Source: http://www.thefederalregister.com/d.p/2003-05-07-03-11359
Timestamp: 2013-05-26 06:42:37
Document Index: 99306748

Matched Legal Cases: ['art 1424', 'arts 15001508', 'art 799', 'arts 11', 'art 1424', 'ART 1424', 'art 1424', 'ART 1424', 'art 1403']

Agriculture Department, Commodity Credit Corporation, Daily Rules, Proposed Rules, and Notices of the Federal Government
DOCID: FR Doc 03-11359
CFR Citation: 7 CFR Part 1424
RIN ID: RIN 0560-AG84
SUBJECT CATEGORY: Bioenergy Program DATES: Effective October 1, 2002. The FY 2003 and beyond sign-up period will end June 6, 2003.
DOCUMENT SUMMARY: This rule finalizes a proposed rule to amend the existing regulations of the Commodity Credit Corporation (CCC) Bioenergy Program (program) in order to implement section 9010 of the Farm Security and Rural Investment Act of 2002 (the 2002 Act). These changes include: modifying the definitions for biodiesel, eligible commodities, and ethanol; extending the program beyond Fiscal Year (FY) 2002; and allowing producers to enter into multiyear agreements for program payments. Additional changes, based on comments received on the proposed rule, include: modifying the conversion factor provisions, making biodiesel payments on a soybean basis, making biodiesel payments on all biodiesel production, basing program payments on market prices as of the 10th business day before the production quarter, and establishing a target notification period for changes to conversion factors. Under the rule, CCC will pay incentives to ethanol producers to increase their use of eligible agricultural commodities in an FY as compared to the corresponding period in the prior FY. For biodiesel, CCC will pay incentives to biodiesel producers for FY 2003 through FY 2005 on all biodiesel production from eligible agricultural commodities. For FY 2006, CCC will pay biodiesel producers incentives only on their increased biodiesel production.
SUMMARY: Agriculture Department, Commodity Credit Corporation, SUPPLEMENTAL INFORMATION
Executive Order 12866 This rule has been determined to be significant for the purposes of Executive Order 12866 and therefore has been reviewed by the Office of Management and Budget (OMB). A summary of the costbenefit assessment is included in the Background section explaining the 2002 Actions this rule will take.
This rule will be submitted to Congress as required by the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996 (5 U.S.C. 801 et seq.) The rule has been determined not to be a major regulatory action. Thus, the 60day delay required by section 801 of SBREFA for Congressional review is not applicable.
The environmental impacts of this rule have been considered in accordance with the provisions of the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et seq.; the regulations of the Council on Environmental Quality (40 CFR parts 15001508); and FSA's regulations for compliance with NEPA, 7 CFR part 799. FSA has concluded that the rule will not have any significant impacts upon the human environment as documented through the completion of a final environmental assessment (FEW) that is on file and available to the public in the Administrative Record at the address specified above by contacting the official named above. The FEW is also available electronically at http://www.fsa.usda.gov/dafp/cepd/epb/nepa.htm. Executive Order 12988 This rule has been reviewed in accordance with Executive Order 12988, Civil Justice Reform. The rule specifies that production will be eligible retroactively beginning October 1, 2002. The administrative appeal provisions published at 7 CFR parts 11 and 780 must be exhausted before bringing any action for judicial review.
The information collection reporting and recordkeeping requirements associated with this rulemaking have been approved by OMB and assigned control number 05600207. The proposed rule contained a notice for this information collection (67 FR 61565, October 1, 2002) as required by 5 CFR 1320.8 (d) (1). Two comments were received supporting the FY 2002 recordkeeping burden.
Responses to the proposed rule were received from 1,994 interested parties representing five different sectors as follows: 1,521 from individuals; 194 comments from 137 companies; 186 comments from 119 cooperatives; 48 comments from 44 trade organizations and special interest groupsmainly representing the American Soybean Association and the National Renderers Association; and 45 from State and local Governments. Most respondents made multiple comments. How Payments Are Determined
CCC received 2,131 comments expressing concern about how CCC proposed to base program payments on [[Page 24597]]
biodiesel production on soybean oil prices instead of on a raw soybean basis. A large majority, 1,635 respondents, wanted the program to increase rather than decrease payments; 296 opposed lowering the payment; 60 supported the proposed change; one stated payments should not be changed until after FY 2003; one supported higher overall payments for all biodiesel payments; and one suggested equal payment for all commodities based on soy oil. Related to the soybean payment issue, 197 respondents wanted increased program payments on animal fats and oils. The majority of respondents opposed proposed changes that revised biodiesel payment calculations, resulting in lower subsidy payments. Many respondents argued that the reduced biodiesel payments would not provide sufficient support to ensure biodiesel's affordability and maintain industry growth. Some also argued that CCC's Bioenergy Program was the primary federal program providing support to the biodiesel industry and was largely responsible for biodiesel becoming one of the fastest growing alternative energy sources. A number of respondents argued that changes in the proposed rule contradicted the intent of Congress and the stated goal of increasing bioenergy production. CCC agrees with many of the respondents' comments on several factors: Program biodiesel payments should be increased not reduced; payments on production from animal fats and oils should be increased; and all biodiesel payments should be based on the FY 2002 soybean payment formula. Therefore, in the final rule, 7 CFR 1424.3 has been adjusted. Also, the proposed language in 7 CFR 1424.8(e) related to gross payable units has been moved to 7 CFR 1424.7. CCC will base all biodiesel payments on a soybean conversion and price, adjusted further by comparing the applicable oil or grease (animal fats and oils) price to the soy oil price. These changes will provide additional support to the biodiesel industry, maintain former payment levels for production from soybeans, and raise payments on production from animal fats and oils. This will reduce disparities between commodities in program payments for biodiesel production. The following table demonstrates how biodiesel payments will be determined taking into account the size
adjustment factor for large and small plants (which is statutory) and accounting for differences in feedstock to produce the eligible biodiesel. Example:
Item Soybeans and oils Mustard seed
Gross Payable Units (Bushels)........................................ 714.30 ..............
Size Factor (2.5 if under 65 million gallons per year total capacity 2.50 .............. ............
or 3.5).............................................................
Adjusted Bushels (Gross Bushels/Size Factor)......................... 285.7 .............. ............
Soybean PCP, Macon County, Illinois \1\.............................. $5.59 .............. ............
Soybean Gross Payment (Soybean PCP x Adjusted Bushels)............... $1,597 $1,597 $1,597
Soy Oil Price, Cents per pound \1\................................... ........... 22.59 22.59
Feedstock Price, Cents per pound \1\................................. ........... 10.00 12.30
Feedstock Factor (Feedstock Price/Soy Oil Price)..................... ........... 0.44 0.54
Gross Program Payment (Soybean Gross Payment x Feedstock Factor)..... $1,597 $707 $869 \1\ Price on November 1, 2002. No change is being made to the proposed rule's ethanol provisions in this area because there does not appear to be a similar need for adjustment.
Fortysix respondents suggested program payments be made on all biodiesel productionbase production (the previous FY volume) plus increased production this FY. One respondent suggested a twotier payment with different payment rates used for base and increased biodiesel production, and another suggested a higher payment specifically for biodiesel. Respondents indicated that the biodiesel industry needs higher levels of support to maintain or increase industry growth. CCC agrees with respondents that the biodiesel industry needs additional program support through higher payments. Consistent with the previous program, the 2002 Act requires the Secretary to make payments on the quantity of bioenergy produced during an FY that exceeds the quantity of bioenergy produced in the prior FY to date. Payment on increased production within a given FY may not provide sufficient incentives for longterm investments in the biodiesel industry. Currently, biodiesel is not costcompetitive with conventional diesel. The payment on FY to FY increases therefore implicitly subsidizes base production of biodiesel, making it costcompetitive. As a result, each successive FY that a producer participates in the program, the level of implicit support for biodiesel production declines as the base production grows larger relative to the yearly increase in production. Furthermore, this may create a potential inequity in the market as newer producers may receive implicitly higher subsidies and, as a result, be more costcompetitive than established producers. This suggests that previous provisions carried forward by reference, arguably, in the new legislation may, if continued without amendment, promote instability, which would impede the goal of fostering growth in the industry. This situation does not apply to the ethanol industry with its more mature market and other Federal and State support programs. In addition, basing a payment only on increased yeartoyear biodiesel production may encourage participants to frustrate the goals of the program by increasing production one year, dropping it the next, then increasing it the following year in order to qualify for higher program payments. To avoid that result, CCC will use its original and continuing authority under section 5 of the CCC Charter Act, 15 U.S.C. 714c, as needed, and the program funding provided by the 2002 Act to make biodiesel production eligible for the program that would not be eligible solely under the bioenergy provisions of the 2002 Act by allowing payments on all of a producer's production and not just the increase in one year as compared with the preceding year. This support will be reduced each FY of the program to encourage industry independence from program payments. In no event will program funding exceed the $150 million per FY funding provided by the 2002 Act. Accordingly, among other changes, 7 CFR 1424.7 as added in the final rule provides that biodiesel may receive payments in the normal manner on production eligible under the 2002 Act (yeartoyear increases) plus a payment on the remaining production at 50 percent of that rate in FY 2003, 30 percent in FY [[Page 24598]]
2004, 15 percent in FY 2005, and 0 percent in FY 2006. No change is being made to the rules for ethanol in this regard because there is not the same need.
CCC received 194 comments that supported the proposed change in the biodiesel definition and supported additional feedstocks being eligible for biodiesel production. Three respondents suggested adding an American Society for Testing and Materials standard as a requirement to the biodiesel definition. Four comments supported eligibility for all biodiesel uses, whether for fuel or not, and expansion of the biodiesel definition to include other biooil/solvent products. Finally, two respondents suggested the program make payments on lower grades of bio fuels that are used for industrial uses. Section 9010(b)(3)(A) of the 2002 Act specifically defines biodiesel as ``a monoalkyl ester that meets the requirements of an appropriate American Society for Testing and Materials standard.'' The language of the 2002 Act indicates that the intent of Congress was that eligible biodiesel be that used for fuel use only. Therefore, no change is made to the biodiesel definition.
One respondent, in addressing the program's requirement for refunds when increased production is not maintained for the entire FY, suggested that the program should ``not force production of baseline if market cannot support the demand.'' Section 9010(b)(5) of the 2002 Act specifically states, ``If the total amount of payments that an eligible producer receives for an FY under this section exceeds the amount that the eligible producer should have received under this subsection, the eligible producer shall repay the amount of the overpayment to the Secretary, with interest (as determined by the Secretary).'' Accordingly, no change is made in this area. However, the change made with regard to basing program payments on all biodiesel production should minimize the impact of this requirement on program biodiesel participants.
The rule resulted in 3,471 comments being received concerning conversion factors for eligible commodities. Of those, 1,829 respondents requested conversion factors be issued more timely, more predictably, and with more sensitivity toward the potential impact of changes after they are announced. An additional 1,640 respondents suggested that conversion factors be more predictable, not be subject to annual change, and codified in the regulations. One respondent recommended the conversion factor for all eligible commodities be codified in the regulations, and one respondent generally opposed removing conversion factors from the regulations. These comments may have resulted from the proposed rule's suggested adoption of a new biodiesel soybean conversion factor. With the exception of the disparity in program payments for biodiesel made from soybeans and soy oil versus animal fats and oils, no complaints had been received in FY 2001 or FY 2002 on the program's conversion factors and no general discontent was expressed by participants about the factors used in those years. The broad list of potential program eligible commodities, many currently not used in bioenergy production, makes publication of a conversion factor for every eligible commodity unrealistic. In addition, as manufacturing processes improve and industry conversion factors improve, CCC needs to be able to reflect the bioenergy producer's true costs of production in a more timely fashion than that allowed by notice and comment rulemaking. From a review of the comments, it appears the real goal is for producers to be able to accurately estimate program payments when they contract future sales prices. To address that, 7 CFR 1424.8(e) has been changed to state, ``After FY 2003, changes to established conversion factors shall be announced in a press release issued by CCC 90 calendar days before the applicable FY's signup, to the extent practicable.'' This should give program participants a 120day notification (90 days before sign
up plus 30day signup period) before applicable production is produced. Conversion factors, as they are established, will also be posted to the program's Internet website.
Fiftyone respondents commented on this aspect of the program. Fifty suggested that CCC use the ``Jacobsen Fats and Oils Bulletin'' for oil feedstock prices without applicable Posted County Prices; one suggested CCC use the Chicago Board of Trade for all virgin crude oil prices with 5year trade adjustments from that for cottonseed oil, corn oil, and canola oil prices. Respondents expressed the belief that the ``Jacobsen Fats and Oils Bulletin'' provided a more accurate market price for animal fats and oils than the USDA's ``Weekly National Carlot Meat Report,'' which was used by the program in FY 2002. The program's regulations do not specify the source CCC will use for feedstock prices for eligible commodities without a Posted County Priceonly that the market price will be ``as determined by CCC.'' For FY 2002, CCC used the U.S. Department of Agriculture's Agricultural Marketing Service's ``Springfield Report'' for corn oil prices and the USDA's ``Weekly National Carlot Meat Report'' for animal fats and oils prices. However, based on comments received, CCC has reviewed the data provided by the ``Jacobsen Fats and Oils Bulletin'' and has determined it does provide an accurate regional price for animal fats and oils. Therefore, CCC will use the ``Jacobsen Fats and Oils Bulletin'' to the extent possible for oil feedstock prices without a Posted County Price. This policy will also be announced in the FY 2003 signup press release announcement. 7 CFR 1424.8(d)(2)(ii) is changed to indicate that as a step in the final calculation of payments the biodiesel gross payment [[Page 24599]]
will be determined for biodiesel made from eligible commodities that have a corresponding oil or grease market price, using the Posted County Price for soybeans for the county where the plant is located. If the biodiesel is made from soybeans or soy oil, this is the gross payment without a further feedstock adjustment (but subject to other possible adjustments). For biodiesel made from other than soy oil or soybeans, the applicable feedstock's oil or yellow grease (for animal fats and oils) market price, as determined by CCC, will be divided by the soy oil price published in the Agricultural Marketing Service's weekly ``Soybean Crush Report (Central Illinois (Decatur, Macon County, Illinois))'' for the applicable date. The resulting percentage will be multiplied by the soybean gross payment to determine the producer's gross payment eligibility subject to such other adjustments as provided in the regulations.
The proposed rule elicited 53 comments in this area. Of these, 50 supported the addition of animal fats and oils as program eligible commodities. Also, three suggested that CCC allow producers to use different eligible commodities during the same FY and not make producers commit at signup to which feedstocks will be used in bioenergy production. CCC recognizes the difficulty producers have in forecasting which feedstocks will be used a year ahead of actual production. However, potential program payments must be estimated after that FY's signup is concluded to determine if a payment factor will be required to keep program expenditures within budgetary authority during the FY. CCC also recognizes that program projections for FY 2001 and FY 2002 were excessive compared to actual production. To address this, the bioenergy agreements will continue to request the maximum possible production by eligible commodity but will separately request the maximum total production increase. Producers will separately list the estimated production by eligible commodity and the total maximum increase from all eligible commodities. The total maximum increase reported will no longer be tied to the estimated production by eligible commodity. When added, the estimated production by commodity may now exceed the total maximum increase reported. This will allow producers to switch production between eligible commodities while still providing CCC the data necessary to project program costs based on eligible commodities being used.
Fiftyfour respondents felt that program payments should only be made to bona fide producersnot marketers. FSA reviews each applicant thoroughly for eligibility before they are approved for the program. To be eligible, a producer must have, among other requirements, risk of loss during the production process. A producer need not own the facility producing the fuel. All program payments are monitored and thorough, onsite examinations are conducted of all program participants' operations to verify program compliance. If noncompliance or over payments are discovered, repayments are required. In addition, program provisions are only applicable to a producer's bioenergy production activitiesnot to other business activities that producer may be involved in. However, to address this issue and also the issue of producers moving production between different plants between FY's to gain larger program payments, 7 CFR 1424.7(c) has been updated to state that there can only be one producer per plant and that when producers transfer all of their operations to a different plant, their prior FY's production will be the greater of the production at the plants they operated in the prior FY or the prior FY production at plants they are taking over in the next FY. Also, to help insure that the program accomplishes its goals, the rule provides that ``Otherwise, for purposes of computing whether a producer has increased production in the current year from the previous year, the determination will be made by comparing for the current year the producer's production figures from all locations in which the producer has an interest with, for the previous year the sum of (i) production at those locations by any person including, but not limited to, the producer, and (ii) additional production by the producer at any other location in that year. Also, as needed to avoid frustrating the goals of the program, the Executive Vice President of CCC may treat producers with common interests, common ownership, or common facilities or arrangements as the same producer. These provisions mirror provisions in the current rule and are provided for additional clarity. Although FY 2003 signup will be held after October 1, 2002, FY 2003 bioenergy production beginning October 1, 2002 will be eligible for FY 2003 program payments.
CostBenefit Assessment
The 2002 Act authorizes bioenergy program funding of up to $150 million per year for FY's 2003 through 2006. Section 743 of the Consolidated Appropriations Resolution, 2003, Public Law 1087, limits FY 2003 payments to eligible bioenergy producers to 77 percent of the amount that those producers would otherwise earn under the program. The President's Budget for FY 2004 also proposes to limit the program to $100 million in FY 2004. The program was first implemented during FY 2001 and funded for FY 2001 and FY 2002 at $150 million each year. Payments have been well under the annual funding levelsFY 2001 payments totaled $40.7 million; FY 2002 payments totaled $78.7 million. The list of eligible commodities is expanded to include cottonseed and any animal byproduct (in addition to oils, fats, and greases) that may be used to produce bioenergy. However, because payments have been made only on corn, grain sorghum, wheat, soybeans, and animal fats and oils, it is difficult to forecast additional payments on the newly eligible commodities. Assuming that some of the new commodities do enter the program, the volume is likely to be small, and the outlay effects negligible. The number of participants receiving payments is expected to increase only slightly. Because of very strong incentives to increase ethanol production independent of the bioenergy program, FY 2003ethanol production and payments are projected to increase sharply from FY's 2001 and 2002. Program payments for ethanol are expected to be highest in FY 2003 and then decline, because the rate of increase in production is projected to slow as California completes the transition to ethanol. Thus, the cost of the program is expected to be higher [[Page 24600]]
initially than in FY's 2001 and 2002. Soybeans have been the predominant commodity for biodiesel payments to date. This is not likely to change substantially due to the expansion in eligible commodities. However, revisions in payment calculations will raise payment rates for animal fats and oils. This will increase incentives to use these commodities for biodiesel production.
Administrative practice and procedure, Energybioenergy, Fuel additives, Gasohol, Oils and fats, Oilseeds, Reporting and recordkeeping requirements.
For the reasons set out in the preamble, 7 CFR part 1424 is amended as set forth below: PART 1424BIOENERGY PROGRAM 1. Part 1424 is revised to read as follows: PART 1424BIOENERGY PROGRAM Sec. 1424.1 Applicability. 1424.2 Administration. 1424.3 Definitions. 1424.4 General eligibility rules. 1424.5 Agreement process. 1424.6 Payment application process. 1424.7 Gross payable units. 1424.8 Payment amounts. 1424.9 Reports required.
1424.10 Succession and control of facilities and production. 1424.11 Maintenance and inspection of records. 1424.12 Appeals. 1424.13 Misrepresentation and scheme or device.
1424.14 Offsets, assignments, interest and waivers.
Authority: 7 U.S.C. 8108, 15 U.S.C. 714b and 714c. Sec. 1424.1 Applicability. This part sets out regulations for the Bioenergy Program (program). It sets forth, subject to the availability of funds as provided herein, or as may be limited by law, the terms and conditions a bioenergy producer must meet to obtain payments under this program and part from the Commodity Credit Corporation (CCC) for eligible bioenergy production. Additional terms and conditions may be set forth in the document required to request program benefits and in the program contract or agreement prescribed by CCC. This program is effective October 1, 2002, through September 30, 2006.
Sec. 1424.2 Administration.
Sec. 1424.3 Definitions.
The definitions set forth in this section shall be applicable for all purposes of program administration under this subpart. Agreement means the Bioenergy Program Agreement or other form prescribed by CCC that must be executed for participation in the program. Application means the application form prescribed by CCC or another form that contains the same terms, conditions, and information required. ATF means the Bureau of Alcohol, Tobacco, Firearms, and Explosives of the United States Department of Justice. Base production means a biodiesel producer's current FY's biodiesel production from eligible commodities that is not an increase over biodiesel production in the previous FY to date. Biodiesel means a mono alkyl ester manufactured in the United States and its territories that meets the requirements of an appropriate American Society for Testing and Materials Standard.
Bioenergy means ethanol and biodiesel produced from eligible commodities. Conversion factor means:
Eligible commodity means barley; corn; grain sorghum; oats; rice; wheat; soybeans; cotton seed; sunflower seed; canola; crambe; rapeseed; safflower; sesame seed; flaxseed; mustard seed; cellulosic crops, such as switchgrass and hybrid poplars; fats, oils, and greases (including recycled fats, oils and greases) derived from an agricultural product; and any animal byproduct (in addition to oils, fats and greases) that may be used to produce bioenergy, as CCC determines, that is produced in the United States and its territories. Eligible producer means a bioenergy producer who meets all requirements for program payments. Ethanol means anhydrous ethyl alcohol manufactured in the United States and its territories and sold either:
(2) As denatured ethanol used by blenders and refiners and rendered unfit for beverage use. Ethanol producer means a person authorized by ATF to produce ethanol. FSA means the Farm Service Agency, USDA. FY means the fiscal year beginning each October 1 and ending September 30 of the following calendar year. KCCO means the FSA, Kansas City Commodity Office.
Posted County Price means the same Posted County Price for different locations as is used under other CCC commodity programs for marketing loan gains and other matters. Producer is a legal entity (individual, partnership, cooperative, or corporation, etc.) who is a commercial bioenergy producer making application or otherwise involved under this program. Quarter means the respective time periods of October 1 through December 31, January 1 through March 31, April 1 through June 30, and July 1 through September 30 of each FY, as applicable. Signup period means the time period announced by CCC during which CCC will accept program agreements. USDA means the United States Department of Agriculture. Sec. 1424.4 General eligibility rules.
(2) The quantity of bioenergy produced from an eligible commodity by location; [[Page 24601]]
(d) For producers not purchasing raw commodity inputs, the production must equal or exceed that amount of production that would be calculated using the raw commodity inputs and the conversion factor set out in Sec. 1424.3. A producer that purchases soy oil from a soybean crushing plant for further refinement into biodiesel must be able to prove to CCC's satisfaction both soy oil purchases and biodiesel production for the applicable quarter. Any special conversion factors needed will be the province of CCC and CCC alone and CCC's decision will be final.
(e) A producer must meet all other conditions set out in these regulations, in the agreement, or in other program documents. Sec. 1424.5 Agreement process.
(a) To participate, an eligible producer must submit a signed agreement during the FY signup period. Agreements may be for single or multiple FY's. However, multiple FY agreements require producers to submit annual production estimate reports during each applicable FY signup period. Such reports must comply with the terms of the agreement and this part. In all cases, the accounting for compliance will be made on a per FY basis.
(b) Signup each FY will be held for 30 calendar days beginning for: (1) FY 2003 on the date of publication of this rule;
(2) FY 2004 and beyond on August 1 of the FY before the applicable FY. (c) After agreements are submitted:
(3) If determined ineligible by KCCO, producers will be notified in writing that their agreement was rejected and the reason for the determination. Sec. 1424.6 Payment application process.
(1) Submit an application or eligibility report for each quarter. Submit the last quarterly application or report of the FY within 30 calendar days of the end of the FY for which payment is requested. If the actual deadline is a nonworkday, the deadline will be the next business day;
(3) Shall promptly refund payments when a refund to CCC is due. If a refund is not made promptly, CCC may establish a claim. Sec. 1424.7 Gross payable units.
(a) For ethanol, producers will be eligible for payments on gross payable units for only their ethanol production from eligible inputs that exceeds, for the program year to date, their total comparable production at all locations as compared to the comparable portion of the previous year. Producers of ethanol are not eligible for base production payments. Producers shall not be paid twice for the same increase and any decline in relative production between quarters will require a comparable refund. For example, if at the end of the first quarter, a producer were to be paid for an increase of 500 gallons of ethanol, but at the end of the second quarter, that producer's yearto
date production was down to a net increase for the year of 450 gallons, then a refund would be due for the loss of the corresponding 50 gallons of net extra production. Repayment rates shall be based on previous payment rates. Unless otherwise determined by CCC, the extra ethanol production from eligible inputs will be converted to gross payable units by dividing the gallons of increased ethanol by the applicable conversion factor.
(2) New producers who are taking over a plant with prior bioenergy [[Page 24602]]
production shall assume that production history for program purposes. For example: in FY 2002, Producer A produced 1,000 gallons of bioenergy in plant 1 and Producer B produced 500,000 of bioenergy in plant 2. In FY 2003, Producer A assumes operation of plant 2; Producer B moves to plant 3, which was not in the program in FY 2002, but with FY 2002 production of 400,000 gallons from eligible commodities; and Producer C assumes operations of plant 1. In FY 2003, for program purposes solely based on these respective plants, Producer A would have a prior FY production of 500,000 gallons; Producer B would have a prior FY production of 500,000 gallons; and Producer C would have a prior FY production of 1,000 gallons. These examples would apply when a producer moves its entire operation from one plant to another. Otherwise, for purposes of computing whether a producer has increased production in the current year from the previous year, the determination will be made by comparing for the current year the producer's production figures from all locations in which the producer has an interest with, for the previous year, the sum of:
(3) Also, as needed to avoid frustrating the goals of the program, the Executive Vice President of CCC may treat producers with common interests, common ownership, or common facilities or arrangements as the same producer. Sec. 1424.8 Payment amounts.
(b) For agreements submitted during an FY signup, applicants must project increases in production. Based on expected commodity prices, using the formula set out in this section, submissions will be assigned an expected payment value. When the payment value of all timely submitted and validly executed agreements exceed available funding, CCC may, at its discretion, prorate payments to be made under such agreements based on total available funding.
(1) Gross payable units, calculated and determined in accordance with Sec. 1424.7, shall be converted to net payable units for producers whose annual bioenergy production is: (i) Less than 65 million gallons, by dividing by 2.5;
(2) Net payable units calculated under paragraph (d)(1) of this section shall then be converted to a gross payment by multiplying net payable units by the perunit value of the commodity as of the 10th business day before the start of the production quarter, determined as follows: (i) For ethanol:
(B) For agricultural commodities that CCC determines do not have Posted County Prices, CCC will use market data CCC determines to be appropriate for the applicable commodity. (ii) For biodiesel made from:
(B) Eligible commodities other than soybeans or soy oil that have a corresponding oil or grease market price, CCC will first use the soybeans Posted County Price for Macon County, Illinois. Then, the applicable feedstock's oil or yellow grease (for animal fats and oils) market price, as determined by CCC, will be divided by the soy oil price published in the Agricultural Marketing Service's weekly ``Soybean Crush Report'' (Central Illinois (Decatur, Macon County, Illinois)) for the applicable date. The resulting percentage will be multiplied by the soybean gross payment to determine the producer's gross payment.
(1) If the commodity's conversion factor is not determined when the signup is announced, the conversion factor will be provided in a letter to producers with accepted agreements to the extent practicable.
(2) After FY 2003, changes to established conversion factors shall be announced in a press release issued by CCC 90 calendar days before the applicable FY's signup, to the extent practicable.
Sec. 1424.9 Reports required.
Once an eligible producer has submitted a payment application, that producer shall file cumulative and perplant information for each relevant bioenergy producing facility quarterly through the end of the applicable FY as specified by CCC or as otherwise needed to establish compliance with this part.
Sec. 1424.10 Succession and control of facilities and production.
Sec. 1424.11 Maintenance and inspection of records.
For the purpose of verifying compliance with the requirements of this part, each eligible producer shall make available at one place at all reasonable times for examination by [[Page 24603]]
representatives of USDA, all books, papers, records, contracts, scale tickets, settlement sheets, invoices, written price quotations, or other documents related to the program that is within the control of such entity for not less than three years from the payment date. Sec. 1424.12 Appeals.
(a) A participant subject to an adverse determination under this part may appeal by submitting a written request to: Deputy Administrator, Commodity Operations, Farm Service Agency, United States Department of Agriculture, STOP 0550, 1400 Independence Avenue, SW., Washington, D.C. 202500550. The appeal must be delivered in writing to the Deputy Administrator or postmarked within 30 days after the date the Agency decision is mailed or otherwise provided to the participant. The Deputy Administrator may consider a late appeal if determined warranted by the circumstances.
(c) Producers who believe they have been adversely affected by a determination by the Agency must seek review with the Deputy Administrator before any other review may be requested within the Agency. Sec. 1424.13 Misrepresentation and scheme or device.
(1) Adopted any scheme or device that tends to defeat the purpose of the program in this part; (2) Made any fraudulent representation; or
(e) Late payment interest shall be assessed on all refunds in accordance with the provisions and rates prescribed in part 1403 of this chapter. Sec. 1424.14 Offsets, assignments, interestand waivers.
(d) CCC may waive the accrual of interest and/or damages if CCC determines that the cause of the erroneous determination was not due to any action of the bioenergy producer. Signed in Washington, DC, on May 1, 2003. James R. Little, Executive Vice President, Commodity Credit Corporation. [FR Doc. 0311359 Filed 5503; 1:43 pm]
BILLING CODE 341001P
Jim Goff, Warehouse and Inventory Division, Farm Service Agency (FSA), United States Department of Agriculture (USDA), STOP 0553, 1400 Independence Avenue, SW., Washington, D.C. 202500553, telephone (202) 7205396 or email address: BioenergyProgram@wdc.fsa.usda.gov. Persons with disabilities who require alternative means of communication (braille, large print, audiotape, etc.) should contact USDA's TARGET Center at (202) 7202600 (voice and TDD).