation, engineering, design, site plans, associated 
professional fees, permits and financing fees.


Sec.  4288.12  Ineligible project costs.

    (a) Any project costs incurred by the applicant prior to 
application for payment assistance under this program will be 
ineligible for payment assistance.

[[Page 20082]]

    (b) A project is not eligible under this program if it is using 
feedstocks for repowering that are feed grain commodities that received 
benefits under Title I of the Food, Conservation, and Energy Act of 
2008.


Sec.  4288.13  Payment information.

    (a) At the time the project is built and commissioned, the 
applicant can request payment for 20 percent of eligible project cost. 
Subsequent payments shall be based on the measurable and verifiable 
production of energy from renewable biomass produced from the 
Repowering Project, and will be paid semiannually when submitted on 
form RD 4288-6.
    (b) Payment limitations. For the purposes of this program, the 
maximum payment an applicant may receive will be 50 percent of total 
eligible project costs up to $5 million. There is no minimum payment to 
an applicant.
    (c) Type of instrument. Payments to an eligible biorefinery will be 
made through a signed Payment Agreement.


Sec. Sec.  4288.14-4288.19   [Reserved]


Sec.  4288.20  Submittal of applications.

    (a) Address to make application. Application must be made to USDA, 
Rural Development-Energy Division, Program Branch, Attention: 
Repowering Assistance Program, 1400 Independence Avenue, SW., Stop 
3225, Washington, DC 20250-3225.
    (b) Content and form of submission. Applicants must submit a signed 
original and one copy of an application containing the information 
specified in this section. The applicant must also furnish the Agency 
the required documentation identified in Form RD 4288-4 to verify 
compliance with program provisions before acceptance into the program. 
Note that applicants are required to have a Dun and Bradstreet 
Universal Numbering System (DUNS) number (unless the applicant is an 
individual). The DUNS number is a nine-digit identification number, 
which uniquely identifies business entities. A DUNS number can be 
obtained at no cost via a toll-free request line at 1-866-705-5711, or 
online at http://fedgov.dnb.com/webform. Applicants must submit to the 
Agency the documents specified in paragraphs (b)(1) through (7) of this 
section.
    (1) Form RD 4288-4, ``Repowering Assistance Program Application.'' 
Applicants must submit this form and all necessary attachments 
providing project information on the biorefinery; the facility at which 
the biorefinery operates, including location and products produced; and 
the types and quantities of renewable biomass feedstock being proposed 
to produce heat or power. This form requires the applicant to provide 
relevant data to allow for technical analysis of their existing 
facility to demonstrate replacement of fossil fuel by renewable biomass 
with reasonable costs and maximum efficiencies. Applicant must also 
submit evidence that the biorefinery was in existence on or before June 
18, 2008. The applicant is required to certify the information 
provided.
    (2) Form RD 4288-5, ``Repowering Assistance Program Agreement''. A 
signed copy of this form will be required prior to receiving payments 
under this program.
    (3) RD Instruction 1940-Q, Exhibit A-1, ``Restriction on Lobbying 
(if over $100,000)''.
    (4) Form RD 400-1, ``Equal Opportunity Agreement''.
    (5) Form RD 400-4, ``Assurance Agreement''.
    (6) Form RD 1940-20, ``Request for Environmental Information'' 
(first page only). Note, however, that applicants must substitute the 
narrative outlined in RD Instruction 1940-G, Exhibit H in place of the 
narrative attachment specified in the instructions to Form RD 1940-20.
    (7) Certifications. The applicant must furnish the Agency all 
required certifications before acceptance into the program, and furnish 
access to records required by the Agency to verify compliance with 
program provisions. Applicant must submit forms or other written 
documentation certifying to the following:
    (i) AD-1047, ``Certification Regarding Debarment, Suspension, and 
Other Responsibility Matters--Primary Covered Transactions'' or other 
written documentation.
    (ii) AD-1048, ``Certification Regarding Debarment, Suspension, 
Ineligibility and Voluntary Exclusion--Lower Tier Covered 
Transactions'' or other written documentation.
    (iii) SF-LLL, ``Disclosure of Lobbying Activities''.
    (c) Application package contents. Applicants are required to 
provide relevant data to allow for technical analysis of their existing 
facilities to demonstrate replacement of fossil fuel by renewable 
biomass with reasonable costs and maximum efficiencies. Applicants in 
existence on or before June 18, 2008 with more than 24 months of actual 
operating data must provide data for the most recent 24-month period. 
Applicants in existence on or before June 18, 2008 with less than 24 
months of actual operating data must provide 12 months of data 
supported by engineering and design calculations, and site plans, 
prepared by the construction engineering firm. All applicants must 
submit the information specified in paragraphs (c)(1) through (9) of 
this section as part of their application package.
    (1) Contact data. Contact information for the primary technical 
contact for the biorefinery.
    (2) Biorefinery data. Basic information on facility operations over 
time (hours/day, days/year).
    (3) Electric use data. Information on existing electric service to 
the facility, data on consumption, peak and average demand, and 
monthly/seasonal use patterns.
    (4) Fuel use data. Information on natural gas and current fuel use 
for boilers and heaters, including fuel type, costs, and use patterns.
    (5) Thermal loads. Information on existing thermal loads, including 
type (steam, hot water, direct heat), conditions (temperature, 
pressure) and use patterns.
    (6) Existing equipment. Information on existing heating and cooling 
equipment, including type, capacities, efficiencies and emissions.
    (7) Site-specific data. Information on other site-specific issues, 
such as expansion plans or neighborhood considerations that might 
impact the proposed new system design or operation; or environmental 
impacts.
    (8) Biofuel production. Information on liquid biofuel production 
(gallons/year).
    (9) Feasibility study. The applicant must submit a feasibility 
study by an independent qualified consultant, which has no financial 
interest in the biorefinery, and demonstrates that the renewable 
biomass system of the biorefinery is feasible, taking into account the 
economic, technical and environmental aspects of the system. The 
feasibility study must include the components specified in paragraphs 
(c)(9)(i) through (x) of this section.
    (i) An executive summary, including resume of the consultant, and 
an introduction/project overview (brief general overview of project 
location, size, etc.).
    (ii) An economic feasibility determination, including:
    (A) Information regarding the project site;
    (B) Information on the availability of trained or trainable labor; 
and
    (C) Information on the availability of infrastructure and rail and 
road service to the site.
    (iii) A technical feasibility determination, including a report 
that:
    (A) Is based upon verifiable data and contains sufficient 
information and

[[Page 20083]]

analysis so that a determination may be made on the technical 
feasibility of achieving the levels of energy production that are 
projected in the statements. The report must provide the information in 
a format that is responsive to the scoring criteria specified in Sec.  
4288.21(b)(1) through (5) and applicants should identify in their 
report the information that corresponds to each of the scoring 
criteria; and
    (B) Identifies and estimates project operation and development 
costs and specifies the level of accuracy of these estimates and the 
assumptions on which these estimates have been based.
    (iv) A financial feasibility determination that discusses the 
following:
    (A) The reliability of the financial projections and assumptions on 
which the project is based including all sources of project capital, 
both private and public, such as Federal funds;
    (B) Projected balance sheets and costs associated with project 
operations;
    (C) Cash flow projections for 3 years;
    (D) The adequacy of raw materials and supplies;
    (E) A sensitivity analysis, including feedstock and energy costs, 
product/co-product prices;
    (F) Risks related to the project; and
    (G) The continuity, maintenance and availability of records.
    (v) A management feasibility determination.
    (vi) Recommendations for implementation.
    (vii) The environmental concerns and issues of the system.
    (viii) The availability of feedstock, including discussions of:
    (A) Feedstock source management;
    (B) Estimates of feedstock volumes and costs;
    (C) Collection, pre-treatment, transportation, and storage; and
    (D) Impacts on existing manufacturing plants or other facilities 
that use similar feedstock.
    (ix) The feasibility/plans of project to work with producer 
associations or cooperatives including estimated amount of annual 
feedstock from those entities.
    (x) Documentation that any and all woody biomass feedstock cannot 
be used as a higher value wood-based product.


Sec.  4288.21  Application review and scoring.

    The Agency will evaluate projects based on the cost, cost-
effectiveness, and capacity of projects to reduce fossil fuels. The 
cost of the project will be taken into consideration in the context of 
each project's ability to economically produce energy from renewable 
biomass to replace its dependence on fossil fuels. Projects with higher 
costs that are less efficient will not score well. The scoring criteria 
are designed to evaluate projects on simple payback as well as the 
percentage of fossil fuel reduction.
    (a) Review. The Agency will evaluate each application and make a 
determination as to whether the applicant is eligible, whether the 
proposed project is eligible, and whether the proposed payment request 
complies with all applicable statutes and regulations. This evaluation 
will be conducted by experts in the Agency and other Federal agencies, 
including the U.S. Department of Energy based on the information 
provided by the applicant. Submission of an application neither 
reserves nor ensures payments.
    (b) Scoring. The Agency will score each application in order to 
prioritize each proposed project. The maximum number of points 
awardable to any applicant will be 100. The evaluation criteria that 
the Agency will use to score these projects are specified in paragraphs 
(b)(1) through (5) of this section.
    (1) Cost-effectiveness. Cost-effectiveness will be scored based on 
the anticipated return on investment (ROI). Anticipated ROI will be 
demonstrated by calculating documented base energy use costs for the 
24-month period prior to submission of the application or at least 12 
months of data supported by engineering and design calculations, and 
site plans, prepared by the construction engineering firm.
    (i) ROI is equal to the simple payback period.

 ROI = C/S; where C = capital expenses; and S = savings in 
annual operating costs.

    Example: Capital expenses, including handling equipment, biomass 
boiler, piping improvements and plant modifications, are equal to 
$5,300,500. The annual difference in fossil fuel cost versus the 
cost for renewable biomass is $990,500. Assume these costs and uses 
are based on a yearly operating cycle, which may include handling, 
storage and treatment costs. In this example, C = $5,300,500; S = 
$990,500; ROI = 5.35 years (C/S = ROI).

    (ii) A maximum of 20 points will be awarded as follows:
    (A) If the anticipated ROI is more than two years, but less than or 
equal to four years, award up to 20 points.
    (B) If the anticipated ROI is greater than four years but less than 
or equal to six years, award up to 10 points.
    (C) If the anticipated ROI will be greater than six years, award 0 
points.
    (2) Percentage of reduction of fossil fuel use. The anticipated 
percent reduction in the use of fossil fuels will be measured using the 
same evidence provided by the applicant for measuring cost-
effectiveness. However, this set of criteria will measure actual fossil 
fuel use for the 24-month period prior to submission of the application 
or for at least 12 months of data supported by engineering and design 
calculations, and site plans, prepared by the construction engineering 
firm.

    Note: The intent of this program is to assist eligible 
biorefineries to use renewable biomass and move away from fossil 
fuels including but not limited to: propane, coal, oil, and natural 
gas. Most sources of electric generation are derived from fossil 
fuel, and the program takes that into account in evaluating the 
content of electric power consumed by an applicant. All fossil fuel 
use, for thermal loads as well as for electric use, will be 
evaluated by using information provided by the Energy Information 
Agency (EIA). The Agency will determine the percentage reduction of 
fossil fuel use based on and in cooperation with the applicant's 
submission of electric power provider contracts, power agreements, 
and utility billings in relation to available information from the 
EIA. A maximum of 35 points will be awarded as follows:
    (i) Applicant demonstrates an anticipated reduction in fossil 
fuel use of 100 percent, award 35 points.
    (ii) Applicant demonstrates an anticipated reduction in fossil 
fuel use of at least 80 percent but less than 100 percent, award 25 
points.
    (iii) Applicant demonstrates an anticipated reduction in fossil 
fuel use of at least 60 percent but less than 80 percent, award 15 
points.
    (iv) Applicant demonstrates an anticipated reduction in fossil 
fuel use of at least 40 percent but less than 60 percent, award 5 
points.
    (v) Applicant demonstrates an anticipated reduction in fossil 
fuel use of less than 40 percent, award 0 points.

    (3) Renewable biomass factors. If an applicant demonstrates that it 
has 100 percent control, via on-site or contractual commitments, over 
its feedstock at the time of application for the repowering project for 
at least 3 years, 10 points will be awarded. If an applicant cannot 
demonstrate this, no points will be awarded.
    (4) Technical review factors. Technical reviews will be conducted 
by a team of experts, including rural energy coordinators and State 
engineers. The Agency may engage the services of other government 
agencies or other recognized industry experts in the applicable 
technology field, at its discretion, to evaluate and rate the 
application. Each section of the technical review will be scored within 
a range of possible points available within that section. A maximum of 
25 points will be awarded as follows:

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    (i) Qualifications of the applicant's project team. The applicant 
must describe the qualifications of those individuals who will be 
essential to successful performance of the proposed project. This will 
include information regarding professional credentials, relevant 
experience, and education, and must be supported with documentation of 
service capabilities, professional credentials, licenses, 
certifications, and resumes, as applicable. Award 0-5 points.
    (ii) Agreements and permits. The applicant must describe the 
agreements and permits necessary for project implementation. An Agency-
acceptable schedule for securing the required documents and permits 
must be provided. Award 0-3 points.
    (iii) Design and engineering. The applicant must describe the 
design, engineering, and testing needed for the proposed project. The 
Design and Engineering documents shall demonstrate that they meet the 
intended purpose, ensure public safety, and comply with all applicable 
laws, regulations, agreements, permits, codes, and standards. Award 0-5 
points.
    (iv) Project development schedule. The applicant must provide a 
detailed plan for project development including a proposed schedule of 
activities, a description of each significant task, its beginning and 
end, and its relationship to the time needed to initiate and carry the 
project through to successful completion. This description must address 
the applicant's project development cash flow requirements. Award 0-3 
points.
    (v) Equipment procurement. The applicant must describe the 
equipment needed, and the availability of the equipment needed, to 
complete installation and activation of the new system. The description 
supports that the required equipment is available, and can be procured 
and delivered within the proposed project development schedule. Award 
0-3 points.
    (vi) Equipment installation. The applicant must provide a 
satisfactory description of the plan for site development and system 
installation that reflects the soundness of the project plan. Award 0-3 
points.
    (vii) Operations and maintenance. The applicant must describe the 
operations and maintenance requirements of the system necessary for the 
system to operate as designed and provide the savings and efficiencies 
as described. The description and requirements noted must be 
supportable by the technical review. Award 0-3 points.
    (5) Liquid transportation fuels. If the biorefinery primarily 
produces liquid transportation fuels, award 10 points.


Sec.  4288.22  Ranking of applications.

    All scored applications will be ranked by the Agency as soon after 
the application deadline as possible. The Agency will consider the 
score an application has received compared to the scores of other 
applications in the priority list, with higher scoring applications 
receiving first consideration for payments.
    (a) Selection of applications for payments. Using the application 
scoring criteria point values specified in Sec.  4288.21 of this 
subpart, the Agency will select applications for payments. The Agency 
will notify, in writing, all applicants whose applications have been 
selected for payments. Applicants whose applications have not been 
selected for payments will be notified in writing, with a brief 
explanation as to why.
    (b) Availability of funds. If, after the majority of applications 
have been considered, insufficient funds remain to pay the next highest 
scoring application, the Agency may elect to pay a lower scoring 
application. Before this occurs, the Agency will provide the applicant 
of the higher scoring application the opportunity to reduce the amount 
of its payment request to the amount of funds available. If the 
applicant agrees to lower its payment request, it must certify that the 
purposes of the project can be met, and the Agency must determine the 
project is feasible at the lower amount.


Sec.  4288.23  Program payment provisions.

    The procedure the Agency will use to make payments to eligible 
biorefineries is specified in paragraphs (a) through (f) of this 
section.
    (a) Payment applications. To request payments under this program 
during a FY, an eligible biorefinery must:
    (1) Submit Form RD 4288-6, ``Repowering Assistance Program-Payment 
Request.''
    (i) Upon completion of the project or project improvements, the 
first payment will not exceed 20 percent of the project award. 
Subsequent semiannual payments will be paid based on actual measured 
renewable biomass energy production at a rate of 50 cents per million 
British thermal units (MMBTUs), up to the limit of the award.
    (ii) After processing an initial payment, additional payments may 
be processed semiannually with the submission of Form RD 4288-6. This 
form must be accompanied by measurement and verification records 
including metered data demonstrating displacement of fossil fuel use 
from the conversion to renewable biomass. Payment will be at the rate 
of 50 cents per MMBTU up to and until the project payment limit has 
been reached.
    (2) Certify that the request is accurate.
    (3) Furnish the Agency such certifications as required in RD Form 
4288-4 Part C, and access to records that verify compliance with 
program provisions.
    (4) Provide documentation, as requested by the Agency, regarding 
the production of usable energy at the biorefinery during the relevant 
payment period. Approved documentation for payment and verification of 
energy production from renewable biomass must include the following:
    (i) Metered data documenting the production of heat, gas and power 
must be obtained utilizing an Agency approved measurement device.
    (ii) Metered data must be verifiable and subject to independent 
calibration testing.
    (iii) Receipts for drop shipments of and use of renewable biomass 
on RD Form 4288-6 Part C(3) for the corresponding period in which 
payments are requested. Payment requests must also present the current 
utility billing data from the same utilities used in the base energy 
use period for the corresponding payment request period.
    (b) Clarifying information. After semiannual payment applications 
are submitted, eligible biorefineries may be required to submit 
additional supporting clarification if their original submittal is not 
sufficient to verify eligibility for payment.
    (c) Notification. The Agency will notify the biorefinery, in 
writing, whenever the Agency determines that a payment request is 
ineligible and why the request was determined ineligible.
    (d) Payment adjustments. The Agency may make adjustments to 
payments otherwise payable to the biorefinery if it finds there is a 
difference between the quantity of fossil fuel actually replaced by 
renewable biomass and the quantity certified to in a payment request.
    (e) Refunds and interest payments. An eligible biorefinery that has 
received a payment under this program may be required to refund such 
payment as specified in paragraphs (e)(1) through (5) of this section.
    (1) An eligible biorefinery receiving payment under this program 
will become ineligible for payments if the Agency determines the 
producer has:
    (i) Made any material fraudulent representation; or

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    (ii) Misrepresented any material fact affecting a program 
determination.
    (2) All payments made to a biorefinery determined by the Agency to 
be ineligible must be refunded to the Agency with interest and other 
such sums as may become due, including, but not limited to, any 
interest, penalties, and administrative costs, as determined 
appropriate under 31 CFR 901.9.
    (3) When a refund is due, it must be paid promptly. If a refund is 
not made promptly, the Agency may use all remedies available to it, 
including Treasury offset under the Debt Collection Improvement Act of 
1996, financial judgment against the biorefinery, and sharing 
information with the Department of Justice.
    (4) Late payment interest will be assessed on each refund in 
accordance with provisions and rates as determined by the Agency.
    (i) Interest charged by the Agency under this program will be at 
the rate established annually by the Secretary of the U.S. Treasury 
pursuant to 31 U.S.C. 3717. Interest will accrue from the date payments 
were received by the biorefinery to the date of repayment, and the rate 
will adjust in accordance with applicable regulations.
    (ii) The Agency may waive the accrual of interest and/or damages if 
the Agency determines that the cause of the erroneous determination was 
not due to any fraudulent action of the biorefinery.
    (5) Any biorefinery or person receiving payment under this program 
will be jointly and severally liable for any refund or related charges 
due under this program.
    (f) Remedies. The remedies provided in this subpart will be in 
addition to other civil, criminal, or administrative remedies that may 
apply.


Sec.  4288.24  Succession and control of facilities and production.

    Any party obtaining a biorefinery that is participating in this 
program must request permission to participate in this program as a 
successor. The Agency may grant such request if it is determined that, 
the party is eligible, and permitting such succession would serve the 
purposes of the program. If appropriate, the Agency will require the 
consent of the previous party to such succession. Also, the Agency may 
terminate payments and demand full refund of payments made if a party 
loses control of a biorefinery whose production of heat or power from 
renewable biomass is the basis of a program payment, or otherwise fails 
to retain the ability to assure that all program obligations and 
requirements will be met.


Sec. Sec.  4288.25-4288.100  [Reserved]

    Dated: April 5, 2010.
Judith A. Canales,
Administrator, Rural Business-Cooperative Service.
[FR Doc. 2010-8283 Filed 4-15-10; 8:45 am]
BILLING CODE 3410-XY-P