On April 26, 2012, the Obama Administration released its National Bioeconomy Blueprint, which is intended to provide a comprehensive approach to harnessing innovations in biological research to address national challenges in health, food, energy, and the environment. In coordination with the release of the National Bioeconomy Blueprint, the Secretary of Health and Human Services Kathleen Sebelius and the Secretary of Agriculture Tom Vilsack announced commitments supportive of the Blueprint's goals. These include initiatives to encourage federal procurement of an expanded range of biobased products; take better advantage of large pharmaceutical data sets to speed drug development; apply the latest genomics discoveries to identify quickly emerging microbial threats; and accelerate research on non-embryonic stem cells as possible treatments for blood-related and neurological diseases.
In a related development, the U.S. Department of Agriculture (USDA) proposed on May 1, 2012, amendments to 7 C.F.R. Part 3201, Guidelines for Designating Biobased Products for Federal Procurement. USDA states that it is proposing to amend the Guidelines for two reasons: (1) to incorporate statutory changes to Section 9002 of the Farm Security and Rural Investment Act (FSRIA) made by enactment of the Food, Conservation, and Energy Act (FCEA) of 2008 on June 18, 2008; and (2) to improve the existing rule based on several years of operating experience. According to USDA, the proposed revisions will not affect products that have already been designated for federal procurement preference. Any changes necessary to the existing designation status of products will be established by future rulemakings.
These notices are yet further expressions of the federal government's sustained interest in spurring the development of biobased products, and its commitment to using the clout of the federal government's purchasing power to influence purchasing preferences and grow the biobased product market. A brief summary of each development follows.
The Bioeconomy Blueprint
The National Bioeconomy Blueprint identifies the following five strategic objectives intended 'to enable a vibrant U.S. bioeconomy in the years and decades ahead, with potential to deliver major economic and social benefits':
- Support research and development investments that will provide the foundation for the future bioeconomy;
- Facilitate the transition of bioinventions from research lab to market, including an increased focus on translational and regulatory sciences;
- Develop and reform regulations to reduce barriers, increase the speed and predictability of regulatory processes, and reduce costs while protecting human and environmental health;
- Update training programs and align academic institution incentives with student training for national workforce needs; and
- Identify and support opportunities for the development of public-private partnerships and precompetitive collaborations -- where competitors pool resources, knowledge, and expertise to learn from successes and failures.
USDA's Proposed Rule
The major provisions of the proposed rule include:
- Designation of Intermediate or Feedstock Categories: The proposed designation of intermediate ingredient or feedstock categories would follow the same process that USDA uses in the ongoing designation of product categories. USDA would establish a minimum biobased content for each intermediate ingredient or feedstock category, based on an evaluation of the available biobased content data. USDA would set the minimum biobased content requirement at the highest level practicable, considering technological limitations.
USDA states that it recognizes that, 'in general, the Federal government does not purchase large quantities of intermediate ingredients and feedstocks.' According to USDA, designating such materials represents a means to include finished products made from such designated materials in the federal biobased products procurement preference program.
The proposed rule presents the procedure for designating those final products that are made from designated intermediate ingredients or feedstocks. Under the FCEA, the USDA shall 'automatically designate' final products composed of designated intermediate ingredients or feedstocks if the content of the designated intermediate ingredients or feedstocks exceeds 50 percent of the final product, unless the Secretary determines a different composition percentage is appropriate. USDA notes that, even though the FCEA uses the term 'automatically' when specifying that these final products are eligible for the federal procurement process, they still must be incorporated into the Guidelines by publication in the Federal Register. USDA is proposing a procedure whereby the designation of these final products would be done in conjunction with the designation of the intermediate ingredient or feedstock categories.
- Designation of Complex Assembly Categories: The proposed rule would establish procedures for designating complex assembly products (multi-component assembled products with one or more component being made with biobased material) within the scope of the federal biobased products procurement preference program. Although FCEA Section 9001 does not specifically mention these multi-component assembled products, USDA states that it believes that including this type of finished product in the BioPreferred Program 'will encourage the increased use of biobased materials and, thus, further advance the objectives of the program.'
USDA is proposing that the biobased content of complex assemblies be calculated using an equation that yields a weighted average and is based on the summation of the biobased content of each individual component that contains, or could contain, biobased material divided by the total weight of all those components. According to the notice, USDA selected this approach because it provides results that relate to the maximum amount of biobased material that could potentially be found in each complex assembly, regardless of the amount or type of materials used in other components.
- Replacement of 'Designated Item' with 'Designated Category': The current Guidelines use the term 'designated item' to refer to a generic grouping of biobased products identified in Subpart B as eligible for the procurement preference. According to USDA, this has created confusion, however, because the word 'item' is also used to refer to individual products, rather than a generic grouping of products. USDA proposes to replace the term 'designated item' with the term 'designated product category.' In addition, USDA would add a definition for the term 'qualifying biobased product' to refer to an individual product that meets the definition and minimum biobased content criteria for a designated product category and is, therefore, eligible for the procurement preference.
- Procurement Preference for New and Emerging Markets: USDA would amend paragraph (b) of Section 3201.5 to add a statement that 'USDA will designate for preferred procurement those product categories and intermediate ingredient or feedstock categories that are determined to create new and emerging markets for biobased materials.' According to USDA, this would emphasize the Section 9002 objectives 'to improve demand for biobased products' and 'to spur development of the industrial base through value-added agricultural processing and manufacturing in rural communities.' The new paragraph is intended to replace the current mature market exclusion, which limits the types of product categories eligible for the federal procurement preference. USDA states that it is proposing this change to be more consistent with the objectives and legislative intent of the Biobased Markets Program.
While USDA requests comment on all aspects of the proposed amendments to the Guidelines, USDA asks that stakeholders address the following topics:
- Whether the use of the new terms 'product category,' 'designated product category,' and 'qualifying biobased product' add clarity and, if not, suggestions on terms that would be more clear.
- Whether the proposed procedure for designating final products made from designated intermediate ingredients or feedstocks is a reasonable and workable approach. USDA requests that commenters provide recommendations for alternative approaches to any element of the procedure they believe is not appropriate.
- Whether the proposed methodology for determining the biobased content of final products composed of intermediate ingredient or feedstock materials is appropriate and, if not, specific recommendations on an alternative approach.
- Whether the definition of the term 'complex assembly' and the procedure for designating complex assemblies is reasonable and appropriate.
- Whether the proposed methodology for determining the biobased content of complex assemblies is appropriate and, if not, specific recommendations on an alternative approach.
- The appropriate role of life cycle analyses (LCA) in the process of qualifying biobased products for the BioPreferred Program and, if you believe there is a role for LCA, the most appropriate methodology to use.
- USDA is proposing to revise Section 3201.5(b) to state that 'USDA will designate for preferred procurement those product categories and intermediate ingredient or feedstock categories that are determined to create new and emerging markets for biobased materials.' USDA is also proposing to remove Section 3201.5(c)(2), the exclusion of mature market products. USDA requests comments on what the term 'new and emerging markets' means to stakeholders.
Comments on the proposed amendments are due July 2, 2012.