SECTION 3. CERTAIN EMISSIONS

ACCOUNTING

.01 Regenerative agriculture practices; safe harbor .

The USDA published a beta version of the USDA Feedstock Carbon Intensity Calculator (USDA FD-CIC) in January 2025. The preamble to the § 45Z NPRM explains that, following publication of the final version of USDA FD-CIC, the Treasury Department and the IRS anticipate that a § 45Z-specific version of the Feedstock Carbon Intensity Calculator (FD-CIC) module would be included as an input to the DOE’s 45ZCF-GREET model (45ZCF FD-CIC) used for calculating carbon intensity adjustments under § 45Z for feedstocks that are produced using certain low-carbon agricultural practices. The preamble also notes that the Treasury Department and the IRS anticipate that 45ZCF FD-CIC may be used for fuel produced and sold in 2025 even though 45ZCF FD-CIC likely would be published in 2026.

In June 2026, the USDA published an updated version of USDA FD-CIC, available at https://www.usda.gov/usda-fdcic, alongside related final Technical Guidelines for the Production of Regenerative Agricultural Biofuel Feedstocks (91 F.R. 39334, June 29, 2026) (USDA technical guidelines). A 2026 version of 45ZCF FD-CIC is forthcoming as part of the 45ZCF-GREET model. For fuel produced in 2025, a taxpayer may use the 2026 version of 45ZCF FD-CIC to determine the emissions associated with feedstocks produced using low-carbon agricultural practices, provided the taxpayer satisfies all requirements for such practices under the USDA technical guidelines in 7 CFR part 2100, including the chain of custody standards

in 7 CFR 2100.030 through 2100.035 and the audit and verification standards in 7 CFR 2100.040 and 2100.041. The Treasury Department and the IRS are aware that for fuel produced in 2025 and 2026, the primary feedstock produced using low-carbon agricultural practices was likely planted before the publication of the final USDA technical guidelines. As such, for fuel produced in 2025 and 2026, the requirements under 7 CFR 2100.060, regarding the pre-application development of a nutrient budget, are deemed satisfied for purposes of § 45Z. However, a taxpayer must be able to substantiate the application of any nutrients (such as nitrogen, phosphorus, and potassium) and measurable nutrient sources and removals that the taxpayer inputs into 45ZCF FD-CIC. A taxpayer must also keep records sufficient to substantiate its claim for the § 45Z credit. See proposed § 1.45Z-4(g)(1)–(2).

.02 Distinct emissions rates for specific animal manure feedstocks .

As discussed in sections 2.03 and 2.04(3) of this notice, § 45Z(b)(1)(B)(v) (I) directs the Secretary to provide, for transportation fuels derived from animal manure, distinct emissions rates based on the specific animal manure feedstock.

(1) Specific animal manure feedstocks . Section 45Z(b)(1)(B)(v)(I) provides that specific animal manure feedstocks may include dairy manure, swine manure, and poultry manure (listed manures). Section 45Z(b)(1)(B)(v)(I) contemplates specific animal manure feedstocks other than the listed manures (unlisted manures), as are determined appropriate by the Secretary. The Treasury Department and the IRS may provide future guidance for determining the emissions rate of fuels derived from unlisted manures, including specific alternative fates. However, the Treasury Department and the IRS anticipate that some unlisted manures will lack technical data to determine an alternative fate for a specific animal manure feedstock.

The Treasury Department and the IRS anticipate that an update to the 45ZCFGREET model including dairy manure and swine manure as distinct primary feedstocks is forthcoming. As such, dairy manure and swine manure are included as

4 The term “alternative fate” has the same meaning as in § 1.45V-4(f)(2)(i).

October 5, 2026 464 Bulletin No. 2026–41

primary feedstocks in the 2026 emissions rate table in the Appendix to this notice.

A taxpayer producing a transportation fuel derived from an animal manure not included in the 2026 emissions rate table may submit a PER petition with the Secretary as provided by § 45Z(b)(1)(D) and in accordance with proposed § 1.45Z-2(f). However, the Treasury Department and the IRS anticipate that the 45ZCF-GREET model will be further updated in 2026 to include poultry manure and beef manure as primary feedstocks. Accordingly, producers of fuels derived from poultry manure and beef manure are encouraged to await this subsequent 45ZCF-GREET model update and to postpone potential submission of any PER petition for such fuels.

(2) Alternative fate . The Treasury Department and the IRS, in consultation with the DOE and the USDA, have determined that in certain instances a distinct emissions rate for a transportation fuel derived from animal manure may be determined within the 45ZCF-GREET model on the basis of the farm-specific prior manure management practices applied to each specific animal manure feedstock, as described below.

A taxpayer producing a transportation fuel derived from animal manure may use an alternative fate reflecting farm-specific prior manure management practices for the animal manure from which the taxpayer derived its transportation fuel. For purposes of determining such alternative fate, a “farm” is any animal feeding operation, with or without a nutrient management plan, or other animal operation with a nutrient management plan. Farm-specific prior manure management practices depend on the animal manure, and may include manure storage in uncovered lagoons, deep pits, liquid/slurry, pasture/ range/paddock, dry lot, and solid storage.

A taxpayer producing a fuel derived from an animal manure determines a distinct emissions rate by inputting into the 45ZCF-GREET model the number of animals by type and share of manure managed using each prior practice in place immediately preceding the earlier of: (i)

the commencement date of any anaerobic digester operation ⁵ or (ii) September 8, 2026. If a farm diverted manure to an offfarm anaerobic digester, the commencement date is the date the farm first began diverting manure to any off-site anaerobic digester. A taxpayer will provide the number of animals by type and the share of manure managed using each practice, including the quantity routed to an anaerobic digester, in the taxable year of production. This information is collectively used to calculate the avoided emissions in the 45ZCF-GREET model for prior manure management practices based on the specific animal manure feedstock.

A taxpayer must be able to substantiate such farm-specific prior manure management practices for all collected manure if such data are used to establish an alternative fate. A taxpayer that cannot substantiate the farm-specific prior manure management practices of a given farm will not have avoided emissions included in the 45ZCF-GREET model for such farm’s portion of the taxpayer’s manure inputs. For more information regarding substantiation of emissions rates and the related safe harbor, see proposed § 1.45Z-4(g) (1)–(2).

The 45ZCF-GREET model will not provide a farm-specific alternative fate with respect to animal manure sourced from a new farm (a farm that begins operations after September 8, 2026) until the Treasury Department and the IRS issue further guidance on this issue. As previously explained, the farm-specific alternative fate for a specific animal manure feedstock reflects the avoided emissions from utilizing an anaerobic digester as compared to the prior manure management practices for a given animal manure on the farm. Given how the farm-specific alternative fate is calculated, a new farm, which necessarily has no existing manure management practices, could be incentivized to select the highest emitting practices on startup. Such intentional inflation of avoided emissions, and in turn the § 45Z credit amount, is contrary to the language of § 45Z and its incentivization of cleaner fuel production. The Treasury

Department and the IRS are studying how a distinct emissions rate for transportation fuel derived from animal manures sourced from a new farm may be determined in a manner that mitigates these concerns.