On July 2, 2015, the Office of Science and Technology Policy (OSTP), the Office of Management and Budget (OMB), the U.S. Trade Representative, and the Council on Environmental Quality jointly issued Modernizing the Regulatory System for Biotechnology Products, a memorandum directing the U.S. Environmental Protection Agency (EPA), the U.S. Food and Drug Administration (FDA), and the U.S. Department of Agriculture (USDA) to update the Coordinated Framework for the Regulation of Biotechnology (Coordinated Framework), develop a long-term strategy to ensure that the federal biotechnology regulatory system can handle future biotechnology products, and commission an external analysis of the future landscape of biotechnology products. Three public meetings were planned, two of which have already occurred, to discuss the memorandum with the public and invite oral and written comments from interested parties. The third public meeting will be held on March 30, 2016, at the University of California's Davis Conference Center in Davis, California, to review progress made on efforts to modernize the regulatory system. Those planning to attend online or in person should register in advance and prepare by reviewing the two draft documents that will be discussed during the meeting: (1) Table of the oversight of biotechnology products and relevant coordination across EPA, FDA, and USDA; and (2) Regulation of Biotechnology Products -- Clarifying Roles and Responsibilities through Hypothetical Case Studies.

The Biobased and Renewable Products Advocacy Group (BRAG^®) has been following these meetings and recently published a summary of the documents discussed at the second public meeting, Biotechnology: Case Studies of Hypothetical, Genetically Engineered Organisms Are Discussed at Second Meeting on Modernizing the Regulatory System for Biotechnology Products to Illustrate Agencies' Roles and Responsibilities. These efforts to modernize the Coordinated Framework are essential to the future of the biotechnology industry. Stakeholders should participate actively in this final meeting to share their experiences using the current regulatory system with the Administration while emphasizing what parts of the Coordinated Framework are successful and what could be improved.

EPA

EPA Signs Final Rule Granting Partial CDR Exemptions For Biodiesel Products

On March 23, 2016, Bloomberg BNA Daily Environment Report announced that EPA signed a final rule exempting manufacturers of six biodiesel chemicals from reporting processing and use information under the Chemical Data Reporting (CDR) rule under Section 8(a) of the Toxic Substances Control Act (TSCA). In 2014, BRAG filed a regulatory petition to exempt the chemicals, requesting the same exemption that EPA currently provides to manufactures of petroleum-based versions of the chemicals. The rule was originally issued as a direct final rule in February 2015 before being withdrawn due to a single comment. This final rule is consistent with the original proposed rule that was issued on July 22, 2015, and applies to manufacturers of:

• Fatty acids, C14-18 and C16-18 unsaturated, methyl esters (Chemical Abstracts Service (CAS) No. 67762-26-9);
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• Fatty acids, C16-18 and C-18 unsaturated, methyl esters (CAS No. 67762-38-3);
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• Fatty acids, canola oil, methyl esters (CAS No.129828-16-6);
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• Fatty acids, corn oil, methyl esters (CAS No. 515152-40-6);
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• Fatty acids, tallow, methyl esters (CAS No. 61788-61-2); and
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• Soybean oil, methyl esters (CAS No. 67784-80-9).

As with all the chemicals currently afforded partial exemption status, the biodiesel chemicals would no longer be eligible for the partial reporting exemption if they were to become the subject of a TSCA Sections 4, 5(a)(2), 5(b)(4), or 6 rule (proposed or final), an enforceable consent agreement, a Section 5(e) order, or relief granted under a civil action under Section 5 or 7. BRAG is pleased that EPA was able to complete the rulemaking process in time for the CDR reporting cycle starting in June 2016. The partial CDR exemption will save manufacturers about two weeks of time that would typically be spent preparing processing and use data for Form U.

EPA Presents Funding Opportunity Through The P2 Grant Program

On March 22, 2016, EPA announced the availability of $7.94 million in federal grants to support pollution prevention (P2) projects during Fiscal Years 2016 and 2017. Projects should reduce or eliminate the use of hazardous materials, water, and energy and will support the P2 Program National Emphasis Areas of:

• Climate Change Mitigation/Prevention of Greenhouse Gas Emissions; 
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• More Sustainable Food Manufacturing and Processing; or 
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• State or Community Approaches to Hazardous Materials Source Reduction.

The grants are available to state agencies, colleges, and universities (serving as instrumentalities of the states), federally-recognized tribes, and intertribal consortia. Corporate entities could collaborate with one of these organizations in order to commercialize or expand their business. EPA expects to award up to 40 grant agreements totaling $7.94 million in federal P2 grant funding over both years. Proposals are due by May 9, 2016.

State

Iowa Senate Approves Renewable Chemical Production Tax Credit Legislation

On March 17, 2016, the Iowa State Senate voted 46-3 to approve Senate File 2300, a bill creating a production tax credit for renewable chemicals. The legislation was created to attract investment in renewable chemical manufacturing and biorefining to Iowa, and covers the production of higher value biochemicals from plant materials left over from biofuel production. The House Ways and Means Committee approved House File 2288, a companion bill, and sent the measure to the House floor. Senate File 2300 allows eligible businesses to claim a five cent tax credit per pound of renewable chemicals produced from biomass feedstock between 2017 and 2026. Tax credits resulting from the bill will be capped at $105 million per year, with a limit of $10 million per company. The Biotechnology Innovation Organization (BIO) released an announcement in favor of the renewable chemical tax credit. Brent Erickson, Executive Vice President of BIO's Industrial & Environmental Section, stated: "Renewable chemicals help protect the environment and create new jobs. Iowa's new tax credit will encourage biotechnology and renewable chemical companies to make investments and deploy innovative homegrown technology in Iowa. BIO will continue to work with the Iowa legislature, other states and the federal government to level the playing field in economic development incentives for renewable chemical and biobased manufacturing technologies."

International

EC Commissioned Study Finds Increased ILUC As A Result Of EU 2020 Goals

On March 11, 2016, a consortium made up of Ecofys, the International Institute for Applied Systems Analysis (IIASA), and E4tech announced that the final report on the Land Use Change (LUC) study is now available online. The study was commissioned and funded by the European Commission (EC) and was focused on using the GLOBIOM model to determine ILUC associated with the ten percent renewable energy use target for transportation mandated by the European Union's (EU)2020 goals. The report, The land use change impact of biofuels consumed in the EU, determined LUC emissions results as well as total LUC caused by the EU 2020 biofuel mandate. Total LUC was determined to be 8.8 million hectares (Mha), with 8 Mha consisting of new cropland, and 0.8 Mha made up of short rotation plantations on existing cropland. LUC emissions were tested by scenario and divided by biomass and biofuel type. Conventional biodiesel feedstocks were found to have high LUC effects, with conventional ethanol feedstocks having lower LUC emissions, and advanced biofuels produced from short rotation crops or perennials having negative LUC emissions.

The credibility of the study has been questioned by several parties, including the EC itself. The European Biodiesel Board (EBB) stated that the study is based on "a model which has still not been disclosed nor validated by peers," resulting in reservations of the scientific reliability of the research. The California Air Resources Board had previously tested Indirect Land Use Change (ILUC) values for biodiesel in an open and peer-reviewed process, and found values four to five times lower than those found in the EU study. This disparity has lead to the EBB and the EC stating that a "scientific peer review of the [Ecofys] study would be desirable" and that "if the model structure cannot fully be disclosed, such a review cannot meet the quality standards set by academic rules." The project has been completed, but feedback and comments will be collected at ILUC@ecofys.com.

Industry

Solazyme Becomes TerraVia, Shifts Focus To Food And Specialty Ingredients

On March 11, 2016, Solazyme announced a name change to reflect a new focus on food, nutrition, and specialty ingredients instead of biofuels. TerraVia™ (TerraVia), as Solazyme is now known, will create value in plant-based food through a transformational algae innovation platform. TerraVia will focus on developing AlgaVia^® Whole Algae ingredients (lipid rich powder and protein) and AlgaWise™ Algae Oils, as well as consumer food products that currently include Thrive^® Culinary Algae Oil. The Company will also focus on animal nutrition ingredients and personal care ingredients, including AlgaPur Oils. The fuels, industrial oils, and Encapso™ business previously run by Solazyme have been moved to a unit called Solazyme Industrials, which is likely to be sold off. This shift towards high-value, low volume product areas is not surprising given the current low oil prices that are hurting biofuel profits, and is a key component in the continued success of the biobased industry.