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CFR Citation: 7 CFR Part 2902

RIN ID: RIN 0503-AA30

NOTICE: Part III

DOCUMENT ACTION: Final Rule.

SUBJECT CATEGORY: Designation of Biobased Items for Federal Procurement

DATES: This rule is effective June 13, 2008.

DOCUMENT SUMMARY: The U.S. Department of Agriculture (USDA) is amending the guidelines for designating biobased products for Federal procurement, to add nine sections to designate items, including subcategories, within which biobased products will be afforded Federal procurement preference. USDA also is establishing minimum biobased content for each of these items and subcategories.

In addition, USDA is amending the guidelines by providing exemptions to the Department of Defense and the National Aeronautic and Space Administration from the preferred procurement requirements. USDA is also making minor technical amendments to several sections of the guidelines to update information on the applicable Web site citation and to provide additional information on products that may overlap with products designated for preferred procurement under the U.S. Environmental Protection Agency's Comprehensive Procurement Guideline for Products Containing Recovered Materials.

SUMMARY: Agriculture Department, Energy Policy and New Uses Office, Agriculture Department,

SUPPLEMENTAL INFORMATION

The information presented in this preamble is organized as follows: I. Authority
II. Background
III. Summary of Changes
IV. Discussion of Comments

V. Regulatory Information

A. Executive Order 12866: Regulatory Planning and Review

B. Regulatory Flexibility Act (RFA)

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

D. Executive Order 12988: Civil Justice Reform

E. Executive Order 13132: Federalism

F. Unfunded Mandates Reform Act of 1995

G. Executive Order 12372: Intergovernmental Review of Federal Programs

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

I. Paperwork Reduction Act

J. Government Paperwork Elimination Act Compliance I. Authority

These items, including their subcategories, are designated 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. Background

As part of the Federal Procurement of Biobased Products, USDA published on August 17, 2006, two proposed rules in the Federal Register (FR) for the purposes of designating a total of 20 items for the preferred procurement of biobased products by Federal agencies (referred hereafter in this FR notice as the ``preferred procurement program''). One of the proposed rules, RIN 0503AA30, can be found at 71 FR 47566. The other proposed rule, RIN 0503AA31, can be found at 71 FR 47590. This FR notice addresses the RIN 0503AA30 proposed rule. The other proposed rule is addressed in a separate FR notice. These two rulemakings are referred to in the preamble and on the BioPreferred Web site as Round 2 (RIN 0503AA30) and Round 3 (RIN 0503AA31).

The Round 2 proposed rule proposed designating the following items for the preferred procurement program: Adhesive and mastic removers; plastic insulating foam for residential and commercial construction; \1\ hand cleaners and sanitizers; composite panels; fluidfilled transformers; disposable containers; \2\ fertilizers; metalworking fluids; \3\ sorbents; and graffiti and grease remover products. \1\ At proposal, this item was identified as ``insulating foam for wall construction.'' Based on comments received, and as explained in this preamble, USDA has renamed this item as ``plastic insulating foam for residential and commercial construction.'' \2\ At proposal, this item was identified as ``biodegradable containers.'' Based on comments received, and as explained in this preamble, USDA has renamed this item as ``disposable containers.'' \3\ Based on comments received, and on additional data obtained, USDA has combined the proposed ``metalworking fluids'' item with the ``cutting, drilling, and tapping oils'' item that was proposed for designation on October 11, 2006 (71 FR 59862). The combined item is designated as ``metalworking fluids'' and is included in the Round 4 final rulemaking.

Today's final rule designates the following nine items, including subcategories, within which biobased products will be afforded Federal procurement preference: Adhesive and mastic removers; plastic insulating foam for residential and commercial construction; hand cleaners and sanitizers, including hand cleaners and hand sanitizers as subcategories; composite panels, including plastic lumber composite panels, acoustical composite panels, interior panels, structural interior panels, and structural wall panels as subcategories; fluid filled transformers, including synthetic esterbased transformer fluids and vegetable oilbased transformer fluids as subcategories; disposable containers; fertilizers; sorbents; and graffiti and grease removers. USDA has determined that each of these items meets the necessary statutory requirements; that they are being produced with biobased products; and that their procurement will carry out the following objectives of section 9002: To improve demand for biobased products; to spur development of the industrial base through valueadded agricultural processing and manufacturing in rural communities; and to enhance the Nation's energy security by substituting biobased products for products derived from imported oil and natural gas.

When USDA designates by rulemaking an item (a generic grouping of products) for preferred procurement under the BioPreferred Program, manufacturers of all products under the umbrella of that item that meet the requirements to qualify for preferred procurement can claim that status for their products. To qualify for preferred procurement, a product must be within a designated item and must contain at least the minimum biobased content established for the designated item. When the designation of specific items is finalized, USDA will invite the manufacturers of these qualifying products to post information on the product, contacts, and performance testing on its BioPreferred Web site, http://www.biopreferred.gov. Procuring agencies will be able to utilize this Web site as one tool to determine the availability of qualifying biobased products under a designated item. Once USDA designates an item, procuring agencies are required generally to purchase biobased products within these designated items, including their
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subcategories, where the purchase price of the procurement item exceeds $10,000 or where the quantity of such items or of functionally equivalent items purchased over the preceding fiscal year equaled $10,000 or more.

Subcategorization. Most of the items USDA is considering for designation for preferred procurement cover a wide range of products. For some items, there are groups of products within the item that meet different markets and uses and/or different performance specifications. For example, within the item ``hand cleaners and sanitizers,'' some products are required to meet performance specifications for sanitizing, while other products do not need to meet these specifications. Where such subgroups, or subcategories, exist, USDA intends to create subcategories. Thus, for example, for the item ``hand cleaners and sanitizers,'' USDA has determined it is reasonable to create a ``hand cleaner'' subcategory and a ``hand sanitizer'' subcategory. Sanitizing specifications would be applicable to the latter subcategory, but not the former. In sum, USDA looks at the products within each item to evaluate whether there are groups of products within the item that meet different performance specifications and, where USDA finds this type of difference, it intends to create subcategories.

For some items, however, USDA may not have sufficient information at the time of proposal to create subcategories within an item. For example, USDA may know that there are different performance specifications that deicing products are required to meet, but it has only information on one type of deicing product. In such instances, USDA may either designate the item without creating subcategories (i.e., defer the creation of subcategories) or designate one subcategory and defer designation of other subcategories within the item until additional information is obtained on products within these other subcategories.

Within today's rulemaking, USDA has created subcategories within three items. These items are: Hand cleaners and sanitizers (i.e., hand cleaners, hand sanitizers); composite panels (i.e., plastic lumber composite panels, acoustical composite panels, interior panels, structural interior panels, and structural wall panels); and fluid filled transformers (i.e., synthetic esterbased fluids and vegetable oilbased fluids).

Minimum Biobased Contents. The minimum biobased contents being established with today's rulemaking are based on products for which USDA has biobased content test data. In addition to considering the biobased content test data for each item, USDA also considers other factors when establishing the minimum biobased content. These other factors include: Public comments received on the proposed minimum biobased contents; product performance information to justify the inclusion of products at lower levels of biobased content; and the range, groupings, and breaks in the biobased content test data array. Consideration of this information allows USDA to establish minimum biobased contents on a broad set of factors to assist the Federal procurement community in its decision to purchase biobased products.

USDA makes every effort to obtain biobased content test data on multiple products within each item. For most designated items, USDA has biobased content test data on more than one product within a designated item. However, in some cases, USDA has been able to obtain biobased content data for a single product within a designated item. As USDA obtains additional data on the biobased contents for products within these nine designated items and their subcategories, USDA will evaluate whether the minimum biobased content for a designated item or subcategory will be revised.

USDA anticipates that the minimum biobased content of an item or subcategory that is based on a single product is more likely to change as additional products in those items and subcategories are identified and tested. In today's rulemaking, the synthetic esterbased subcategory under the fluidfilled transformers designated item and the acoustical composite panels subcategory under the composite panels designated item are based on a single tested product.

For all items and subcategories where additional information indicates that it is appropriate to revise a minimum biobased content established under today's rulemaking, USDA will propose the change in a notice in the Federal Register to allow public comment on the proposed revised minimum biobased content. USDA will then consider the public comments and issue a final rulemaking on the minimum biobased content.

Biodegradability. Many of the products within items being designated for the preferred procurement program are designed to be disposed of after a single use and/or used in environmentally sensitive applications. USDA believes that biodegradability is an important feature that should be considered when purchasing, using, and disposing of these products.

In simple terms, biodegradability measures the ability of microorganisms present in the disposal environment to completely consume the biobased carbon product within a reasonable time frame and in the specified environment.

Composting is one such environment under which biodegradability occurs. In that composting environment, the explanation of the environment, the degree of microbial utilization (biodegradation), and the time frame within which it occurs are specified through established standards. Composting is but one environment under which
biodegradability occurs. For example, nonfloating biodegradable plastics can also biodegrade in a marine environment.

For some designated items and subcategories, USDA is requiring biodegradability as a prerequisite for receiving preferred procurement status under the BioPreferred Program. For most items and
subcategories, however, USDA has decided not to require
biodegradability as a prerequisite for receiving preferred procurement status. For products within a designated item for which USDA will require biodegradability, USDA will specify the appropriate ASTM standards.

USDA believes that the relationship between the performance and the biodegradability of products within an item (or subcategory) must be considered before biodegradability is included as a prerequisite for a designated item. For some designated items, product performance is the critical factor in a purchaser's decision as to which product to purchase. Within other designated items, especially those designed for onetime use, disposal considerations may be equally important as performance considerations.

Where USDA judges product performance to be the key decisionmaking factor for purchasers, USDA will not require biodegradability as a prerequisite for designation of items to participation in the preferred procurement program. In those cases where disposal considerations are believed to be as important as performance, however, USDA will require biodegradability for products within the designated item (or subcategory) if there are established biodegradability standards.

In this rulemaking, products that fall within the disposable containers designated item are required to meet biodegradability standards to receive preferred procurement under the BioPreferred Program. For the remaining items in this rulemaking, USDA believes that the product performance
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considerations outweigh biodegradability. USDA does, however, encourage procuring agencies to purchase biodegradable products in any case where they meet the agencies' performance needs.

USDA will continue to gather additional information on the relationship between performance and biodegradability of products within designated items and may add biodegradability as a prerequisite for other items at a later date. USDA will also make information regarding biodegradability of items available on the BioPreferred Web site.

Preference compliance date. Because USDA has identified only one manufacturer of products within the synthetic esterbased fluidfilled transformers subcategory, the preference compliance date is deferred until USDA identifies two or more manufacturers of products in this subcategory. When it identifies two or more manufacturers, USDA will publish a document in the Federal Register announcing that Federal agencies will have one year from the date of publication of that announcement to give procurement preference to biobased synthetic esterbased fluidfilled transformers.

USDA notes that although only one product from the acoustical composite panels subcategory has been tested for biobased content, nine manufacturers of products in this subcategory have been identified. Thus, USDA is not deferring the preference compliance date for this subcategory.

Overlap with EPA's Comprehensive Procurement Guideline program for recovered content products. Some of the products that are biobased items designated for preferred procurement may also be items the Environmental Protection Agency (EPA) has designated under the EPA's Comprehensive Procurement Guideline (CPG) for Products Containing Recovered Materials. Where that occurs, an EPAdesignated recovered content product (also known as ``recycled content products'' or ``EPA designated products'') has priority in Federal procurement over the qualifying biobased product as identified in 7 CFR 2902.2. In situations where it believes there may be an overlap, USDA is asking manufacturers of qualifying biobased products to provide additional product and performance information to Federal agencies to assist them in determining whether the biobased products in question are, or are not, the same products for the same uses as the recovered content products. As this information becomes available, USDA will place it on the BioPreferred Web site with its catalog of qualifying biobased products.

In cases where USDA believes an overlap with EPAdesignated recovered content products may occur, manufacturers are being asked to indicate the various suggested uses of their product and the performance standards against which a particular product has been tested. In addition, depending on the type of biobased product, manufacturers are being asked to provide other types of information, such as whether the product contains petroleumbased components and whether the product contains recovered materials. Federal agencies may also ask manufacturers for information on a product's biobased content and its profile against environmental and health measures and life cycle costs (the Building for Environmental and Economic Sustainability (BEES) analysis or ASTM Standard D7075 for evaluating and reporting on environmental performance of biobased products). Such information will permit agencies to determine whether or not an overlap occurs.

Section 6002 of RCRA requires a procuring agency procuring an item designated by EPA generally to procure such items composed of the highest percentage of recovered materials content practicable. However, a procuring agency may decide not to procure such an item based on a determination that the item fails to meet the reasonable performance standards or specifications of the procuring agency. An item with recovered materials content may not meet reasonable performance standards or specifications, for example, if the use of the item with recovered materials content would jeopardize the intended end use of the item.

Where a biobased item is used for the same purposes and to meet the same Federal agency performance requirements as an EPAdesignated recovered content product, the Federal agency must purchase the recovered content product. For example, if a biobased hydraulic fluid is to be used as a fluid in hydraulic systems and because ``lubricating oils containing rerefined oil'' has already been designated by EPA for that purpose, then the Federal agency must purchase the EPAdesignated recovered content product, ``lubricating oils containing rerefined oil,'' assuming such oil is available. If, on the other hand, that biobased hydraulic fluid is to be used to address a Federal agency's certain environmental or health performance requirements that the EPA designated recovered content product would not meet, then the biobased product should be given preference, subject to cost, availability, and performance.

This final rule designates five items for preferred procurement for which there may be overlap with EPAdesignated recovered content products. These items are: (1) Plastic insulating foam for residential and commercial construction, (2) composite panels, (3) disposable containers, (4) sorbents, and (5) fertilizer. Depending on how they are to be used, qualifying biobased products under these five items may overlap, respectively, with building insulation; laminated paperboard and structural fiberboard, shower and restroom dividers, or signage; paper and paper products; sorbents; and fertilizer made from recovered organic material. EPA provides recovered materials content recommendations for these five recovered content products in various Recovered Materials Advisory Notices (RMAN), including RMAN I, RMAN II, RMAN III, and RMAN V. The RMAN recommendations for each of these CPG products can be found by accessing EPA's Web site http://www.epa.gov/ epaoswer/nonhw/procure/products.htm and then clicking on the appropriate product name.

Future designations. In making future designations, USDA will continue to conduct market searches to identify manufacturers of biobased products within designated items. USDA will then contact the identified manufacturers to solicit samples of their products for voluntary submission for biobased content testing and for the BEES analytical tool. Based on these results, USDA will then propose new items for designation for preferred procurement.

As stated in the preamble to the first six items designated for preferred procurement (71 FR 13686, March 16, 2006), USDA plans to identify approximately 10 items in each future rulemaking. USDA has developed a preliminary list of items for future designation. This list is available on the BioPreferred Web site. While this list presents an initial prioritization of items for designation, USDA cannot identify with any certainty which items will be presented in each of the future rulemakings. Items may be added or dropped and the information necessary to designate an item may take more time to obtain than an item lower on the prioritization list.

Exemptions. In an earlier item designation rule (71 FR 13686), USDA created exemptions from the preferred procurement program's requirements for procurements involving combat or combatrelated missions and for
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spacecraft systems and launch support equipment. Since publication of that final rule in the Federal Register, and in response to comments from the Department of Defense (DoD) and NASA (see General Comments, below), USDA has decided to create ``blanket'' exemptions for all items used in products or systems designed or procured for combat or combat related missions and for spacecraft systems and launch support equipment, which will apply to all items designated for the procurement preference. Accordingly, in order to avoid repetition, this final rule removes all the exemption references contained in individual item designations and adds the identical language, as a blanket exemption, to the Guidelines, in subpart A.

III. Summary of Changes

As the result of comments received on the proposed rule (see Section IV), USDA made changes to the rule, which are summarized below.

Items combined. The proposed ``metalworking fluids'' item has been combined with the ``cutting, drilling, and tapping oils'' item that was proposed for designation on October 11, 2006 (71 FR 59862). The combined item is now known as ``metalworking fluids'' and includes three subcategories: straight oils; high performance soluble, semi synthetic, and synthetic metalworking fluids; and general purpose soluble, semisynthetic, and synthetic metalworking fluids. The ``metalworking fluids'' item is now included in the Round 4 final rulemaking replacing the proposed ``cutting, drilling, and tapping oils'' item.

Item names. The names for two of the remaining nine items were revised. ``Insulating foam for wall construction'' is now ``plastic insulating foam for residential and commercial construction.'' ``Biodegradable containers'' is now ``disposable containers.''

Item definitions. The definitions for six of the remaining nine items were modified to varying degrees. These six items are: Adhesive and mastic removers; plastic insulating foam for residential and commercial construction; hand cleaners and sanitizers; composite panels; disposable containers; and fertilizers. Some definitions were modified and/or added in order to address the addition of subcategories (as discussed in the following paragraph).

Subcategories. Subcategories were created for three items to reflect the different use applications where information was available. Hand cleaners and sanitizers were subcategorized into (1) hand cleaners and (2) hand sanitizers. Composite panels were subcategorized into (1) plastic lumber composite panels, (2) acoustical composite panels, (3) interior panels, (4) structural interior panels, and (5) structural wall panels. Fluidfilled transformers were subcategorized into (1) synthetic esterbased fluidfilled transformers and (2) vegetable oil based fluidfilled transformers.

Minimum biobased contents. Several of the proposed minimum biobased contents for the designated items have changed for the final rule in response to public comments and in consideration of available product performance information. As a result of the comments received regarding the proposed minimum biobased contents and the availability of additional biobased content tests for several items, USDA reevaluated the proposed minimum biobased contents of all of the items.

Items for which the minimum biobased content was changed from the proposed level are presented here and the rationale for the changes is discussed in the section of this preamble presenting the itemspecific comments and responses.

For plastic insulating foam, the proposed minimum biobased content of 8 percent was changed to 7 percent.

For the proposed hand cleaner item the proposed minimum biobased content of 18 percent was changed to 64 percent for the hand cleaners subcategory and 73 percent for the hand sanitizers subcategory.

For the proposed composite panels item the proposed minimum biobased content of 26 percent was changed for each of the newly established subcategories. In this final rule, minimum biobased contents were set for each subcategory, as follows: Plastic lumber composite panels23 percent, acoustical composite panels37 percent, interior panels55 percent, structural interior panels89 percent, and structural wall panels94 percent.

For the proposed fluidfilled transformers item the proposed minimum biobased content of 66 percent was retained for the synthetic esterbased subcategory and the minimum biobased content for the vegetable oilbased subcategory was set at 95 percent.

For the proposed biodegradable containers item (now disposable containers), the proposed minimum biobased content of 96 percent was changed to 72 percent.

For sorbents, the proposed minimum biobased content of 52 percent was changed to 89 percent.

For graffiti and grease removers, the proposed minimum biobased content of 21 percent was changed to 34 percent.

Preference compliance date. For the synthetic esterbased fluid filled transformers subcategory, the preference compliance date is deferred until USDA identifies two or more manufacturers in this subcategory. When it identifies two or more manufacturers in this subcategory, USDA will publish a document in the Federal Register announcing that Federal agencies will have one year from the date of publication of that announcement to give procurement preference to biobased synthetic esterbased fluidfilled transformers.

Overlap with EPA CPG products. For composite panels, potential overlap with EPA CPG products was added to the final rule. Then, for all items that may overlap with EPA CPG products (plastic insulating foam for residential and commercial construction; composite panels; disposable containers; sorbents; and fertilizer), a note was added to facilitate finding information on the EPA CPG products.

Biodegradability. For disposable containers, a biodegradability requirement was added.

Exemptions. Exemptions from the preferred procurement requirements were added for all items, including their subcategories, used in certain applications within DoD and NASA. For DoD, exemptions were provided for ``products or systems designed or procured for combat or combatrelated missions.'' For NASA, exemptions were provided for ``spacecraft systems and launch support equipment.'' These exemptions were added in the Guidelines for the procurement program (subpart A) rather than under each item designation. At proposal, this exemption was proposed only for the fluid filled transformer item. Additional discussion of this decision is presented in the responses to comments later in this Preamble.

IV. Discussion of Comments

USDA solicited comments on the proposed rule for 60 days ending on October 16, 2006. USDA received comments from 29 commenters by that date. The comments were from individual manufacturers, trade organizations, private groups, and Federal agencies.

The comments contained in this Federal Register (FR) notice address general and specific comments related to Round 2 items. In addition to the
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information provided in the responses to public comments presented in this preamble, USDA has prepared a technical support document titled ``Technical Support for Final RuleRound 2 Designated Items,'' which contains documentation of USDA's efforts to research and respond to public comments. The technical support document is available on the BioPreferred Web site. The technical support document can be located by clicking on the Proposed and Final Regulations link on the left side of the BioPreferred Web site's home page (http://www.biopreferred.gov). Click on Supporting Documentation under Round 2 Designation under Final Rules. This will bring you to the link to the technical support document.

Several of the commenters expressed appreciation for USDA's effort in designating items for preferred procurement. While these comments are not presented within this preamble, USDA thanks the commenters for such comments.

Following the comments and responses, USDA discusses the amendments being made to various sections of 7 CFR part 2902 regarding reference to the Web site and the provision of additional information on products that may overlap with products designated for preferred procurement under EPA's CPG program.
General Comments

Reporting of Biobased Purchases

Comment: One commenter suggested that USDA consider the method that is least burdensome to Federal agencies when the agencies are required, per Executive Order 13101, to estimate their purchases of products placed on the USDA Biobased Products List and report on their estimated purchases of such products to the Secretary of Agriculture.

Response: Under FSRIA, the Office of Federal Procurement Policy (OFPP) reports to Congress biennially about Federal agency progress in implementing the section 9002 purchasing requirements. Under E.O. 13423, the Federal Environmental Executive reports to the President biennially about Federal agency progress in implementing the purchasing requirements of the E.O., including the purchase of biobased products. OFPP and the Office of the Federal Environmental Executive (OFEE) jointly send a data questionnaire to the agencies to gather information for these reports. As a member of the interagency Reporting Workgroup that makes recommendations to OFPP and OFEE about reporting mechanisms, USDA will work with the other members to recommend the least burdensome mechanisms for tracking and reporting on purchases of the designated biobased items.

Warranties

Comment: Two commenters expressed concern about a biobased product's effects on warranties. One commenter stated that USDA should consider creating a fact sheet about warranty myths and realities, including the type of questions buyers should ask Original Equipment Manufacturers (OEMs) and contractors to make sure that the warranty issue is real and not just an excuse to avoid purchasing a biobased product.

The second commenter recommended that USDA fully address the effect of biobased product usage on equipment warranties (i.e., such use as might void equipment warranties) prior to final item designation.

Response: USDA shares the commenters' concerns about the potential effect of biobased products on warranties. As noted in the response to a similar comment on the first designated item rule (see 71 FR 13702), USDA is working with manufacturers on the issue of maintenance warranties as time and resources allow. USDA is contacting manufacturers, industry associations, and service professionals to request information about warranty issues. About 200 different contacts have been made, but the results have been inconclusive. Many of the contacts have been reluctant to discuss warranty issues related to either their products or to biobased components. Additional information on the results of USDA's information gathering efforts are available on the BioPreferred Web site.

At this time, USDA does not have sufficient information to determine whether or not the manufacturers of biobased products will state that the use of these products will void maintenance warranties. This does not mean that the use of such products will void warranties, only that USDA does not currently have such information. As additional information becomes available on warranties, USDA will make such information available on the BioPreferred Web site.

Because it is difficult for USDA to fully address the warranty concern for each product within each item designated for preferred procurement, USDA continues to encourage manufacturers of biobased products to test their products against all relevant standards, including those that would affect warranties, and to work with OEMs to ensure that the biobased products will not void maintenance warranties when used. Whenever manufacturers of biobased products find that existing performance standards for maintenance warranties are not relevant or appropriate for biobased products, USDA is willing to assist them in working with the appropriate OEMs to develop tests that are relevant and appropriate for the end uses in which biobased products are intended. If, in spite of these efforts, there is insufficient information regarding the performance of a biobased product and its effect on equipment maintenance warranties, USDA notes that the procurement agent would not be required to buy such a product. Industry and Agency Meeting/Forum

Comment: One commenter suggested that USDA consider sponsoring an industry and government forum or meeting to discuss program implementation issues. Topics identified by the commenter included how best to identify and communicate performance standard information and warranty issues associated with biobased products and original equipment manufacturers.

Response: USDA agrees with the commenter that a forumtype meeting to address implementation issues, including those identified by the commenter, has merit and will consider hosting such a forum as time and resources allow.

Supporting DocumentationPerformance Standards

Comment: Two commenters stated that the background information for the proposed designated items did not distinguish between test methods and performance standards. One commenter stated that the entry in the column ``Standard Title'' under Performance Standards (as found in the Supporting Documentation on the BioPreferred Web site) does not appear to have much to do with performance. The commenter pointed, as an example, to the OSHA Hazard Communication Standard as not providing information as to whether the biobased adhesive or grease remover will work as intended. The second commenter stated that most of the ``performance standards'' listed by USDA are not really performance standards but are rather ``test methods.'' This commenter noted that while some test methods listed are relevant to meeting performance standards for some applications, others are not. The second commenter recommended that test methods be differentiated from performance standards.

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The second commenter also stated that end users are well aware of these performance standards because the operating manuals for their equipment will list the standards and that endusers will want to know from a manufacturer if its product meets that performance standard. For products that do not have recognized performance standards, such as glass cleaners, the commenter stated that users may have to try a sample to determine if the product meets their needs. The commenter also stated that in other cases, such as carpets or insulation, specifications for purchase will be set by designers, architects, and/ or engineers based on a specific project's needs, and manufacturers would have to show the buyers that they can meet the specification. For these reasons, the commenter recommended that, rather than providing a list of test methods, USDA should offer manufacturers the opportunity to provide as much performance data as possible on the BioPreferred Web site when they list their products. By doing so, the commenter continued, information will be provided to potential buyers and users so that they can compare the performance data with the particular performance requirements they need for the product.

Response: USDA agrees with the commenters that many of the standards listed under ``Standard Title'' in the background information are test methods and not performance standards. USDA further agrees that such distinctions should be made in the background document. USDA believes that it is necessary to continue to report both test methods and performance standards because it is very important that consistent test methods are used when measuring the performance of a product. USDA will, therefore, update the background information on the BioPreferred Web site to reflect the distinction between test methods and performance standards. Further, as additional information on performance standards is obtained, USDA will update the BioPreferred Web site to include such information. The results of the effort to distinguish between test methods and performance standards for the designated items in this final rule can be found in Chapter 1.0 of the document ``Technical Support for Final RuleRound 2 Designated Items,'' which is available on the BioPreferred Web site.

USDA also agrees that manufacturers need to provide as much information as possible on the performance of their products, especially as measured against recognized performance standards. USDA is working with manufacturers to make this information available by posting on the BioPreferred Web site links to the manufacturer's Web site for additional information on biobased product performance. Reduced Greenhouse Gases

Comment: Three commenters recommended that USDA continue to emphasize the potential of biobased products to reduce greenhouse gas emissions as part of the preferred procurement program.

Response: USDA agrees with the commenters that the potential for biobased products to reduce greenhouse gas emissions is an important attribute of which purchasers and others need to be aware. USDA will continue to identify this potential in preambles and in the background information on the BioPreferred Web site. USDA welcomes the commenters, and others, to provide USDA with ``cradletograve'' studies that demonstrate this potential attribute. USDA would then consider putting such results on the BioPreferred Web site.

Biobased MaterialsPrequalify

Comment: Three commenters recommended that USDA develop a program for prequalifying the biobased material that will form the basis of biobased products. The commenters point out that biobased products are made from biobased materials. According to the commenters, testing and qualifying biobased materials will greatly accelerate the designation process for preferred procurementif a product is made from a prequalifed biobased material, it is then a simple matter for the manufacturer of the bioproduct to provide information to USDA on its biobased composition and, if verification of manufacturer supplied compositional information is needed, the ASTM biobased content test can always be conducted as needed.

The commenters also suggested making prequalified biobased materials part of the ``U.S.D.A. Certified'' labeling program. When part of the labeling program, manufacturers would be able, according to the commenter, to contact biomaterial suppliers for information on the performance and other characteristics to determine the most appropriate biomaterials for their particular application. According to the commenters, this would expedite the development of biobased products consistent with the Congressional intent of FSRIA.

Response: USDA agrees that there is merit in the concept of prequalifying biobased materials that are used to manufacture biobased products for preferred procurement. However, as noted in a response to public comments on the first six items designated for preferred procurement (71 FR 13702), section 9002 of FSRIA requires USDA to designated ``products'' for preferred procurement. Section 9001 of FSRIA defines ``biobased products'' as ``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 * * * or forestry materials.'' Based on this definition, USDA does not believe it has the authority to consider ``biobased material used in the manufacture of biobased products'' to be ``products.'' USDA is, however, gathering information on biobased intermediate feedstocks and developing a list of these materials. USDA will provide this information on the BioPreferred Web site. USDA also notes that NIST currently includes soybeans, corn, wheat, rice, cotton, canola, potatoes, and wool as feedstocks when conducting the BEES life cycle analysis for biobased products.

USDA has considered the commenter's recommendation to make prequalified biobased materials part of the ``U.S.D.A. Certified'' labeling program in developing the proposed rule for that program. Recycled vs. Biobased Products

Comment: Three commenters agreed with USDA that additional information should be sought first from manufacturers prior to procurement decisions where recycled content and biobased materials products are both being considered for the same application. Two of the commenters went on to recommend that USDA's Preferential Procurement Guidelines for Biobased Products be upgraded to include the proposal in this rulemaking for handling the ``overlap'' between the recycled content and biobased content programs.

Response: While USDA appreciates the commenters' suggestion on revising the Guidelines to reflect the overlap potential between biobased products and products with recycled content, USDA will continue to discuss such overlap within each of the designated item rulemakings on an itembyitem basis.

Mature Markets

Comment: Three commenters urged USDA to not exclude natural fiber and other biobased products with mature markets in 1972. The commenters felt
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that by doing so petroleum plastic blends (such as in leaf collection bags) would get an unfair advantage over entirely natural fiber biobased products (e.g., a Kraft paper leaf collection bag made from 100 percent plant matter).

Response: USDA extensively addressed the issue of mature markets in the final rule for the Guidelines for Designating Biobased Products for Federal Procurement (70 FR 1792). In that notice, USDA explained the rationale for excluding products that had mature markets in 1972 from the preferred procurement program``The intent of section 9002, as described in the conference report accompanying FSRIA, is to stimulate the production of new biobased products and to energize emerging markets for those products. Given that, USDA finds that it is entirely appropriate for the guidelines to exclude products having mature markets from the program.'' (see 70 FR 1802). This was finalized in paragraph 2902.5(c)(2). USDA reiterated its position in the final rule for the first six items designated for preferred procurement and explained further on its reasons for excluding mature market products (see 71 FR 13701).

For the reasons stated in these two FR notices, the USDA will continue to exclude mature market products as they are identified within items designated for preferred procurement.

In addition, in its response to comments on the first six items proposed for designation for preferred procurement, USDA stated: ``As USDA designates additional items for preferred procurement, USDA will make determinations of whether mature markets existed in 1972 and, if so, identify those materials that do not qualify as biobased material. Unless a material is specifically identified as a material not qualifying as a biobased feedstock, such as cotton fiber has been for bedding, bed linens, and towels, the material may be used in any designated item and will be considered a qualifying biobased feedstock.'' (see 71 FR 13702). None of the 20 items proposed for preferred procurement in the two proposed rules were identified as having mature markets for which preferred procurement would not be given. Therefore, the specific example of Kraft paper leaf collection bags made from 100 percent plant matter provided by the commenters would qualify for preferred procurement under this program. Sustainability Guidelines for Biopolymers

Comment: One commenter noted that biobased products are not automatically better for the environment than the items they replace, depending upon the way the feedstock is grown, how the product is manufactured, and how the product is handled at the end of its life.

The commenter further noted that a group of nongovernment organizations are working with companies interested in manufacturing and using biobased products to develop sustainability guidelines for biopolymers and urged the federal government to engage in this process and consider how it can in future rulemakings encourage the biopolymer industry to move toward truly sustainable products.

Response: USDA agrees with the commenter that biobased products are not necessarily better for the environment than the items that they replace. This emphasizes the need for lifecycle analyses (LCAs), which is the type of information generated under the BEES analysis. USDA welcomes additional information on biobased products, including aspects concerning sustainability, and urges the commenter and the non governmental organizations to provide the results of their sustainability guidelines to USDA and other Federal agencies. USDA will then consider posting validated information on the BioPreferred Web site as additional information available to Federal purchasing agencies.

LifeCycle Analysis (LCA)

Comment: One commenter commended USDA for considering LCAs and the use of the BEES as a tool for LCA and urged USDA to be cautious in its endorsement of Green Seal, stating that some Green Seal standards are several years old and were not developed using a true consensus based approach.

Response: USDA appreciates the commenter's recognition of the use of BEES as a tool for LCA. With regard to Green Seal standards, it is USDA's intent to provide information on all standards that are being used for products within items being proposed for designation. The identification of such standards, however, does not represent an endorsement on the part of USDA of any standard, including any Green Seal standard. Because the programs provide information that many prospective purchasers of biobased products may find useful, however, USDA will continue to identify and post information concerning these programs on the BioPreferred Web site.

For the designated items in this final rule, USDA identified two relevant Green Seal standards. These are GS34, Cleaning/Degreasing Agents, and GS41, Hand Cleaners and Hand Soaps Used for Industrial and Institutional Cleaners. These two GS standards are relevant, respectively, to graffiti and grease removers and to hand cleaners and sanitizers. These standards can be accessed through the Green Seal Web site at http://www.greenseal.org/certification/standards.cfm Leadership in Energy and Environmental Design (LEED)

Comment: One commenter requested that USDA remove references to the LEED green building rating system in the final rule because, according to the commenter, (1) the LEED system was not developed using an LCA, (2) the organization that developed it (US Green Building Council) recognizes that the rapidly renewable credit is flawed and is not supportable, based on an LCA, and (3) there are other green building rating systems (such as Green Globes, which is being examined by several U.S. Federal agencies) that already incorporate aspects of lifecycle assessment. However, if USDA retains the reference, the commenter recommended that USDA indicate the lack of an LCA approach in LEED, and that USGBC has proposed to its membership that the rapidly renewable credit be removed.

The commenter further suggested that USDA discuss and incorporate Green Globes into the rule, based on the fact that it already incorporates aspects of LCA.

Response: USDA appreciates the information provided by the commenter on the LEED. USDA's identification of the LEED rating system does not represent an endorsement of LEED, but simply acknowledges its existence and use. USDA will consider further clarification of LEED if and when it is referenced in future rulemakings for the BioPreferred Program, as well as considering mentioning Green Globes, where appropriate.

Exemptions

Comment: One commenter requested that the rule reflect exemptions for all items used in products and systems designed or procured for combat or combatrelated missions and that this exemption be extended to all services and products contracted for combat or combatrelated missions. The commenter pointed out that USDA has stated that it is inappropriate to apply the preferred procurement requirement unless the DoD has documented that such products can meet the performance requirements for such equipment and are available in sufficient supply to meet domestic and overseas deployment
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needs. According to the commenter, their experiences to date have reinforced that it is not practical at this time to conduct the testing and evaluation necessary for such performance documentation for all products used in combat.

Response: USDA has discussed, at length, with DoD the need for exempting from preferred procurement items whose products are used in combat or combatrelated situations. USDA has also had similar discussions with NASA regarding products used in space and critical mission areas. These discussions have included whether there is a need for exemptions and, if so, whether exemptions should be on an itemby item basis or whether a ``blanket'' exemption should be implemented for these two agencies. As a result of these discussions, USDA is exempting from preferred procurement all items used in products or systems designed or procured for combat or combatrelated missions and for spacecraft systems and launch support equipment. The exemption is stated in the Guidelines (subpart A) rather than under each item designation. USDA believes it is inappropriate to apply the biobased purchasing requirement to DoD tactical equipment and NASA mission critical equipment at this time. However, USDA reserves the right to withdraw such exemptions, on an itembyitem basis, as biobased products are demonstrated to meet all of the performance requirements of these applications.

Comment: One commenter stated that the proposed exemptions for critical applications are unnecessary given the provisions of the Guidelines, noting that no product, biobased or not, should be used in any critical application if it does not meet performance requirements. The commenter is concerned that proposing an exemption that limits the use of biobased products to ``more conventional applications'' implies that biobased products are inferior in their performance
characteristics to the incumbent product. According to the commenter, not only is this not the case, but it sends the wrong message regarding the potential benefits of and uses for biobased products.

Response: USDA agrees with the commenter that providing exemptions could imply that biobased products are inferior to nonbiobased products. USDA can only emphasize that these exemptions are not intended to convey such meaning. USDA points out, however, that the statute does allow agencies the ability to not purchase a biobased product if it does not meet applicable performance standards. Because so many biobased products are in their infancy, more effort is required on the part of their manufacturers to demonstrate that the biobased products perform as well as their nonbiobased counterparts, whether in conventional or nonconventional applications.

USDA also agrees that all Federal agencies have the same ``off ramps'' available to them in determining whether or not to purchase biobased products within a designated item. USDA has received repeated requests from both DoD and NASA for exemptions. DoD is particularly concerned about the use of biobased products in combat or combat related situations and NASA about the use of any biobased product in critical mission areas. USDA has reached agreement with these agencies to provide ``blanket'' exemptions for both NASA and DoD. Providing this blanket exemption will allow these agencies the flexibility to choose how they utilize their resources in evaluating various biobased products and determining which products meet their critical requirements.

USDA recognizes that such blanket exemptions could discourage manufacturers from developing biobased products for these two ``markets.'' However, if manufacturers of biobased products can demonstrate to the satisfaction of these two agencies that biobased products can meet all of their concerns, USDA would reconsider such exemptions on an itembyitem basis.

Item Designations

Comment: Two commenters requested that USDA not designate items for preferred procurement where the products within the item contain nanoparticles because of the many outstanding public and environmental health issues surrounding the use of nanotechnology. According to the commenters, there are no manufacturing standards, labeling regulations, or safety guidelines for nanoparticle use and the effect of nanoparticles on health and the environment are not yet understood.

Response: At this time, the statute for designating biobased products for preferred procurement does not address the issue of products made with nanoparticles. Congress would need to change the statute in order for USDA to consider it within the BioPreferred program. Therefore, USDA does not address the issue in this rulemaking.

USDA points out that EPA is conducting several major activities with respect to nanotechnology including, but not limited to, initiating the development of a voluntary pilot program for the evaluation of nanomaterials and reviewing nanomaterial new chemical submissions in the Office of Pollution Prevention and Toxics. For additional information on the work EPA is pursuing with regard to nanomaterials, access the Web site http://www.epa.gov/oppt/nano/. Environmental and Health information

Comment: One commenter stated that providing agencies with tables summarizing BEES analyses does not satisfy the statutory requirement that USDA provide agencies with information on the public health and environmental benefits of biobased products. According to the commenter, the summary tables included in the preamble to the proposed products designation rule do not provide useful information to agencies, because the information is not provided in the context of comparisons with nonbiobased products. The commenter, therefore, recommended that USDA provide narrative information and comparative reference points on the environmental and public health benefits of the designated products by placing this information in the technical background documents or in case studies on the BioPreferred Web site. The commenter then provided examples of information that could help agencies make a ``best value'' determination.

Another commenter provided a list of some of the benefits associated with using soy in industrial products.

Response: The BEES analysis provides a factual review of environmental and health effects of products. The results of the BEES analysis allow the comparison of similar products that have undergone the analysis. For example, one can compare the relative environmental and health effects between two biobased disposable containers. In addition, the BEES analysis provides information on the carbon cycle, which is being acknowledged as an increasingly important environmental effect. Thus, the BEES analysis provides important and relevant information on the environmental and health effects of biobased products.

USDA agrees with the commenter that providing additional information on manufacturers' claims regarding the public health and environmental effects of their biobased products on the BioPreferred Web site is useful, and has begun posting such information. As more information on the public health and environmental effects of biobased products is obtained, USDA will continue to post such information. If the
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information is anecdotal, it will be so indicated.

USDA also agrees that quantitative, sciencebased, comparative reference points on the environmental and public health benefits of the designated products would be useful. USDA, therefore, encourages procurement officials to request this information from manufacturers of biobased products and from manufactures of nonbiobased products to facilitate the comparison of products. Until then, BEES results for both biobased and traditional products, covering a handful of proposed and designated items, are available through the free BEES 4.0 tool published by NIST in May 2007 (http://www.bfrl.nist.gov/oae/bees.html).

USDA thanks the other commenter for its information on using soy in industrial products and will post such information, as appropriate, on the BioPreferred Web site.

Purchasing Analysis

Comment: One commenter stated that biobased products should be fully tested to determine if they meet performance specifications before requiring Federal agency purchase. According to the commenter, there are many products in the marketplace that do not work as advertised. Because there are numerous industry and other recognized standardsetting groups that are responsible for setting standards for products used in various applications, the commenter felt that it would be prudent for Federal agencies to purchase biobased products that have been determined by an outside organization to meet minimal performance standards.

Two commenters stated that USDA needs to make available information on the availability, economic and technical feasibility, environmental and public health benefits, and lifecycle costs for each of the designated items and the name of each of the product's manufacturer in order to enable Federal agencies to determine whether they are buying a product that will perform as intended at a reasonable cost and to prevent an incorrect assessment of a product's attributes, which may led to unintended consequences.

One of the commenters recognized that to provide complete information is a challenge given that a biobased product market is still in its infancy. However, the commenter believes that it is ill advised to proceed with designating products for which ``information on the availability, relative price, performance, and environmental and public health benefits of individual products within each of these 10 items is not presented'' (71 FR 47568).

Response: In designating items for preferred procurement, USDA is responsible for designating those items which are or can be produced with biobased products and to provide, in part, information on their performance. Further, USDA is responsible for considering the technological feasibility of using products within such items. Finally, the statute allows a Federal agency not to purchase a product if, in part, it fails to meet the reasonable performance standards of the procuring agency. USDA believes that its process for designating items meets the intent and requirements of the authorizing statute and results in items that generally meet performance standards applicable to products within those items.

USDA does not believe it is reasonable, nor statutorily required, to conduct full testing of every product within every item (or even the full testing of a single product within every item) in order to list an item for preferred procurement. To grant the commenter's request that biobased products be fully tested would result in an essentially insurmountable obstacle to implementing the program. USDA has improved the process for making available information on products within items proposed and promulgated for designation. USDA is continually working to upgrade the amount and quality of such information, which can be found on the BioPreferred Web site.

As stated in the final Federal Register notice for the first set of designated items, USDA reached an agreement with manufacturers not to publish their names in the Federal Register when designating items. This agreement was reached to encourage manufacturers to submit products for testing to support the designation of an item. Once an item has been designated, the manufacturers of products within the designated item may elect to post their names and other contact information on the BioPreferred Web site.

USDA has linked the BioPreferred Web site to Defense Standardization Program and GSArelated standards lists used as guidance when procuring products, which can be accessed through the ``Selling to the Federal Government'' link on the BioPreferred Web site. To access the DoD list, go to the BioPreferred Web site and click on the ``Selling to Federal Government'' tab and look for the DoD Specifications link. To access the GSArelated standards list, click on the GSA Schedule Suppliers link under ``Selling to the Federal Government.'' Once at the GSA Web site, search for ``Global Supply Standards'' and then follow the appropriate links. Instructions on accessing these lists from the BioPreferred Web site will also be included in all future Federal Register notices for USDA's designated item rules. Further, USDA also will invite and actively encourage manufacturers of qualifying products within a designated item to post, on USDA's passwordprotected Web site, performance standards by which a qualifying product's performance has been evaluated.

Minimum Biobased Content

Four commenters felt that USDA was proposing minimum biobased contents that were too low for many of the products. These, and other, commenters also provided specific comments on the proposed minimum biobased contents for specific items. Those specific comments are addressed later in the preamble under Item Specific Comments. Here, USDA is responding to the comments that more generally address the procedure USDA uses in proposing minimum biobased contents. Approach Used

Comment: Several commenters were concerned about the approach USDA used to determine minimum biobased contents. One commenter recommended that, rather than setting the threshold level below the lowest percentage observed in the lowest end product in the survey, USDA reward the top half or top two thirds of the respondents, at least where the spread is more than 20 percentage points. Two other commenters recommended that USDA consider a minimum threshold of 50 percent biobased content given that products with biobased contents above 50 percent are available in all categories.

Response: In response to these public comments and ongoing discussions with other Federal agencies, and because several additional biobased content test results were obtained after proposal, USDA re evaluated the proposed minimum biobased contents for each of the proposed items. In reevaluating the minimum biobased contents, USDA considered factors including the number of, and the distribution of, the test data points as well as the product manufacturer's claims related to performance, biodegradability, and range of applicability.

In those cases where all of the products' biobased contents were within a narrow range and no data were available to distinguish significant performance differences among the products, USDA set the minimum biobased content at the level that would allow preferred procurement for all of
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the products for which data were available.

For items where the products' biobased contents showed a wider range and included one or more significant breaks in the range, USDA reviewed the product information to determine if there were performance or applicability differences among the products that could be used for creating subcategories based on the groups of products that have similar biobased contents. For example, if the biobased contents of half of the products within an item were in the 30 to 50 percent range and the other half were in the 80 to 95 percent range, USDA considered whether the product information supported the creation of two subcategories. Information that was considered to

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., MS3815 Washington, DC 20250 3815; email: mduncan@oce.usda.gov; phone (202) 4010461. Information regarding the Federal Procurement of Biobased Products (one part of the BioPreferred Program) is available on the Internet at http:// www.biopreferred.gov.