2386 Federal Register / Vol. 61, No. 17 / Thursday, January 25, 1996 / Notices

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.

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:

frane.jean@epamail.epa.gov.

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 anticancer 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 ‘‘flowthrough’’ 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
Federal Register / Vol. 61, No. 17 / Thursday, January 25, 1996 / Notices 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
2388 Federal Register / Vol. 61, No. 17 / Thursday, January 25, 1996 / Notices

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
Federal Register / Vol. 61, No. 17 / Thursday, January 25, 1996 / Notices 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