[Federal Register Volume 72, Number 139 (Friday, July 20, 2007)]
[Proposed Rules]
[Pages 39762-39764]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-14018]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 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.
 
 ========================================================================
 

  Federal Register / Vol. 72, No. 139 / Friday, July 20, 2007 / 
Proposed Rules  

[[Page 39762]]



DEPARTMENT OF AGRICULTURE

Grain Inspection, Packers and Stockyards Administration

7 CFR Chapter VIII

RIN 0580-AB00


The Role of USDA in Differentiating Grain Inputs for Ethanol 
Production and Standardizing Testing of the Co-Products of Ethanol 
Production

AGENCY: Grain Inspection, Packers and Stockyards Administration, USDA.

ACTION: Advance notice of proposed rulemaking.

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

SUMMARY: We are inviting comments from producers, handlers, processors, 
livestock feeders, industry representatives, and other interested 
persons on the appropriate government role with regard to 
differentiating grain attributes for ethanol conversion, as well as 
standardizing the testing of co-products of ethanol production, 
commonly referred to as distillers grains. We have monitored the 
development of this expanding industry and believe now is an 
appropriate time to seek input from stakeholders in order to foster 
collaboration among segments of this industry and support the marketing 
of ethanol co-products.

DATES: We will consider comments that we receive by September 18, 2007.

ADDRESSES: We invite you to submit comments on this advance notice of 
proposed rulemaking. You may submit comments by any of the following 
methods:
     E-Mail: Send comments via electronic mail to 
[email protected].
     Mail: Send hardcopy written comments to Tess Butler, 
GIPSA, USDA, 1400 Independence Avenue, SW., Room 1647-S, Washington, DC 
20250-3604.
     Fax: Send comments by facsimile transmission to: (202) 
690-2755.
     Hand Delivery or Courier: Deliver comments to: Tess 
Butler, GIPSA, USDA, 1400 Independence Avenue, SW., Room 1647-S, 
Washington, DC 20250-3604.
     Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting 
comments.
     Instructions: All comments should make reference to the 
date and page number of this issue of the Federal Register.
     Read Comments: All comments will be available for public 
inspection in the above office during regular business hours (7 CFR 
1.27 (b)).

FOR FURTHER INFORMATION CONTACT: Eric Jabs at GIPSA, USDA, 6501 Beacon 
Drive, Suite 180 Stop 1404, Kansas City, MO 64133; Telephone (816) 823-
4635; Fax Number (816) 823-4644; e-mail [email protected].

SUPPLEMENTARY INFORMATION: 

Executive Order 12866

    This advance notice of proposed rulemaking has been determined to 
be not significant for the purposes of Executive Order 12866, and 
therefore, has not been reviewed by the Office of Management and 
Budget.

Background

    The modern fuel ethanol industry uses cereal grains, such as corn, 
sorghum, and wheat, to convert the starch in the seeds to ethanol by 
fermentation and distillation. GIPSA has followed the growth of this 
industry for several years, focusing on utilization of grains, the 
subsequent impact on supply, and the development of markets for the co-
product known as distillers grains. Expansion of the fuel ethanol 
industry is driven, among other things, by the Energy Policy Act of 
2005 (42 U.S.C. 15801) which mandates that 7.5 billion gallons of 
renewable fuels are utilized by 2012 (which has had a bullish impact on 
corn prices), the relationship between ethanol prices and crude oil 
futures, and overall profitability in the ethanol sector. At the 
beginning of 2007, there were 110 bio-refineries or ethanol plants on-
line in 19 States with an annual capacity of 5.5 billion gallons. 
Seventy-three refineries were under construction and eight were 
expanding, creating an additional 6 billions gallons of production 
capacity by 2009. Corn is currently the primary grain for ethanol 
production (more than 95 percent). In calendar year 2006, 1.8 billion 
bushels of corn produced 4.9 billion gallons of ethanol and 12 million 
metric tons of distillers grains. In calendar year 2006, the United 
States exported 1.25 million metric tons of distillers dried grains 
(DDG), primarily to Mexico, the European Union, Canada, Japan, Taiwan, 
and others.
    Distillers grains are typically marketed to feed formulators for 
livestock feeding, primarily beef, dairy, pork, and poultry. Most U.S. 
ethanol plants are located in reasonable proximity to animal feeding 
operations to aid logistics. When used locally, the distillers grains 
move by truck and are sold on a ``wet'' (50-65 percent moisture 
content) basis, which saves the cost of drying. Distillers grains may 
move by rail, either to feedlots or to export facilities. In this case, 
DDG have a moisture content of about 11-12 percent and 75-80 percent of 
distillers grains are sold this way. One bushel of corn produces 
approximately 2.8 gallons of ethanol and 17 pounds of distillers 
grains.
    The grains used for ethanol production are standardized in 7 CFR 
Part 810. Unless exported, there is no requirement for those grains to 
be officially inspected. The Association of American Feed Control 
Officials (AAFCO) has developed definitions for distillers grains as 
provided in their 2006 Official Publication. Section 27 of the Feed 
Ingredient Definitions provides definitions for Corn Distillers Dried 
Grains (DDG), Corn Distillers Dried Grains with Solubles (DDGS), Corn 
Distillers Wet Grains (DWG) and Corn Condensed Distillers Solubles 
(CDS). (2006 Official Publication, Association of American Feed Control 
Officials Incorporated. Sharon Krebs, Editor. Oxford, IN. 2006. 
Distillers Products, pages 273-274.)

Trading Without Federal Standards

    There are well developed markets for by-products of standardized 
grain which trade without government participation. Examples include 
soybean meal, soybean oil, and brewers spent grains. In the soybean 
meal market, the National Oilseed Processors Association (NOPA) 
established trading rules in 1933, which were last revised in February 
2007. The rules serve as guides, and parties to trades are free to 
adopt, modify, or disregard the rules. These rules govern sampling, 
testing, and specifications for soybean meal.

[[Page 39763]]

Soybean meal trades on the Chicago Board of Trade, and the standard 
specifications for deliverable grade define specified levels of 
protein, fat, fiber and moisture content. Unlike distillers grains 
which are highly variable, soybean meal is very consistent because one 
processing method is used almost exclusively.

Testing Grain

    We contacted industry participants and heard that price was the 
focal point for ethanol processors, while grain quality and timing of 
deliveries were also of concern. Basic quality factors a processor 
might consider when sourcing grain include moisture content, protein 
content, and mycotoxins (aflatoxins in corn for example) content. 
Additional factors for testing might include some aspect of starch 
quality, nutrient composition, crude fat, crude fiber; a test to 
differentiate a grain specifically designed for ethanol conversion, 
such as grain with a high total fermentable starch content; or an end-
use trait, such as a specific amino acid characteristic. Many 
processors indicated that co-product quality was of concern when 
sourcing grain, and most processors have grain inspected, either in-
house or by contract with an independent laboratory. Conversion of 
grain to ethanol consumes the starch and leaves the remainder of the 
grain as the co-product. As a general rule, conversion results in a 
three-fold concentration in the residual material (i.e., protein, fat, 
or mycotoxins) in the distillers dried grains. Aflatoxin, 
Deoxynivalenol, Fumonisins, Zearalenone, and T2 Toxin are mycotoxins 
that can be present in distiller's grains by-products if the grain 
delivered to the ethanol plant is contaminated. Mycotoxins are not 
destroyed during the ethanol production process and are not destroyed 
during the drying process to produce distillers grains co-products.

Definitions and Standardization of Testing for Distillers Grains

    While we heard from industry participants that at this time there 
is no need for GIPSA to establish grading standards for distillers 
grains (but we might have a role in minimizing market inefficiencies 
caused by inconsistent testing, either through standardization or 
validating tests used by the market), others have asked that we at 
least consider whether there is a need for official standards. Some 
stakeholders told us they do not feel that current industry-based 
definitions adequately describe the products.
    Alternately, an industry working group, including the American Feed 
Industry Association (AFIA), the Renewable Fuels Association, and the 
National Corn Growers Association, states that the current definitions 
adequately define the distillers products of today, preferring a broad 
definition. Further, the working group stated that the AFIA Ingredient 
Guidelines should be considered for updating to address modern 
processing technologies.
    The industry working group also evaluated empirical methods of 
analyses for Distillers Dried Grains with Solubles (DDGS) for which 
``there are no guidelines or recommendations on which analytical test 
methods should be used * * *'', focusing on analytical methods for 
moisture, crude protein, crude fat and crude fiber. DDGS currently 
accounts for about half of the distillers grains industry volume.

Potential Role for GIPSA

    GIPSA facilitates the marketing of livestock, poultry, meat, 
cereals, oilseeds, and related agricultural products, and promotes fair 
and competitive trading practices for the overall benefit of consumers 
and American agriculture. We facilitate the marketing of U.S. grains 
and oilseeds by establishing standards for quality assessments, 
regulating handling practices, and managing a network of Federal, 
State, and private laboratories that provide impartial, user-fee funded 
official inspection and weighing services. Recognizing that sampling is 
the single largest source of error in the analysis of grains, we offer 
sampling guidelines to the grain handling industry. Finally, for grains 
and commodities which are not standardized (e.g., hulless oats, 
popcorn, corn gluten feed), we provide official procedures for analysis 
of specific factors.
    As agricultural crops evolve and varieties with enhanced traits are 
developed, reliable tests must be developed to quantify the quality 
traits important to the market. Rapid tests and test kits are evaluated 
that detect biotechnology derived grains and oil seeds, analyze 
protein, moisture, oil, and mycotoxins. With the development of such 
new testing procedures, reference methods are needed to validate and 
improve their accuracy. This is an area where GIPSA has experience and 
expertise, which may prove valuable in this instance.
    Objective grain/co-product quality assessments (official and 
unofficial) require reliable, well-standardized measurement methods. 
Inspection methods can be classified as reference (direct) methods or 
secondary (indirect) methods. Reference methods are those that 
``define'' the quantity or quality in question. To provide the market 
with rapid, cost-effective quality assessments, GIPSA develops 
secondary or rapid methods, based on national reference methods, for 
routine inspection use in the official system. These secondary methods 
make physical, chemical, electronic, and/or optical measurements 
related to the desired quality characteristics. GIPSA conducts research 
to develop, evaluate, and improve reference methods and secondary 
methods for grain and grain product quality analysis to better meet 
global grain inspection and marketing needs.
    In 2001, we took a new approach in response to the market's need 
for testing the products of agricultural biotechnology. We established 
a voluntary proficiency program to organizations testing for 
biotechnology-derived grains and oilseeds to improve the reliability of 
testing. We also evaluate the performance of rapid tests developed to 
detect biotechnology-derived grains and oilseeds and mycotoxins, and 
confirm the tests operate in accordance with the manufacturers' claims.
    GIPSA is issuing this advance notice of proposed rulemaking to 
invite comments from all interested persons on how we can best 
facilitate the marketing of distillers grains in today's evolving 
marketplace. We are seeking comment on market needs and the feasibility 
and desirability of GIPSA's programs to facilitate the marketing of 
these products. All interested persons are encouraged to comment on the 
following issues related to this notice:
    1. What should GIPSA's role, if any, be in standardizing the 
testing of inputs and outputs of ethanol co-product processing?
    2. What factors are currently assessed on the input grains for 
ethanol conversion? Please list the factors by specific grain. What 
other factors would you test input grain for, if a test were available?
    3. What analytes or factors are currently assessed on co-products 
of ethanol production? Please list the factors by specific co-product 
type. What other factors would you test for, if a test were available?
    4. The industry lacks agreement on reference methods for analysis 
of co-product attributes. Should GIPSA play a role in the 
standardization of reference methods? If so, what should that role be?
    5. Secondary or rapid methods are used by the official inspection 
system to determine product quality. Should GIPSA play a role in the 
validation or

[[Page 39764]]

standardization of secondary or rapid methods? Should we limit our 
participation to validating the performance of test kits? Are there 
rapid tests in existence other than test kits of which you are aware?
    6. Should we work on developing reference methods for tests of 
specific traits in grains, such as fermentable starch content? Should 
GIPSA pursue standardized, secondary tests for the presence of specific 
traits in grains, such as fermentable starch content?
    7. Are co-products of ethanol production considered cereal 
products, according to the European Union regulations (COMMISSION 
REGULATION (EC) No 856/2005) for mycotoxin limits in cereals and cereal 
products? Should GIPSA validate the performance of test kits for the 
detection of mycotoxins in distillers grains? If so, what are the 
limits of detection which should be considered?
    We welcome your comments on these issues as well as any comments or 
suggestions related to distillers grains.

    Authority: 7 U.S.C. 71-87.

David R. Shipman,
Acting Administrator, Grain Inspection, Packers and Stockyards 
Administration.
 [FR Doc. E7-14018 Filed 7-19-07; 8:45 am]
BILLING CODE 3410-KD-P