Section 130.10  Purpose

The Department of Commerce and Economic Opportunity recognizes that renewable fuels produced from Illinois agricultural products will enhance the economy of Illinois, expand rural economic development, reduce the nation's dependence on foreign oil supplies, and improve the environment by reducing harmful emissions from vehicles.  In 2003, factors such as the electric blackout in the northeastern United States, the electricity crisis affecting California and other western states, instability in the Middle East, and extraordinarily high gasoline prices have created a situation in which renewable forms of energy must be utilized in order for both the Illinois economy and national economy to grow. 

Reliable supplies of renewable fuels will be integral to the long term energy security of the United States [20 ILCS 689/5].  Illinois is the largest producer of soybeans in the United States and ranks second in annual corn production.  Illinois is also the leading producer of ethanol and biodiesel in the nation, with an ethanol production capacity of approximately 800 million gallons per year. Accordingly, the Illinois Department of Commerce and Economic Opportunity administers the Illinois Renewable Fuels Development Program, which will offer grants to new and existing ethanol and biodiesel production facilities in Illinois.  Implementation of the Program is intended to reduce costs for ethanol production facilities, stimulate the agricultural sector of Illinois' economy, encourage the use of renewable fuels as alternatives to the nation's reliance on fossil fuels, and reduce global warming emissions.  New and expanded renewable fuel production facilities will expand local economies, create permanent jobs, generate revenue for the State of Illinois, and increase revenue for local grain farmers.

When awarding public funds for public works projects, the State of Illinois has a compelling interest in ensuring that the highest standards of quality and efficiency are applied to the project.  Project labor agreements provide the State of Illinois with a guarantee that specific public works projects will be completed with highly skilled workers, and also functions as a means to provide for peaceful, orderly and mutually binding procedures for resolving labor issues.  Accordingly, recipients of renewable fuel development grants will be required to enter into project labor agreements establishing wages, benefits and other provisions pertaining to labor organization employees. This requirement does not prohibit the construction of renewable fuel production facilities in Illinois that are undertaken without a project labor agreement.

Section 130.20  Definitions

The following definitions are applicable to this Part:

"Act" means the Illinois Renewable Fuels Development Program Act [20 ILCS 689].

"Award Value Criteria" means the criteria established by the Department in Section 130.90 in order to determine appropriate grant award levels.

"Biodiesel" means a renewable diesel fuel derived from biomass that is intended for use in diesel engines (Section 10 of the Act).

"Biodiesel blend" means a blend of biodiesel with petroleum-based diesel fuel in which the resultant product contains no less than 1% and no more than 99% biodiesel (Section 10 of the Act).

"Biofuels" means either ethanol or biodiesel.

"Biomass" means non-fossil organic materials that have an intrinsic energy content.  "Biomass" includes, but is not limited to, soybean oil, vegetable oils, and ethanol. (Section 10 of the Act)

"Cooperative" means a business that is established, financed, operated and owned by individuals for the purpose of providing additional value to their agricultural  products.

"Department" means the Illinois Department of Commerce and Economic Opportunity.

"Diesel Fuel" means any product intended for use or offered for sale as a fuel for engines in which the fuel is injected into the combustion chamber and ignited by pressure without electric spark (Section 10 of the Act).

"Director" means the Director of the Department.

"Ethanol" means a product produced from agricultural commodities or by-products used as a fuel or to be blended with other fuels for use in motor vehicles (Section 10 of the Act).

"Fuel" means fuel as defined in Section 1.19 of the Motor Fuel Tax Law [35 ILCS 505/1.19] (Section 10 of the Act).

"Gasohol" means motor fuel that is no more than 90% gasoline and at least 10% denatured ethanol that contains no more than 1.25% water by weight (Section 10 of the Act).

"Gasoline" means all products commonly or commercially known or sold as gasoline (including casing head and absorption or natural gasoline) (Section 10 of the Act).

"Illinois Agricultural Product" means any agricultural commodity grown in Illinois that is used by a production facility to produce renewable fuel in Illinois, including, but not limited to, corn, barley, and soybeans (Section 10 of the Act).

"Labor Organization" means any organization or regional body or group of local unions:

in which building and construction industry trades, crafts, or labor employees, or all or any of these, participate; and

that represents building and construction industry trades, crafts, or labor employees, or any or all of these; and

that exists for the purpose, in whole or in part, of negotiating with the employers of building and construction industry trades, crafts, or labor employees, or any or all of these, terms and conditions of employment, including, but not limited to: wages, hours of work, overtime provisions, fringe benefits, and the settlement of grievances; and

that participate in apprenticeship and training approved and registered with the United States Department of Labor's Bureau of Apprenticeship and Training, in the State of Illinois. (Section 10 of the Act)

"Majority Blended Ethanol Fuel" means motor fuel that contains no less than 70% and no more than 90% denatured ethanol and no less than 10% and no more than 30% gasoline (Section 10 of the Act).

"Motor Vehicles" means motor vehicles as defined in the Illinois Vehicle Code [625 ILCS 5] and watercraft propelled by an internal combustion engine (Section 10 of the Act).

"Owner" means any individual, sole proprietorship, limited partnership, co-partnership, joint venture, corporation, cooperative, or other legal entity that operates or will operate a plant located within the State of Illinois (Section 10 of the Act).

"Permanent Job" means a job in which a new employee works for the owner at the project at a rate of at least 35 hours per week and does not include construction jobs.

"Plant" means a production facility that produces a renewable fuel.  "Plant" includes land, any building or other improvement on or to land, and any personal properties deemed necessary or suitable for use, whether or not now in existence, in the processing of fuel from agricultural commodities or by-products. (Section 10 of the Act)

"Plant Construction" means any new construction of a renewable fuels production plant with a minimum annual production capacity of 30 million gallons.

"Plant Expansion" means any modification, alteration or retrofitting of an existing plant, with a minimum annual renewable fuels production capacity of 30 million gallons, that will result in an increased renewable fuels production capacity, yield or efficiency.

"Project" means a plant construction or plant expansion project that is funded under the program.  Over a period of time, separated by a reasonable period, multiple "projects" could occur at one facility; for instance, an initial plant construction project followed by a plant expansion project at the same facility.

"Program" means the Renewable Fuels Development Program.

"Renewable fuel" means ethanol, gasohol, majority blended ethanol fuel, biodiesel blend fuel, and biodiesel (Section 10 of the Act).

"Rural County" means a county in the State of Illinois designated as a non-Metropolitan Statistical Area by the United States Office of Management and Budget.  A rural county has a population of less than 50,000.

"State" means the State of Illinois.

Section 130.30 Allocation of Appropriations

Subject to appropriation, the Director is authorized to award grants for projects approved pursuant to this Part.  An approved project is eligible for only one grant per fiscal year from the Renewable Fuels Development Program.  A project means either the construction of a new facility where such production did not previously exist or an expansion to increase the capacity of an existing production facility, as described in the application approved and funded by the Department through this program.  Further, a facility receiving a grant for new construction or a plant expansion in one fiscal year may be eligible for a grant for expansion of the capacity of that facility in another fiscal year.

(Source:  Amended at 31 Ill. Reg. 2283, effective January 18, 2007)

Section 130.40  Project Eligibility Requirements 

In order to be eligible for funding under the program, the proposed project must meet all of the following criteria:

a)         the project must be physically located in the State of Illinois;

b)         the project must be either a plant construction project or a plant expansion project; new construction must consist of 30 million gallons or more;

c)         the owner must commit to entering into a Project Labor Agreement covering the project that is compliant with the provisions of Section 130.60;

d)        the owner must commit to securing all financing (debt and equity) necessary to complete the project; and

e)         The owner must commit to using Illinois agricultural products as the primary source in the renewable fuels production process.

Section 130.50  Eligible Uses of Grant Funds

Program grant proceeds may be expended solely for costs incurred, including labor and other bondable expenses, that are directly related to capital facilities consisting of buildings, structures and durable equipment in connection with an approved plant construction or plant expansion project.  Grant funding may not be used for administrative expenditures, including labor such as architectural and engineering fees, that are not related to the project.

Section 130.60 Project Labor Agreements

a)         A Project Labor Agreement for the plant construction or plant expansion to be funded through the Renewable Fuels Development Program must include the following:

1)         provisions setting forth established standard hourly wages for each class of labor organization employee;

2)         provisions setting forth area standard benefits and other compensation for each class of labor organization employee;

3)         provisions establishing that no strike, job interruption, or delay will be engaged in by the covered employees;

4)         provisions setting forth effective, immediate, and mutually binding procedures for resolving jurisdictional labor disputes and grievances arising before the completion of work;

5)         provisions ensuring a reliable source of skilled and experienced labor;

6)         provisions to further public policy objectives as to improved employment opportunities for minorities and women in the construction industry to the extent permitted by State and federal law;

7)         provisions to permit the selection of the most qualified lowest responsible bidder, without regard to union or non-union status at other construction sites;

8)         provisions to bind all contractors and subcontractors on the project through the inclusion of appropriate bid specifications in all relevant bid documents;

9)         the names, addresses, and occupations of the owner of the plant and the individuals representing the labor organization employees participating in the Project Labor Agreement.

b)         Project Labor Agreements shall include other terms as the parties deem appropriate.

c)         The Project Labor Agreement shall be filed with the Director in accordance with the procedures established by the Department  (Section 25 of the Act).

Section 130.70  Form of Application

The grant application package must include all of the following materials/information:

a)         Application cover page (Appendix A);

b)         Application form (Appendix B);

c)         Projected Energy Use by Type form (Appendix C);

d)         Narrative description of the proposed project, including:

1)         Plant description.  A description of the proposed construction or expansion project, including a description of the scope and nature of the plant, a description of equipment, technologies and processes used; a description of the renewable fuels production capacity; a description of the amounts, types and sources of Illinois agricultural products used as feedstock in the project; a location map showing project site and connections to existing transportation routes; and a description of all permits, contracts or other agreements necessary to complete the project.  If the applicant does not have all relevant or necessary operating permits, identification of the status of any permit applications and anticipated date of permit issuance should be included in the narrative, in addition to the date that any required contracts or agreements will be executed.

2)         Project benefits.  Economic justification for the project that includes a summary of the social or economic benefits of the project to Illinois; identification of those communities, businesses, and other entities likely to benefit from the project; identification of employment impacts, such as number and type of permanent jobs created or retained by the project itself (i.e., non-construction jobs) and projected payrolls; and the existing and or new agricultural commodity and renewable fuel markets that would be affected by the project.

3)         Project costs and schedule.  A project budget and time schedule for completion of the project and for major project components.  Direct material and labor costs associated with construction must be defined and itemized in the proposal.  For instance, proposals should include specific line item budget amounts for equipment such as fermenters, grain-storage, dryer systems, tanks, and centrifuges, not simply reference to broad categories such as structures, mechanical, electrical, etc.

4)         Ownership disclosure.  Identification by name of those individuals or entities with 10% or more ownership of the plant that is the subject of the project.

5)         Performance disclosure.  As asserted against the owner, or any parent organization or holding company, identification of all pending or unresolved violations of state or federal laws or regulations that could result in legal or regulatory impact on the operation of the project; 

e)         Copy of the Prospectus to Shareholders, if applicable;

f)         Copy of the business plan;

g)         Organization/management structure information;

h)         Copy of the Project Labor Agreement (or draft agreement if the final agreement is still pending at the time of initial application);

i)          Certification that owner will obtain all necessary, applicable and required permits;

j)          Certification that owner will obtain all financing (debt and equity) necessary to complete the project;

k)         Certification identifying the number of permanent jobs to be created/retained and identification of the types of jobs created/retained.

Section 130.80 Application Submittal

a)         Applications to the program for grant funds may be submitted to the Department at any time in accordance with this Part, or pursuant to the time frame specified in a formal Request for Proposals issued by the Department.

b)         One original and five copies of each grant application shall be submitted to Illinois Renewable Fuels Development Program, Bureau of Energy and Recycling, Illinois Department of Commerce and Economic Opportunity, 620 East Adams Street, CIPS-5, Springfield IL  62701-1615. Applications submitted by e-mail or facsimile are not acceptable unless the Department specifically requests additional information and/or materials to be submitted by the applicant.

c)         The Department may require applications to be clarified or supplemented through additional written submissions or oral presentations.

d)         Information submitted that could reasonably be considered to be proprietary, privileged, or confidential commercial or financial information should be identified as such in the application.  The Department will maintain the confidentiality of that information to the extent permitted by law.

Section 130.90  Application Evaluation Procedures

a)         The Department will evaluate complete proposals in the following manner:  proposals will be evaluated to determine whether the proposed project meets the project eligibility criteria specified in Section 130.40 and to determine whether, based on the information supplied in the application documentation, the proposal demonstrates that: 

1)         the project is economically viable;

2)         the project is technically viable; and

3)         the Project will result in economic development benefits to the State.

b)         The Department may obtain the assistance of other persons either within or outside of State government in reviewing part or all of any application when, in the opinion of the Department, to do so would promote a more thorough and fair understanding of the proposed project.  If the Department elects to obtain such assistance, the Department shall select persons qualified by relevant environmental, technical, or engineering experience.

c)         The Department reserves the right to make on-site survey inspections during the

evaluation when, in the opinion of the Department, to do so would promote a more thorough and fair understanding of the proposed project.

d)         Upon completion of the evaluation and determination of the grant award, in accordance with Section 130.100, the Department staff shall make a recommendation to the Director.  The Director may then approve, reject, or amend the grant award, according to the best interests of the State, at her or his discretion.

e)         Rejection of applications. The Department reserves the right to reject any proposal that does not comply with the requirements of this Part.

f)         No rights conferred.  The submission of a proposal under this Section confers no right upon any applicant.  The Department is not obligated to award a grant, to pay any cost incurred by the applicant in the preparation and submission of a proposal, or pay any grant related costs incurred prior to the project start date.

Section 130.100   Grant Award Evaluation Criteria and Funding Limitations

The Department staff shall utilize the following award evaluation criteria to determine the award amount for any grant to be recommended to the Director:

a)         General Award Evaluation Criteria.

1)         Cooperative ownership share of the project.

2)         The size (total new biofuels production capacity) of the project.

3)         The volume of usage of Illinois agricultural products in the production of renewable fuels at the facility.

4)         The number of permanent new jobs created.

5)         The local or regional economic need for the project.

6)         The current local base prices for corn and soybeans in the project area.

7)         The use of new process technologies, new energy efficiency or energy production technologies, other new technologies designed to reduce production costs or increase profitability of the facility, or the production of new value-added by-products.

8)         In addition to the criteria listed in this subsection (a), the Department may consider one or more of the following factors when evaluating an application, if the Department determines it to be in the best interest of the State of Illinois:

A)        the applicant is considering at least one neighboring state for the project and could reasonably and efficiently locate the project outside of Illinois;

B)        receipt of the award is a major factor in the applicant's decision to locate the project in Illinois and that, without the award, the applicant likely would not create new jobs in Illinois; or

C)        approval of the award would support a business with potential to generate additional growth in the area and create jobs as a result of spin-off businesses.

b)         Grant limitations and other grant award considerations.

1)         The maximum grant award under the program is $5.5 million for either a plant expansion or a new construction project.

2)         Grants for biofuels facilities shall not exceed 10% of the total construction

costs of the facility or expansion, or $0.10 per gallon of additional biofuels production capacity, whichever is greater.

3)         The Department reserves the right to determine the final amount of the grant based on its evaluation of the project, amount of funds available, and the number of applications for program funds.

4)         Funding awards are not transferable or assignable to another project and may not be assigned to another entity without the Department's prior written permission.

5)         The Department will negotiate the structure of the agreement (i.e., advance production payment, conventional grant award, etc.) with the recipient, taking into consideration the organizational status of the recipient, project financing, applicable tax credits and considerations, and applicable Illinois statutory and administrative requirements.

Section 130.110  General Program Requirements

a)         Reporting requirement.  Recipients will be required to submit Monthly Progress Reports to the Department during the grant term, including information on the number of jobs created or retained.  Recipients shall also be required to provide production data/records for the performance period specified by the Department.  The grant term/performance period will be determined on a project specific basis.

b)         Disbursement of grant funds.  Notwithstanding selection for a grant award pursuant to this Part, disbursement of grant funds is contingent upon the following requirements:

1)         Submission of a fully executed grant agreement;

2)         Submission of a fully executed Project Labor Agreement for the construction of the project;

3)         Submission of evidence of a commitment from a primary lender for all financing necessary to complete the project, or evidence that the grantee has secured other means of financing.

c)         Freedom of Information Act/confidential information.  Funded proposals are subject to disclosure, in response to requests received under provisions of the Freedom of Information Act [5 ILCS 140]. Information that may reasonably be considered to be proprietary, privileged or confidential commercial or financial information should be identified as such in the proposal.  The Department will maintain the confidentiality of that information only to the extent permitted by law.

d)         Ownership/use of equipment.  Grant recipients may not sell, lease, transfer assignment or encumber any equipment or material purchased with grant funds, without the express written approval of the Department, for the duration of the grant term/performance period.

e)         Dissemination of information/technology transfer.  Recipients will be contractually required to allow the Department access to the project site and allow the Department to obtain, publish, disseminate or distribute any and all information obtained from the project (except any data or information that has been negotiated as being confidential or proprietary), without restriction and without payment or compensation by the Department.

f)         Recapture of grant funds.  A recipient must operate the plant to produce renewable fuels for a period of five years.   In the event that the plant ceases production during that period, or fails to create and maintain the number of jobs specified in the Grant Agreement, the Department reserves the right to require appropriate proportional repayment of funds up to the entire amount of the grant.

g)         The Director may elect to waive enforcement of any provision of this Part or of a contractual provision arising out of a Arant Agreement based on a finding that the waiver is necessary to avert any imminent and demonstrable hardship to the recipient that may result in the recipient's insolvency or discharge of workers.

h)         In addition to compliance with any federal, State or local permitting requirements, funded projects will be subject to review by the following Illinois agencies:  Departments of Natural Resources, Historic Preservation and Agriculture and the Illinois Environmental Protection Agency.  Recipients will be required to comply with requirements established by these agencies relative to their respective reviews.  Recipients will be responsible for coordinating directly with the applicable external agencies.  Any requirements communicated to the Department shall be incorporated into the agreement awarded as of its execution date, or if received from the applicable agency subsequent to execution, as an addendum to the agreement.  Recipients will be contractually obligated to comply with these requirements. Prior to notification of compliance by the applicable agency, recipients may request disbursement of funds only for the following purposes:  administrative, contractual, legal, engineering or architectural/engineering costs incurred that are necessary to allow for compliance by the recipient with requirements established by the external agency.  Funds will not be disbursed for land acquisition or any activity that physically impacts the project site until the Department receives the appropriate sign-off from the applicable agencies.

Section 130.120  Grant Agreement

a)         When a grant has been awarded, the grantee and the Department shall execute an  agreement.  The agreement shall be executed between the grantee and the Director or the Director's designee on behalf of the Department.

b)         The agreement shall contain substantive provisions, including, but not limited to, the following:

1)         A recitation of legal authority pursuant to which the agreement is made;

2)         An identification of the project scope and schedule and the work or services to be performed or conducted by the grantee;

3)         An identification of the grant amount;

4)         The conditions and manner in which the Department shall pay the grant amount, subject at all times to annual appropriation by the General Assembly;

5)         A promise by the grantee not to assign or transfer any of the rights, duties or obligations of the grantee without the written consent of the Department;

6)         A promise by the grantee not to amend the agreement without the written consent of the Department.  Failure to do so will result in a cost disallowance.  The project must be completed by the completion date in the agreement unless a written request for an extension is submitted no later than 30 days prior to the award completion date;

7)         A covenant that the grantee shall expend the grant amount and any accrued interest only for the purposes of the project as stated in the agreement and approved by the Department; and

8)         A covenant that the grantee shall refrain from entering into any written or oral agreement or understanding with any party that might be construed as an obligation of the State of Illinois or the Department for the payment of any funds under the Act.

Section 130.130  Administrative Requirements for Grants

a)         Termination of grant. Grants shall be terminated for the following reasons:

1)         Termination due to loss of funding.  In the absence of State funding for a fiscal year, all grants for that year will be terminated in full.  In the event of a partial loss of State funding, the Department will make proportionate cuts to all grantees.  In the event the Department suffers such a loss of funding in full or part, the Department will give the grantee written notice setting forth the effective date of full or partial termination or, if a change in funding is required, setting forth the change in funding and changes in the approved budget.

2)         Termination for cause.

A)        If the Department determines that the grantee has failed to comply with the terms and conditions of the grant, the Department shall terminate the grant in whole, or in part, at any time before the date of completion.  Circumstances that will result in the termination of a grant include, but are not necessarily limited to, the following: consistent failure to submit required reports; failure to maintain required records; evidence of fraud and abuse; and consistent failure to meet performance standards.  These circumstances are explained in the agreement.

B)        The Department shall notify the grantee in writing, within 10 working days after the determination to terminate, of the reasons for the termination and the effective date of the termination.  Payments made to the grantee or recoveries by the Department shall be made in accordance with legal rights and liabilities expressed in the agreement.

3)         Termination for convenience. The Department may terminate the grant upon its determination that continuation of the project is not in the best interest of the State such that it would justify further expenditure of public funds.  The grantee shall not incur new obligations for the terminated portion after the effective date and shall cancel as many outstanding obligations as possible. The Department shall allow full credit to the grantee for the Department's share of the noncancelable obligations properly incurred by the grantee prior to termination.

b)         Interest on grant funds.  In accordance with Section 10 of the Illinois Grant Funds Recovery Act [30 ILCS 705/10], all interest earned on funds held by the grantee under the grant shall become part of the grant when earned, as long as this amount does not exceed the maximum allowable grant award.  Any interest earned under the grant, and not expended as grant principal during the term of the grant, shall be returned to the Department.

c)         Grant close-out.  In accordance with Section 4 of the Illinois Grant Funds Recovery Act [30 ILCS 705/4], all funds, including any interest, remaining at the end of the grant period or at the expiration of the period of time grant funds are available for expenditure or obligation by the grantee, shall be returned to the Department within 45 days after the end of the relevant period. The grantee agrees to repay the Department for any funds that are determined by the Department to have been spent in violation of the agreement.

d)         Audits.  A grantee shall be responsible for securing a compliance audit for any grant award exceeding $300,000.  Additionally, an audit may be required when certain risk conditions exist, including, but not limited to, a negative compliance history and disclosure of previous material audit findings.  The audit shall be performed by an independent certified public accountant, licensed by authority of the State of Illinois pursuant to the Illinois Public Accounting Act [225 ILCS 450].  The audit shall be conducted in accordance with generally accepted auditing standards contained in the publication entitled AICPA Professional Standards, American Institute of Certified Public Accountants, Harborside Financial Center, 201 Plaza 3, Jersey City, New Jersey 07311 (June 2001, no later editions are incorporated).

e)         Special audits.  The Department reserves the right to conduct special audits, of the funds expended under Department grants, including but not limited to an agency-wide audit, at any time during normal working hours.

f)         Monitoring and evaluation.  Grantee shall permit any agent authorized by the Department, upon presentation of credentials, in accordance with the constitutional limitation on administrative searches, to have full access to, and the right to examine, any documents, papers, and records of the grantee involving transactions related to a grant from the Department.  Once the Department has concluded its monitoring activities, the grantee will be notified of the Department's findings.  If a determination of noncompliance has been made by the Department, the grantee will be allowed an opportunity to cure any and all noncompliance issues.  If any noncompliance issues cannot be resolved within 60 days from the date the grantee received notice of the noncompliance, the Department will issue a notice requesting that the grantee repay any funds that are determined by the Department to have been spent in violation of the agreement.  If the grantee fails to comply with the Department's notice, the Department shall issue a final notice providing the grantee the opportunity to request an administrative hearing pursuant to the Department's Administrative Hearing Rules (56 Ill. Adm. Code 2605).

g)         Complaint process.  An administrative hearing is initiated by a party serving a Petition for Hearing on the Department, or by the Department serving a Notice of Charges on the grantee.  In either case, the Department and the grantee shall follow the Administrative Hearing Rules set forth in 56 Ill. Adm. Code 2605.

h)         Certifications.  The grantee shall make all certifications required by statute or

administrative rules or regulations relative to the issuance of a grant. 

i)          Reports.  Grantee shall submit, as required by the Department, reports on the financial status of the project and reports on outcomes and results of the project.