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[Federal Register Volume 61, Number 17 (Thursday, January 25, 1996)]
[Notices]
[Pages 2386-2389]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1213]

[[Page 2386]]

ENVIRONMENTAL PROTECTION AGENCY

[OPP-300407; FRL-4992-4]
RIN 2070-AC54

Pesticides; Status of Dried Commodities as Raw Agricultural 
Commodities

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice; Interpretive ruling.

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SUMMARY: This notice describes EPA's interpretation of the term ``raw 
agricultural commodity'' as applied to dried commodities under the 
Federal Food, Drug and Cosmetic Act (21 U.S.C. 301 et seq.). The 
statutory definition is not clear, and EPA's current regulatory 
definition does not augment or improve the statutory language. EPA's 
interpretation turns on the purpose of the drying rather than the means 
or degree of the drying. EPA's interpretation is consistent with EPA's 
current practice and therefore will not require that any dried 
commodity be reclassified from its designation as a processed food to a 
raw agricultural commodity or vice versa.

FOR FURTHER INFORMATION CONTACT: By mail: Jean Frane, Policy and 
Special Projects Staff (7501C), Environmental Protection Agency, 401 M 
St. SW., Washington, DC 20460. Telephone number: 703-305-5944; e-mail: 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Introduction

    In Les v. Reilly, 968 F.2d 985 (9th Cir. 1992), cert. denied, 113 
S.Ct. 1361 (1993), the Ninth Circuit U.S. Court of Appeals held that 
the Delaney anti-cancer clause in the food additives provision of the 
Federal Food, Drug, and Cosmetic Act (FFDCA) was not subject to an 
exception for pesticide uses which pose a de minimis cancer risk. 
Because the food additives provision applies to pesticides in processed 
food but not to pesticides in raw agricultural commodities, in the wake 
of the Les decision, a number of people have requested that EPA 
reclassify certain foods now treated as processed as raw agricultural 
commodities. This notice explains EPA's interpretation of the term 
``raw agricultural commodity'' (RAC) as it pertains to dried 
agricultural commodities.

II. Background

A. Statutory Background

    The FFDCA, 21 U.S.C. 301 et seq., authorizes the establishment by 
regulation of maximum permissible levels of pesticides in foods. Such 
regulations are commonly referred to as ``tolerances.'' Without such a 
tolerance or an exemption from the requirement of a tolerance, a food 
containing a pesticide residue is ``adulterated'' under section 402 of 
the FFDCA and may not be legally moved in interstate commerce. 21 
U.S.C. 331, 342. EPA was authorized to establish pesticide tolerances 
under Reorganization Plan No. 3 of 1970. 5 U.S.C. App. at 1343 (1988). 
Monitoring and enforcement of pesticide tolerances are carried out by 
the U.S. Food and Drug Administration (FDA) and the U.S. Department of 
Agriculture.
    The FFDCA has separate provisions for tolerances for pesticide 
residues on raw agricultural commodities (RACs) and for residues on 
processed food. For pesticide residues in or on RACs, EPA establishes 
tolerances, or exemptions from tolerances when appropriate, under 
section 408 of the act. 21 U.S.C. 346a. EPA regulates pesticide 
residues in processed foods under section 409 of the act, which 
pertains to ``food additives.'' 21 U.S.C. 348. Maximum residue 
regulations established under section 409 are commonly referred to as 
food additive tolerances or food additive regulations (FARs). Section 
409 FARs are needed, however, only for certain pesticide residues in 
processed food. Under section 402(a)(2) of the FFDCA, a pesticide 
residue in processed food generally will not render the food 
adulterated if the residue results from application of the pesticide to 
a RAC and the residue in the processed food when ``ready to eat'' is 
below the RAC tolerance set under section 408. This exemption in 
section 402(a)(2) is commonly referred to as the ``flow-through'' 
provision because it allows the section 408 raw food tolerance to flow 
through to the processed food form. Thus, a section 409 FAR is only 
necessary to prevent foods from being deemed adulterated when the 
concentration of the pesticide residue in a processed food when ready 
to eat is greater than the tolerance prescribed for the RAC, or if the 
processed food itself is treated or comes in contact with a pesticide.
    To establish a tolerance regulation under section 408, EPA must 
find that the regulation would ``protect the public health.'' 21 U.S.C. 
346a(b). In reaching this determination, EPA is directed to consider, 
among other things, the ``necessity for the production of an adequate, 
wholesome, and economical food supply.'' Id. Prior to establishing a 
food additive tolerance under section 409, EPA must determine that the 
``proposed use of the food additive [pesticide], under the conditions 
of use to be specified in the regulation, will be safe.'' 21 U.S.C. 
348(c)(3). Section 409 specifically addresses the safety of 
carcinogenic substances in the so-called Delaney clause, which provides 
that ``no additive shall be deemed safe if it has been found to induce 
cancer when ingested by man or animal or if it is found, after tests 
which are appropriate for the evaluation of the safety of food 
additives, to induce cancer in man or animal * * * .'' Id. Although EPA 
has interpreted the general standard under section 408 to require a 
balancing of risks and benefits, where a pesticide which is an animal 
or human cancinogen is involved, the section 409 Delaney clause, in 
contrast to section 408 and FIFRA, explicitly bars such balancing no 
matter how infintesimal the potential human cancer risk. Les v. Reilly, 
968 F.2d at 989.

B. Regulatory Background

    The consequences of the RAC/processed food determination can be 
significant. Pesticide residues in RACs do not require section 409 FARs 
and thus only pesticide residues in processed food face the possibility 
that they will be evaluated against the Delaney clause. Moreover, it 
has been EPA's traditional policy to deny a section 408 tolerance for 
residues of a pesticide in a particular RAC if a section 409 FAR is 
needed for residues of that pesticide in the processed form of the RAC 
but such FAR is barred by the Delaney clause. Elsewhere in this issue 
of the Federal Register, EPA reiterates that policy in a response to a 
petition filed by the National Food Processors' Association.
    Hops growers pressed EPA for several years to reclassify dried hops 
from a processed food to a RAC. In 1993, EPA granted the hops growers' 
request (refer to Unit III below in this document). In the wake of the 
Les v. Reilly decision, reclassification requests have increased 
dramatically. Some of these requests have come in the form of 
petitions; others have been in comments responding to a petition filed 
by the National Food Processors Association (58 FR 7470, Feb. 5, 1993), 
or specific EPA tolerance actions. All of these requests have concerned 
dried commodities, such as dried fruits.

III. Proper Classification of Dried Commodities

    The dried hops situation as well as the many requests EPA has 
received for reclassification of other dried commodities as RACs 
persuaded EPA that the classification of dried 

[[Page 2387]]
commodities generally needed to be evaluated and the regulated 
community and public apprised of EPA's approach to this issue. 
Accordingly, in this document, EPA is setting forth its interpretation 
of how the statutory term ``raw agricultural commodity'' applies to 
dried commodities.

A. The Statute and Legislative History

    A RAC is defined in FFDCA section 201(r) as ``any food in its raw 
or natural state, including all fruits that are washed, colored, or 
otherwise treated in their unpeeled natural form prior to marketing.'' 
21 U.S.C. 321(r). This definition is further amplified by the statute, 
EPA's regulations, and the legislative history of section 408 through 
language which specifies steps which remove a food from its raw or 
natural state, namely, ``canning, cooking, freezing, dehydrating, or 
milling.'' Section 402(a)(2), 21 U.S.C. 342(a)(2); 40 CFR 180.1(e); H. 
Rep. No. 1385, 83d Cong., 2d Sess. 7 (1954) reprinted in XII A 
Legislative History of the Federal Food, Drug, and Cosmetic Act 839 
(hereinafter cited as ``Leg. Hist.'').
    The legislative history of section 408 explains that the term RAC 
is intended to apply to ``food in its raw or natural state as usually 
purchased by the consumer or food processor.'' H. Rep. No. 1385, 83d 
Cong., 2d Sess. 6 (1954), XII Leg. Hist. 838. Both House and Senate 
committee reports list the following examples of foods Congress 
considered to be RACs: ``fresh fruits and vegetables, grains, nuts, 
eggs, and milk and similar agricultural produce grown or produced at 
the farm level.'' Id.; S. Rep. 1635, 83d Cong., 2d Sess. 6, XII Leg. 
Hist. at 1014. On the other hand, both reports mention apple juice and 
applesauce as examples of processed foods not considered to be RACs. 
Id. The Senate report alone also notes that ``sun-dried or artificially 
dehydrated fruits'' should not be considered RACs. S. Rep. 1635, 83d 
Cong., 2d Sess. 6, XII Leg. Hist. at 1014.
    The Senate report reference to dried fruits was added in reaction 
to the confusion of the dried fruit industry concerning the coverage of 
the term RAC. At the conclusion of the Senate hearing on the pesticides 
bill, the following colloquy occurred between committee staff and the 
Commissioner of the FDA:

    MR. SNEED. Dr. Crawford, it has come to the attention of the 
committee that the dried fruit industry is uncertain as to whether 
that industry is intended to be included under the provisions in 
this bill. What is your interpretation of the intent of the bill in 
that regard?
    DR. CRAWFORD. We had regarded the term ``raw agricultural 
commodities'' as used in this bill and as interpreted when used in 
other statutes that have been on the books for some time as 
excluding processed foods, and dry [sic] fruits are processed foods.
    MR. SNEED. Do you think it is necessary to amend the bill to 
clarify that matter?
    DR. CRAWFORD. I doubt if it is necessary, particularly if the 
committee report makes that clear.

Residues of Pesticide Chemicals: Hearing Before the Subcomm. on Health 
of the Senate Comm. on Labor and Public Welfare, 83d Cong., 2d Sess. 
90-91 (1954), XII Leg. Hist. at 975-76. Presumably, in referring to 
``other statutes,'' Dr. Crawford was referring to the legislation 
authorizing USDA to establish identity standards for ``raw and 
processed'' foods. 7 U.S.C. 414. Under that authority, USDA had set 
identity standards for dried fruits, including ``processed raisins,'' 
as processed foods. 7 CFR 52.1841 (1953).
    Congress briefly revisited this issue in the 1994 Appropriations 
Bill by barring EPA from spending any money to treat dried hops as a 
processed food. Pub. L. No. 103-124, Title III, 107 Stat. 1275, 1295 
(1993). The legislative history of this measure suggests that Congress 
believed that EPA had misclassified dried hops given that EPA had 
treated many other dried commodities (principally, grains) as RACs. 139 
Cong. Rec. S12179, S12204 (1993). As a result of the congressional 
action, EPA issued guidance stating it would treat dried hops as a RAC. 
PR Notice 93-12 (December 23, 1993).

B. Possible Interpretations

    Application of the term RAC is difficult because of the many 
variations in drying practices. Some crops are dried while still on the 
vine; others are harvested but left to dry in the field or elsewhere on 
the farm. Still other crops are dried off the farm in some other 
location. Many crops are dried at more than one of the above stages. 
Crops also receive different degrees of drying: for some crops drying 
results in minimal moisture reduction and for others the moisture 
reduction is significant. Further, the drying process can be a natural 
process, an artificial process designed to emulate natural drying, or a 
wholly artificial process which achieves greater moisture reduction 
than natural drying. On many occasions, artificial drying is used to 
speed the natural drying process. Finally, the purposes of drying can 
differ. In many instances crops are dried as a routine part of storage 
and transportation. Other crops, however, are dried for the purpose of 
creating a separately marketable commodity.
    The statute does not clearly address the drying issue. As noted, a 
RAC is defined as ``any food in its raw or natural state, including all 
fruits that are washed, colored, or otherwise treated in their unpeeled 
natural form prior to marketing.'' 21 U.S.C. 321(r) (emphasis added). A 
dried commodity probably could not considered to be ``raw,'' but could 
be construed to be ``natural.'' Further, the drying of a commodity may 
qualify as a form of treatment of a commodity in its ``unpeeled natural 
form.'' On the other hand, Congress in 1958 included ``dehydration'' in 
a list in FFDCA sec. 402 of procedures intended to exemplify 
processing. All drying could be regard as dehydrating, and thus a 
processing step which converts a RAC to a non-RAC processed food. 
However, if all drying is regarded as processing this appears to read 
the term ``natural'' out of the statute because it is difficult to 
identify foods other than dried commodities which could qualify as non-
raw natural foods.
    The legislative history further clouds the issue. Congress listed 
two commodities that are commonly dried to some extent, grains and 
nuts, as RACs. Drying of these commodities occurs by both natural and 
artificial means. However, the Senate specified that sun-drying or 
artificial dehydration of fruits removed dried fruits from the RAC 
category.
    EPA has concluded that the statutory guidance provided on this 
issue is ambiguous. Congress clearly thought some dried commodities 
would be RACs and others not, but Congress gave EPA little instruction 
on how to draw the dividing line. With respect to crops allowed to dry 
on the plant before cutting or harvesting, EPA believes the only 
reasonable interpretation of the statute is that such commodities are 
RACs. With respect to crops dried after harvest, EPA considered four 
approaches to the classification of commodities dried after harvest, 
which EPA believes are reasonable constructions of the statute. These 
interpretations are based on the method of drying, the degree of 
drying, and the purpose of drying.
    The first interpretation draws a distinction between RAC drying and 
non-RAC dehydration based on whether the drying is done by natural or 
mechanical or artificial means. This approach is based on the fact 
that, in the statute, the term dehydration is grouped with a number of 
processes (canning, cooking, freezing, and milling) which generally 
involve mechanical or artificial as opposed to natural processes. This 
interpretation, however appears inconsistent with the legislative 

[[Page 2388]]
history and general purpose of the legislation. The legislative history 
indicates that two crops that are commonly dried, grains and nuts, 
should be treated as RACs. However, because most crops that are dried 
frequently receive a mix of natural and artificial drying, most dried 
crops, including grains and nuts, would be excluded from section 408 
under this interpretation. Additionally, this interpretation is not 
only inconsistent with Congress' specific direction regarding grains 
and nuts but with Congress' understanding of section 408 as a 
comprehensive provision addressing pesticides. Finally, this 
interpretation--focusing on whether the drying was accomplished by 
natural or artificial means--would present difficult implementation and 
enforcement issues. Where the same crop can be dried either naturally 
or artificially, different lots of the same commodity could be 
classified differently. From an enforcement perspective, this approach 
would be unworkable since it is impossible to determine, for example, 
whether a particular lot of peanuts was dried naturally or 
artificially.
    The second and third alternative interpretations attempt to draw 
the dividing line between drying and dehydration based on the degree of 
drying. The second interpretation would categorize as a RAC food which 
is dried by natural processes (e.g., sunlight) or by an artificial 
process that emulates the result achieved by natural drying. Any drying 
that removed more water from the product than could be achieved 
naturally would be categorized as the processing step dehydration.
    This interpretation would shift dried fruits such as raisins from 
the category of processed food to RAC. As such, it is inconsistent with 
the direct statement in the Senate committee report on dried fruits.
    The third interpretation divides dried foods into RAC and non-RAC 
foods based solely on the degree of moisture removal that occurs during 
drying. EPA's experience is that there are two general groups of 
commodities that are dried: first, the grains, certain legumes (e.g., 
dried beans and peas), and nuts which are harvested with a moisture 
content in the range of roughly 15 to 30 percent and are dried to a 
range of roughly 10 to 20 percent; and second, crops such as fruits, 
hops, and hays which have a relatively high moisture content at harvest 
(usually greater than 60 percent) yet are dried to a similar level as 
the first group. Under the third interpretation, only the significant 
drying that occurs with this second group (fruits, hops, and hay) would 
be considered as converting a RAC to a non-RAC processed food. This 
interpretation shows fidelity to the Senate committee report language 
on dried fruit, but would require EPA to reclassify two commodities 
currently classified as raw. First, dried hops would have to be 
reclassified as a processed food only shortly after Congress barred EPA 
from regulating dried hops under such a classification. Second, hay 
would become a processed food. Although the cultural practices in the 
drying of hay are very similar to raisins, it would seem to strain the 
common vernacular to speak of hay as a processed food and not as food 
in its raw or natural state.
    The last interpretation draws a distinction between routine drying 
for storage and transportation purposes and drying intended to create a 
new product. Under this approach, grains and nuts, and similar 
commodities such as legumes, hays, and hops, would be treated as RACs 
because such commodities are routinely dried for storage or 
transportation purposes. Dried fruits would not be RACs because the 
drying of these commodities would be done to create a distinct 
commodity. This approach treats the Senate report's reference to dried 
fruit not as an example of a process (drying) that removes a food from 
the RAC category but as a type of food (newly created food products) 
that would not be considered RACs. Admittedly, this approach is not 
explicitly endorsed in the legislative history, but this approach does 
harmonize the various references to specific commodities in the 
legislative history.

IV. EPA's Interpretation

    EPA intends to follow the fourth interpretation that focuses on 
whether the drying is routinely intended for storage or transportation 
purposes or is designed to create a new commodity (e.g., converting 
fresh grapes into raisins). EPA believes this approach best harmonizes 
the potential conflict between the terms ``natural'' and 
``dehydrating'' in the statute, is fully consistent with the 
legislative history, and, with only one exception (dried hops), mirrors 
FDA's and EPA's practice over the last 37 years. EPA would note that, 
as to the one instance in which this interpretation is inconsistent 
with FDA's and EPA's historical practice (i.e., dried hops), Congress 
has quite strongly suggested only recently that EPA's classification of 
that commodity was incorrect and EPA promptly reclassified the 
commodity.

V. Impacts of EPA Interpretation

    The determination that a food or feed commodity is raw or processed 
assumes significance and has potential impacts only because of the 
Delaney clause of section 409 of the FFDCA, which prohibits the 
establishment of processed food tolerances for a pesticide which 
induces cancer in man or animals.
    This interpretation is unlikely to have human health impacts, 
because EPA would act under its other statutory authorities to revoke 
any pesticide tolerance (and remove the use) that it determined posed 
unreasonable risks.
    Each of the interpretations considered by the Agency has potential 
economic impacts upon some commodities. The interpretation defines the 
universe of commodities potentially subject to the Delaney clause 
because they are processed. It is not possible to quantify impacts 
attributable to the various interpretations, however, because other 
factors are considered in determining whether the Delaney clause 
actually applies to a processed food tolerance. EPA has discussed those 
factors more fully in its policy statement on concentration and the 
definition of ``ready-to-eat,'' issued on June 14, 1995 (60 FR 31300).
    The first interpretation, which delineates commodities by type of 
drying, would leave significant uncertainty about the status of a 
commodity, since a single commodity could be both raw and processed. 
For regulatory and enforcement purposes, EPA and FDA would have to 
treat commodities such as nuts and grains as processed, which would 
increase the universe of processed commodities potentially subject to 
the Delaney clause.
    The second interpretation would have the least potential economic 
impact, since it would treat as processed only those commodities dried 
beyond natural drying. Under this interpretation, dried fruits would 
likely be treated as RACs, thereby removing them from any potential 
Delaney impacts, and no current RACs would become processed 
commodities.
    The third interpretation, focussed on the degree of drying, could 
have the highest potential economic impact. Commodities currently 
classified as raw which are significantly dried, such as hops and hay, 
would become processed commodities, while no commodities currently 
classified as processed would become RACs.
    EPA's interpretation, which is based upon the purpose of drying, 
and which maintains the current classification of all commodities, has 
potentially 

[[Page 2389]]
significant impacts upon dried fruits, which are retained as processed 
commodities.
    Under EPA's interpretation, for example, tolerances for raisins as 
processed foods are subject to the Delaney clause. Under current Agency 
policies, 8 pesticides (2 insecticides and 6 fungicides) used on grapes 
that may be processed into raisins could be subject to revocation. If 
all 8 tolerances are revoked and the uses canceled, EPA's best estimate 
of the aggregate first year impact to grape growers who use these 
pesticides is $110 million ($69 million for insecticides and $41 
million for fungicides). This estimated impact is for all types of 
grapes, including those grown for raisins, and represents about 5% of 
the total value of U.S. grape production. As noted above, because there 
are numerous other factors which determine whether the Delaney clause 
actually applies to a processed food tolerance, these impacts could be 
significantly less.

VI. Regulatory Assessment Requirements

A. Executive Order 12866

    Under Executive Order 12866 (50 FR 51735, October 4, 1993), it has 
been determined that this interpretive rule is a ``significant 
regulatory action'' because it may raise novel policy issues arising 
out of legal mandates. Therefore, this interpretive rule was submitted 
to the Office of Management and Budget (OMB) for review and any changes 
made during OMB review have been documented in the public record.

B. Regulatory Flexibility Act

    This interpretive rule has no direct impact on any entity, 
including small entities. As noted above, any adverse impacts arise 
indirectly and solely because of the application of the Delaney clause. 
Moreover, this interpretive rule does not change the status of any 
current commodity. I therefore certify that this interpretive rule does 
not require a separate Impact Analysis under the Regulatory Flexibility 
Act.

List of Subjects

    Environmental protection, Administrative practice and procedure, 
Agricultural commodities, Feed additives, Food additives, Pesticides 
and pests, Reporting and recordkeeping requirements

    Dated: January 19, 1996.
Lynn R. Goldman,
Assistant Administrator for Prevention, Pesticides and Toxic 
Substances.

[FR Doc. 96-1213 Filed 1-22-96; 3:59 pm]
BILLING CODE 6560-50-F
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