[Federal Register Volume 79, Number 207 (Monday, October 27, 2014)]
[Proposed Rules]
[Pages 63846-63855]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-25427]


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DEPARTMENT OF AGRICULTURE

7 CFR Part 3202

RIN 0599-AA22


Voluntary Labeling Program for Biobased Products

AGENCY: Office of Procurement and Property Management, USDA.

ACTION: Proposed rule.

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SUMMARY: The U.S. Department of Agriculture (USDA) is proposing to 
amend 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: USDA will accept public comments on these proposed rule 
amendments until December 26, 2014.

ADDRESSES: You may submit comments by any of the following methods. All 
submissions received must include the agency name and Regulatory 
Information Number (RIN). The RIN for this rulemaking is 0599-AA22. 
Also, please identify submittals as pertaining to the ``Proposed 
Amendments to Voluntary Labeling Program for Biobased Products.''
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Email: biopreferred@usda.gov. Include RIN number 0599-AA22 
and ``Proposed Amendments to the Voluntary Labeling Program for 
Biobased Products'' on the subject line. Please include your name and 
address in your message.
     Mail/commercial/hand delivery: Mail or deliver your 
comments to: Ron Buckhalt, USDA, Office of Procurement and Property 
Management, Room 361, Reporters Building, 300 7th St. SW., Washington, 
DC 20024.
     Persons with disabilities who require alternative means 
for communication for regulatory information (Braille, large print, 
audiotape, etc.) should contact the USDA TARGET Center at (202) 720-
2600 (voice) and (202) 690-0942 (TTY).

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@usda.gov; 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 http://www.biopreferred.gov.

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

I. Authority
II. Background
III. Executive Summary
IV. Discussion of This Proposed Rule
V. Request for Comment
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

I. Authority

    The Voluntary Labeling Program for Biobased Products was 
established

[[Page 63847]]

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''.)

II. 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 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 CFR 38295). 
The voluntary labeling program final rule was promulgated on January 
20, 2011 (76 FR 3790).
    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 this proposed 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 
proposing certain clarifying amendments to the program rules based on 
several years of operating experience. These proposed 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.

III. Executive Summary

    USDA is proposing to amend 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 proposing amendments that clarify the 
rules under which the voluntary labeling program operates. The 
remainder of this section presents a brief summary of the proposed 
amendments to the existing voluntary labeling program rules and Section 
IV of this preamble presents more detailed discussions.

A. Purpose of the Regulatory Action

1. Need for the Regulatory Action
    The 2014 Farm Bill contains legislative requirements related to the 
Biobased Markets Program that cannot be implemented without further 
guidance. For example, the proposed amendments provide the framework 
for implementing the requirement that USDA promote biobased products 
regardless of the date of entry into the marketplace, thus overriding 
previous regulatory provisions excluding mature market products.\a\ The 
proposed action also responds to Congressional direction that USDA 
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. This proposed 
regulatory action revises the definition of ``biobased product'' to 
state that the term includes 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. This proposed rule establishes procedures to carry out this 
and other provisions of the 2014 Farm Bill.
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    \a\ Mature market products previously were defined as those that 
had a significant market share prior to 1972. USDA developed this 
exclusion based on the legislative history of the 2002 Farm Bill.
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2. Legal Authority for the Regulatory Action
    Enactment of the Agricultural Act of 2014 (Pub. L. 113-79) on 
February 7, 2014 provides the legal authority for the proposed rule 
amendments.

B. Summary of Major Provisions of the Proposed Rule

    The following paragraphs present a brief summary of the changes 
being proposed to the voluntary labeling program rules by this action. 
More detailed discussions of the proposed changes are presented in 
Section IV of this preamble.
1. Revisions to Section 3202.2 ``Definitions''
    USDA is proposing to amend 7 CFR 3202.2 by deleting the definitions 
of ``BioPreferred Product,'' ``Designated item,'' and ``Mature market 
products.'' USDA is also proposing to revise the definitions of 
``Biobased product,'' ``Certification mark artwork,'' and 
``Intermediate ingredient or feedstock'' and to add new definitions for 
``Designated product category,'' ``Forest product,'' ``Qualified 
biobased product,'' and ``Renewable chemical.'' These changes are 
proposed 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 proposing to add 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 proposed action would update

[[Page 63848]]

the voluntary labeling program rules to include these products.
    USDA is also proposing to add 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' 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, proposing 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 proposing to amend 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 
proposed provision would 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 proposing to amend 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 proposing to amend 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 also 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 proposing to amend 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 proposing to add 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.

C. Costs, Benefits, and Transfers

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               Type                          Costs                    Benefits                  Transfers
----------------------------------------------------------------------------------------------------------------
Quantitative.....................  Unable to quantify at      Unable to quantify at     Unable to quantify at
                                    this time; USDA seeks      this time; USDA seeks     this time; USDA seeks
                                    comments that would help   comments that would       comments that would
                                    to inform a quantitative   help to inform a          help to inform a
                                    estimate of impacts.       quantitative estimate     quantitative estimate
                                                               of impacts.               of impacts.
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 product    developing the 2002,     2. Opportunity for newly
                                    information for            2008, and 2014 Farm       developed biobased
                                    BioPreferred Web site;.    Bills.                    products to be
                                                                                         publicized via
                                                                                         BioPreferred Web site.
                                                                                        3. Loss of market share
                                                                                         by manufacturers who
                                                                                         choose not to offer
                                                                                         biobased versions of
                                                                                         products.
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IV. Discussion of This Proposed Rule

    USDA is proposing to amend five sections of 7 CFR part 3202, as 
described below.

A. 7 CFR 3202.2--Definitions

    USDA is proposing to amend 7 CFR 3202.2 by revising three existing 
definitions and adding four new definitions for terms that are used in 
the voluntary labeling program rules as a result of revisions to 
section 9002 made by the 2014 Farm Bill. USDA is also proposing to 
delete three definitions that are no longer applicable. The proposed 
changes to section 3202.2 are

[[Page 63849]]

discussed in more detail in the following paragraphs.
    USDA is proposing to revise the existing definition of the term 
``biobased product'' to add a statement that the term includes 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. The addition of this 
statement to the definition of ``biobased product'' is taken directly 
from the language in the 2014 Farm Bill and emphasizes Congress' 
intention that the mature market exclusion be removed and that forest 
products be accepted into the BioPreferred program.
    USDA is proposing to revise the definition of the term 
``certification mark artwork'' by replacing the graphic images of the 
three variations of the certification mark with slightly updated 
images. In the updated images, the ``FP'' letters indicating that the 
product is eligible for Federal preferred procurement have been moved 
so that they show up better and a solid line has been added between the 
text ``USDA Certified Biobased Product'' and the text that presents the 
product's biobased content. These changes in the certification mark 
graphics were made by the BioPreferred program after the current rule 
was finalized but before the voluntary labeling program began 
certifying products to display the mark. Therefore, this proposed 
update will merely bring the graphics presented in the rule in line 
with the graphics currently being issued and will not require any 
participants to revise their label graphics.
    USDA is proposing to revise the definition of the term 
``intermediate ingredient or feedstock'' to align the definition with 
the one presented in subpart A of 7 CFR 3201 (the BioPreferred program 
Guidelines). The definition presented in the Guidelines was revised in 
response to the language in the 2008 Farm Bill (79 FR 44641; August 1, 
2014).
    USDA is proposing to add a new definition for the term ``designated 
product category.'' This term has been adopted in the Guidelines as a 
replacement for the term ``designated item'' because of confusion 
caused by the inconsistent use of the word ``item.'' This proposal 
would bring the terminology used in the voluntary labeling rules in 
line with the existing Guidelines.
    USDA is proposing to add a new definition for the term ``qualified 
biobased product'' to indicate a biobased product that is eligible for 
Federal preferred procurement. This term is used in the Guidelines and 
adding it to the voluntary labeling rule would help in understanding 
the difference between a ``qualified biobased product'' and a 
``certified biobased product'' (one that has been certified to display 
the certification mark).
    USDA is also proposing to add definitions for the terms ``forest 
product'' and ``renewable chemicals.'' These terms were defined in the 
text of the 2014 Farm Bill and USDA is proposing to add them verbatim 
to the voluntary labeling rule. The term ``forest product'' is used in 
language clarifying Congress' intent that these products, regardless of 
the market share the product holds, the age of the product, or whether 
the product's market is new or emerging, are eligible for Federal 
preferred procurement and for the voluntary labeling program as long as 
the product meets biobased content requirements and use innovative 
approaches in the growing, harvesting, sourcing, procuring, processing, 
manufacturing, or application of the biobased product.
    The term ``renewable chemical'' is also defined in the 2014 Farm 
Bill and USDA is proposing to add this definition to the voluntary 
labeling program rules. Both the 2008 and 2014 Farm Bills emphasize 
Congress' intent that USDA include intermediate ingredients and 
feedstock materials in the BioPreferred program and renewable chemicals 
make up a significant portion of these biobased materials. USDA 
believes that having a clear definition of the term ``renewable 
chemicals'' will be useful as intermediate ingredients and feedstock 
materials are incorporated into the BioPreferred program.
    USDA is proposing to delete the terms ``BioPreferred product'' and 
``Designated item'' because the use of the terms has led to confusion 
and the terms have been replaced with other, more accurate terms. The 
term ``BioPreferred product'' is being replaced with the terms 
``certified biobased product'' and ``qualified biobased product'' 
because these terms account for the fact that the BioPreferred program 
has two initiatives, the voluntary labeling program and the Federal 
preferred procurement program, and products may be eligible for either 
initiative.
    USDA is proposing to delete the term ``Designated item'' and 
replace it with the term ``Designated product category,'' as discussed 
above. This change has already been made in the Guidelines and is being 
proposed to make the voluntary labeling rule consistent.
    USDA is proposing to delete the definition of the term ``Mature 
market products.'' The 2014 Farm Bill clearly stated Congress' intent 
that the BioPreferred program should ``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.'' Product categories that were previously considered 
to be mature market products and, thus, ineligible for the BioPreferred 
program will now be included in the program if manufacturers 
demonstrate that they apply an ``innovative approach'' in the life 
cycle of their product. Therefore, the use of the term ``mature market 
products'' is no longer applicable for the BioPreferred program and the 
definition of the term is not needed.

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

    Two significant changes to this section are being proposed in this 
action. The first proposed change is to add a paragraph (b)(4) that 
presents the minimum biobased content requirement for a product that 
would be considered a ``complex assembly'' (a multi-component assembled 
product with one or more component(s) being made with biobased 
material). A key feature of complex assemblies is that their biobased 
content cannot be determined using ASTM D6866 because of their size 
and/or shape. USDA has incorporated into the BioPreferred program 
Guidelines a procedure for determining the biobased content of a 
complex assembly using an equation that yields the ratio of the mass of 
biobased carbon in the assembly to the mass of total organic carbon in 
the assembly. USDA has also added procedures to the Guidelines for 
incorporating complex assemblies into the Federal preferred procurement 
initiative of the BioPreferred program. This proposal incorporating a 
minimum biobased content requirement into the voluntary labeling rule 
is consistent with the Guidelines and language in the 2014 Farm Bill 
that directs USDA to ``begin issuing criteria for determining which 
assembled and finished products may qualify to receive the label'' 
within one year of enactment of the Farm Bill.
    The text of the 2014 Farm Bill includes a statement that the 
BioPreferred program shall ``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

[[Page 63850]]

of entry into the marketplace.'' Product categories that were 
previously considered to be mature market products and, thus, 
ineligible for the BioPreferred program will now be included in the 
program if manufacturers demonstrate that they apply an ``innovative 
approach'' in the life cycle of their product. Working in conjunction 
with the USDA Forest Products Laboratory, as required by the 2014 Farm 
Bill (Section 9002(h)), USDA has developed proposed criteria that would 
be used in evaluating whether a biobased product is eligible for the 
voluntary labeling program because it uses ``innovative approaches.'' 
USDA is proposing that any one or more of four possible criteria must 
be met to demonstrate that a biobased product uses ``innovative 
approaches.'' This proposal to incorporate criteria for determining 
``innovative approaches'' is consistent with the 2014 Farm Bill 
language and, in a separate rulemaking, USDA is also proposing to add 
the criteria to the BioPreferred program Guidelines.
    The first possible criterion would require that the product or 
material is either used or applied in applications that differ from 
historical applications or that the product or material is grown, 
harvested, manufactured, processed, sourced, or applied in other 
innovative ways. There is an unknown, ever changing, and potentially 
very large number of innovative approaches that may be used in the 
manufacturing and/or application of biobased products. Therefore, USDA 
will review information supporting claims of meeting criterion number 
one and will approve the claims on a case-by-case basis.
    The second possible criterion would require that the 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 that the 
product or material is manufactured or processed with technologies that 
ensure high feedstock material recovery and use.
    The third possible criterion would require that the product or 
material has a current Environmental Product Declaration as defined by 
International Standard ISO 14025, Environmental Labels and 
Declarations--Type III Environmental Declarations--Principles and 
Procedures.
    The fourth possible criterion would require that the product or 
material is either:
    1. sourced from a Legal Source (see Note below), 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
    2. 100% resourced or recycled (such as material obtained from 
building deconstruction), or
    3. 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.

    Note:  In item 1 above, the term ``legal source'' (also referred 
to as a ``non-controversial source'') means that the wood fibers are 
from jurisdictions with a low risk of illegal activity or from 
controlled wood standards, stair-step standards, legality 
assessments, or other proprietary standards. Products from non-
controversial sources are traceable to the applicable jurisdiction, 
or chain of custody.
    ``Responsible source'' means that the wood fibers are acquired 
from a legal source utilizing independently certified procurement 
standards or are from a proprietary forestry standard or from 
jurisdictions with regulatory or quasi-regulatory programs to 
implement best management practices.
    ``Certified sources'' means wood fiber acquired in accordance 
with, and independently certified to, an internationally recognized 
voluntary forest certification standard or equivalent.


    USDA believes that meeting any one or more of these four criteria 
would be an acceptable demonstration that a biobased product uses 
innovative approaches in either the growing, harvesting, sourcing, 
procuring, processing, manufacturing, or application of the product.

C. 7 CFR 3202.5--Initial Approval Process

    USDA is proposing to amend 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 raw materials 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. This proposed provision would result in reduced 
biobased content testing, and thus a cost savings, for manufacturers 
who use the same biobased raw materials to formulate different 
products.
    USDA is proposing to amend 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 proposing to amend 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 also 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.

D. 7 CFR 3202.8--Violations

    USDA is proposing to correct a reference in paragraph (c)(3). The 
original reference to 7 CFR part 3017 is incorrect and should refer 
instead to 2 CFR part 417 and 48 CFR subpart 9.4.

E. 7 CFR 3202.10--Oversight and Monitoring

    USDA is proposing to add 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. 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.
    Stage 2 auditing consists of a random sampling of certified 
products to confirm the accuracy of biobased

[[Page 63851]]

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 is scheduled to be completed during 2014 and includes the re-
testing of 50 randomly selected products. The second Stage 2 audit will 
be conducted in 2020.
    USDA chose to re-test 50 products during the initial Stage 2 audit 
because that number was believed to be sufficient to meet the objective 
of preserving the integrity of the labeling program. In addition, ASTM 
Standard E2234 Standard Practice for Sampling a Stream of Product by 
Attributes Indexed by AQL (acceptance quality limit) calls for 50 
samples when the total lot size is between 1,201 and 3,200 and 
following general inspection level 1. At the time the audit Stage 2 
plans were developed there were slightly less than 1,500 certified 
products.
    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. The voluntary labeling 
program was initiated in 2011 and, at the time of the first Stage 3 
audit, only those products certified during the first year of the 
program will require re-testing.
    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.

V. Request for Comment

    USDA is requesting comment on all aspects of these proposed 
amendments to the voluntary labeling program rules. In particular, USDA 
requests that stakeholders provide comment on the following topics:
    1. Whether the proposed definitions are clear, complete, and 
appropriate.
    2. Whether the criteria that are being proposed for use in 
determining if biobased products meet the requirement to apply an 
``innovative approach'' are appropriate and, if not, specific 
recommendations on alternative criteria. USDA is particularly 
interested in expanding the criteria to apply to products made from 
traditional materials such as cotton, wool, leather, or other biobased 
materials.

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 ``significant regulatory 
action'' under section 3(f) of Executive Order 12866. Accordingly, the 
rule has been reviewed by the Office of Management and Budget.
1. Need for the Rule
    This proposed rule would amend 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 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 would 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 proposed 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 would 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.
    We request information that would help us quantify the shift in 
product sales potentially resulting from this action.

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 proposed rule itself will not have a direct 
significant economic impact on a substantial number of small entities. 
Private sector manufacturers and

[[Page 63852]]

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

D. Executive Order 12988: Civil Justice Reform

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

E. Executive Order 13132: Federalism

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

F. Unfunded Mandates Reform Act of 1995

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

G. Executive Order 12372: 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 proposed 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 proposed 
regulation 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 for which they intend to seek 
certification to display the label or which 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.

List of Subjects in 7 CFR Part 3201

    Labeling, Procurement, USDA Certified Biobased Product.

    For the reasons stated in the preamble, the Department of 
Agriculture is proposing to amend 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. Section 3202.2 is amended by:
0
a. Removing the definitions of ``BioPreferred Product,'' ``Designated 
item,'' and ``Mature market products''; and
0
b. Revising the definitions of ``Biobased product,'' ``Certification 
mark artwork,'' ``Intermediate ingredient or feedstock''; and
0
c. Adding, in alphabetical order, definitions for ``Designated product 
category,'' ``Forest product,'' ``Qualified biobased product,'' and 
``Renewable chemical.''
    The revisions and additions read as follows:


Sec.  3202.2  Definitions.

* * * * *
    Biobased product. A product determined by USDA to be a commercial 
or industrial product (other than food or feed) that is:
    (1) Composed, in whole or in significant part, of biological 
products, including renewable domestic agricultural materials and 
forestry materials; or
    (2) An intermediate ingredient or feedstock.
    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.
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* * * * *
    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 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 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 product or material is used or 
applied in applications that differ from historical applications; or
    (ii) The product or material is grown, harvested, manufactured, 
processed, sourced, or applied in other innovative ways.
    (2) Manufacturing and processing. (i) The 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 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 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 analyzed by a 
third-party, ISO 9001 conformant, testing entity for

[[Page 63855]]

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 is scheduled to be 
completed during 2014 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: October 15, 2014.
Gregory L. Parham,
Assistant Secretary For Administration, U.S. Department of Agriculture.
[FR Doc. 2014-25427 Filed 10-24-14; 8:45 am]
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