[Federal Register Volume 71, Number 144 (Thursday, July 27, 2006)]
[Rules and Regulations]
[Pages 42572-42575]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-12018]


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

DEPARTMENT OF AGRICULTURE

7 CFR Part 2902

RIN 0503-AA26


Office of Energy Policy and New Uses; Designation of Biobased 
Items for Federal Procurement

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

ACTION: Interim final rule with comment period.

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

SUMMARY: The U.S. Department of Agriculture (USDA) is amending 7 CFR 
part 2902, Guidelines for Designating Biobased Products for Federal 
Procurement, to be consistent with the statutory changes to section 
9002 of the Farm Security and Rural Investment Act (FSRIA) that were 
effected when the Energy Policy Act of 2005 was signed into law on 
August 8, 2005. In addition, USDA amends part 2902 in order to clarify 
that biobased products from certain designated countries must be 
treated by procuring agencies as eligible for the procurement 
preference under FSRIA. Finally, this rule amends part 2902 to clarify 
the USDA intent to exclude from the preferred procurement program 
biobased products that are merely incidental to Federal funding. The 
amendment is issued as an immediately effective interim rule, with 
opportunity for public comment.

[[Page 42573]]


DATES: This rule is effective July 27, 2006.
    Comment Date: Submit comments on or before August 28, 2006.

ADDRESSES: Please submit any comments, or a notice of intent to submit 
comments, identified by ``Amendments to Guidelines'' or Regulatory 
Information Number (RIN) 0503-AA26, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Agency Web site: http://www.biobased.oce.usda.gov. Follow 
the instructions for submitting comments.
     E-mail: fb4p@oce.usda.gov. Include RIN number 0503-AA26 
and ``Amendments to Guidelines'' on the subject line. Please include 
your name and address in your message.
     Mail/commercial/hand delivery: Mail or deliver your 
comments to: Marvin Duncan, USDA, Office of the Chief Economist, Office 
of Energy Policy and New Uses, Room 4059, South Building, 1400 
Independence Avenue, SW., MS-3815, Washington, DC 20250-3815.
     Persons with disabilities who require alternative means 
for communication for regulatory information (Braille, large print, 
audiotape, etc.) should contact the USDA TARGET Center at (202) 720-
2600 (voice) and (202) 401-4133 (TDD).

FOR FURTHER INFORMATION CONTACT: Marvin Duncan, USDA, Office of the 
Chief Economist, Office of Energy Policy and New Uses, Room 4059, South 
Building, 1400 Independence Avenue, SW., MS-3815, Washington, DC 20250-
3815; e-mail: mduncan@oce.usda.gov; phone (202) 401-0461.

SUPPLEMENTARY INFORMATION: The information presented in this preamble 
is organized as follows:

I. Authority
II. Background
III. Summary of Changes
IV. Regulatory Information
    A. Executive Order 12866: Regulatory Planning and Review
    B. Executive Order 12630: Governmental Actions and Interference 
With Constitutionally Protected Property Rights
    C. Executive Order 12988: Civil Justice Reform
    D. Executive Order 13132: Federalism
    E. Unfunded Mandates Reform Act of 1995
    F. Executive Order 12372: Intergovernmental Review of Federal 
Programs
    G. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments

I. Authority

    The Guidelines for Designating Biobased Products for Federal 
Procurement (the Guidelines) are established 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''), as amended by the Energy Policy Act of 2005 (Pub. L. 109-58).

II. Background

    As originally enacted, section 9002 provides for the preferred 
procurement of biobased products by Federal agencies. USDA proposed 
guidelines for implementing this preferred procurement program on 
December 19, 2003 (68 FR 70730-70746). The Guidelines were promulgated 
on January 11, 2005 (70 FR 1792), and are contained in 7 CFR part 2902, 
``Guidelines for Designating Biobased Products for Federal 
Procurement.''
    The Guidelines identify various procedures Federal agencies are 
required to follow in implementing the requirements of section 9002. 
They were modeled in part on the ``Comprehensive Procurement Guidelines 
for Products Containing Recovered Materials (40 CFR part 247), which 
the Environmental Protection Agency (EPA) issued pursuant to the 
Resource Conservation Recovery Act (``RCRA''), 40 U.S.C. 6962. The RCRA 
guideline states that it does not apply to purchases of designated 
items that are merely incidental to Federal funding. A similar 
statement relating to the purchase of biobased products was 
inadvertently omitted from part 2902, although it is USDA 's intent to 
follow the same policy of removing incidental purchases from the scope 
of the biobased preferred procurement program.
    On August 8, 2005, the Energy Policy Act of 2005 was signed into 
law. Sections 205 and 943 of the Energy Policy Act revised section 9002 
of FSRIA, as follows: Section 205 provides that, in addition to 
biobased products with the highest available biobased content, 
procuring agencies are to give procurement preference to products that 
comply with regulations issued under 42 U.S.C. 6914b-1, which addresses 
plastic ring beverage containers made of naturally degradable material. 
Section 943 of the Energy Policy Act of 2005 adds to the definitions 
section of FSRIA, 7 U.S.C. 8101, a definition of ``procuring agency,'' 
which includes both Federal agencies and ``any person contracting with 
any Federal agency with respect to work performed under that 
contract.'' In addition, section 943 of the Energy Policy Act of 2005 
amends subsections within section 9002 of FSRIA by replacing the term 
``Federal agencies'' with ``procuring agencies.'' These changes have 
the effect of making Federal contractors expressly subject to the 
procurement preference provisions of section 9002 of FSRIA.
    On March 16, 2006, USDA published a final rule (71 FR 13686) 
designating six items within which biobased products will be afforded 
the procurement preference, as required by section 9002 of FSRIA. In 
the final rule, USDA responded to a comment that questioned how USDA 
intends to implement the preference program consistent with the United 
States' international trade obligations. The response in the final rule 
stated that ``biobased products from any designated country [as defined 
in Federal Acquisition Regulation section 25.003] would receive the 
same preference extended to U.S.-sourced biobased products. In order to 
clarify and make this policy applicable to all biobased designations, 
USDA plans to propose a broad-based revision to the USDA biobased 
procurement guidelines (7 CFR part 2902).'' 71 FR 13690.
    The purpose of this interim final rule, therefore, is three-fold: 
(1) To revise the Guidelines (i.e., 7 CFR part 2902) to make them 
consistent with the changes to section 9002 of FSRIA as the result of 
the Energy Policy Act of 2005, (2) to ensure the Guidelines are 
consistent with existing policy concerning incidental purchases, and 
(3) to clarify existing USDA policy regarding the equal treatment by 
procuring agencies of certain non-domestic biobased products. Because 
the interim final rule responds to a statutory amendment that became 
effective August 8, 2005, and because it codifies USDA policy as 
already stated in the first final rule designating biobased products, 
the interim final rule is effective immediately.

III. Summary of Changes

    USDA is amending five sections of 7 CFR part 2902, as described 
below.

A. 7 CFR 2902.1--Purpose

    As promulgated, the Guidelines applied to Federal agencies. In 
response to section 943(a)(2) of the Energy Policy Act, USDA is 
amending 7 CFR 2902.1(a) and (b) to replace the term ``Federal 
agencies'' with ``procuring agencies.'' The effect of these changes is 
to broaden the purpose and scope of the procurement program to include 
``procuring agencies;'' that is, to include contractors of Federal 
agencies as well as Federal agencies.

[[Page 42574]]

B. 7 CFR 2902.2--Definitions

    USDA is amending the definitions section by adding the definition 
for ``procuring agency,'' as stated in section 943(a)(1)(B) of the 
Energy Policy Act. The definition of ``procuring agency'' covers both 
Federal agencies and ``any person contracting with any Federal agency 
with respect to work performed under the contract.''

C. 7 CFR 2902.3--Applicability to Federal Procurement

    In response to section 943(a)(2) of the Energy Policy Act, USDA is 
amending 7 CFR 2902.3(a) by replacing the first two occurrences of 
``Federal agencies'' with ``procuring agencies'' in the first sentence 
of the paragraph. In the first instance, this change makes the 
guidelines applicable to ``all procurement actions by procuring 
agencies involving items designated by USDA in this part,'' not just to 
Federal agencies. In the second instance, the change broadens the 
applicability of the $10,000 threshold value to both Federal agencies 
and their contractors. Both of these changes are the result of 
revisions to section 9002 as contained in the Energy Policy Act.
    USDA is not changing the other occurrence of ``Federal agencies'' 
and ``Federal agency'' in the last sentence in 7 CFR 2902.3(a) because 
the sentence is applicable only at the Federal agency level; that is, 
the $10,000 threshold value applies to Federal agencies as a whole 
rather than to agency subgroups, such as regional offices of 
subagencies of a larger Federal department or agency. Similarly, 
purchases made by contractors under contract with a Federal agency 
would be included in the total value of products purchased by the 
Federal agency.
    In response to section 943(a)(2) of the Energy Policy Act, USDA is 
amending 7 CFR 2902.3(b) to apply to ``procuring agencies'' rather than 
to ``Federal agencies.'' This paragraph states that these guidelines do 
not apply for any procurement that is subject to section 6002 of the 
Solid Waste Disposal Act as amended by the Resource Conservation 
Recovery Act of 1976. The non-applicability of these guidelines applies 
equally to procurements made by Federal contractors and by Federal 
agencies. Therefore, USDA is changing the term ``Federal agencies'' to 
``procuring agencies.''
    In response to section 943(a)(2) of the Energy Policy Act, USDA is 
amending 7 CFR 2902.3(c) to apply to ``procuring agencies'' rather than 
to ``Federal agencies.'' This paragraph addresses the requirement to 
purchase products within designated items with the highest biobased 
contents unless such products are not reasonably priced, are not 
readily available, or do not meet specified or reasonable performance 
standards. This requirement and the exceptions to the purchase of 
biobased products are equally applicable to Federal contractors and to 
Federal agencies. Therefore, USDA is revising this paragraph to make it 
applicable to ``procuring agencies.''
    In response to section 205 of the Energy Policy Act of 2005, USDA 
is amending 7 CFR 2902.3(c) to require procuring agencies to also give 
a preference to items that comply with regulations issued under 42 
U.S.C. 6914b-1 (section 103 of Pub. L. 100-556). (Section 6914b-1 
requires the Administrator of the U.S. Environmental Protection Agency 
to require, by regulation, that any plastic ring beverage container 
``intended for use in the United States shall be made of naturally 
degradable material which, when discarded, decomposes within a period 
established by such regulation.'')
    Finally, USDA is amending section 2902.3 to add paragraph (d), in 
order to ensure that the preferred procurement program will be 
implemented consistent with similar guidelines issued under RCRA by the 
EPA. Specifically, the new paragraph will clarify that the Guidelines 
do not apply to purchases of biobased items that are not the direct 
result of contracts with procuring agencies (i.e., incidental 
purchases).

D. 7 CFR 2902.4--Procurement Programs

    In the final rule designating six items under the biobased 
preferred procurement program (71 FR 13686), USDA proposed a broad-
based revision to the Guidelines that would clarify its policy of 
implementing the program consistent with the United States' 
international trade obligations. USDA now carries out that proposal by 
adding to section 2902.4 a new subparagraph (b)(3), which requires 
Federal agencies to give equal consideration under the preferred 
procurement program to biobased products from ``designated countries.'' 
As defined in the Federal Acquisition Regulation section 25.003, 
``designated countries'' include, for example, countries that have 
entered into specific trade agreements with the United States or offer 
reciprocal equal treatment to U.S.-sourced goods.

E. 7 CFR 2902.8--Determining Life Cycle Costs, Environmental And Health 
Benefits, And Performance

    In response to section 943(a)(2) of the Energy Policy Act, USDA is 
amending 7 CFR 2302.8(b) to refer to ``procuring agencies'' rather than 
to ``Federal agencies.'' The subject paragraph requires agencies to 
rely on results of performance tests using applicable ASTM, ISO, 
Federal or military specifications, or other similarly authoritative 
industry test standards when assessing the performance of qualifying 
biobased products. The reliance on these results is equally applicable 
to Federal contractors making procurement decisions under contracts to 
a Federal agency and to the procuring agents within a Federal agency. 
Therefore, USDA is changing the term ``Federal agencies'' to 
``procuring agencies'' in 7 CFR 2302.8(b).

IV. Regulatory Information

A. Executive Order 12866: Regulatory Planning and Review

    This rule has been reviewed under Executive Order 12866. It has 
been determined that this interim final rule, which amends the 
Guidelines, is not a ``significant regulatory action'' under the terms 
of Executive Order 12866, because its purpose is only to implement the 
statutory amendments to FSRIA. Therefore, this interim final rule has 
not been reviewed by the Office of Management and Budget (OMB).

B. Executive Order 12630: Governmental Actions and Interference With 
Constitutionally Protected Property Rights

    This interim final 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.

C. Executive Order 12988: Civil Justice Reform

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

D. Executive Order 13132: Federalism

    This interim final rule does not have sufficient federalism 
implications to warrant the preparation of a federalism assessment. 
Provisions of this 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.

[[Page 42575]]

E. Unfunded Mandates Reform Act of 1995

    This interim final 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.

F. Executive Order 12372: Intergovernmental Review of Federal Programs

    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.

G. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    Today's interim final rule does not significantly or uniquely 
affect ``one or more Indian tribes, * * * the relationship between the 
Federal Government and Indian tribes, or * * * the distribution of 
power and responsibilities between the Federal Government and Indian 
tribes.'' Thus, no further action is required under Executive Order 
13175.

List of Subjects in 7 CFR Part 2902

    Biobased products, Procurement.


0
For the reasons set forth in the preamble, the Department amends 7 CFR 
part 2902 as follows:

Department of Agriculture

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

0
1. The authority citation for part 2902 continues to read as follows:

    Authority: 7 U.S.C. 8102.

0
2. Section 2902.1 is revised to read as follows:

Sec.  2902.1  Purpose and scope.

    (a) Purpose. The purpose of the guidelines in this part is to 
assist procuring agencies in complying with the requirements of section 
9002 of the Farm Security and Rural Investment Act of 2002 (FSRIA), 
Public Law 107-171, 116 Stat. 476 (7 U.S.C. 8102), as they apply to the 
procurement of the items designated in subpart B of this part.
    (b) Scope. The guidelines in this part designate items that are or 
can be produced with biobased products and whose procurement by 
procuring agencies will carry out the objectives of section 9002 of 
FSRIA.

0
3. Section 2902.2 is amended by adding, in alphabetical order, the 
definition of ``procuring agency'' to read as follows:


Sec.  2902.2  Definitions.

* * * * *
    ``Procuring agency'' means any Federal agency that is using Federal 
funds for procurement or any person contracting with any Federal agency 
with respect to work performed under the contract.
* * * * *

0
4. Section 2902.3 is revised to read as follows:


Sec.  2902.3  Applicability to Federal procurements

    (a) Applicability to procurement actions. The guidelines in this 
part apply to all procurement actions by procuring agencies involving 
items designated by USDA in this part, where the procuring 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 Federal 
agencies as a whole rather than to agency subgroups such as regional 
offices or subagencies of a larger Federal department or agency.
    (b) Exception for procurements subject to EPA regulations under the 
Solid Waste Disposal Act. For any procurement by any procuring agency 
that is subject to regulations of the Administrator of the 
Environmental Protection Agency under section 6002 of the Solid Waste 
Disposal Act as amended by the Resource Conservation Act of 1976 (40 
CFR part 247), these guidelines do not apply to the extent that the 
requirements of this part are inconsistent with such regulations.
    (c) Procuring items composed of highest percentage of biobased 
products. FSRIA section 9002(c)(1) requires procuring agencies to 
procure designated items composed of the highest percentage of biobased 
products practicable or such items that comply with the regulations 
issued under section 103 of Public Law 100-556 (42 U.S.C. 6914b-1), 
consistent with maintaining a satisfactory level of competition, 
considering these guidelines. Procuring 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.
    (d) This guideline does not apply to purchases of designated items 
that are unrelated to or incidental to Federal funding; i.e., not the 
direct result of a contract or agreement with persons supplying items 
to a procuring agency or providing support services that include the 
supply or use of items.

0
5. Section 2902.4 is amended by adding paragraph (b)(3) to read as 
follows:


Sec.  2902.4  Procurement programs.

* * * * *
    (b) * * *
    (3) In implementing the preference program, Federal agencies shall 
treat as eligible for the preference biobased products from 
``designated countries,'' as that term is defined in section 25.003 of 
the Federal Acquisition Regulation, provided that those products 
otherwise meet all requirements for participation in the preference 
program.
* * * * *

0
6. Section 2902.8 is amended by revising paragraph (b) to read as 
follows:


Sec.  2902.8  Determining life cycle costs, environmental and health 
benefits, and performance.

* * * * *
    (b) Performance test information. In assessing performance of 
qualifying biobased products, USDA requires that procuring agencies 
rely on results of performance tests using applicable ASTM, ISO, 
Federal or military specifications, or other similarly authoritative 
industry test standards. Such testing must be conducted by an ASTM/ISO 
compliant laboratory. The procuring official will decide whether 
performance data must be brand-name specific in the case of products 
that are essentially of the same formulation.
* * * * *

    Dated: July 21, 2006.
Joseph Glauber,
Deputy Chief Economist, U.S. Department of Agriculture.
 [FR Doc. E6-12018 Filed 7-26-06; 8:45 am]
BILLING CODE 3410-GL-P