SECTION 4. TRANSITION

GUIDANCE FOR OBBBA AMENDMENTS

.01 In general . The Treasury Department and the IRS are aware of the need for guidance on how to apply the OBBBA amendments discussed in section 2.03 of this notice by taxpayers using a version of an allowed methodology that does not reflect these OBBBA amendments. This section 4 provides transition guidance on how to apply these OBBBA amendments in such cases.

The first version of the 45ZCF-GREET model to incorporate some of these OBBBA amendments was released on June 12, 2026 (June 2026 version of the 45ZCF-GREET model). Generally, a taxpayer using a pre-June 2026 version of the 45ZCF-GREET model must generate one result for transportation fuel produced on or before December 31, 2025, and another result, modified as specified in section 4.02 of this notice, for transportation fuel produced after December 31, 2025. Utilizing separate results implements the OBBBA’s amendments and effective dates.

.02 Application of OBBBA amend- ments in prior model versions .

(1) ILUC exclusion . Pursuant to § 45Z(b)(1)(B)(iv), a taxpayer producing a transportation fuel after December 31, 2025, must determine an emissions rate that does not include ILUC emissions. For taxpayers using a version of the 45ZCF-GREET model that includes ILUC emissions to determine the emissions rate for a transportation fuel produced after December 31, 2025, the ILUC value published in the 45ZCFGREET model must be subtracted from the Total Life Cycle Analysis Results (Total LCA Results). To make this adjustment, a taxpayer must subtract the ILUC value in the calculated results table from the Total LCA Results, expressed

5 For purposes of this determination, an anaerobic digester is considered operational on the date at which the system begins capturing, productively using, and/or destroying biogas after an initial start-up period. The initial start-up period must not exceed nine months.

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in grams of CO2e per megajoule. The adjusted Total LCA Results must then be multiplied by a factor of 1.055 to convert the Total LCA Results into kg of CO2e per mmBTU.

Taxpayers that use CORSIA Default to determine the emissions rate for a SAF transportation fuel produced after December 31, 2025, must exclude the relevant Default ILUC value listed in CORSIA Default.

Taxpayers that use CORSIA Actual to determine the emissions rate for a SAF transportation fuel produced after December 31, 2025, must exclude any ILUC value included as part of the CORSIA Actual verification process. See section 2.04(3) of this notice for more information on identifying which version of CORSIA Default or CORSIA Actual a taxpayer must use.

(2) Foreign feedstock limitation . Versions of the 45ZCF-GREET model have included pathways for transportation fuel derived from primary feedstocks produced or grown outside the United States, Mexico, or Canada. However, pursuant to § 45Z(f)(1)(A)(iii), a taxpayer may not claim a § 45Z credit for any such fuel produced after December 31, 2025. See section 2.03 of this notice. The § 45Z NPRM also discusses how, after the OBBBA, prohibited foreign feedstocks would be those that originate from a source and/or are purchased from an aggregator located outside the United States, Canada, or Mexico (imported non-Canadian/Mexican).

As discussed in the preamble to the § 45Z NPRM, the Treasury Department and the IRS remain concerned about the ability to reliably distinguish between imported used cooking oil (UCO) and palm oil, and the resulting risk of crediting ineligible fuels. The preamble to the § 45Z NPRM also states that, as a result, pathways that use imported non-Canadian/ Mexican UCO will not be available in the 45ZCF-GREET model until the Treasury Department and the IRS publish further guidance. This section 4.02(2) contains that guidance.

Pre-June 2026 versions of the 45ZCFGREET model included United States UCO as a primary feedstock for certain pathways. The OBBBA’s restriction on imported non-Canadian/Mexican feed

stocks permits a § 45Z credit for transportation fuel produced from Canadian and Mexican UCO. Accordingly, the June 2026 version of the 45ZCF-GREET model added Canadian and Mexican UCO as another primary feedstock for pathways that include United States UCO as a primary feedstock. The calendar year 2026 emissions rate table in the Appendix to this notice also does so. A taxpayer producing a transportation fuel from Mexican or Canadian UCO must use a version of the 45ZCF-GREET model that includes such primary feedstocks to determine the emissions rate of such fuel. The first emissions rate for such fuel, established in the June 2026 version of the 45ZCF-GREET model, relates back for such fuel produced since January 1, 2025. See section 2.04(1) of this notice.

Transportation fuel produced after December 31, 2025, from imported non-Canadian/Mexican UCO, is not eligible for the § 45Z credit. However, for fuel produced in 2025 only, a taxpayer producing a transportation fuel from imported non-Canadian/Mexican UCO must use the applicable pathway in a forthcoming version of the 45ZCF-GREET model for imported non-Canadian/Mexican UCO. Although concerns about the reliability and substantiation of imported non-Canadian/Mexican UCO persist, they are limited in scope, and partly mitigated, by the OBBBA’s prohibition on imported non-Canadian/Mexican UCO as a feedstock for transportation fuel produced after December 31, 2025. Further, because any producer using such imported non-Canadian/Mexican UCO would have already produced the fuel before these pathways were available, and would likely have access to contemporaneous records for 2025 production, the potential for fraud or falsified records is lower.

The § 45Z NPRM requested comments on appropriate substantiation and recordkeeping requirements for feedstocks imported from Canada and Mexico, including UCO, to ensure such feedstocks meet the statutory sourcing requirement. A taxpayer producing a transportation fuel from UCO must keep records sufficient to substantiate its claim for the § 45Z credit, including any specific requirements for UCO in the final § 45Z regulations. See proposed § 1.45Z-4(g)(1)–(2).

(3) Animal manure . Distinct emissions rates based on the specific animal manure feedstock are applicable for all transportation fuel derived from animal manure produced after December 31, 2025, as provided by § 45Z(b)(1)(B)(v) and sections 2.03 and 3.02 of this notice. As discussed in section 3.02(1) of this notice, versions of the 45ZCF-GREET model providing such distinct emissions rates are anticipated. A taxpayer producing a transportation fuel derived from animal manure after December 31, 2025, must use such a version of the 45ZCF-GREET model to determine the emissions rate of such fuel produced after December 31, 2025. See section 2.04 of this notice. A taxpayer must use a version of the 45ZCF-GREET model reflecting an alternative fate derived from the national average of all animal waste management practices to determine the emissions rate of a transportation fuel derived from animal manure produced on or before December 31, 2025. See section 2.04 of this notice. (4) Negative emissions rates . Negative emissions rates are prohibited for transportation fuel produced after December 31, 2025, unless derived from animal manure. Section 4.02(3) of this notice discusses transportation fuel derived from animal manure produced in 2026. A taxpayer using a pre-June 2026 version of the 45ZCF-GREET model to determine the emissions rate of any other transportation fuel produced in 2026 must adjust any negative result up to zero.