On June 25, 2026, the USDA issued Technical Guidelines for the Production of Regenerative Agricultural Biofuel Feedstocks. This final Rule seeks to quantify reductions in greenhouse gas (GHG) emissions associated with crops raised with specific regenerative practices. Specifically, it establishes guidelines for calculating, reporting and verifying carbon intensity (CI) of four agricultural crops used in biofuel production. Using the Rule and its accompanying Calculator, farmers can quantify changes in net emissions associated with crops produced using authorized regenerative practices. Once incorporated into IRS and DOE guidance, the reduced-CI score of feedstocks will become a component of the fuel producer’s I.R.C. § 45Z credit calculation. Last summer, the One Big Beautiful Bill Act extended this clean fuel production credit for fuel sold through December 31, 2029.
Although farmers are not eligible to claim the 45Z credit directly, many expect biofuel producers to pay a premium for feedstocks with reduced CI to increase the value of their 45Z credits. The extent of any premium remains uncertain, but this guidance could create new market opportunities for farmers raising commodities with reduced CI scores.
The Rule updates interim guidance issued January 17, 2025. In conjunction with the Rule, the USDA also released its final USDA Feedstock Carbon Intensity Calculator (USDA FD-CIC). This revised Calculator allows farmers to enter their data and calculate CI on a field-by-field basis. Here we summarize the guidance, paying particular attention to changes from the interim guidance.
Background
Feedstock emissions account for more than 50 percent of the direct GHG emissions from producing corn ethanol and soybean biodiesel. These emissions result, for example, from soil carbon released during tillage. Although the adoption of certain conservation practices such as no-till, cover crops, and nutrient management result in emissions benefits, no comprehensive standards for measuring the impact of low-carbon practices have existed. Most programs have relied on assumptions about average or typical farming practices. The USDA says that the new Rule and associated Calculator allow for the differentiation and quantification of GHG reductions associated with the production of biofuel feedstocks using low-carbon practices.
CI Calculator
The CI Calculator, developed through work with academic institutions and experts, provides users with a crop-specific, per bushel CI. It can be used for four biofuel feedstock crops grown with one or more authorized low carbon practices.
The Calculator determines the CI based upon nutrient management data and checklists of low-carbon practices input by the user. The Calculator does not factor in land-use change or other market-mediated effects. The USDA explains that the CI generated by this Calculator may not be representative of values applicable to other carbon incentive programs.
New Purpose and Definitions
The Rule clarifies the purpose of the guidance by stating that it is intended to support the quantification, reporting and verification of the carbon intensity of agricultural biofuel feedstock commodity crops grown in the United States.
Carbon intensity (CI) is defined as a measure of greenhouse gas (GHG) performance reflecting the estimated quantity of GHG emissions associated with one unit of production. For biofuel feedstock crops, carbon intensity is expressed as grams of carbon dioxide equivalent (CO2e) per bushel of produced crop (g CO2e/bushel).
The Rule eliminates the term “climate smart agriculture (CSA) practices,” instead referring to “low-carbon agriculture practices.” Reduced-carbon intensity crops are crops produced according to the Rule.
Crops
The new Calculator quantifies a reduced-CI for four domestic feedstocks grown with at least one low-carbon agriculture practice:
- Corn
- Soybeans
- Sorghum
- Spring Canola
Spring canola was newly added to the Calculator based upon comments to the interim rule. It is defined as a canola crop planted during or between the months of January and June. Crops not raised with low-carbon practices are called conventional crops. Farmers may produce both reduced-CI crops and conventional crops. These crops may be mixed.
Low Carbon Practices
The Rule reworked the “climate smart” practices set forth in the interim rule and states that a reduced-CI crop must be produced using (1) nutrient management or (2) nutrient management and one or more of the following low-carbon practices:
- No Till
- Reduced Till
- Cover Crops
The Rule revises nutrient management requirements by adopting a nitrogen use efficiency (NUE) approach. Under this framework, all farmers must report their actual nitrogen application rates, as well as their actual and expected yields, to more accurately measure the impact of their nutrient management practices. By contrast, the interim rule relied on farmers identifying specific nitrogen management practices, and the Calculator estimated their emissions impact using standard assumptions. Nutrient management is no longer optional under the final rule; all users must now report their nitrogen use data. In response to public comments, the Rule now recognizes the application of nitrification inhibitors and manure as qualifying nutrient management practices.
Under the interim rule, eligibility for reduced tillage or no-till practices was based on a STIR rating (Soil Tillage Intensity Rating), which measures the intensity and disturbance caused by tillage operations. Under Rule, the USDA now uses a T-DISC rating (Tillage Disturbance Intensity Score/Classification). The USDA chose the no-till, reduced till and cover crop options because they can be used in raising all four of the selected feedstocks, and scientific evidence has proven they are effective in reducing GHG emissions or sequestering carbon.
Note: The Rule only includes practices used in producing low-CI crops. Farmers do not receive a reduced CI for implementing saturated buffers, grassed waterways, prairie strips or similar conservation practices. Despite comments urging the inclusion of these other conservation practices, the USDA states that its Rule is limited to on-field practices that apply to the production of the feedstocks currently in the tool, but it may consider adding these practices in the future.
Quantifying the CI
The Rule provides that any farm producing and selling reduced-CI crops must use the Calculator to determine a field-level CI score for each field or management unit utilizing nutrient management practices or a unique combination of nutrient management and other low-carbon practices for a particular crop. The field-level CI score applies to the year in which the crop was harvested, and the amount of crop harvested from that field or management unit must be included in the calculation.
Producer Record-Keeping
Farm producers are required to keep records demonstrating:
- Their implementation of nutrient management and low-carbon practices used in the calculation of their CI. Their records must also include:
- All sales from the farm of corn, soybeans, sorghum, and spring canola for the duration of the crop interval. The records must include amount sold, moisture content, the purchaser, and the date. For sales of reduced CI, the record must also include the CI score.
- The expected yield input into the Calculator.
- This must include the crop insurance policy documenting the expected yield
- If no crop insurance, producers must record the transitional yield published by the RMA (screenshots or printouts are appropriate)
- That the actual yield input in the Calculator has been adjusted for moisture content.
Under the Rule, producers must also provide a third-party verifier with documentation of any “sustainability certification system” in which they participate or have recently participated. The third-party verifier will ensure the producer is not violating the anti-stacking requirements of this Rule. This means that producers (or anyone along the supply chain) may not sell low-CI feedstocks to biofuel producers if they are already receiving compensation for lowering carbon emissions through a different program.
Note: This provision appears to prevent double dipping with carbon credits or offset programs compensating farmers for implementing low-carbon practices. It should not prevent farmers from participating in a cost-share program or a USDA program encouraging new conservation practices without quantifying a carbon or GHG reduction score.
Biofuel Feedstock Report
For each crop sold as a reduced-CI crop, the producer must prepare and maintain a Biofuel Feedstock Report. This report is provided to any entity purchasing reduced-CI crop. The Biofuel Feedstock Report must:
- Begin with a statement that the farm producer certifies the following under penalty of perjury.
- State the farm name, farm producer name, and farm location (county and state)
- Demonstrate the quantification of each field or management unit with reduced-CI crop through:
- Documentation of the Calculator CI for each field or management unit (screenshots or printouts from the Calculator Tool are sufficient)
- Include a Farm Producer Attestation declaring that the farm producer:
- Has operational control over all fields using low-carbon practices and decision-making authority to manage fields as specified.
- Implemented low-CI practices according to standards set forth in the rule
- Calculated each field-level CI as specified in the rule
- Will retain required records for five years and will make them available upon request to an accredited third-party verifier
- Will not double sell CI information, attributes, or GHG benefits into more than one market
- When implementing no-till, will continue no-till on all crops in the rotation for a minimum of four out of five years
- Did not convert the land used to produce reduced-CI biofuel feedstock crops into crop production after January 17, 2025
- Include a statement that the farm producer understands that the fraudulent use of the Biofuel Feedstock Report may subject them to a fine and/or imprisonment.
Chain of Custody Standards
As noted above, the farmer must provide a copy of the Biofuel Feedstock Report to the purchaser of the crop, which the rule calls the “first point of aggregation.”
First point of Aggregation and Intermediary Entities
The Rule specifies that the first point of aggregation, along with all intermediary entities must also maintain records demonstrating the quantity of reduced-CI crops and reduced-CI processed products and associated CI crops moving in and out of the entity. The records must include:
- Documentation that the first point of aggregation or intermediary entity received third-party verification
- The Biofuel Feedstock Report
- An attestation signed under penalty of perjury
The Rule requires records to use a “mass balance” method of accounting to track the weight or volume of products moving through the supply chain without requiring physical segregation of the commodities. Under the mass balance approach, the low-CI attributes documented through the Biofuel Feedstock Report remain associated with the specific quantity of commodity transferred through the supply chain. As a result, the commodity itself must ultimately be supplied to the biofuel producer for the fuel producer to benefit from the lower CI score in calculating the § 45Z credit.
By contrast, a “book-and-claim” system would allow the low-CI attributes to be separated from the physical commodity and sold independently. Under that approach, a farmer could sell the corn itself into a conventional market, such as for livestock feed, while separately transferring the CI attributes to a biofuel producer. The biofuel producer could then use those attributes in calculating its § 45Z credit.
Note: USDA stated that it received an “overwhelming” response to questions posed about using a book and claim versus a mass balance system. Sixty comments were received and over 45 of them supported a book and claim approach. In the end, the USDA chose to implement the mass balance system with the Rule, acknowledging that they did not have the infrastructure required to adequately implement a book and claim traceability standard. USDA did say that it may consider moving to a book and claim system in the future.
Entities that Process, Sell, or Purchase Processed Product Derived from Reduced-CI Crops
Entities that process, sell, or purchase processed product derived from reduced-CI crops must keep records on their processing, including their crushing yield, the amount of reduced CI-crops used in processing, the Biofuel Feedstock Report associated with the input crops, and the amount of reduced-CI processed product sold or purchased.
Biofuel Refiners
Finally, biofuel refiners must keep records of incoming reduced-CI crops or processed products, which must include:
- Total amount of crop or processed product purchased
- The moisture content of the reduced-CI crop
- The entity from which the crop or processed product was purchased,
- The associated CI and the date of the transaction
- The Biofuel Feedstock Report associated with the reduced-CI crop or reduced CI crop used as an input in the reduced-CI processed product purchased
- Documentation that the entity supplying reduced-CI crop or reduced CI processed product has undergone third-party verification by an accredited third-party verifier
Verification
The Rule establishes a verification program under which all entities from the first point of aggregation to the refiner must hire a third-party to conduct an annual audit. All entities along the supply chain must provide proof of the verification to all subsequent entities.
Farms are audited as suppliers to the first point of aggregation. A representative sample of farms supplying reduced CI-crops to each first-point of aggregation entity must be audited by a third-party verifier each year. The first point of aggregation must include all farms supplying reduced-CI crops in its audit scope. The sample must be representative of the types of farms, geographic areas, etc.
When conducting sample farm audits, the verifiers will check to ensure that the low-CI practices have been conducted and that the farmer has retained the proper records. The verifier must confirm that the field-level CI was calculated correctly and that the actual and expected yields are accurate. The verifier must also ensure that the farmer has not double counted low-CI benefits. This verification is required if the farmer has recently or is currently participating in another sustainability certification program.
Farm producers may seek exemption from an audit if they have already been audited in a particular year. They are also allowed to elect to proactively retain a third-party verifier accredited to ISO 14065 to complete their audit. This would allow the farmer to complete the yearly audit on their timetable instead of waiting for a random appointment.
Accreditation of Third-Party Verifiers
Third-party verifiers must be:
- Accredited to ISO 14065
- Unrelated to the entity seeking verification
- On a team comprising an Agricultural Expert, defined as someone employed by the Cooperative Extension System or the agricultural department of universities, or other person approved by the Federal Crop Insurance Corporation, whose research or occupation is related to the specific crop or practice for which such expertise is sought.
What’s Ahead?
This Rule brings the industry one step closer to a system in which farmers may receive a premium price for producing low-carbon crops used in biofuel production. Before that can occur, however, Treasury and the Department of Energy must issue additional guidance integrating the USDA rule and Calculator into the § 45Z credit calculation framework.
Because the USDA chose to retain the mass-balance system for tracking feedstocks, farmers located near ethanol plants or biorefineries may be best positioned to benefit once the program is fully implemented. Livestock producers in those areas could also face higher feed costs if low-CI crops are diverted to biofuel markets and command premium prices.
The Rule also provides incentives for only a limited set of conservation practices, specifically, nutrient management, no-till or reduced-till practices, and cover crops. Expanding the Calculator to recognize practices such as grassed waterways, prairie strips, and other edge-of-field conservation measures could encourage broader adoption of these proven conservation practices.