PART 452—PRODUCTION INCENTIVES FOR CELLULOSIC BIOFUELS Link to an amendment published at 91 FR 56004, Sept. 1, 2026. Authority: 42 U.S.C. 7101 et seq.; Source: 74 FR 52871, Oct. 15, 2009, unless otherwise noted. § 452.1 Purpose and scope. (a) This part sets forth the standards, policies, and procedures that the Department of Energy uses for receiving, evaluating, and awarding bids in reverse auctions of production incentive payments for cellulosic biofuels under section 942 of the Energy Policy Act of 2005 (42 U.S.C. 16251). (b) Part 1024 of chapter X of title 10 of the Code of Federal Regulations shall not apply to actions taken under this part. § 452.2 Definitions. As used in this part: Cellulosic biofuel Cellulosic feedstock Commercially significant quantity DOE Eligible biofuels producer Eligible cellulosic biofuels production facility (1) Located in the United States (including U.S. territories and possessions); (2) Which meets all applicable Federal and State permitting requirements; (3) Employs a demonstrated refining technology; and (4) Meets any relevant financial criteria established by the Secretary. EPAct 2005 Open window Secretary § 452.3 Solicitations. The reverse auction process commences with the issuance of a solicitation by DOE. DOE will publish a solicitation in the Federal Register www.eere.energy.gov (a) Invite interested persons and businesses to submit pre-qualification statements; (b) Set forth the terms on which bids will be accepted; (c) Specify the open window for bidding; and (d) Specify the date by which successful bidders will be required to file pre-auction eligibility submissions. § 452.4 Eligibility requirements. (a) Pre-auction eligibility submissions. (2) Each pre-auction eligibility submission's implementation plan must, at a minimum: (i) Demonstrate that the filing party owns and operates or plans to own and operate an eligible cellulosic biofuels production facility; (ii) Identify the site or proposed site for the filing party's eligible cellulosic biofuels production facility; (iii) Demonstrate that the cellulosic biofuel to be produced for purposes of receiving an award either currently is suitable for widespread general use as a transportation fuel or will be suitable for such use in a timeframe and in sufficient volumes to significantly contribute to the goal of 1 billion gallons of refined cellulosic biofuel by August 2015. (iv) Provide audited or pro forma (v) Identify one or more proposed sources of financing for the construction or expansion of the filing party's eligible cellulosic biofuels production facility. (b) Notification of pre-auction eligibility status. (c) Progress reports. (1) Acquired the site where its proposed eligible cellulosic biofuels production facility is or will be located; (2) Obtained secure financing commitments for the plant or expansion thereof, as necessary to produce cellulosic biofuels; and (3) Entered into a written engineering, procurement, and construction (EPC) contract for design and construction of the eligible cellulosic biofuels production facility; such EPC contract must provide for completion of construction of the eligible cellulosic biofuels production facility such that operations at the plant or plant expansion will commence within three years of the reverse auction in which the bidder successfully competed. (d) Production agreement. (e) Confirmation of continuing eligibility. (f) Contractual condition on eligibility. (2) As a condition of continuing to receive production incentive payments under this part, a bidder that has entered into a production agreement with DOE must annually submit to DOE, by a commercially reasonable date specified by DOE, verification of the bidder's production volumes for the prior calendar year. Within 90 days of the submission of such verification, DOE shall notify the successful bidder whether the bidder has fulfilled the terms of the production agreement and shall make payment of any production incentive awards then outstanding for the one year period covered by the verified data submission. § 452.5 Bidding procedures. DOE shall conduct an electronic reverse auction through a limited duration single bid per producer auction process open only to pre-auction eligible cellulosic biofuels producers. The following procedures shall be used: (a) DOE shall accept only electronic bids received from pre-auction eligible cellulosic biofuels producers during the open window established in the solicitation. The open window shall consist of a single continuous period of at least four hours for each auction. (b) Bids shall identify an estimated annual production amount from an eligible cellulosic biofuels production facility on a per gallon, site, entity, and year specific basis for a consecutive six year production period. A bid also may be submitted for additional incentives for uncovered production volumes at a site where an award was made in an earlier auction round. (c) All bids must set forth the methodology used to derive the estimates of annual production volumes covered by the bid and the bid shall be calculated on a gasoline equivalent volumetric basis using the lower heating Btu value of the fuel compared to the lower heating Btu value of gasoline. (d) All bids will be confidential until 45 days after the close of the window for submission of bids for the reverse auction. (e) Bid evaluation and incentive awards selection procedures include the following: (1) After DOE evaluates the bids received during the open window, it shall, within 45 days following the close of the open window for submission of bids for the reverse auction, announce on DOE's website and by direct mail the names of the successful bidders and the terms of their bids. (2) DOE shall issue awards for the bid production amounts beginning with the bidder that submitted the bid for the lowest level of production incentive on a per gallon basis. (3) In the event of a tie among the lowest bids, preference will be given to the lowest tied bidder based on DOE's evaluation of the extent to which the tied bids meet the following criteria: (i) Demonstrates outstanding potential for local and regional economic development; (ii) Includes agricultural producers or cooperatives of agricultural producers as equity partners in the ventures; and (iii) Has a strategic agreement in place to fairly reward feedstock suppliers. (4) In the event more than one lowest tied bid equally meets the standards in paragraph (c)(3) of this section, the award will be distributed equally on a per capita basis among those lowest tied bidders meeting the standards. § 452.6 Incentive award terms and limitations. (a) Amount of incentive. (b) Failure to commence production. (c) Failure of the successful bidder to meet annual production obligations. (d) Shortfalls remaining at the end of the production period. (e) Incentive award limitations. (1) During the first four years after the commencement of the program, the incentive shall be limited to $1.00 per gallon. For purposes of this limitation, the program shall be deemed to have commenced on the date that the first solicitation for a reverse auction is issued; (2) A per gallon cap over the remaining lifetime of the program of $.95 per gallon provided that— (i) This cap shall be lowered by $.05 each year commencing the first year after annual cellulosic biofuels production in the United States exceeds 1 billion gallons; (ii) Not more than 25 percent of the funds committed within each reverse auction shall be awarded to any single project; (iii) Not more than $100 million in production incentives shall be awarded in any one calendar year; and (iv) Not more than $1 billion in production incentives shall be awarded over the lifetime of the program. (f) Participation in subsequent auctions. (g) Transferability of awards.