| Farm Bill Boosts Biobased Lubricants Demand |
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In a significant development for makers of vegetable oil based lubricants, the Farm Bill signed into law by President Bush on May 13, 2002, contains provisions designed to dramatically increase the purchase of "biobased" materials by federal agencies. Title IX of the new law requires each federal agency to "develop a procurement program which will assure that items composed of biobased products will be purchased to the maximum extent practicable." "Biobased products" include any commercial or industrial product that is composed, in whole or in significant part, of biological products or renewable domestic agricultural materials . . . or forestry materials." The procurement requirement will have limited exceptions for products that do not meet performance specifications, are not available within a reasonable time, or are available only at an "unreasonable" price. The requirement will apply to any item whose price exceeds $10,000 or where the total quantity purchased by the agency during the preceding fiscal year exceeded $10,000. The law also allocates $1,000,000 per year for the next five years to support testing of biobased products. Such testing may be carried out through contracts or cooperative agreements with "entities that have experience or special skills to conduct such testing." Over time, the law also might affect purchasing patterns at other levels of government and in the private sector. Similar procurement requirements for recycled products have been deemed applicable to state agencies that receive significant federal funding and to private companies performing work under federally funded contracts with federal or state agencies. In addition, the new law itself requires the establishment of a program under which producers of biobased products will be permitted to use the label "USDA Certified Biobased Product." The Department of Agriculture also will develop a program to "recognize government agencies and private entities that use a substantial amount of biobased products." Toward the end of 2002, the Secretary of the Department will release regulations designating items which can be produced with biobased products; setting forth recommended practices for procurement of biobased products; providing information as to the availability, relative price, performance, environmental and public health benefits of such materials; and, where appropriate, recommending the level of biobased material to be contained in procured items. BioBlend's lubricants typically contain ninety percent or more biobased material. As one industry participant has noted, "the federal government, including the military, is the world's single largest [lubricants] customer." (Lubes-n-Greases "Lube Report," May 22, 2002.) Although the procurement requirement will not be fully effective until late 2003, BioBlend already has received a product inquiry from a large military installation. We expect our benchmark performance advantages to enable us to capture a significant share of lubricant sales to federal agencies. |
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