[Federal Register Volume 68, Number 244 (Friday, December 19, 2003)]
[Proposed Rules]
[Pages 70730-70746]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-31347]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 68, No. 244 / Friday, December 19, 2003 / 
Proposed Rules  

[[Page 70730]]



DEPARTMENT OF AGRICULTURE

Office of Energy Policy and New Uses

7 CFR Part 2902

RIN 0503-AA26


Guidelines for Designating Biobased Products for Federal 
Procurement

AGENCY: Office of Energy Policy and New Uses, USDA.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The U.S. Department of Agriculture (USDA) is proposing to 
establish guidelines for designating items made from biobased products 
that would be afforded Federal procurement preference, as required 
under Section 9002 of the Farm Security and Rural Investment Act of 
2002 (FSRIA).

DATES: Submit comments on or before February 17, 2004.

ADDRESSES: You may submit comments by postal mail/commercial delivery 
or by e-mail. If you use postal mail/commercial delivery, please send 
your comments to: Marvin Duncan, USDA, Office of the Chief Economist, 
Office of Energy Policy and New Uses, Room 361, 300 Seventh Street SW., 
Washington, DC 20024. If you wish to use e-mail, go to the Web site 
http://www.biobased.oce.usda.gov for e-mail instructions or use the e-
mail address [email protected]. Please include your name and address in 
your message and ``Proposed Guidelines'' on the subject line. Persons 
with disabilities who require alternative means for communication for 
regulatory information (braille, large print, audiotape, etc.) should 
contact USDA's TARGET Center at (202) 720-2600 (voice) and (202) 401-
4133 (TDD).

FOR FURTHER INFORMATION CONTACT: Marvin Duncan by e-mail at 
[email protected] or by phone at (202) 401-0532.

SUPPLEMENTARY INFORMATION:

I. Authority

    These guidelines are proposed under the authority of section 9002 
of the Farm Security and Rural Investment Act of 2002 (FSRIA), 7 U.S.C. 
8102 (referred to in this document as ``section 9002'').

II. Overview of Section 9002

    Section 9002 provides for preferred procurement of biobased 
products by Federal agencies. Federal agencies are required to purchase 
biobased products, as defined in regulations to implement the statute, 
for all items costing over $10,000 or when the quantities of 
functionally equivalent items purchased over the preceding fiscal year 
equaled $10,000 or more. Procurements by a Federal agency subject to 
section 6002 of the Solid Waste Disposal Act (42 U.S.C. 6962) are not 
subject to the requirements under section 9002 to the extent that the 
requirements of the two programs are inconsistent. Federal agencies 
must procure biobased products unless the items are not reasonably 
available, fail to meet applicable performance standards, or are 
available only at an unreasonable price.
    The Office of Federal Procurement Policy (OFPP) and the USDA will 
work in cooperation to implement the requirements of section 9002. In 
this document, we are proposing to establish guidelines for Federal 
agencies to follow in the procurement of items designated for preferred 
procurement. These guidelines also address the statutory requirement 
that Federal agencies have in place, within 1 year of the publication 
of final guidelines, a procurement program that assures items composed 
of biobased products will be purchased to the maximum extent practical. 
Those procurement programs would have to contain a biobased products 
preference program, an agency promotion program, and provisions for the 
annual review and monitoring of an agency's procurement program. USDA 
consulted with the Environmental Protection Agency (EPA), the General 
Services Administration (GSA), and the Department of Commerce National 
Institute of Standards and Technology (NIST) in preparing these 
proposed guidelines.
    In designating items (generic groupings of specific products such 
as crankcase oils or synthetic fibers), the Secretary will consider the 
availability of such items and the economic and technological 
feasibility of using such items, including life cycle costs. Federal 
agencies would be required to purchase products contained within an 
item only after that item has been designated for preferred 
procurement. In addition, the Secretary would provide information to 
Federal agencies on the availability, relative price, performance, and 
environmental and public health benefits of such items and, where 
appropriate, would recommend the level of biobased content to be 
contained in the procured product. Manufacturers and vendors would be 
able to offer their products to Federal agencies for preferred 
procurement under the proposed program when their commercial products 
fell within the definition of an item that had been designated for 
preferred procurement and the biobased content of the products met the 
standards set forth in the guidelines.
    Paragraph (h) of section 9002 provides that the Secretary, in 
consultation with the Administrator of the Environmental Protection 
Agency (EPA), shall establish a voluntary program authorizing producers 
of biobased products to use a ``U.S.D.A. Certified Biobased Product'' 
label. In a subsequent rulemaking, we intend to establish that 
voluntary program and provide eligibility criteria and guidelines for 
the use of the ``U.S.D.A. Certified Biobased Product'' label.
    Paragraph (j) of section 9002 provides funds to the Secretary to 
support the testing of biobased products to carry out the provisions of 
the section.
    The legislative history of Title IX of FSRIA suggests that Congress 
had in mind three primary objectives that would apply to section 9002. 
The first objective is to improve demand for biobased products. This 
would have a number of salutary effects, one of which would be to 
increase domestic demand for many agricultural commodities that can 
serve as feedstocks for production of biobased products. Another 
important effect would be the substitution of products with a more 
benign or beneficial environmental impact, as compared to the use of 
fossil energy based products.
    As a second objective, Congress wants to spur the development of 
value-added agricultural processing and manufacturing in rural 
communities.

[[Page 70731]]

Since biobased feedstocks are largely produced in rural settings and, 
because of their bulk, require pre-processing or manufacturing close to 
where they are grown, increased dependence on biobased products appears 
likely to increase the amount of pre-processing and manufacturing of 
biobased products in rural regions of the Nation. This trend would help 
to create new investment, job formation, and income generation in these 
rural regions.
    The third objective is to enhance the Nation's energy security by 
substituting domestically produced biobased products for fossil energy-
based products derived from imported oil and natural gas. The growing 
dependence of the Nation on imported oil and natural gas, along with 
heightened concerns about political instability in some of the oil rich 
regions in the world, have led the Congress to place a higher priority 
on domestically produced energy and biobased products.

III. Background

    In 1999, as required by section 504 of Executive Order 13101, 
``Greening the Government through Waste Prevention, Recycling, and 
Federal Acquisition,'' the U.S. Department of Agriculture (USDA) 
Biobased Products Coordination Council (now called the Biobased 
Products and Bioenergy Coordination Council) published a notice in the 
Federal Register (64 FR 44185, Aug. 13, 1999) to solicit public 
comments on a process for considering items for inclusion on a USDA 
Biobased Products List and suggested criteria for including biobased 
items on that list. The Council was established by the Secretary of 
Agriculture and is comprised of USDA representatives with 
commercialization, legislative, marketing, procurement, rural 
development, research, and other technical expertise. Others consulted 
regarding the listing procedures described in the August 1999 notice 
included the Office of the Federal Environmental Executive, NIST, EPA, 
the Federal Trade Commission (FTC), environmental organizations, and 
agricultural organizations. Also advising USDA were Federal members of 
the Executive Order 13101 Inter-Agency Advisory Group.
    The requirements of section 9002 differ from those of Executive 
Order 13101. For example, the Executive Order and section 9002 use 
slightly different definitions of the term ``biobased product.'' 
Another distinction is that the Executive Order encourages, but does 
not require, procurement of biobased products. Section 9002 establishes 
a mandatory procurement preference, with limited exceptions, for 
designated items. The Executive Order envisions a list of specific 
products to be promulgated, whereas section 9002 requires guidelines 
designating ``items which are or can be produced with biobased 
products'' and recommended procurement practices for both biobased 
products and items containing biobased products.
    Under section 9002, the term ``biobased products'' refers to ``a 
product determined by the Secretary to be a commercial or industrial 
product (other than food or feed) that is composed, in whole or in 
significant part, of biological products or renewable domestic 
agricultural materials (including plant, animal, and marine materials) 
or forestry materials.'' The term ``item'' refers to a subcategory or 
grouping of similar products containing biobased content. An item is 
populated by commercial and industrial products available for purchase 
by Federal agencies. An example of an item (or subcategory) under the 
``Lubricants and functional fluids category'' discussed later in this 
document is hydraulic, power steering, and transmission fluids. Under 
Executive Order 13101, the term ``biobased product'' was used to mean 
what the term ``item'' means under section 9002.
    USDA no longer intends to promulgate a list of biobased products as 
envisioned in Executive Order 13101. Rather, USDA will designate items 
that qualify for preferred procurement as required by section 9002.
    The statutorily required elements of the section 9002 guidelines 
further distinguish the guidelines from the Executive Order list. 
Despite these differences, comments received in response to the 1999 
proposed procedures to implement the biobased products list were taken 
into consideration when preparing proposed product categories and 
selection criteria for these proposed guidelines.
    For purposes of identifying a Federal agency in implementing 
section 9002, we have chosen to use the definition of ``Federal 
agency'' found in the Federal Acquisition Regulation (48 CFR 2.101), 
i.e., ``any executive agency or any independent establishment in the 
legislative or judicial branch of Government (except the Senate, the 
House of Representatives, the Architect of the Capitol, and any 
activities under the Architect's direction).''
    Once USDA designates an item, responsibility for complying with 
section 9002 rests with Federal agencies. Responsibilities and 
implementation strategies of USDA, Federal agencies, the Office of 
Federal Procurement Policy, and manufacturers and vendors, 
respectively, are outlined briefly below in section IV.
    This program is modeled on the EPA Comprehensive Procurement 
Guideline for Products Containing Recovered Materials, known as the 
Comprehensive Procurement Guideline (CPG), 40 CFR part 247, which 
designates items that are or can be made with recovered materials. The 
CPG implements section 6002 of the Solid Waste Disposal Act (42 U.S.C. 
6962), as amended by the Resource Conservation and Recovery Act of 1976 
(RCRA), as amended. Executive Order 13101 also facilitated RCRA 
implementation. RCRA requires EPA to designate items that are or can be 
produced with recovered materials and to recommend practices for the 
procurement of designated items by procuring agencies. Executive Order 
13101 directs EPA to designate the products in the CPG and to provide 
purchasing recommendations in Recovered Materials Advisory Notices 
(RMANs). Information on the CPG and the RMANs can be found on the 
Internet at http://www.epa.gov/cpg.
    The legislative history of section 9002 suggests that Congress 
intended to use this program to speed the development of new markets 
for biobased products, rather than to support mature markets for 
products. Hence, USDA has crafted this program to focus on new market 
development. It is USDA's intention to exclude from this program 
biobased products it concludes have mature markets. USDA proposes to 
use a number of filters or tests to exclude products in what it defines 
as mature markets. If a product falls within an excluded group of 
products in any one filter, it is excluded from consideration under the 
program to implement section 9002. To be eligible for preferred 
procurement under section 9002, a product must be found eligible under 
each of these filters or tests. In the first test, silk, cotton and 
wool garments, household items, and industrial or commercial products 
are excluded, unless made with a substantial amount of a biobased 
plastic product. Also excluded are wood products made from 
traditionally harvested forest materials.
    Biobased products marketed only in regional or in single 
specialized markets, rather than national markets, are not considered 
to be in mature markets for purposes of this program. Finally, products 
developed, or that have made significant market penetration, more 
recently than 1972 also are not considered to be in mature markets for 
purposes of this program. The first of several oil supply and price 
shocks, which occurred in the United States beginning at about 1972, 
was an

[[Page 70732]]

important impetus for beginning sustained serious new development of 
biobased alternatives for fossil based energy and other products in the 
United States. Hence, USDA has chosen to use 1972 as a dividing point 
between mature and emerging markets for this program.

IV. Responsibilities and Implementation Strategies under Section 9002

A. USDA's Responsibilities and Implementation Strategies

    To carry out the requirements of section 9002, USDA will:
    [sbull] Propose guidelines, after consultation with the EPA, GSA, 
and NIST, for the use of Federal agencies that indicate which items are 
or can be produced with biobased products and whose procurement by 
procuring agencies would carry out the objectives of this program;
    [sbull] Determine in the guidelines, as appropriate, the minimum 
level of biobased material to be contained in a designated item;
    [sbull] Propose items to be available for designation under the 
guidelines and explain the factors to be considered in their 
designation (availability, economic and technological feasibility, and 
life cycle costs);
    [sbull] Identify in the guidelines the information about 
availability, relative price, performance, and environmental and public 
health benefits that will be provided to Federal agencies on items 
designated for preferred procurement; and
    [sbull] Set forth recommended practices for the procurement of 
biobased products and designated items.

B. Federal Agencies' Responsibilities and Implementation Strategies

    Following the issuance of final guidelines and the designation of 
items, Federal agencies would:
    [sbull] Give a procurement preference, with certain exceptions, to 
designated items with the highest percentage of biobased products 
practicable, consistent with the guidelines and with maintaining 
sufficient competition;
    [sbull] Incorporate in procurement specifications biobased item 
preferences consistent with the guidelines and the requirements of 
section 9002; and
    [sbull] Establish an agency affirmative procurement program that 
includes a biobased products preference program, an agency promotion 
program to promote the preference program, and an annual review to 
monitor the effectiveness of the agency's procurement program.

C. Office of Federal Procurement Policy Responsibilities and 
Implementation Strategies

    Following the issuance of final guidelines and subsequent 
regulatory action to designate items eligible for preferred 
procurement, the OFPP would:
    [sbull] Work in cooperation with USDA to implement the biobased 
product procurement preference program;
    [sbull] Coordinate the biobased products procurement policy with 
other Federal procurement policies; and
    [sbull] Report to Congress every 2 years on the actions taken by 
Federal agencies in the implementation of the biobased product 
procurement program.

D. Manufacturers' and Vendors' Responsibilities and Implementation 
Strategies

    Following the issuance of final guidelines and designation of items 
eligible for preferred procurement, firms desiring to participate in 
the program would:
    [sbull] Determine whether products they intend to offer for Federal 
agency procurement qualify under the guidelines and fall within items 
designated by USDA for preferred procurement;
    [sbull] Certify the percentage of biobased content in the 
commercial or industrial products that fall within designated items and 
are proposed by the manufacturer or vendor to be used in the 
performance of a contract; and
    [sbull] When offering biobased products from an item that has been 
designated by the Secretary for preferred procurement by Federal 
agencies, certify that the biobased products to be used in the 
performance of the contract will comply with the applicable 
specifications or other contractual requirements.

V. Proposed Guidelines

    The proposed guidelines would be contained in a new 7 CFR part 
2902, ``Guidelines for Designating Biobased Products for Federal 
Procurement.'' The new part would be divided into two subparts, 
``Subpart A--General,'' and ``Subpart B--Biobased Product Eligibility 
for Federal Preference.'' Subpart A would address the purpose and scope 
of the guidelines and their applicability, provide guidance on product 
availability and procurement, define terms used in the part, and 
address affirmative procurement programs and USDA funding for testing. 
Subpart B would address communicating information on qualifying 
biobased products and characteristics required for obtaining designated 
item status, and would set out the initial categories of designated 
items and minimum content. The proposed guidelines are discussed in 
detail below.

Proposed Sec.  2902.1: Purpose and Scope

    This section would introduce the guidelines by explaining that 
their purpose is to assist Federal agencies in complying with the 
requirements of section 9002 as they apply to the procurement of 
designated items. This section would also note that items designated in 
the guidelines are those items that are or can be produced with 
biobased products and whose procurement by Federal agencies will carry 
out the objectives of section 9002.

Proposed Sec.  2902.2: Applicability to Federal Agencies and Exceptions 
to Procurement of Biobased Items

    The procurement preference applies to all Federal agencies (as 
defined in this document) with respect to all procurement actions where 
the purchase price of the item exceeds $10,000 or where the quantity of 
such items (or of functionally equivalent items) purchased during the 
preceding fiscal year cost a total of $10,000 or more. Unlike the EPA 
program for procurement of items with recovered materials, section 9002 
affords a procurement preference for biobased products only for 
procurement by Federal agencies. Thus, unlike RCRA (42 U.S.C. 
6903(17)), the guidelines do not apply to State and local agencies 
using appropriated Federal funds to procure qualifying biobased items, 
and persons contracting with such agencies with respect to work 
performed under such contracts. USDA proposes to apply the $10,000 
threshold as applicable to Federal agencies as a whole, rather than to 
agency subgroups such as regional offices or subagencies of a larger 
department or agency.
    As noted previously, the proposed guidelines would not apply to any 
procurement by any Federal agency that is subject to the regulations 
issued by the EPA under section 6002 of the Solid Waste Disposal Act 
(40 CFR part 247), to the extent that the requirements of the 
guidelines are inconsistent with those regulations. Further, as 
provided by paragraph (i) of section 9002, these guidelines do not 
apply to the procurement of motor vehicle fuels or electricity.
    Section 9002 requires Federal agencies to purchase designated 
biobased items unless the agency determines the items to be procured 
are not readily available within a reasonable

[[Page 70733]]

period of time, fail to meet the performance standards set out in 
applicable specifications or fail to meet reasonable performance 
standards of procuring agencies, or are available only at an 
unreasonable price.

Proposed Sec.  2902.3: USDA Guidance on Item Availability and 
Procurement

    The proposed guidelines would provide that, prior to designating 
items for preferred procurement under the section 9002 program, USDA 
would consider a number of factors. These factors are availability of 
the items and the economic feasibility and technological feasibility of 
using such items, including life cycle costs. Moreover, when 
designating items for preferred procurement under the program, USDA 
would provide the following information to Federal agencies on the 
items designated: availability, relative price, performance, and 
environmental and public health benefits of using the designated items.
    In order to accomplish these requirements, USDA plans to initially 
rely, in part, on the information developed in a study by Concurrent 
Technologies Corporation (CTC) to address the statutory requirement for 
information on item availability. This study was conducted by CTC under 
a contract with the USDA Agricultural Research Service (ARS) as one of 
the activities undertaken by ARS in order to fulfill Executive Order 
13101's requirement for the development of information on the market 
availability of biobased items. The CTC study can be viewed on the Web 
site http://www.biobased.oce.usda.gov.
    Information on economic and technological feasibility of using 
biobased items and life cycle costs will be sought from industry. 
Because of the heterogeneity among commercial products with biobased 
content within any grouping of biobased items, and the heterogeneity of 
characteristics across item groupings, information will be sought on 
individual commercial products included within each type of item. Once 
this information is available on a sufficient number of such products 
within an item, the information will be evaluated and extrapolated to 
the generic item level and, if determined to be adequate to meet the 
requirements of section 9002, the item will be designated for preferred 
procurement.
    Information on relative price, performance, and environmental and 
public health benefits that the Secretary is required to provide to 
Federal agencies will be gathered from manufacturers and vendors at the 
individual product level. This information, to be of maximum value to 
Federal agencies in making procurement decisions, must be considered at 
an individual product level.
    USDA proposes to gather the above discussed information from 
industry using an Internet Web site to which manufacturers and vendors 
will be invited to voluntarily provide information, including 
availability on the commercial products with biobased content that they 
offer to Federal agencies. That Web site will provide business contact 
information, selected test information, and the information about the 
offered commercial products noted in this discussion. It will also 
group such information by item and indicate whether the item has been 
designated for preferred procurement under the section 9002 program. No 
items will be designated for preferred procurement until adequate 
information has been obtained from manufacturers and vendors to enable 
the Secretary to both designate the item and provide Federal agencies 
the required information about the item. USDA also believes that making 
the above noted information available on an individual commercial 
product basis on USDA's informational Web site will provide the 
greatest help to Federal agencies in making decisions on the purchase 
of biobased products.
    USDA envisions the voluntary, web-based information system as the 
principal clearinghouse of information on manufacturer and vendor 
contact information, currently available products, and relevant product 
characteristics.
    A standardized format with interactive capabilities will permit 
manufacturers and vendors to enter information into the Web site. The 
information is not expected to be either confidential or proprietary, 
but will instead be information a business firm would provide 
prospective purchasers. Data placed on the Web site will be password 
protected and can only be changed by the submitting manufacturer or 
vendor or by USDA. Moreover, password protection can extend, if 
necessary, to making individual product information accessible only to 
Federal agencies, USDA, and to the firm providing the information. USDA 
will ask manufacturers and vendors to annually review data provided on 
the Web site and to purge inaccurate or out-of-date information. In 
addition, USDA will periodically audit the information displayed and, 
where questions arise, contact the manufacturer or vendor to verify, 
correct, or remove incorrect or out-of-date information.
    Federal agency procurement officials are encouraged to access the 
website to gather information on commercially available products within 
the scope of designated items, as a means of facilitating the 
acquisition of designated items, in furtherance of the requirements of 
section 9002.
    After discussions with the Office of Management and Budget (OMB), 
USDA also has agreed to develop a model procurement policy and program 
for designated items to support its own procurement practices. USDA 
intends to work with OFPP to develop outreach and education programs, 
based on the USDA model procurement policy, to assist other Federal 
agencies in complying with the requirements of this program.
    USDA seeks comments on the kinds of contact and product information 
that should be made available on its web-based information system, as 
well as comments on the appropriate components of a model procurement 
program for biobased items.

Proposed Sec.  2902.4: Definitions

    Section 2902.4 would define the terms used in the proposed 
guidelines. The definition of biobased product restates the statutory 
definition for that term in section 9001 of FSRIA. The section also 
defines several basic operational terms such as Secretary, BEES, ASTM 
International, diluent, filler, and FSRIA. The basis for many operative 
definitions is self-evident. The operative technical definitions 
reflect common industry usage. USDA is exercising its discretion in 
defining the remaining operational terms, most significantly biological 
products, Federal agency, agricultural materials, biobased content, 
forestry materials, and small and emerging private business 
enterprises.

Proposed Sec.  2902.5: Preferred Procurement Program

    Section 2902.5 sets out the procurement requirements or 
expectations that would apply to Federal agencies. In most respects, 
the information in this section reflects the responsibilities and 
implementation strategies discussed previously in this document (see 
section IV above). Section 2902.5(a) addresses procurement 
specifications and maximizing biobased content when procuring 
designated items. Section 2902.5(b) implements the requirement for 
Federal agencies to develop affirmative procurement programs. Section 
2902.5(c) addresses the preference program component of the affirmative 
procurement programs.

[[Page 70734]]

    Biobased content on items procured should be maximized subject to 
additional considerations. Section 9002(c) requires, with certain 
exceptions discussed above, that Federal agencies, when making 
procurement decisions on items designated in the guidelines, give 
preference to items composed of the highest percentage of biobased 
products practicable, consistent with maintaining a satisfactory level 
of competition. These guidelines propose minimum content levels of 
biobased products in designated items. It is recognized that the 
highest percentage of biobased content may not always result in the 
best item for Federal agencies, since other characteristics, such as 
performance, may not, in all cases, be positively correlated with 
higher content. Therefore, Federal agencies should interpret the 
requirement to mean procuring items with the highest biobased content 
consistent with other desired attributes such as availability, price, 
and performance.
    Performance of designated items is important. USDA believes that 
evidence of performance by a qualifying biobased item in its intended 
use will be a very important factor in Federal agencies' decisions to 
procure that item. In most circumstances, biobased items can be 
manufactured with a blend of components that enable them to meet 
required performance standards. In some circumstances, prior experience 
with product performance or observation of its widespread use elsewhere 
will be sufficient evidence of performance to cause Federal agencies to 
procure the qualifying biobased item. In most other cases, especially 
for new items in the marketplace or for certain users of high 
performance items in Federal agencies, more formal evidence of 
performance may be required. When Federal agencies require more formal 
performance related information for their procurement decision, USDA 
encourages these agencies to request this information from 
manufacturers or vendors of designated items, focusing on performance 
against ASTM, ISO, Federal or military specifications, or other 
industry performance standards.
    It is also important to set minimum requirements for biobased 
content of items at levels which are low enough to allow items produced 
with biobased products to compete with fossil energy based products in 
performance and economics, using current technology. While the statute 
requires Federal agencies, when purchasing designated items, to give 
preference to those that have the highest percentage of biobased 
content, that requirement must be considered in the context of whether 
the product meets required performance standards for the application in 
which it will be used.
    USDA has statutory requirements to meet in designating items for 
preferred procurement. Section 9002 requires USDA to designate items 
that are or can be made with biobased products. In making the 
designation, the Secretary is required to consider, at a minimum, the 
availability of such items and the economic and technological 
feasibility of using such items, including life cycle costs. In 
addition, section 9002 requires the Secretary to provide information on 
availability, relative price, performance, and environmental and public 
health benefits to Federal agencies. No designation of items will be 
made until the above noted requirements are met. Only upon publication 
of a final rule in the Federal Register of designation of an item for 
preferred procurement will manufacturers and vendors of commercial 
products with biobased content that fall within the item definition be 
able to assert preferred procurement status for those products to 
Federal agencies.
    USDA also will utilize the data entered by manufacturers and 
vendors on its Web site, on individual commercial products with 
biobased content, to develop information on availability, relative 
price, performance, and environmental and public health benefits that 
can be extrapolated to the generic item, the scope of which embraces 
those individual commercial products, prior to designating that item. 
This information will be made available to Federal agencies to satisfy 
the additional statutory information requirements (section 
9002(e)(1)(C)) the Secretary is required to provide Federal agencies on 
designated items. Because the primary value of this information to 
Federal agencies is at the specific product level and in the ability to 
compare data across products within a designated item, USDA will 
encourage manufacturers and vendors to voluntarily post this product 
specific information on those products they are offering for preferred 
procurement.
    USDA plans to rely on information from the previously discussed CTC 
study to determine the availability of items. USDA will evaluate 
information on relative price and performance of individual commercial 
products with biobased content, from the voluntary Web site, to develop 
the information on items and products the Secretary must consider in 
designating items and must make available to Federal agencies.
    Information on environmental and public health benefits will be 
developed from voluntary information manufacturers and vendors provide 
on individual products. When voluntarily providing such information to 
USDA, this information must be based on a National Institute of 
Standards and Technology BEES (Building for Environmental and Economic 
Sustainability) analytical tool analysis of the product.
    No designation of an item will be made by USDA until USDA has 
sufficient information to reasonably meet the information requirements 
the Secretary must address, as specified in the statute, and to provide 
the required information to Federal agencies about items designated in 
subsequent regulations. Based on the information considered, USDA will 
publish regulations in the Federal Register designating an item(s) 
under these guidelines. USDA will work to first designate items in 
categories having greatest likelihood of sale to Federal agencies.

Proposed Sec.  2902.6: Funding for Testing

    As explained above, section 9002 requires the Secretary to consider 
specific types of information in determining whether to designate an 
item under these guidelines. Also as explained above, section 9002 
requires that the Secretary provide specific types of information to 
Federal agencies regarding designated items. As a means of obtaining 
some of the required information, section 9002(j) provides to the 
Secretary $1 million per year for each of the fiscal years 2002 through 
2007 to support the testing of biobased products to carry out the 
provisions of the section. Section 9002(j) further provides that the 
Secretary, at her discretion, may ``give priority to the testing of 
products for which private sector firms provide cost sharing for the 
testing.'' 7 U.S.C. 8102(j)(2)(C).
    For the first few years of this program, the Secretary is 
exercising her discretion to test products based on the USDA assessment 
of the best use of these funds to designate items most expeditiously 
under this program. USDA will work first to designate items in 
categories having the greatest likelihood of sale to Federal agencies. 
Additionally, should USDA obtain sufficient data from manufacturers' 
voluntary submissions or from other sources that very limited 
informational gaps exist to delay designation, USDA may target the use 
of these funds to fill in the limited data gaps to expedite designation 
of that item. USDA will enter into arrangements with entities capable 
of conducting tests to conduct tests of biobased content and BEES 
Analyses on

[[Page 70735]]

products identified by USDA as part of the process of gathering such 
information on a sufficient number of products to enable USDA to 
extrapolate such information to the item level. During this period, 
entities are welcome to propose cost-sharing for the testing of such 
items. However, USDA will not consider cost-sharing in deciding what 
products to test. Cost-sharing will be accepted to the extent 
consistent with USDA product testing decisions.
    Once the program has achieved a critical mass of designated items, 
anticipated to occur within the next three years, USDA will exercise 
its discretion to make cost-sharing a more determinative factor in the 
selection of some products for testing. USDA will make some of the 
section 9002(j) funds available for testing of competitively-selected 
products for which private sector firms have offered cost sharing. USDA 
will make a public announcement to that effect at the time and solicit 
cost-sharing proposals. Paragraph 2902.7(b) sets forth how USDA 
proposes to exercise this discretion. USDA will consider cost-sharing 
proposals only for the BEES Analysis and performance testing of 
products. USDA does not intend to consider cost-sharing for testing to 
determine biobased content.
    Cost sharing will be considered first for products of ``small and 
emerging private business enterprises.'' If funds remain to support 
further testing, a second tranche of applicants could be drawn from all 
other producers of biobased items. Proposals will be evaluated and 
assigned a priority rating. Priority ratings will be based on the 
following criteria:
    [sbull] A maximum of 25 points will be awarded a proposal based on 
the market readiness.
    [sbull] A maximum of 20 points will be awarded a proposal based on 
the potential size of the market for that product in Federal agencies.
    [sbull] A maximum of 25 points will be awarded based on the 
financial need, for testing assistance, of the manufacturer or vendor.
    [sbull] A maximum of 20 points will be awarded a proposal based on 
the product's prospective competitiveness in the market place.
    [sbull] A maximum of 10 points will be awarded a proposal based on 
its likely benefit to the environment.
    Projects will be funded in order of declining priority ratings 
(from highest to lowest) until available funds are committed. USDA 
could provide up to 50 percent of the cost of determining the life 
cycle costs and environmental and health effects using the NIST's BEES 
Analysis, up to a maximum of $5,000 of assistance per product. USDA 
could provide up to 50 percent of cost for performance testing, up to 
$100,000 of assistance per product for up to two performance tests 
(measures of performance) per product.
    Pursuant to section 9002(j)(2)(B), USDA will enter into agreements 
with and provide the funds to entities that have the experience and 
special skills to conduct the testing. These entities will use the USDA 
and any private sector cost sharing funds to test the items. Products 
submitted in one year, but not funded for testing in that year, could 
be resubmitted to be considered for cost-sharing in the next year. USDA 
does not intend to provide financial assistance for testing to 
determine biobased content.
    USDA seeks comments on possible methods of providing financial 
assistance for manufacturers and vendors for testing of individual 
commercial products with biobased content that are intended to qualify 
for preferred procurement by Federal agencies under this program.

Proposed Sec.  2902.10: Communicating Information on Qualifying 
Biobased Products

    Section 2902.10 of the proposed guidelines would provide general 
information applicable to the exchange of information regarding 
biobased products. In paragraph (a), we would reiterate that 
manufacturers and vendors of designated items have the responsibility 
to inform Federal procurement officials of items that comply with the 
guidelines, including the biobased content of the product, and 
recommend that Federal agencies, for their part, affirmatively seek 
this information. This paragraph would also point out the informational 
Web site referred to in Sec.  2902.3 as a resource that can be utilized 
by both Federal agencies and manufacturers and vendors.
    Manufacturers and vendors of biobased products that fall within an 
item (generic grouping) that has been designated by regulation for 
preferred procurement under the program are free to market those 
products to Federal agencies while claiming the preferred procurement 
status for the products under the program. Manufacturers and vendors 
must be able to certify to Federal agencies that their products are 
consistent with the definition of biobased product in section 2902.4. 
In addition manufacturers and vendors must be able to present third 
party test results that indicate the biobased products have at least 
the threshold amount of biobased feedstock content specified in the 
designating regulations for the item under which the biobased products 
fit.
    Manufacturers and vendors must use the BEES analytical tool to 
provide information on life cycle costs and environmental and health 
benefits when asked for such information by Federal Agencies. In the 
case of products which are essentially the same formulation, but 
marketed under a variety of brand names, the manufacturers and vendors 
can simply refer to the underlying BEES Analysis data as the basis to 
demonstrate the life cycle costs, rather than conducting a BEES 
Analysis on each branded item. USDA is adopting the BEES Analysis 
method in order to establish a uniform methodology and platform for 
analysis of environmental and health effects and life cycle costs; 
doing so will enable Federal agencies to evaluate BEES results (scores) 
and life cycle costs across biobased products within a designated item.
    When asked for performance data by Federal agencies, manufacturers 
and vendors are required to use test results obtained, for the 
individual products they offer for preferred procurement, from testing 
against industry accepted performance standards, which may include a 
Federal or Military Specification (ASTM, ISO, Military Specifications, 
etc.) for the product, in the use for which it is intended. The test 
must be conducted by a third party in an ASTM/ISO compliant test 
facility.
    In paragraph (d), we would remind manufacturers and vendors that 
any claims regarding health and environmental benefits of their 
products should conform to the Federal Trade Commission (FTC) Guides 
for the Use of Environmental Marketing Claims, 16 CFR part 260. A copy 
can be obtained through FTC's Web site: http//www.ftc.gov/ftc/legal/htm. As explained in 16 CFR 260.5, any party making a claim concerning 
a product's environmental attribute ``must, at the time the claim is 
made, possess and rely upon a reasonable basis substantiating the 
claim.''

Proposed Sec.  2902.11: Characteristics Required for Obtaining 
Designated Item Status

    Section 9002 envisions giving preference to items composed of the 
highest percentage of biobased products practicable. Hence, to further 
the purposes of section 9002, USDA believes it is important to guard 
against designating items for preferred procurement which contain only 
token amounts of biobased materials. However, for some uses of biobased 
products in the production of a

[[Page 70736]]

designated item, such as in the case of biobased adhesives used in the 
manufacture of furniture, it is recognized that the biobased content in 
the finished item may be relatively small, measured on a content basis. 
In these guidelines, USDA proposes that all qualifying items under this 
program must have at least 5 percent of its total manufactured value 
(measured after manufacture at the location of manufacture) made up of 
biobased product(s). USDA proposes that manufacturers and vendors self 
certify to Federal agencies that designated items meet this 
requirement. Moreover, manufacturers and vendors must be able to verify 
that certification from a third party test if asked to do so by Federal 
agencies or by USDA.
    ASTM International is in the process of finalizing and adopting a 
method for determining biobased content. USDA anticipates that ASTM 
International will adopt a standard prior to USDA publishing its final 
rule. The method under consideration by ASTM International is a 
Radioisotope Standard Method to discriminate between ``old carbon'' 
from fossil resources and ``new carbon'' from renewable resources. A 
measurement of a product's contemporary \14\C/\12\C content is 
determined relative to a standard reference material. Thus, in 
paragraph (c) of proposed Sec.  2902.11, we would identify that ASTM 
method as the standard to be used by manufacturers and vendors in 
certifying biobased content.
    Further, USDA proposes that manufacturers and vendors must utilize 
third party ASTM/ISO compliant test facilities using that testing 
standard method to determine the biobased content of their products 
offered for preferred procurement. Federal agencies and USDA may 
request verification of biobased content from manufacturers and vendors 
for products certified to qualify for preferred procurement.
    In the case of products which are essentially the same formulation, 
but marketed under a variety of brand names, the manufacturers and 
vendors can simply refer to the underlying biobased content test data 
as the basis to demonstrate the biobased content, rather than 
conducting a biobased content test on each branded item.
    USDA is proposing that biobased content be determined based on the 
weight of the biobased material (exclusive of water and other non-
active ingredients, fillers, and diluents) divided by the total weight 
of the product and expressed as a percentage by weight.
    Minimum biobased content requirements used in the proposed 
guidelines refer to the biobased portion of the product itself. For 
example, in a carpet using a biobased material as a carpet backing, the 
minimum biobased content indicated for the carpet refers only to the 
biobased backing. It is understood that the completed carpet, made up 
of several different materials, would have a lower biobased content 
than is specified in these guidelines for the biobased product (the 
carpet backing) itself. Minimum percentages used for various products 
in these guidelines refer to the biobased content of the product (such 
as carpet backing) itself, not to a finished product (the carpet) that 
might be fabricated using both a biobased product and other inputs, 
unless that is otherwise specified.
    Section 2902.11 also would incorporate the filters discussed 
earlier in this preamble to exclude from this program those products 
having mature markets.

Proposed Sec.  2902.12: Items and Minimum Biobased Content

    The biobased products listed in the proposed guidelines would be 
grouped according to category, with each category consisting of one or 
more items; an item developed by a particular manufacturer is referred 
to as a product. That is, an item is made up of individual products and 
a category consists of items. For instance, ``Lubricants and Functional 
Fluids'' is a category. Hydraulic fluids is an item within that 
category, and ``ABC Hydraulic Fluid'' made by the ABC Company is a 
product.
    As noted previously, the items and the indicated biobased content 
of items contained within the categories discussed in this preamble are 
based on the study conducted in 2002 for the USDA Agricultural Research 
Service by CTC. The final report of the study can be viewed at the 
Office of Energy Policy and New Uses, Reporters Building, Room 361, 300 
7th Street, SW., Washington, DC 20024. To arrange for viewing, contact 
Marvin Duncan at 202-401-0532. USDA also has posted the study on its 
informational Web site, http://www.biobased.oce.usda.gov.
    The items discussed below are intended to be the items that will be 
proposed for designation for preferred procurement by Federal agencies 
after the Secretary has sufficient information on availability of the 
items and the economic and technological feasibility of using such 
items, including life cycle costs. The information on availability of 
the items is determined from the CTC study from which the categories, 
items, and proposed minimum biobased content data were developed. 
However, items will not be designated for preferred procurement until 
the additional information required by section 9002 is considered by 
the Secretary. As items are designated for procurement preference, they 
would be added to Sec.  2902.12 of the guidelines.
    Comments proposing a new item should include information similar to 
that found in USDA's initial survey of the industry, including biobased 
products from which the items are derived, item characteristics, likely 
uses of the item, and percentage of biobased content of the items. In 
addition to new items proposed for inclusion in the guidelines, USDA is 
seeking comment on procedural issues, such as a process for proposing 
additional items, the review of such proposals, and what market 
information should be necessary to support the addition or deletion of 
an item. USDA particularly seeks public comment on the proposed 
categories and items, and the reasonableness of the biobased content 
percentages, discussed below.
    Proposed Sec.  2902.12 would contain items, grouped according to 
category, that are or can be produced with biobased products and 
provide the minimum biobased content for each listed item. It is 
anticipated that as the biobased product industry develops, new 
products will enter the market. As necessary, new items will be 
designated. USDA intends to periodically survey the industry to learn 
of new products entering the marketplace and to determine new items for 
designation. While Sec.  2902.12 in these proposed guidelines contains 
no categories or items, given that none have yet been designated for 
procurement preference, the following paragraphs contain a discussion 
of future proposed categories and minimum content levels thus far 
identified. USDA seeks comments on the following categories, items 
(subcategories), minimum content levels based on manufactured value, 
and the minimum biobased content levels.

Adhesives Category

    Biobased adhesives are chemical products used to join or bond two 
or more other materials together. A wide range of agricultural 
materials can be used to make biobased adhesives, including but not 
limited to starch from corn, potatoes, wheat, tapioca, and other 
plants; casein from skimmed milk; soy protein; soybean oil; vegetable 
gums; gelatin; livestock derivatives; tannins from woody biomass; and 
marine animal derivatives.

[[Page 70737]]

    USDA proposes to include in this category both biobased adhesives 
and items embodying those adhesives. Items using such adhesives include 
book bindings, envelopes, stamps, medical application such as tapes and 
alternatives to sutures, doors, windows, paper bonds, corrugated paper 
boxes, lumber, furniture, and more. Biobased pressure sensitive 
adhesives have been developed for clear tape, duct tape, masking tape, 
labels, and a variety of disposable items. Another example of biobased 
adhesives is soy-based products used to glue wood to form finger-
jointed lumber, glulam beams, I-joists, and other engineered wood 
products.

Proposed Minimum Content--Adhesives Category

    Adhesive products are to have a minimum biobased content of 70 
percent by weight of the adhesive. Biobased adhesive additives may also 
be used to reduce the total amount of phenol-formaldehyde and 
isocyanate-containing adhesives used to bond plywood and other wood 
panels. These products and wood products made with these products are 
proposed to qualify when the additive is used to reduce total adhesive 
content of the finished product by at least 25 percent and when the 
minimum content of the additive is at least 70 percent biobased 
material. Finished products in which 90 percent of all of the adhesives 
used in production are biobased would be designated as biobased 
products.

Construction Materials and Composites Category

    The Construction Material Subcategory (or item) includes product 
applications containing biobased adhesives, such as plywood and finger 
jointed lumber; oriented strand board, medium density fiberboard, and 
hardboard; engineered wood building components, e.g., laminated beams, 
trusses, finger jointed lumber, oriented strand lumber; moldings and 
trim; and decorative composites. Construction products include round 
wood; lumber; composites; and plastic-wood composite lumber and panels 
such as plywood, oriented strand board, medium density fiberboard, and 
hardboard that contains agricultural or wood-based materials.
    The Composite Panels Subcategory (or item) is composed of 
nonstructural composite materials such as highly engineered blends of 
recycled paper products or agricultural wastes, biobased resins, and 
color additives can combine to provide a composite and composite 
panels. Product applications include furniture, tabletops, trim, store 
fixtures, awards, plaques, trophies, indoor signs, and other interior 
or nonstructural uses. Composite panel products include panels made 
from straw or other agricultural residues.
    Molded Reinforced Composites subcategory (or item) products, such 
as decorative trim, shingles, or siding, may be made from bioplastic 
resins used to bind inorganic fibers such as fiber glass or 
agricultural fibers such as kenaf. These resins may be made from a 
combination of biobased materials and may be reacted with petro-based 
chemicals to achieve functional properties.
    The Insulating Foams and Films Subcategory (or item) includes 
biobased polyurethane made from a soybean oil polyol, poly-lactides 
made from cornstarch, polyesters made from vegetable oils, and other 
bioplastic materials. Hundreds of products can employ these materials 
ranging from carpet backing to foam cushions; pads for furniture; 
automotive seats and dashboards; molded cases and covers for 
appliances; telephones; computers; and rigid insulating foams used to 
insulate refrigerators, freezers, coolers, and appliances. Each use may 
have different biobased content requirements.
    This item also includes bioplastic rigid and soft foam, used to 
produce such products as fiber and foam insulation. Starch mixtures 
such as aqua gels or vegetable compounds can be added to concrete 
mixture during setting to reduce the density of concrete, and concrete 
mold release agents from vegetable oils are available products.
    The Mixed System Products Subcategory (or item) is composed of 
products where specific component parts are designated as biobased 
(such as carpets and carpet squares with backing, attached pad, or face 
material that is biobased) but other components of the products may be 
from another product subcategory (item) or be non-biobased. The minimum 
content requirement may be applied to the biobased component rather 
than the complete product. An example would be the replacement of a 
portion of petroleum-based urethane for carpet backing with a 
percentage of soybean oil-based urethane.
    In use, these items may include a large percentage of inert fillers 
and extenders which are not counted in computing total product weight. 
When determining the percent biobased content, calculations should be 
made on the weight of the component less excluded materials, and not on 
the weight of the total product.

Proposed Minimum Content--Construction Materials and Composites 
Category

    The minimum biobased content requirement may be based on the weight 
of the biobased component rather than the complete material. USDA is 
providing guidance on the more prevalent products. As subsequent 
regulations to designate items for preferred procurement continue to 
evolve, more content information will be forthcoming. USDA particularly 
welcomes comments on adding additional subcategories to this section to 
more clearly define content requirements. The minimum biobased content 
of each item in this category must be:

------------------------------------------------------------------------
                                                                Minimum
                                                               biobased
                            Items                               content
                                                                  (%)
------------------------------------------------------------------------
Construction material.......................................          85
Composite panels............................................          70
Molded reinforced composites................................          10
Insulating foams and films..................................          15
Components of mixed system products.........................          20
------------------------------------------------------------------------

Fibers, Paper, and Packaging Category

    There is a broad range of agricultural crops, forest biomass, and 
livestock that contributes materials to this category including non-
tree sources such as bamboo, corn stover, low-grade cotton, flax, 
kenaf, cereal and grain straws, sugar cane bagasse, switch grass, 
leaves, and poultry feathers; and wood from forest thinnings, saw dust, 
flour, shavings, chips, grindings, and curls from trees.
    Fibers from biobased sources can be used in the manufacture of 
product containers such as boxes, drums, and pails for the storage or 
shipment of food or manufactured products. Biobased fibers can also be 
used as bulk packaging materials for filler and protection of stored or 
transported goods. Natural biobased fibers are very ductile and 
typically do not splinter. Their properties have been compared to 
carbon and glass fibers for use in fiberglass composites.
    Fiber composites are created when biobased fibers are blended with 
molten plastic in ratios of up to 70 percent fiber by weight to make 
furniture, toys, and other molded items.
    Composite packaging materials use an emerging technology that 
relies on a mix of organic and inorganic materials, such as starch and 
limestone, and sometimes include fibers and coating materials that are 
also biodegradable. These materials often use starch from potatoes, 
corn, or

[[Page 70738]]

other crops, and can sometimes be derived from reclaimed waste streams. 
Recent developments have also allowed for the development of non-rigid 
wrap materials and other food packaging innovations in addition to the 
sandwich ``clamshells'' made from starch and agricultural fibers.
    Woven fiber products represent important uses of biobased fibers. A 
variety of biobased fibers can be spun or woven into items such as 
ropes, textiles, and yarns. For example, flax is a traditional textile 
fiber used to make linen, while other fibers, such as jute, are woven 
to make burlap for bags and coverings.
    Packaging materials can be made from waste fibers described above 
that, if not used in the paper making process, might be sent to a 
landfill.
    Paperboard and packaging products, strong lightweight honeycomb 
panels made from recycled and agricultural fibers, illustrate another 
use of biobased fibers. Panel items can also be made almost entirely 
from cereal straw residue and used in nonstructural applications such 
as furniture, cabinets, store displays, door panels, moldings, and 
other fixtures.
    Items such as pillows and comforters are made from milkweed fibers 
mixed with goose down to create bedding materials.

Proposed Minimum Content--Fibers, Paper, and Packaging Category

    Like the construction category above, this item application is very 
large and each application may have separate content requirements. The 
category may require additional subcategories, or the creation of new 
categories; for instance tree-free paper versus tree-derived paper. In 
this guideline, USDA has listed a few of the more common uses and 
encourages comment on content requirements for a wide range of uses. To 
be included in the biobased fiber, paper, and packaging category, the 
minimum biobased content of each item must be:

------------------------------------------------------------------------
                                                                Minimum
                                                               biobased
                            Items                               content
                                                                  (%)
------------------------------------------------------------------------
Fibers......................................................          90
Fibers composites...........................................          30
Composite packaging materials...............................          30
Woven fiber products........................................          75
Packaging materials.........................................          80
Uncoated printing and writing papers........................          20
Coated printing and writing papers..........................          20
Bristols....................................................          50
Newsprint...................................................          20
Sanitary tissues............................................          30
Paperboard and packaging products...........................          30
Other paper products........................................          50
------------------------------------------------------------------------

Fuel Additives Category

    A variety of fuel additives can be made from agricultural and 
forest materials and can be used to help power vehicles, heat 
buildings, provide heat for steam for industrial process, and other 
applications. Fuel additives can be mixed or diluted with other 
materials or used as an additive to enhance certain properties of a 
fuel.
    Raw material sources for these biobased liquid fuel additive items 
include processed products from agricultural crops such as corn; soy 
bean; rapeseed; canola; animal fat; wood; and crop and processing 
residues such as stalks, manure, used cooking oils, used wood, 
nonrecyclable paper and paper sludge, and hulls.
    Raw material sources for solid fuel additive items include 
agricultural and forest materials such as wood and wood processing 
residues, formed wood residue; nonrecyclable papers, paper sludge, and 
other paper processing residues; grains, grain processing byproducts 
and residues; byproducts or residues from soy, cotton, and sugar 
processing; pelletized residues from livestock production and 
processing, including manures.
    Ethanol is the most widely used biobased fuel additive. It is 
typically made by fermentation of an agricultural product or residue 
and can be used as an oxygenated additive and a source of octane in a 
formulation with other fuels. Another liquid biobased fuel additive is 
biodiesel. Biodiesel is defined as a mono-alkyl ester of vegetable oils 
or animal fats and can be use as a lubricity agent with low-sulfur 
conventional diesel fuel.
    Biobased items that are solid fuels are typically ``formed'' for 
ease of handling into a wide variety of shapes and sizes including 
pellets, rolls, briquettes, and other forms. Combustible binders, which 
may both act as fuels or be blended with other primary fuels, allow the 
fuel to be formed into various shapes and sizes. Biobased and other 
binders, such as resins and propellants, are also used to facilitate 
ignition and combustion. Formed coal fines are one example of a solid 
fuel. Recovered coal fines can be formed into a variety of shapes and 
sizes, e.g., pellets and briquettes, by using a biobased binder such as 
proteins or sugars derived from soy or milk, or a combination binder 
composed of biobased materials and other chemicals. Biobased binders 
typically comprise only a small part of the total solid fuel and can be 
derived from dairy byproducts and other agricultural sources. The 
binder would be considered a biobased fuel additive.
    As noted previously, section 9002 and these guidelines do not apply 
to the procurement of motor vehicle fuels or electricity.

Proposed Minimum Content--Fuel Additives Category

    To be included in this fuel additives category, the minimum 
biobased content of each item must be:

------------------------------------------------------------------------
                                                                Minimum
                                                               biobased
                            Items                               content
                                                                  (%)
------------------------------------------------------------------------
Solid fuels.................................................           5
Liquid fuel additives.......................................          80
------------------------------------------------------------------------

Landscaping Materials, Compost, and Fertilizer Category

    This category includes materials and items associated with 
landscaping materials and compost. Many biobased items, such as 
construction materials, coatings, paper, fibers, and sorbents are 
compostable and reusable as landscaping materials.
    Various agricultural crops and residues, including straws and short 
rotation woody crops, are the sources of landscaping materials. For the 
purposes of this category, woody materials are those obtained from 
activities such as forest thinning, fuel reduction in plantation 
stands, regenerated forest stands, intensively cultivated short 
rotation woody stands (i.e., less than 10 years old), or from wood 
residue or recovered wood products.
    Compost is derived from a managed process that decomposes and 
transforms organic material into a soil-like item called humus. Food 
scraps, leaves, paper, wood, livestock manures, and agricultural 
residues are organic materials that can be composted. Composting 
reduces the amount of waste that may go to a landfill and it produces a 
soil amendment that can improve the texture and fertility of the soil. 
Mulches and composted materials can be used to control moisture and 
nutrients in soils and reduce the potential for erosion. Other 
materials, such as agricultural and animal wastes, serve as 
fertilizers.
    Items include landscaping materials such as bark, chips, mulch, and 
pine needles. Composted materials provide fertilizer and ground cover. 
These

[[Page 70739]]

materials may also be coated with biobased materials to provide color, 
retard biodegradation, or reduce loss from wind or water erosion.
    Agricultural and animal wastes are fertilizers and may be in 
composted form or, in the case of manures, may be applied as 
fertilizers without further composting or processing.

Proposed Minimum Content--Landscaping Materials, Compost, and 
Fertilizer Category

    To be included in the landscaping materials and compost category, 
the minimum biobased content of each item must be:

------------------------------------------------------------------------
                                                                Minimum
                                                               biobased
                            Items                               content
                                                                  (%)
------------------------------------------------------------------------
Landscaping materials.......................................         100
Compost.....................................................         100
Fertilizer..................................................          80
------------------------------------------------------------------------

Lubricants and Functional Fluids Category

    Biobased lubricants and functional fluids are important materials 
used to reduce friction between moving surfaces or between moving and 
stationary surfaces in engines and other machinery, to reduce wear and 
dissipate heat on those surfaces, and to provide other benefits such as 
corrosion protection. Items like 2-cycle engine oils can be formulated 
from biobased sources. These formulated lubricants are added to fuels 
used in 2-cycle engines found in lawnmowers, chainsaws, string 
trimmers, and other small machinery.
    Biobased functional fluids are used as items that transfer heat 
and/or pressure to or from surfaces, reduce friction in machining 
operations, provide electrical insulation, and for many other purposes. 
There is a broad range of biobased lubricant and functional fluid 
items, each carefully designed to meet particular performance needs and 
applications. These materials often need to be replaced on a routine 
schedule to maintain their expected performance.
    Biobased lubricants and functional fluids are typically made from 
multiple components, including one or more base stocks plus additives 
that enhance performance or extend the life of the item. A variety of 
agricultural-based oils can be used as biobased lubricants and 
functional fluids, including but not limited to canola, corn, rapeseed, 
soybean, sunflower, other plant materials, and animal fats. The base 
oil used must have sufficient natural or enhanced stability to be used 
as base stock for biobased lubricants. Biobased items in this category 
can be base stock (the starting material into which additives and other 
materials are blended to make the final formulated product), lubricant 
or functional fluid additive (materials that are used for specific 
performance benefits such as lower pour point, increased flash point, 
greater extreme pressure properties, a desired viscosity, or reduced 
foam), or formulated lubricant or functional fluid (the final product 
including base stock and all additives).
    Vehicles, heavy machinery, and mobile equipment use lubricant items 
such as crankcase oils and greases, and functional fluids such as 
transmission fluids, coolants, power steering fluids, brake fluids, and 
others. Industrial equipment uses for lubricants include metal working 
fluids (cutting and drilling oils/lubricants, stamping and forming 
lubricants), hydraulic fluids, and process fluids (heat transfer and 
dielectric fluids). Total loss lubricants are released directly into 
the environment in such applications as rail and flange, wire rope, and 
chain saw lubricants; concrete and asphalt form release fluids; and 2-
cycle engine oils.
    Biobased lubricants can include bar, chain, and sprocket oils or 
general purpose lubricants used for general cleaning, lubrication, and 
corrosion prevention of metal parts including wheels, bearings, gears, 
rollers, chains, hinges, hand tools, guns, and sporting equipment.
    Biobased hydraulic fluid items can be used in construction 
equipment, industrial pumps, and other equipment, as well as in 
specialty uses where incidental food contact may occur. These specialty 
fluids can also be used in transmission systems of vehicles and other 
transportation equipment.
    Biobased functional fluid items include the fluids used to 
lubricate and cool equipment/metals and nonmetal parts during cutting 
and parts fabrication, as well as drilling and machining operations.
    Biobased functional fluids can be used for specialty purposes items 
such as mold release agents that are applied to wood, metal, or plastic 
forms prior to pouring concrete to facilitate the removal of forms 
after concrete has cured, or to foundry molds prior to pouring the 
foundry metal to facilitate the removal of metal parts from the molds. 
These biobased items can also be used as dielectric fluids that are 
used in electric transformers to provide insulation and to dissipate 
heat generated by the transmission of electric current.

Proposed Minimum Content--Lubricants and Functional Fluids Category

    To be included in this lubricants and functional fluids category, 
the minimum biobased content of each item must be:

------------------------------------------------------------------------
                                                                Minimum
                                                               biobased
                            Items                               content
                                                                  (%)
------------------------------------------------------------------------
Crankcase oils (water cooled engines).......................          10
Crankcase oils (air cooled engines).........................          50
2-cycle engine oils.........................................          50
Fifth-wheel grease..........................................          40
Automotive and other metal complex grease...................          25
Total loss lubricants (wire rope, bar-chain, etc.)..........          50
Turbine and other industrial lubricants.....................          50
Penetrating oils............................................          50
General purpose and other...................................          90
Hydraulic, power steering, transmission fluids..............          50
Brake fluids................................................          20
Cutting, drilling, and tapping oils (neat use)..............          50
Metal working concentrates (for dilution)...................          30
Forming pastes and extreme pressure stamping................          30
Concrete and asphalt release................................          70
Metal foundry and mold release..............................          50
Transformer oil and dielectric fluids.......................          70
------------------------------------------------------------------------

Plastics Category

    Most plastics are made from petroleum-based monomers and polymers. 
Biobased plastics from renewable resources are sometimes biodegradable 
and have positive life-cycle benefits. Biobased plastics can be derived 
from a wide variety of agricultural and forest materials in the form of 
starch, cellulose, and other polymers or synthesized from plant oil and 
process byproduct monomers.
    Biobased plastic polymers include cellulose, the most plentiful 
carbohydrate since 40 percent of all organic matter in the world is 
cellulose; starch, found in corn, potatoes, wheat, tapioca, and other 
plants can be used for such nonfood items as paper, cardboard, textile 
sizing, and adhesives; collagen, the most abundant protein found in 
mammals, including gelatin used to make sausage casings, capsules for 
drugs and vitamin preparations, and other miscellaneous industrial 
applications, including photography; and casein, a commercial product 
derived mainly from milk, used in adhesives, binders, protective 
coatings, and other biobased items. Corn, soy, and wheat proteins are 
abundant and can be

[[Page 70740]]

used to make adhesives and coatings for paper and cardboard. Polyesters 
are produced by bacteria through fermentation processes and are used in 
biomedical applications.
    The plastic materials made with biobased monomers, such as plant 
oils, propane diol, and lactic acid, can be made to closely resemble 
the molecular structures of petroleum-based plastics and provide 
particular performance and application benefits, e.g., thermoplastic or 
thermoset characteristics, pressure sensitivity, elastomeric, or other 
characteristics. When used for disposable items such as food packaging, 
the biobased plastic packaging can be fully compostable.
    Used in durable goods for insulation and cushioning, biobased 
plastics may be rigid for panels in appliances, flexible in cushions, 
or molded for automotive dashboards, for example. Examples of 
biodegradable plastic films are biofilms, plastic films made 
biodegradable by formulation with starch. Examples of durable films and 
coatings are components in durable goods such as automotive and 
construction equipment, tools, electrical equipment, and appliances. 
Water-soluble polymers are biobased items used in wastewater facilities 
and can help mining and heavy industry clean heavy metals from their 
wastewater. Examples of biodegradable/compostable molded plastic items 
are table flat ware, knives, forks, and spoons. Examples of durable 
molded plastic items and composites using biobased resins are thermoset 
automotive parts and equipment hoods and doors and access panels for 
farm and industrial equipment. Examples of molded composite items using 
biobased fibers are automotive parts combining petroleum-based resins 
with natural fibers, such as interior door panels and trunk liners. 
Examples of synthetic fibers from biobased raw materials are synthetic 
fibers, similar in function to nylon, woven into various textiles such 
as carpeting.

Proposed Minimum Content--Plastics Category

    To be included in this bioplastics and biopolymers category, the 
minimum biobased content of each item must be:

------------------------------------------------------------------------
                                                                Minimum
                                                               biobased
                            Items                               content
                                                                  (%)
------------------------------------------------------------------------
Biodegradable foams.........................................          50
Durable foams...............................................          15
Biodegradable films.........................................          25
Durable films and coatings..................................          20
Water soluble polymers......................................          50
Compostable molded products.................................          75
Molded plastics and composites/biobased resins..............          10
Molded composites/biobased fibers...........................          20
Synthetic fibers............................................          50
------------------------------------------------------------------------

Paints and Coatings Category

    Paints and other types of coatings such as stains, varnishes, and 
sealants can be derived from agricultural materials. These coatings 
enhance the appearance and protect the materials onto which they are 
applied. The protective function includes reducing corrosion, water 
infiltration, weathering from sun and wind exposure, and other damage. 
Biobased paints and coatings are important alternatives to traditional 
paints and coatings that are derived from petroleum-based chemicals and 
metal pigments.
    A wide variety of agricultural materials can be used to produce 
items for biobased paint and coatings applications, including: xanthan 
gum to help thicken latex paints and coatings, and to uniformly suspend 
zinc, copper, and other metal additives in corrosion control coatings; 
cellulose esters and ethers can be used to make lacquers and paints; 
guayule derived epoxy-amine can be used to make coatings for metal 
panels that help protect the metal from corrosion during exposure to 
fog and salt; corn, soy, wheat, and other proteins are used to make 
coatings for paper and cardboard; and epoxidized linseed oil and 
soybean oil can be used as plasticizers, as well as intermediate 
chemicals in the manufacture of paints.
    Biobased paints and coatings have a wide range of item uses that 
include protection of seeds to enhance germination, marine coatings, 
concrete and wood sealers, stains, corrosion inhibitors, and polishes. 
Architectural coatings made from soybean and linseed oils constitute a 
significant portion of the coatings market. Industrial coatings made 
from vegetable oils have been the mainstay in architectural and 
industrial paints for corrosion prevention, weatherability, and ease of 
application.

Proposed Minimum Content--Paints and Coatings Category

    To be included in the paints and coatings category, the minimum 
biobased content of each item must be:

------------------------------------------------------------------------
                                                                Minimum
                                                               biobased
                            Items                               content
                                                                  (%)
------------------------------------------------------------------------
Formulated product..........................................          20
------------------------------------------------------------------------

Solvents and Cleaners Category

    Biobased solvents and cleaners are widely used as cleaners and de-
greasers in manufacturing and other processes and as ingredients in 
adhesives, paints, and coatings. Solvent and cleaner applications are 
broad and include alternatives to petroleum chemicals such as mineral 
spirits, ketones, acetone, trichloroethylene, xylene, toluene, and 
methylene chloride. As a cleaning item, uses include fabric and textile 
cleaning; fruit and vegetable cleaning; removal of grease, tar, oil, 
stains, paints from concrete and metal surfaces; paint stripper from 
metals and wood; carpet and upholstery cleaner; solvent for inks, 
paints; agricultural chemicals such as fertilizers, herbicides and 
pesticides; graffiti remover; and industrial parts cleaning. Some 
biobased solvents may also be used as carrier solvents for paints, 
inks, lotions, insect repellents, polishes, and other uses.
    Biobased solvents and cleaners are made from renewable agricultural 
materials including crops and livestock.
    Diluent items made from soybean oil, linseed oil, and tung oil can 
reduce the viscosity of a paint or coating. These diluents can act as 
both a solvent and a resin, thus eliminating the need for volatile 
organic compounds (VOCs). These solvents can be used in a variety of 
specialty applications such as metal finishing and ink formulation.
    Parts cleaning compounds can contain one or more biobased solvents 
that are formulated with other performance additives such as 
surfactants, biocides, and rheology agents. These items are used in 
manufacturing and fabrication operations for cleaning parts prior to 
assembly, or in repair operations such as automotive shops or jet 
aircraft engine repair. Printing ink removers can be formulated items 
used for the removal of ink from printing presses and other printing 
equipment, such as press and blanket washes and screen cleaners. 
Adhesive/mastic removers are generally formulated items designed to 
remove adhesives or mastics from machinery used in gluing applications 
or from surfaces where an adhesive or mastic has been applied, such as 
with tile removal. Paint strippers are generally formulated items 
designed to remove paints from wood or metal surfaces. Asphalt removal 
and release materials are formulated or neat solvent

[[Page 70741]]

items used to remove built up asphalt from machinery, or they can be 
used as a pre-spray for dump trucks to prevent sticking of asphalt to 
truck beds.
    Hard surface cleaners include general purpose formulated items for 
the removal of greases and other dirt from metal, tile, glass, 
plastics, and hard surfaces. Glass cleaners are generally formulated 
items for the removal of dirt from glass surfaces with minimal or no 
film residues. Food machinery cleaners are formulated items used to 
remove accumulated greases and soils from metal and non-metal parts of 
food machinery (meat saws and slicers, vent fans, ovens, cooking vats, 
etc.), and should be approved for incidental food contact or certified 
by the manufacturer as safe. Textile cleaners are formulated items for 
the removal of heavy stains from textiles prior to institutional 
cleaning (dry cleaning or laundry). Graffiti removers are formulated 
items for the removal of graffiti (spray paint, markers, crayons, etc.) 
from metal and or wood surfaces. Concrete, stone, and masonry cleaners 
are formulated items that remove oil, grease, soot, and other soils 
from concrete driveways/sidewalks, stone, and masonry.
    Hand cleaners and soaps are formulated items for the removal of 
heavy greases and dirt from skin. Laundry aids include stain removers 
and pre-washes for the treatment of stains on fabrics. Wood cleaners 
and polishes are formulated items for cleaning and polishing of wood 
surfaces and furniture.
    Some biobased solvents are used as carrier solvents for paints, 
inks, lotions, insect repellents, polishes, and other uses.

Proposed Minimum Content--Solvents and Cleaners Category

    To be included in this solvents and cleaners category, the minimum 
biobased content of each item must be:

------------------------------------------------------------------------
                                                                Minimum
                                                               biobased
                            Items                               content
                                                                  (%)
------------------------------------------------------------------------
Formulated product..........................................          50
Neat product (concentrate)..................................         100
------------------------------------------------------------------------

Sorbents Category

    Biobased sorbents are materials that are used to take up and hold 
liquids. A wide range of agricultural and forest materials can be used 
as biobased sorbents, including but not limited to wool, cotton and 
cotton linters, vegetable starch, kenaf, and agricultural residues such 
as corn stover and peanut hulls. The range of items produced includes 
products to collect oil and other environmental spills, collect blood 
and other fluids in medicinal and surgical applications, collect urine 
in diapers and incontinence products, and for animal bedding (including 
wood chips).
    Sorbents can be placed in items such as containers, packages, 
gauzes, or other carriers to create a sorbent system. This aids in 
handling of the sorbent and application of the sorbent at a location to 
achieve greatest benefit. The sorbent carrier may be of a material 
other than a biobased item. For the purposes of this category, the 
biobased material is the ``active'' part of the sorbent system. 
Biobased items in this category must address the function of the entire 
product, e.g., the sorbent itself as well as the casing or framework 
holding or enclosing the sorbent.
    Plant starch contained within a cotton bag is an illustration of a 
sorbent system. While the plant starch is not the end product, it is 
the ``active'' ingredient in these sorbent systems. The USDA 
Agricultural Research Service developed a patented sorbent gel that 
would be a sorbent system. The gel is capable of absorbing hundreds of 
times its own weight in water and has been used in such items as seed 
coatings, wound dressings, automobile fuel filters, plastic barriers 
used at construction sites, and, most notably, in disposable diapers.

Proposed Minimum Content--Sorbents Category

    The biobased sorbents product category is organized as two broad 
groups of items: sorbents and sorbent systems. A sorbent system 
involves the use of a sorbent (active ingredient) in combination with a 
non-active carrier or an active carrier. For example a disposable 
diaper is a carrier for a specialized absorbent material, which is the 
sorbent. To be included in the sorbents category, the minimum biobased 
content of each item must be:

------------------------------------------------------------------------
                                                                Minimum
                                                               biobased
                            Items                               content
                                                                  (%)
------------------------------------------------------------------------
Sorbents....................................................          90
Sorbent systems.............................................          75
------------------------------------------------------------------------

Plant and Vegetable Inks Category

    Here the category and the item are one and the same. Plant and 
vegetable oils can be used to make a wide variety of biobased inks. 
Over 90 percent of all U.S. daily newspapers use at least some soy ink, 
made by blending soybean oil with pigments, resins, and waxes to make 
either black or color ink. Unlike petroleum inks, soy ink does not 
release VOCs into the atmosphere upon drying. Newspapers printed with 
soy ink are easier to recycle.
    In 1994, the U.S. Congress enacted the ``Vegetable Ink Printing Act 
of 1994,'' Public Law 103-348, mandating that, when technologically 
feasible and price competitive, Federal lithographic printing be 
performed using ink containing minimum percentages of plant and 
vegetable oil. Plant and vegetable inks are not considered to be in 
mature markets because plant and vegetable inks did not have 
significant national market penetration prior to 1972.
    Biobased inks can be provided in black and a variety of colors. 
These inks can be used to print a broad range of documents, including 
newspapers, magazines, brochures, business cards, and reports. The inks 
can also be used with a variety of specialty applications including 
stencils, textiles, labeling, as well as pens and other writing 
instruments.

Proposed Minimum Content--Plant and Vegetable Inks Category

    To be included in the inks category, the minimum biobased content 
of each item must be:

------------------------------------------------------------------------
                                                                Minimum
                                                               biobased
                    Items by application                        content
                                                                  (%)
------------------------------------------------------------------------
News inks--black............................................          40
News inks--color............................................          30
Sheet-fed inks..............................................          20
Forms inks..................................................          20
Heat-set inks...............................................          10
Specialty inks..............................................          20
------------------------------------------------------------------------

VI. Plan for Future Development of Voluntary Labeling Program

    Section 9002(h) directs USDA to establish a voluntary labeling 
program for biobased items. USDA will address requirements for the 
labeling program in a future rulemaking. However, in order to signal 
USDA thinking in this regard, the potential parameters of the labeling 
program are described here.
    It is anticipated the labeling program will build on the 
requirements to qualify for preferred procurement of biobased items 
discussed in this current proposed regulation. Biobased products that 
qualify for preferred procurement would be eligible to qualify for use 
of the ``U.S.D.A. Certified Biobased Product'' label. Two additional 
criteria would determine eligibility to use the label. First, an 
analysis of life cycle costs and health benefits of the product would 
be required using NIST's BEES

[[Page 70742]]

(Building for Environmental and Economic Sustainability) analytical 
tool. This analysis would be conducted by NIST or by a third party 
authorized by NIST to conduct the BEES Analysis. Second, the product 
would have passed one or more tests against applicable ASTM, 
International Organization for Standardization (an international 
standards setting organization identified by the acronym ISO), Federal 
or military specifications, or industry performance standards by a 
third party ASTM/ISO compliant testing facility, and results of those 
tests would be available to Federal procurement officials.
    USDA seeks comments on the potential direction of future regulation 
regarding a voluntary program for use of the label by manufacturers and 
vendors of biobased products and on the possibility of assessing a user 
fee to support the labeling program.

VII. Regulatory Information

A. Executive Order 12866, Regulatory Planning and Review

    It is estimated the proposed rule, when finalized, will not have an 
annual effect on the economy of $100 million or more. This program will 
have only a relatively small effect on the economy for the foreseeable 
future. This rule does not propose to designate any items. Successive 
items will be designated for preferred procurement through subsequent 
rulemakings over a period of at least several years. The industry, 
itself, is still very small. Although this program is intended to spur 
development of the industry, that is likely to occur only over many 
years. Each time an item is proposed for designation, USDA will 
evaluate the economic effect of that designation, as well as the 
cumulative effect of that and previous item designations.
    For the above reasons, this rule has been determined to be not 
significant for purposes of Executive Order 12866 and, therefore, has 
not been reviewed by the Office of Management and Budget.

B. Regulatory Flexibility Act

    When an agency issues a rulemaking proposal, the Regulatory 
Flexibility Act (RFA), 5 U.S.C. 601-612, requires the agency to 
``prepare and make available for public comment an initial regulatory 
flexibility analysis'' which will ``describe the impact of the proposed 
rule on small entities.'' 5 U.S.C. 603(a). Section 605 of the RFA 
allows an agency to certify a rule, in lieu of preparing an analysis, 
if the proposed rulemaking is not expected to have a significant 
economic impact on a substantial number of small entities.
    Although this program ultimately may have a direct impact on a 
substantial number of small entities, USDA has determined that this 
proposed rule will not have a direct significant economic impact on a 
substantial number of small entities. This rule will affect directly 
primarily Federal agencies. Private sector manufacturers and vendors of 
biobased products voluntarily may provide information to USDA through 
the means set forth in this proposed rule. However, the proposed rule 
imposes no requirement on manufacturers and vendors to do so, and does 
not differentiate between manufacturers and vendors based on size. USDA 
does not know how many small manufacturers and vendors may opt to 
participate at this stage of the program.
    As explained above, when USDA issues a proposed rulemaking to 
designate items for preferred procurement under this program, USDA will 
assess the anticipated impact of such designations, including the 
impact on small entities. USDA anticipates that this program will 
impact small entities which manufacture or sell biobased products. For 
example, once items are designated, this program will provide 
additional opportunities for small businesses to manufacture and sell 
biobased products to Federal agencies. This program also will impact 
indirectly small entities that supply biobased materials to 
manufacturers. Additionally, this program may decrease opportunities 
for small businesses that manufacture or sell nonbiobased products or 
provide components for the manufacturing of such products. Again, USDA 
cannot assess these anticipated impacts on small entities until USDA 
proposes items for designation. This rule does not propose to designate 
any items.
    The proposed rule will directly impact small entities by 
implementing a cost-sharing program which gives first consideration to 
proposals for products of ``small and emerging business enterprises.'' 
Submission of a proposal is voluntary and not limited to small 
entities. The direct impact would be beneficial for those entities 
whose products are selected for cost-sharing. Because of the limited 
amount of funds available for cost-sharing, the proposed ceilings on 
cost-sharing, and the anticipated breadth of any competition (not 
limited to a particular manufacturing sector and open to other than 
small entities), USDA does not anticipate that this cost-sharing 
competition would have a significant economic impact on a substantial 
number of small entities.
    Accordingly, USDA hereby certifies that this proposed rule will not 
have a significant economic impact on a substantial number of small 
entities. USDA invites comments from members of the public who believe 
that the proposed rule will have a significant economic impact on a 
substantial number of small entities.

C. Executive Order 12630

    This rule has been reviewed in accordance with Executive Order 
12630, Governmental Actions and Interference with Constitutionally 
Protected Property Rights, and does not contain policies that would 
have implications for these rights.

D. Executive Order 12988

    This proposed rule has been reviewed in accordance with Executive 
Order 12988, Civil Justice Reform. This proposed rule does not preempt 
State or local laws, is not intended to have retroactive effect, and 
does not involve administrative appeals.

E. Executive Order 13132

    This proposed rule does not have sufficient federalism implications 
to warrant the preparation of a Federalism Assessment. Provisions of 
this proposed rule will not have a substantial direct effect on States 
or their political subdivisions or on the distribution of power and 
responsibilities among the various government levels.

F. Unfunded Mandates Reform Act of 1995

    This proposed rule contains no Federal mandates under the 
regulatory provisions of Title II of the Unfunded Mandates Reform Act 
of 1995 (UMRA), 2 U.S.C. 1531-1538, for State, local, and tribal 
governments, or the private sector. Therefore, a statement under 
section 202 of UMRA is not required.

G. Executive Order 12372

    For the reasons set forth in the Final Rule Related Notice for 7 
CFR part 3015, subpart V (48 FR 29115, June 24, 1983), this program is 
excluded from the scope of the Executive Order 12372 which requires 
intergovernmental consultation with State and local officials. This 
program does not directly affect State and local governments.

H. Executive Order 13175

    The policies contained in this rulemaking do not have tribal 
implications and thus no further action is required under Executive 
Order 13175.

[[Page 70743]]

I. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995, 44 U.S.C. 
chapter 35, and the implementing Office of Management and Budget (OMB) 
regulations in 5 CFR part 1320, USDA has submitted the information 
collections contained in this proposed rule to the OMB for review under 
section 3507(d) of the Act. Comments addressing the proposed 
information collections should be submitted to the Office of 
Information and Regulatory Affairs of OMB, Attention: Desk Officer for 
Agriculture, Margaret Malanoski, 725 17th Street, NW., Room 10202, 
Washington, DC 20503.
    Title: Guidelines for Designating Biobased Products for Federal 
Procurement
    Abstract: USDA will collect information from biobased product 
manufacturers and vendors on a voluntary basis to support a website 
maintained by USDA for the use of those parties, as well as the use of 
Federal agencies and the public. Information to be requested will 
include identification of products offered for preferred procurement 
within a designated item, contact information for the manufacturer or 
vendor, and demographic information about the manufacturer or vendor 
that will assist Federal agencies in reporting on the performance of 
the preferred procurement program. In addition, information will be 
sought regarding availability of products within an item considered for 
designation; relative prices of the products; performance of the 
products against industry standards such as ASTM, ISO, Federal or 
military specifications, or other standards; and environmental and 
public health benefits using NIST's BEES analytical tool.
    This information may be included on the website or a hotlink may be 
established to manufacturers' or vendors' websites to access the 
information. The information sought for this voluntary website is 
envisioned to be non-proprietary. Should proprietary information be 
provided, the website will be password protected making that accessible 
only to USDA, Federal agencies, and to the manufacturer or vendor that 
provided the information.
    Estimate of respondent burden: Public reporting burden for the 
collection of information is estimated to average 50 hours per product. 
Reporting is voluntary on the part of manufacturers/vendors of biobased 
products.
    Respondents: Biobased product manufacturers and vendors.
    Estimated annual number of respondents: 200.
    Estimated number of responses per respondent: 1.
    Estimated total annual burden hours on respondents: 10,000.
    USDA invites written comments on:
    (a) Whether the proposed collection of information is necessary for 
the proper performance of the functions of the agency, including 
whether the information will have practical utility;
    (b) The accuracy of the agency's estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used;
    (c) Ways to enhance the quality, utility, and clarity of the 
information to be collected; and
    (d) Minimizing the burden of the collection of the information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology.

List of Subjects in 7 CFR Part 2902

    Biobased products, Procurement.

    For the reasons stated in the preamble, the Department of 
Agriculture proposes to amend 7 CFR chapter XXIX as follows:

CHAPTER XXIX--OFFICE OF ENERGY POLICY AND NEW USES, DEPARTMENT OF 
AGRICULTURE

    1. The chapter heading of chapter XXIX is revised to read as set 
forth above.
    2. A new part 2902 is added to chapter XXIX to read as follows:

PART 2902--GUIDELINES FOR DESIGNATING BIOBASED PRODUCTS FOR FEDERAL 
PROCUREMENT

Subpart A--General
Sec.
2902.1 Purpose and scope.
2902.2 Applicability.
2902.3 USDA guidance on item availability and procurement.
2902.4 Definitions.
2902.5 Preferred procurement program.
2902.6 Funding for testing.
Subpart B--Biobased Product Eligibility for Federal Preference
2902.10 Communicating information on qualifying biobased products.
2902.11 Characteristics required for obtaining designated item 
status.
2902.12 Items and minimum biobased content.

    Authority: 7 U.S.C. 8102.

Subpart A--General


Sec.  2902.1  Purpose and scope.

    (a) The purpose of the guidelines in this part is to assist Federal 
agencies in complying with the requirements of section 9002 of FSRIA, 7 
U.S.C. 8102, as they apply to the procurement of the items designated 
in subpart B of this part.
    (b) The guidelines in this part designate items that are or can be 
produced with biobased products and whose procurement by Federal 
agencies will carry out the objectives of section 9002 of FSRIA.


Sec.  2902.2  Applicability.

    (a) The guidelines in this part apply to all procurement actions by 
Federal agencies involving items designated by USDA in this part, where 
the Federal agency purchases $10,000 or more worth of one of these 
items during the course of a fiscal year, or where the quantity of such 
items or of functionally equivalent items purchased during the 
preceding fiscal year was $10,000 or more. The $10,000 threshold 
applies to procuring agencies as a whole rather than to agency 
subgroups such as regional offices or subagencies of a larger 
department or agency.
    (b) The guidelines in this part do not apply to:
    (1) Any procurement by any Federal agency that is subject to 
regulations of the Administrator of the Environmental Protection Agency 
under section 6002 of the Solid Waste Disposal Act (40 CFR part 247), 
to the extent that the requirements of this part are inconsistent with 
such regulations; or
    (2) The procurement of motor vehicle fuels or electricity.
    (c) FSRIA section 9002(c)(1) requires Federal agencies to procure 
designated items composed of the highest percentage of biobased 
products practicable, consistent with maintaining a satisfactory level 
of competition, considering such guidelines. Federal agencies may 
decide not to procure such items if they are not reasonably priced or 
readily available or do not meet specified or reasonable performance 
standards.


Sec.  2902.3  USDA guidance on item availability and procurement.

    An informational USDA website implementing section 9002 can be 
found at: http://www.biobased.oce.usda.gov. USDA will maintain a 
voluntary web-based information site for manufacturers and vendors of 
designated items produced with biobased products and Federal agencies. 
Through this website, USDA

[[Page 70744]]

intends to provide information as to the availability, relative price, 
performance and environmental and public health benefits of the 
designated items. USDA encourages manufacturers and vendors to provide 
product, business contacts, and product information for designated 
items. USDA also encourages Federal agencies to utilize this website to 
obtain current information on designated items, contact information on 
manufacturers and vendors, and access to information on product 
characteristics relevant to procurement decisions.


Sec.  2902.4  Definitions.

    These definitions apply to this part:
    Agricultural materials. Agricultural-based, including plant, 
animal, and marine materials, raw materials or residues used in the 
manufacture of commercial or industrial, nonfood/nonfeed products.
    ASTM International. ASTM International, a nonprofit organization 
organized in 1898, is one of the largest voluntary standards 
development organizations in the world with about 30,000 members in 
over 100 different countries. ASTM provides a forum for the development 
and publication of voluntary consensus standards for materials, 
products, systems, and services.
    BEES. An acronym for ``Building for Environmental and Economic 
Sustainability,'' an analytic tool used to determine the environmental 
and health benefits and life cycle costs of items, developed by the 
U.S. Department of Commerce's National Institute of Standards and 
Technology, with support from the U.S. Environmental Protection Agency, 
Office of Pollution Prevention and Toxics (BEES 3.0, Building for 
Environmental and Economic Sustainability Technical Manual and User 
Guide, NISTIR 6916, National Institute of Standards and Technology, 
U.S. Department of Commerce, October 2002). Also, see http://www.bfrl.nist.gov/oae/software/bees_USDA.html for a discussion of how 
biobased feedstocks are addressed in the BEES Analysis.
    Biobased components. Any intermediary materials or parts that, in 
combination with other components, are functional parts of the biobased 
product.
    Biobased content. The weight (or volume, where appropriate) of the 
biobased material in the product divided by the total weight (or 
volume, where appropriate) of the product, times 100 to yield the 
percent of biobased content. Total product weight may be calculated 
exclusive of water or other inactive ingredients, fillers and diluents.
    Biobased product. A product determined by the Secretary to be a 
commercial or industrial product (other than food or feed) that is 
composed, in whole or in significant part, of biological products or 
renewable domestic agricultural materials (including plant, animal, and 
marine materials) or forestry and materials.
    Biological products. Products derived from living materials other 
than agricultural or forestry materials.
    Designated item. A category of products identified in Sec.  2902.12 
that is eligible for the procurement preference established under 
section 9002 of FSRIA.
    Diluent. A substance used to diminish the strength, scent, or other 
basic property of a substance.
    Engineered wood products. Products produced with a combination of 
wood, food fibers and adhesives.
    Federal agency. Any executive agency or independent establishment 
in the legislative or judicial branch of the Government (except the 
Senate, the House of Representatives, the Architect of the Capitol, and 
any activities under the Architect's direction).
    Filler. A substance added to a product to increase the bulk, 
weight, viscosity, strength, or other property.
    Forest thinnings. The removal of trees from a dense forest, 
primarily to improve growth, enhance forest health, or recover 
potential mortality. To recover potential mortality means to remove 
trees that are going to die in the near future.
    Forestry materials. Materials derived from the practice of planting 
and caring for forests and the management of growing timber. Such 
materials must come from short rotation woody crops (less than 10 years 
old), sustainably managed forests, wood residues, or forest thinnings.
    Formulated product. A product that is prepared or mixed with other 
ingredients, according to a specified formula and includes more than 
one ingredient.
    FSRIA. The Farm Security and Rural Investment Act of 2002, Pub. Law 
107-171.
    Ingredient. A component; part of a compound or mixture; may be 
active or inactive.
    ISO. The International Organization for Standardization, a network 
of national standards institutes from 145 countries working in 
partnership with international organizations, governments, industries, 
business, and consumer representatives.
    Neat product. A product that is made of only one ingredient and is 
not diluted or mixed with other substances.
    Relative price. The price of a product as compared to the price of 
other products on the market that have similar performance 
characteristics.
    Residues. That which remains after a part is taken, separated, 
removed, or designated; a remnant; a remainder; and, for this purpose, 
is from agricultural materials, biological products, or forestry 
materials.
    Secretary. The Secretary of the United States Department of 
Agriculture.
    Small and emerging private business enterprise. Any private 
business that employs 50 or fewer employees and has less than $1 
million in projected annual gross revenues.
    Sustainably managed forests. Practice of a land stewardship ethic 
that integrates the reforestation, management, growing, nurturing, and 
harvesting of trees for useful products while conserving soil and 
improving air and water quality, wildlife, fish habitat, and 
aesthetics.


Sec.  2902.5  Preferred procurement program.

    (a) Within 1 year after the publication date of each designated 
item, Federal agencies that have the responsibility for drafting or 
reviewing specifications for items procured by Federal agencies shall 
ensure that their specifications require the use of designated items 
composed of biobased products, consistent with the guidelines in this 
part. The biobased content of a designated item may vary considerably 
from product to product based on the mix of ingredients used in its 
manufacture. In procuring designated items, the percentage of biobased 
content should be maximized, consistent with achieving the desired 
performance for the product.
    (b) Within 1 year after the publication date of the guidelines in 
this part, each Federal agency shall develop a procurement program 
which will assure that items composed of biobased products will be 
purchased to the maximum extent practicable and which is consistent 
with applicable provisions of Federal procurement laws. Each 
procurement program shall contain:
    (1) A preference program for purchasing designated items, (2) A 
promotion program to promote the preference program; and
    (3) Provisions for the annual review and monitoring of the 
effectiveness of the procurement program.
    (c) In developing the preference program, Federal agencies shall 
adopt one of the following options, or a substantially equivalent 
alternative, as part of the procurement program:
    (1) A policy of awarding contracts to the vendor offering a 
designated item

[[Page 70745]]

composed of the highest percentage of biobased product practicable 
except when such items:
    (i) Are not available within a reasonable time;
    (ii) Fail to meet performance standards set forth in the applicable 
specifications, or the reasonable performance standards of the Federal 
agency; or
    (iii) Are available only at an unreasonable price.
    (2) A policy of setting minimum biobased products content 
specifications in such a way as to assure that the biobased products 
content required is consistent with section 9002 of FSRIA and the 
requirements of the guidelines in this part except when such items:
    (i) Are not available within a reasonable time;
    (ii) Fail to meet performance standards for the use to which they 
will be put, or the reasonable performance standards of the Federal 
agency; or
    (iii) Are available only at an unreasonable price.


Sec.  2902.6  Funding for testing.

    (a) USDA will use funds to support testing for biobased content and 
conduct of the BEES Analysis for products within items USDA has 
selected to designate for preferred procurement through early 
regulatory action. USDA initially will focus on gathering the necessary 
test information on a sufficient number of products within an item 
(generic grouping of products) to support regulations to be promulgated 
to designate an item or items for preferred procurement under this 
program. USDA may accept cost sharing for such testing to the extent 
consistent with USDA product testing decisions. During this period USDA 
will not consider cost sharing in deciding what products to test. When 
USDA has concluded that a critical mass of items have been designated, 
USDA will exercise its discretion, in accordance with the competitive 
procedures outlined in paragraph (b) of this section, to allocate a 
portion of the available USDA testing funds to give priority to testing 
of products for which private sector firms provide cost sharing for the 
testing.
    (b)(1) Subject to the availability of funds and paragraph (a) of 
this section, USDA will announce annually the solicitation of proposals 
for cost-sharing for the testing of biobased products to carry out this 
program. Information regarding the submission of proposals for cost 
sharing also will be posted on the USDA informational Web site, http://www.biobased.oce.usda.gov.
    (2) Cost-sharing proposals will be considered first for products of 
small and emerging private business enterprises. If funds remain to 
support further testing, a second tranche of applicants may be drawn 
from all other producers of biobased items. Proposals will be evaluated 
and assigned a priority rating. Priority ratings will be based on the 
following criteria:
    (i) A maximum of 25 points will be awarded a proposal based on the 
market readiness;
    (ii) A maximum of 20 points will be awarded a proposal based on the 
potential size of the market for that product in Federal agencies;
    (iii) A maximum of 25 points will be awarded based on the financial 
need for assistance of the manufacturer or vendor;
    (iv) A maximum of 20 points will be awarded a proposal based on the 
product's prospective competitiveness in the market place;
    (v) A maximum of 10 points will be awarded a proposal based on its 
likely benefit to the environment.
    (3) Proposals will be selected in order of declining priority 
ratings (from highest to lowest) until available funds for the fiscal 
year are committed.
    (4)(i) For products selected for BEES Analysis testing under this 
paragraph, USDA could provide up to 50 percent of the cost of 
determining the life cycle costs and environmental and health effects 
using the NIST's BEES Analysis, up to a maximum of $5,000 of assistance 
per product.
    (ii) For products selected for performance testing under this 
paragraph, USDA could provide up to 50 percent of cost for performance 
testing, up to $100,000 of assistance per product for up to two 
performance tests (measures of performance) per product.
    (5) For selected proposals, USDA will enter into agreements with 
and provide the funds directly to the testing entities.
    (6) Proposals submitted in one fiscal year, but not selected for 
cost-sharing of testing in that year, may be resubmitted to be 
considered for cost-sharing in the following year.

Subpart B--Biobased Product Eligibility for Federal Preference


Sec.  2902.10  Communicating information on qualifying biobased 
products.

    (a) Manufacturers and vendors are expected to provide relevant 
information to Federal agencies, upon request, with respect to product 
characteristics. USDA recommends that Federal agencies affirmatively 
seek this information. Manufacturers must be able to verify the 
biobased content in their products. The level of biobased content in 
the product is to be determined using the ASTM International standard 
that is a Radioisotope Standard Method to distinguish between carbon 
from fossil resources and that from renewable sources.
    (b) Manufacturers and vendors must use the National Institute of 
Standards and Technology BEES (Building for Environmental and Economic 
Sustainability) analytical tool to provide information on life cycle 
costs and environmental and health benefits to Federal agencies, when 
asked.
    (c) In assessing performance of qualifying biobased products, USDA 
requires that Federal agencies rely on results of performance tests 
using applicable ASTM International, International Organization for 
Standardization (ISO), Federal or military specifications, or other 
similarly authoritative industry test standards. Such testing must be 
conducted by a third party ASTM/ISO compliant laboratory.
    (d) Manufacturers and vendors are reminded that their advertising, 
labeling, and other marketing claims, including claims regarding health 
and environmental benefits of the product, must conform to the Federal 
Trade Commission Guides for the Use of Environmental Marketing Claims, 
16 CFR part 260.


Sec.  2902.11  Characteristics required for obtaining designated item 
status.

    (a) All qualifying items under this program must have at least 5 
percent of their total manufactured value (measured after manufacture 
at the location of manufacture) made up of biobased product(s).
    (b) Minimum biobased content requirements in Sec.  2902.12 refer to 
the biobased portion of the product, and not the entire item. These 
requirements are in addition to the 5 percent total manufactured value 
requirement in paragraph (a) of this section.
    (c) Manufacturers and vendors must utilize third party ASTM/ISO 
compliant test facilities using the ASTM International Radioisotope 
Standard Method to determine and certify the biobased content of their 
products offered for preferred procurement. Federal agencies and USDA 
may request verification of biobased content from manufacturers and 
vendors for products certified to qualify for preferred procurement.
    (d)(1) Biobased content shall be determined based on the weight of 
the biobased material (exclusive of water and other non-active 
ingredients, fillers,

[[Page 70746]]

and diluents) divided by the total weight of the product and expressed 
as a percentage by weight.
    (2) In the case of products that are essentially the same 
formulation, but marketed under a variety of brand names, the 
manufacturer or vendor may refer to the underlying biobased content 
test data as the basis to demonstrate the biobased content, rather than 
conducting a biobased content test on each branded product.
    (e) Products having mature markets are excluded from this program. 
For purposes of this program, a product has a mature market if the 
product falls within any of the following groups:
    (1) Silk, cotton and wool garments, household items, and industrial 
or commercial products unless made with a substantial amount of 
biobased plastic product.
    (2) Wood products made from traditionally-harvested forest 
materials.
    (3) Products having significant national market penetration prior 
to 1972.


Sec.  2902.12  Items and minimum biobased content.

    USDA shall designate items that meet the criteria set forth in this 
part as eligible for the procurement preference. In designating items, 
USDA will group items by category and will identify the minimum 
biobased content for each listed item. As items are designated for 
procurement preference, they will be added to this section.

    Dated: December 16, 2003.
Keith Collins,
Chief Economist, Department of Agriculture.
[FR Doc. 03-31347 Filed 12-18-03; 8:45 am]
BILLING CODE 3410-GL-P