United States: Opportunity To Comment On Department Of Agriculture Rules That Will Require The Use Of "Biobased" Products By Federal Contractors

On October 23, 2008, the U.S. Department of Agriculture ("USDA") issued a Notice of Proposed Rulemaking ("Proposed Rule") that would amend the Guidelines for Designating Biobased Products for Federal Procurement. The Proposed Rule would add nine items with biobased content to be afforded federal procurement preference. These products include chain and cable lubricants, corrosion preventatives, food cleaners, forming lubricants, gear lubricants, general purpose household cleaners, industrial cleaners, multipurpose cleaners, and parts wash solutions. Companies whose business could be affected by the expanded scope of the federal preference must submit comments on or before December 22, 2008 in order to ensure their views are expressed to USDA before the proposed rule becomes final.

Overview

Section 9002 of the Farm Security and Rural Investment Act of 2002, as amended, 7 U.S.C. § 8102 ("Section 9002"), requires federal agencies to observe a preference for biobased materials in any procurement over $10,000. Specifically, Section 9002 requires agencies to implement procurement procedures that impose a preference for biobased products, and agencies must consider whether to make rules that either call for awards to contractors whose products contain the highest percentage of biobased materials or establish minimum requirements for biobased content. USDA is charged with designating specific items that will be subjected to biobased content requirements.

Biobased products are commercial or industrial products (other than food or feed) composed wholly or in significant part of biological products including renewable agricultural materials (plant, animal, and marine materials) or forestry materials. The Secretary of Agriculture issues determinations concerning which products "count" as biobased. USDA is identifying biobased items, or generic groupings of biobased products, that require procurement preference by Federal agencies. Aside from designating items, USDA specifies minimum biobased content and provides information on technical, health, and environmental characteristics of products that fall under a designated item.

Products that are unrelated or incidental to the underlying purpose of a federal contract are not subject to the preferred procurement program. For example, if a contractor was hired to provide an elevator for a federal building, the hydraulic fluid purchased to operate the elevator would be subject to the preferred procurement program. However, if such fluid were necessary to operate a crane being used in construction of the building, the fluid would be "incidental" to the underlying contract, and would not be subject to the preference for biobased products. Thus, the Proposed Rule would affect procurement of designated items that are related, or "non-incidental," to an underlying project.

Guidance regarding the preference program is available at the website: www.biopreferred.gov.

Content of the Proposed Rule

As mentioned above, USDA proposes to designate nine items for preferred procurement: (1) chain and cable lubricants; (2) corrosion preventatives; (3) food cleaners; (4) forming lubricants; (5) gear lubricants; (6) general purpose household cleaners; (7) industrial cleaners; (8) multipurpose cleaners; and (9) parts wash solutions. USDA also proposes minimum biobased content for each of those items. Finally, USDA proposes that all Federal agencies must incorporate designated items into their procurement specifications within 30 days after publication of a final rule.

USDA Invites Comment on Specific Topics

In the Proposed Rule, USDA mentions five topics regarding which it is particularly interested in comments from interested parties.

First, USDA explains that "gear lubricants," may overlap with one of the products designated under the Environmental Protection Agency's Comprehensive Procurement Guideline for Products Containing Recovered Material. To help procuring agencies in making their purchasing decisions among biobased products within the proposed designated items that overlap with products containing recovered material, USDA is requesting product-specific information on unique performance attributes, environmental and human health effects, and disposal costs regarding biobased products from products recovered material as well as non-biobased products.

Second, USDA seeks information regarding standards or relevant measures of performance for the proposed items. Specifically, USDA requests the name of any such standards, names of companies or industries that are using the standards, and the circumstances in which the products are being used when the standards are applied.

Third, USDA seeks comments regarding any positive environmental or human health attributes that biobased products involved in the preference program may have. USDA opines that such information will be relevant when agencies make "best value" procurement determinations.

Fourth, USDA is proposing minimum biobased content levels for corrosion preventatives, industrial cleaners, and multipurpose cleaners. USDA seeks comments on the appropriateness of the proposed minimum contents for these items and whether there are potential subcategories within the items that should be considered.

Fifth, and finally, USDA considered combining the proposed items "gear lubricants," "chain and cable lubricants," and "forming lubricants" into a single designated item with multiple subcategories. The decision to propose the items separately was based largely on the differences in functional performance between the items. While the basic purpose of products within each of these items is to provide lubrication, the applications and the conditions under which they perform are very different. USDA requests comments from manufacturers of these products specifically addressing the advantages and disadvantages of these items being designated separately versus combined into a single item with subcategories.

Significance

USDA's proposed rulemaking should be of interest to any manufacturers of the solvents and lubricants affected by the rule, as well as firms, particularly construction firms, whose performance of contracts with the Government may require the procurement of biobased products. In particular, contractors should take note that including biobased products in proposals can enhance their ability to win contracts in "best value" procurements. Again, comments on the Proposed Rule are due December 22, 2008.

Attorneys in Reed Smith's Global Regulatory Enforcement group are actively monitoring USDA's proposed rulemaking. We are prepared to assist clients in determining how specific aspect of the proposed rulemaking will affect their businesses and in developing comments for submission to USDA to ensure that their interests are protected throughout the rulemaking process. It is import that clients interested in submitting comments act quickly as comments are due in December 2008.

This article is presented for informational purposes only and is not intended to constitute legal advice.