Voluntary Labeling Program for Biobased Products, 34030-34039 [2015-14417]

Agencies

• DEPARTMENT OF AGRICULTURE
• Office of Procurement and Property Management

[Federal Register Volume 80, Number 114 (Monday, June 15, 2015)]
[Rules and Regulations]
[Pages 34030-34039]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-14417]


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DEPARTMENT OF AGRICULTURE

Office of Procurement and Property Management

7 CFR Part 3202

RIN 0599-AA22


Voluntary Labeling Program for Biobased Products

AGENCY: Office of Procurement and Property Management, USDA.

ACTION: Final rule.

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SUMMARY: The U.S. Department of Agriculture (USDA) is amending its 
regulations concerning the Voluntary Labeling Program for Biobased 
Products, to incorporate statutory changes to section 9002 of the Farm 
Security and Rural Investment Act (the 2002 Farm Bill) that went into 
effect when the Agricultural Act of 2014 (the 2014 Farm Bill) was 
signed into law on February 7, 2014.

DATES: This rule is effective July 15, 2015.

FOR FURTHER INFORMATION CONTACT: Ron Buckhalt, USDA, Office of 
Procurement and Property Management, Room 361, Reporters Building, 300 
7th St. SW., Washington, DC 20024; email: 
BioPreferred_Support@amecfw.com; phone (202) 205-4008. Information 
regarding the Voluntary Labeling Program for Biobased Products (one 
part of the BioPreferred[supreg] Program) is available on the Internet 
at https://www.biopreferred.gov.

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

I. Executive Summary
II. Authority
III. Background
IV. Summary of Changes
V. Discussion of Public Comments
VI. Regulatory Information
    A. Executive Orders 12866 and 13563: 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. E-Government Act Compliance
    K. Congressional Review Act

I. Executive Summary

    USDA is amending 7 CFR part 3202 to incorporate the statutory 
changes to section 9002 of the Farm Security and Rural Investment Act 
made by enactment of the Agricultural Act of 2014 on February 7, 2014. 
USDA is also finalizing amendments that clarify the rules under which 
the voluntary labeling program operates. The remainder of this section 
presents a brief summary of the amendments to the existing voluntary 
labeling program rules and Section IV of this preamble presents more 
detailed discussions.

A. Summary of Major Provisions of the Final Rule

1. Revisions to Section 3202.2 ``Definitions''
    USDA is amending 7 CFR 3202.2 by deleting the definitions of 
``BioPreferred Product,'' ``Designated item,'' and ``Mature market 
products.'' USDA is also revising the definitions of ``Biobased 
product,'' ``Certification mark artwork,'' and ``Intermediate 
ingredient or feedstock'' and adding new definitions for ``Designated 
product category,'' ``Forest product,'' ``Qualified biobased product,'' 
and ``Renewable chemical.'' These changes are being made to bring the 
voluntary labeling rule up to date with the BioPreferred Program 
Guidelines and the 2014 Farm Bill.
2. Revisions to Section 3202.4 ``Criteria for Product Eligibility To 
Use the Certification Mark''
    USDA is adding a paragraph and subparagraphs to section 3202.4 that 
describe the biobased content criteria for complex assemblies. 
Procedures for designating complex assemblies for the federal preferred 
procurement initiative have been added to the BioPreferred Program 
Guidelines and this final rule updates the voluntary labeling program 
rules to include these products.
    USDA is also adding paragraphs to section 3202.4 to present the 
criteria for evaluating whether products use ``innovative approaches.'' 
The Conference Report on the 2014 Farm Bill states that ``It is the 
Managers'

[[Page 34031]]

intention that all products in the program use innovative approaches in 
the growing, harvesting, sourcing, procuring, processing, 
manufacturing, or application of the biobased product.'' USDA is, 
therefore, adopting criteria to be used when evaluating whether 
biobased products meet the requirement to use ``innovative 
approaches.''
3. Revisions to Section 3202.5 ``Initial Approval Process''
    USDA is amending paragraph (a)(1) to specifically address 
situations where a manufacturer seeks certification for a new product 
that is composed of the same biobased ingredients and has the same 
biobased content as a previously certified product. In these cases, 
where a new product for which certification is sought is composed of 
the same biobased ingredients and has the same biobased content as a 
product that has already been certified, the manufacturer may, in lieu 
of having the new product tested, self-declare the biobased content of 
the new product by referencing the tested biobased content of the 
certified product. Certification of the original product must have been 
obtained by either the manufacturer of the new product or by the 
supplier of the biobased ingredients used in the new product. This 
provision will result in reduced biobased content testing, and thus a 
cost savings, for manufacturers who use the same biobased ingredients 
to formulate products that differ in size or shape or that are marketed 
for different applications.
    USDA is also amending paragraph (c)(5) to state that manufacturers 
wishing to change the name of their company or the name of a certified 
product must notify USDA in writing within 30 days of making such 
changes.
    USDA is also amending paragraph (d)(2) to clarify that, although 
certifications do not have a predetermined expiration date, they are 
subject to mandatory periodic auditing activities and to suspension or 
revocation if biobased content violations are identified. USDA is 
amending this paragraph to allow for the revocation of a certification 
if it is discovered that certification was issued as a result of 
error(s) on the part of USDA during the approval process.
4. Revisions to Section 3202.8 ``Violations''
    USDA is amending paragraph 3202.8(c)(3) to correct an error in a 
reference cited in the paragraph. The reference to 7 CFR part 3017 is 
incorrect. The appropriate references are 2 CFR part 417 and 48 CFR 
subpart 9.4.
5. Revisions to Section 3202.10 ``Oversight and Monitoring''
    USDA is adding a new section 3202.10(d) that identifies three 
auditing efforts that will be ongoing for the voluntary labeling 
program. The 2014 Farm Bill contained specific language authorizing 
USDA to perform auditing and compliance activities necessary to ensure 
that the label is used only on products that meet the established 
eligibility criteria.
    USDA expects to conduct audits of the voluntary labeling program on 
an ongoing basis with audit activities conducted every other calendar 
year (bi-annually). Audit activities will include three stages and will 
be conducted in sequential order. Stage 1 was conducted in 2012, Stage 
2 will be conducted in 2014, and Stage 3 will be conducted in 2016. In 
2018, the sequence will start over with Stage 1.
    Stage 1 auditing includes contacting all participants via email and 
requesting that they complete a ``Declaration of Conformance Form.'' 
Program participants are asked to confirm that they still manufacture 
the product and that the formulation and manufacturing processes remain 
the same.
    Stage 2 auditing consists of a random sampling of certified 
products to confirm the accuracy of biobased content percentages 
claimed. The participants whose products are selected will be required 
to submit product samples to be tested by independent testing labs at 
USDA expense.
    Stage 3 auditing requires manufacturers of products that have been 
certified for 5 years or more to have their products re-tested at their 
expense to confirm that the biobased content remains at or above the 
level at which the product was originally certified.
    USDA believes that the audit program outlined above will be a 
valuable tool in ensuring the integrity of the program and compliance 
with the voluntary labeling program rules.

B. Costs, Benefits, and Transfers

----------------------------------------------------------------------------------------------------------------
                 Type                           Costs                   Benefits                Transfers
----------------------------------------------------------------------------------------------------------------
Quantitative.........................  Unable to quantify at    Unable to quantify at    Unable to quantify at
                                        this time.               this time.               this time.
Qualitative..........................  1. Costs of developing   Advances the objectives  1. Opens new (federal)
                                        biobased alternative     of the BioPreferred      market for biobased
                                        products;                Program, as envisioned   products that USDA
                                       2. Costs to gather and    by Congress in           newly designates.
                                        submit biobased          developing the 2002,    2. Opportunity for
                                        product information      2008, and 2014 Farm      newly developed
                                        for BioPreferred Web     Bills.                   biobased products to
                                        site;.                                            be publicized via
                                                                                          BioPreferred Web site.
                                                                                         3. Loss of market share
                                                                                          by manufacturers who
                                                                                          choose not to offer
                                                                                          biobased versions of
                                                                                          products.
----------------------------------------------------------------------------------------------------------------

II. Authority

    The Voluntary Labeling Program for Biobased Products was 
established under the authority of section 9002 of the Farm Security 
and Rural Investment Act of 2002 (the 2002 Farm Bill), as amended by 
the Food, Conservation, and Energy Act of 2008 (the 2008 Farm Bill), 
and further amended by the Agricultural Act of 2014 (the 2014 Farm 
Bill), 7 U.S.C. 8102. (Section 9002 of the 2002 Farm Bill, as amended 
by the 2008 and the 2014 Farm Bills, is referred to in this document as 
``section 9002'').

III. Background

    Section 9002 establishes a program for preferred procurement of 
biobased products by federal agencies and a voluntary program for the 
labeling of biobased products. These two programs are referred to 
collectively by USDA as the BioPreferred[supreg] program.
    Under the preferred procurement program, federal agencies and their 
contractors are required to purchase biobased products, as defined in 
regulations implementing the statute, that are within designated 
product categories when the cumulative purchase price of the products 
to be procured is more than $10,000 or when the quantities of 
functionally equivalent items purchased over the preceding fiscal year 
equaled $10,000 or more. The final rules under which the preferred 
procurement program operates are

[[Page 34032]]

found at 7 CFR part 3201, ``Guidelines for Designating Biobased 
Products for Federal Procurement.'' In a separate rulemaking, the 
provisions of the Guidelines are being amended to reflect the 
provisions of the 2014 Farm Bill.
    The final rules for the voluntary labeling program, under which 
USDA authorizes manufacturers and vendors of biobased products to use a 
``USDA Certified Biobased Product'' label (hereafter referred to in 
this preamble as ``the certification mark''), are found at 7 CFR part 
3202. The voluntary labeling program is intended to encourage the 
purchase and use of biobased products by reaching beyond the federal 
purchasing community and promoting the purchase of biobased products by 
commercial entities and the general public. In establishing this 
program, USDA identified the criteria to determine those products on 
which the certification mark may be used and developed specific 
requirements for how the mark can be used. It is USDA's intent that the 
presence of the certification mark on a product will mean that the 
labeled product is one for which credible factual information is 
available as to the biobased content, consistently measured across 
labeled products by use of the American Society of Testing and 
Materials (ASTM) radioisotope test D6866.
    On July 31, 2009, USDA published a proposed rule for the voluntary 
labeling program under the authority of section 9002 (74 FR 38296-01). 
The voluntary labeling program final rule was promulgated on January 
20, 2011 (76 FR 3790-01).
    On February 7, 2014, the 2014 Farm Bill was signed into law and 
included several provisions that amended the provisions of section 
9002. The primary purpose of these rule amendments is to revise the 
voluntary labeling program final rule to incorporate changes to section 
9002 that were included in the 2014 Farm Bill. USDA is also finalizing 
certain clarifying amendments to the program rules based on several 
years of operating experience. These amendments will not affect the 
status of products that have already been certified by USDA to display 
the certification mark. However, when Stage 3 of the auditing program 
(7 CFR part 3202, section 3202.10) is conducted in 2016, manufacturers 
whose product certification is at least 5 years old will incur 
additional costs of about $400 per certified product for biobased 
content re-testing.

IV. Summary of Changes

    As a result of public comments received on the proposed amendments 
to the Voluntary Labeling Program regulations, USDA has made changes in 
finalizing the amendments. These changes are summarized in the 
remainder of this section. A summary of each comment received, USDA's 
response to the comment or group of related comments, and the rationale 
for any change made in the final rule is presented in section V.

A. 7 CFR 3202.2--Definitions

    USDA is finalizing the proposed definitions with no changes.

B. 7 CFR 3202.4--Criteria for Product Eligibility To Use the 
Certification Mark

    USDA revised the proposed language in paragraph (c)(2) to add the 
word ``biobased'' to the description of products or materials that 
qualify under criterion 1 and also added a paragraph (iii) stating that 
products meet the criteria if the biobased content of the product or 
material makes its composition different from products or material used 
for the same historical uses or applications.
    In the final rule, USDA added a sentence at 3202.4(c)(4) to clarify 
that evidence of an innovative approach will not be restricted to only 
those innovative criteria listed in the Guidelines and that 
consideration of other evidence will be on a case-by-case basis.

C. 7 CFR 3202.5--Initial Approval Process

    This section has been finalized as proposed.

D. 7 CFR 3202.8--Violations

    This section has been finalized as proposed.

E. 7 CFR 3202.10--Oversight and Monitoring

    This section has been finalized as proposed.

V. Discussion of Public Comments

    USDA solicited comments on the proposed amendments for 60 days 
ending on December 26, 2014. USDA received eight comments by that date. 
One of the comments was from an individual citizen, five were from 
industry trade groups, one was from an academic institution, and one 
was from a biobased product manufacturer. The comments are presented 
below, along with USDA's responses, and are grouped by the Code of 
Federal Regulation (CFR) section numbers to which they apply.

A. General Comments on BioPreferred Program

    Comment: One commenter expressed concern that the proposed 
amendments to the Voluntary Labeling Program will ``reduce consumer 
protection.'' The commenter did not specify which part of the proposed 
amendments she was referring to but stated that she expects the 
government to inform and protect her and not to create an easier 
process for ``controversial production activities including ongoing use 
and further development of GMO's.''
    Response: USDA appreciates the commenter's interest in the 
BioPreferred Program but disagrees with the idea that the proposed 
amendments might reduce consumer protection. The purpose of the 
voluntary labeling program is to inform the consumer regarding the 
biobased content of certified products. USDA does not make or 
specifically endorse any claims of performance nor consumer protection 
or risks. The BioPreferred Program also does not evaluate or 
investigate the use of genetically modified organisms (GMOs) and the 
use of such materials is neither defended nor endorsed by the Program.
    Comment: Another commenter recommended including in the Voluntary 
Labeling Program biochar and the process used to produce this material. 
The commenter described briefly what biochar is and how it may be 
produced. In addition, the commenter provided USDA with a research 
paper that may provide background information on this material.
    Response: USDA agrees with the commenter and notes that a biochar 
product has already been certified to display the label. No change to 
the proposed rule language is required in response to this comment.

B. 7 CFR 3202.2--Definitions

    Comment: One commenter stated their agreement with USDA's proposed 
definitions for ``Biobased product,'' ``Certification mark artwork,'' 
and ``Forest product'' and none of the commenters provided adverse 
comments.
    Response: USDA appreciates the support of the commenters.

C. 7 CFR 3202.4--Criteria for Product Eligibility To Use the 
Certification Mark

    Comment: One commenter believed that a ``federal preference 
program'' should not endorse products on the grounds that they contain 
biobased ingredients and that they are ``new and different'' from the 
way products were manufactured historically instead of

[[Page 34033]]

considering whether the products are better for the environment and 
human health, or perform better than those that are currently 
available.
    Response: While USDA understands the commenter's position, the 
statutory requirements of the 2002 Farm Bill, as amended in the 2008 
and 2014 Farm Bills, mandate that the BioPreferred Program promote and 
give a preference to the purchase of biobased products, particularly 
those using ``innovative approaches.'' USDA does not have the authority 
nor the resources to evaluate the life cycle environmental and human 
health impacts of biobased products compared to those of traditional 
petroleum based products. USDA does present manufacturer-supplied 
information regarding the performance of products in cases where the 
manufacturer provides such information. However, as with life cycle 
impacts, USDA does not have the statutory authority or the resources to 
independently investigate the performance of products that participate 
in the Program.
    Comment: One commenter asked USDA whether this proposed rule would 
be applied in a ``multi-plant manufacturing scenario'': Would it be 
applied at the product or at the manufacturing plant level, and would 
one plant's compliance be sufficient for all plants?
    Response: USDA certification of biobased products to display the 
label is product specific, but is independent of the actual 
manufacturing plant in which the product is produced. That is, if a 
manufacturer produces product A in two different locations and the 
product is otherwise identical, the manufacturer only has to apply for 
certification once and the manufacturer may select a sample for 
biobased content testing from either manufacturing plant. USDA believes 
that this procedural question is adequately covered in the Program 
operating procedures and has not made changes to the actual rule 
language.
1. 7 CFR 3202.4(b)(4)--Finished Products That Are Complex Assemblies
    Comment: One commenter stated that calculating the biobased content 
of a complex assembly is complicated and recommended that USDA provide 
extra guidance via written communication or webinars for companies 
interested in receiving certification to display the USDA Certified 
Biobased Product label on products that would be considered complex 
assemblies. The commenter explained that because ``complex products'' 
have not yet been designated as a product category for federal 
procurement preference they should meet or exceed the default 25% 
minimum biobased content requirement to receive certification to 
display the USDA Certified Biobased Product label. The commenter stated 
that companies and stakeholders will need assistance from USDA to 
determine appropriate eligibility conditions to ``support a proposed 
alternative applicable minimum biobased content.''
    Response: USDA appreciates the support expressed by the commenter 
regarding the labeling of complex assemblies and agrees that additional 
guidance for applicants would be beneficial. As the labeling of complex 
assemblies is initiated, USDA will prepare training materials that will 
be provided to applicants. USDA routinely provides training and 
guidance materials to applicants seeking to certify their products and 
will expand the coverage of such materials as the BioPreferred Program 
expands. No revisions to the proposed rule language are expected as a 
result of this comment.
2. 7 CFR 3202.4(c)--Innovative Approach
    Comment: One commenter expressed concern that Sec.  3202.4(c) was 
written specifically for forestry products, which may cause issues for 
non-forestry products. The commenter suggested clarifying the first 
paragraph in Sec.  3202.4(c) by adding the word ``biobased'' in front 
of ``product'' and ``products.'' The commenter also suggested 
clarifying Sec.  3202.4(c)(2)(i) and (ii) to read:

    (i) Product composition and applications. (A) The biobased 
product or material is used or applied in applications that differ 
from historical applications; (B) The biobased product or material 
is grown, harvested, manufactured, processed, sourced, or applied in 
other innovative ways; or (C) The biobased content of the product or 
material makes its composition different from products used for the 
same historical uses or applications.
    (ii) Manufacturing and processing. (A) The biobased product or 
material is manufactured or processed using renewable, biomass 
energy or using technology that is demonstrated to increase energy 
efficiency or reduce reliance on fossil fuel based energy sources; 
or (B) The biobased product or material is manufactured or processed 
with technologies that ensure high feedstock material recovery and 
use; or (C) The product or material is manufactured or processed in 
a way that adds biobased content.

    Response: USDA agrees with the commenter that certain edits to the 
proposed language add clarity to the rule and, thus, will revise the 
proposed language for the final rule. However, USDA disagrees with the 
commenter's recommendation to include the statement that the 
manufacturing and processing criteria should be revised to specifically 
include processes that ``add biobased content.'' Many biobased products 
are made by replacing petroleum-based components of traditional 
products with biobased components, which could be characterized as 
adding biobased content, and these products would be covered by 
criterion (i)(C) in the commenter's edited paragraphs. Thus, there 
would be no benefit to adding a third item to the manufacturing and 
processing criterion.
3. 7 CFR 3202.4(c)(3)--Environmental Product Declaration
    Comment: One commenter was concerned that the proposed criterion 
for an Environmental Product Declaration (EPD) would ``expand the 
reach'' of the BioPreferred Program ``beyond what was originally 
intended.'' This commenter added that the EPD should merely supplement 
the product's participation in the BioPreferred Program, instead of 
being a requirement for it.
    A second commenter provided USDA with two examples of a Type III 
EPD and noted that the EPD requires a product to meet ``Product 
Category Rules.'' The commenter pointed out that this information ``may 
or may not be available and would require time to develop.'' The 
commenter added that the ``LCA related data'' included in the EPD will 
assist in comparing products but inquired how federal agencies will use 
this data. Additionally, the commenter asked if there is an advantage 
to using this data as one means of defining ``biobased purchasing.''
    Response: In response to both commenters, USDA points out that the 
proposal did not make it a ``requirement'' that a manufacturer submit 
an EPD to participate in the BioPreferred Program. Submitting an EPD is 
one of the means available for manufacturers to demonstrate that their 
biobased products meet the ``innovative approach'' criteria. Various 
other types of documentation are also acceptable. Also, in response to 
the second commenter, USDA agrees that not all manufacturers have EPDs 
for their products and that the completion of an EPD can be time 
consuming. The purpose of requesting documentation such as, but not 
limited to, an EPD is to demonstrate that the manufacturer meet 
Congress' intention that ``all products in the program use innovative 
approaches in the growing, harvesting, sourcing, procuring, processing, 
manufacturing, or application of the biobased product.'' Because not 
all manufacturers have

[[Page 34034]]

performed an EPD, USDA does not believe that it would be beneficial to 
require this type of data in defining ``biobased purchases'' by federal 
agencies. USDA's position is that purchases of biobased products that 
have been accepted into the BioPreferred Program and are, thus, listed 
in the Program's Biobased product catalog are eligible to be counted as 
``biobased purchases.''
4. 7 CFR 3202.4(c)(4)--Raw Material Sourcing
    Comment: One commenter wanted USDA to take into account that a 
finished wood product may be sourced domestically or globally; thus, 
the commenter cautioned USDA that the criteria proposed in Sec.  
3202.4(c)(4) do not ``inadvertently create a technical barrier to 
trade'' and do not exclude imported wood products that were harvested 
and exported legally in the U.S. and their country of harvest. This 
commenter recommended that USDA recognize in the proposed rule that new 
certification measures for forestry products develop every year and 
encouraged USDA to include ``new legality systems,'' for example, the 
Voluntary Partnership Agreements under the European Union's Forest Law 
Enforcement, Governance and Trade Action Plan as another way to 
demonstrate innovation. In addition, the commenter advised USDA to be 
aware that the definitions for ``legal, responsible, or certified 
sources are not applied in a manner that prevents innovation in 
forestry management and certification.'' The commenter looked forward 
to ``working closely with USDA'' to help implement these rules.
    Response: USDA agrees with the commenters that the proposed 
innovative criteria should not be considered as an all-inclusive list. 
USDA recognizes that sustainability advances are occurring worldwide 
and does not intend that new and valid certifications be excluded from 
consideration by the BioPreferred Program. In the final rule, USDA will 
clarify that evidence of an innovative approach will not be restricted 
to only those innovative criteria listed in the Guidelines and that 
consideration of other evidence will be on a case-by-case basis.

D. 7 CFR 3202.5--Initial Approval Process

    Comment: While one commenter specifically supported this section of 
the proposed rule, another expressed concern regarding a manufacturer's 
ability to waive testing via ASTM D6866 and to self-declare its 
product's biobased content by referencing the tested biobased content 
of a product that has already been certified if both products share the 
same biobased ingredients and biobased content. The commenter indicated 
that this approach would work smoothly if these products are made by 
the same manufacturer; however, ``complications'' could arise if the 
manufacturers are different. Thus, the commenter suggested that USDA 
clarify how manufacturers are supposed to proceed and recommended that 
USDA make sure this proposed approach does not cause the manufacturer 
of the initially certified product to have a disadvantage, as that 
manufacturer ``would carry the entire burden and cost of testing.'' 
Thus, the commenter stated that USDA should consider any obligations 
that the manufacturer of the initially certified product may have to 
check the biobased content of the new product before sharing its 
certification. The commenter added that because USDA has not provided 
guidance on the conditions in which certifications may be shared, USDA 
should be ``proactive'' in doing so to address any questions that 
manufacturers will have.
    The same commenter stated appreciation for the proposed rule but 
recommended that USDA develop methods for downstream companies that use 
USDA Certified Biobased chemicals/products in their formulations. The 
commenter stated that companies that choose to blend USDA Certified 
Biobased chemicals/products in their products should be able to display 
the USDA Certified Biobased Product label.
    Response: USDA agrees with the commenter that the ``self-declare'' 
procedure should not result in a situation where one manufacturer is 
relieved of the cost of testing the biobased content of their product 
at the expense of another manufacturer without permission. The proposed 
rule language restricts the use of this provision to (1) manufacturers 
seeking certification of additional products they manufacture that have 
the same formulation as a previously certified product and (2) 
manufacturers whose products are made from certified intermediate 
ingredients in those cases where the manufacturer of the certified 
intermediate ingredient gives permission to use the test results from 
their product. It is not OPPM's intention that one manufacturer be 
allowed to use the test results from another manufacturer without the 
approval and cooperation of the party who paid for the testing. USDA 
also points out that the commenter's statement regarding ``downstream'' 
companies is addressed by USDA plans to designate for federal 
procurement those finished products that are made from designated 
intermediate ingredients and feedstock materials. USDA does not believe 
the any changes in the proposed rule language are necessary as a result 
of this comment.

E. 7 CFR 3202.8--Violations

    No comments were received on the revisions proposed for this 
section.

F. 7 CFR 3202.10--Oversight and Monitoring

    Comment: One commenter expressed support specifically for USDA's 
periodic auditing activities.
    Response: USDA appreciates the commenter's support for the auditing 
plans as described in the proposed rule.

VI. Regulatory Information

A. Executive Orders 12866 and 13563: Regulatory Planning and Review

    Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule has been designated a ``non-significant 
regulatory action'' under section 3(f) of Executive Order 12866. 
Accordingly, the final rule was not reviewed by the Office of 
Management and Budget.
1. Need for the Rule
    This final rule amends the voluntary labeling program rules to 
establish the regulatory framework for the labeling of products that 
were previously excluded from the program because they were mature 
market products. The designation of such products is specifically 
required under the Agricultural Act of 2014, which states that the 
Guidelines shall: ``(vi) Promote biobased products, including forest 
products, that apply an innovative approach to growing, harvesting, 
sourcing, procuring, processing, manufacturing, or application of 
biobased products regardless of the date of entry into the 
marketplace.''
2. Costs, Benefits and Transfers
    This rule advances the objectives of the BioPreferred Program, as 
envisioned by Congress in the 2002, 2008 and 2014

[[Page 34035]]

Farm Bills, by expanding the scope of products that may be certified to 
display the USDA Certified Biobased Product certification mark. The 
entry into the voluntary labeling program of biobased products that 
were previously considered to be mature market products provides newly 
developed biobased products the opportunity to be publicized via the 
BioPreferred Web site. Thus, the rule is expected to increase demand 
for these products, which, in turn, is expected to increase demand for 
those agricultural products that can serve as ingredients and 
feedstocks. This expansion of the voluntary labeling program will, 
thus, yield private benefits for businesses producing these ingredients 
and feedstocks.
    Simultaneously, this action could reduce demand for competing 
products that are not eligible for the voluntary labeling program. 
Producers of biobased products, including intermediate ingredients and 
feedstocks, that are not certified for labeling or producers of non-
biobased products could face a loss of market share within both the 
public and federal agencies. USDA does not have sufficient information 
on the expected extent of this potential loss of market share to assign 
a dollar value to this impact.
    As part of the Stage 3 auditing process to be conducted during 
calendar year 2016, manufacturers of biobased products that have been 
certified for five or more years will be required to have their 
products biobased content re-tested. We estimate that the cost for 
product re-testing is about $300 to $400 per product. The labeling 
program was implemented in 2011 and only those products that were 
certified during 2011 will incur the re-testing cost of the Stage 3 
audit to be conducted during 2016. There were 1,338 applications for 
certification received during 2011 and USDA estimates that 1,000 of the 
products represented by those applications continue to display the 
label under the original certification. Thus, the total estimated cost 
of the auditing effort to all manufacturers is expected to be, at most, 
$400,000 (1,000 products x $400 per test) during 2016. Considering that 
this total cost would be spread over several hundred manufacturers 
making these products and that no additional re-testing costs are 
expected until the year 2022, USDA believes that the cost to any one 
manufacturer is reasonable.

B. Regulatory Flexibility Act (RFA)

    The RFA, 5 U.S.C. 601-602, generally requires an agency to prepare 
a regulatory flexibility analysis of any rule subject to notice and 
comment rulemaking requirements under the Administrative Procedure Act 
or any other statute unless the agency certifies that the rule will not 
have a significant economic impact on a substantial number of small 
entities. Small entities include small businesses, small organizations, 
and small governmental jurisdictions.
    Although the voluntary labeling program ultimately may have a 
direct impact on a substantial number of small entities, USDA has 
determined that this final rule itself will not have a direct 
significant economic impact on a substantial number of small entities. 
Private sector manufacturers and vendors of biobased products 
voluntarily may provide information to USDA through the means set forth 
in this rule. However, the rule imposes no requirement on manufacturers 
and vendors to do so, and does not differentiate between manufacturers 
and vendors based on size. USDA does not know how many small 
manufacturers and vendors may opt to participate in the voluntary 
labeling program. USDA anticipates that this program will positively 
impact small entities which manufacture or sell biobased products by 
allowing them to display the certification mark and to list their 
products in the BioPreferred Program Web site catalog. However, this 
program may decrease opportunities for small businesses that 
manufacture or sell non-biobased products or provide components for the 
manufacturing of such products. It is, however, not possible for USDA 
to definitively assess these anticipated impacts on small entities.

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

    This 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 have implications for these rights.

D. Executive Order 12988: Civil Justice Reform

    This 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.

E. Executive Order 13132: Federalism

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

F. Unfunded Mandates Reform Act of 1995

    This 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.

G. 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.

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

    This final rule has been reviewed in accordance with the 
requirements of Executive Order 13175, Consultation and Coordination 
with Indian Tribal Governments. The review reveals that this final rule 
will not have substantial and direct effects on Tribal governments and 
will not have significant Tribal implications.

I. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501 through 3520), the information collection under the voluntary 
labeling program is currently approved under OMB control number 0503-
0020.

J. E-Government Act Compliance

    USDA is committed to compliance with the E-Government Act, which 
requires Government agencies, in general, to provide the public the 
option of submitting information or transacting business electronically 
to the maximum extent possible. USDA is implementing an electronic 
information system for posting information voluntarily submitted by 
manufacturers or vendors on the products they intend to offer for 
federal preferred procurement under each designated item. For 
information pertinent to E-Government Act compliance related to this 
rule, please contact Ron Buckhalt at (202) 205-4008.

[[Page 34036]]

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, that includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. USDA has submitted a report containing this rule and 
other required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register.

List of Subjects in 7 CFR Part 3202

    Biobased products, Procurement.
    For the reasons stated in the preamble, the Department of 
Agriculture is amending 7 CFR part 3202 as follows:

PART 3202--VOLUNTARY LABELING PROGRAM FOR BIOBASED PRODUCTS

0
1. The authority citation for part 3202 continues to read as follows:

    Authority:  7 U.S.C. 8102.


0
2. In Sec.  3202.2:
0
a. Revise the definition of ``Biobased product'';
0
b. Remove the definition of ``BioPreferred Product'';
0
c. Revise the definition of ``Certification mark artwork'';
0
d. Remove the definition of ``Designated item'';
0
e. Add in alphabetical order definitions of ``Designated product 
category'' and ``Forest product'';
0
f. Remove the definition of ``Intermediate ingredients or feedstocks'';
0
g. Add in alphabetical order a definition of ``Intermediate ingredient 
or feedstock'';
0
h. Remove the definition of ``Mature market products''; and
0
i. Add in alphabetical order definitions of Qualified biobased 
product'' and ``Renewable chemical''.
    The revisions and additions read as follows:


Sec.  3202.2  Definitions.

* * * * *
    Biobased product. (1) A product determined by USDA to be a 
commercial or industrial product (other than food or feed) that is:
    (i) Composed, in whole or in significant part, of biological 
products, including renewable domestic agricultural materials and 
forestry materials; or
    (ii) An intermediate ingredient or feedstock.
    (2) The term ``biobased product'' includes, with respect to 
forestry materials, forest products that meet biobased content 
requirements, notwithstanding the market share the product holds, the 
age of the product, or whether the market for the product is new or 
emerging.
* * * * *
    Certification mark artwork. The distinctive image, as shown in 
Figures 1-3, that identifies products as USDA Certified.

[[Page 34037]]

[GRAPHIC] [TIFF OMITTED] TR15JN15.000

    Designated product category. A generic grouping of biobased 
products, including those final products made from designated 
intermediate ingredients or feedstocks, or complex assemblies 
identified in subpart B of 7

[[Page 34038]]

CFR part 3201, that is eligible for the procurement preference 
established under section 9002 of FSRIA.
* * * * *
    Forest product. A product made from materials derived from the 
practice of forestry or the management of growing timber. The term 
``forest product'' includes:
    (1) Pulp, paper, paperboard, pellets, lumber, and other wood 
products; and
    (2) Any recycled products derived from forest materials.
* * * * *
    Intermediate ingredient or feedstock. A material or compound made 
in whole or in significant part from biological products, including 
renewable agricultural materials (including plant, animal, and marine 
materials) or forestry materials that have undergone value added 
processing (including thermal, chemical, biological, or a significant 
amount of mechanical processing), excluding harvesting operations, 
offered for sale by a manufacturer or vendor and that is subsequently 
used to make a more complex compound or product.
* * * * *
    Qualified biobased product. A product that is eligible for federal 
preferred procurement because it meets the definition and minimum 
biobased content criteria for one or more designated product 
categories, or one or more designated intermediate ingredient or 
feedstock categories, as specified in subpart B of 7 CFR part 3201.
    Renewable chemical. A monomer, polymer, plastic, formulated 
product, or chemical substance produced from renewable biomass.
* * * * *

0
3. Section 3202.4 is amended by revising the introductory text and the 
headings for paragraphs (b)(1) and (2) and adding paragraphs (b)(4) and 
(c) to read as follows:


Sec.  3202.4  Criteria for product eligibility to use the certification 
mark.

    A product must meet each of the criteria specified in paragraphs 
(a) through (c) of this section in order to be eligible to receive 
biobased product certification.
* * * * *
    (b) * * *
    (1) Qualified Biobased Products. * * *
    (2) Finished biobased products that are not Qualified Biobased 
Products. * * *
* * * * *
    (4) Finished products that are complex assemblies. (i) If the 
product is a complex assembly, as defined in subpart A of 7 CFR part 
3201, that is not eligible for federal preferred procurement at the 
time the application for certification is submitted, the applicable 
minimum biobased content is 25 percent. The biobased content shall be 
determined using the procedures specified in Sec.  3201.7(c)(3) of this 
chapter. Manufacturers, vendors, groups of manufacturers and/or 
vendors, and trade associations may propose an alternative applicable 
minimum biobased content for the product by developing, in consultation 
with USDA, and conducting an analysis to support the proposed 
alternative applicable minimum biobased content. If approved by USDA, 
the proposed alternative applicable minimum biobased content would 
become the applicable minimum biobased content for the complex assembly 
to be labeled.
    (ii) If a product certified under paragraph (b)(4)(i) of this 
section is within a category that USDA subsequently designates for 
federal preferred procurement, the applicable minimum biobased content 
shall become, as of the effective date of the final designation rule, 
the minimum biobased content specified for the item as found in subpart 
B of 7 CFR part 3201.
    (c) Innovative approach. In determining eligibility for 
certification under the BioPreferred Program, USDA will consider as 
eligible only those products that use innovative approaches in the 
growing, harvesting, sourcing, procuring, processing, manufacturing, or 
application of the biobased product. USDA will consider products that 
meet one or more of the criteria in paragraphs (c)(1) through (4) of 
this section to be eligible for certification. USDA will also consider 
other documentation of innovative approaches in the growing, 
harvesting, sourcing, procuring, processing, manufacturing, or 
application of biobased products on a case by case basis. USDA may deny 
certification for any products whose manufacturers are unable to 
provide USDA with the documentation necessary to verify claims that 
innovative approaches are used in the growing, harvesting, sourcing, 
procuring, processing, manufacturing, or application of their biobased 
products.
    (1) Product applications. (i) The biobased product or material is 
used or applied in applications that differ from historical 
applications; or
    (ii) The biobased product or material is grown, harvested, 
manufactured, processed, sourced, or applied in other innovative ways; 
or
    (iii) The biobased content of the product or material makes its 
composition different from products or material used for the same 
historical uses or applications.
    (2) Manufacturing and processing. (i) The biobased product or 
material is manufactured or processed using renewable, biomass energy 
or using technology that is demonstrated to increase energy efficiency 
or reduce reliance on fossil-fuel based energy sources; or
    (ii) The biobased product or material is manufactured or processed 
with technologies that ensure high feedstock material recovery and use.
    (3) Environmental Product Declaration. The product has a current 
Environmental Product Declaration as defined by International Standard 
ISO 14025, Environmental Labels and Declarations--Type III 
Environmental Declarations--Principles and Procedures.
    (4) Raw material sourcing. (i) The raw material used in the product 
is sourced from a Legal Source, a Responsible Source, or a Certified 
Source as designated by ASTM D7612--10, Standard Practice for 
Categorizing Wood and Wood-Based Products According to Their Fiber 
Sources; or
    (ii) The raw material used in the product is 100% resourced or 
recycled (such as material obtained from building deconstruction); or
    (iii) The raw material used in the product is from an urban 
environment and is acquired as a result of activities related to a 
natural disaster, land clearing, right-of-way maintenance, tree health 
improvement, or public safety.

0
4. Section 3202.5 is amended by:
0
a. Revising paragraph (a)(1);
0
b. Adding a sentence to the end of paragraph (c) introductory text;
0
c. Adding paragraph (c)(5);
0
d. Revising paragraph (d)(1); and
0
e. Adding paragraphs (d)(2)(iv) and (v).
    The revisions and additions read as follows:


Sec.  3202.5  Initial approval process.

    (a) * * *
    (1) General content. The applicant must provide contact information 
and product information including all brand names or other identifying 
information, intended uses of the product, information to document that 
one or more of the innovative approach criteria specified in section 
3202.4(c) has been met, and, if applicable, the corresponding product 
category classification for federal preferred procurement. The 
applicant must also provide a sample of the product to be

[[Page 34039]]

analyzed by a third-party, ISO 9001 conformant, testing entity for 
determination of the biobased content. In situations where a new 
product for which certification is sought is composed of the same 
biobased ingredients and has the same biobased content as a product 
that has already been certified, the manufacturer may, in lieu of 
having the new product tested, self-declare the biobased content of the 
new product by referencing the tested biobased content of the original 
certified product. Certification of the original product must have been 
obtained by either the manufacturer of the new product or by the 
supplier of the biobased ingredients used in the new product.
    (c) * * * Paragraph (c)(5) of this section presents the procedures 
for revising the information provided under paragraphs (c)(1) through 
(4) of this section after a notice of certification has been issued.
* * * * *
    (5) If at any time, during the application process or after a 
product has been certified, any of the information specified in 
paragraphs (c)(1) through (4) of this section changes, the applicant 
must notify USDA of the change within 30 days. Such notification must 
be provided in writing to USDA.
    (d) * * *
    (1) The effective date of certification is the date on which the 
applicant receives a notice of certification from USDA. Except as 
specified in paragraphs (d)(2)(i) through (d)(2)(v) of this section, 
certifications will remain in effect as long as the product is 
manufactured and marketed in accordance with the approved application 
and the requirements of this subpart.
    (2) * * *
    (iv) All certifications are subject to USDA periodic auditing 
activities, as described in Sec.  3202.10(d). If a manufacturer or 
vendor of a certified biobased product fails to participate in such 
audit activities or if such audit activities reveal biobased content 
violations, as specified in Sec.  3202.8(b)(1), the certification will 
be subject to suspension and revocation according to the procedures 
specified in Sec.  3202.8(c).
    (v) If USDA discovers that a certification has been issued for an 
ineligible biobased product as a result of errors on the part of USDA 
during the approval process, USDA will notify the product's 
manufacturer or vendor in writing that the certification is revoked 
effective 30 days from the date of the notice.

0
5. Section 3202.8 is amended by revising paragraph (c)(3) to read as 
follows:


Sec.  3202.8  Violations.

* * * * *
    (c) * * *
    (3) Other remedies. In addition to the suspension or revocation of 
the certification to use the label, depending on the nature of the 
violation, USDA may pursue suspension or debarment of the entities 
involved in accordance with 2 CFR part 417 and 48 CFR subpart 9.4. USDA 
further reserves the right to pursue any other remedies available by 
law, including any civil or criminal remedies, against any entity that 
violates the provisions of this part.

0
6. Section 3202.10 is amended by adding paragraph (d) to read as 
follows:


Sec.  3202.10  Oversight and monitoring.

* * * * *
    (d) Audits. USDA expects to conduct audits of the voluntary 
labeling program on an ongoing basis with audit activities conducted 
every other calendar year (bi-annually). Audit activities will include 
three stages and will be conducted in sequential order as follows:
    (1) Stage 1 auditing includes contacting all participants via email 
and requesting that they complete a ``Declaration of Conformance 
Form.'' Program participants are asked to confirm that they still 
manufacture the product and that the formulation and manufacturing 
processes remain the same. Participants are also asked to list all 
active products and advise the USDA of any complaints regarding the 
claim of the biobased content. The first Stage 1 auditing activity was 
completed in 2012 and the second Stage 1 audit will be conducted in 
2018.
    (2) Stage 2 auditing consists of a random sampling of certified 
products to confirm the accuracy of biobased content percentages 
claimed. The participants whose products are selected will be required 
to submit product samples to be tested by independent testing labs at 
USDA expense. The first Stage 2 auditing activity began in 2014 and is 
scheduled to be completed during 2015 and the second Stage 2 audit will 
be conducted in 2020.
    (3) Stage 3 auditing requires manufacturers of products that have 
been certified for 5 years or more to have their products re-tested at 
their expense to confirm that the biobased content remains at or above 
the level at which the product was originally certified. The first 
Stage 3 auditing activity is scheduled to be completed during 2016 and 
the second Stage 3 audit will be conducted in 2022.

    Dated: June 5, 2015.
Gregory L. Parham,
Assistant Secretary for Administration, U.S. Department of Agriculture.
[FR Doc. 2015-14417 Filed 6-12-15; 8:45 am]
 BILLING CODE 3410-TX-P