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Advanced Biofuel Payment Program Update for FY2020


Greetings everyone, thank you for tuning in to USDA’s Advanced Biofuel Payment Program program updates video. My name is Lisa Noty and I’ll be walking through the presentation with you. In this video we will be covering a brief overview of the Advanced Biofuel Payment Program. We’ll talk about the funds that are associated with it; the changes and new definitions; applications, contracts, pay requests specifically as they relate to fiscal year 2019 and 2020; and resources where additional information can be obtained. The Advanced Biofuel Payment Program was first authorized in the Food Conservation Energy Act of 2008. It was reauthorized in Agriculture Act of 2014, and then reauthorized again in Agriculture Improvement Act of 2018 where it was funded at a level of up to 7 million dollars for fiscal year 2019 through 2023. It also made some fundamental changes to the payment provisions. Because of the changes outlined in the 2018 Farm Bill USDA needed to rewrite the regulation that governs the program so the program was not opened for fiscal year 2019. The rules have been rewritten and were published in the Federal Register on December 27 and the program is open for enrollment for fiscal year 2019 and 2020. Some of the key changes to the final rule are moving away from a two-tier payment structure to a single tier. Moving away from bonuses and discounts to a payment based on actual production. Statutory equitable distribution of payments including capping payments to producers who meet the definition of large to 5 percent. Imposing a commodity limitation which translates to not more than one-third of available funds to be paid to anyone advanced biofuel producer from any one commodity. Individual producer limitation of 8 percent so that the maximum available to any one producer will be 8 percent. The commodity used in production of advanced biofuel became key to the program. Another key change is advanced biofuel produced under bailment or toll arrangements is no longer eligible. There is a new definitions for bailment and third party production. The production of woodchips or hog chips are no longer eligible under the new definition of derived. The 2018 farm bill funded the program up to 7 million dollars. Assuming that we have the full 7 million that would equate to $1,750,000 per quarter. A commodity limit of 1/3 would equate to $583,333, five hundred and eighty three thousand three hundred and thirty three dollars per quarter. Large producers would have three hundred and fifty thousand available to them. Individual producer limit at eight percent would be five hundred and sixty thousand. Now we’ll start looking at some of the definitions that we’ve been making reference to. Advanced biofuel is a fuel that is derived from a renewable biomass other than corn kernel starch. Large producer is an advanced biofuel producer which in the prior fiscal year produced more than 150 million gallons of liquid biofuel. This includes the advanced biofuel in all facilities in the United States in which the producer and/or its parent company have a 50% or greater ownership. Commodity is renewable biomass other than corn kernel starch used as feedstock from which to produce advanced biofuel. Eligible renewable biomass is organized into the following categories: Title 1 grains and oil seeds including wheat, grain sorghum, barley, oats, rice, sugars starches, soybeans, sunflower seed, rapeseed, canola, safflower, flax seed, mustard, cranbe, sesame, and peanuts. Other oil seeds and nuts including cottonseed, palm, camelina, coconut, olive, and algae. Cellulosic commodity grown for energy purposes such as hybrid poplar or other energy trees, switch grasses and other energy grasses, cellulose, hemicellulose, or lignin. Waste material including crop residue, vegetative waste material, animal manure, food waste and yard waste. Fats, oils, and greases derived from an agricultural products including recycled fats oils and greases such as used cooking oil and reclaimed industrial grade distillers corn tallow, white grease, yellow grease, and other livestock remains. Any animal by-product in addition to those listed in fats oils and grease that may be used to produce bioenergy. So there are 22 commodity groups. Derived a process that creates a physical, chemical, and/or biological change in renewable biomass. Examples of physical change include processing energy grasses or woody biomass into pellets. A biological change would be the aerobic digestion of livestock manure into biogas. A chemical change fatty acid methyl ester processing of fats, oils and greases into biodiesel or torrefaction of woody biomass into fuel solid fuel. To qualify as an advanced biofuel a minimum of one change physical, chemical, or biological must occur to the feedstock. The activity of collecting, bailing, bundling, chopping, or chipping are not considered advanced biofuel. Final product of a bio refinery that is ready for sale or distribution without further processing. Bailment, third-party production, toll production are all define terms that relate to third-party production. Moving on into the application stage typically enrollment applications are filed during the month of October. Because the program was still in the process of being updated it was opened up on December 18th and has a 60-day application window. The vehicle used for that announcement was the Notice of Contact Proposals that was published in the Federal Register on December 18th. The enrollment period is now open for enrolling both fiscal year 2019 and 2020. Producers need a separate enrollment application and certifications for each year. There are some supporting documents and forms that are needed. With the application there’s a 1940 Q certification, a lobbying Disclosure, an assurance agreement, and an ACH document to ensure that the payments are directed into the proper bank account. The NOCP opened up the enrollment application for both fiscal year 19 a separate application and certification are required for each year. It is important that the enrollment application is the updated version. In the upper left-hand corner of page 1 there should be a revision date that relates to 2019 in it. If the date is 2011 or 11 rather than 19 then we need to get you an updated form. There’s also enrollment certifications. Applications are to be filed where the producer’s headquarters are located. We have a number of producers who have headquarters located in different states than the facilities are located in so they need to be filed where the headquarters are located. Now we’ll take a look at the application. On page 1 the first table you’ll see some basic identifying information and then page 2 gets into the specifics on the biorefinery itself. The facility number if we have multiple facilities you’d put facility number one facility number, two would go on its own table, next to the facility number is the name of the facility. What advanced biofuel is produced at the facility so for column C we’re going to go down to page 3 and we’re going we should be set up that we can copy the advanced biofuel and paste it right up into the cell. In column D we’re going to list the commodities that are expected to be used in the production of the advanced biofuel throughout the year. It’s a projection and again it’s going to relate to the table on page three only this time on the right-hand side. Again it should be set up that you should be able to just copy it and paste it right up to the to the table. Tthe address of the facility, the county it’s located in, the registration number, and the physical form of the advanced biofuel either solid, liquid, or gas. Prior year production information, the amount of advanced biofuel produced in the prior fiscal year and the unit of measure. Then you should be ready for page four which is going to collect some information as it relates to the determination of large producers. If there’s any facilities that the producer has a 50% or more interest in or companies the parents have a 50% or more interest in we will need to have that information identified. If there’s none you’re going to check none. If there’s some then check the second box and then list the name of the advanced biorefinery that there’s a 50% or more relate ownership relationship in, its address, the type of advanced biofuel that it produces, and the amount produced in the prior fiscal year. Again that’s to assess whether we have a large producer or not. Then sign it and submit it to the agency. If you have any questions or need any guidance there should be a state contact that that you’ve been working with. If not or they’re not available please reach out to Tony or I. Our contact information is is on the last slide. A couple of slides as they relate to contracts. Producers who were enrolled in the program in fiscal year 2018 have contracts in place. Those contracts will be renewed or roll forward, no exchange of new contracts is required. The existing contracts will stay in place. If you are new to the program then there will be a contract. Once we’ve determined that a producer is eligible then a contract will be sent for the producer signature. Once it’s received back by USDA the appropriate USDA official will sign-off and a valid contract will be put in place. The contract will stay in place as long as the producer continues to participate or it’s terminated. Moving on to payment requests. For fiscal year 2019 all four payment requests need to be submitted with the enrollment application, all before February 18th. Payment requests should include the payment request form, again make sure that it’s the proper form with the 2019 date in it in the upper left-hand corner. If it has the 2011 date then we need to get you an updated form. Along with the pay request needs to come the supporting documentation. For fiscal year 20 the quarter one pay request needs to be submitted with the application, again prior to February 18th. Then quarter two January, February, and March production will be due at the end of April. Then we’ll resume the normal scheduling for fiscal year 2021, we should be back on the regular schedule where quarter one for October through December production is due the end of January, and then so on. The things you want to make sure to watch for: be sure that you’re filing your pay request by the established due date, the documentation supports the amount of production listed, be sure that the pay request clearly supports which commodity or commodities from which it is produced. Looking at the Pay Request, some identifying information in the first table. The second table identifies what advanced biofuel being produced. Again this can be clipped out of one of the tables that follow this page. The physical form the fuel produced, the amount of advanced biofuel produced, the unit of measure, the related commodity that it’s produced from. These tables tie to page three where the advanced biofuel is on the left and the commodity that was used to produce it is in the right. Producers with multiple commodities will look like something like this. If you have multiple facilities then the form is set up to to provide attachments for each of the facilities. Again with payment requests please reach out to the state coordinators or to Tony and I and will be available to provide any assistance. Some information on resources on this slide. You’ll see the government USDA website, this hyperlink will get you right in to the tools and information The State Energy coordinators you can get there a couple of ways, here’s a specific site and you can type in the search box or here’s the hyperlink that will get you directly to the Energy coordinator contacts. The coordinators are the first line of communication, if there’s any issues getting to them, then there’s a slide with Tony and my contact information in and will be available to answer questions also. This concludes today’s presentation. thank you much for participating and we hope you have found this helpful.

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