13512 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 205

[Docket Number: TMD–00–02–PR2]

RIN 0581–AA40

National Organic Program

AGENCY: Agricultural Marketing Service,

USDA.

ACTION: Proposed rule.

SUMMARY: This proposed rule would

establish a National Organic Program

(NOP or program) under the direction of

the Agricultural Marketing Service

(AMS), an arm of the United States

Department of Agriculture (USDA). This

national program is intended to

facilitate interstate commerce and

marketing of fresh and processed food

that is organically produced and to

assure consumers that such products

meet consistent, uniform standards.

This program will establish national

standards for the production and

handling of organically produced

products, including a National List of

substances approved and prohibited for

use in organic production and handling.

This proposal will establish a nationallevel accreditation program to be

administered by AMS for State officials

and private persons who want to be

accredited as certifying agents. Under

the program, certifying agents will

certify production and handling

operations in compliance with the

requirements of this regulation and

initiate compliance actions to enforce

program requirements. The proposal

includes requirements for labeling

products as organic and containing

organic ingredients. The rule also

provides for importation of organic

agricultural products from foreign

programs determined to have equivalent

organic program requirements. The

program is proposed under the Organic

Foods Production Act of 1990, as

amended.

DATES: Comments must be submitted on

or before June 12, 2000.

ADDRESSES: Interested persons are

invited to submit written comments on

this proposal to: Keith Jones, Program

Manager, National Organic Program,

USDA–AMS–TMP–NOP, Room 2945–

So., Ag Stop 0275, PO Box 96456,

Washington, DC 20090–6456.

Comments also may be sent by fax to

(703) 365–0760 or filed via the Internet

through the National Organic Program’s

homepage at: http://www.ams.usda.gov/

nop. Written comments to this proposed

rule submitted by regular mail and

faxed comments should be identified

with docket number TMD–00–02-PR. To

facilitate the timely scanning and

posting of comments to the NOP

homepage, multiple page comments

submitted by regular mail should not be

stapled or clipped. Commenters should

identify the topic and section number of

this proposal to which the comment

refers.

It is our intention to have all

comments to this proposal, whether

mailed, faxed, or submitted via the

Internet, available for viewing on the

NOP homepage at http://

www.ams.usda.gov/nop in a timely

manner. Comments submitted in

response to this proposal will be

available for viewing at USDA–AMS,

Transportation and Marketing, Room

2945–South Building, 14th and

Independence Ave., SW, Washington,

DC, from 9:00 a.m. to 12:00 p.m. and

from 1:00 p.m. to 4:00 p.m., Monday

through Friday (except official Federal

holidays). Persons wanting to visit the

USDA South Building to view

comments received in response to this

proposal are requested to make an

appointment in advance by calling (202)

720–3252.

FOR FURTHER INFORMATION CONTACT:

Richard Mathews, Senior Agricultural

Marketing Specialist, USDA–AMS–TM–

NOP, Room 2510–So., PO Box 96456,

Washington, DC 20090–6456;

Telephone: (202) 205–7806; Fax: (202)

205–7808.

SUPPLEMENTARY INFORMATION:

Background of the National Organic

Program

To address problems created by

inconsistent organic standards, the

organic industry attempted to establish

a national voluntary organic

certification program in the late 1980’s.

However, that effort failed to develop a

consensus on needed organic standards.

Congress was then petitioned by an

organic industry trade association to

establish a mandatory national organic

program, resulting in the Organic Foods

Production Act of 1990 (the Act).

Congress passed the Act to: (1) Establish

national standards governing the

marketing of certain agricultural

products as organically produced

products; (2) assure consumers that

organically produced products meet a

consistent standard; and (3) facilitate

commerce in fresh and processed food

that is organically produced. This

proposal is designed to implement the

Act.

To help readers better understand this

proposal, we have provided answers to

some frequently asked questions about

the proposed rule, including some of the

issues most commonly raised in public

comments.

Is this the final word on National

organic standards?

No. This is only a proposed rule. It is

important that you take the time to read

it carefully and write to USDA to give

us your recommendations, being as

specific as you can. Your comments are

due by June 12, 2000.

Your comments do matter. On

December 16, 1997, the first proposed

rule was published in the Federal

Register, and 275,603 people wrote to

us to explain why and how the rule

should be rewritten, the largest public

response to a proposed rule in USDA

history. Then, in the October 24, 1998

Federal Register, we asked for public

comment on issues concerning livestock

confinement, medications, and the

authority of certifying agents, and

10,817 people wrote to us. As you read

through this document, you will get a

sense of what these comments said

because in each section we briefly

summarize the relevant comments and

provide our response to them.

We expect to publish a final rule later

this year, once we know what you think

about this proposal. The final rule will

have, as proposed here, an

implementation phase-in period so

farmers and processors won’t have to

change overnight.

Has there been citizen input on this

proposal beyond public comments?

Yes. The National Organic Standards

Board (NOSB) is a 15-member citizen

board that advises the Secretary on all

aspects of the National Organic Program

and has special responsibility for

development of the National List.

Established by law in 1990, the NOSB

includes 3 environmental

representatives, 3 consumer

representatives, 4 organic farmers/

ranchers, 2 organic processors, 1

retailer, 1 scientist, and 1 certifying

agent. Currently, the NOSB comprises

14 members. The 15th member, an

accredited certifying agent, would be

appointed after certifying agents are

accredited by the Secretary. Since the

first NOSB was appointed in 1993, the

Board has held 19 public meetings,

including one public teleconference,

crisscrossing the country to hear from

the public before making

recommendations to the Secretary on

national standards. The vast majority of

commenters on the first proposed rule

urged the Secretary to rewrite the

proposal in line with NOSB

recommendations—and this is what we

have done. More information on NOSB

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13513

members, meeting minutes, and a sideby-side comparison of this proposal

with NOSB recommendations can be

found at www.ams.nop/gov.

In addition, to be consistent with

OMB Circular No, A–119, which directs

agencies to use voluntary consensus

standards, USDA considered adoption

of the American Organic Standards,

Guidelines for the Organic Industry as a

voluntary consensus standard for use in

the National Organic Program. In

October 1999, the Organic Trade

Association published the American

Organic Standards (AOS). The AOS

standards were developed over several

months with two opportunities for

comment from interested parties. The

introduction states that the standards

are written as an up-to-date compilation

and codification of organic standards

and certification procedures, as they are

understood and applies in the United

States. Organic Trade Association

members are expected to follow the

guidelines.

USDA has determined that it would

be impractical to use the American

Organic Standards in lieu of USDA

developed standards for the following

reasons: (1) Not all participants in the

organic industry elected to participate

in developing the AOS; (2) the AOS are

new to the industry so there has not

been sufficient time for the industry to

assess their effectiveness, and (3) some

certifying agents disagree with portions

of the AOS.

Why do we need national standards for

organic food?

National standards for organic food

production are designed to bring about

greater uniformity in the production,

manufacture, and marketing of organic

products. In the absence of a national

standard, 49 State and private

organizations have established

individual programs and standards for

certifying organic agricultural products.

The lack of consistency between these

standards has created problems for

farmers and handlers of organic

products, particularly if they want to

sell their products in multiple States

with different standards. Lack of a

nationwide standard has also created

confusion for consumers, who may be

uncertain what it really means when a

food product is called ‘‘organic.’’

With a national standard, consumers

across the country can go into any store

and have full confidence that any food

product labeled ‘‘organic’’ meets a strict,

consistent standard no matter where it

was made. Use of the word, ‘‘organic,’’

on the label of any product that does not

meet the standard is strictly prohibited.

Consumers will have that confidence,

because this proposal requires for the

first time that all organic operations be

certified by USDA-approved certifying

agents. Up to now, certification has been

optional; some farmers choose not to be

certified at all, and others are certified

by State or private certifiers using

different standards. It can be hard for

consumers to know if a product has

been certified, or, if it has, to what

standard. Under this proposal, all

organic operations, except for the very

smallest, would be certified to the same

standard. And all products labeled as

‘‘organic’’ would have to comply with

the production and handling standards

in this rule.

Consumers can also look for the

USDA organic seal, which can only be

used on products that have been

certified by USDA-approved certifying

agents. This seal assures consumers that

the maker of the product is part of a

rigorous certification program and has

been thoroughly reviewed by

professional inspectors trained in

organic agriculture.

National standards will also bring

greater predictability for producers of

organic foods. There will be no

confusion about whether a product

satisfies the particular standard of any

State, for example, because all organic

foods will meet the same standards.

Finally, a national standard for

organic food will help our farmers and

manufacturers sell organic products in

other countries. The lack of a consistent

national organic program has limited

access to important markets in other

countries because of the confusion

created by multiple, independent

standards. A strong national standard

will help to ensure buyers in other

countries that all U.S. organic products

meet the same standards.

How can I tell how much organic food

is in a product?

This proposal sets strict labeling

standards based on the percentage of

organic content. If a product is 100

percent organic, it can, of course, be

labeled as such. A product that is at

least 95 percent organic can be

described as, for example, ‘‘organic

cereal.’’ If a cereal, for example,

contains between 50 and 95 percent

organic content, it can be described as

‘‘cereal made with organic ingredients,’’

and up to three organic ingredients can

be listed. Finally, if the food contains

less than 50 percent organic content, the

term, ‘‘organic,’’ may only appear on the

ingredient information panel. These

four new labeling categories will

provide consumers with much greater

information than they have today.

[Labeling is covered in subpart D.]

What is the National List?

The National List of Allowed and

Prohibited Substances (known as the

National List) identifies specific

substances that may or may not be used

in organic production and handling

operations. The National List is

developed by the NOSB, through

consultation with outside experts, and

forwarded to the Secretary for approval.

The list identifies those synthetic

substances, which would otherwise be

prohibited, that may be used in organic

production based on the

recommendations of the NOSB. Only

those synthetic substances found on the

National List may be used. The National

List also identifies those natural

substances that may not be used in

organic production, as determined by

the Secretary based on the NOSB

recommendations.

The first proposal included some

substances on the National List that

were not recommended by the NOSB.

This proposal contains no substances on

the approved list that were not found in

the NOSB recommendations.

This proposal also includes

restrictions or other conditions on the

use of allowed substances, also known

as ‘‘annotations,’’ as recommended by

the NOSB. Such annotations have been

used by existing State and private

certification programs to further ensure

that allowed substances are used in a

manner that is consistent with organic

production. (The National List is

covered in subpart G, §§ 205.600

through 205.607.)

Does this proposal prohibit use of

genetic engineering in organic

production?

Yes. This proposal prohibits the use

of genetic engineering (included in the

broad definition of ‘‘excluded methods’’

in this proposal, based on the definition

recommended by the National Organic

Standards Board) in the production of

all foods and ingredients that carry the

organic label.

275,603 commenters on the first

proposal nearly universally opposed the

use of this technology in organic

production systems. Based on this

overwhelming public opposition, this

proposal prohibits its use in the

production of all organic foods even

though there is no current scientific

evidence that use of excluded methods

presents unacceptable risks to the

environment or human health. While

these methods have been approved for

use in general agricultural production

and may offer certain benefits for the

13514 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

environment and human health,

consumers have made clear their strong

opposition to their use in organically

grown food. Since the use of excluded

methods in the production of organic

foods runs counter to consumer

expectations, foods produced with these

methods will not be permitted to carry

the organic label. (Excluded methods

are defined in subpart A and discussed

further under Production and Handling

(subpart C), Labeling (subpart D), and

the National List (subpart G).)

Will genetic engineering be allowed in

the production of foods that contain

both organic and nonorganic

ingredients?

No. For products with mostly organic

content—those products where more

than half of the ingredients are organic

and that have the word, ‘‘organic,’’ on

the main product label— excluded

methods must not be used in the

production of any ingredients. Only

those products, in which fewer than half

of the ingredients are organic and in

which the organic ingredients are only

identified on the ingredient panel, could

contain nonorganic ingredients

produced through excluded methods.

We believe consumers have expressed

a clear expectation that these methods

should not be used in the production of

any ingredients contained in mostly

organic products. Because prominent

use of the word, ‘‘organic,’’ on the label

of such products reinforces that

expectation, we have chosen to prohibit

use of excluded methods in production

of both the organic and nonorganic

ingredients.

We recognize that this policy will

place additional burdens on organic

food processors and certifying agents

because the ability to meet these

requirements will depend largely on

practices used in conventional

agricultural markets. For organic food

processors, it may be harder to find

sources of nonorganic ingredients that

are produced without use of excluded

methods. Similarly, certifying agents

may face greater difficulty because they

will be required to ensure that handlers

have complied with this requirement.

However, we believe that the need to

meet strong consumer expectations

outweighs these concerns. Furthermore,

we anticipate that as marketplace

practices or standards evolve, these

practices will be the basis for

implementing this provision, providing

handlers and certifying agents recognize

criteria with which to evaluate sources

of nonorganic ingredients in products

containing both organic and nonorganic

ingredients.

Does this proposal prohibit use of

irradiation in organic production?

Yes. This proposal prohibits the use

of irradiation in the production of all

foods and ingredients that carry the

organic label. 275,603 commenters on

the first proposal almost universally

opposed the use of this technology in

organic production systems. Based on

this overwhelming public opposition,

this proposal prohibits its use in the

production of all organic foods even

though there is no current scientific

evidence that use of irradiation presents

unacceptable risks to the environment

or human health and may, in fact, offer

certain benefits. Because this rule is a

marketing standard and consumers have

expressed a clear expectation that

irradiation should not be used in the

production of organic foods, foods

produced with this technology will not

be permitted to carry the organic label.

The prohibition on irradiation

extends to nonorganic ingredients used

in mostly organic ingredients—those

products where more than half of the

ingredients are organic and that have

the word, ‘‘organic,’’ on the main

product label. Only those products, in

which fewer than half of the ingredients

are organic and in which the organic

ingredients are only identified on the

ingredient panel, could contain

irradiated nonorganic ingredients. We

do not believe that this prohibition on

irradiation in nonorganic ingredients

will place undue burden on either

handlers or certifiers because of current

labeling requirements for irradiated

products.

Does this proposal prohibit use of

sewage sludge in organic production?

Yes. This proposal prohibits the use

of sewage sludge in the production of all

foods and ingredients that carry the

organic label. This prohibition extends

to nonorganic ingredients used in the

production of mostly organic foods—

those products in which more than half

of the ingredients are organic and that

have the word, ‘‘organic,’’ on the main

product label. Only those products, in

which fewer than half of the ingredients

are organic and which the organic

ingredients are only identified on the

ingredient panel, could contain

nonorganic ingredients produced using

sewage sludge.

275,603 commenters on the first

proposal almost universally opposed the

use of this technology in organic

production systems. Based on this

overwhelming public opposition, this

proposal prohibits its use in the

production of all organic foods, even

though there is no current scientific

evidence that use of sewage sludge in

the production of foods presents

unacceptable risks to the environment

or human health. We believe consumers

have expressed a clear expectation that

sewage sludge should not be used in the

production of any ingredients contained

in mostly organic products. Because

prominent use of the word, ‘‘organic,’’

on the label of such products reinforces

that expectation, we have chosen to

prohibit use of sewage sludge in

production of both the organic and

nonorganic ingredients. We recognize

that this policy may place additional

burdens on organic food processors and

certifying agents. However, we believe

that the need to meet strong consumer

expectations outweighs these concerns.

Does this proposal set standards for

livestock production?

Yes. The proposal sets the first

comprehensive standards for production

of organic animals and meat products.

Under this proposal, use of antibiotics

would be prohibited in organic livestock

production. The standards also prohibit

the routine confinement of animals and

require that ruminant animals have

access to outdoor land and pasture,

although temporary confinement would

be allowed under certain, limited

circumstances. Animals under organic

management must also receive 100-

percent organically grown feed.

(Organic livestock management issues

are discussed in greater detail under

subpart C, 205.236 through 205.239.)

Does this proposal prohibit

‘‘ecolabeling’’?

No. This proposal only regulates use

of the term, ‘‘organic,’’ on product

labels. Other labels would be allowed as

long as they are truthful and not

misleading and meet general food

labeling requirements. The labeling

requirements of this proposal are

intended to assure that the term,

‘‘organic,’’ and other similar terms or

phrases are not used in a way that

misleads consumers. Should we find

that terms or phrases are being used to

represent ‘‘organic’’ when the products

are not produced to the requirements of

this regulation, we would proceed to

restrict their use. (Labeling is covered in

subpart D.)

Are organic foods pesticide-free?

No. Organic farmers can use natural

pesticides to control weeds and insects

and maintain the high quality of organic

products that consumers have come to

expect. Use of synthetic chemical

pesticides, however, is prohibited

unless specifically allowed on the

National List as recommended by the

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13515

National Organic Standards Board and

approved by the Secretary. (The

National List is covered in subpart G,

sections 205.600 through 205.607.)

Who needs to be certified?

As a general rule, all organic

production and handling operations

must be certified. The Act and this

proposal, however, do provide for some

exceptions. For example, organic

operations with less than $5,000 in

annual sales of organic products do not

require certification. Similarly, organic

operations that handle only those

products with less than 50 percent

organic content or that restrict labeling

of organic ingredients to the ingredient

information panel do not require

certification. Finally, we are not

requiring certification of most grocery

stores and restaurants (referred to in this

proposal as ‘‘retail food

establishments’’) at this time.

Even where operations do not require

certification, however, all organic food

products must meet the national

standards as described in this proposal.

In that way, consumers can be confident

that all products labeled as ‘‘organic’’

meet the national standards, even if they

did not require certification under the

NOP. (Certification is covered in subpart

E; the exceptions from certification are

found in subpart B.)

Will organic farmers have to pay fees?

Organic farmers and other organic

operations will have to pay fees for

organic certification but will not be

charged any fees by USDA. Fees for

certification services will be set by the

private or State certifying agents. The

proposal also requires that certifying

agents make their schedule of fees

publicly available so that organic

operations can plan appropriately and

so that they can make informed choices

where multiple certifying agents are

available. USDA will also review fees

charged by certifying agents to ensure

that they are reasonable and that they

are being applied fairly to all organic

operations. Under this proposal, USDA

would only charge fees for reviewing

(‘‘accrediting’’) certifying agents. These

fees will primarily be based on the

actual costs of the accreditation work

done by USDA staff so that certifying

agents with smaller and less complex

programs will pay lower fees. The

proposal also provides for a reduction in

the accreditation fees during the first 18

months of the program to provide an

incentive for certifying agents to become

accredited under the new national

program as soon as possible. (Fees are

covered in subpart G, §§ 205.640

through 205.642.)

How do I become an accredited

certifying agent?

All certifying agents must be

accredited by USDA. Certifying agents

may apply for accreditation effective

with publication of the final rule and

are encouraged to apply as soon after

publication of the final rule as possible.

USDA will provide additional

information on applying for

accreditation on or about the date of

publication of the final rule. This

information will be available on the

NOP website and by mail upon request.

Applications for accreditation will be

handled on a first-come-first-served

basis. Those that apply within the first

6 months following publication of the

final rule and are determined by the

Administrator to meet the requirements

for accreditation will be notified of their

status in writing on or about 12 months

after publication of the final rule. This

approach is being taken because of the

market advantage that could be realized

by accredited certifying agents if USDA

did not announce the accreditations

simultaneously. (Accreditation is

covered in subpart F.)

What are the roles and responsibilities

of certifying agents in the National

Organic Program?

Certifying agents are the ‘‘front line’’

representatives of USDA and play a

critical role in the oversight and

enforcement of the national organic

standards program. Once accredited by

USDA, certifying agents are empowered

to make key decisions regarding the

status of organic operations. Certifying

agents review the organic plans of

organic operations and are authorized to

grant certification to those operations

that meet the strict national organic

standards. Certifying agents are also

responsible for the continuing oversight

of organic operations— reviewing

annual updates of organic plans,

conducting residue analyses, and

conducting other monitoring activities.

In cases in which a certifying agent

finds that an organic operation does not

meet the national standards, the agent is

empowered to issue notices of

noncompliance and to initiate

suspension or revocation of

certification. Organic operations can

appeal such decisions to USDA but

unless the organic operation appeals the

certifying agent’s decision or can correct

the problems identified by the certifying

agent, the agent’s decision will stand.

(Accreditation is covered in subpart F;

Compliance is covered in subpart G,

§§ 205.660 through 205.668; and

Appeals are covered in subpart G,

§§ 205.680 through 205.681.]

How will USDA ensure that the National

standards are applied fairly and

consistently by all certifying agents?

Because this proposal gives certifying

agents such an important role in

enforcing the national standards, USDA

oversight of those certifying agents is

particularly important. Under this

proposal, all certifying agents, both

private and in State organic programs,

would have to be accredited by USDA

before they could begin to certify

organic operations. It is this

accreditation process, in which USDA

reviews all certifying agents to make

sure they understand and can accurately

apply the national organic standards,

that is USDA’s main tool to ensure that

the standards are applied fairly and

consistently by all certifying agents.

The accreditation process is really one

of ongoing oversight by USDA.

Accreditation must be renewed every 5

years so that we can be sure certifying

agents continue to meet the program

standards. USDA will conduct one or

more site visits of certifying agents

during the period of accreditation as

another mechanism of monitoring their

compliance. Finally, certified operations

may file complaints with USDA if they

believe they have been treated unfairly

or if a certifying agent is otherwise not

following the program requirements. We

will investigate these complaints for

possible enforcement action.

Can States have organic standards that

are more strict than the National

standard?

Yes. Some States may have unique

environmental or other concerns that

they believe require extra conditions

above the national standard. In those

cases, States would apply to USDA to

have their special State program

approved by the Secretary.

However, no State would be allowed

to set up a program that does not at least

meet the national standard. And States

would not be allowed to use their

programs to keep out or otherwise

discriminate against organic products

made in another State. (State Programs

are covered in subpart G, §§ 205.620

through 205.622.)

What is the timeframe for

implementation?

The final rule in this rulemaking

process will establish a procedure and

a timeframe for implementing the NOP.

We expect that the interim period

between publication of the final rule in

this rulemaking process and the

effective date of the program (actual

implementation of regulations) will be

18 months. The following is a

13516 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

preliminary list of several

administrative and program issues that

must be implemented during that

period. Certifying agent applications

will be evaluated and accreditation

granted. Certifying agents will, in turn,

certify production and handling

operations to the requirements of these

regulations. Equivalency discussions

will be held with foreign governments

and foreign certifying agents. Guidelines

and practice standards on production

and handling practices must be

finalized and distributed by the NOP. A

petition process for recommending

amendments to the National List must

be developed and distributed. The

NOSB will continue to review materials

for the National List. State programs

may have to make adjustments in their

organic certification programs for

consistency with the standards of this

program. Producers should use the

interim period to prepare their

production operations to comply with

the relevant requirements of this

program. Handlers should use the

interim period to prepare for necessary

changes in the labeling of their

products.

Prior Documents in This Proceeding

This proposed rule is issued pursuant

to the Organic Food Production Act of

1990 (Act or OFPA), as amended (7

U.S.C. 6501 et seq.). This proposal

replaces the proposed rule published in

the Federal Register December 16, 1997.

Comments to the first proposal were

considered in the preparation of this

proposed rule.

The following notices related to the

NOSB and the development of this

proposed regulation have been

published in the Federal Register. Five

notices of nominations for membership

on the NOSB were published between

April 1991 and June 1999 (56 FR 15323,

59 FR 43807, 60 FR 40153, 61 FR 33897,

64 FR 33240). Two notices of extension

of time for submitting nominations were

published on September 22, 1995, and

September 23, 1996 (60 FR 49246, 61 FR

49725). Seventeen notices of meetings of

the NOSB were published between

March 1992 and October 1999 (57 FR

7094, 57 FR 27017, 57 FR 36974, 58 FR

85, 58 FR 105, 58 FR 171, 59 FR 58, 59

FR 26186, 59 FR 49385, 60 FR 51980,

60 FR 15532, 61 FR 43520, 63 FR 7389,

63 FR 64451, 64 FR 3675, 64 FR 28154,

64 FR 54858). One notice of public

hearings on organic livestock and

livestock products was published on

December 30, 1993 (58 FR 69315). One

notice specifying a procedure for

submitting names of substances for

inclusion on the National List was

published on March 27, 1995 (60 FR

15744). A rule proposing the NOP was

published on December 16, 1997 (62 FR

65850). An extension of the time period

for submitting comments to the

proposed rule was published on

February 9, 1998 (63 FR 6498). One

request for comments on Issue Papers

was published on October 28, 1998 (63

FR 57624). A notice of a program to

assess organic certifying agencies was

published on June 9, 1999 (64 FR

30861).

This preamble includes a discussion

of the proposed rule and supplementary

information, including the Regulatory

Impact Assessment, Regulatory

Flexibility Act Analysis, Federalism

Impact Statement, and Paperwork

Reduction Act Analysis. The Civil

Rights Impact Analysis is not included

as an attachment but may be obtained

by writing at the address provided

above or via the Internet through the

National Organic Program’s homepage

at: http://www.ams.usda.gov/nop.

National Organic Program Overview

Subpart A—Definitions

Proposal Description

This subpart defines various terms

used in this part. These definitions are

intended to enhance conformance with

the regulatory requirements through a

clear understanding of the meaning of

key terms.

We have amended terms and

definitions carried over from the first

proposal where necessary to make their

wording consistent with the language

used in this proposal. We have removed

the definition for the following terms

because the terms are not used in this

proposal or have been determined to be

unnecessary: Active ingredient in any

input other than pesticide formulations,

active ingredient in pesticide

formulations, agroecosystem, botanical

pesticides, breeding, chapter, cation

balancing agent, certification activities,

certification applicant, certified facility,

chapter, confirmation of accreditation,

contaminant, critical control point,

cytotoxic mode of action, degradation,

detectable residue level, extract, farm,

foliar nutrient, formulated product,

fungicide, generic name, incidental

additive, inert ingredient in any input

other than pesticide formulations,

intentionally applied, made with certain

organic ingredients, mating disrupter,

micronutrient, nonactive residues,

nonorganic agricultural ingredient or

product, petition, preliminary

evaluation, processing methods,

production aid, production input,

proper manuring, putrefaction, site

evaluation, soil amendment, split

operation, subtherapeutic, suspension of

accreditation, synergist, synthetic

volatile solvent, treated, untreated

seeds, USDA seal, and weed. We

received comments on some of the

definitions that have been deleted. We

have not addressed these comments

here because the relevant definitions

have been deleted.

Definitions—Changes Based On

Comments

This subpart differs from our first

proposal in several respects as follows:

(1) We have amended the term, ‘‘audit

trail,’’ by replacing the category,

‘‘organic’’ or ‘‘made with certain organic

ingredients,’’ with ‘‘100 percent

organic,’’ ‘‘organic,’’ or ‘‘made with

organic (specified ingredients),’’ or

agricultural product containing less

than 50 percent organic ingredients

identified as organic in an ingredients

statement. We have taken this action to

clarify the definition as requested by

several commenters.

(2) We have amended the term,

‘‘buffer area,’’ to ‘‘buffer zone’’ and

amended the term by replacing ‘‘a

certified farm or portion of a farm’’ with

‘‘a certified production operation or

portion of a production operation.’’ A

few commenters suggested including a

minimum size for the buffer zone and

specifying that buffer zones must be

uncropped vegetated areas. The

appropriate size and type of a buffer

zone is highly site-specific and cannot

be rigidly specified for all locations

without placing unreasonable burdens

on some producers. Several commenters

supported determination of the

appropriate buffer zone size and type by

the producer in consultation with the

certifying agent. Additional information

on this issue can be found at subpart C,

Crop Production, Changes Requested

But Not Made, item 1.

(3) We have amended the definition of

the term, ‘‘certification or certified,’’ to

make the language in the definition

consistent with the language of this

proposal. We have also removed the

language concerning the information to

be found on a certificate. Commenters

suggested amending the definition by

adding the words, ‘‘annual’’ and ‘‘based

on an on-site inspection and

comprehensive review of the

operation.’’ Other commenters

recommended deleting the reference to

products on a certificate because it is

the operation, not the product, that is

certified. We have not made the

suggested additions because the issues

are adequately addressed in the

regulations. We have removed the

language concerning information found

on a certificate because this information

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13517

is adequately addressed in the

regulations.

(4) We have amended the definition of

‘‘certifying agent’’ to clarify that the

term only applies to State-entity and

private-entity certifying agents. We have

taken this action because there was

some confusion among commenters

over whether the original definition

included a State program’s governing

State official.

(5) We have amended the definition of

‘‘commercially available’’ by removing

the phrase, ‘‘to be feasibly and

economically used.’’ We have taken this

action because we agree with

commenters that use of the phrase

provides an opportunity for producers

and handlers to avoid use of preferred

inputs. We have also clarified that

‘‘commercially available’’ applies to

processors by including the words, ‘‘or

processing ingredient.’’ Additional

information on this issue can be found

at subpart C, Production and Handling

(General), Changes Requested But Not

Made, item 2.

(6) We have amended the definition of

‘‘compost’’ by referring to compost as

‘‘the product of a carefully managed

process through which microorganisms

break down plant and animal materials

into more available forms suitable for

application to the soil.’’ We also state

that ‘‘composting’’ must use methods to

raise the temperature of raw materials to

the levels needed to stabilize nutrients

and kill pathogens. Specific instructions

on the production of compost for use in

organic production has been referenced

to the National Resources Conservation

Service’s (NRCS) practice standard for a

composting facility (Code 317). The

NRCS practice Standard provides a field

tested and verifiable procedure for

producing compost. We have made

these changes because commenters

suggested that we clarify the meaning of

compost. Several commenters stated

that the definition should include rules

about what kinds of materials are

acceptable for use in compost.

Additional information on this issue can

be found at subpart C, Production and

Handling (General), Changes Based On

Comments, item 4.

(7) We have amended the definition of

‘‘crop rotation’’ by adding a statement

about the relationship of crop rotation to

perennial crops as suggested by an

industry association.

Several commenters suggested

inserting references to the use of

legumes and sod as essential to crop

rotation. The benefits achieved through

the use of legumes and sod could be

fulfilled through many types of rotation

plans, which could only be developed

according to the site-specific climate,

soil type, and type of crops or livestock

produced on a given operation. In the

interest of flexibility this proposal does

not specify what specific crops have to

be included in a crop rotation. The issue

addressed in this suggestion is

addressed in the crop rotation practice

standard at § 205.205. Additional

information on crop rotation can be

found at subpart C, Production, Changes

Based On Comments, item 5.

(8) We have amended the definition of

‘‘disease vectors’’ by adding that disease

vectors include plants and animals that

transmit disease organisms or pathogens

which may attack crops or livestock. A

few commenters pointed out that the

definition as originally proposed was

technically inaccurate because it did not

address the transmission of disease

organisms to crops or livestock.

(9) We have rewritten the definition of

‘‘employee’’ to provide that an

employee is any person providing paid

or volunteer services for a certifying

agent. A few States requested that the

definition clearly reference volunteers.

A trade association recommended

expanding the definition to include any

person who works for a certifying agent.

We have included volunteers in this

proposal because of their substantial use

by some certifying agents. Other States

suggest changing ‘‘certification

decisions’’ to ‘‘certification activities’’ to

include any person who is involved in

the certification process. We have

addressed the commenters’ concern by

referring to services provided by the

employee for the certifying agent. A few

States stated that the definition needs to

clarify who is the employer of an

independent inspector. An independent

inspector would not be included in the

definition of employee. Such persons

are considered to be contractors. Some

States expressed concern regarding the

use of volunteers from certified

production and handling operations.

Section 205.501(a)(11) requires that a

certifying agent prevent conflicts of

interest by not permitting any employee,

inspector, contractor, or other personnel

to accept payment, gifts, or favors of any

kind, other than prescribed fees, from

any business inspected, except that a

certifying agent that is a not-for-profit

organization with an Internal Revenue

Code tax exemption may accept

voluntary labor from certified

operations. Under this exception all

volunteers would be excluded from

work, discussions, and decisions in all

stages of the certification process and

the monitoring of certified production

or handling operations for all entities in

which such person has or has held a

commercial interest, including an

immediate family interest or the

provision of consulting services, within

the prior 12-month period. Additional

information on conflicts of interest can

be found at subpart F, Changes Based

On Comments, items 4 and 5, and

subpart F, Changes Requested But Not

Made, items 5, 6, 7, and 8; subpart F,

Additional Provisions, item 2.

(10) We have rewritten the definition

of ‘‘fertilizer’’ to provide for the

inclusion of minor nutrients and trace

elements with the three primary

nutrients (nitrogen, phosphorus,

potassium) contained in a substance or

a blended substance utilized in a soil

fertility program. This is a generic

definition of fertilizer. Issues concerning

what substances may be present in a

fertilizer for organic production are

addressed in subpart C of this proposal.

(11) We have amended the definition

of ‘‘handle’’ by providing that the term

shall not include the sale,

transportation, or delivery of crops or

livestock by the producer thereof to a

handler. This change was made because

we found merit in a certifying agent’s

concern that farmers were turned into

handlers by definition. This was not our

intent.

(12) We have amended the definition

of ‘‘inspector’’ to make terms used in the

definition consistent with terms used in

this proposal and to remove the phrase,

‘‘who is qualified.’’ A State certifying

agent suggested deleting the phrase,

‘‘who is qualified,’’ because the issue of

inspector qualification is more

appropriately addressed in the

regulations. We concur that the

definition of ‘‘inspector’’ does not need

to address the issue of qualifications,

especially in light of the fact that

certifying agents are required by these

regulations to use qualified inspectors.

(13) We have amended the definition

of ‘‘livestock’’ by adding reference to the

production of fiber, feed, and other

agricultural-based consumer products

and by providing that ‘‘livestock’’ shall

not include fish or bees for the

production of food, fiber, feed, or other

agricultural-based consumer products.

A trade association and several States

recommended adding fibers to the

definition. We have added fiber, feed,

and other agricultural-based consumer

products to the definition to capture all

types of consumer products that would

be produced from livestock. We have

excluded aquatic animals from the

definition of livestock pending future

development of detailed practice

standards for specific aquatic animals.

We have also excluded bees from the

definition of livestock pending future

National Organic Standards Board

(NOSB or Board) review and

recommendations on apiculture.

13518 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

Additional information on this issue can

be found at subpart C, Livestock

Production, Changes Based On

Comments, items 3 and 4.

(14) We have amended the definition

of ‘‘market information.’’ A commenter

suggested that the definitions of the

terms, ‘‘labeling’’ and ‘‘market

information,’’ were difficult to

distinguish from one another and

needed clarification. We have added

language to make a distinction between

the two terms. ‘‘Market information’’

now includes the phrase, ‘‘distributed,

broadcasted, or made available outside

of retail outlets.’’ This phrase indicates

that any information distributed,

broadcasted, or made available outside

of retail outlets to assist in the sale or

promotion of a product falls under the

‘‘market information’’ category.

‘‘Labeling’’ includes any information

displayed or made available in retail

outlets on or about the product.

(15) We have amended the definition

of ‘‘organic’’ to clarify that the term,

‘‘organic,’’ is used as a labeling term.

Commenters, including several States,

stated that the definition repeated the

proposed requirements for allowing the

use of ‘‘organic’’ on a product label.

They suggested amending the definition

to clarify that the term, ‘‘organic,’’ is

used as a labeling term. We made the

suggested change because we agree that

the definition unnecessarily repeated

regulatory information and that use of

the term, ‘‘organic,’’ is intended as a

labeling term.

(16) We have amended the definition

of ‘‘producer’’ to clarify that the term

includes the production of fiber and

other agricultural-based consumer

products. Several States suggested that

the definition of ‘‘producer’’ be

amended to clarify that a producer

could also be growing or producing a

fiber product. We agree that this

clarification is needed and have also

added reference to ‘‘other agriculturalbased consumer products’’ to further

clarify that the term includes all

agricultural-based consumer products

produced by a producer.

(17) We have changed the definition

of ‘‘routine use of parasiticide’’ to the

definition recommended by the NOSB.

Commenters suggested removing

‘‘without cause’’ from the definition in

the first proposal and adding such

phrases as ‘‘without an indication of

illness from parasites,’’ ‘‘administration

with need based on the presence of a

diagnosed problem with parasites,’’ and

‘‘with or without cause.’’ The NOSB’s

definition solves the problems caused

by the use of the phrase, ‘‘without

cause.’’ Additional information on this

issue can be found at subpart C,

Livestock Production, Changes Based

On Comments, item 9.

(18) We have amended the definition

of ‘‘slaughter stock’’ by changing

‘‘human consumption’’ to

‘‘consumption by humans and other

animals.’’ A few commenters

recommended deleting the word,

‘‘human,’’ to indicate that organic

livestock may also be used to produce

pet food. We agree that slaughter stock

may be used in the production of

products for consumption by humans

and other animals.

(19) We have amended the term, ‘‘soil

quality,’’ and its definition by

referencing ‘‘water’’ in the term and the

definition. This change was made

because of the reference to ‘‘soil and

water quality’’ in § 205.200 of this

proposal. Several State commenters

stated that the definition of ‘‘soil

quality’’ was too vague and would pose

problems in enforcing a requirement

that addressed the effect of various

practices on soil quality. Other

commenters requested expansion of the

definition to include a discussion of

why soil quality is important and what

functions healthy soil serves in an

organic production system. Another

State suggested expanding the definition

to include water quality, since there

were several references in the

regulations to effects on soil or water

quality. The importance of soil quality

has been addressed under subpart C of

this proposal. We acknowledge that the

phrase, ‘‘soil and water quality,’’ is used

in subpart C and have, therefore,

expanded the term, ‘‘soil quality,’’ to

‘‘soil and water quality’’ and amended

the definition accordingly. We have also

added a new phrase to the previous

definition to acknowledge that one

important criterion of soil and water

quality is the control of environmental

contaminants. The determination of

which observable indicators to monitor

and how to interpret the observations

will be subject to documentation in the

organic system plan and consultation

between the producer and the certifying

agent. Guidance will be provided to

certifying agents through program

manuals. Additional information on this

issue can be found at subpart C,

Production and Handling (General),

Changes Based On Comments, item 2.

(20) We have amended the term,

‘‘governing State official,’’ to ‘‘State

program’s governing State official’’ and

retained the definition to clarify the

difference between a State certifying

agent and a governing State official. We

have used the term, ‘‘State program’s

governing State official,’’ throughout

this proposal. A trade association and a

State recommended removing the word,

‘‘certification,’’ from the definition. We

have not made this change because the

term is meant to identify the person

responsible for administering the State’s

organic certification program. By ‘‘State

organic certification program,’’ we mean

the law, regulations, and any policies

and procedures established by the State

to govern the organic certification of

producers or handlers by State or

private certifying agents.

(21) We have amended the definition

of ‘‘unavoidable residual environmental

contamination.’’ Commenters stated that

USDA should set levels rather than

make case-by-case decisions regarding

residual environmental contamination.

They suggested that background levels

could be used to determine whether

land exceeds the level. Another

commenter requested a clear statement

of ‘‘unavoidable’’ and ‘‘contamination’’

to facilitate enforcement. Some States

stated that there should be a level that

is unacceptable for organic agriculture.

A commenter suggested that the

definition read, ‘‘The presence of a

material prohibited in organic

production, processing, or handling in

soil, crop, or food that occurs as a result

of factors beyond the control of the

producer, processor, or handler.’’

Another commenter suggested that the

definition read, ‘‘Background levels of

prohibited substances at a site which are

clearly beyond the control of a certified

organic farm operator through notices to

neighbors, careful avoidance of

abnormally precontaminated sites, and

establishment of buffer zones.’’ In this

proposal, we have defined ‘‘unavoidable

residual environmental contamination’’

as ‘‘background levels of naturally

occurring or synthetic chemicals that

are persistent in the soil or present in

organically produced agricultural

products that are below established

tolerances.’’

Definitions—Changes Requested But

Not Made

This subpart retains from our first

proposal terms and their definitions on

which we received comments as

follows:

(1) A few commenters requested that

the definition of ‘‘Administrator’’ be

revised to provide that authority to

administer the National Organic

Program may be delegated to a State

official. We have not made the

recommended change because the

definition of ‘‘Administrator’’ merely

addresses the top official of the

Agricultural Marketing Service (AMS)

and any AMS official to whom the

Administrator may delegate authority.

The definition is not meant to address

working relationships established

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13519

between AMS and a State or State

entity.

(2) An environmental group requested

that we delete the phrase, ‘‘other than

during the manufacture of a

multiingredient product containing both

types of ingredients,’’ from the

definition of ‘‘commingling.’’ This

proposal requires that a handler prevent

the commingling of organic and

nonorganic products but permits use of

the word, ‘‘organic,’’ in labeling a

product made with organic and

nonorganic ingredients in accordance

with these regulations. Therefore, it is

necessary to indicate that the term,

‘‘commingling,’’ does not apply to the

manufacture of multiingredient

products produced in accordance with

these regulations.

(3) A farmers’ association

recommended that the Secretary

delegate authority for determining crop

year to certifying agents because crop

year will vary from region to region. We

have found no compelling reason to

make certifying agents responsible for

determining crop year and have not

made the recommended change.

(4) A few commenters requested that

the definition of ‘‘handling operation’’

be amended to exclude retailers of

prepackaged agricultural products. This

change is unnecessary because such

retailers are excluded by the definition

of ‘‘handling operation’’ through the

phrase, ‘‘except final retailers of

agricultural products that do not process

agricultural products.’’

(5) Several commenters, including a

State department of agriculture,

recommended elimination of the

exception for weight labels in the

definition of ‘‘label.’’ We have not made

the recommended change to the

definition of ‘‘label’’ because, as used in

this proposal, ‘‘label’’ is intended to

represent the organic nature of the

product. A weight label that does not

refer to the organic nature of the product

would not constitute a label for the

purposes of this proposal.

(6) A commenter requested that the

definitions for ‘‘labeling’’ and ‘‘market

information’’ be amended to refer only

to products produced by the seller. We

have not made this requested change

because changing the definitions to only

include products produced by the seller

would severely restrict the application

of the terms, ‘‘labeling’’ and ‘‘market

information.’’ As defined, ‘‘labeling’’

and ‘‘market information’’ correctly

include any information that may be

presented to consumers concerning all

products sold whether produced by the

seller, most likely a retail outlet, or

produced by a production or handling

operation from which the seller

acquired the products.

(7) A commenter requested that we

include definitions for ‘‘manure’’ and

‘‘aged or rotted manure.’’ Under this

proposal it is not necessary to define

either term.

(8) An environmental organization

requested that a phrase be added to the

definition of ‘‘mulch’’ to indicate that

acceptable mulch materials leave no

chemical or toxic residues. This

proposal allows the use of composted

plant and animal wastes obtained from

nonorganic sources, such as commercial

compost products. Uncomposted plant

or animal waste material which has

been treated with a substance can be as

utilized as a mulch provided the

substance appears on the National List

or complies with the OFPA. Off-farm

plant and animal wastes from food

processing, municipal yard waste

facilities, and other sources are used

extensively in existing organic

operations and generally permitted by

organic certification programs. Using

such organic wastes is consistent with a

system of organic production and

handling, which calls for recycling

organic wastes to return nutrients to the

land. We believe that concerns about

potential contaminants in plant and

animal waste materials can be addressed

by the requirement in this proposal that

these materials be managed in a manner

that prevents such contamination.

Accordingly, this change has not been

made. Additional information on this

issue can be found at subpart C, Crop

Production, Changes Requested But Not

Made, items 2 and 3.

(9) Several commenters suggested

adding information to the definition of

‘‘National Organic Standards Board’’ to

address the role of the NOSB with

regard to the National List. This change

is unnecessary because the role of the

NOSB is adequately covered in section

6517, National List, of the Act.

(10) Numerous comments were

received from consumers,

environmental groups, and organic

producers concerning the definition of

the term, ‘‘nonagricultural ingredient.’’

Commenters expressed the view that

this term represented an attempt by

USDA to circumvent the intent of the

Act that synthetic ingredients not be

permitted in organic processed

products. We disagree with the position

that the Act prohibits the use of

synthetic ingredients in organic

processed products. The use of

synthetic ingredients in organic

processed products is discussed in the

preamble to the National List found in

subpart G. We have changed the term,

‘‘nonagricultural ingredient,’’ to

‘‘nonagricultural substance’’ to be

consistent with the language used in

this proposal. The definition remains

the same.

(11) Commenters stated their

objection to the use of the term,

‘‘nonsynthetic (natural),’’ and its

definition. A commenter mistakenly

stated that the term, ‘‘natural,’’ was

defined in the Act. Other commenters

felt that use of any term that was not

included in the Act was a violation of

the Act. Because the term, ‘‘natural,’’ is

so ambiguous and subject to differing

interpretations, the term,

‘‘nonsynthetic,’’ as used throughout this

regulation, represents an important

clarification of the intent of the Act, and

we have, therefore, retained it in this

proposal.

(12) A few commenters requested that

the definition of ‘‘petition’’ be amended

by adding the phrase, ‘‘to the National

Organic Standards Board,’’ immediately

following the word, ‘‘submitted.’’ We

have not made the requested change for

two reasons. First, the change is

unnecessary. Second, petitions, whether

addressed to the NOSB or National

Organic Program (NOP) Staff, will be

received by the NOP because the

administrative functions of the NOSB

are performed at the NOP office.

Petitions received will be distributed by

the NOP to the NOSB and appropriate

technical reviewers.

(13) A producers association stated

that the definition for ‘‘processing’’ was

confusing with regard to the difference

between a handler and a processor. A

handling operation that performs any of

the activities listed in the definition of

processing becomes a processor. We

have found no compelling reason to

revise this comprehensive definition for

processing, which comes directly from

the Act. A commenter suggested that

this definition be changed to include

repackaging for weight. In addition to

the definition being stipulated by the

Act, affixing a weight label to a product

is a normal retail activity that does not

warrant the expense and effort

necessary to certify all retailers who

routinely affix weight labels to organic

product.

(14) A few commenters requested that

the definition of ‘‘State organic

certification program’’ be amended by

adding a statement indicating that a

State program could have additional

requirements. This issue is addressed in

subpart G, State Organic Certification

Programs, Proposal Description.

(15) A technical institute

recommended including genetically

engineered organisms and their

products in the definition of

‘‘synthetic,’’ and an environmental

13520 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

group wanted the definition to include

the combustion of minerals. We have

not amended the definition as given in

the Act because it already includes the

combustion of minerals, which are

chemically changed by the process of

combustion. We also do not consider it

necessary to classify genetically

engineered organisms as either synthetic

or nonsynthetic for the purposes of this

regulation, since these organisms and

their products are prohibited for use in

organic production or handling

regardless of whether or not they are

synthetic.

(16) A commenter recommended

adding the word, ‘‘synthetic,’’

immediately preceding the word,

‘‘substances,’’ in the second sentence of

the definition of ‘‘system of organic

farming and handling.’’ We disagree

with this suggestion because

‘‘substances’’ as used in this definition

could be synthetic or nonsynthetic. A

few commenters requested deletion of

the word, ‘‘extraneous,’’ as a modifier of

‘‘synthetic additives’’ in the definition

of ‘‘system of organic farming and

handling.’’ The commenters stated that

use of the word, ‘‘extraneous,’’ implied

that synthetic additives can be used in

organic processed products. Synthetics

may be used in processed products if

the substance is included on the

National List. Additionally, the word,

‘‘extraneous,’’ modifies the word,

‘‘processing,’’ in the definition, and we

consider use of extraneous processing to

be inconsistent with organic handling.

For these reasons, we have not removed

the word, ‘‘extraneous,’’ from the

definition. We have, however, amended

the term, ‘‘system of organic farming

and handling,’’ by deleting ‘‘farming’’

and inserting ‘‘production.’’ The

definition for the term, ‘‘system of

organic production and handling,’’ is

unchanged. We have taken this action to

make the term consistent with the

language of this proposal. Additional

information on this issue can be found

at subpart C, Production and Handling

(General), Changes Requested But Not

Made, item 1.

(17) Several commenters, including a

State Department of Agriculture and a

fishery association, requested that wild

game and aquatic animals be included

in the definition of ‘‘wild crop.’’

Regarding aquatic animals, we intend to

develop detailed practice standards for

specific aquatic species, which will be

published for comment and finalized

prior to the implementation of the NOP.

Given the virtual absence of recognized

certification programs for aquatic

operations, including aquaculture, there

are no U.S. models on which to base

national standards. Additional

information on this issue can be found

at subpart B, Changes Requested But

Not Made, item 11 and subpart C, Crop

Production, Changes Requested But Not

Made, item 7. Accordingly, we have not

made the requested changes to the

definition of ‘‘wild crop.’’

Definitions—Additional Provisions

Upon further review of the definitions

in the first proposal, we have decided to

propose the following additions and

changes.

Amended Definitions

(1) We have amended the definition of

‘‘accreditation’’ to include foreign

entities as now provided for in subpart

F, Accreditation. Additional

information on including foreign

entities in accreditation can be found at

subpart B, Additional Provisions, item

1, and subpart F, Changes Based On

Comments, item 1.

(2) We have amended the definition of

‘‘allowed synthetic’’ by replacing ‘‘for

use in organic farming’’ with ‘‘for use in

organic production, or handling.’’ This

correction was necessary because the

National List includes synthetic

substances used in organic production

and handling.

(3) We have amended the terms,

‘‘certified organic farm,’’ ‘‘certified

organic handling operation,’’ and

‘‘certified organic wild-crop harvesting

operation,’’ with the term, ‘‘certified

operation.’’ The term, ‘‘certified

operation,’’ is used throughout this

proposal to refer to a crop or livestock

production, wild-crop harvesting, or

handling operation or portion of an

operation that is certified by an

accredited certifying agent as utilizing a

system of organic production or

handling as described by the Act and

regulations in this part. We have taken

this action to simplify the regulatory

language.

(4) We have amended the term,

‘‘cultural,’’ to ‘‘cultural methods’’ and

amended the definition by removing all

references to livestock. We have taken

this action because this proposal does

not refer to cultural methods with

reference to livestock health care.

(5) We have amended the definition of

‘‘field’’ by replacing ‘‘farm’’ with

‘‘production operation.’’ This action was

taken because ‘‘farm’’ has been replaced

by ‘‘production operation’’ throughout

this proposal.

(6) We have amended the definition of

‘‘handler’’ by adding the phrase,

‘‘including producers who handle crops

or livestock of their own production.’’

We have made this change to clarify that

producers who handle their own

production become handlers under the

regulations. Such producer/handlers

must be certified as a handler.

(7) We have amended the term, ‘‘inert

ingredient in pesticide formulations,’’ to

‘‘inert ingredient.’’ We have also

amended the definition by specifying

that the pesticide product is used in

organic crop or livestock production

and handling. These changes have been

made to make the term and its

definition consistent with the language

used in the National List. This proposal

takes a different position on inert

ingredients, as explained in subpart G,

National List, Changes Based on

Comments, item 6, than was taken in

the first proposal. Because of the

increased importance of inert

ingredients in this proposal, we have

rejected the position of the few

commenters who recommended

removal of this definition.

(8) We have amended the term,

‘‘organic plan,’’ to ‘‘organic system

plan’’ and made editorial changes to the

definition to make the term and

language of the definition consistent

with the language in this proposal.

(9) We have amended the definition of

‘‘peer review panel’’ by removing ‘‘to

assist in evaluating the performance of

a certifying agent’’ and inserting ‘‘to

assist in evaluating applicants for

accreditation as certifying agents.’’ This

change clarifies that the role of the peer

review panel is to evaluate applicants

for accreditation. Additional

information on ‘‘peer review panel’’ can

be found at subpart C, Proposal

Description, Production and Handling

(General).

(10) We have amended the definition

of ‘‘person’’ by adding ‘‘contractor’’ to

clarify that, when the regulations use

‘‘person,’’ the meaning includes

‘‘contractors.’’

(11) We have amended the definition

of ‘‘records’’ by removing the record

examples. A trade association and

several States recommend adding

‘‘process flow charts’’ to the examples of

records. Another commenter, who does

not want to give USDA unlimited access

to personnel files, suggested the creation

of a specific list of records to be

maintained. We have rewritten the

recordkeeping provisions, removing all

references to specific records or types of

records which must be maintained. We

have taken this action because we

believe that it is impracticable to specify

in detail every class of records which

may be found essential in demonstrating

compliance with the Act and

regulations. Different types of certified

production and handling operations

will, by the very nature of their

business, be required to maintain

different records to establish their

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13521

compliance with the Act and

regulations. Additional information on

the issue of listing every class of records

which may be found essential in

demonstrating compliance with the Act

and regulations can be found at subpart

B, Changes Based On Comments, item 6.

(12) We have amended the definition

of ‘‘State.’’ Addition of the term, ‘‘State

entity,’’ necessitated our amendment of

the definition of ‘‘State’’ to clarify that

State means the States of the United

States of America.

(13) We have amended the term,

‘‘system of organic farming and

handling,’’ to ‘‘system of organic

production and handling’’ and retained

the original definition in this proposal.

The original definition was crafted to be

consistent with the requirements of the

Act. We have changed ‘‘farming’’ to

‘‘production’’ to provide a more

encompassing term, which may come to

include such diverse activities as

hydroponics, green house production,

and harvesting of aquatic animals. The

purpose of the original definition was to

describe practices and substances

consistent with systems of organic

farming and organic handling as

required by the Act and to provide an

explicit reference point for determining

which practices and substances are most

consistent with these systems. Several

commenters suggested that the

definition include the concepts,

‘‘agroecosystem health,’’ ‘‘ecological

harmony,’’ and ‘‘biological diversity.’’

Commenters also suggested including

definitions for ‘‘organic agriculture,’’

‘‘organic farming,’’ and ‘‘transition to

organic.’’ This definition is intended to

clarify regulatory provisions in this

proposal and is not intended as a broad

philosophical statement. The terms,

‘‘organic agriculture,’’ ‘‘organic

farming,’’ and ‘‘transition to organic,’’

are not used in this proposal and,

therefore, are not defined.

(14) We amended the definition of

transplant to prevent confusion with a

related term, ‘‘seedling.’’ While the

terms, ‘‘transplant’’ and ‘‘seedling’’ are

often used interchangeably, the Act

treats them as distinct and establishes

separate regulatory requirements. We

have determined that the physical

process of moving and replanting a

seedling results in that seedling

becoming a transplant. We have created

this distinction to be able to enforce the

full requirements of the Act. Additional

information on ‘‘transplant’’ can be

found at subpart C, Crop Production,

Changes Based On Comments, item 4.

New Definitions

(1) We have defined ‘‘accredited

laboratory.’’ Information concerning

‘‘accredited laboratory’’ can be found at

subpart G, Inspection and Testing,

Reporting, and Exclusion from Sale,

Proposal Description.

(2) We have defined ‘‘action level.’’

Information concerning ‘‘action level’’

can be found at subpart G, Inspection

and Testing, Reporting, and Exclusion

from Sale, Changes Based On

Comments, item 2.

(3) We have defined ‘‘agricultural

inputs.’’ Information concerning

‘‘agricultural inputs’’ can be found at

subpart G, Inspection and Testing,

Reporting, and Exclusion from Sale,

Changes Based On Comments, item 1.

(4) We have defined ‘‘Agricultural

Marketing Service (AMS) ‘‘ because the

term is used throughout this proposal.

(5) We have defined ‘‘breeder stock.’’

We have added this definition because

this proposal establishes conditions for

the administration of an allowed

synthetic parasiticide to livestock

producing offspring for incorporation

into an organic operation. We have also

proposed conditions under which dairy

stock, whose milk or milk products are

to be sold, labeled, or represented as

organically produced, may be treated

with allowed synthetic parasiticides.

Additional information on this issue can

be found at subpart C, Livestock

Production, Changes Based On

Comments, item 9.

(6) We have defined ‘‘bulk.’’

Information concerning ‘‘bulk’’ can be

found at subpart D, Additional

Provisions, item 7.

(7) We have defined ‘‘claims.’’

Information concerning ‘‘claims’’ can be

found at subpart D, Changes Based On

Comments, item 1.

(8) We have defined ‘‘detectable

residue.’’ Information concerning

‘‘detectable residue’’ can be found at

subpart G, Inspection and Testing,

Reporting, and Exclusion from Sale,

Proposal Description and at Changes

Based On Comments, item 2.

(9) We have defined ‘‘drift.’’

Information concerning ‘‘drift’’ can be

found in subpart G, Residue Testing,

changes based on comments, item 2.

(10) We have defined ‘‘estimated

national mean.’’ Information concerning

‘‘estimated national mean’’ can be found

at subpart G, Inspection and Testing,

Reporting, and Exclusion from Sale,

Proposal Description and at Changes

Based On Comments, item 2.

(11) We have defined ‘‘excluded

methods.’’ As a result of extensive

public comment, we have revised the

definition of certain methods to be

excluded from organic production

systems. Many commenters suggested

that we use the definition for certain

methods to be excluded from organic

production systems proposed by the

NOSB. This proposal essentially adopts

that definition. ‘‘Excluded methods’’

refers to a variety of methods used to

genetically modify organisms or

influence their growth and development

by means that are not possible under

natural conditions or processes and are

not considered compatible with organic

production. Such methods would

include recombinant DNA, cell fusion,

and micro-and macroencapsulation.

Such methods would not include the

use of traditional breeding, conjugation,

fermentation, hybridization, in vitro

fertilization, or tissue culture.

We recognize that the phrases,

‘‘natural conditions or processes’’ and

‘‘not considered compatible with

organic production,’’ may be subject to

interpretation. We have proposed to use

these phrases for two reasons. First,

‘‘natural conditions or processes’’ is

used in the NOSB and American

Organic Standards definitions, both of

which were the result of consultation

with organic industry and consumer

stakeholders and, thus, accurately

reflect current industry practices as well

as consumer preferences. Second, we

recognize that industry and consumer

expectations regarding the products of

these techniques in organic production

systems may evolve. We believe that,

taken together, these phrases allow for

a degree of flexibility to ensure that our

regulations continue to accurately

reflect industry practices and consumer

preferences. In cases where questions

may arise regarding a specific

technique, we anticipate that such

questions would be resolved by the

Administrator based on

recommendations from the NOSB.

(12) We have defined ‘‘feed additive.’’

Information concerning ‘‘feed additive’’

can be found at subpart C, Livestock

Production, Changes Based On

Comments, item 7.

(13) We have defined ‘‘feed

supplement’’ Information concerning

feed supplement’’ can be found at

subpart C, Livestock Production,

Changes Based On Comments, item 7.

(14) We have defined ‘‘forage.’’

Information concerning ‘‘forage’’ can be

found at subpart C, Livestock

Production, Changes Based On

Comments, item 4.

(15) We have defined ‘‘immediate

family.’’ Information concerning

‘‘immediate family’’ can be found at

subpart F, Changes Based On

Comments, items 14 and 15; Changes

Requested But Not Made, item 18; and

Additional Provisions, item 2.

(16) We have defined ‘‘ingredient’’

because the term is used throughout

subpart D.

13522 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

(17) We have defined ‘‘inspection’’

because the term is used throughout

subparts E and F.

(18) We have defined ‘‘lot.’’

Information concerning ‘‘lot’’ can be

found at subpart D, Proposal

Description and at Additional

Provisions, item 6.

(19) We have defined ‘‘natural

resources of the operation.’’ This

definition has been added to provide

greater context for evaluating the

‘‘maintain or improve’’ requirement for

a system of organic production and

handling. Information concerning

‘‘natural resources of the operation’’ can

be found at subpart C, Production and

Handling (General), Changes Based On

Comments, item 2.

(20) We have defined ‘‘nonretail

container.’’ Information concerning

‘‘nonretail container’’ can be found at

subpart D, Proposal Description and at

Additional Provisions, item 6.

(21) We have defined ‘‘practice

standard.’’ Practice standards have been

added to this proposal in response to

commenter requests for more specific

guidelines for measuring the

performance of an organic system of

production and handling. A practice

standard is a series of specific

guidelines, requirements, and operating

procedures through which a production

or handling operation implements a

required component of its organic

system plan. For example, this proposal

contains a practice standard for soil

fertility and crop nutrient management

which describes the tillage practices,

sources and handling restrictions for

nutrients, and prohibited activities that

a production operation must comply

with. There are specific practice

standards applicable to crop, livestock,

and wild-crop production, and handling

operations. We are also proposing to

incorporate the terms of the NRCS

practice standard for a composting

facility into the requirements of this

proposal. Additional information on

‘‘practice standards’’ can be found at

subpart C, Production and Handling

(General), Changes Based On

Comments, item 4.

(22) We have defined ‘‘private entity’’

because the term is used throughout

subpart F to differentiate between

governmental (State entity) and

nongovernmental (private entity)

organizations providing certification

services.

(23) We have defined ‘‘production lot

number.’’ Information concerning

‘‘production lot number’’ can be found

at subpart D, Proposal Description and

at Additional Provisions, item 6.

(24) We have defined ‘‘residue

testing’’ because the term is used

throughout the inspection and Testing,

Reporting, and Exclusion from Sale

portion of subpart G.

(25) We have defined ‘‘retail food

establishment.’’ Information on ‘‘retail

food establishment’’ can be found in

subpart B, Applicability, Proposal

Description and Additional Provisions,

item 2.

(26) We have defined ‘‘sewage

sludge.’’ This term has been added and

defined as synonymous with

‘‘biosolids’’ to incorporate the

Environmental Protection Agency’s

regulatory language for this category of

materials. Information concerning

‘‘sewage sludge’’ can be found at

subpart C, Crop Production, Changes

Based On Comments, item 1.

(27) We have defined ‘‘State entity.’’

This proposal provides for the

accreditation of domestic, tribal

government, and foreign governmental

subdivisions that provide certification

services. We refer to such an entity in

this proposal as a ‘‘State entity.’’

Additional information on ‘‘State

entity’’ can be found at subpart F,

Changes Based On Comments, item 1.

(28) We have defined ‘‘tolerance.’’

Information concerning ‘‘tolerance’’ can

be found at subpart G, Inspection and

Testing, Reporting, and Exclusion from

Sale, Proposal Description and at

Changes Based On Comments, item 2.

Subpart B—Applicability

This subpart provides an overview of

what has to be certified under the

National Organic Program (NOP),

describes exemptions and exclusions

from certification, addresses use of the

term, ‘‘organic,’’ and addresses

recordkeeping by certified production

and handling operations.

Proposal Description

Except for exempt and excluded

operations, each production or handling

operation or specified portion of a

production or handling operation that

produces or handles crops, livestock,

livestock products, or other agricultural

products that are intended to be sold,

labeled, or represented as ‘‘100 percent

organic,’’ ‘‘organic,’’ or ‘‘made with

organic (specified ingredients)’’ must be

certified. Certified operations must meet

all applicable requirements of these

regulations.

Certifying agents will begin the

process of certifying organic production

and handling operations to the national

standards upon receipt of their

accreditation from the Administrator.

All production and handling operations

certified by an accredited certifying

agent will be considered certified to the

national standards until the certified

operation’s anniversary date of

certification. We are providing this

phase-in procedure for production and

handling operations certified by newly

accredited certifying agents because we

believe that such certifying agents will,

upon publication of the final rule,

demonstrate their eligibility for

accreditation by applying the national

standards to the certification and

renewal of certification of their clients.

We are also providing this phase-in

procedure to provide relief to certified

operations which would otherwise have

to be certified twice within a 12-month

period (prior to their certifying agent’s

accreditation and again following their

certifying agent’s accreditation). This

relief will only be available to those

certified operations certified by a

certifying agent that receives its

accreditation within 18 months from the

date of publication of the final rule. We

anticipate that certifying agents and

production and handling operations

will move as quickly as possible to

begin operating under the national

organic standards. We are providing this

substantial phase-in period because

accredited certifying agents will have to

schedule on-site inspections around

varying growing seasons and because

certifying agents and production and

handling operations will need time to

adapt to the new national organic

standards.

Exempt and Excluded Operations.

This regulation establishes several

categories of exempt or excluded

operations. Exempt operations derive

their exemption from the Act while

excluded operations are excluded as a

result of a Departmental policy decision.

An exempt or excluded operation does

not need to be certified. However,

operations that qualify as exempt or

excluded operations may elect to apply

for certification. A production or

handling operation that is exempt or

excluded from obtaining certification

still must meet other regulatory

requirements contained in this rule as

explained below.

Exempt Operations. (1) A production

or handling operation that has $5,000 or

less in gross agricultural income from

organic sales annually is exempt from

certification and does not need to

submit an the organic system plan to

anyone for acceptance or approval.

However, an exempt producer or

handler must comply with the labeling

requirements of § 205.309 and the

organic production and handling

requirements applicable to its type of

operation. For example a producer of

organic vegetables, that performs no

handling functions, would have to

comply with the labeling requirements

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13523

of § 205.309 and the applicable

production requirements in §§ 205.202

through 205.207. The labeling and

production and handling requirements

protect the integrity of organically

produced products.

(2) A retail food establishment or

portion of a retail food establishment

that handles organically produced

agricultural products but does not

process them is exempt from all of the

requirements in these regulations.

(3) A handling operation or portion of

a handling operation that handles

agricultural products containing less

than 50 percent organic ingredients by

total weight of the finished product

(excluding water and salt) is exempt

from the requirements in these

regulations, except the recordkeeping

provisions of § 205.101(c); the

provisions for prevention of contact of

organic products with prohibited

substances in § 205.272; and the

labeling regulations in § 205.309. The

recordkeeping provisions maintain an

audit trail for organic products. The

prevention of contact with prohibited

substances and the labeling

requirements protect the integrity of

organically produced products.

(4) If a handling operation or portion

of a handling operation that handles

agricultural products containing at least

50 percent organic ingredients by

weight (excluding water and salt) does

not use the word, ‘‘organic,’’ on any

package panel other than the

information panel, it is exempt from the

requirements in these regulations,

except the recordkeeping provisions of

§ 205.101(c); the provisions for

prevention of contact of organic

products with prohibited substances as

provided in § 205.272; and the labeling

regulations in § 205.309. The

recordkeeping provisions maintain an

audit trail for organic products. The

prevention of contact with prohibited

substances and labeling requirements

protect the integrity of organically

produced products.

As noted above, exempt handling

operations producing multiingredient

products must maintain records as

required by § 205.101(c). This would

include records sufficient to: (1) prove

that ingredients identified as organic

were organically produced and handled,

and (2) verify quantities produced from

such ingredients. Such records must be

maintained for no less than 3 years and

the operation must allow

representatives of the Secretary and the

applicable State program’s governing

State official access to the records

during normal business hours for

inspection and copying to determine

compliance with the applicable

regulations.

Excluded Operations. (1) A handling

operation or portion of a handling

operation that sells organic agricultural

products labeled as ‘‘100 percent

organic,’’ ‘‘organic,’’ or ‘‘made with

organic (specified ingredients)’’ that are

packaged or otherwise enclosed in a

container prior to being received or

acquired by the operation, remain in the

same package or container, and are not

otherwise processed while in the

control of the handling operation is

excluded from the requirements in these

regulations, except for the provisions for

prevention of commingling and contact

of organic products with prohibited

substances in § 205.272. The

requirements for the prevention of

commingling and contact with

prohibited substances protect the

integrity of organically produced

products.

This exclusion will avoid creating an

unnecessary barrier for handlers who

distribute nonorganic products and who

want to offer a selection of organic

products.

(2) A retail food establishment or

portion of a retail food establishment

that processes or prepares, on the

premises of the retail food

establishment, raw and ready-to-eat

food from certified agricultural products

labeled as ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with organic

(specified ingredients)’’ is excluded

from the requirements in these

regulations, except for the provisions for

prevention of contact of organic

products with prohibited substances as

provided in § 205.272; and the labeling

regulations in § 205.309. The prevention

of commingling and contact with

prohibited substances and labeling

requirements protect the integrity of

organically produced products.

Excluded retail food establishments

include restaurants; delicatessens;

bakeries; grocery stores; or any retail

outlet with an in-store restaurant,

delicatessen, bakery, salad bar, or other

eat-in or carry-out service of processed

or prepared raw and ready-to-eat food.

We have excluded such retail food

establishments because comments to the

first proposal concerning the issue of

certification of retail food

establishments were completely

divergent. Comments ranged from the

certification of all retail food

establishments to exclusion of all retail

food establishments. There is clearly a

great deal of public concern regarding

the handling of organic products by

retail food establishments. Someday

retail food establishments may be

subject to regulation under this NOP.

Any such regulation would be preceded

by rulemaking with an opportunity for

public comment. Our exclusion of retail

food establishments from this proposal

does not prevent a State from

developing an organic retail food

establishment certification program or

otherwise regulating retail food

establishments that prepare, package, or

process organic agricultural products.

No retailer, regardless of this

exclusion and the exceptions found in

the definitions for ‘‘handler’’ or

‘‘handling operation,’’ may sell, label, or

provide market information on a

product unless such product has been

produced and handled in accordance

with the Act and these regulations. Any

retailer who knowingly sells or labels a

product as organic, except in

accordance with the Act and these

regulations, will be subject to a civil

penalty of not more than $10,000 under

this program. Such retailer may also be

subject to enforcement actions and

penalties under Federal statutes and

their implementing regulations

administered by other agencies of the

Federal government.

Recordkeeping Requirements for

Certified Operations. A certified

operation must maintain records

concerning the production and handling

of agricultural products that are sold,

labeled, or represented as ‘‘100 percent

organic,’’ ‘‘organic,’’ or ‘‘made with

organic (specified ingredients)’’

sufficient to demonstrate compliance

with the Act and regulations. Such

records must be adapted to the

particular business that the certified

operation is conducting, fully disclose

all activities and transactions of the

certified operation in sufficient detail to

be readily understood and audited, be

maintained for not less than 5 years

beyond their creation, and be sufficient

to demonstrate compliance with the Act

and regulations. Certified operations

must make the records required by this

regulation available for inspection and

copying by authorized representatives of

the Secretary, the applicable State

program’s governing State official, and

the certifying agent. Access to such

records must be provided during normal

business hours.

Examples of Records. Each exempt,

excluded, and certified operation

should maintain the records which

demonstrate compliance with the Act

and the regulations applicable to it and

which it believes establish an audit trail

sufficient to prove to the Secretary, the

applicable State program’s governing

State official, and the certifying agent

that the exempt, excluded, or certified

operation is and has been in compliance

with the Act and regulations.

13524 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

Examples of records include:

Application and supporting documents

for certification; organic system plan

and supporting documents; purchased

inputs, including seeds, transplants,

livestock, and substances (fertilizers,

pesticides, and veterinary biologics

consistent with the livestock provisions

of subpart C), cash purchase receipts,

receiving manifests (bills of lading),

receiving tickets, and purchase invoices;

field records (planting, inputs,

cultivation, and harvest); storage records

(bin register, cooler log); livestock

records, including feed (cash purchase

receipts, receiving manifests (bills of

lading), receiving tickets, purchase

invoices, copies of grower certificates),

breeding records (calendar, chart,

notebook, veterinary documents),

purchased animals documentation (cash

purchase receipts, receiving manifests

(bills of lading), receiving tickets,

purchase invoices, copies of grower

certificates), herd health records

(calendar, notebook, card file, veterinary

records), and input records (cash

purchase receipts, written records,

labels); producer invoice; producer

contract; receiving manifests (bills of

lading); transaction certificate; producer

certificate; handler certificate; weigh

tickets, receipts, and tags; receiving

tickets; cash purchase receipts; raw

product inventory reports and records;

finished product inventory reports and

records; daily inventories by lot; records

as to reconditioning, shrinkage, and

dumping; production reports and

records; shipping reports; shipping

manifests (bills of lading); paid freight

and other bills; car manifests; broker’s

contracts; broker’s statements;

warehouse receipts; inspection

certificates; residue testing reports; soil

and water testing reports; cash receipt

journals; general ledgers and supporting

documents; sales journals; accounts

payable journals; accounts receivable

journals; cash disbursement journals;

purchase invoices; purchase journals;

receiving tickets; producer and handler

contracts; cash sales receipts; cash

purchase journals; sales invoices,

statements, journals, tickets, and

receipts; account sales invoices; ledgers;

financial statements; bank statements;

records of deposit; canceled checks;

check stubs; cash receipts; tax returns;

accountant’s or other work papers;

agreements; contracts; purchase orders;

confirmations and memorandums of

sales; computer data; computer

printouts; and compilations of data from

the foregoing.

Request for Comment. This proposal

provides that all ingredients in a

multiingredient product identified as

organic must have been produced by a

production or handling operation

certified by an accredited certifying

agent. We are seeking comment on the

following question. Should handlers be

allowed to identify organically

produced products produced by exempt

production operations as organic

ingredients? Such identification would

be restricted to the ingredients list on

the information panel. This may provide

a wholesale outlet for organically

produced agricultural products

produced by producers exempted from

certification because their gross

agricultural income from organic sales

totals $5,000 or less annually.

Compliance with Federal Statutes and

Regulations. Any agricultural product

that is sold, labeled, or represented as

‘‘100 percent organic,’’ ‘‘organic,’’ or

‘‘made with organic (specified

ingredients)’’ must be produced and

handled in accordance with the

requirements in these regulations.

Organic agricultural products must be

produced and handled in compliance

with the Federal Meat Inspection Act,

the Poultry Products Inspection Act,

and the Egg Products Inspection Act,

concerning meat, poultry, and egg

products; the Federal Food, Drug, and

Cosmetic Act; the Federal Insecticide,

Fungicide, and Rodenticide Act; and

any other applicable Federal statute and

its implementing regulations.

Foreign Applicants. The regulations

in this part, as applicable, apply equally

to domestic and foreign applicants for

accreditation, accredited certifying

agents, domestic and foreign applicants

for certification as organic production or

handling operations, and certified

production and handling operations

unless otherwise specified.

Applicability—Changes Based on

Comments

This subpart differs from our first

proposal in several respects as follows:

(1) Exception for Handlers Serving

Three or Fewer Certified Operations. We

have removed the provision that would

have allowed handlers providing

services to fewer than three certified

organic producers to operate without

separate certification under the NOP

(§ 205.201). Such handlers will now

have to be certified unless otherwise

exempted or excluded from certification

under § 205.101 of these regulations. We

have taken this action because we

believe that the first proposal invites

problems, such as making certain that

the contracted handler maintains

compliance with the Act and

regulations, taking enforcement actions

against persons violating the Act and

regulations, and being equitable to all

handlers since large-volume handling

operations may qualify for inclusion

under the provision on the basis of few

clients while small-volume handlers

would be disqualified because they have

three or more clients.

More than 100 comments were

received, most from consumers, in

opposition to the provision. Many of the

commenters erroneously interpreted the

provision as an exemption for handlers

of product for less than three certified

operations. Most of these commenters

expressed the belief that it is a violation

of the Act to allow handlers to operate

through inclusion under another

certified operation’s certification rather

than through separate certification

under the Act and regulations. Several

commenters stated that it is

unacceptable to exempt handling

operations providing services to fewer

than three certified entities from

separate certification. Several

commenters stated that operations that

process products from a certified

producer should always be certified.

Several State departments of agriculture

and others stated that the exemption for

handlers servicing fewer than three

certified operations does not make

sense. They emphasized that certified

operations could produce very large

quantities of organic product and a

large-scale handler may contract with

only a few certified producer

operations. Therefore, they called for

elimination of the exemption. A few

commenters questioned the certified

operation’s ability to ensure that the

contracted handler maintains

compliance with the Act and

regulations. They expressed their belief

that the certified operation would have

no authority to maintain compliance

with the Act within a facility it neither

owns nor manages.

We never intended to exempt

handlers of fewer than three certified

operations from certification. Rather, we

proposed a means by which handlers of

fewer than three certified operations

could be covered under the certification

of a certified operation for which it

provides handling services.

Several of the commenters favored the

provision that any handling operation

that provides handling services to fewer

than three certified entities that produce

or handle agricultural products that are

or that are intended to be sold, labeled,

or represented as organic or made with

certain organic ingredients would not be

required to be separately certified apart

from the operations for which it

provides such services. However,

supporters of the concept differed in

their position on the proposal. Most

stated that the provision would work

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13525

only if it is made clear that a handler

can provide services to only one or two

separate entities and qualify for the

exemption and only if included in the

certifications of and inspected along

with the entities for which the handler

will provide the services. They further

emphasized that all applicable

standards must be met. A few

supporters recommended that there be a

contract between the handler and the

certified operation and that the certified

operation be responsible for any failure

of the handler to adhere to these

regulations. Another commenter stated

that, if handlers are to be exempt from

certification, the qualifying parameter

for exemption should be based upon

economic value similar to that for

production operations.

Two commenters supported the

proposal but wanted the fewer-thanthree-certified-operations limitation

removed. One of the commenters, a

nonprofit agricultural organization,

expressed the belief that the limitation

needlessly restricts commercial activity,

invites an excessive amount of

paperwork related to certification

applications, and provides no greater

assurances for quality control. This

commenter, referring to the definition of

handling operation at section 6502(10)

of the Act, interpreted ‘‘to receive or

otherwise acquire’’ as synonymous with

taking legal title to the product. This

commenter stated that this

interpretation creates a distinct,

verifiable threshold which clearly

identifies those operations needing to be

certified and those that do not need to

be certified. Under the commenter’s

suggested system, handlers who take

legal title to organic products assume

responsibility for their subsequent

handling and are required to have their

operations certified. Any handler who

works on organic products without

taking legal title would have his or her

activities approved and monitored by

the certifying agent responsible for the

product when it arrived at the handler’s

door. The commenter believes that

noncertified handlers who wanted to

serve organic customers would quickly

learn to provide the quality control and

accountability requirements which

certifying agents expect to see.

We disagree with the commenters

who recommended removal of the

fewer-than-three-certified-operations

restriction on the grounds that the

proposal to limit exemptions to

handlers contracting with fewer than

three certified operations needlessly

restricts commercial activity, invites an

excessive amount of paperwork related

to certification applications, and

provides no greater assurances for

quality control. The primary

justification given for removal of the

fewer-than-three-certified-operations

restriction is the belief that any handler

who works on organic products without

taking legal title would have his or her

activities approved and monitored by

the certifying agent responsible for the

product when it arrived at the handler’s

door. First, it is unreasonable to expect

the certifying agent to be responsible for

monitoring noncertified handlers even if

they are providing services to an

operation certified by the certifying

agent. Second, we disagree with the

commenter’s interpretation that ‘‘to

receive or otherwise acquire’’ is

synonymous with taking legal title to

the product. ‘‘To receive or otherwise

acquire’’ involves the possession,

control, or custody of a product. Such

possession, control, or custody of a

product may or may not involve the

transfer of title to the product. In other

words, a handler may have possession,

control, or custody of the product under

a right derived from a certified

operation but not under a claim of the

handler’s title to the product.

(2) Certification for a Portion of a

Production or Handling Operation. We

have clarified that a portion of a

production or handling operation can be

certified. We have taken this action

because we agree with the association

commenter who suggested that the

Department clarify for potential

applicants for certification that a portion

of their production or handling

operation can be certified. The Act at

section 6506(b) authorizes the

certification of specific fields of a

production operation or parts of a

handling operation when: (1) In the case

of a production operation or field, the

area to be certified has distinct, defined

boundaries and buffer zones separating

the land being operated through the use

of organic methods from land that is not

being operated through the use of such

methods; (2) the operators of such

production or handling operation

maintain records of all organic

operations separate from records

relating to other operations and make

such records available at all times for

inspection by the Secretary, the

certifying agent, and the State program’s

governing State official; and (3)

appropriate physical facilities,

machinery, and management practices

are established to prevent the possibility

of a mixing of organic and nonorganic

products or a penetration of prohibited

chemicals or other substances on the

certified area. This clarification is found

at § 205.100 of this proposal.

(3) Exemption for Operations with

$5000 or Less in Income. We have

clarified at § 205.101(a)(1) that the

producer and handler exemption from

certification applies to production and

handling operations that sell

agricultural products as organic but

whose gross agricultural income from

organic sales totals $5,000 or less

annually. We have taken this action

because of commenter confusion over

whether the $5,000 level applied to all

sales of agricultural products or just

sales of organic agricultural products.

This action is consistent with the

position of a State department of

agriculture, which stated that the $5,000

exemption should apply to organic

sales, not sales of all agricultural

products. The commenter believes that,

as originally proposed, the regulation

would limit opportunities for organic

industry development, especially for

small producers and other small

agribusinesses.

(4) Applicability of Regulation to

Exempt Operations. We have revised

the producer and handler exemption,

provided to producers and handlers

with gross agricultural income from

organic sales totaling $5,000 or less

annually, to provide that such

operations are exempt from certification

and do not need to submit an organic

system plan to anyone for acceptance or

approval but must comply with the

requirements for organic production and

handling and the labeling requirements

for agricultural products produced on

an exempt or excluded operation. We

have taken this action because the first

proposal too narrowly addressed the

regulatory requirements that exempt

producers must meet. Our purpose is to

exempt such production and handling

operations from the regulatory and

financial burdens of certification but not

to exempt them from the standards for

organic production and handling. A

fundamental concept of this regulation

is to establish a label for organic. To the

extent that these entities will be using

the term, ‘‘organic,’’ to describe their

product, they must be truthful. If they

don’t comply with the other

requirements of this part, they cannot

truthfully describe their product as

organic.

Several State commenters expressed

the belief that the producer exemption

would be too difficult to enforce. Some

expressed the belief that exempt

production operations would still

require monitoring to verify compliance

with organic standards. A State

department of agriculture commented

that some monitoring of uncertified

operations would still be needed to

verify compliance with standards;

otherwise there would be no guarantee

that standards would be met for

13526 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

products being sold as organic. Another

State, which expressed strong

disagreement with the producer

exemption, asked how complaints

against such producers would be

reconciled if they are exempt from the

NOP and do not have to maintain

records over a multiple-year period.

This commenter stated its intent, under

its State program, to require certification

of organic production operations

producing less than $5,000 in

agricultural product yearly. This same

commenter acknowledged the Federal

program’s obligation to provide the

exemption as required by section

6505(d) of the Act.

A producer raised the issue of having

exempt operations provide affidavits of

compliance with the Act and

regulations except for certification. A

certifying agent made the observation

that the rule as first proposed would not

permit exempt producers, whether

operating under an affidavit or not, to

sell any of their products to a certified

operation for further processing unless

they were fully certified. This certifying

agent stated that it did not believe

excluding exempt producers from

selling any of their products to a

certified operation for further processing

unless they were fully certified was

consistent with the intent of the Act.

We disagree with both commenters.

First, we believe that an affidavit

program for exempt producers, opting to

exercise their right to the exemption,

would impose unnecessary regulation

upon entities that the Act clearly

intended not to impose such regulation

upon. Second, an affidavit program

would create a regulatory burden on the

Department and certifying agents that

would not be justified by the size of

such operations. We recognize, as

pointed out by commenters, that some

State programs currently require organic

production operations that would be

exempt under this national program to

register with the State and to comply

with requirements such as filing

financial records and maintaining

records of production methods and

substances used.

While we believe that an affidavit

program is not appropriate at the

national level, we do believe that States

would be authorized to regulate organic

operations exempted under the NOP’s

$5,000-or-less organic sales exemption

under an approved State program.

Under this proposal, producers and

handlers exempted under the NOP’s

$5,000-or-less organic sales exemption

will be exempt from the certification

regulations and will not have to submit

an organic system plan to anyone for

acceptance or approval but will be

required to comply with the

requirements for organic production and

handling and for labeling. States may

implement a program for monitoring the

activities of exempt production and

handling operations and enforcing

compliance with the NOP. States will be

permitted to require certification of

federally exempted producers and

handlers under an approved State

organic certification program. The

Department will consider any complaint

of noncompliance with these

regulations by an exempt production or

handling operation and take appropriate

action.

(5) Applicability of Federal Statutes.

We have added at § 205.102(c) reference

to a production or handling operation’s

responsibility for complying with all

applicable Federal statutes and their

implementing regulations as those

statutes may apply to the production

and handling of agricultural products.

We have made this addition as a means

of advising producers, handlers, and the

public that these regulations do not

supersede or alter a producer’s or

handler’s responsibilities under other

Federal statutes and their implementing

regulations.

A processors association urged the

Department to advise the public in this

rule that food products produced and

processed under the organic standard

must comply with applicable provisions

of the Federal Food, Drug, and Cosmetic

Act; the Federal Meat Inspection Act;

the Poultry Products Inspection Act;

and all other relevant statutes and their

implementing regulations, in all

respects, especially related to

adulteration and misbranding.

(6) Recordkeeping Provisions. We

have rewritten the recordkeeping

provisions removing all references to

specific records or types of records

which must be maintained. In their

place, we are requiring that certified

operations maintain records adapted to

the particular business that the certified

operation is conducting. Such records

must disclose all activities and

transactions of the certified operation in

sufficient detail as to be readily

understood and audited and must be

sufficient to demonstrate compliance

with the Act and regulations. We have

taken this action because we believe

that it is impracticable to specify in

detail every class of records which may

be found essential in demonstrating

compliance with the Act and

regulations. Different types of certified

production and handling operations

will, by the very nature of their

business, be required to maintain

different records to establish their

compliance with the Act and

regulations.

A certifying agent and a beekeepers

association expressed support for the

recordkeeping requirements in the first

proposal. The beekeeping association

emphasized the value of such

recordkeeping in monitoring the use of

substances. A marketing association and

a State commented that the

recordkeeping period for a list of

substances applied to a certified

operation should be changed from 3 to

5 years to be consistent with the

requirements of section 6511(d) of the

Act. A research foundation suggested

removal of the requirement for

identifying the name and address of the

person who applies and who has

applied any substance to any part of the

farm and any livestock or other

agricultural product. A trade association

recommended the addition of a new

paragraph addressing the records

required to be maintained by crop

production operations to establish an

audit trail. Specifically, the commenter

recommended that the new paragraph

require that an audit trail be maintained

by all organic crop production

operations, which records: (1) All

sources and amounts of all off-farm

inputs; (2) the dates, rate, method of

application, location, reason for use,

and name and address of applicator for

all off-farm inputs; (3) the dates,

projected and actual yield, and harvest

location of all crops produced by the

operation, both organic and nonorganic;

(4) the dates, quantities, and locations of

all crops stored; (5) the transport

system(s) used to distribute organic

crops; and (6) the product name, date,

quantity, and buyer of all products sold,

both organic and nonorganic. A State

commenter stated that the maintenance

of records on a certified operation is

important, but there must be restraint in

requiring redundant or irrelevant

information. Approximately 50 retail

commenters, speaking on behalf of a

producer handler, stated that the

recordkeeping requirements were

burdensome and overly complicated.

Comments indicated that there was

some concern regarding what records

had to be maintained by certified

operations. Commenters were

concerned about requiring the

maintenance of the correct records for

establishing an audit trail, avoiding the

retention of redundant or irrelevant

records, and minimizing the burden and

complexity of the recordkeeping.

We agree with the commenters who

stated that the recordkeeping period for

a list of substances applied should be

consistent with the 5-year

recordkeeping requirements of the Act.

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13527

Accordingly, this proposal at

§ 205.103(b)(3) requires that certified

operations maintain all records

applicable to their organic operations

for not less than 5 years beyond their

creation. We disagree with those

commenters who called for more

specifics relative to what records need

to be maintained and agree with those

commenters who expressed concern

regarding the magnitude of records

required to be maintained. This

proposal provides each production and

handling operation with the opportunity

to decide for itself what records are

necessary to demonstrate its compliance

with the Act and regulations.

(7) Exemption from Prevention of

Commingling. We have removed the

requirement that a handling operation

or portion of a handling operation that

handles only agricultural products that

contain less than 50 percent organic

ingredients by total weight of the

finished product (excluding water and

salt) that is exempt from the

requirements in this part comply with

the provision for the prevention of

commingling. As noted in item 8 below,

exempt handlers of agricultural

products that contain at least 50 percent

organic ingredients by weight will also

be exempt from complying with the

provision for the prevention of

commingling. We have taken this action

because the commingling of agricultural

products is often a part of the processing

activity. Such operations must,

however, comply with all of the

applicable labeling provisions of

subpart D including the prohibition on

the combining of organic and

nonorganic forms of the same

agricultural product. In other words, the

handler must not, for example, combine

organic and nonorganic corn if corn is

to be shown on the information panel as

‘‘organic corn.’’

A commenter called for the removal

of the requirement that an exempt

handler comply with the provisions for

the prevention of commingling and

contact of organic products with

prohibited substances. The commenter

claimed that requiring exempt handlers

to prevent commingling of organic and

nonorganic products and contact of

organic products with prohibited

substances is inconsistent with the Act.

We do not agree. As noted above, we

have removed the prevention of

commingling requirement because the

commingling of agricultural products is

often a part of the processing activity.

We have not, however, removed the

requirement for the prevention of

contact of organic products with

prohibited substances because the

requirement is necessary to safeguard

the integrity of organic ingredients used

in the products being handled.

(8) Exemption for Handlers that

Handle Product Containing at Least 50

Percent Organic Ingredients. We have

provided at § 205.101(a)(4) that any

handling operation or portion of a

handling operation that handles

agricultural products that contain at

least 50 percent organic ingredients by

weight (excluding water and salt) that

chooses to not use the word, ‘‘organic,’’

on any panel other than the information

panel is exempt from the requirements

in these regulations, except the

provisions for prevention of contact of

organic products with prohibited

substances as set forth in § 205.272, the

labeling provisions of § 205.309, and the

recordkeeping provisions of

§ 205.101(c).

A commenter stated that the

Department is required under the Act to

exempt any handling operation or

portion of a handling operation that

processes agricultural products that

contain at least 50 percent organically

produced ingredients by weight

(excluding water and salt). We disagree

with the commenter. Section 6505(c)(1)

of the Act ties the exemption from

certification to use of the word,

‘‘organic,’’ on the principal display

panel. The Secretary, in consultation

with the National Organic Standards

Board (NOSB) and the Secretary of

Health and Human Services, may

require certification of any operation

that chooses to use the word, ‘‘organic,’’

on the principal display panel. This

proposal provides that handlers,

processing agricultural products that

contain at least 50 percent organically

produced ingredients by weight

(excluding water and salt), who choose

to only use the word, ‘‘organic,’’ on the

information panel are exempt from

certification. Handlers processing

agricultural products that contain at

least 50 percent organically produced

ingredients by weight (excluding water

and salt) who choose to use the word,

‘‘organic,’’ on any other panel, including

the principal display panel, must be

certified. Use of the word, ‘‘organic,’’ on

the principal display panel carries with

it connotations in the minds of

consumers regarding the organic nature

of the product which necessitate

certification of handlers of such

products. Further, requiring certification

of handlers of such products is

consistent with current industry

practice.

Applicability—Changes Requested But

Not Made

This subpart retains from our first

proposal regulations on which we

received comments as follows:

(1) Exemptions for Handlers.

Commenters stated that under no

circumstances should organic handling

operations be exempt from certification.

A few environmental organizations, a

certifying agent, and an industry

association commented that the first

proposal exceeded statutory authority

by broadening the producer exemption

in section 6505(d) of the Act to apply to

handlers. An agriculture research and

education organization stated that,

while the Act does not specifically

identify handling operations under the

producer exemption, including them is

a reasonable and workable

interpretation of the Act. The

commenter stated that the Act provides

an exemption to persons who sell no

more than $5,000 annually in value of

agricultural products and it sees no

reason why the exemption should not

include handlers. This commenter also

recommended that the NOP develop a

new category of exemption of up to

$10,000 for on-farm processing. The

commenter’s recommended exemption

would apply to value-added, made-onsite products, such as maple syrup,

jams, and relishes, and would allow

individuals to combine their production

and handling exemptions.

We do not agree with those

commenters who stated that the first

proposal exceeded statutory authority.

The title of the exemption in the Act

(section 6505(d)) specifically refers to

small farmers. However, the text to the

exemption provides, in full, that

‘‘subpart (a)(1) shall not apply to

persons who sell no more than $5,000

annually in value of agricultural

products.’’ ‘‘Person’’ is defined in the

Act as ‘‘an individual, group of

individuals, corporation, association,

organization, cooperative, or other

entity.’’ The Act defines ‘‘agricultural

product’’ as ‘‘any agricultural

commodity or product, whether raw or

processed, including any commodity or

product derived from livestock, that is

marketed in the United States for

human or livestock consumption.

Handlers are covered by the definition

of ‘‘person’’ and ‘‘agricultural product’’

and are thereby eligible for exemption.

The financial burden of certification

is no less for handlers with sales of no

more than $5,000 annually than it is for

producers with sales of no more than

$5,000 annually. Therefore, since the

cost of certification is the primary

reason for exempting production

13528 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

operations with sales of no more than

$5,000 annually, it is reasonable to also

exempt handling operations with sales

of no more than $5,000 annually.

This proposal exempts production

and handling operations that sell

agricultural products as ‘‘organic’’ but

whose gross agricultural income from

organic sales totals $5,000 or less

annually. Production and handling

operations exempted on the basis of

organic sales of $5,000 or less annually

are exempt from certification under

Subpart E and do not need to submit an

organic system plan under § 205.201 but

must comply with the applicable

organic production and handling

requirements of subpart C and the

labeling requirements of § 205.309.

Exemptions for production operations

and handling operations are separate

exemptions. Therefore, a production

operation that is also a handling

operation, due to its production and sale

of processed products, must qualify for

each exemption separately. The balance

of this paragraph lists exemption

eligibility examples. A production

operation with gross agricultural income

from organic sales totaling $5,000 or less

annually will be exempt from

certification as an organic production

operation. A handling operation with

gross agricultural income from organic

sales totaling $5,000 or less annually

will be exempt from certification as an

organic handling operation. A

production and handling operation with

gross agricultural income from organic

production sales totaling $5,000 or less

annually and organic handling sales

totaling $5,000 or less annually will be

exempt from certification as an organic

production operation and from

certification as an organic handling

operation. A production and handling

operation with gross agricultural income

from organic production sales totaling

$5,000 or less annually and organic

handling sales totaling more than $5,000

annually will be exempt from

certification as an organic production

operation only. A production and

handling operation with gross

agricultural income from organic

production sales totaling more than

$5,000 annually and organic handling

sales totaling $5,000 or less annually

will be exempt from certification as an

organic handling operation only.

Products marketed by exempt

production operations and handling

operations cannot be represented as

certified organic or display the U.S.

Department of Agriculture (USDA)

organic seal. Products from exempt

operations may not be included as

organic ingredients in a multiingredient

product produced or processed in a

certified operation. We anticipate that

this exemption will be used primarily

by small market gardeners, hobbyists,

and other small producers who sell

produce and other agricultural products

at farmers markets and roadside stands

to consumers within their communities.

(2) Exceeding $5000 Limit for

Exemption. A few commenters,

including a State, raised the concern

that an organic operation might not

anticipate sales over $5,000 but could

exceed its exemption due to a bumper

crop or market price increases, putting

the operation in violation. The

Department believes that once an

exempted operation reaches the $5,000

maximum exemption level, it is

compelled to seek certification, which it

would have to obtain and maintain if it

is to continue to sell organic products.

A certified organic operation, including

one which previously lost its exempt

status, could switch from certified to

exempt if its size or operations were

changed such that it no longer sold

more than $5,000 annually in value of

agricultural products.

(3) Certification of Exempt

Operations. A producer interpreted

‘‘exempt’’ as meaning that operations

exempted from certification could not

be certified as an organic operation.

This interpretation is not correct. Any

production or handling operation,

including an exempt operation, which

makes application for certification as an

organic operation and meets the

requirements for organic certification

may be certified.

(4) Increasing the Statutory Limitation

of $5000 for Exemption. In the first

proposal, we asked for comments as to

whether the $5,000 level for exemption

from certification should be raised to

$10,000 or to another amount and why

an increased amount would be

appropriate. Suggested levels ranged

from $2,000 to $50,000. The suggested

levels and justifications for such levels

are not sufficiently consistent for us to

recommend that Congress change the

$5,000 level.

In addition, we requested data as to

the number of operations that may be

exempt under the current $5,000

limitation for exemption and the

number of operations that may be

exempt under any new monetary

amount suggested. Comments from the

few States responding to the request for

data as to the number of operations that

may be exempt under the current $5,000

limitation revealed that from one-third

to one-half of organic producers in the

commenting States would be exempt

under the statutorily authorized $5,000

exemption limitation.

(5) Certification of Retail Operations.

A commenter said the first proposal

ignored retail operations which contract

with an organic farm to produce organic

products with the store’s brand on the

label. The commenter said the retail

operation should be certified because it

is responsible if violation occurs in the

organic production or handling of the

branded product. The commenter is

incorrect in suggesting that the retailer

would be held responsible for a

violation if the violation occurred at the

production or handling facility. When a

retail operation contracts for the

production, packaging, or labeling of

organic product, it is the certified

production or handling operation that is

responsible for meeting the applicable

organic production or handling

requirements under the Act and these

regulations. If a violation occurs in the

organic production or handling of the

product, the certified production or

handling operation retains

responsibility for the violation even if

the retailer’s name is on the label.

(6) Exemption for Products

Containing Less than 50 Percent

Organic Ingredients. Several

commenters representing States and

organic organizations opposed the

exemption of a handling operation or

portion of a handling operation that

handles only agricultural product

containing less than 50 percent organic

ingredients. They stated that handling

operations creating products with

organic ingredients should be certified

regardless of the percentage of organic

ingredients found in the products they

produce. These commenters stated that

exemptions from certification

undermine audit trails and consumer

confidence. Each of these commenters

called for removal of the proposed

exemption. Another commenter stated

that, if a product is less than 50 percent

organic, then it is not organic and

should not be labeled or sold as such.

We disagree with the comments.

Because such products consist of less

than 50 percent organic ingredients,

handlers may only use the word,

‘‘organic,’’ on the information panel of

such products to truthfully represent the

organic nature of the ingredients. Such

handlers must also comply with the

recordkeeping provisions of

§ 205.101(c), the prevention of contact

of organic products with prohibited

substances provisions of § 205.272, and

the labeling provisions of § 205.309.

(7) Ensuring Organic Ingredients are

Not Contaminated. A commenter asked

how the Department would ensure that

organic ingredients are not

contaminated without certification of

the handling operation creating the final

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13529

product. Handling operations that

handle agricultural products containing

less than 50 percent organic ingredients

and at least 50 percent organic

ingredients that are exempt from

certification must maintain records

sufficient to: (1) Prove that ingredients

identified as organic were organically

produced and handled, and (2) verify

quantities produced for such

ingredients. Such operations are

required at § 205.101(c) of this proposal

to allow representatives of the Secretary

and the applicable State program’s

governing State official access to these

records for inspection and copying

during normal business hours to

determine compliance with the

applicable regulations.

(8) Exclusion for Handlers that

Receive and Distribute Prepackaged

Product. Commenters raised several

issues regarding the exclusion of

handlers who receive and distribute

prepackaged organic products. At least

three certifying agents commented that

all retailers should be certified unless

they handle only organic product in a

‘‘final, sealed retail container,’’ or ‘‘final

impermeable containers.’’ The

commenters are apparently seeking

further assurance that nothing is added

to the organic product while under

control of a distributor or retail

operation. Because of the wide variety

of organic products and the special

needs of some of those products,

establishing restrictions on the kind of

containers used for transportation could

unfairly treat some products and

commodity industries. For example,

some organic products may require

containers which ‘‘breathe’’ or allow the

exchange of air and outside

temperatures. Nonpermeable containers

could hasten spoilage of some fresh and

processed organic products.

A few certifying agents proposed that

distributors and trucking companies

which transport agricultural products

also should be certified under this part.

However, such transportation

operations do not carry out the

functions specified in the definitions for

handler and handling operations.

Distributors and trucking companies

have traditionally been excluded from

requirements of agricultural production

regulations. The Act cannot be used to

regulate activities or entities beyond its

regulatory authorities. In this case, it is

the responsibility of producers,

handlers, interim handlers, and retailers

to meet the requirements of this

regulation by ensuring that their

contracted shippers and distributors

understand, respect, and protect the

integrity of the organic products they

are transporting.

An organic association requested that

proper notification of ‘‘good organic

handling practices’’ be made to the

transportation, trucking, and public

warehousing sectors to inform them of

their responsibilities. The commenter

stated that the notification should

include requirements for audit trail

records, measures needed to prevent

commingling and contamination by

prohibited substances. This commenter

expressed the belief that excluded

handlers should preregister and provide

a signed statement of acknowledgment

of the requirements. Regarding

enforcement of the suggested

requirements, this commenter stated

that enforcement of the requirements

should be funded and administered by

existing State and Federal inspection

services.

We acknowledge the need for

education regarding the requirements of

this rule as well as such issues as the

handling of organic products. The NOP,

in cooperation with the NOSB, will

provide educational material to the

public regarding the requirements of

this rule. Such educational material will

include good organic handling practices

made available to the transportation,

trucking, and public warehousing

sectors. However, we disagree with the

suggestions calling for preregistration of

exempt and excluded handlers and

enforcement of the requirements by

existing State and Federal inspection

services. We believe the suggestions

create a burden, on exempt and

excluded handlers, the Department, and

certifying agents, not justified by the

nature of the handling performed.

(9) Seafood Products. A marketing

institute recommended that the first

proposal be revised to address seafood

products in a separate seafood section

and to include provisions that apply to

seafood harvested in the wild. This

commenter stated that wild-caught

seafood should be allowed to be labeled

as organic. A processors association also

called for the labeling of wild-caught

seafood as organic.

While the first proposal contained no

standards solely for aquatic animals in

an organic operation, it did contain

provisions applicable to their

production. The first proposal allowed

fish and crustaceans, among other

livestock types, to be sold, labeled, or

represented as organic if such livestock

had been brought into an organic

operation no later than the earliest

commercially available stage of life.

Several commenters suggested that the

management of aquatic animals differs

sufficiently from mammals and poultry

to require separate regulatory

provisions. We concur and intend to

develop detailed practice standards for

specific aquatic animals as discussed

further under the production and

handling subpart.

Applicability—Additional Provisions

Upon further review of the

applicability provisions in the first

proposal, we have decided to propose

the following additions and changes.

(1) Foreign Applicants. We have

added a new provision at § 205.104

addressing applicability of these

regulations to foreign applicants. We

have made this addition to clarify our

intent that the regulations in this part

apply equally to domestic and foreign

applicants for accreditation, accredited

certifying agents, domestic and foreign

applicants for certification as organic

production or handling operations, and

certified organic production and

handling operations unless otherwise

specified in these regulations.

(2) New Exclusions. We have

excluded retail food establishments that

process or prepare raw and ready-to-eat

food from most of the requirements in

these regulations. An excluded retail

food establishments must comply with

the requirements for the prevention of

contact with prohibited substances

provisions of § 205.272 and the labeling

provisions of § 205.309. We have

excluded such retail food

establishments because comments to the

first proposal concerning the issue of

certification of retail food

establishments (restaurant, delicatessen,

bakery, grocery store, or other retail

outlet) preparing, packaging, or

processing raw and ready-to-eat organic

agricultural products that are previously

labeled as ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with organic

(specified ingredients)’’ were

completely divergent. The first proposal

also contained an inconsistency which

would have required a supermarket

delicatessen to be certified but would

have excluded from certification a

restaurant with carry-out delicatessen

products.

As the comments discussed below

show, there is clearly a great deal of

public concern regarding the handling

of organic products by retail food

establishments. Should we decide to

regulate retail food establishments

under the NOP, we will proceed with

rulemaking and provide an opportunity

for public comment.

Our exclusion of retail food

establishments from this proposal does

not prevent a State from developing an

organic retail food establishment

certification program or otherwise

regulating retail food establishments

that prepare, package, or process organic

13530 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

agricultural products. Texas and

Maryland currently have retailer

certification programs.

No retailer, regardless of this

exclusion and the exceptions found in

the definitions for ‘‘handler’’ or

‘‘handling operation,’’ may sell or label

a product as organically produced and

handled or fix a label to or provide other

market information concerning an

agricultural product if such label or

information implies that such product is

produced and handled using organic

methods unless such product has been

produced and handled in accordance

with the Act and these regulations. Any

retailer who knowingly sells or labels a

product as organic, except in

accordance with the Act and these

regulations, will be subject to a civil

penalty of not more than $10,000 under

this program. Such retailer may also be

subject to enforcement actions and

penalties under Federal statutes and

their implementing regulations

administered by other agencies of the

Federal Government.

More than 90 commenters, including

an organic association, stated that the

retailer exclusion in the first proposal

violates the requirement to certify all

handling operations. The organic

association believes that processing, as

defined in the Act, includes all the

normal culinary arts, food

manufacturing, and packaging. All of

these commenters, including some

States, recommended removal of the

exclusion. Several commenters,

including a few States, expressed

concern that exclusions from

certification eliminate effective audit

trails and undermine consumer

confidence in organic products. One

State commented that it believed retail

food establishments should be certified

because they are the last handler link

from producer to consumer.

Several commenters stated that

retailers who receive organic product

have a high potential for loss of integrity

of the organic product due to accidental

misuse of pesticides and sanitizers

during shipping or storage and to

inadvertent commingling with

nonorganic product. The commenters

believe that, even though a retailer may

only display and sell organic product,

such retailer should be certified and

monitored for compliance to ensure

proper treatment of the product in

shipment and storage. A State agency,

however, cautioned against establishing

another burden on the organic industry.

The commenter said that if sorting from

bulk and repackaging into smaller

packages requires certification, then

many small ‘‘natural food’’ retail outlets

would find certification more costly

than the economic benefits of marketing

organic products. The commenter said

many small, natural food retail food

establishments would likely stop

carrying organic items.

A few commenters stated there is a

high potential for fraud among retailers

who have the opportunity to repackage,

mislabel, and sell nonorganic product as

organic. Therefore, they believe that all

retailers must be subject to certification

or some form of oversight to assure that

they are not mislabeling product.

A commenter representing a large

retail grocery store operation said that

good identification procedures enable

retail stores to keep organic product

separated from nonorganic product

during transportation, storage, and instore displays. The commenter

continued that unduly rigid

requirements would be burdensome on

retailers. The commenter indicated that

the costs of certification and compliance

may outweigh the benefits of carrying

organic product.

Another commenter from a major

retail food establishment suggested that

retailers that wash and sort fresh organic

produce for display should be required

to follow ‘‘good organic handling

practices’’ that would establish

recordkeeping responsibilities and

prevent commingling with nonorganic

products and contamination by

prohibited materials. The commenter

suggested that conformance could be

maintained by existing State or local

health inspectors or Federal inspectors

with special training in organic

handling systems. However, there is no

authority in the Act to require the

services of State or local inspectors.

Another retailer stated that retailers

will comply with regulations because

consumers will hold retailers

responsible for deficiencies or illegal

actions through the entire production

and processing chain for agricultural

products.

A commenter stated that, if a

restaurant serves organic foods, it

should be allowed to so state. The

commenter went on to say that

restaurants and grocery stores have a

right to state that they used organic

ingredients in preparing a given dish.

This commenter believes that

restaurants and grocery stores selling

organic products, even if they prepare

them, should not have to be certified. A

few commenters claimed that

processing, as defined in the Act,

includes all culinary arts and food

manufacturing. They stated that

restaurants must be certified or, at the

very least, be required to keep records

of organic foods prepared. A State

commenter who stated that exemptions

undermine audit trails and consumer

confidence suggested that restaurants

serving organic foods be required to

maintain records showing the origin and

certification status of raw agricultural

ingredients used in the restaurant’s food

products.

The Department routinely monitors

compliance of various food producers,

handlers, distributors, and retailers

which are regulated under a variety of

Departmental programs. The

Department responds to consumer

complaints and often conducts

unannounced compliance investigations

and audits of agricultural industry

businesses. The Department

understands the need for and commits

Departmental resources to this organic

program. In addition, oversight of these

operations can be conducted by State

agencies.

Subpart C—Organic Crop, Wild Crop,

Livestock, and Handling Requirements

Proposal Description

This subpart sets forth the

requirements with which production

and handling operations must comply

in order to sell, label, or represent

agricultural products as ‘‘100 percent

organic,’’ ‘‘organic,’’ or ‘‘made with

organic (specified ingredients).’’ The

producer or handler of an organic

production or handling operation must

comply with all applicable provisions of

subpart C. Any practice implemented in

accordance with this subpart must

maintain or improve the natural

resources, including soil and water

quality, of the operation. Production

and handling operations which sell,

label, or represent agricultural products

as organic in any manner and which are

exempt or excluded from certification

must comply with the requirements of

this subpart, except for the development

of an organic system plan.

Production and Handling (General).

The Organic Food Production Act of

1990 (OFPA or Act) requires that all

crop, wild crop, livestock, and handling

operations requiring certification submit

an organic system plan to their

certifying agent and, where applicable,

the State organic program. The organic

system plan is a detailed description of

how an operation will achieve,

document, and sustain compliance with

all applicable provisions in the OFPA

and these regulations. The certifying

agent must concur that the proposed

organic system plan fulfills the

requirements of Subpart C, and any

subsequent modification of the organic

plan by the producer or handler must

receive the approval of the certifying

agent.

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13531

The organic system plan is the forum

through which the producer or handler

and certifying agent collaborate to

define, on a site-specific basis, how to

achieve and document compliance with

the requirements of certification. The

organic system plan commits the

producer or handler to a sequence of

practices and procedures resulting in an

operation that complies with every

applicable provision in the regulations.

Accreditation qualifies the certifying

agent to attest to whether an organic

system plan comports with the organic

standard. The organic system plan must

be negotiated, enacted, and amended

through an informed dialogue between

certifying agent and producer or

handler, and it must be responsive to

the unique characteristics of each

operation.

An organic system plan contains six

components. First, the organic system

plan must describe the practices and

procedures used, including the

frequency with which they will be used,

in the certified operation. Second, it

must list and characterize each

substance used as a production or

handling input. Third, it must identify

the monitoring techniques which will

be used to verify that the organic plan

is being implemented in a manner

which complies with all applicable

requirements. Fourth, it must explain

the recordkeeping system used to

preserve the identity of organic products

from the point of certification through

delivery to the customer who assumes

legal title to the goods. Fifth, the organic

system plan must describe the measures

to be taken to avoid contact between

certified production and handling

operations and prohibited substances

and document how the operation will

prevent commingling of organic and

nonorganic products. Finally, the

organic system plan must contain the

additional information deemed

necessary by the certifying agent to

evaluate site-specific conditions

relevant to compliance with these or

applicable State program regulations.

Producers or handlers may submit a

plan developed to comply with other

Federal, State, or local regulatory

programs if it fulfills the requirements

of an organic system plan.

The first element of the organic

system plan requires a narrative or other

descriptive format that identifies the

practices and procedures to be

performed and maintained, including

the frequency with which they will be

performed. Practices are tangible

production and handling techniques

such as the method for applying

manure, the mechanical and biological

methods used to prepare and combine

ingredients and package finished

products, and the measures taken to

exclude pests from a facility. Procedures

are the protocols established for

selecting appropriate practices and

materials for use in the organic system

plan, such as a procedure for locating

commercially available organically

produced seed. Procedures reflect the

decision-making process used to

implement the organic system plan.

By requiring information on the

frequency with which production and

handling practices and procedures will

be performed, this proposal calls for the

organic system plan to include an

implementation schedule, including

information on the timing and sequence

of all relevant production and handling

activities. The plan will include, for

example, information about planned

crop rotation sequences, the timing of

any applications of organic materials,

and the timing and location of soil tests.

Livestock management practices might

describe development of a rotational

grazing plan or addition of mineral

supplements to the feed supply. A

handling operation might identify steps

involved in locating and contracting

with farmers who could produce

organic ingredients that were in short

supply.

The second element that must be

included in an organic system plan is

information on the application of

substances to land, facilities, or

agricultural products. This requirement

encompasses both natural and synthetic

materials allowed for use in production

and handling operations. For natural

materials which may be used in organic

operations under specific restrictions,

the organic plan must detail how the

application of the materials will comply

with those restrictions. For example,

farmers who apply manure to their

fields must document in their organic

system plans how they will prevent that

application from contributing to water

contamination.

The third element of the organic

system plan is a description of the

methods used to evaluate its

effectiveness. Producers and handlers

are responsible for identifying

measurable indicators that can be used

to evaluate how well they are achieving

the objectives of the operation. For

example, production objectives could be

measured through regular tallies of

bushels or pounds of product sold from

the farm or in numbers of cases sold

from a handling operation. Indicators

that can identify changes in quality or

effectiveness of management practices

could be relatively simple, such as the

information contained in a standard soil

test. The specific indicators used to

evaluate a given organic system plan

will be determined by the producer or

handler in consultation with the

certifying agent. Thus, if the organic

system plan calls for improvements in

soil organic matter content in a

particular field, it would include

provisions for analyzing soil organic

matter levels at periodic intervals. If

herd health improvement is an

objective, factors such as somatic cell

count or observations about changes in

reproductive patterns might be used as

indicators.

The fourth element of the organic

system plan is a description of the

recordkeeping system used to verify and

document an audit trail, as appropriate

to the operation. For each crop or wildcrop harvested, the audit trail must trace

the product from the field, farm parcel,

or area where it is harvested through the

transfer of legal title. A livestock

operation must trace each animal from

its entrance into through removal from

the organic operation. A handling

operation must trace each product that

is handled and sold, labeled, or

represented as organic from the receipt

of its constituent ingredients to the sale

of the processed product. In response to

several comments received, this

proposal provides information, found in

subpart B, § 205.103, on the records

needed to establish a verifiable audit

trail.

The fifth element which must be

included in an organic system plan

pertains to split production or handling

operations. This provision requires an

operation that produces both organic

and nonorganic products to describe the

measures used to prevent commingling

of organic and nonorganic products.

This requirement addresses contact of

organic products, including livestock,

organic field units, storage areas, and

packaging to be used for organic

products, with prohibited substances.

Requirements in the first proposal for

information about the nonorganic

portion of the operation have been

removed.

We do not propose to list the specific

requirements to be included in an

organic system plan. We expect to

publish a program manual to provide

guidance on appropriate documentation

for the certification process. In the

meantime, the accreditation process

provides an assurance that certifying

agents are competent to determine the

specific documentation they require to

review and evaluate an operation’s

organic system plan. Section

205.200(a)(6) allows a certifying agent to

request additional information needed

to determine that an organic system

plan meets the requirements of this

13532 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

subpart. The site-specific nature of

organic production and handling

necessitates that certifying agents have

the authority to determine whether

specific information is needed to carry

out their function.

Crop Production. Any field or farm

parcel used to produce an organic crop

must have been managed in accordance

with the requirements in §§ 205.203

through 205.206 and have had no

prohibited substances applied to it for at

least 3 years prior to harvest of the crop.

Such fields and farm parcels must also

have distinct, defined boundaries and

buffer zones to prevent contact with the

land or crop by prohibited substances

applied to adjoining land.

A producer of an organic crop must

manage soil fertility, including tillage

and cultivation practices, in a manner

that maintains or improves the physical,

chemical, and biological condition of

the soil and minimizes soil erosion.

Crop nutrients must be budgeted and

supplied through proper use of manure

or other animal and plant materials,

mined mineral substances, and other

substances approved for use under these

regulations. The producer must manage

animal and plant waste materials to

maintain or improve soil organic matter

content in a manner that does not

contribute to contamination of crops,

soil, or water by plant nutrients,

pathogenic organisms, heavy metals, or

residues of prohibited substances. Raw

animal manure must either be

composted, applied to land used for a

crop not intended for human

consumption, or incorporated into the

soil at least 90 days before harvesting an

edible product that does not come into

contact with the soil or soil particles

and at least 120 days before harvesting

an edible product that does come into

contact with the soil or soil particles.

Composted plant or animal waste

materials used for soil fertility must be

produced in compliance with the

Natural Resources Conservation

Service’s (NRCS) Conservation Practice

Standard for a Composting Facility

(Code 317). Uncomposted plant and

animal waste materials may be used to

amend soil fertility. A plant or animal

waste material that has been chemically

altered by a manufacturing process may

be used only if it is included on the

National List of synthetic substances

allowed for use in organic production.

Mined substances of low solubility may

be used as sources of crop nutrients, as

may mined substances of high

solubility, when justified by soil or crop

tissue analysis. Ashes of untreated plant

or animal materials which have not

been combined with a prohibited

substance and which are not included

on the National List of nonsynthetic

substances prohibited for use in organic

crop production may be used to produce

an organic crop. Synthetic crop nutrient

supplements that appear on the

National List of allowed synthetic

substances may be used as a source of

crop nutrients when justified by soil or

crop tissue analysis. The producer may

not use any fertilizer that contains a

synthetic substance not allowed for crop

production on the National List or use

sewage sludge. Burning crop residues as

a means of disposal, except for

trimmings of perennial crops burned to

suppress the spread of disease, is

prohibited.

The producer must use organically

grown seeds, annual seedlings, and

planting stock, except that untreated

nonorganic seeds and planting stock

may be used when equivalent organic

varieties are not commercially available.

Seed and planting stock treated with

substances that appear on the National

List of synthetic substances allowed for

use in organic production may be used

when an organically produced or

untreated variety is not commercially

available. Nonorganically produced

annual seedlings may be used when a

temporary variance has been established

due to damage caused by unavoidable

business interruption, such as fire,

flood, or frost. Planting stock used to

produce a perennial crop may be sold as

organically produced planting stock

after it has been maintained under a

system of organic management for at

least 1 year. Seeds, annual seedlings,

and planting stock treated with

prohibited substances may be used to

produce an organic crop when the

application of the substance is a

requirement of Federal or State

phytosanitary regulations. Seeds, annual

seedlings, or planting stock produced

through an excluded method may not be

used for organic production.

The producer is required to

implement a crop rotation, including

but not limited to sod, cover crops,

green manure crops, and catch crops.

The crop rotation must maintain or

improve soil organic matter content,

provide for effective pest management

in perennial crops, manage deficient or

excess plant nutrients, and control

erosion to the extent that these

functions are applicable to the

operation.

The producer must use preventive

practices to manage crop pests, weeds,

and diseases, including but not limited

to crop rotation, soil and crop nutrient

management, sanitation measures, and

cultural practices that enhance crop

health. Such cultural practices include

the selection of plant species and

varieties with regard to suitability to

site-specific conditions and resistance to

prevalent pests, weeds, and diseases.

Mechanical and biological methods that

do not entail application of synthetic

substances may be used as needed to

control pest, weed, and disease

problems that may occur. Pest control

practices include augmentation or

introduction of pest predators or

parasites; development of habitat for

natural enemies; and nonsynthetic,

nontoxic controls such as lures, traps,

and repellents. Weed management

practices include mulching with fully

biodegradable materials; mowing;

livestock grazing; hand weeding and

mechanical cultivation; flame, heat, or

electrical techniques; and plastic or

other synthetic mulches, provided that

they are removed from the field at the

end of the growing or harvest season.

Disease problems may be controlled

through management practices which

suppress the spread of disease

organisms and the application of

nonsynthetic biological, botanical, or

mineral inputs. When these practices

are insufficient to prevent or control

crop pests, weeds, and diseases, a

biological or botanical substance, or a

synthetic substance that is allowed on

the National List may be used provided

that the producer evaluates and

mitigates the effects of repetitive use of

the same or similar materials on

resistance and shifts in pest, weed, or

disease types. The producer must use a

pest, weed, or disease control substance

in compliance with the Federal

Insecticide, Fungicide, and Rodenticide

Act. Pest control substances produced

through excluded methods are

prohibited.

Any wild crop that is to be sold,

labeled, or represented as ‘‘100 percent

organic,’’ ‘‘organic,’’ or ‘‘made with

organic (specified ingredients)’’ must be

harvested from land to which no

prohibited substances have been

applied for at least 3 years prior to

harvest. The wild crop must also be

harvested in a manner that ensures such

harvesting or gathering will not be

destructive to the environment and will

sustain the growth and production of

the wild crop.

Livestock Production. We propose

that any livestock or edible livestock

product to be sold, labeled, or

represented as organic must be

maintained under continuous organic

management from birth or hatching,

with four exceptions. Poultry or edible

poultry products must be from animals

that have been under continuous

organic management beginning no later

than the second day of life. Milk or milk

products must be from animals that

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13533

have been under continuous organic

management beginning no later than 1

year prior to the production of such

products. A nonedible livestock product

must be derived from an animal that has

been under continuous organic

management beginning no later than 1

year prior to the harvest of the

nonedible product. Livestock used as

breeder stock may be brought from a

nonorganic operation into an organic

operation at any time, provided that, if

such livestock are gestating and the

offspring are to be organically raised

from birth, the breeder stock must be

brought into the organic operation prior

to the last third of pregnancy.

We also propose that, should an

animal be brought into an organic

operation pursuant to this section and

subsequently moved to a nonorganic

operation, neither the animal nor any

products derived from it may be sold,

labeled, or represented as organic.

Breeder or dairy stock that has not been

under continuous organic management

from birth may not be sold, labeled, or

represented as organic slaughter stock.

No organism produced with excluded

methods may be used for breeding

purposes or for the production of

livestock products intended to be sold,

labeled, or represented as organic. The

producer of an organic livestock

operation must maintain records

sufficient to preserve the identity of all

organically managed livestock and all

edible and nonedible organic livestock

products produced on his or her

operation.

We are proposing that, except for feed

additives and supplements included on

the National List of synthetic substances

allowed for use in organic livestock

production, the total feed ration for

livestock managed in an organic

operation must be composed of

agricultural products, including pasture

and forage, that are organically

produced. Any portion of the feed ration

that is handled must comply with

organic handling requirements. The

producer must not use animal drugs,

including hormones, to promote growth

in an animal or provide feed

supplements or additives in amounts

above those needed for adequate growth

and health maintenance for the species

at its specific stage of life. The producer

must not feed animals under organic

management plastic pellets for roughage

or formulas containing urea or manure.

The feeding of mammalian and poultry

slaughter by-products to mammals or

poultry is prohibited. The producer

must not supply animal feed, feed

additives, or feed supplements in

violation of the Federal Food, Drug, and

Cosmetic Act.

The producer of an organic livestock

operation must establish and maintain

preventive animal health care practices.

The producer must select species and

types of livestock with regard to

suitability for site-specific conditions

and resistance to prevalent diseases and

parasites. The producer must provide

organic feedstuffs, as well as vitamins,

minerals, and other supplements,

sufficient to meet the animals’

nutritional requirements. The producer

must establish appropriate housing,

pasture conditions, and sanitation

practices to minimize the occurrence

and spread of diseases and parasites.

Animals in an organic livestock

operation must be maintained under

conditions which provide for exercise,

freedom of movement, and reduction of

stress appropriate to the species.

Additionally, all physical alterations

performed on animals in an organic

livestock operation must be conducted

to promote the animals’ welfare and in

a manner that minimizes stress and

pain.

The producer of an organic livestock

operation must administer vaccines and

other veterinary biologics as needed to

protect the well-being of animals in his

or her care. When preventive practices

and veterinary biologics are inadequate

to prevent sickness, the producer may

administer medications included on the

National List of synthetic substances

allowed for use in livestock operations.

The producer may not administer

synthetic parasiticides to breeder stock

during the last third of gestation if the

progeny is to be sold, labeled, or

represented as organically produced.

After administering synthetic

parasiticides to dairy stock, the

producer must observe a 90-day

withdrawal period before selling the

milk or milk products produced from

the treated animal as organically

produced. Every use of a synthetic

medication or parasiticide must be

incorporated into the livestock

operation’s organic system plan subject

to approval by the certifying agent.

We propose that the producer of an

organic livestock operation must not

treat an animal in that operation with

antibiotics, any synthetic substance not

included on the National List of

synthetic substances allowed for use in

livestock production, or any substance

that contains a nonsynthetic substance

included on the National List of

nonsynthetic substances prohibited for

use in organic livestock production. The

producer must not administer any

animal drug, other than vaccinations, in

the absence of illness. The use of

hormones is prohibited in organic

livestock production, as is the use of

synthetic parasiticides on a routine

basis. The producer must not administer

synthetic parasiticides to slaughter stock

or administer any animal drug in

violation of the Federal Food, Drug, and

Cosmetic Act. The producer must not

withhold medical treatment from a sick

animal to maintain its organic status.

All appropriate medications and

treatments must be used to restore an

animal to health when methods

acceptable to organic production

standards fail. Livestock that are treated

with prohibited materials must be

clearly identified and shall not be sold,

labeled, or represented as organic.

Under this proposal, a livestock

producer must document in his or her

organic system plan the preventative

measures he or she has in place to deter

illness, the allowed practices he or she

will employ if illness occurs, and his or

her protocol for determining when a

sick animal must receive a prohibited

animal drug. The standards we are

proposing will not allow an organic

system plan that envisions an

acceptable level of chronic illness or

proposes to deal with disease by

sending infected animals to slaughter.

Neither situation can be considered

consistent with the principles of organic

management. The organic system plan

must reflect a proactive approach to

health management, drawing upon

allowable practices and materials.

Animals with conditions that do not

respond to this approach must be

treated appropriately and diverted to

nonorganic markets.

The producer of an organic livestock

operation must establish and maintain

livestock living conditions for the

animals under his or her care which

accommodate the health and natural

behavior of the livestock. The producer

must provide access to shade, shelter,

exercise areas, fresh air, and direct

sunlight suitable to the species, its stage

of production, the climate, and the

environment. This requirement includes

access to pasture for ruminant animals.

The producer must also provide

appropriate clean, dry bedding, and, if

the bedding is typically consumed by

the species, it must comply with

applicable organic feed requirements.

The producer must provide shelter

designed to allow for the natural

maintenance, comfort level, and

opportunity to exercise appropriate to

the species. The shelter must also

provide the temperature level,

ventilation, and air circulation suitable

to the species and reduce the potential

for livestock injury. The producer may

provide temporary confinement of an

animal because of inclement weather;

the animal’s stage of production;

13534 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

conditions under which the health,

safety, or well-being of the animal could

be jeopardized; or risk to soil or water

quality. The producer of an organic

livestock operation is required to

manage manure in a manner that does

not contribute to contamination of

crops, soil, or water by plant nutrients,

heavy metals, or pathogenic organisms

and optimizes nutrient recycling.

Handling. This proposal permits

mechanical or biological methods to be

used to process an agricultural product

intended to be sold, labeled, or

represented as ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with organic

(specified ingredients)’’ for the purpose

of retarding spoilage or otherwise

preparing the agricultural product for

market. It permits the use of

nonagricultural substances and

nonorganically produced agricultural

products that are included on the

National List in or on a processed

agricultural product intended to be sold,

labeled, or represented as ‘‘organic’’ or

‘‘made with organic (specified

ingredients).’’ This proposal prohibits a

handler from using ionizing radiation

for any purpose, an ingredient produced

with excluded methods, or a volatile

synthetic solvent in or on a processed

agricultural product intended to be sold,

labeled, or represented as ‘‘100 percent

organic,’’ ‘‘organic,’’ or ‘‘made with

organic (specified ingredients).’’

The practice standard for facility pest

management requires the producer or

handler operating a facility to use

management practices to prevent pests,

including removing pest habitat, food

sources, and breeding areas; preventing

access to handling facilities; and

controlling environmental factors, such

as temperature, light, humidity,

atmosphere, and air circulation to

prevent pest reproduction. Permitted

pest control methods include

augmentation or introduction of

predators or parasites for the pest

species; mechanical or physical

controls, including traps, light, or

sound; and nontoxic, nonsynthetic

controls, such as lures and repellents.

This proposal permits the use of a

nonsynthetic biological or botanical

substance or any synthetic substance to

control facility pests if the permitted

prevention and control practices are not

effective. Any substance applied must

be used in accordance with the label

provisions as approved by the

appropriate authority, such as the

Environmental Protection Agency (EPA)

or the Food and Drug Administration

(FDA). We propose that the handler of

an organic handling operation who uses

any biological, botanical, or synthetic

substance to control facility pests must

specify in the organic system plan all

measures taken or intended to be taken

to prevent contact between the

substance and any ingredient or

finished product intended to be sold,

labeled, or represented as organic or

made with organic ingredients. In

addition to these restrictions, the

handler must include in the organic

handling plan an evaluation of the

effects of repetitive use of the same or

similar materials on pest resistance and

shifts in pest types.

This proposal delineates practice

standards that must be followed by an

organic handling operation to prevent

the commingling of organic and

nonorganic products and protect organic

products from contact with prohibited

substances. An organic handling

operation must not use packaging

materials and storage containers or bins

that contain a synthetic fungicide,

preservative, or fumigant in handling an

organic product. The operation also

must not use or reuse any storage bin or

container that was previously in contact

with any prohibited substance unless

the reusable bin or container has been

thoroughly cleaned and poses no risk of

prohibited materials contacting the

organic product.

Temporary Variances. This subpart

establishes conditions under which

operations may receive temporary

variances from the provisions contained

in §§ 205.203 through 205.207, 205.336

through 205.239, and 205.270 through

205.272. The Administrator may

establish temporary variances due to

natural disasters declared by the

Secretary; unavoidable business

interruption caused by catastrophe such

as wind, fire, hail, flooding, excessive

moisture, earthquake, or drought; or to

conduct research on organic production

and handling techniques or inputs. A

certifying agent may recommend that

the Administrator establish a temporary

variance for unavoidable business

interruption. The Administrator will

determine how long a temporary

variance will be in effect at the time it

is established, subject to extension as

the Administrator deems necessary.

Upon notification by the Administrator

that a temporary variance has been

established due to a natural disaster, a

certifying agent must inform each

production and handling operation it

certifies within the affected

geographical region or each individual

production and handling operation

affected by the temporary variance.

Temporary variances may not be issued

for any practice, material, or procedure

which is otherwise prohibited by these

regulations.

A request for issuance of a temporary

variance, the justification for it, and

measures to evaluate the impact of the

practice on the operation’s natural

resources must be documented in the

organic plan and approved by the

certifying agent. For example, if a

drought resulted in a severe shortage of

organically produced hay, a dairy

operation might be permitted to

substitute some nonorganic hay for a

portion of the herd’s diet to prevent

liquidation of the herd. The producer

must keep records showing the source

and amount of the hay and update the

organic plan to describe the justification

for the practice and a timeframe for

restoring the total feed ration to organic

sources. The certifying agent might also

request that the plan include

contingency measures to avoid the need

to resort to nonorganic feed in case of

a future shortage. A variance for

experimental purposes might be issued

to permit a crop producer to undertake

on-farm trials of small quantities of a

new (but not produced with excluded

methods) crop variety that was not

available as organic seed.

Production and Handling (General)—

Changes Based on Comments

The subpart differs from our first

proposal in several respects as follows:

(1) Genetically Engineered Organisms.

In the first proposal, we invited public

comment on the use of genetically

engineered organisms (GEO’s) or their

products in a system of organic

production and handling. Specifically,

we asked whether the use of GEO’s or

their products should be permitted,

prohibited, or allowed on a case-by-case

basis in organic production or handling

operations. Hundreds of thousands of

public comments opposed the use of

GEO’s or their products in organic

production or processing. In response to

these comments, this proposal prohibits

use of genetic engineering (included in

the broad definition of ‘‘excluded

methods’’ in this proposal, based on the

definition recommended by the

National Organic Standards Board

(NOSB)) in all stages of organic

production and handling. This proposal

contains a specific prohibition on the

use of seeds, annual seedlings and

planting stock (§ 205.204(b)), pest

control substances (§ 205.206(f)),

organisms (§ 205.236 (b)(3)), and

ingredients (§ 205.270(c)(2)) produced

with excluded methods.

Products created with modern

biotechnology techniques have been

tested, approved by the appropriate

regulatory agencies, and can be used

safely in general agricultural

production. At the same time,

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13535

consumers have made clear their

opposition to use of these techniques in

organic food production. This rule is a

marketing standard, not a safety

standard. Since use of genetic

engineering in the production of organic

foods runs counter to consumer

expectations, foods produced through

excluded methods will not be permitted

to carry the organic label.

We acknowledge that the broad

prohibition on use of excluded methods

in organic production and handling

systems may create compliance

obstacles for organic operations and

certifying agents. For example, many

current certification programs allow

vaccination of animals with synthetic

compounds when such treatment is

mandatory. However, while many FDAapproved vaccines are now produced

using excluded methods, we are

unaware of any certification program

which has an enforcement mechanism

to ensure that such substances are not

used in organic production. We do not

know to what extent, if any, organic

livestock producers are currently using

vaccines produced with excluded

methods or how a prohibition on the

use of such substances would affect

development of the industry.

Similarly, the prohibition on the use

of excluded methods in the production

of organic foods may also present

challenges to organic handlers and

certifying agents. This may pose a

particular problem with respect to the

nonorganic ingredients of

multiingredient products with 50-95

percent organic content, to which the

prohibition on use of excluded methods

also applies. For example, it may be

harder for organic food processors, who

may struggle to find sources of

nonorganic ingredients that are

produced without use of excluded

methods and for certifying agents, who

must ensure that handlers have

complied with this requirement.

As with most elements of this

program, compliance monitoring and

enforcement will rely on the ongoing

oversight of organic operations by

USDA-accredited certifying agents,

rather than on product testing.

Certifying agents must approve organic

plans that detail procedures and

practices to be followed by organic

operations and will review extensive

records maintained by organic

operations to ensure that they are

complying with the approved organic

plans and the regulations.

This system of compliance assurance

will be particularly important with

respect to the prohibition on use of

excluded methods. Producers and

handlers must be vigilant in the

acquisition of materials and products.

Certifying agents should be aware of

agricultural products produced through

excluded methods and must carefully

review material and product origin

documentation. It will be the

responsibility of certifying agents to

review the sourcing specifications and

other provisions of producer and

handler organic plans to ensure the

integrity of organic and multiingredient

products. We anticipate that this system

of carefully reviewed and documented

organic plans, which establishes

documented procedures demonstrating

good faith efforts to diligently pursue

and maintain the integrity of ingredients

produced without use of excluded

methods, could satisfy the requirements

in this regulation.

With respect to the prohibition on the

use of excluded methods in production

of the nonorganic ingredients in

multiingredient products, we recognize

that the ability to meet these

requirements depends primarily on

practices used in conventional

agricultural markets. We also recognize

that practices for preserving product

identity, including segregating

genetically engineered and

nongenetically engineered products, are

evolving in some conventional markets.

Currently there are no consensus

industry standards for product

segregation, rather contractual

agreements are used to the extent

possible. As the marketplace evolves

toward recognized best practices or

standards for product testing and

segregation, we anticipate that these

methods and systems will become the

standards for implementing the

prohibition on use of excluded methods

in production of nonorganic ingredients

in multiingredient products. Linking the

requirements pertaining to nonorganic

ingredients in this proposal to the

evolving practices within the

marketplace will provide certifying

agents with a verifiable criterion against

which to evaluate production and

handling processes, as well as providing

greater certainty to handlers and

processors as they seek to identify

acceptable sources of nonorganic

ingredients.

As with other prohibited substances,

a positive detection of a product of

excluded methods would trigger an

investigation by the certifying agent to

determine if a violation of organic

production or handling standards

occurred and would not necessarily

represent a violation on its own. The

presence of a detectable residue alone

does not necessarily indicate use of a

product of excluded methods that

would constitute a violation of the

standards.

We anticipate that these issues will be

of particular interest to commenters on

the proposal, and that comments may

help to shed light on industry

capabilities and expectations. We

recognize that this policy will place

additional burdens on certified

operations and certifying agents, but we

believe that the necessity to meet strong

consumer expectations outweighs these

concerns.

(2) Measurable Degradation Standard.

We are proposing that any practice

implemented in accordance with the

requirements for organic production and

handling must maintain or improve the

soil and water quality of the operation.

This provision is a modification of the

requirement in the first proposal that

the use or application of a practice not

result in measurable degradation of soil

or water quality. Some commenters

stated that the concept of measurable

degradation was too limiting and

reduced the holistic principles behind

organic production to an exercise in risk

assessment. In introducing the concept

of measurable degradation, we stated

that its purpose was to ‘‘clarify that all

methods and substances used in an

organic operation shall be consistent

with a system of organic farming and

handling and the purposes of the

OFPA.’’ As such, measurable

degradation and the specific indicators

of soil and water quality used to

monitor it were designed as tools to

evaluate compliance with the OFPA and

not as ends in themselves.

The new provision requiring that an

organic operation maintain or improve

its soil and water quality retains the

linkage between production and

handling practices and the natural

resources of the operation, which is a

fundamental tenet of both organic

production and the OFPA. We have

introduced the ‘‘maintain or improve’’

provision to allow for consideration of

a variety of environmental indicators

that contribute to the overall

performance of the operation. Both the

objective of certification—establishing

an organic system of production and

handling—and the standard by which it

is achieved—the requirements in this

proposal—remain constant for all

operations. The environmental

indicators used to establish and monitor

compliance with an approved organic

system plan will depend upon the sitespecific conditions of the individual

operation. For example, a producer and

certifying agent would consider the soil

types, hydrology, other environmental

conditions and the specific nature of the

crops and livestock being produced to

13536 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

determine which indicators would best

reflect the performance of the organic

system plan. Site-specific conditions—

high water table, soils that are prone to

erosion—combined with the operation’s

production practices—the use of

persistent inputs such as copper or

sulfur compounds, the type of tillage

practices used—will dictate the

selection of environmental indicators.

While individual indicators, especially

when signaling that significant change

has occurred, remain important, the

‘‘maintain or improve’’ provision allows

a producer or handler and his or her

certifying agent to assume a broader

perspective in monitoring compliance

with the OFPA.

Many commenters objected to the

requirement in the first proposal that

certain production practices ‘‘not result

in a measurable degradation of the soil.’’

The purpose of the ‘‘measurable

degradation’’ requirement was solely to

provide producers and their certifying

agents with quantifiable, verifiable tools

with which to evaluate compliance with

the applicable regulations. While the

current proposal does not refer to

‘‘measurable degradation’’ in the

practice standards, producers and

handlers must identify and incorporate

into their organic system plans specific

testing and evaluation techniques to

measure the environmental impact of

their production practices. In many

cases, this requirement could be filled

with a standard soil analysis, which

would indicate trends in soil organic

content, nutrient composition, and

physical properties. In other cases,

chemical or biological analysis of stream

water entering and leaving a crop or

livestock operation could suffice to

monitor compliance with the practice

standards. There is no way to

substantiate the effectiveness of the

practices and materials used in an

organic production system without

some form of measurable verification.

Analytical procedures to monitor the

condition, over time, of an operation’s

resource base are a standard feature of

efficient resource management, whether

or not the operation is organically

managed.

(3) Function and Content

Requirements of the Organic System

Plan. We propose significant changes in

the function and content requirements

of the organic system plan to solidify its

role in the relationship between

producer or handler and certifying

agent. Public comment on the first

proposal identified numerous perceived

deficiencies in the provisions for an

organic system plan. Some commenters,

including organic certifying agents and

industry associations, stated that the

proposed content requirements were a

‘‘shadow’’ of the plan intended by the

OFPA because the regulatory text did

not include the words, ‘‘management,’’

‘‘rotation,’’ or ‘‘manure.’’ Some

commenters characterized the organic

system plan in the first proposal as a

simple list of materials to be used and

practices to be followed and thought

that it would not adequately address

why the producer or handler made

specific production choices. Echoing the

recommendation adopted by the NOSB

at its June 1994 meeting in Santa Fe,

NM, other commenters suggested that

each organic system plan should be

required to include key elements of

organic production, such as soil and

crop management, resource

conservation, crop protection, and

maintenance of organic integrity

through growing, harvesting, and

postharvest operations. We fully agree

with the principle that a comprehensive

organic system plan is an integral

component of a certified operation and

that it provides the foundation for the

working relationship between the

certifying agent and the producer or

handler. This proposal contains a

standard that defines and characterizes

an organic system of production and

handling and establishes the organic

system plan as the centerpiece of the

relationship between producer or

handler and certifying agent.

Some commenters expressed concern

that the first proposal did not link the

organic system plan to specific

regulatory requirements such as proper

tillage, crop rotation, and manuring. The

first proposal did, however, require

operations to document compliance

with all applicable standards. The

obligation to document compliance with

all applicable standards was implicit in

the requirement that an organic system

plan contain a description of the

practices to be performed and

maintained to establish a system of

organic farming and handling. A

producer or handler intending to engage

in a practice must comply with the

corresponding standards and include

his or her intentions for doing so in the

organic system plan. This proposal

contains a similar provision, found in

§ 205.200(a)(1), which requires a

description of the practices and

procedures used in the certified

operation, again, without stating the

specific standards with which the

operation must comply.

We acknowledge that, by providing

the regulatory guidance necessary to

implement the OFPA, the Secretary is

further empowering accredited

certifying agents to determine whether

an operation’s organic system plan

meets the requirements of the statute.

The provisions for an organic system

plan in § 205.200(a)(1)–(6) outline the

prerequisites for certification. Combined

with the production and handling

standards in §§ 205.201 through

205.207, 205.236 through 205.239, and

205.270 through 205.272, these

requirements provide the criteria

necessary for certifying agents to

determine whether to grant certification.

For similar reasons, we propose not to

include in this proposal a list of the

specific requirements to be included in

a particular type of organic system plan.

For example, while the first proposal

required that a farm operation submit

the total acreage under organic

management as part of its organic

system plan, there is no similar

requirement in this proposal. We

believe that accredited certifying agents

are capable of determining the specific

documentation they require to review

an application for certification.

Certifying agents are granted authority

to request the information they deem

essential to the performance of their

duties. Many resources are available to

certifying agents for determining the

information needed to make

certification decisions. The FederalState Marketing Improvement Program

of the Agricultural Marketing Service

(AMS) helped fund a project (#12–25–

G–0202) which created an organic

inspection manual and developed a

whole set of organic certification form

templates. Among these templates are

detailed forms for organic farm,

livestock, and handling system plans.

AMS worked with the Independent

Organic Inspectors Association and the

Organic Certifiers Council on this

project and supports continued

movement toward standardized

certification documentation. The NOSB

provided recommendations, including

sample questionnaires, for the

information it deems necessary for

inclusion in an organic system plan.

Additionally, the Organic Trade

Association recently released the

American Organic Standards that drew

upon broad industry involvement to

create a detailed description of organic

system plan requirements.

The organic system plan in the first

proposal included requirements for split

farming operations—meaning farms that

engage in both organic and nonorganic

production—that some commenters

stated were excessive. These

commenters pointed out that the OFPA

does not provide for the organic system

plan to include any production or

handling practice not consistent with

the OFPA, and that the practices on the

nonorganic portion of the split-farm

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13537

would not be consistent with the Act.

Based on these comments, this proposed

organic production system plan will not

require information about a split-farm’s

nonorganic operations. However, this

proposal requires that a split operation,

whether a production or a handling

operation, describe the measures it is

taking or will take to prevent

commingling of organic and nonorganic

product and to prevent contact of

organic products, fields, or facilities

with prohibited substances.

(4) Regulatory Enforcement. The

National Organic Program (NOP) will

require consistent and effective

enforcement of the regulations across

diverse crop, wild crop, livestock, and

handling operations which are

differentiated by site-specific conditions

within dissimilar geographic regions.

The resources and objectives of each

certified operation are unique, and the

OFPA, accordingly, provides certifying

agents with criteria, not formulas, to

determine whether the practices,

procedures, and inputs described in an

organic system plan constitute

compliance with the OFPA. The

flexibility implicit in this approach

allows producers and handlers to

choose from a variety of production and

handling options. In addition to being

flexible, a regulatory mechanism must

be clear, consistent, and enforceable.

For this reason, producers and handlers

must document the choices they make

in an organic system plan and

demonstrate a good-faith effort to

implement the plan. For example, the

decision to use an allowed synthetic

pest control substance must be based on

evidence that prevention and

nonsynthetic pest control measures are

not adequate.

Public comment indicated that the

regulatory mechanisms that were

introduced in the first proposal,

including orders of preference,

performance standards, and provision

for allowance of certain practices ‘‘if

necessary,’’ provided producers and

handlers too much discretion in

selecting materials and practices. These

comments indicated that insufficient

oversight by certifying agents could

dilute the meaning of organic

certification. Therefore, we are

proposing significant changes in the

regulatory mechanisms which govern

producers, handlers, and their certifying

agents in determining the materials,

practices, and procedures used in an

organic operation.

One regulatory mechanism used in

the first proposal was an ‘‘order of

preference’’ scheme for selecting organic

practices or materials employed in

production and handling. This scheme

was proposed for a number of areas:

Crop rotation; manuring practices; soil

fertility and nutrient management; seeds

and planting stock selection; crop pest,

weed, and disease prevention and

management; livestock health care;

selection of handling ingredients; and

prevention and facility pest

management. There was also a general

order of preference requirement that

mandated the use of nonsynthetic

substances in preference to synthetic

substances.

Comments from at least one industry

association supported using orders of

preference to assure that choices made

by producers and handlers will be as

consistent as possible with organic

farming and handling principles.

Others, including several organic

certifying agents, felt that the conditions

for choosing a lower order of preference

were not specified clearly enough and

could result in inconsistent enforcement

of the standards. Some commenters

thought that certifying agents would be

overly burdened by having to review

and approve the justification in the

organic plan for choosing less preferable

practices, although some stated that if

the criteria for choosing a lower order of

preference were clarified and

documentation of the reasoning behind

the choice was explicitly required, then

this scheme would be workable. Some

noted that ranking practices and inputs

according to their suitability is

analogous to the ‘‘approved, restricted,

prohibited’’ scheme which many State

and private certification programs

employ. A few commenters expressed

the belief that establishing provisions to

issue variances would address their

concerns and provide for adequate

oversight and enforcement concerning

practices, procedures, and inputs that

are considered to be acceptable but less

desirable for organic production and

handling.

However, several commenters,

including consumers and organic

certifying agents, asserted that

‘‘preference’’ could be interpreted as

purely based on the personal choice or

convenience of the producer or handler.

Some certifying agents indicated that

the soil fertility order of preference was

too complex and difficult to enforce. A

number of consumers disliked this

concept because it permitted some

deviation from the most desirable

standards, such as use of organically

produced seeds. Another commenter

speculated that this scheme could be

interpreted as establishing different

levels of ‘‘organicness.’’ Although these

interpretations do not reflect the intent

of the first proposal, in the interest of

clarity, we have removed references to

orders of preference in the current

regulatory text. We also removed the

general requirement for orders of

preference and to simplify the scheme

so that it will be less burdensome for

certifying agents to enforce. Several

provisions in this proposal, including

the seeds and planting stock practice

standard (§ 205.204) and the crop pest,

weed, and disease management practice

standard (§ 205.206) will allow less

desirable practices or substances to be

used only if the preferred alternative is

either ineffective or not commercially

available. As was true of the first

proposal, justification for choosing a

less desirable alternative, such as

nonorganic seeds or planting stock,

must be documented in the relevant

organic system plan and approved by

the certifying agent.

Several commenters, including

industry and environmental

associations, also took issue with the

use in the first proposal of performance

standards, which specify the required

outcome but not the practices that must

be used to achieve it. The general

provision that any practice or substance

used in an organic operation not

contribute to measurable degradation of

soil or water quality is an example of

such a performance standard.

Objections to the use of performance

standards referred to the nature of

organic production standards, which

focus on the production process and not

quantifiable outcomes such as pesticide

residue levels. Some of these

commenters asserted that such a

mechanism would relegate organic

standards to a risk assessment model,

which is not appropriate for evaluating

a system of organic management.

We agree that standards for an organic

management system cannot be reduced

to measurable outcomes, and this was

not the intent of the proposed

performance standards in the first

proposal. The evaluation of measurable

indicators as benchmarks of the proper

functioning of a management system is

compatible with the overall requirement

that practices be implemented that are

consistent with a system of organic

farming and handling. Such indicators

help to determine whether a given

operation is in compliance with the

regulations. For example, the crop

rotation provisions in this proposal list

a series of functions, including weed

management, that should be provided

by an appropriate rotation. While the

possible types of rotation that could

achieve this objective are virtually

limitless and could not be specifically

prescribed, recording changes in weed

populations could document the

13538 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

effectiveness of the rotation being

implemented.

Another type of regulatory provision

employed in the first proposal permitted

the use of certain practices or

substances only ‘‘if necessary.’’ This

was proposed for the introduction of

nonorganic animals into an organic

operation, for using up to 20 percent

nonorganic livestock feed, for

permitting restrictions on access by

livestock to space for movement and

access to outdoors, and for use of

synthetic processing aids in producing

an organic processed product. A

producer or handler was required to

establish his or her need to use a

particular practice or substance based

on site-specific circumstances. The basis

for each such decision was to be stated

in the organic system plan and

evaluated by the certifying agent. Many

commenters indicated that this

provision was not appropriate because,

for example, the allowance for the use

of 20 percent nonorganic livestock feed,

‘‘if necessary,’’ left a loophole that could

permit an unscrupulous producer to use

nonorganic feed without a valid reason

that was consistent with the regulations.

We concur that this allowance for

practices ‘‘if necessary’’ is overly vague

and have removed the provision from

this proposal. It has been replaced by

more specific regulatory restrictions,

referred to as practice standards, which

better reflect the recommendations of

the NOSB.

We have addressed comments that

requested more specific guidelines for

acceptable organic practices by

introducing the concept of practice

standards. Practice standards are a

series of specific guidelines,

requirements, and operating procedures

for common agricultural practices such

as crop rotation, pest management, and

crop nutrient management. The NOSB

reviewed portions of the current NRCS

practice standards for crop rotation,

nutrient management, pest management,

composting facilities, and cover or green

manure crops at its Washington, DC,

meeting in June 1999. NRCS practice

standards, while not public health

standards, contain rigorous, field-tested

provisions which provide specific

benchmarks for monitoring the

performance of many required organic

production techniques. A practice

standard can also serve as the

foundation for an even more detailed

program manual.

For example, we are proposing that

composted animal and plant waste

materials which are used for soil

fertility and crop nutrient management

must be produced at a facility in

compliance with the NRCS practice

standard for a Composting Facility

(Code 317). This document establishes

minimum acceptable requirements for

the design, construction, and operation

of a composting facility. A copy of this

practice standard may be obtained from

any NRCS field office. A copy of this

practice standard may be viewed at

USDA–AMS–TMD–NOP, Room 2510—

South Building; 1400 Independence

Ave., SW, Washington, DC 20250–0248.

The NOP intends to publish additional

practice standards for public comment

in the Federal Register. We are also

holding discussions with NRCS to

determine whether farming operations

which comply with the certification

requirements of the NOP will have the

added benefit of being able to

participate simultaneously with NRCS

cost-share programs.

Incorporating NRCS practice

standards into the requirements for

organic certification introduces a

significantly greater degree of specificity

than most organic standards have

previously contained. For example, the

Composting Facility practice standard

includes specifications for facility size,

moisture content of the compost pile,

carbon-nitrogen ratio, and the interval

which certain temperatures must be

sustained to achieve a finished product.

The practice standard also contains

restrictions on source materials which

may make it difficult to utilize certain

categories of materials which have

traditionally been allowed in organic

compost production. Enforcing these

additional requirements will require far

greater oversight from the certifying

agent, and expertise in this area will

become another factor in accreditation.

NRCS uses its practice standards for

voluntary cost-share programs, and

organic producers may find the

requirements burdensome as an added,

mandatory expense. Despite the many

comments we received criticizing the

provisions for performance standards in

the first proposal, organic certification

schemes have traditionally prescribed

outcomes and allowed producers and

handlers flexibility in selecting

practices used to achieve them.

However, we received many other

comments stating that more rigorous,

clearly defined regulatory mechanisms

were needed to protect the integrity of

organic certification. We have

considered the use of NRCS practice

standards to provide clear, consistent,

and verifiable guidelines for conducting

essential organic production practices.

We are particularly interested in

receiving specific comment on the

feasibility of using NRCS practice

standards for compost production and

how such practice standards may

generally be used to establish organic

standards.

(5) Temporary Variances. Section

205.201(b) of this proposal provides

procedures for establishing a temporary

variance from certain requirements of

subpart C. The temporary variance is a

mechanism for providing regulatory

flexibility that did not appear in the first

proposal. This mechanism is proposed

in response to comments from an

industry association and several

certifying agents who expressed the

need, in certain circumstances, to use

practices that would otherwise not

comply with the applicable practice

standard. Similar mechanisms are used

by most existing certifying agents to

make exceptions in cases of compelling

need, when there is minimal concern for

compromising the integrity of an

organic system. Temporary variances

are established from specific

requirements and not, unless specified,

from all production standards. They are

established for a determined period of

time, subject to extension as deemed

necessary by the Administrator. For

example, the Administrator could,

under appropriate circumstances, waive

the requirement that a producer must

provide livestock with a ration

composed of 100 percent organically

produced feed.

Temporary variances are created

under very specific circumstances and

are subject to strong oversight by the

Department to prevent potential abuse.

This proposal contains three situations

in which the Administrator could

establish a temporary variance. These

situations are: natural disasters as

declared by the Secretary in a specific

geographical area; business interruption

caused by wind, flood, fire, or other

catastrophic event; or for the purpose of

conducting research or trials of

techniques, varieties, or ingredients

used in organic production or handling.

In the case of natural disaster declared

by the Secretary, the Administrator will

establish a temporary variance available

to all organic operations within the area

designated as affected. For local

catastrophic events in which the

Secretary does not declare a disaster, the

certifying agent is responsible for

making recommendations to the

Administrator for establishing

temporary variances. Catastrophic

events must be of a sufficient magnitude

and have a direct, immediate impact

such that the operation could not

continue to function without the

temporary variance. Certifying agents

are responsible for making a

recommendation for a temporary

variance in situations prompted by

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13539

research needs. Producers and handlers

cannot appeal directly to the

Administrator for a temporary variance

but must make such a request through

their certifying agent.

Temporary variances, as proposed

here, will not extend to any practice or

substance that is expressly prohibited

by any provision of the OFPA, the

applicable standards, these regulations,

or any other Federal, State, or local laws

or regulations. For example, a variance

cannot be granted for use of an organism

produced through excluded methods,

for use of sewage sludge as a fertilizer,

or for use of irradiation to process an

organic product or ingredient. We

expect to provide additional guidelines

in a program manual to assist certifying

agents in evaluating how much of an

allowance is appropriate, such as how

much of the ration for which animals

could come from nonorganic sources

under a variance.

Production and Handling (General)—

Changes Requested But Not Made

This subpart retains from our first

proposal regulations on which we

received comments as follows:

(1) Definition of ‘‘System of Organic

Farming and Handling’’. The first

proposal contained a definition of a

‘‘system of organic farming and

handling’’ to provide an explicit

reference point for determining which

practices and substances were

consistent with such a system. Several

industry associations and certifying

agents commented that the definition

was helpful but lacking in key concepts,

such as ‘‘ecological balance,’’

‘‘agroecosystem health,’’ and ‘‘biological

diversity.’’ Several thought the

definition should receive greater

emphasis in the regulations as a

reference point for the underlying

principles of organic production and

handling and that the NOSB’s definition

should be used. Although we

considered many of the concepts

discussed by commenters, only the

scope and not the meaning of the

original definition has been changed.

The definition in this proposal is based

on the one we developed in

consultation with the NOSB but is

limited to concepts that are

incorporated into the OFPA. Measuring

compliance with the component-based

mandates of the OFPA, such as fostering

soil fertility and preventing water

contamination by manure, does not

require criteria as far-reaching as

‘‘agroecosystem health’’ or ‘‘biological

diversity.’’ We also took into

consideration the costs to comply with

such open-ended requirements and

determined that this could be

excessively burdensome. Synergistic

benefits may be associated with organic

production and handling systems, but

the OFPA requires only that individual

components of the system—soil, water,

wild crop environment—be protected.

Adherence to the conservation practices

found in the individual practice

standards will result in cumulative

benefits to the agroecosystem, but

producers and handlers would have

difficulty measuring compliance at this

scale. Establishing standards that

address individual components of an

organic farming system, such as tillage

practices and manure management, will

directly and beneficially impact the

entire ecosystem. For the purpose of

enforcement, however, we propose

retaining the component-based criteria

for evaluating a system of organic

farming and handling.

(2) Commercial Availability Standard.

The first proposal allowed certain

materials and practices, such as

nonorganic seeds and nonorganic minor

ingredients in a product labeled organic,

to be chosen if preferable alternatives

were not ‘‘commercially available.’’ We

have retained the commercial

availability principle in this proposal

but have limited its use to the

provisions addressing the selection of

organic or untreated seeds and planting

stock. A number of producers,

consumers, and certifying agents

expressed concern that producers or

handlers not be permitted to base claims

of commercial unavailability on any

price difference between organic and

nonorganic inputs. They argued that the

term, ‘‘feasibly and economically,’’ in

the proposed definition of

‘‘commercially available’’ were too

vague to be enforceable. Comments from

an industry association supported the

use of this concept but requested a more

specific definition that could be used to

assess the economic dimension of

commercial availability. The NOSB has

also cited commercial availability as a

valid criterion for allowing some

flexibility in the choice of inputs and

stated that the term is applicable to the

quantity and quality of available

product as well as its cost.

Although commercial availability is

not defined in the OFPA, the concept is

well established within current

certification programs and the

commercial world in general. To be

considered commercially available, a

preferred input must be known and

readily available in the sense that a

producer or handler can locate and

acquire the quantity and quality of

product needed to sustain his or her

operation. The producer or handler

must make a good faith effort to procure

the preferred input but should not be

expected to rely on an inconsistent

supply of a necessary commodity. We

do not provide a formula for

determining when price difference

alone is enough to justify purchase of

the less desirable input because of the

multiple factors which could affect such

a decision.

By limiting the application of the

commercial availability standard to the

selection of organic or untreated seeds

and planting stock, we are limiting its

use to relatively narrow and well

defined markets. A producer must

justify a choice based on commercial

availability when submitting an organic

plan to the certifying agent, and it must

be supported by evidence of a good-faith

effort to obtain the preferred input. The

attempt to source an input from known

suppliers and an investigation to

discover potential new suppliers

constitute the producer’s good-faith

effort. Certifying agent approval of the

organic plan provides sufficient

protection against abuse of this

provision. Although comments reflected

concern that too many allowances for

nonorganic inputs could dilute the

integrity of certification, the organic

industry has built its reputation while

using the commercial availability

exemption for sourcing certain

materials. Certifying agent oversight can

ensure that it works in the NOP as well.

Production and Handling (General)—

Additional Provisions

Upon further review of the provisions

in the first proposal, we have decided to

propose the following additions and

changes.

(1) Dual Use of an Organic System

Plan. Section 205.201(b) allows a

producer or handler to submit an

organic production system plan

developed to meet the requirements of

another Federal, State, or local

regulatory program if the plan fulfills

the applicable requirements of this

section. Government agencies may have

programs in place that require

participating agricultural producers or

handlers to develop and follow a

management plan. For example, the

NRCS Environmental Quality Incentives

Program (EQIP) requires a conservation

plan. An organic production system

plan could be incorporated into such a

conservation plan and fully comply

with the requirements proposed in

§ 205.201 of this proposal. This new

provision could reduce the paperwork

burden for an operation that participates

in more than one program requiring a

farm conservation plan.

13540 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

Crop Production—Changes Based on

Comments

This subpart differs from our first

proposal in several respects as follows:

(1) Biosolids. The first proposal

requested public comment on the

possible use of biosolids as a means of

enhancing soil fertility on an organic

agricultural operation. Our

interpretation of the term, ‘‘biosolids,’’

is synonymous with the definition of

sewage sludge contained in 40 CFR part

503. In response to the comments we

received, this proposal adds biosolids to

the list in § 205.203(e)(2) of substances

that are specifically prohibited for use

in organic production.

The first proposal reviewed some

historical information about the Federal

enforcement of biosolids use and the

steps taken by EPA, FDA, and the U.S.

Department of Agriculture (USDA) to

ensure that biosolids are safe to use on

crops for human consumption.

Comments were solicited as to whether

biosolids should be permitted or

prohibited in organic production. The

first proposal noted that the NOSB

recommended that biosolids should be

classified as synthetic and were not

appropriate for use in organic crop

production. The NOSB took this

position at its 1996 meeting in

Indianapolis, IN, and reaffirmed it at its

1998 meeting in Ontario, CA.

We received hundreds of thousands of

comments, virtually all of which

strongly opposed the use of biosolids in

organic agriculture. The vast majority of

the commenters stated that biosolids

can contain synthetic substances

prohibited in organic agriculture, such

as industrial waste, street runoff

containing petroleum products, and

household waste contaminated with

cleaning products, polychlorinated

biphenyls (PCB’s) and dioxins.

Commenters indicated that sewage

sludge should not be allowable because

it may contain synthetic materials

prohibited in organic production which

are not restricted under EPA

regulations. Many commenters stated

that biosolids are not currently allowed

in organic production and that

permitting their use would run contrary

to consumer expectations. Such an

allowance would place producers at a

competitive disadvantage in domestic

and international markets. While

sewage sludge may be safely used in

conventional agriculture, allowing its

use under these standards would be

inconsistent with the historical

understanding of organic fertility

management shared by producers and

consumers. Therefore, this proposal

prohibits the use of sewage sludge in

organic production.

(2) Tillage and Conservation

Practices. While no comments objected

to the inclusion of tillage and

cultivation practices in the first

proposal, a few took issue with the

requirement that these practices result

in ‘‘no measurable degradation’’ of soil

quality. In this proposal, the concept of

‘‘ no measurable degradation’’ has been

replaced with the requirement to

‘‘maintain or improve’’ soil quality. We

agree with commenters who suggest that

prevention of soil erosion is an

important consideration for the

selection of tillage and cultivation

methods and have included a

requirement that tillage and cultivation

practices maintain or improve the

physical, chemical, and biological

condition of soil and minimize soil

erosion. We have removed other

references to preventing measurable

degradation when using plant or animal

wastes in the first proposal and replaced

them with a requirement, in

§ 205.203(c), that the producer manage

these materials to maintain or improve

soil organic matter content in a manner

that does not contribute to

contamination of crops, soil, or water by

plant nutrients, pathogenic organisms,

heavy metals, or residues of prohibited

substances. In accordance with several

comments received, this provision

frames the requirement in terms of

achieving a positive outcome rather

than avoiding a negative one. This

proposal specifies the types of

measurable degradation that could

result from improper or excessive

application of plant or animal waste

materials, and producers, in

consultation with the certifying agent,

will identify potential problems and

address them in the organic system

plan. The organic system plan must also

identify appropriate monitoring

activities to ensure that the ‘‘maintain or

improve’’ requirement is being met. For

example, a producer who manages an

on-farm composting facility might make

regular observations of the pile to check

for leaking and periodically sample a

nearby stream for nitrate content.

(3) Application of Raw Manure. The

first proposal requested public comment

on appropriate guidelines to ensure that

use of raw animal manure would not

cause contamination of food products

by pathogens that cause foodborne

illness. The OFPA restricts the use of

raw manure by requiring that a

reasonable period of time elapse

between its application to a crop

intended for human consumption and

the harvest of that crop. This period of

time must be approved by the certifying

agent, but in no event may it be less

than 60 days. The OFPA stipulates that

the certifying agent determine the

interval between the last application of

raw manure and harvest of the crop to

ensure the safety of the crop.

Furthermore, the OFPA prohibits raw

manure from being applied to any crop

in a way that significantly contributes to

water contamination by nitrates or

bacteria. The first proposal contained an

order of preference which favored the

use of composted materials, including

manure, as inputs for soil fertility but

allowed raw manure applications

subject to the 60-day minimum

preharvest interval contained in the

OFPA.

Many public comments addressed the

issue of raw manure use, and some

industry, producer, consumer, and

environmental groups submitted

substantial technical information. Many

of these commenters addressed the

human health risk associated with the

use of manure in organic crop

production. Most of these comments

suggested that a determination of

sufficient time to ensure the safety of a

crop depends on soil and climate

conditions, but that the 60-day period

specified in the OFPA was not

sufficient. Some commenters cited

various amounts of time that might be

considered safe. Other commenters

stated that no interval between

application and harvest could be

considered safe and recommended

prohibiting the application of raw

manure to any crop. The NOSB had

extensive deliberations on the use of

raw manure in organic crop production

at its June 1999 meeting in Washington,

DC.

The OFPA’s requirement that raw

manure be applied in a manner that

ensures the safety of the crop presents

a unique regulatory challenge. We have

consistently maintained that the NOP is

for marketing, not food safety, purposes.

Organic production and handling

standards, which are not based on risk

assessment of public health

consequences, may differ from the

requirements established by agencies

that are responsible for food safety

regulations. The OFPA’s requirement

that the application of raw manure

ensures the safety of the food to which

it has been applied requires the NOP to

move toward establishing a public

health standard. This requirement is

especially challenging given that there

is no Federal oversight of the

application of raw manure to any kind

of crop nor any public health standards

to establish what constitutes safe use of

raw manure. Applications of raw

manure are a hazardous, threatening

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13541

pathogenic contamination of food

products, notwithstanding the use of

composted manure, which can carry

similar hazards.

We have responded to the concerns

regarding the application of raw manure

to organically produced crops by

proposing the standards contained in

§ 205.203(c)(1). We propose that raw

animal manure must be composted,

unless it is applied to land used for a

crop not intended for human

consumption, incorporated into the soil

not less than 120 days prior to the

harvest of a product in direct contact

with the soil surface or particles, or

incorporated into the soil not less than

90 days prior to the harvest of a product

the edible portion of which does not

have contact with the soil surface or

particles. However, many site-specific

variables affect the viability of

pathogens in raw manure, and we

cannot determine whether this standard

will be sufficient under all conditions to

fulfill the safe food requirement

contained in the OFPA. We are

requesting comment on the

development of more comprehensive

standards that certifying agents are

capable of enforcing. We are also

requesting comment on how to regulate

the authority to determine the

‘‘reasonable period of time’’ between the

last application of raw manure and

harvest of a crop which the OFPA

delegates to the certifying agent. Given

the need for far greater scientific

understanding of the spread of

pathogens in raw manure, we do not

consider that certifying agents should be

expected to make the determination of

safety.

Several comments were received

which suggest that any use of raw

animal manure could jeopardize human

health and that the use of raw animal

manure by organic farmers thereby

increases the risk that organic foods may

not be as safe as conventionally

produced foods. We recognize that our

knowledge of the risks from foodborne

pathogens has advanced since the OFPA

was passed a decade ago, and that safety

precautions have been strengthened

accordingly. Therefore, we are seeking

further guidance for developing

regulations that minimize the potential

for contamination of crops grown for

human consumption by pathogens from

raw animal manure. This approach is

consistent with the traditional organic

certification procedures which have

restricted the use of raw manure for

environmental as well as health

concerns. Other Federal and State

regulatory programs may impose

additional requirements on the use of

raw manure in crop production which

could be applicable to organic

operations.

The first proposal required that

management practices for the

application and storage of raw manure

be implemented in a manner that does

not significantly contribute to

contamination of water by nitrates and

bacteria, including human pathogens.

The use of the word, ‘‘significantly,’’ in

this provision is a direct reference to the

authorizing language in the OFPA

(Section 2114(b)(2) (C)). However,

commenters suggested that this

language implies that ‘‘insignificant’’

contamination would be acceptable.

This proposal requires that soil

management practices aim at

preventing, to the extent possible, any

contamination of water by nitrates and

pathogenic bacteria.

(4) Use of Treated Seed. The first

proposal permitted the use of treated

seeds if the same variety was not

commercially available in untreated

form or if unanticipated or emergency

circumstances made it infeasible to

obtain untreated seeds. In this context,

‘‘treated seed’’ refers to the application

of a pesticide to a seed prior to planting

and does not include the use of a

disinfection treatment for a seed that is

intended for sprouting and food use. A

number of comments from producer and

industry groups suggested that this was

appropriate but that a producer should

have to choose an ‘‘equivalent’’

untreated seed variety that was

commercially available. The term,

‘‘equivalent,’’ indicates that two seed

varieties have similar performance

attributes, such as resistance to drought

and insects, and production traits,

including yield, size, and shape of the

commodity. We agree with this

provision because it favors a

nonsynthetic input over a synthetic one

and have, therefore, included it in this

proposal. We are also requiring that,

when selecting a nonorganically

produced seed, a producer select an

untreated equivalent variety in

preference to one which has been

treated with an allowed synthetic

treatment.

Some comments objected to any

allowance for the use of treated seeds or

planting stock, citing the prohibition in

2109(c)(3) of the OFPA (7 U.S.C.

6508(c)(3)) on the use of transplants that

are treated with any synthetic or

prohibited material. We recognize that

the use of synthetic seed treatments,

some of which are acutely toxic, may

seem inconsistent with a system of

organic production and handling, but it

is an established practice in State and

private certification programs and is

supported by provisions of the OFPA.

We believe that retention of the

commercial availability requirement, a

preference for untreated, nonorganically

produced seed over treated,

nonorganically produced seed, and the

use of temporary variances in this

proposal provide an appropriate context

for regulating the use of synthetic seed

treatments.

The requirement from the first

proposal that all seeds, annual

seedlings, and planting stock be

organically produced is retained in this

proposal. Similarly, this proposal

contains a comparable exception to the

requirement so that nonorganically

produced seeds and planting stock

could be used to produce an organic

crop when an equivalent organically

produced variety is not commercially

available. A producer’s decision to use

nonorganically produced seeds and

planting stock for reasons of commercial

nonavailability of equivalent organic

varieties must be included in his or her

organic plan and agreed to by the

certifying agent. We decided to retain

these provisions from the first proposal

after receiving comments from producer

and industry groups that acknowledged

that the supplies of organic farm inputs

will not be sufficient to provide for the

seed and planting stock needs of all

organic operations in the near future.

We have added the requirement that

producers select equivalent untreated

seed over treated seed when commercial

availability allows them to use a

nonorganically produced variety. We

recognize that these provisions could

lead to certifying agents facing

numerous decisions regarding

commercial availability and equivalency

in the organic system plans they review.

This degree of oversight is warranted,

however, to ensure that the use of

synthetic materials in organic

production is kept to a minimum. We

are not extending the commercial

availability exception to the

requirement for organically produced

annual seedlings because the comments

indicated that the organic input

suppliers are effectively meeting this

demand.

In contrast to the first proposal, we

propose that any synthetic seed

treatment used in organic production

must be included on the National List

of synthetic substances allowed for use

in organic production. We base this

requirement on the OFPA, which

identifies ‘‘treated seed’’ as a category of

synthetic substances eligible for

inclusion on the National List. We

believe that including specific seed

treatments on the National List will

satisfy the requirement in the OFPA that

a farmer shall not apply a material to or

13542 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

engage in a practice on seeds or

seedlings that is contrary to or

inconsistent with the applicable

certification program. The approach we

are proposing is also consistent with

current practice in the organic industry.

The NOSB endorsed this approach at its

1994 meeting in Santa Fe, NM, by

recommending that seed treated with

synthetic fungicides appearing on the

National List be allowed when

nontreated varieties are commercially

unavailable.

We propose that producers or

handlers may request a temporary

variance due to unavoidable natural

disaster in order to use nonorganically

produced annual seedlings. The

temporary variance will be appropriate

in instances in which an unexpected

event such as a frost, flooding, fire, or

other catastrophic event destroyed the

producer’s nontreated planting

materials and no organically produced

replacements are commercially

available. This provision cannot be used

to compensate for mismanagement by

the producer. For example, a producer

who planted seedlings prior to the

recognized frost date and lost his or her

crop to a freeze could not claim that this

disaster was unavoidable. This

provision requires that the producer

make all reasonable efforts to protect his

or her seeds, annual seedlings, and

planting stock before being allowed to

substitute with treated replacements.

Some commenters cited the

prohibition in section 2109(c)(3) of the

OFPA against using transplants that are

treated with any synthetic or prohibited

material as justification for prohibiting

the use of synthetic seed treatments.

However, the statute permits the use of

seeds and seedlings treated with

substances included on the National

List of allowed synthetic substances.

The seemingly inconsistent

requirements for seedlings and

transplants, functionally equivalent

terms, have made this a difficult issue

to resolve. The first proposal attempted

to reconcile these differences by

defining transplant as an annual

seedling produced on an organic farm

and transplanted to a field on the same

farm operation to raise an organically

produced crop. Many commenters felt

that distinguishing between annual

seedlings which originated on and off

the operation was not a valid approach.

We concur, and have removed this

definition, and interpret the term,’’

transplant,’’ as applying to any seedling

which is transported and replanted,

regardless of whether it originated on

the operation or not. We interpret the

prohibition on using a transplant treated

with any synthetic or prohibited

material as taking effect after the

seedling has been physically

transplanted. Therefore, the prohibition

only applies to materials applied after

transplanting and not to the synthetic

treatment included on the National List,

which may have been applied to the

seed that produced the seedling.

The application of disinfectants to

seeds used for sprouting represents a

unique dimension of the seed treatment

issue. Raw sprouts pose a potential food

safety risk because the conditions under

which they are produced—growing

time, temperature, water activity, pH

and nutrient content—can foster the

rapid growth of bacteria. In 1999, FDA

issued guidance advising sprout

producers and seed suppliers of

measures to reduce microbial hazards

common to sprout production. These

measures include treating seeds with

one or more approved methods such as

presprout soaking with 20,000 ppm

calcium hypochlorite. Based on the

recommendation of the NOSB, the

Secretary has included on the National

List in this proposal three chlorine

materials to disinfect and sanitize food

contact surfaces. However, these

materials carry the annotation that

residual chlorine levels in water shall

not exceed the maximum residual

disinfectant limit under the Safe

Drinking Water Act, which is well

below the 20,000 ppm level that FDA

currently advises sprout producers to

follow.

Existing State and private certification

programs have diverged in their

response to the FDA guidance on

chlorine treatments. While treating food

products with high concentrations of

chlorine has traditionally been

prohibited, some certifying agents

currently allow sprout treatment at the

20,000 ppm level. Producers of organic

sprouts are finding it increasingly

difficult to balance the FDA guidance,

the expectations of consumers, and the

requirements of their certifying agents.

This proposal contains no specific

guidance on the use of chlorine

treatments on seeds used in sprout

production. As synthetic compounds,

chlorine materials would have to be

added to the National List at specified

concentrations to be used for

disinfecting sprouts. Without a specific

National List exemption, operations that

treat sprouts at the level established in

the FDA guidance could not be

organically managed.

(5) Crop Rotation. The OFPA requires

an organic crop production plan to

foster soil fertility through practices that

include a crop rotation. The first

proposal required the establishment of a

crop rotation or other ‘‘means’’ of

ensuring soil fertility and effective pest

management but did not provide

explicit restrictions concerning

situations in which those means could

be substituted. Producers and producer

groups sent many comments stressing

the importance of a proper crop rotation

for successful organic crop production

and objecting to the vague allowance for

other methods to be used in its place.

Although we have not changed the

definition of crop rotation from the first

proposal, the new practice standard

eliminates the possibility that an

organic producer will substitute some

other practice for a crop rotation. This

proposal does, however, allow for

variances from an approved crop

rotation plan due to natural disasters,

including weather.

A few commenters made the point

that, although the OFPA includes a

provision for a crop rotation as a means

of improving soil fertility, a crop

rotation serves other critical functions

as well. We reviewed the NRCS practice

standard for crop rotation (Code 328)

which addresses many of the concerns

raised in public comment. Accordingly,

§ 205.205 of this proposal requires the

producer to implement a crop rotation,

including, but not limited to, cover

crops, sod, green manure crops, alley

crops, and catch crops. These

techniques serve the following functions

as applicable to the operation: maintain

or improve soil organic matter content;

provide for effective pest management

in annual and perennial crops; manage

deficient or excess plant nutrients;

provide erosion control to minimize soil

loss; and manage subsurface water to

prevent transport of dissolved materials.

A few comments suggested requiring

that rotation plans include sod or

legumes, which serve to improve soil

organic matter content and increase soil

nitrogen supplies to meet the demands

of a following crop. However, all of

these functions could be fulfilled

through many different types of rotation

plans, which could only be developed

according to the site-specific climate,

soil type, and type of crops or livestock

produced on a given operation. In the

interest of flexibility, therefore, this

proposal does not specify what crops

have to be included in a crop rotation.

An organic plan that meets the criteria

specified in this proposal must be

developed by a producer and approved

by the certifying agent.

Proposed § 205.205(b) specifically

applies to perennial crops. Under this

provision, an orchard plan might

include establishment of hedgerow

areas that provide habitat for beneficial

insects to assist in effective pest

management. This provision was added

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13543

in response to comments stating that an

organic farm plan should address the

functions provided by crop rotations

even in the case of perennial crops such

as orchards and sod. We expect to

develop program manuals containing

more detailed information on different

types of rotations, including methods to

fulfill the prescribed functions for

perennial crops, that are suitable to a

wide range of types of operations and

geographic conditions.

(6) Prohibition on Cytotoxic Pest

Control Substances. In response to

several comments, we have deleted the

provision in the first proposal to

prohibit use of a synthetic carbon-based

substance having a cytotoxic mode of

action for any use as a pest control

substance. Some commenters

interpreted this provision to mean that

this single criterion would substitute for

those specified in the OFPA for

evaluating substances proposed for

inclusion on the National List. Other

commenters, including industry groups,

objected to this provision because it has

not previously been part of certification

standards and its meaning was too

ambiguous. Some substances that have

historically been accepted for organic

production could have cytotoxic effects

when used in inappropriate

concentrations. Although this provision

added to and did not replace the

evaluation criteria contained in the

OFPA and eliminated the need for the

NOSB to review clearly inappropriate

substances, it has been removed from

this proposal in the interest of clarity.

Crop Production—Changes Requested

But Not Made

This subpart retains from our first

proposal regulations on which we

received comments as follows:

(1) Buffer Zones. Section 205.202(a)(3)

of this proposal requires that any land

on which organic crops are produced

have distinct, defined boundaries and

buffer zones, such as runoff diversions,

to prevent the unintended exposure of

the crop to prohibited substances from

adjoining land. Several commenters

suggested that the regulations should

specify a minimum size for buffer zones,

as is currently required by some organic

certifying agents. Although specifying a

size for these zones would establish a

more definable requirement, it could

also impose unnecessary burdens on

some organic producers without offering

greater protection of organic fields and

crops from unintended contact with

prohibited substances. Another

commenter argued that buffer zones

should not be required for unmanaged

lands such as wilderness areas or

abandoned farms. There might be no

need for a buffer zone if an organic farm

were completely surrounded by

wilderness or abandoned farms, which

is one reason why a the size of a buffer

zone should not be specified. This

proposal leaves the determination of an

adequate buffer zone to the organic

producer and the certifying agent on a

case-by-case basis. Buffer zone

provisions are an important part of each

organic production system plan, and we

will provide guidelines for buffer zones

in program manuals.

(2) Nonorganic Plant and Animal

Waste Materials. The first proposal

permitted the use of any uncomposted

plant or animal wastes. It also allowed

use of composted plant or animal wastes

obtained from nonorganic sources, such

as commercial compost products.

Several consumer and environmental

groups objected to permitting the use of

plant or animal wastes from nonorganic

sources. Such materials, they argued,

could potentially contain residues of

prohibited substances that could

compromise the integrity of the organic

farm system. However, off-farm plant

and animal wastes from food

processing, municipal yard waste

facilities, and other sources are used

extensively in existing organic

operations and are generally permitted

by organic certification programs. Bone

meal, fish meal, and seaweed meal are

also commonly used as organic farm

inputs. Commercial fertilizer products

that contain mixtures of such plant and

animal by-products are commonly

permitted for use in existing organic

certification programs, subject to

certifying agent review. Using such

organic wastes is consistent with a

system of organic production and

handling, which calls for recycling

organic wastes to return nutrients to the

land. We believe that concerns about

potential contaminants in plant and

animal waste materials can be addressed

by the requirement in this proposal that

these materials be managed in a manner

that prevents such contamination. For

example, cotton gin trash that had been

treated with a prohibited substance

could only be used if the organic system

plan specified composting the material

before adding it to the soil. Composting

has been shown to effectively

biodegrade synthetic organic

compounds, and the organic system

plan could also call for the compost or

soil to be monitored regularly for

specific residues.

Finally, the first proposal and this

proposal prohibit the use of any

commercially blended fertilizer product

that contains a prohibited substance, as

required by the OFPA. Although a

number of commenters worried that a

product containing toxic synthetic

substances as inert ingredients could be

used for organic production, this

prohibition prevents such products from

being used. For this reason, the use of

any composted or uncomposted plant or

animal wastes to supply soil or crop

nutrient is permitted without further

limitation other than preventing

contamination of soil or water by

pathogenic organisms, heavy metals, or

residues of prohibited substances. The

certifying agent will be expected to have

the expertise to recognize materials that

might be of concern and ensure that

they are properly addressed in the

organic system plan. We expect to

provide additional guidelines in

program manuals to help evaluate

whether animal manure is fully

decomposed, as well as guidelines for

other types of materials to address

potential soil or water quality concerns.

We acknowledge the need to examine

carefully commercial blended fertilizers

and soil amendments to ensure that

such products do not contain prohibited

substances.

(3) Chemically Altered Plant or

Animal Waste Materials. The first

proposal allowed the use of a

composted or uncomposted plant or

animal waste material that had been

chemically altered by a manufacturing

process—such as leather meal,

newspaper, and biosolids—if the

material was included on the National

List of allowed synthetics. Only

newspaper was proposed for inclusion

on the National List. A few commenters

objected to this allowance, although

newspaper is commonly permitted as a

mulch material or as an ingredient in

compost in existing organic certification

programs and was recommended for

this use by the NOSB. The National List

review process offers an adequate

safeguard to ensure that other waste

materials that may be permitted in the

future will be consistent with a system

of organic production and handling, and

we propose to retain this provision in

§ 205.203(c)(5) of this proposal.

(4) Soil and Crop Mineral Nutrients.

This proposal includes provisions for

supplying soil and crop mineral

nutrients that are similar to those in the

first proposal. While use of a proper

crop rotation and recycled plant and

animal wastes can often provide all the

mineral nutrients required by crops,

supplemental sources of these nutrients

are sometimes needed. Section

205.203(d) of this proposal permits a

producer to supply soil and crop

nutrients through use of mined minerals

and other nonsynthetic sources.

Synthetic micronutrients are also

allowed if they are included on the

13544 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

National List. Ash from plant or animal

materials can be used, as long as the

burned material was not treated or

combined with a prohibited substance

and was not included on the National

List of prohibited nonsynthetic

substances. For example, ashes from

treated wood or incinerator ash are not

permitted, nor is ash from manure,

which is on the National List of

prohibited nonsynthetics. The

prohibition of burning crop residues on

the farm in the first proposal has been

retained, but an exception for burning

trimmings of perennial crops to control

diseases has been added in response to

an NOSB recommendation.

Commenters raised no objection to the

proposed allowance for mineral

substances of low solubility, including

lime, greensand (glauconite), and rock

phosphate, which have traditionally

been permitted in organic certification

programs. However, numerous

producers and certifying agents

expressed concern about the allowance

for use of mined mineral substances of

high solubility or salinity. These

include substances such as sodium

(Chilean) nitrate or potassium nitrate

(niter), potassium chloride (muriate of

potash), langbeinite (sulfate of potash

magnesia), and potassium sulfate.

Because of their potential to degrade

soil quality by contributing to soil

salinization, these substances, along

with the synthetic micronutrients that

are on the National List of allowed

synthetics, were allowed only when

used in cases of known nutrient

deficiency. Many commenters objected

to the use of sodium nitrate and

potassium nitrate in organic production,

and some contested the determination

that nonsynthetic, mined sources of

potassium nitrate are available. Some

also objected to allowing potassium

chloride, which has traditionally been

prohibited in most organic certification

programs. Several commenters argued

that no highly soluble source of

nitrogen, synthetic or not, should be

permitted for application to soil in an

organic management system. They

indicated that these materials are not

permitted in international organic

standards, and approval could

potentially harm exports of organic

products. The NOSB reviewed Chilean

nitrate in 1995 and recommended

certain restrictions on the use of this

material, which is allowed with

restrictions in some existing organic

certification programs and prohibited in

others. In accordance with the NOSB’s

recommendation, this proposal permits

these materials to be used according to

justifications in the organic system plan.

More detailed guidance will be

provided in program manuals on the

appropriate justifications for the use of

highly soluble nutrient sources,

including plans for discontinuing their

use. Soil or tissue testing will be an

important aspect of justifying the need

for any such supplementation.

Producers concerned about

requirements for export markets can

request certification to the standards

required by individual contracts.

(5) Nonorganically Produced Planting

Stock. The first proposal allowed

nonorganically produced planting stock

used to produce a perennial crop to be

sold, labeled, or represented as

organically produced after the planting

stock had been managed on an organic

operation for a period of no less than 1

crop year. This provision is authorized

by section 2107(a)(11) of the OFPA (7

U.S.C. 6506(a)(11)). Some commenters

thought this provision provided a

loophole for indiscriminate use of

treated planting stock on an organic

operation. They argued that a producer

could purchase treated nursery stock

and list it as organic planting stock in

the organic plan after only 1 year.

However, producer and industry groups

supported this provision as an

important stimulus to the organic input

suppliers, since it allows a nursery

operation to purchase planting stock

from a nonorganic operation and later

resell this stock as organically

produced. The first proposal described

an organic nursery operation which

could purchase nonorganic dwarf apple

rootstock and graft it with locally

adapted varieties and then sell the

resulting planting stock as organically

produced after raising it organically for

at least 1 year. We agree that the

potential benefits of this provision

outweigh its possible abuses, and

§ 205.204(d) of this proposal permits

nonorganically produced planting stock

to be used as planting stock to produce

a perennial crop to be sold, labeled, or

represented as organically produced

after the planting stock has been under

a system of organic management for no

less than 1 crop year.

(6) Pest, Weed, and Disease Control

Practice Standard. The OFPA sets forth

practices such as the use of natural

poisons that persist in the environment

or plastic mulches that are prohibited or

restricted in the control of pests, weeds,

and diseases in organic crops. It also

lists the following categories of active

synthetic pest, weed, and disease

control substances that may be

considered for exemption if they are

included on the National List: Copper

and sulfur compounds; toxins derived

from bacteria; pheromones; soaps;

horticultural oils; fish emulsions;

treated seed; vitamins and minerals;

livestock parasiticides and medications,

and production aids, including netting,

tree wraps and seals, insect traps, sticky

barriers, row covers, and equipment

cleansers. Section 205.206 of this

proposal contains the practice standard

to implement the provisions of the

OFPA for synthetic pest control

substances.

We have made a minor modification

by eliminating one element of the order

of preference which commenters

considered too difficult to enforce.

There is no distinction made in this

proposal between pest prevention and

control practices in terms of

preferability. However, a provision in

the first proposal that permitted

application of a botanical or allowed

synthetic pest control substance only if

previously delineated methods were

ineffective has been retained. This

provision is supported by public

comments from producers, certifying

agents, and many consumers who

emphasized that such substances, while

sometimes necessary, should only be

permitted as a last resort. This provision

requires a producer to document the

need for copper and sulfur fungicides,

dormant oils, or similar materials in

their organic system plan.

(7) Wild-crop Harvesting. We received

few comments on the provision in the

first proposal concerning wild-crop

harvesting, and, therefore, this proposal

retains similar requirements. Changing

the term for the location from which

wild crops may be harvested from

‘‘land’’ to ‘‘area’’ is the only substantive

difference between the first proposal

and this one. We made this change to

be consistent with the language in the

OFPA. One commenter stated that maps

should be required as part of the

certification process. A certifying agent

could reasonably require such maps to

assist in evaluating the organic system

plan, but we have not made their

inclusion a requirement.

The provisions of this section apply

only to the management of wild crops.

The OFPA includes ‘‘fish used for food,

wild or domesticated game, or other

nonplant life’’ in the definition of

livestock, and we are considering

additional standards for animals and

animal products harvested from the

wild. We received substantial public

comment on the opportunities for

developing standards for marine and

freshwater aquatic animals

(encompassing finfish and shellfish) and

apiculture operations. Additional

comments addressed the feasibility of

developing production standards for

harvesting wild terrestrial animals.

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13545

The certification of aquatic animals

has very limited precedent among

existing certifying agents and will

require additional dialogue before

credible standards can be developed.

The FY 2000 Agriculture, Rural

Development, Food and Drug

Administration, and Related Agencies

Appropriations Act provides funds for

the NOP to convene national meetings

to consider the development of organic

standards for aquatic animals. Meetings

will be held in Alaska, Alabama, and

Rhode Island. Simultaneously, the NOP

will be working with stakeholders from

the aquaculture community to consider

standards for the production of farmraised aquatic animals.

The certification of apiculture

operations has some precedent among

certifying agents. However, due to many

unique production considerations,

organic certification for apiculture

operations has been very limited. Public

comment on the first proposal indicated

that consensus on critical apiculture

issues including forage area and pest

management will require considerable

additional dialogue. The NOSB has

expressed interest in leading the

discussion of the key issues pertinent to

certification of apiculture operations.

We will incorporate public participation

and the NOSB’s recommendations into

future production standards for

apiculture as well as for other wild

harvested livestock operations as

needed.

(8) Practice Standards for Specialty

Crop Operations. Several organic

certifying agents and producer

associations commented that the

proposed rule did not sufficiently detail

prescribed practices for many

specialized aspects of organic

production and handling, such as

mushrooms, greenhouses, and

aquaculture. We concur that such

details are lacking, and to a certain

extent, this proposal addresses that gap

through the introduction of more

detailed practice standards. In some

cases, more specific regulations

appropriate for such specialized

operations, including aquaculture,

mushroom production, and greenhouse

operations, will be filled in as

recommendations are developed by the

NOSB. Beyond this, the Department

expects to address the need for greater

specificity through program manuals,

which will provide more detailed

guidance about site-specific decisions.

For example, program manuals could

include examples of crop rotation plans

suited to different geographic regions,

soil conditions, and types of enterprises.

Program manuals could also be used to

provide guidance about how indicators

of the condition of the natural resource

base can be qualitatively assessed using

simple field observations so that the

impact of site-specific practices on soil

and water quality can be documented in

the organic plan.

Crop Production—Additional

Provisions

Upon further review of the provisions

in the first proposal, we have decided to

propose the following additions and

changes.

(1) Mandatory Phytosanitary

Treatment of Seeds, Seedlings, and

Planting Stock. Section 205.204(e) of

this proposal contains a new provision

that permits the use of treated seeds,

seedlings, or planting stock in cases in

which Federal or State phytosanitary

regulations require treatment. For

example, some States require seed

potatoes or strawberry crowns to be

treated to prevent the spread of plant

diseases. The OFPA authorizes

reasonable exemptions from specific

requirements for compliance with

Federal or State emergency pest or

disease treatment programs. This

provision is also consistent with the

NOSB’s recommendation on the use of

treated planting stock.

(2) Restriction on the Use of a

Synthetic Pest Control Substance. The

first proposal included a provision that

any use of biological or botanical pest

control substances or synthetic pest

control substances approved for use on

the National List had to be used in a

manner that did not result in

measurable degradation of soil or water

quality. This provision has been

removed, and § 205.207(e) of this

proposal includes a new provision that

further restricts use of these substances

by requiring the producer to implement

measures to evaluate and mitigate the

effects of repetitive use of the same or

similar materials on pest resistance and

shifts in pest types. This requirement

can be met by reviewing available

research on pest resistance to the

substance being used and observing

changes in pest populations following

repeated application of the substance.

Public comments pointed out evidence

that nonsynthetic biological and

botanical pest control substances, if

overused, pose concerns for inducing

accelerated resistance in pest

populations.

Livestock Production—Changes Based

on Comments

This subpart differs from our first

proposal in several respects as follows:

(1) Minimum Period of Organic

Management—Nonedible Products. The

first proposal established a 90-day

minimum period of organic

management for animals from which

nonedible products, such as wool, were

to be harvested. Many consumers and

producers said that a 90-day period was

too short and that an animal should be

under organic management for at least 1

year before a nonedible organic product

could be obtained from it. This

requirement is consistent with the

provision that dairy animals receive a

minimum of 1 year of continuous

organic management prior to the

production of the milk or milk products

to be sold, labeled, or represented as

organic. Therefore, this proposal has

been revised to state that an animal

brought into an organic operation must

be under continuous organic

management for 1 year prior to the

harvest of nonedible products that are

sold, labeled, or represented as organic.

(2) Origin of Mammalian Slaughter

Stock. The first proposal allowed

mammalian livestock from a nonorganic

source for the production of organic

meat if the livestock was brought into an

organic operation no later than the 15th

day of life, if necessary. Public comment

was sought as to the specific conditions,

such as commercial unavailability of

organic livestock or an emergency

situation, that should be a prerequisite

for allowing mammalian livestock of

nonorganic origin to be designated as

organic slaughter stock. Thousands of

commenters, along with the NOSB,

strongly opposed allowing the use of

cows, sheep, or other mammals as

organic slaughter stock if they were not

organic from birth. Most of them also

rejected allowing such practices on an

‘‘if necessary’’ basis. Accordingly,

§ 205.236 requires that mammalian

slaughter stock be organically raised

from birth.

(3) Standard for Aquatic Animal

Production. While the first proposal

contained no standards solely for

aquatic animals in an organic operation,

it did contain provisions applicable to

their production. The first proposal

allowed fish and crustaceans, among

other livestock types, to be sold, labeled,

or represented as organic if such

livestock had been brought into an

organic operation no later than the

earliest commercially available stage of

life. Several commenters suggested that

the management of aquatic species

differs significantly from mammals and

poultry and would require separate

regulatory provisions. We concur and

intend to develop detailed practice

standards for specific aquatic species

that will be published for comment and

finalized prior to the implementation of

the NOP. Given the virtual absence of

recognized certification programs for

13546 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

aquatic operations, including

aquaculture, there are limited models on

which to base national standards.

Therefore, we must create opportunities

for producers, consumers, certifying

agents, and other interested parties to

participate in the development of

practice standards. We will hold public

meetings in Alaska, Alabama, and

Rhode Island to receive comment and

anticipate that the NOSB will also

provide recommendations.

(4) Apiculture Standard. The first

proposal allowed bees to be brought into

an organic operation at any stage of life

and required that the predominant

portion of their forage be organically

produced. Several commenters,

including producer and industry

groups, pointed out that bees differ

significantly from other livestock types

and that the first proposal lacked

sufficient details to guide honey

producers. Many consumers stated that

the provisions proposed for bee forage,

which required only that a predominant

portion of the bees’ forage be organic,

were too vague and lenient. Recognizing

that the provisions in the first proposal

for certifying beekeeping operations

were inadequate, we removed them

entirely from this proposal. We will

review the detailed production and

handling standards for beekeeping

operations that several certifying agents

have developed and assess the

feasibility of developing a practice

standard. The NOSB has agreed to

review and recommend an apiculture

practice standard for organic honey

production and hive care, including the

origin of organic bees.

(5) Organic Feed Requirement. The

first proposal allowed a producer to feed

livestock up to 20 percent of the total

feed ration in a given year that was not

organically produced. Furthermore, in

an emergency situation, the first

proposal allowed the Administrator to

increase the amount of nonorganic feed

that could be provided. Thousands of

comments were received opposing any

allowance for nonorganic livestock feed,

and many thought that no conditions

justified providing any nonorganic feed

to organic animals. Most producer

groups, organic certifying agents, and

industry groups, however, recognized

that eliminating all flexibility in this

regard could seriously inhibit growth of

the organic livestock industry and

reduce the availability organic livestock

products. Several existing certification

programs allow some use of nonorganic

feed in emergencies, in one case

specifying that up to 10 percent of the

livestock ration may be nonorganic.

Commenters made it clear that the

commercial availability of certified

organic livestock feed has increased

enough to eliminate exemptions based

on availability, even in regions such as

the Northeast where supplies were

previously difficult to obtain. The NOSB

also recommended providing an

allowance for livestock to receive

nonorganic feed in emergency

situations, with strict requirements for

documentation in the organic system

plan.

Based on the public comment

received and the recommendations of

the NOSB, we agree that allowances for

providing nonorganic feed to

organically managed livestock should be

limited to emergencies, such as fire,

drought, flood, and other natural

disasters. Accordingly, we have

removed the provision from the first

proposal that a producer may provide

up to 20 percent nonorganically raised

feed ‘‘as necessary.’’ Exemptions for

emergency use of nonorganic feed must

be authorized by the Administrator

through the procedures for establishing

a temporary variance. Producers will

work with their certifying agents to

determine the minimum percentage of

nonorganic feed needed to supply the

nutritional requirements of the livestock

until the 100 percent organic ration can

be restored.

(6) New Dairy Herd exemption. The

first proposal included an exemption to

allow an entire, distinct dairy herd—

converted to organic management for

the first time—to be fed nonorganic feed

up to 90 days prior to the production of

milk or milk products labeled as

organic. A few producer groups

supported this allowance for a one-time,

whole-herd exemption to make it

feasible for existing conventional dairy

farmers to convert to organic

management without incurring the costs

of 100 percent organic feed for 12

months prior to certification. However,

in light of the strong opposition to any

nonorganic feed allowance by

consumers and its inconsistency with

NOSB recommendations, we have

eliminated this provision.

(7) Synthetic Feed Additives. The first

proposal prohibited the feeding of

substances containing synthetic amino

acid additives and synthetic trace

elements to stimulate the growth or

production of livestock. In

§ 205.237(c)(2), the term, ‘‘synthetic

amino acids,’’ is replaced with the term,

‘‘additives,’’ which includes nutritional

substances other than amino acids.

Some commenters stated that the term,

‘‘additives,’’ more precisely reflects the

intent of the OFPA, which prohibits the

use of growth stimulants. The provision

in the first proposal to permit use of

synthetic amino acid additives to fulfill

the normal nutritional needs of

livestock is retained in § 205.237(a).

(8) Prohibition on Antibiotics. The

OFPA prohibits producers from using

subtherapeutic doses of antibiotics.

While this suggests that treatment with

antibiotics at therapeutic levels is

allowed, the OFPA does not contain

affirmative conditions for their use. In

developing provisions in the first

proposal for treating livestock with

antibiotics, we reviewed the NOSB

recommendations, public input received

at NOSB meetings, testimony presented

at livestock hearings, and existing State

and private standards. We found that

innovative production practices and

consumer expectations had increasingly

diminished the use of antibiotics in

organic livestock since passage of the

OFPA. At its 1994 meeting in Santa Fe,

NM, the NOSB recommended

prohibiting the use of antibiotics in the

production of organic slaughter stock

but allowing their use with extended

withdrawal intervals for dairy and

breeder stock. By its Ontario, CA,

meeting in 1998, the NOSB

recommended prohibiting all antibiotic

use after animals were brought into an

organic operation. Other comments we

reviewed favored allowing the use of

antibiotics because organic livestock

might benefit from receiving such

treatments. Other commenters requested

that organic producers be prohibited

from withholding treatment from sick

animals for economic reasons.

The first proposal permitted mammals

raised as organic slaughter stock to

receive antibiotics in the first 21 days of

life and other species to be given

antibiotics in the first 7 days of life. The

rationale for allowing antibiotic use was

based on concerns about the

vulnerability of newly born or hatched

livestock brought into an organic

operation from a nonorganic source. The

first proposal permitted organic

slaughter stock to originate from

nonorganic sources if it was brought

under organic management at an early

stage of life. Allowing the use of animal

drugs could be an appropriate safety net

for young organic livestock during their

first week of organic management. We

requested public comment on the use of

animal drugs in the production of

organic livestock, including organic

slaughter stock. We also published an

issue paper in October 1998 entitled

‘‘The Use of Antibiotics and

Parasiticides in Organic Livestock

Production,’’ requesting additional

public comment on this subject.

We received thousands of comments

from consumers, producers, and

industry groups objecting to any

allowance for antibiotic use in

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13547

organically produced livestock. Many of

these comments supported a

comprehensive prohibition on the use of

antibiotics, regardless of the animal’s

age or the type of products produced

from it. Based on these public

comments and the availability of

alternative production practices, this

proposal prohibits selling, labeling, or

representing as organic any animal that

has been treated with an antibiotic at

any dosage.

(9) Parasiticide Use. The first proposal

permitted livestock in an organic

operation to receive parasiticides

topically at any time of life, provided

that the producer complied with the

prohibition against routine use of a

synthetic internal parasiticide. We

concluded that, while some earlier

public comment favored prohibiting the

use of internal parasiticides and the

NOSB recommended restricting their

use, many producers had indicated that

parasiticides were essential to their

operations. These producers stated that

parasites can threaten animal health at

any stage of life and that the use of

parasiticides is unavoidable in certain

regions of the country. Even under

highly controlled situations, some

parasites endemic to certain regions can

be carried by wild birds, water, or feed.

Concerns for the overall health of an

animal warranted that parasiticides be

used as soon as possible after

determining the presence of parasites at

a level affecting the health of the

infected livestock.

In responding to the first proposal, a

large number of commenters stated that

synthetic parasiticides should be

prohibited in organic production,

especially for slaughter stock. The

NOSB also recommended prohibiting

the use of parasiticides in slaughter

animals. For other livestock, the Board

recommended that, in certain climates,

in certain stages of production, and for

certain animals, the use of synthetic

parasiticides might be necessary. The

Board stated that breeding stock, for

example, could receive parasiticides up

to certain stages of gestation specific to

the type of livestock. Such use of

synthetic parasiticides would be highly

restricted and include a lengthy period

of elapsed time before the animal’s

offspring would be eligible for use in a

certified operation. The Board proposed

developing practice standards to

address specific instances in which

parasiticides could be allowed.

This proposal allows the use of

synthetic parasiticides included on the

National List for use in organic

production on breeder and dairy stock

provided that preventative practices and

veterinary biologics are inadequate to

prevent infestation. This proposal

prohibits administering synthetic

parasiticides to livestock sold for

slaughter. These provisions reflect an

attempt to balance the conflicting

positions taken by consumers and

producers in response to the first

proposal and the subsequent issue paper

on livestock medications. We recognize

that the goal of organic production is to

use management practices and natural

substances to eliminate, when possible,

reliance on synthetic materials.

However, we do not believe that a

comprehensive prohibition on synthetic

parasiticides is feasible for all species

and for all regions of the country at this

time. Additionally, the new

requirements for access to the outdoors

for organically managed livestock

contained in this proposal may

exacerbate exposure to parasites for

animals in systems which previously

used greater degrees of confinement.

These provisions are also consistent

with the position of the NOSB, which

recommended at its October 1999

meeting to allow a synthetic parasiticide

for use on organically raised breeder

and dairy stock with the same

restrictions incorporated in this

proposal.

The OFPA prohibits the use of

synthetic internal parasiticides on a

routine basis. In the first proposal, the

word, ‘‘routine,’’ was defined as

administering an animal drug ‘‘without

cause.’’ Many commenters objected to

that definition, pointing out that

producers would not administer a

parasiticide unless they perceived a

justifiable cause. Commenters fear that

this might lead to dependence on

parasiticides rather than a management

system to reduce the number of

parasites. Therefore, this proposal

adopts the NOSB-recommended

definition for ‘‘routine’’ as use of a

synthetic parasiticide on a regular,

planned, or periodic basis. The

prohibition on using synthetic

treatments on a routine basis is retained

in § 205.238(c)(4).

(10) Temporary Confinement. The

first proposal provided that, if

necessary, animals could be maintained

under conditions that restrict the

available space for movement or access

to outdoors if other living conditions

were adequate to maintain the animals’

health without the use of permitted

animal drugs. This provision considered

the effects of climate, geographical

location, and physical surroundings on

the ability of animals to have access to

the outdoors. We explained that a

system of organic production is soil

based and that animals should be

allowed, as appropriate, access to the

soil. This understanding was considered

in balance with animal health issues,

such as the need to keep animals

indoors during extended periods of

inclement weather. The determination

of necessity was to be based on sitespecific conditions described by the

producer in an organic system plan or

updates to an organic plan, which

required approval from the certifying

agent. We requested public comment as

to the conditions under which animals

may be maintained to restrict the

available space for movement or access

to the outdoors. We also released an

issue paper in October 1998 entitled

‘‘Livestock Confinement in Organic

Production Systems’’ to solicit further

public participation in preparing this

proposal.

Many commenters stated that, while

confinement is appropriate under

certain conditions, access to the

outdoors is a fundamental tenet of

organic livestock production.

Commenters cited the widespread

prohibition on confinement systems,

such as raising poultry in battery cages,

contained in domestic and international

standards. Producers of organic

livestock have incorporated access to

the outdoors into viable production

systems for all major commercial

species, and consumers clearly identify

these practices as a distinguishing

characteristic of organic products. Some

commenters stated that production

standards containing broad allowances

for confinement would weaken their

incentive for purchasing organic

products. Some producers pointed out

that providing animals access to the

outdoors can reduce stress and diminish

the risk of transmitting disease. The vast

majority of commenters strongly

indicated that protection of an animal’s

welfare or the soil and water resources

of the operation were the only

appropriate conditions for restricting

access to the outdoors. Furthermore,

many commenters stated that the

condition and properties of the outdoor

area to which an animal receives access,

such as the nutritional content of

pasture, must be important

considerations in developing livestock

production standards.

Section 205.239(b) of this proposal

specifies the circumstances under

which animals may be temporarily

confined. This new requirement

proposes temporary confinement during

periods of inclement weather; certain

stages of production such as when dairy

animals are very young; when the

animal’s health, safety, or well-being are

jeopardized; or when there is risk to soil

and water quality. The NOSB specified

that the stage of an animal’s production

13548 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

is not intended to include the lactation

cycle of dairy animals in which only dry

cows would be allowed access to the

outside and pasture. The NOSB

recommended and we propose that

when there is a risk to soil or water

quality, livestock should be temporarily

confined. Practice standards addressing

when and how individual species may

be temporarily confined will be

developed and published in program

manuals. We are also incorporating the

NOSB recommendation that ruminants

receive access to pasture during the

periods they are not temporarily

confined.

(11) Physical Alterations. This

proposal contains a requirement in

§ 205.238(a)(5) that the producer of an

organic livestock operation must

perform, as needed, physical alterations

on livestock to promote the animal’s

welfare and in a manner that minimizes

pain and stress. Physical alterations

include castration and other practices,

such as wing clipping, intended to

modify or affect the animal’s behavior in

confinement. We received comments on

the first proposal which stated that the

performance of physical alterations is

integral to a system of organic livestock

production which must be addressed in

the standards. Subsequently, some

commenters on the confinement issue

paper drew a connection between

certain physical alterations, such as

debeaking in poultry, and the

conditions for space and mobility under

which livestock are raised We anticipate

that this subject will be a significant

consideration when the NOP engages in

equivalency discussions under the

Codex Alimentarius guidelines.

While many certification programs

have production standards for

conducting physical alterations on

animals, we cannot identify general

consensus on which practices should be

approved or prohibited. Many

production variables, including breed,

the number and concentration of

animals raised, and the available natural

resource base, influence the selection of

production practices. Operations which

raise the same species of livestock

could, due to differences in production

practices, require different approaches

to whether and how to conduct physical

alterations. We do not have sufficient

information at this time to propose

species-specific guidelines but

anticipate working with producers,

consumers, and certifying agents to

develop a better understanding on

which to act. By including the

requirement for conducting physical

alterations in a manner which promotes

an animal’s welfare and minimizes pain

and stress in this proposal, we are

acknowledging two points. One,

physical alterations have an appropriate

and at times necessary role in livestock

production, and, two, consideration for

animal welfare and comfort is an

integral component of organic livestock

production.

In order to use an animal’s welfare

and comfort as a condition for

establishing standards, we are

requesting comment on techniques to

measure animal stress. Certifying agents

will need objective, verifiable methods

to determine whether a producer is

fulfilling the livestock management

conditions established in the organic

system plan. Such methods may include

physiological or behavioral approaches

to measuring stress and may be directed

at individual animals or larger groups

such as herds or flocks. The many

comments addressing the well-being of

animals under organic management

indicate that this issue is central to the

differentiation of organic production

standards from nonorganic practices.

We need consistent, verifiable

enforcement techniques to ensure that

organic producers are capable of

attaining and documenting such

standards.

(12) Treatment of Sick or Injured

Animals. In this proposal, any animal

that is to be sold, labeled, or represented

as organic may not be treated with a

prohibited animal drug, including

antibiotics, synthetic substances that are

not allowed, or nonsynthetic substances

that are prohibited. Any substance used

as an animal drug in organic livestock

production must be approved by FDA or

registered by EPA and must be

administered in compliance with the

Federal Food, Drug, and Cosmetic Act.

This proposal simultaneously requires

that sick or injured animals must be

treated with the appropriate animal

medicine regardless of whether organic

status is lost as a result of doing so. This

requirement has been added in response

to an NOSB recommendation.

Thousands of comments expressed

concern that organic livestock would

suffer unduly if producers were not

required to provide treatment,

especially to save the life of a critically

ill animal, rather than risk the suffering

or death of the animal simply to

maintain its organic status. If the

treatment required under this proposal

includes the use of a prohibited

substance, the animal and any product

derived from it must be diverted to the

nonorganic market.

(13) Feeding of Animal By-Products.

Although we received thousands of

comments supporting a ban on the

feeding of any animal by-products to

livestock under organic management, a

broad prohibition would prevent certain

essential practices, such as feeding milk

to young mammals. This prohibition is

also inappropriate in the case of

carnivorous livestock, such as many

aquatic species. We believe that the

comments we received were not

intended to prohibit such practices but

were, rather, motivated by concerns for

food safety and the humane treatment of

animals. This proposal prohibits the

feeding of poultry and mammalian

slaughter by-products to organically

raised poultry or mammals. This change

is based on the thousands of comments

that expressed strong consumer

preference against adding animal byproducts into feed for the same species.

There was concern that this practice

could expose ruminant animals to

Bovine Spongiform Encephalopathy

(BSE). FDA regulates animal feed

additives and uses its authority to

address the human health

considerations of animal refeeding. FDA

continually revises its regulations to

ensure the highest level of protection

against known and emerging human

health risks. The prohibition on feeding

poultry and mammalian slaughter byproducts to organically raised poultry or

mammals contained in this proposal is

based solely on the consumer preference

expressed in public comment and is not

a food safety standard. Future changes

that are made to FDA regulations will be

reflected in NOP standards.

(14) Withdrawal Intervals. The first

proposal required that a producer

determine that an animal was fully

recovered from the condition for which

an animal drug was administered before

a product obtained from that animal

could be sold, labeled, or represented as

organic. In compliance with FDA

regulations, this could not have been

less than the withdrawal time specified

on the label of the animal drug

administered. We received comments

from producer groups that favored

extending the withdrawal times

specified on animal drug labels. Many

private certification programs applied

the principle of extended withdrawal

periods to the use of antibiotics in dairy

and breeder stock before innovations in

production led to such substances being

prohibited. The NOSB has continued to

include extended withdrawal period

annotations with its recommendations

for the use of parasiticides.

Based on consumer preference and

the recommendations of the NOSB, we

are proposing an extended withdrawal

interval for three animal drugs

(Ivermectin, Lidocaine, and Procaine)

included on the National List in this

proposal. FDA exercises full

responsibility for determining and

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13549

enforcing the withdrawal intervals for

animal drugs. No food safety arguments

are used or implied to support the use

of extended withdrawal periods. Rather,

we determined that extended

withdrawal periods are more compatible

with consumer expectations of

organically raised animals. In

emergency situations where the need for

a synthetic parasiticide or medicine is

unavoidable, an extended withdrawal

period would indicate that such use was

neither routine nor normal. This

approach is consistent with the manner

in which organic certification agencies

addressed antibiotic use in livestock

production. Before the current

prohibition on antibiotics became the

industry norm, certifying agents allowed

their use under restricted conditions,

including extended withdrawal

intervals, to demonstrate to consumers

that such use was genuinely essential.

Livestock Production—Changes

Requested But Not Made

This subpart retains from our first

proposal regulations on which we

received comments as follows:

(1) Feed Requirements. The first

proposal required the use of preventive

health care practices, including diverse

feedstuffs, appropriate housing, well

maintained pasture, and good sanitation

practices, and this proposal contains

similar provisions. It also included

provisions for administering appropriate

veterinary biologics, vitamins, and

minerals, and on selecting species and

types of livestock with regard to

suitability for site-specific conditions

and resistance to prevalent diseases and

parasites. Preventive health care

practices were generally supported by

comments as being consistent with a

system of organic livestock production.

Many commenters requested an

explanation of the term, ‘‘diverse

feedstuffs,’’ and some expressed

concern that this provision could permit

use of feed supplements which might be

prohibited by other Federal, State, or

local laws. All provisions proposed in

this subpart must be in compliance with

applicable laws and regulations,

including the Federal Food, Drug, and

Cosmetic Act; the OFPA; and our

definition of a system of organic

production and handling. Vitamins,

minerals, and other synthetic or

nonagricultural supplements, which

appear on the National List of allowed

synthetic livestock products in the first

proposal are similarly permitted here,

and provide a means to diversify an

animal’s diet. Soybean meal and other

organically produced feed concentrates

also serve this purpose. We encourage

the NOSB to develop and recommend

practice standards to provide additional

guidance regarding the appropriate

variety of feed for specific livestock

species. Both the first proposal and this

one defer to publications of the National

Research Council’s Committee on

Animal Nutrition to establish nutrient

requirements for livestock. Producers

and certifying agents will use these

publications to ensure that animal

nutrient requirements are met.

Handling—Changes Based on

Comments

This subpart differs from our first

proposal in several respects as follows:

(1) Irradiation. In the first proposal,

we requested public comment on the

compatibility of ionizing radiation

(irradiation) with a system of organic

production and handling. We also asked

if there are effective alternatives to

ionizing radiation, such as sanitary

practices, heat pasteurization, and

incidental additives, that are compatible

with a system of organic production and

handling, and, if so, how they are

compatible. We further asked whether

the use of ionizing radiation was

considered an essential standard

industry practice or good manufacturing

practice. Although the NOSB

recommended prohibiting the use of

ionizing radiation for organic products,

we requested this information because

of increasing concern about foodborne

illness and growing interest in FDAapproved ionizing radiation as a

sanitation or preservation treatment for

a wide range of agricultural products.

We received hundreds of thousands of

comments from every segment of the

organic community—producers,

processors, certifying agents,

consumers, environmental groups, and

retailers—opposing the use of ionizing

radiation. These comments indicated

that ionizing radiation has been

expressly prohibited in all existing

organic certification standards,

international as well as domestic.

Allowing this practice could put

domestic producers and handlers at a

trade disadvantage, disrupt

international markets, and undermine

consumer faith in the integrity of the

domestic organic label.

Comments suggested alternatives to

ionizing radiation for preventing

contamination by human pathogens.

Alternatives include heat disinfection,

refrigeration, moisture and oxygen

reduction, packaging, hygienic

handling, and appropriate use of

disinfectant substances. Although no

one suggested that any products might

be unavailable if irradiation were

prohibited, many commenters expressed

the willingness to do without any

product that required irradiation. In

response to the overwhelming

consensus of public comment, this

proposal prohibits any use of ionizing

radiation for the handling of any organic

product in § 205.270(c).

(2) Incidental Additives. The first

proposal included a provision that

permitted the use of incidental additives

in processing, except those extracted

with a volatile synthetic solvent, if it

was necessary for the production of the

product. As with previous provisions

for practices that could be used only ‘‘if

necessary,’’ the preamble to the first

proposal explained that a determination

of necessity was based on site-specific

conditions that were described by a

producer or handler in an organic

system plan or updates to an organic

system plan and reviewed by the

certifying agent. We requested

comments as to the conditions under

which an incidental additive might be

considered necessary and requested

comment as to whether handlers who

handle only products sold, labeled, or

represented as ‘‘made with certain

organic ingredients’’ should be

exempted from the restriction of using

incidental additives only if necessary.

An incidental additive was defined as

an additive that is present in an

agricultural product at an insignificant

level, does not have any technical or

functional effect in the product, and is

not considered an active ingredient.

This definition is consistent with 21

CFR 101.100(a)(3)(ii) and is the basis for

the definition of an incidental additive

in this proposal.

Although thousands of consumers

objected to the use of synthetic

substances in processed organic

products, many others specified that an

incidental additive that had been

reviewed and approved by the NOSB

would be acceptable. Few respondents

supported exempting products labeled

as ‘‘made with organic ingredients’’

from restrictions on the use of

incidental additives. The NOSB

recommended that documentation be

required for use of synthetic incidental

additives and that handlers demonstrate

progress over time in finding

replacements. Organic industry groups

also commented that hundreds of

incidental additives are currently being

used to process organic products and

that prohibiting the use of such

substances would severely restrict the

choices available to consumers and

limit the growth of the organic sector.

The NOSB recommended several

synthetic incidental additives for the

National List, recognizing that a wide

range of organic products could not be

feasiblely manufactured without the use

13550 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

of incidental additives such as

defoaming agents, adjuvants, clarifiers,

filtering agents, and equipment

cleansers. Therefore, this proposal

requires that any incidental additive

used to process agricultural products

that are intended to be sold, labeled, or

represented as ‘‘organic’’ or ‘‘made with

organic (specified ingredients)’’ must be

included on the National List of allowed

nonagricultural (nonorganic) substances

in § 205.605. A product labeled as ‘‘100

percent organic’’ could not be produced

through the use of any synthetic

processing aid.

(3) Prevention and Control of Facility

Pests. The first proposal addressed the

prevention and control of facility pests

and authorized the NOP to require such

terms and conditions as are determined

necessary. These provisions were based

on existing organic certification

programs and NOSB recommendations.

The first proposal included a three-step

order of preference, which commenters

found to be overly complex and difficult

to enforce. This proposal retains similar

provisions but simplifies the scheme so

that there are only two levels of

distinction between preferable and less

preferable practices. In this proposal,

pest prevention and control methods

that do not entail use of biological,

botanical, or synthetic substances are

equally acceptable, and the producer or

handler may only use biological,

botanical, or synthetic substances if

other approved methods are not

effective. Paragraph (c) of § 205.271

parallels the provision proposed in

§ 205.206(d) addressing crop pest, weed,

and disease management. Accordingly,

it requires an operator of an organic

handling operation who applies any

biological, botanical, or synthetic

substance for the prevention or control

of pests to implement measures to

evaluate the effects of repetitive use of

the same or similar materials on pest

resistance and shifts in pest types.

(4) Storage Containers. Sections

205.272 (b)(1) and (b)(2) of this proposal

contain provisions similar to the first

proposal which prohibit the use of

storage containers or bins, including

packages and packaging materials, that

contain synthetic fungicides,

preservatives, or fumigants. These

requirements also prohibit the use or

reuse of any bag or container that was

previously in contact with any

substance that could compromise the

organic integrity of its contents. This

proposal adds a provision to permit the

reuse of a bag or container originally

used for conventional products if the

reusable bin or container has been

thoroughly cleaned and poses no risk of

prohibited materials contacting organic

products. Producers and handlers

commented that it is possible and

desirable to reuse some kinds of

containers if precautions are taken. This

modification is consistent with the

OFPA, which requires that the organic

quality of a product not be

compromised.

(5) Agricultural Fibers. Some

commenters stated that the labeling

provisions in the first proposal for

processed commodities containing

organically produced cotton fibers were

excessively restrictive. The OFPA

provides the Secretary with the

authority to implement standards for

organically produced agricultural fibers,

including cotton, used for nonfood

purposes. This authority includes

standards for the production of the

agricultural fiber as well as handling

standards to regulate the practices and

materials that are used in the

manufacture of the nonfood commodity.

State and private certification agents

have made substantial progress in

developing and implementing handling

standards for organically produced

agricultural fibers that are gaining

acceptance in the marketplace. We are

reviewing the existing certification

guidelines and industry practices and

anticipate developing standards for

processing organically produced

agricultural fibers.

Handling—Changes Requested But Not

Made

This subpart retains from our first

proposal regulations on which we

received comments as follows:

(1) Facility Pest Control Substances.

The first proposal permitted the use of

any substance to control facility pests,

as long as the intended use was

approved by the appropriate regulatory

authority and the substance was applied

in a manner that prevents it from

coming into contact with any organic

product. Many consumers objected to

this provision and suggested that

prohibited substances should never be

allowed to be used in any organic

operation. However, comments from a

number of organic handlers and one

industry association stated that, because

handling operations must comply with

health regulations that require

elimination of any pests that may

invade food handling facilities,

prohibited substances must sometimes

be used. The NOSB also acknowledged

this possibility in its recommendations,

and most organic certification programs

similarly allow for such an occurrence,

with strict provisions for safeguarding

the integrity of organic products. In

agreement with these comments, we

have proposed a similar allowance in

§ 205.271(c). The handler must fully

document in his or her organic plan the

evidence that such a measure was

necessary and the measures taken to

protect organic products or ingredients

from coming into contact with any pest

control substance.

(2) Waxes. We propose to retain the

definition of packaging included in the

first proposal, which encompasses

waxes used in contact with an edible

surface of an agricultural product. A

number of commenters disagreed with

the inclusion of waxes in the definition

of packaging, arguing that waxes should

be considered nonagricultural

ingredients and, therefore, should be

required to appear on the National List

of nonagricultural (nonorganic)

substances allowed as ingredients in or

on processed products labeled as

‘‘organic’’ or ‘‘made with organic

(specified ingredients).’’ However, the

first proposal did require carnauba and

other waxes to be on the National List

of nonagricultural ingredients allowed

for use in organic processed products,

and this proposal contains a similar

provision. These provisions adequately

address the concerns expressed by the

commenters that only waxes meeting

the criteria for ingredients in organic

processed products be permitted. It is

appropriate to include waxes in the

definition of packaging to ensure that

prohibited substances are not added to

approved waxes that may be applied to

the edible surface of organic products,

in accordance with the OFPA, which

prohibits use of any packaging materials

that contain synthetic fungicides,

preservatives, or fumigants.

Subpart D—Labels, Labeling, and

Market Information

The Act provides that a person may

sell or label an agricultural product as

organically produced only if the product

has been produced and handled in

accordance with provisions of the Act

and these regulations. This subpart sets

forth labeling requirements for organic

agricultural products and products with

organic ingredients based on their

percentage of organic composition. For

each labeling category, this subpart

establishes what ‘‘organic’’ terms and

references can and cannot be displayed

on a product package’s principal display

panel, information panel, ingredient

statement, and on other package panels.

Labeling is proposed for containers used

in shipping and storing organic product

and for denoting organic bulk products

in market information which is

displayed or disseminated at the point

of retail sale. Restrictions on labeling

organic product produced by exempt

operations are described. Finally, this

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13551

subpart proposes a new USDA organic

seal or shield (hereafter referred to as

the USDA Seal) and regulations for

display of the USDA seal and display of

the seals, logos, or other identifying

marks of certifying agents.

The intent of these sections is to

ensure that organically produced

agricultural products are consistently

labeled to aid consumers in selection of

organic products and to prevent labeling

abuses. These provisions cover the

labeling of a product as ‘‘organic’’ and

are not intended to supersede other

labeling requirements specified in

various Federal labeling regulations. For

instance, we propose that the percent of

organic ingredients and the name of the

certifying agent be displayed on the

information panel of packaged products

and that the organic ingredients be

identified as ‘‘organic’’ in the ingredient

statement. The Food and Drug

Administration (FDA) has authority to

regulate the placement of information

on package information panels and,

thus, FDA labeling requirements in 21

CFR parts 100 through 169 must be

complied with by handler when affixing

organic labels to product packages.

Display of the USDA Seal and certifying

agent seals, logos, or other identifying

marks also must be in accordance with

those regulations. The requirements of

FDA’s Fair Packaging and Labeling Act

(FLPA) and the Federal Food, Drug, and

Cosmetic Act (FFDCA) must be

followed. Likewise, the Federal Trade

Commission has authority over product

advertising and the extent to which a

handler or retail food establishment

engages in advertising as part of its

market information activities. The

Federal Trade Commission (FTC)

regulations in 16 CFR must be followed.

USDA’s Food Safety and Inspection

Service’s (FSIS) Federal Meat Inspection

Act, Poultry Products Inspection Act,

and Egg Products Inspection Act also

have implementing regulations in 9 CFR

which must be followed. The labeling

requirements specified in this subpart

must not be applied in a manner so that

they would conflict with the labeling

requirements of these and other Federal

and State programs.

While this regulation does not require

labeling of an organic product as

organic, we assume that producers and

handlers will choose to label their

organic products and display the USDA

Seal to the extent allowed in these

regulations. They will do this to

improve the marketability of their

organic product.

In this proposal, assembly, packaging,

and labeling of a multiingredient

organic product are considered handling

activities. The certification of handling

operations is covered in subpart C of

this regulation. No claims, statements,

or marks using the term, ‘‘organic,’’ or

display of certification seals, other than

as provided in this regulation, may be

used. A handler which chooses not to

use these required and prohibited

labeling provisions may not otherwise

label or represent a product as organic.

Once a handler makes a decision to

market a product as organic or

containing organic ingredients, the

handler is required to follow the

provisions in this subpart regarding use,

display, and location of organic claims

and certification seals. Handlers who

may produce organic ingredients and/or

assemble multiingredient products

composed of more than 50 percent

organic ingredients must be certified as

an organic handling operation. Handlers

of products of less-than-50-percent

organic ingredients do not have to be

certified unless the handler actually

produces one or more of the ingredients

used in the less-than-50-percent

product. Repackers who purchase

certified organic product from other

entities for repackaging and labeling

must be certified as an organic

operation. Entities which simply relabel

a product package would be subject to

recordkeeping requirements to show

proof that the product purchased prior

to relabeling was, indeed, organically

produced. Distributors which receive

and transport labeled product to market

are not subject to certification or any

handling requirements of this

regulation.

Proposal Description

The general labeling principle

employed in this proposal, and to which

we think most commenters would

subscribe, is that labeling or

identification of the organic nature of a

product should increase as the organic

content of the product increases. In

other words, the higher the organic

content of a product, the more

prominently its organic nature can be

displayed. This is consistent with

provisions of the Act which establishes

the three percentage categories for

organic content and basic labeling

requirements in two of those categories.

Section 205.300 specifies the general

use of the term, ‘‘organic,’’ on product

labels. Paragraph (a) establishes that the

term, ‘‘organic,’’ may be used only on

labels and in market information of

agricultural products and ingredients

that have been certified as produced and

handled in accordance with these

regulations. The term, ‘‘organic,’’ cannot

be used on a product label for any

purpose other than to modify or identify

the product or ingredient in the product

that is organically produced and

handled. Products not organically

produced and handled will not be able

to use the term, ‘‘organic,’’ on any

package panel or in market information

in any way that implies the product is

organically produced.

Categories of Organic Content. The

type of labeling and market information

that can be used and its placement on

different panels of consumer packages

will be based on the percentage of

organic ingredients in the product. The

percentage will reflect the actual weight

or fluid volume (excluding water and

salt) of the organic ingredients in the

product. Four categories of organic

content are proposed: 100 percent

organic; 95 percent or more organic

content; 50 to 95 percent organic

content; and less than 50 percent

organic content.

100 Percent Organic

For labeling and market information

purposes, this proposal allows a ‘‘100

percent organic’’ label for an

agricultural product that is composed of

a single ingredient such as raw,

organically produced fruits and

vegetables. The product also may be

composed of two or more organically

produced ingredients, provided that the

individual ingredients are organically

produced and handled consistent with

provisions in subpart C of this

regulation. No processing aids may be

used in the production of 100 percent

organic products. This proposal

provides that labeling provisions for

‘‘100 percent organic’’ products be the

same as provisions for the 95 percent

‘‘organic’’ products specified below.

Organic

Products labeled or represented as

‘‘organic’’ will contain, by weight

(excluding water and salt), at least 95

percent organically produced raw or

processed agricultural product. The

organic ingredients must be produced

using production and handling practices

pursuant to subpart C of this regulation.

The nonorganic (5 percent or less)

ingredients may be composed of

nonorganic or nonagricultural

substances. The difference between 100

percent organic products and 95

percent-plus products is that the latter

may contain up to 5 percent nonorganic

or nonagricultural products.

Multiingredient Product: 50–95 Percent

Organic Ingredients

For labeling and market information

purposes, the third category of

agricultural products are

multiingredient products containing by

weight or fluid volume (excluding water

13552 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

and salt) between 50 and 95 percent

organic agricultural ingredients

produced pursuant to these regulations.

Such products may be labeled or

represented as ‘‘made with organic

(specified ingredients).’’ By ‘‘specified,’’

we mean the name of the agricultural

product forming the organic ingredient.

The organic ingredients must be

produced using substances on the

approved National List in subpart G and

employing organic production and

handling practices consistent with

subpart C of this regulation. For

instance, breakfast cereal made with 75

percent organically produced and

processed wheat and 25 percent other,

nonorganically produced grains, raisins,

and nuts can be labeled as ‘‘made with

organic wheat’’ on the principal display

panel. To qualify for this organic

labeling, the nonorganic ingredients

(grains, raisins, and nuts) must be

produced and handled without use of

the first three prohibited practices

specified in paragraph (e) (excluded

methods, sewage sludge, or ionizing

radiation). However, those nonorganic

ingredients may be produced or handled

using practices prohibited in paragraphs

(e)(4) through (e)(7) (using substances

not on the National List; containing

added sulfites, nitrates, or nitrites; using

nonorganic ingredients when organic

ingredients are available; and using

organic and nonorganic forms of the

same ingredient).

Multiingredient Product: Less Than 50

Percent Organic Ingredients

The final labeling category covers

multiingredient products with less than

50 percent organic ingredients (by

weight or fluid volume, excluding water

and salt). The organic ingredients must

be produced using substances on the

approved National List in subpart G and

employing organic production and

handling practices consistent with

subpart C of this part. The remaining

nonorganic ingredients (50 percent or

more of the product) may be produced,

handled, and assembled without regard

to these regulations (using prohibited

substances and prohibited production

and handling practices). Organic

labeling of these products is limited to

the information panel only as provided

in § 205.305.

Prohibited Practices. This proposal

prohibits labeling of whole products or

ingredients as ‘‘organic’’ if those

products or ingredients are produced

using any of the following production or

handling practices: (1) Ingredients or

processing aids containing or created

using excluded methods (genetically

modified organisms (GMO)) or the

products of excluded methods; (2)

ingredients that have been produced

using applications of sewage sludge

(biosolids) as fertilizer; (3) ingredients

that have been processed with ionizing

radiation; (4) processing aids not

approved on the National List; (5)

sulfites, nitrates, or nitrites added to or

used in processing of an organic product

in addition to those substances

occurring naturally in a commodity; (6)

use of the phrase, ‘‘organic when

available,’’ or similar statement on

labels or in market information when

referring to products composed of

nonorganic ingredients used in place of

specified organic ingredients; and (7)

labeling as ‘‘organic’’ any product

containing both organic and nonorganic

forms of an ingredient specified as

‘‘organic’’ on the label. The prohibitions

on the use of excluded methods, sewage

sludge, irradiated products, and

prohibited processing aids are included

here to be consistent with the revised

National List of Approved and

Prohibited Substances in subpart G.

These seven prohibitions apply to the

four labeling categories of products and

are not individually repeated as

prohibited practices in the following

sections. Table 1, Prohibited Production

and Handling Practices for Organic

Labeling, is a summary reference of how

the seven prohibited practices must be

applied in the production and handling

of organic and nonorganic ingredients of

products in the four labeling categories.

TABLE 1.—PROHIBITED PRODUCTION AND HANDLING PRACTICES FOR LABELING CATEGORIES

Labeling category

Use

excluded

methods

Use sewage sludgeUse

irradiation

Use processing aids

not on national list

Contain

added sulfites, nitrates,

nitrites

Use organic ingredients

when available

Use both

organic &

nonorganic

forms of

same ingredient

‘‘100 percent Organic’’

Single/multiingredients completely organic NO ............ NO ............ NO ............ Use NO

Processing

Aids.

NO ............ NO ............ NO.

‘‘Organic’’

Organic Ingredients (95% or more) ........... NO ............ NO ............ NO ............ NO ............ NO ............ NO ............ NO.

Nonorganic Ingredients (5% or less) ......... NO ............ NO ............ NO ............ NO ............ NO ............ NO ............ NO.

‘‘Made with Organic (specified ingredients)’’

Organic Ingredients (50–95%) ................... NO ............ NO ............ NO ............ NO ............ NO ............ NO ............ NO.

Nonorganic Ingredients (49% or less) ....... NO ............ NO ............ NO ............ OK ............ OK ............ NA* ........... NA*.

Less-than 50% Organic Ingredients

Organic Ingredients (49% or less) ............. NO ............ NO ............ NO ............ NO ............ NO ............ NO ............ NO.

Nonorganic Ingredients (50% or more) ..... OK ............ OK ............ OK ............ OK ............ OK ............ NA* ........... NA*

* Not applicable.

Calculating the Percentage of Organic

Ingredients. This proposal specifies

procedures for calculating the

percentage, by weight or fluid volume,

of organically produced ingredients in

an agricultural product labeled or

represented as ‘‘organic.’’

The organic percentage of liquid

products and liquid ingredients will be

determined based on the fluid volume

of the product and ingredients

(excluding water and salt). When a

product is identified on the principal

display panel or the information panel

as being reconstituted with water from

a concentrate, the organic content will

be calculated on the basis of a singlestrength concentration.

Some products may contain both dry

and liquid ingredients that are produced

organically. In such cases, this proposal

provides that the percentage of total

organic ingredients will be based on the

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13553

combined weight of the dry organic

ingredient(s) and the weight of the

liquid organic ingredient(s), excluding

water and salt. For example, a product

may be made using organically

produced vegetable oils or grain oils or

contain organic liquid flavoring extracts

in addition to other organic and

nonorganic ingredients. In these cases,

the weight of the liquid organic oils or

flavoring extracts, less any added water

and salt, would be added to other solid

organic ingredients in the product, and

their combined weight would be the

basis for calculating the percentage of

organic ingredients. We believe this

process provides the most appropriate

and least burdensome method for

calculating the organic percentage of

such multiingredient products.

Only one figure providing the total

percentage of all organic ingredients

will be shown on the information panel.

The total percentage will be displayed

on the information panel of the

consumer package above or below the

ingredient statement with the words,

‘‘contains X percent organic

ingredients,’’ or a similar phrase. If the

total percentage is a fraction, it will be

rounded down to the nearest whole

number. The percentage of each organic

ingredient will not be required to be

displayed.

Labeling ‘‘100 Percent Organic’’ and

‘‘Organic’’ Products. This proposal

includes optional, required, and

prohibited practices for labeling

packages of agricultural products that

are ‘‘100 percent organic’’ or ‘‘organic’’

(at least 95 percent organic). Only

products that are composed of a wholly

organic single ingredient or entirely of

certified organic ingredients may be

identified with a percentage number

(100 percent) on the principal display

panel. Products between 95 and 100

percent organic composition, when

identified as ‘‘organic’’ on the principal

display panel, will be required to state

on the information panel the percentage

of organic ingredients in the finished

product and identify each organic

ingredient in the ingredient statement.

The handler may display the

following information on the principal

display panel, the information panel,

and any other part of the package and

in market information representing the

product: (1) The term, ‘‘100 percent

organic’’ or ‘‘organic,’’ as applicable, to

the content of the product; (2) the USDA

Seal; and (3) the seal, logo, or other

identifying mark of the certifying agent

(hereafter referred to as ‘‘seal or logo’’)

which certified the handler of the

finished product. The seals or logos of

other certifying agents which certified

organic raw materials or organic

ingredients used in the product also

may be displayed, at the discretion of

the handler. If multiple organic

ingredients are identified on the

ingredient statement, the handler of the

finished product that combined the

various organic ingredients must

maintain documentation, pursuant to

subpart B of this regulation, certifying

the organic content of the added

ingredients.

While certifying agent identifications

can appear on the package with the

USDA Seal, they may not appear larger

than the USDA Seal on the package.

There is no restriction on the size of the

USDA Seal as it may appear on any

panel of a packaged product, provided

that display of the Seal conforms with

the labeling requirements of FDA and

FSIS.

This proposal specifies three labeling

practices that will be required if a

handler labels a product ‘‘100 percent

organic’’ or ‘‘organic’’ on the principal

display panel. If a product is labeled as

‘‘100 percent organic’’ the ingredients

may also be modified with the term,

‘‘organic,’’ but would not have to be so

labeled because it is assumed from the

100 percent label that all ingredients are

organic. For 95 percent-plus products

that contain more than one ingredient,

each organic ingredient listed in the

ingredient statement must be modified

with the term, ‘‘organic.’’ Water and salt

in the ingredient will not be identified

as ‘‘organic.’’ Secondly, the total

percentage of organic ingredients in the

product must be shown on the

information panel. The percentage

statement should be placed in a manner

that it can be viewed in relation to the

ingredient statement.

The handler also must display on the

information panel the name of the

certifying agent which certified the

handler producing the finished product.

The handler has the option to include

the business address or telephone

number of the certifying agent. This

information must be placed below or

otherwise near the manufacturer or

distributor’s name.

Labeling Products ‘‘Made with

Organic (Specified Ingredients)’’. With

regard to agricultural products ‘‘made

with organic (specified ingredients)’’—

those products containing between 50

and 95 percent organic ingredients—this

proposal establishes the following

optional, required, and prohibited

labeling practices.

Under optional practices, the

statement, ‘‘made with organic

(specified ingredients),’’ may be placed

on the principal display panel and other

panels of the package. The same

statement can also be used in market

information representing the product.

However, the following restrictions will

be placed on the statement, ‘‘made with

organic (specified ingredients),’’ when it

appears on the principal display panel:

(1) The statement cannot list more than

three organic ingredients in the product;

(2) the statement cannot appear in print

that is larger than one half (50 percent)

of the size of the largest print or type

appearing on the principal display

panel; and (3) the statement must

appear in its entirety in the same type

size, style, and color without

highlighting. Display of the statement,

‘‘made with organic (specified

ingredients),’’ on other panels must be

similarly consistent with the size of

print used on those panels. These

restrictions are consistent with FDA

regulations and similar to the

recommendations of the National

Organic Standards Board (NOSB). This

provision will help assure that the

statement, ‘‘made with organic

(specified ingredients),’’ is not

displayed in such a manner as to

misrepresent the actual organic

composition of the product.

We also propose that, at the handler’s

option, the certifying agent’s seal or logo

may be displayed on the principal

display panel or other package panel.

Packages of products labeled as

‘‘made with organic (specified

ingredients)’’ will be required to display

on the information panel the total

percentage of organic ingredients in the

product and modify each organic

ingredient listed in the ingredient

statement with the term, ‘‘organic.’’ The

percentage of organic ingredients must

be displayed so that it can be viewed in

relation to the ingredient statement.

The name of the certifying agent

which certified the handler of the

finished product must be displayed

below or otherwise near the

manufacturer or distributor’s name. The

statement may include the phrase,

‘‘Certified organic by * * *’’ or

‘‘Ingredients certified as organically

produced by * * *’’ to help distinguish

the certifying agent from the

manufacturer or distributor. At the

handler’s option, this label may include

the business address or telephone

number of the certifying agent which

certified the handler of the finished

product.

Labeling Products with Less Than 50

Percent Organic Ingredients. The final

labeling category covers packaged

multiingredient agricultural product

containing less than 50 percent organic

ingredients.

Handlers of ‘‘less than 50 percent’’

multiingredient products, who choose

to declare the organic nature of the

13554 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

product, may do so only on the

information panel by declaring the total

percentage of organic ingredients in the

product and, in the ingredient

statement, modifying the organic

ingredients with the term, ‘‘organic.’’

The percentage statement must be

displayed so that it can be viewed in

relation to the ingredient statement.

Products composed of less than 50

percent organic content cannot display

the USDA Seal or any certifying agent’s

seal or logo anywhere on the product

package or in market information.

Handlers of such products will be

subject to this regulation in the

following ways. Those handlers who

only purchase organic and nonorganic

ingredients and assemble a finished

product of less than 50 percent organic

content do not have to be certified as

organic handlers. They will be

responsible for appropriate handling

and storage of the organic ingredients

prior to product assembly and for

maintaining records verifying the

organic certification of the ingredients

used in the product. To the extent that

the packaging process includes affixing

the label to finished product package,

those handlers will be responsible for

meeting the labeling requirements of

this subpart. Handlers who produce an

organic ingredient prior to assembly

into a finished product, even though the

finished product contains less than 50

percent organic content, and must be

certified as to the source of the organic

ingredient(s). The nonorganic

ingredients may be produced, handled,

and assembled without regard to the

requirements of this part.

The handler who affixes the label to

the product package will be responsible

for calculating the percentage of organic

ingredients in an organic product. As

part of the certifying agent’’ annual

certification of the handler, the certifier

will verify the calculation and labeling

of packages.

Table 2, Labeling Consumer Product

Packages, provides a summary of the

required and prohibited labeling

practices for the four labeling categories.

TABLE 2.—LABELING CONSUMER PRODUCT PACKAGES

Labeling category Principal display panel Information panel Ingredient statement Other package panels

‘‘100 percent Organic’’ (Entirely organic; whole, raw or processed

product).

‘‘100 percent organic’’ .... ‘‘100% Organic’’ ............. If multiingredient product, identify each ingredient as ‘‘organic’’.‘‘100 percent Organic’’.

USDA Seal and Certifying agent sets(s).Certifying agent name

(required); business

address, tele. # (optional).

........................................ USDA Seal and Certifying agent seal(s).

‘‘Organic‘‘ (95% or more organic

ingredients).

‘‘Organic’’ ....................... ‘‘X% Organic Ingredients’’.Identify organic ingredients as ‘‘organic’’.‘‘Organic’’.

USDA Seal and Certifying agent seals(s).Certifying agent name

(required); business

address, tele. # (optional).

........................................ USDA Seal and Certifying agent seal(s).

‘‘Made with Organic (specified ingredients)’’ (50 to 95% organic

ingredients).

‘‘Made with organic

(specified ingredients)’’.

‘‘X% Organic Ingredients’’.Identify organic ingredients as ‘‘organic’’.‘‘Made with organic

(specified ingredients)’’.

Certifying agent seal of

final product handler.

Certifying agent name

(required; business

address, tele. # (optional).

Identify organic ingredients as ‘‘organic’’.‘‘Made with organic

(specified ingredients)’’.

Prohibited: USDA Seal .. Prohibited: USDA Seal .. ........................................ Prohibited: USDA Seal.

Less-than 50% Organic Ingredients (49% or less organic ingredients).Prohibited: Any reference to organic content of product.‘‘X% Organic Ingredients’’.Identify organic ingredients as ‘‘organic’’.Prohibited: Any reference to organic content of product.

Prohibited: USDA Seal &

Certifying agent seal.

Prohibited: USDA Seal &

Certifying agent seal.

........................................ Prohibited: USDA Seal &

Certifying agent seal.

Misrepresentation in Labeling of

Organic Products. The labeling

requirements of this proposal are

intended to assure that the term,

‘‘organic,’’ and other similar terms or

phrases are not used on a product

package or in marketing information in

a way that misleads consumers as to the

contents of the package. Thus, we

intend to monitor the use of the term,

‘‘organic,’’ and other similar terms and

phrases. Should we find that terms or

phrases are being used on product

packages to represent ‘‘organic’’ when

the products are not produced to the

requirements of this regulation, we will

proceed to restrict their use.

After consideration of alternative

labeling terms that handlers might wish

to use to qualify or modify the term,

‘‘organic,’’ we have determined that

handlers may not qualify or modify the

term, ‘‘organic,’’ using adjectives such

as, ‘‘pure’’ or ‘‘healthy,’’ e.g., ‘‘pure

organic beef’’ or ‘‘healthy organic

celery.’’ The term, ‘‘organic,’’ is used in

labeling to indicate a certified system of

agricultural production and handling.

Terms such as ‘‘pure,’’ ‘‘healthy,’’ and

other similar adjectives attribute

hygienic, compositional, or nutritional

characteristics to products. Use of such

adjectives misrepresents products

produced under the organic system of

agriculture as having special qualities as

a result of being produced under the

organic system. Furthermore, use of

such adjectives would incorrectly imply

that products labeled in this manner are

different from other ‘‘organic’’ products

that are not so

Moreover, ‘‘pure,’’ ‘‘healthy,’’ and

other similar terms are regulated by

FSIS and FDA. These terms may be used

only in accordance with the labeling

requirements of FDA and FSIS. For

example, the regulations implemented

by FSIS, 9 CFR 317.363, define the

terms, ‘‘healthy,’’ ‘‘health,’’ and similar

derivations and the conditions of use as

a nutritional claim. Also, according to

FSIS regulations, 9 CFR 317.8(b)(34), the

term, ‘‘pure,’’ as well as the terms, ‘‘all,’’

‘‘100 percent,’’ and similar terms, may

only be used to indicate that a single

ingredient product is composed of 100

percent of the product ingredient and

contains no other ingredients. The term,

‘‘healthy,’’ is regulated by FDA (21 CFR

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13555

101.14) and can be used, with

documentation, only to indicate or

characterize a relationship of the

product to a disease or health-related

condition. The prohibition on use of

these terms to modify ‘‘organic’’ does

not otherwise preclude their use in

other labeling claims.

We also intend to monitor the use of

the term, ‘‘organic,’’ in corporate or

company names and seek additional

guidance from the FTC. We do not

believe that the term, ‘‘organic,’’ in a

brand name context inherently implies

an organic production or handling claim

or inherently constitutes a false or

misleading statement.

The determination as to whether the

use of the term, ‘‘organic,’’ in a brand

name conveys a message about the

product’s attributes must be made by

the Secretary. We will monitor use of

the term, ‘‘organic,’’ in product and

company names at this time. However,

if we find that the term is being used in

a false or misleading way to

misrepresent the organic nature of the

product, we have the authority under

section 6519(b) of the Act to take action

against such use. Such determinations

and actions will be taken on a case-bycase basis.

Labeling of Products Shipped in

International Markets. Domestically

produced organic products intended for

export may be labeled to meet the

requirements of the country of

destination or any labeling requirements

specified by a particular foreign buyer.

For instance, a product label may

require a statement that the product has

been certified to, or meets, certain

European Union organic standards.

Such factual statements regarding the

organic nature of the product will be

permitted. However, those packages

must be exported and cannot be sold in

the United States with such a statement

on the label because the statement

indicates certification to standards other

than are required under this program.

As a safeguard for this requirement, we

require that shipping containers and

bills of lading for such exported

products display the statement, ‘‘for

export only,’’ in bold letters. Handlers

also will be expected to maintain

records, such as bills of lading and U.S.

Customs Service documentation,

showing export of the products. Only

products which have been certified and

labeled consistent with the

requirements of the National Organic

Program (NOP) may be shipped to

international markets without marking

the shipping containers ‘‘for export

only.’’

Organic product produced under a

foreign country’s or international

association’s organic standards deemed

equivalent to these standards and

certified by a certifying agent accredited

by the Secretary may be imported into

the United States provided that the

product labels are consistent with the

requirements of this subpart. Any

labeling on the product package or in

market representation cannot imply that

the product is also certified to other

organic standards or requirements that

are more restrictive than this national

program. These provisions are

consistent with international standards

and will facilitate international trade of

organically produced products and,

thus, benefit the global organic industry.

Labeling Nonretail Containers.

Section 205.306 provides for labeling

nonretail containers used to ship or

store raw or processed organic

agricultural products that are labeled

‘‘100 percent organic,’’ ‘‘organic,’’ and

‘‘made with organic (specified

ingredients).’’ These labeling provisions

are not intended for shipping or storage

containers that also will be used in

displays at the point of retail sale. They

would be used for easy identification of

the product to help prevent

commingling with nonorganic product

or handling of the product which would

destroy the organic nature of the

product (fumigation, etc.). Retail

containers will have to meet labeling

provisions specified in § 205.307.

Containers used only for shipping and

storage of any product labeled as

containing 50 percent or more organic

content may, at the handler’s discretion,

display the following information: (1)

The name and contact information of

the certifying agent which certified the

handler of the finished product; (2) the

term, ‘‘organic,’’ modifying the product

name; (3) any special handling

instructions that must be followed to

maintain the organic integrity of the

product; and (4) the USDA Seal and the

appropriate certifying agent seal. This

information is optional if handlers

believe display of the information helps

ensure special handling or storage

practices which are consistent with

organic practices.

Containers used for shipping and

storage of organic product must display

a production lot number if such a

number is used in the processing and

handling of the organic product being

shipped or stored. The lot number must

be included for inventory control and

quality assurance purposes. To help

assure export of organic product

produced and labeled to foreign

specifications, the shipping containers

and shipping documents (bills of lading)

must be marked with the phrase, ‘‘for

export only,’’ in bold letters. The

handler also must maintain records

showing export of the product to a

foreign country.

Much of the required information may

overlap information that the handler

normally affixes to shipping and storage

containers or information that is

required under other Federal labeling

regulations. Provisions in this proposal

do not take precedence over food safety

or quality control provisions which may

be required for specified products or

types of products covered by such

Federal regulations. There are no

restrictions on size or display of the

term, ‘‘organic product,’’ or the

certifying agent seal unless otherwise

required by other Federal or State

statutes.

Labeling Products at the Point of

Retail Sale Section 205.101(b)(2) of

subpart B on Applicability provides

regulations regarding the certification of

retail food establishments under this

program. Those operations are subject to

labeling and market information

requirements concerning products

offered to consumers at the point of

retail sale. Such labeling and market

information must truthfully represent

the organic nature and handling of the

product.

Section 205.307 applies to organically

produced products that are not

prepackaged prior to sale and are

presented in a manner which allows the

consumer to select the quantity of the

product purchased.

To be labeled as ‘‘100 percent

organic’’ or ‘‘organic’’ at the point of

retail sale, the processing and assembly

of such products must be carried out by

a certified manufacturing facility for

distribution to a retail food

establishment. For instance, a tossed

salad may be labeled as ‘‘100 percent

organic tossed salad’’ or ‘‘organic tossed

salad’’ (consistent with the percentage

of organic ingredients in the salad)

provided the salad and ingredients have

been produced and assembled under

organic certification. If the

multiingredient product is identified as

‘‘organic’’ at the point of retail sale, any

ingredient statement displayed at retail

sale must identify the organic

ingredients as ‘‘organic.’’ The retail

materials may also display the USDA

Seal and the seal or logo of the

certifying agent. If shown, the certifying

agent seal must not be larger than the

USDA Seal.

Using the same example, a product

made with 95 percent or more certified

organic salad components but which is

assembled at an uncertified operation

may be labeled ‘‘tossed salad made with

organic (specified ingredients).’’ The

retail food establishment may not

13556 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

display the USDA Seal or the seal or

seals of cerftifying agents involved in

ingredient certifications because the

final assembly of the product was not

certified pursuant to the handling

requirements of this regulation.

Our position on the applicability of

these regulations to different business

entities is more completely explained in

subpart B, Applicability, of this

regulation.

‘‘Section 205.308 addresses processed

products ‘‘made with organic (specified

ingredients)’’ that are not prepackaged

prior to sale and are presented in a

manner which allows the consumer to

select the quantity of the product

purchased. These products will include,

but will not be limited to,

multiingredient products containing

between 50 and 95 percent organic

ingredients. Retail displays, display

containers, and market information for

such products may display the phrase,

‘‘made with organic (specified

ingredients)’’ provided that the product

has been assembled by a manufacturing

facility certified pursuant to this

regulation. Up to three organic

ingredients may be identified in the

statement. If such statement is declared

in market information at the point of

retail sale, the ingredient statement

must identify the organic ingredients as

‘‘organic.’’ Retail display and market

information of such bulk products

cannot use the USDA Seal but may

display the seal or logo of the certifying

agent which certified the finished

product, provided that assembly of the

product was carried out at a certified

manufacturing facility. The certifying

agent’s seal or logo may be displayed at

the option of the retail food

establishment. If such a product has not

been assembled at a certified

manufacturing facility, the retail display

and market information may not

identify the product as ‘‘made with

organic (specified ingredients).’’

Prepared food products containing

less than 50 percent organic ingredients

at retail sale may not be identified as

organic or containing organic

ingredients. The USDA Seal and any

certifying agent seal or logo may not be

displayed.

Labeling Products Produced on

Exempt or Excluded Operations. This

proposal provides limited organic

labeling provisions for organic product

produced or handled on exempt and

excluded operations. Such operations

would include retail food

establishments, certain manufacturing

facilities, and production and handling

operations with annual organic sales of

less the $5,000. They are discussed

more thoroughly in subpart B,

Applicability.

Under this proposal, any such

operation that is exempt or excluded

from certification, or which chooses not

to be certified, may not label its

products in a way which indicates that

the operation has been certified as

organic. Primarily, this means that the

exempt or excluded operation may not

display the USDA Seal or any seal or

logo of a certifying agent. Any packaged

organic product from an exempt or

excluded operation may not use the

labeling terms ‘‘100 percent organic,’’ or

‘‘organic,’’ or ‘‘made with organic

(specified ingredients),’’ on the

principal display panel. Those labeling

terms are reserved for products

produced by certified operations. The

organic representation of exempt or

excluded operation products may only

be made on the information panel where

the organic percentage can be displayed

and the organic ingredients identified as

‘‘organic.’’

Retail displays and market

representation of such products may not

indicate that the product has been

certified as organic. For instance, a

whole, raw, organic product marketed

directly to consumers at a farmers

market or roadside stand as ‘‘organic

apples’’ or ‘‘organic tomatoes.’’

However, no terms may be used which

indicate ‘‘certified’’ organic apples, etc.

No organic seal or logo may be

displayed with the product at the point

of retail sale.

We propose these restrictions simply

as truth in labeling provisions because

use of terms or phrases reserved for

certified operations and products and

display a certification seal will indicate

that the product has been certified. We

believe this requirement will help

differentiate between certified and not

certified products and help maintain the

integrity of certified products while

providing limited organic labeling

opportunities for exempt and excluded

operations.

Finally, this rule proposes that

exempt organic producers cannot sell

their product to a handler for use as an

ingredient or for processing into an

ingredient that will be labeled as

‘‘organic’’ on the information panel.

However, this restriction is raised for

public comment in subpart B,

Applicability, of this part.

Small producers or handlers who

qualify for exemption but who choose to

be certified pursuant to these

regulations can label their product as

certified organic and can sell that

product to certified handlers for further

processing as an organic ingredient.

USDA Seal. This proposal introduces

a new, redesigned, USDA Seal, that can

be placed on consumer packages,

displayed at retail food establishments,

and used in market information to show

that products have been produced and

handled in accordance with these

regulations. The Seal can only be used

to identify raw and processed products

that are labeled as ‘‘100 percent

organic’’ or ‘‘organic.’’ It cannot be used

for products labeled as ‘‘made with

organic (specified ingredients)’’ (50 to

95 percent organic ingredients) or on

multiingredient products with less than

50 percent organic ingredients.

The USDA Seal presented in this

proposal will consist of the phrase,

‘‘USDA Certified Organic,’’ on a shield

or badge design. When used, the seal

must be the same form and design as

shown in figure 1 of § 205.310 of this

proposal. The seal must be printed

legibly and conspicuously. On

consumer packages, retail displays, and

labeling and market information, the

Seal may be printed on a white, light

colored, or transparent background with

contrasting dark colored words and

shield outline or on a dark colored

background with contrasting words and

shield outline in one or two light colors.

The Seal also may be printed in the

colors red, white, and blue as follows:

a white background, with dark blue

shield outline, and red words. The

choice of color scheme is left to the

discretion of the producer, handler, or

retail food establishment based on other

colors on the product package and other

considerations.

Labeling—Changes Based On Comments

This subpart differs from our first

proposal in several respects as follows:

(1) Use of terms other than ‘‘organic.’’

The first proposal stated that

informational statements which imply

‘‘organic’’ production and handling

should be used only on products that

are produced and handled in

accordance with these regulations. The

proposal identified several

informational statements commonly

referred to as ‘‘eco-label’’ or ‘‘green’’

terms and phrases such as: ‘‘produced

without synthetic fertilizers,’’ ‘‘pesticide

free farm,’’ ‘‘no drugs or growth

hormones used,’’ ‘‘raised without

antibiotics,’’ ‘‘ecologically produced,’’

‘‘sustainably harvested,’’ etc. We asked

for comments on these and other terms

or phrases which directly or indirectly

imply that a product was organically

produced and handled.

Commenters favored use of ‘‘ecolabel’’ and ‘‘green’’ terms and phrases

on any product labels. The general

consensus expressed in the comments is

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13557

that producers and handlers should be

able to make claims about their product

provided the claims are truthful.

While commenters did not oppose the

use of eco-label terms or phrases on

nonorganic products, they made it clear

that the term, ‘‘organic,’’ should only be

used on products produced and handled

in accordance with these regulations.

Several commented that consumers

respond favorably to the term,

‘‘organic,’’ when used on a product

label, and, therefore, proper use of the

term must be closely protected.

We also received several comments

regarding use of the terms, ‘‘biological’’

and ‘‘ecological,’’ on product labels. A

few comments indicated that the terms

should be allowed on nonorganic

products to truthfully describe an

alternative agricultural system under

which the product was produced or

processed. However, most commenters

opposed use of the terms as substitutes

for the term ‘‘organic’’ on product

labels.

We agree with the majority of

comments received on this subject, and

we, therefore, propose to regulate the

term, ‘‘organic,’’ and no other terms. We

propose that the term, ‘‘organic,’’ may

only be used on labeling and market

information of products that are

produced and handled in accordance

with these regulations. We understand

that the terms, ‘‘ecological’’ and

‘‘biological,’’ are a special case in that

they are used synonymously with the

term, ‘‘organic,’’ in other countries.

However, they cannot be used

interchangeably with the term,

‘‘organic,’’ in this country. These terms

may be used as eco-labels at this time.

However, we will proceed to restrict use

of these or any other terms if we find

that they are used on product packages

in the United States to represent

‘‘organic’’ when the products are not

produced to the requirements of this

regulation.

(2) 100 percent organic category. Our

first proposal did not provide for a ‘‘100

percent organic’’ category because that

level of organic composition is not

specifically provided for in the Act.

While the Act and the first proposal

provide for a labeling category of 95

percent or higher organic content,

commenters appealed for a labeling

category for product that is 100 percent

organic. Many suggested that being able

to use the term, ‘‘100 percent,’’ will give

handlers added incentive to use only

certified ingredients in multiingredient

products. Some commenters suggested

that if a product is composed only of

organic ingredients, with no additives or

other substances, it should be allowed

to be labeled and represented in market

information as 100 percent.

We agree that a ‘‘100 percent organic’’

labeling category may increase the

effectiveness of marketing efforts and

may provide incentives for handlers to

use more certified organic ingredients in

their multiingredient products.

Therefore, this proposal will allow the

term, ‘‘100 percent organic,’’ to be used

on labels affixed to or market

information representing raw or

processed organic products that are

composed entirely of organically

produced agricultural product.

(3) Identification of private certifying

agents. Under the first proposal,

identification of private certifying

agents was not permitted on the

principal display panel with the USDA

Seal and the State organic seal. While a

few commenters suggested that only the

USDA Seal should be displayed on the

principal display panel, the majority of

those commenting on this topic

requested that private certifying agent

seals be displayed on an equal basis

with a seal of the appropriate State’s

organic program. Although the number

of State certifying agents is relatively

small, private certifying agents believe

that State organic programs and State

certifying agents may implement

measures in States that work against the

interests of private certifying agents.

The Department believes those concerns

to be unfounded. Under the NOP, the

Secretary will approve all State organic

programs and accredit all State

certifying agents. However, any of those

programs or agents that might

discriminate or work against the

interests of private certifying agents in

the State would not be approved by the

Secretary.

Some commenters suggested that

many private certifying agent seals are

widely recognized and respected and

their seals influence consumer choices

in product purchases. It is appropriate

that private certifying agents be afforded

the same treatment with regard to

labeling as the State certifying agent. We

agree with commenters’ requests for

equal treatment of certifying agents and

that certifier seals may have marketing

potential in some areas. Therefore, we

specify in this proposal that a private

certifying agent’s seal or logo can be

displayed to the same extent as the seal

of a State certifying agent. This change

is reflected throughout this subpart.

(4) Use of a certifying agent’s seal or

logo. Many commenters believe that the

certifying agent’s seal, logo, or

identifying mark shown on ‘‘100 percent

organic’’ and ‘‘organic’’ products should

be the seal or mark of the certifying

agent that certifies the handler of

finished product. Commenters also

stated that labels should not be used to

misrepresent one product as being more

organic than another product, which

might happen if multiple seals are

displayed on one product package and

only two are displayed on a competing

product package. While we understand

the commenters’ points, we believe that

display of certifying agent seals on

products labeled ‘‘100 percent organic,’’

‘‘organic,’’ and ‘‘made with organic

(specified ingredients)’’ should remain

optional for handlers. If two or more

certifying agents are involved in

certifying raw organic agricultural

product and organic ingredients used in

a finished product, the seals or marks of

those certifying agents may be

displayed, at the discretion of the

handler. There should be only two

restrictions to using multiple certifying

agent seals: (1) The seal of the certifier

of the handling operation producing the

finished product should be displayed;

and (2) only the seals of those certifying

agents actually involved with

certification of the product or

ingredients may be displayed. For

instance, a private certifying agent may

certify a product assembled using

organic ingredients produced in Texas

and certified by the Texas State

certifying agent. The product package

may, at the handler’s option, display the

Texas State agent’s seal in addition to

the seal of the private certifying agent

which certified the operation creating

other organic ingredients and creating

the finished product. Likewise, display

of a seal of a foreign country’s organic

program or foreign certifying agent will

be permitted only if the foreign agent

certified the finished product or a

product ingredient.

Some commenters say that display of

two State agent seals may confuse

consumers. However, we do not believe

it is likely that handlers will choose to

display multiple certifying agent seals to

misrepresent a product. We also do not

believe that possible consumer

confusion from display of multiple seals

should take precedence over the

handler’s right to provide product

information. If multiple certifying agent

seals or marks are displayed on a

product package or in market

information, the handler or retail food

establishment must maintain

appropriate records showing proof of all

organic certifications.

(5) Display of certifying agent name

and business address. Commenters also

suggested that the certifying agent’s

name and business address be displayed

adjacent to identification of the handler

or distributor of products labeled

‘‘organic’’ and ‘‘made with organic

13558 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

(specified ingredients).’’ The

commenters stated that such

information should be available for

consumers who may have questions

about the organic nature of a product or

product ingredients. We agree that the

name of the certifying agent should be

included on a product package but

believe that display of the business

address or telephone number should be

optional to the handler who assembles

the finished product and affixes the

label on the package. If a consumer

wants to inquire about the organic

nature of a purchased product, the

consumer can obtain contact

information through the certifying agent

database listed on the NOP homepage.

Finally, to clearly identify the

information provided, the statement,

‘‘Certified organic by * * *’’ or

‘‘Ingredients certified as organically

produced by * * *,’’ may be used to

distinguish the certifying agent from the

manufacturer or distributor of the

product.

The statement and agent

identification is intended for

information purposes only and is not to

promote the organic nature of the

product. The certifying agent

identification may be placed below the

manufacturer or distributor information

and must not interfere with display of

that information.

(6) Size of certifying agent seal. There

was a general consensus among

commenters that the seals of State and

private certification agents should not

be larger than the USDA Seal. To

emphasize the market value of such a

national organic seal and maintain some

consistency of treatment with regard to

the different organic content categories,

we propose that State and private

certifying agent seals can be the same

size as but must not exceed the size of

the USDA Seal on any package label or

in market information. The size of the

USDA Seal on a package is left to the

discretion of the handler.

(7) Displaying the percentage of

organic ingredients. The first proposal

permitted use of the word, ‘‘organic,’’ in

the ingredient statements to modify

those ingredients that were produced

and handled pursuant to these

regulations, but did not require the

percentage of organic ingredients to be

displayed on the label. Most all

commenters responding to this labeling

issue stated that identification of

organic ingredients as ‘‘organic’’ will

encourage handlers to increase the

organic composition of multiingredient

products. However, some commenters

did not favor any use of the word,

‘‘organic,’’ on packages of

multiingredient products containing

less than 50 percent organic ingredients.

Some commenters also suggested that

including the total percentage of organic

content adjacent to the ingredient

statement (in which the organic

ingredients are identified) would give

relevance to the ingredient statement.

We concur with commenters’

recommendations about the display of

the total percentage of organic content

and propose that the percentage of

organic ingredients be placed on the

information panel. The percentage

statement and the ingredient statement

should be shown in a way that indicates

the relationship of the information. If a

product is labeled ‘‘100 percent

organic,’’ all ingredients (except water

and salt), by definition, would have to

be certified organic ingredients, and

each ingredient may be but would not

have to be identified as ‘‘organic.’’

Identification of organic ingredients

would be required for products labeled

‘‘organic’’ and ‘‘made with organic

(specified ingredients),’’ and for

products containing less than 50 percent

organic ingredients. We did not change

the identification of organic ingredients

for products containing less than 50

percent organic ingredients because we

believe the uses of the term on the

information panel and ingredient

statement of such product packages do

not imply that the product is organic.

(8) Labeling of products containing

50–95 percent organic ingredients. The

first proposal specified that products

with 50–95 percent organic content

could use ‘‘made with certain organic

ingredients’’ on the label. Many

commenters suggested that the word,

‘‘certain,’’ may appear confusing to

consumers and that a stronger statement

is needed to identify the organic nature

of the product. One commenter sought

clarification of whether the term,

‘‘certain,’’ is a substitute for the name of

the ingredient in a single-ingredient

product. Many requested that the

statement be changed to allow specific

identification of the organic ingredients

on the principal display panel. Because

that is the panel first and most often

observed by consumers, the commenters

indicated that the information presented

on the principal display panel should be

clear and accurate to assist consumers

in making their purchasing decisions.

After review of the comments, we

believe that, if the statement is going to

be displayed on the principal display

panel, it should state the specified

organic ingredient in the product; e.g.,

‘‘made with organic (specified

ingredients).’’ Replacing the word,

‘‘certain,’’ with the actual organic

commodity name or organic ingredient

will add the specificity sought by

commenters and assist consumers in

making more informed choices. Under

this proposal, the statement, ‘‘made

with organic (specified ingredients),’’

must be used on the principal display

panel and on other package panels of a

product containing between 50 and 95

percent organic ingredients.

Several commenters suggested that

the size of the letters in the phrase be

limited to a fraction of the size of the

product name as it appears on the

principal display panel. They stated that

limiting the size of the letters will keep

the statement from making the product

appear more organic than products with

95 percent organic ingredients. For

instance, if a product contains 55

percent organic ingredients and the

statement, ‘‘made with organic

(specified ingredients),’’ is displayed on

the principal display panel in large,

bold letters, the product may appear

more organic than a 97-percent product

simply labeled ‘‘organic.’’ Commenters

recommended letter sizes from one-half

to three-fourths the size of the product

name as it appears on the principal

display panel.

We also believe that the labeling for

these products should not use typeface

or letter sizes which would mislead

consumers. FDA labeling requirements

in 21 CFR 101.3(d) specify that required

statement of identity of the product

shall be in a size most reasonably

related to the largest printed matter on

a panel. FDA enforces ‘‘reasonably

related’’ as being one half the size of the

largest printed matter, which is usually

the product name. Therefore, to be

consistent with FDA labeling

requirements, we have established the

print size of the statement, ‘‘made with

organic (specified ingredients),’’ to be

not more than 50 percent, or one half,

of the largest print size appearing on the

principal display panel. This print size

is consistent with the recommendation

of many commenters but is smaller than

the 75 percent recommended by the

NOSB. We propose that the statement,

‘‘made with organic (specified

ingredients),’’ appear in only one print

style and color, without highlighting.

We believe that these additional

restrictions on display of the statement

will enable the message to be delivered

and yet provide some structure and

consistency to display of the statement.

It is our intention that the statement not

be used to disproportionately dominate

the principal display panel or other

panels and not be used to misrepresent

the organic nature of the product.

(9) Limiting the number of organic

ingredients listed. Some commenters

suggested limiting the number of

organic ingredients that could be

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13559

included in the statement ‘‘made with

organic ingredients.’’ This topic was the

subject of much NOSB deliberation and

public discussion. Commenters

reasoned that if the list of organic

ingredients became too long, the

product could appear to be more organic

than ‘‘95 percent’’ products. For

instance, a product could have 10

organic ingredients, but those 10

ingredients may comprise only 51

percent of the product. The consensus

of comments suggested that the

statement should be limited to three

organic ingredients, which is the

industry standard. We believe their

recommendation has merit and,

therefore, propose that up to three

organic ingredients can be shown in the

statement. We encourage additional

comments on the maximum number of

ingredients that should be allowed to

appear in the statement on the principal

display panel. Commenters should

provide reasons for the number they

recommend.

(10) Qualifications for display of the

USDA Seal. In the first proposal, we

permitted the display of the USDA seal

on products with 50 percent or more

organic ingredients. Commenters

objected. They overwhelmingly

endorsed a high organic content

standard for a product to be labeled as

‘‘organic.’’ They believe products

containing less than 95 percent organic

ingredients do not have sufficient

organic content to justify an ‘‘organic’’

label on the principal display panel, and

should not be so labeled under the NOP

regulations. Commenters also stated that

display of the USDA Seal will be very

desirable. Many stated that a prohibition

on display of the USDA Seal on 50-to95-percent products would encourage

handlers who assemble multiingredient

products to use more organically

produced ingredients and fewer

nonorganic ingredients. They suggested

that the USDA Seal and the certifying

agent’s seal or logo not be displayed on

any package panel of products ‘‘made

with organic (specified ingredients)’’ or

on products with less than 50 percent

organic ingredients.

We agree that some distinction should

be made between 95 percent-plus

organic products and the 50–95 percent

organic products. Handlers of 95

percent-plus organic products may

display both the USDA Seal and the

certifying agent seal or logo on the

principal display panel of the product.

The commenters propose that handlers

of 50–95 percent organic products not

be allowed to display either seal on the

principal display panel. However, we

believe that, because handlers of 50–95

percent organic product are required to

be certified under this program, it is

appropriate that they should be allowed

to display some evidence of that

certification. We propose, therefore, that

handlers of 50–95 percent organic

product may display the seal or logo of

the certifying agent which certified the

finished product. Display of the USDA

Seal will still be restricted to only 100

percent organic products and to 95

percent-plus products. We believe this

provision will provide more equitable

treatment for handlers of 50–95 percent

products who are required under this

regulation to obtain and maintain

organic certification in order to label

their organic product. It will also

maintain a distinction between the two

product levels by continuing the

restriction on display of the USDA Seal.

We believe that, while display of the

USDA Seal is less likely to be an

incentive for handlers of products at the

lower end of the 50 to 95 percent range

of organic content, handlers of products

at the higher end of the 50 to 95 percent

organic content range may be

encouraged to increase the organic

content in order to display the USDA

Seal.

An organic product produced or

handled by an exempt or excluded

operation, including those with less

than $5,000 annual organic sales, may

not display the USDA Seal or the seal

of a certified agent because the

operation has not been certified. Even if

the organic content of the product is 95

percent or higher, the product still

cannot be labeled as ‘‘certified’’ organic

or marketed using an organic seal or

logo.

(11) Design of the USDA Seal. The

final change prompted by comments is

redesign of the USDA Seal. The Seal in

the first proposal was a triangular shape

behind a circle of recycling arrows

around a globe figure with the word,

‘‘organic,’’ printed diagonally across the

globe. That proposed seal was opposed

by hundreds of commenters. Comments

included: The triangle resembles a

radioactive warning symbol or fallout

shelter sign; the diagonal line across the

circle appears to be the universal ‘‘no’’

sign (such as ‘‘no walking,’’ ‘‘no

smoking’’); the globe design doesn’t

show up; the globe design implies an

international program; the design is too

busy; simplify the design; use the

words, ‘‘certified organic’’; use a text

logo; the seal will be too costly to

produce; and the triangle points will

puncture or tear plastic when printed.

Given the overwhelming negative

response to the first seal, we propose a

simplified design composed of the

words, ‘‘USDA CERTIFIED ORGANIC,’’

inside a shield or badge design. This

design is consistent with comments

requesting simplicity and use of the

words, ‘‘certified organic.’’ At the

request of commenters, this proposal

provides for labeling on transparent

material. We believe the proposed basic

dark on light or light on dark

requirement is broad enough to allow

handlers the flexibility needed to match

color schemes compatible with their

product packages. The alternative red,

white, and blue color scheme offers

handlers what consumers may identify

as a more official or patriotic display of

the Seal. We believe it is important that

the Seal be displayed in a consistent

manner, within general light/dark

guidelines so that the Seal becomes

easily recognizable to consumers.

Labeling—Changes Requested But Not

Made

Comments reflecting different

opinions on the same topic are covered

above (e.g., the number of organic

ingredients listed on the principal

display panel, the size of ‘‘organic’’

letters on the principal display panel, a

recommended redesign of the USDA

Seal, etc.). Obviously, not all such

conflicting recommendations can be

accepted. Two comments were received

which are not accepted but which we

believe warrant further consideration by

the public and the organic community.

We request additional comments

regarding the following two

recommendations. Commenters should

specify their recommendation regarding

each topic and provide reasons for their

recommendation.

(1) Changing the ‘‘organic’’ threshold

for multiingredient products. At least

one commenter suggested that the 50–95

percent labeling category sets too low a

threshold for organic labeling of

multiingredient products. The

commenter suggested that, for increased

international acceptance of USDA

standards, the lowest acceptable

percentage for receiving an organic label

should be 70 percent organic

ingredients, based on the European

Union (EU) standard which now

requires a minimum of 70 percent

organic ingredients for the product to be

labeled as ‘‘organic’’ (or, ‘‘biological’’ or

‘‘ecological’’).

The EU standard allows products

with a 70 percent organic content to be

labeled as ‘‘organic,’’ where our

proposal will require at least 95 percent

organic content before a product could

be labled as ‘‘organic.’’ This 95 percent

standard is in the Act. Where the two

standards differ is that the EU standard

doe not have a ‘‘made with organic

(specified ingredients)’’ category

proposed in this rule.

13560 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

While the Act establishes a 50-percent

minimum ingredient content, that

percentage can be adjusted upward if

doing so would further the purposes of

the Act. To do so, however, the

Secretary must have good cause and

justification for establishing a higher

minimum organic ingredient content. In

other words, we could raise the

minimum organic ingredient content

threshold to 70 percent, redefining two

of our four categories. The four

categories would be: less than 70

percent, 70–95 percent, greater than 95

percent, and 100 percent. Under this

scenario, the prohibitions on excluded

methods, irradiation, and sewage sludge

would not apply to the nonorganic

ingredients of products with less than

70 percent organic content. At the same

time, these products would only be able

to list the organic ingredients on the

information panel. The ‘‘made with

organic ingredients’’ category, to which

the prohibition would apply, would be

70–95 percent organic content. The only

products that would get the ‘‘organic’’

designation would still be those with at

least 95 percent organic content.

Because we find no compelling reason

to raise the 50-percent minimum

ingredient content threshold established

in the Act, we have not accepted the

commentor’s recommendation in this

proposal. However, if comments on this

proposal suggest an appropriate

justification, the minimum ingredient

content threshold could be raised in the

final rule.

(2) Minimum content requirements for

organic ingredients. One commenter

suggested that a minimum percentage of

the entire product weight be established

to qualify for a single ingredient to be

included in the statement, ‘‘made with

organic (specified ingredients).’’ The

commenter suggested that this would

help prevent misrepresentation of the

organic nature of a product. The

commenter suggested that the minimum

content for any ingredient should be 15

percent. The commenter did not justify

the 15-percent minimum (as opposed to

another minimum percentage). Because

such a recommendation could prevent

important ingredients from being

specified on a product label, we have

not incorporated the comment in this

proposal. However, we believe the

comment may have merit. One factor in

establishing a minimum percentage for

any individual ingredient listed on the

principal display panel would be the

established minimum percentage for all

organic ingredients in a product, the

question raised in the paragraph above.

For instance, if the minimum percentage

of all ingredients is established at 70

percent to conform to EU standards,

should there be a minimum percentage

for any individual organic ingredient

that could be listed on the principal

display panel as one of three organic

ingredients in the product? Would such

a labeling restriction prevent

identification of an important organic

ingredient from being displayed on the

principal display panel?

Commenters on questions (1) and (2)

should state whether they think the

recommendations would further the

marketing of organic products and, if so,

clearly state the recommended

percentage for each question and the

reasons for their opinions regarding

each issue.

(3) Labeling requirements for small

operations. A majority of those who

commented on the exemption for small

operations (less than $5,000 organic

sales) in the first proposal stated that

such operations are not exempt from

labeling requirements under the Act. In

this proposal, we provide limited

labeling provisions which prohibit

exempt and excluded operations,

including those with less than $5,000 in

annual organic sales, from labeling their

products in a way that indicates the

operations or the products have been

certified as organic. These provisions

will not allow such operations to use

labeling terms and organic seals and

logos specified for certified operations.

We believe those terms, logos and seals

should be reserved for operations and

products that are certified under these

regulations.

Labeling—Additional Provisions

Upon further review of the label and

market information provisions in the

first proposal, we propose the following

additions and changes.

(1) Display of a State organic seal.

Under the first proposal, each State

organic certification program would

have been allowed to display a seal or

logo of its State organic program. The

first preamble stated that it was

appropriate for a State to have a seal

representing its organic program, thus

allowing product produced under that

program to bear the State’s seal.

Currently, 13 State departments of

agriculture (or other State agency) and

approximately 40 private agents certify

to a variety of private and State organic

requirements. After establishing a policy

which more clearly defines the criteria

for approval of a State organic program,

we believe that, in the interest of

consistent and uniform national

standards, product packages should not

display the seal of a State organic

program if the seal is different from the

seal or mark used by the State’s organic

certifying agent.

This determination is based on a

proposed change in State programs. A

State organic program will be approved

by the Secretary for specific, need-based

reasons particular to that State (see State

Programs under subpart G). To establish

and maintain uniform national

standards, States will not be authorized

to implement more restrictive organic

standards simply to promote State

products that are ‘‘more organic’’ than

products produced and handled in other

States or under NOP requirements.

Rather, the Secretary will approve only

those State programs that need more

restrictive requirements to protect or

preserve unique environmental

conditions or to accommodate product

and handling practices unique to a State

or portion of a State. In the absence of

such environmental conditions or

production practice needs, a State’s

organic program must have the same

requirements as this NOP. If this is the

case and if a relatively few State

programs are approved to have more

restrictive requirements, then no real

purpose is served by permitting State

organic programs to display a separate

and distinct seal on a product label.

Such a seal would not represent a ‘‘more

organic’’ product.

In the place of a State organic program

seal, this proposal provides for the seal

or logo of a State certifying agent to be

displayed on packages, if that certifying

agent certifies the organic operation

producing the product. Selection of a

State or private certifying agent is the

choice of the organic producer or

handler being certified. A State’s

department of agriculture (or other

equivalent State agency) may establish

one or more State certifying agent

offices as part of its governmental

operations, or the State may license a

private certifying agent to certify organic

operations on behalf of the State. In

either case, the certifying agent would

certify these national requirements and

not the particular requirements of a

State organic program unless those

requirements were approved by the

Secretary. Therefore, the only organic

seal or mark representing a State will be

the seal or mark of a State’s certifying

agent or licensed certifying agent. Any

certifying agent licensed by the State

must be accredited by the Secretary

pursuant to subpart F of this proposal.

(2) Labeling for international markets.

We have added two paragraphs under

section 205.300 to provide for labeling

of products intended for international

markets. Domestically produced organic

products intended for export may be

labeled to meet the requirements of the

country of destination or any labeling

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13561

requirements specified by a particular

foreign buyer.

If labeled to meet foreign labeling

requirements, such packaged products

cannot be sold in the United States.

Pursuant to § 205.306, shipping

containers and bills of lading for these

products would have to be marked ‘‘for

export only’’ to assure that the product

was not distributed domestically. We

are providing this exception to labeling

requirements for the convenience of

exporters only. If the foreign country or

buyer does not require different product

labeling, domestic product which has

been produced, certified, and labeled

pursuant to these regulations may be

shipped without the statement, ‘‘for

export only,’’ on the containers and bills

of lading.

Organic product produced in another

country for export to the United States

may be certified to the requirements of

this regulation or to an approved foreign

organic certification program that has

been recognized as equivalent to the

requirements of the NOP. Such products

must be labeled pursuant to the

requirements of this subpart.

(3) Product composition. Under new

§ 205.301, Product Composition, we

have clarified the composition of

organic and nonorganic ingredients in

products covered in the four labeling

categories. All ingredients labeled as

‘‘organic’’ in the ingredient statement of

the product package must be produced

and handled pursuant to these

requirements. No substances prohibited

on the National List in subpart G and no

production or handling practices

prohibited in § 205.301(e) may be used

in the production or handling of any

ingredient labeled as ‘‘organic.’’

Regulations covering the production

and handling of nonorganic ingredients

varies with the labeling category. The

higher the percentage of a product’s

organic composition, the more

restrictive the production and handling

requirements of the nonorganic

ingredients in the product. These

requirements are found under § 205.301

and explained above under Proposal

Description.

(4) Prohibited practices. Section

205.301(e) lists seven production and

handling practices that are prohibited

from being used to produce whole

products or product ingredients that

would be labeled as ‘‘organic’’ under the

NOP. Some of these prohibited practices

appear for the first time in this proposal,

and others were specified in the first

proposal and were supported by all

those who addressed them in their

comments.

The first proposal prohibited organic

labeling of a product or ingredient

produced using water that does not

meet requirements of the Safe Drinking

Water Act (42 U.S.C. 300(f) et seq.). We

have not included that provision in this

proposal because potable water is

required in other FDA and FSIS

processing regulations and does not

need to be repeated as a requirement in

this regulation.

The first three practices (use of

excluded methods, sewage sludge, and

irradiation) are discussed elsewhere in

this proposal and are added as

prohibited practices in this labeling

section for consistency purposes.

Only processing aids and substances

on the National List in subpart G of this

regulation may be used in the

production and handling of 95 percentplus organic products and 50–95

percent organic products and in any

ingredient labeled as organic on a

product package.

The first proposal prohibited use of

sulfites, nitrates, and nitrites in

production or processing of organic

products or ingredients. We have

amended the wording of this provision

to clarify that a handler cannot add any

sulfites, nitrates, and nitrites to a

product and still label the finished

product or ingredient as ‘‘organic.’’ We

make this clarification because these

substances are found naturally in many

substances and may appear naturally in

potable water used in processing.

The last two processing practices that

would prohibit an ‘‘organic’’ label

appeared in separate sections of the first

proposal and are included in this

proposal in § 205.301(e)(6) and (e)(7).

The first is that products and organic

ingredients assembled using organic or

nonorganic forms of the same ingredient

or component ingredients—depending

on availability of the organic

ingredients—cannot be labeled as

‘‘organic when available’’ or a similar

phrase. Similarly, products and organic

ingredients assembled using both

organic and nonorganic forms of the

same ingredient or component

ingredients cannot be labeled as organic

if that ingredient is identified as organic

on the ingredient statement and

included in the percentage of organic

content on the information panel.

(5) Calculating organic content.

Because labeling requirements are based

on the amount of organic ingredients in

a product, we have added new section

205.302, which addresses the

calculation of organic percentages.

Provisions in this new section were not

included in the first proposal. While

this should be a simple mathematical

procedure, the section proposes certain

guidelines for calculating and labeling

organic percentages.

Only one percentage figure for total

organic ingredients will be shown on a

package. The percentage of individual

organic ingredients will not be

displayed.

An organic product may be

constituted completely of organic liquid

products. Therefore, this proposal adds

the phrase, ‘‘or fluid volume,’’ in several

places in the proposal when referring to

liquid products and ingredients. For

ingredients in liquid form that are

reconstituted with water from a

concentrate, the calculation would be

based on a single-strength solution of

the liquid concentrate. For products that

may contain both dry and liquid organic

ingredients, the percentage calculation

would be based on the combined weight

of the organic ingredients, including the

weight of the liquid ingredients, minus

water and salt.

(6) Labeling of nonretail containers.

We have added new § 205.306, covering

labeling of nonretail containers—those

used only for shipping and storage of

agricultural products labeled as organic

or containing organic ingredients. While

the same containers are commonly used

for both shipping and storage, the first

proposal did not reference storage

containers or specify labeling

requirements for those containers. These

provisions are proposed only for

products labeled as ‘‘100 percent

organic,’’ ‘‘organic,’’ and ‘‘made with

organic (specified ingredients).’’ Some

may believe that use of the USDA Seal

on a shipping container of products

‘‘made with organic (specified

ingredients)’’ may be inconsistent with

other labeling provisions prohibiting

display of the Seal on consumer

packages of those products. However, in

the case of shipping and storage

containers, the display of seals is not

intended for marketing purposes but

would be used for easy identification of

the product to help prevent

commingling with nonorganic product

or handling of the product which would

destroy the organic nature of the

product (fumigation, etc.). These

provisions will not apply to shipping

and storage containers of products

containing less than 50 percent organic

ingredients.

(7) Retail Food Establishments. The

extent of the regulatory authority of this

regulation has been the subject of

intense discussions in comments

received, NOSB deliberations, and AMS

discussions. Commenters claimed that it

makes no sense to regulate and certify

the production and handling of organic

product but not require certification and

regulate retail food establishments

where some fresh foods containing

organic ingredients are processed and

13562 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

assembled and where they can become

adulterated or misrepresented to the

consuming public.

Retail food establishments that market

organic product, whether produced instore, in a corporate commissary, or by

others, will be subject to the labeling

provisions of this subpart as that

labeling applies to: (1) Point-ofpurchase, in-store displays describing

the organic nature of the product; and

(2) other market information and media

advertising regarding the product being

marketed at the retail food

establishment. Food retail

establishments must describe the

product in in-store retail displays,

market information, and media

advertising that is consistent with the

organic content of the finished product.

Any labeling of a product that is

inconsistent with the percentage of

organic content of the product will be

considered a violation of truth in

labeling and/or truth in advertising

regulations of FDA and the FTC.

Multiingredient products which are

described as organic product in retail

displays and market information must

be assembled by a certified

manufacturing facility, pursuant to the

Applicability subpart of this regulation.

Packaged organic products, organic

fresh produce, and organic bulk bin

food items must be described in pointof-purchase displays, pricing

information, and consumer information

in terms consistent with the organic

content of the product. For instance, an

in-store retail display would describe an

87 percent organic product by

specifying the percentage of organic

content of the product and identifying

the organic ingredients in the ingredient

statement, as may be required by FDA.

The market information for such a

product must not, for instance, label the

product as ‘‘organic’’ or ‘‘100 percent

organic.’’ This would be a violation of

truth in labeling and advertising

regulations of FDA and FTC. The USDA

Seal and the seal of the certifying agent

may be displayed at retail sales and in

market information on products

certified as containing 95 percent or

more organic content. Multiingredient

products containing 50–95 percent

organic ingredients may display the seal

or logo of the certifying agent of the

organic handling operation.

We believe these labeling practices

will help assure appropriate

representation of bulk organic products

at retail sale and will encourage

handlers to use more organic

ingredients.

Products containing less than 50

percent organic ingredients at the point

of retail sale may not be identified in

any way as ‘‘organic’’ or containing

organic ingredients. In addition, the

USDA Seal and seal, logo, or other

identifying mark of the certifying agent

is prohibited from being used in retail

displays and market information.

(8) Change in calculating the $5,000

exemption. We are proposing a change

in calculating the $5,000 exemption for

producers and handlers. The $5,000

annual exemption will be calculated on

sales of organically produced product

and not on all agricultural products

marketed by the exempt producer or

handler, as provided in the first

proposal. This exemption means that

qualifying exempt organic producers

and handlers may annually sell up to

$5,000 of organically produced products

and not be certified as an organic

operation under this regulation. The

exemption could apply to a large,

conventional agricultural operation that

also has a small amount of acreage

designated for organic production—the

products of which, for example, is sold

at a roadside stand. Any sale of other,

nonorganic products will not count

against the $5,000 sales total. The

labeling and market information

requirements for organic products

produced by such exempt operations are

specified in § 205.309 of this regulation.

Subpart E—Certification

This subpart sets forth the

requirements for a national program to

certify production and handling

operations as certified organic

production or handling operations. The

certification process proposed in this

subpart will be carried out by accredited

certifying agents.

Proposal Description

General Requirements. Production

and handling operations seeking to

receive or maintain organic certification

must comply with the Act and

applicable organic production and

handling regulations. Such operations

must establish, implement, and

annually update an organic production

or handling system plan that is

submitted to an accredited certifying

agent. They must permit on-site

inspections by the certifying agent with

complete access to the production or

handling operation, including

noncertified areas and structures.

As discussed in Subpart B, certified

operations must maintain records

concerning the production and handling

of agricultural products that are sold,

labeled, or represented as ‘‘100 percent

organic,’’ ‘‘organic,’’ or ‘‘made with

organic (specified ingredients)’’

sufficient to demonstrate compliance

with the Act and regulations. Records

applicable to the organic operation must

be maintained for not less than 5 years

beyond their creation. Authorized

representatives of the Secretary, the

applicable State program’s governing

State official, and the certifying agent

must be allowed access to the

operation’s records during normal

business hours. Access to the

operation’s records will be for the

purpose of reviewing and copying the

records to determine compliance with

the Act and regulations.

Certified operations are required to

immediately notify the certifying agent

concerning any application, including

drift, of a prohibited substance to any

field, production unit, site, facility,

livestock, or product that is part of the

organic operation. They must also

immediately notify the certifying agent

concerning any change in a certified

operation or any portion of a certified

operation that may affect its compliance

with the Act and regulations.

Certification Process. To obtain

certification, a producer or handler must

submit a request for certification to an

accredited certifying agent. The request

must contain descriptive information

about the applicant’s business, an

organic production and handling system

plan, information concerning any

previous business applications for

certification, and any other information

necessary to determine compliance with

the Act.

Applicants for certification and

certified operations must submit the

applicable fees charged by the certifying

agent. An applicant may withdraw its

application at anytime. An applicant

who withdraws its application will be

liable for the costs of services provided

up to the time of withdrawal of the

application.

The certifying agent will decide

whether to accept the applicant’s

application for certification. Certifying

agents may decline to accept an

application for certification but may not

decline to accept an application on the

basis of race, color, national origin,

gender, religion, age, disability, political

beliefs, sexual orientation, or marital or

family status.

Upon acceptance of an application for

certification, a certifying agent will

review the application to ensure

completeness and to determine whether

the applicant appears to comply or may

be able to comply with the applicable

production or handling regulations. As

part of its review, the certifying agent

will verify that an applicant has

submitted documentation to support the

correction of any deficiencies identified

in a previously received notification of

noncompliance. The certifying agent

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13563

1 ISO Guide 10011–1 is available for viewing at

USDA–AMS, Transportation and Marketing

Programs, Room 2945—South Building, 14th and

Independence Ave., SW, Washington, DC, from 9:00

a.m. to 4:00 p.m., Monday through Friday (except

official Federal holidays). A copy may be obtained

from the American National Standards Institute, 11

West 42nd Street, New York, NY 10036; Website:

www.ansi.org; E-mail: ansionline@ansi.org;

Telephone: 212–642–4900; Facsimile: 212–398–

0023.

will also review any available U.S.

Department of Agriculture (USDA) data

on production and handling operations

for information concerning the

applicant.

We anticipate using data collected

from certifying agents to establish and

maintain a password-protected Internet

database only available to accredited

certifying agents and USDA. This

database would include data on

production and handling operations

issued a notification of noncompliance,

noncompliance correction, denial of

certification, certification, proposed

suspension or revocation of

certification, and suspension or

revocation of certification. Certifying

agents would use this Internet database

during their review of an application for

certification. This data will not be

available to the general public because

much of the data would involve ongoing

compliance issues inappropriate for

release prior to a final determination.

After a complete review of the

application, the certifying agent will

communicate its findings to the

applicant. If the review of the

application reveals that the applicant

may be in compliance with the

applicable production or handling

regulations, the certifying agent will

schedule an on-site inspection of the

applicant’s operation to determine

whether the applicant qualifies for

certification. The initial on-site

inspection must be conducted within a

reasonable time following a

determination that the applicant

appears to comply or may be able to

comply with the requirements for

certification.

The certifying agent will conduct an

initial on-site inspection of each

production unit, facility, and site

included in the applicant’s operation.

As a benchmark, certifying agents

should follow auditing guidelines

prescribed by the International

Organization for Standardization Guide

10011–1, ‘‘Guidelines for auditing

quality systems—Part 1: Auditing’’ (ISO

Guide 10011–1).1 The certifying agent

will use the on-site inspection in

determining whether to approve the

request for certification and to verify the

operation’s compliance or capability to

comply with the Act and regulations.

Certifying agents will conduct on-site

inspections when the applicant or an

authorized representative of the

applicant who is knowledgeable about

the operation is present. An on-site

inspection must also be conducted

when land, facilities, and activities that

demonstrate the operation’s compliance

with or capability to comply with the

applicable production or handling

regulations can be observed.

The on-site inspection must verify

that the information provided to the

certifying agent accurately reflects the

practices used or to be used by the

applicant or certified operation and that

prohibited substances have not been

and are not being applied to the

operation. Certifying agents may use the

collection and testing of soil; water;

waste; plant tissue; and plant, animal,

and processed products samples as tools

in accomplishing this verification.

The inspector will conduct an exit

interview with an authorized

representative of the inspected

operation to confirm the accuracy and

completeness of inspection observations

and information gathered during the onsite inspection. The main purpose of

this exit interview is to present the

inspection observations to those in

charge of the firm in such a manner so

as to ensure they clearly understand the

results of the inspection. The firm is not

required to volunteer any information

during the exit interview but would be

required to respond to questions or

requests for additional information. The

inspector will raise and discuss during

the exit interview any known issues of

concern, taking into account their

perceived significance. As a general

rule, the inspector will not make

recommendations for improvements to

the operation during the exit interview.

However, the certifying agent will have

the discretion to decide the extent to

which an inspector may discuss any

compliance issue.

Notification of Approval. A certifying

agent will review the on-site inspection

report, the results of any analyses for

substances, and any additional

information provided by the applicant

within a reasonable time after

completion of the initial on-site

inspection. The certifying agent will

approve certification upon making two

determinations: (1) That the applicant’s

operation, including its organic system

plan and all procedures and activities,

is in compliance with the Act and

regulations; and (2) that the applicant is

able to conduct operations in

accordance with its organic systems

plan.

Upon determining the applicant’s

compliance and ability to comply, the

agent will approve certification and

issue a ‘‘certificate of organic

operation.’’ The approval may include

restrictions regarding minor deficiencies

that would not prevent certification as

a condition of continued certification. A

certificate of organic operation will

specify the name and address of the

certified operation; the effective date of

certification; the categories of organic

operation, including crops, wild crops,

livestock, or processed products

produced by the certified operation; and

the name, address, and telephone

number of the certifying agent. Once

certified, a production or handling

operation’s organic certification

continues in effect until surrendered by

the organic operation or suspended or

revoked by the certifying agent, the

State program’s governing State official,

or the Administrator.

Denial of Certification. Should the

certifying agent determine that the

applicant is not able to comply or is not

in compliance with the act, the

certifying agent will issue a written

notification of noncompliance to the

applicant. Applicants who receive a

notification of noncompliance may

correct the deficiencies and submit, by

the date specified, a description of

correction and supporting

documentation to the certifying agent.

As an alternative, the applicant may

submit a new application to another

certifying agent, along with the

notification of noncompliance and a

description of correction of the

deficiencies and supporting

documentation. Applicants may also

submit, by the date specified, written

information to the certifying agent to

rebut the noncompliance described in

the notification of noncompliance.

When a noncompliance cannot be

corrected, a notification of

noncompliance and a ‘‘notification of

denial of certification’’ may be

combined in one notification.

The certifying agent will evaluate the

applicant’s corrective actions taken and

supporting documentation submitted or

the written rebuttal. If necessary, the

certifying agent will conduct a followup

on-site inspection of the applicant’s

operation. When the corrective action or

rebuttal is sufficient for the applicant to

qualify for certification, the certifying

agent will approve certification. When

the corrective action or rebuttal is not

sufficient for the applicant to qualify for

certification, the certifying agent will

issue the applicant a written notice of

denial of certification. The certifying

agent will also issue a written notice of

denial of certification when an

applicant fails to respond to the

notification of noncompliance. The

13564 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

notice of denial of certification will state

the reasons for denial and the

applicant’s right to reapply for

certification, request mediation, or file

an appeal.

An applicant who has received a

notification of noncompliance or notice

of denial of certification may apply for

certification again at any time with any

certifying agent. When the applicant

submits a new application to a different

certifying agent, the application must

include a copy of the notification of

noncompliance or notice of denial of

certification. The application must also

include a description of the actions

taken, with supporting documentation,

to correct the deficiencies noted in the

notification of noncompliance. When a

certifying agent receives such an

application, the certifying agent will

treat the application as a new

application and begin a new application

process.

A certifying agent has limited

authority to deny certification without

first issuing a notification of

noncompliance. This authority may be

exercised when the certifying agent has

reason to believe that an applicant for

certification has willfully made a false

statement or otherwise purposefully

misrepresented its operation or its

compliance with the requirements for

certification.

Continuation of Certification. Each

year, the certified operation must

update its organic production or

handling system plan and submit the

updated information to the certifying

agent to continue certification. The

updated organic system plan must

include a summary statement,

supported by documentation, detailing

deviations from, changes to,

modifications to, or other amendments

to the previous year’s organic system

plan. The updated organic system plan

must also include additions to or

deletions from the previous year’s

organic system plan, intended to be

undertaken in the coming year. The

certified operation must update the

descriptive information about its

business and other information as

deemed necessary by the certifying

agent to determine compliance with the

Act and regulations.

Following receipt of the certified

operation’s updated information, the

certifying agent will arrange and

conduct an on-site inspection of the

certified operation. As a benchmark,

certifying agents should follow auditing

guidelines prescribed by ISO Guide

10011–1. Upon completion of the

inspection and a review of updated

information, the certifying agent will

determine whether the operation

continues to comply with the Act and

regulations. If the certifying agent

determines that the operation is in

compliance, certification will continue.

If any of the information specified on

the certificate of organic operation has

changed, the certifying agent will issue

an updated certificate of organic

operation. If the certifying agent finds

that the operation is not complying with

the Act and regulations, a written

notification of noncompliance will be

issued as described in § 205.662.

In addition to annual inspections, a

certifying agent may conduct additional

on-site inspections of certified

operations to determine compliance

with the Act and regulations. The

Administrator or State program’s

governing State official may also require

that additional inspections be

performed by the certifying agent to

determine compliance with the Act and

regulations. Additional inspections may

be announced or unannounced and

would be conducted, as necessary, to

obtain information needed to determine

compliance with identified

requirements.

Such on-site inspections would likely

be precipitated by reasons to believe

that the certified operation was

operating in violation of one or more

requirements of the Act or these

regulations. The policies and

procedures regarding additional

inspections, including how the costs of

such inspections are handled, would be

the responsibility of each certifying

agent. Misuse of such authority would

be subject to review by the Department

during its evaluation of a certifying

agent for reaccreditation and at other

times in response to complaints.

Certified production and handling

operations could file complaints with

the Department at any time should they

believe a certifying agent abuses its

authority to perform additional

inspections.

Certification After Suspension or

Revocation of Certifying Agent’s

Accreditation. When the Administrator

revokes or suspends a certifying agent’s

accreditation, affected certified

operations will need to make

application for certification with

another accredited certifying agent. The

certification of the production or

handling operation remains in effect

during this transfer of the certification.

The certified production or handling

operation may seek certification by any

qualified certifying agent accredited by

the Administrator. To minimize the

burden of obtaining the new

certification, the Administrator will

oversee transfer of the original certifying

agent’s file on the certified operation to

the operation’s new certifying agent.

Upon initiation of suspension or

revocation of a certifying agent’s

accreditation, or upon suspension or

revocation of a certifying agent’s

accreditation, the Administrator may

initiate proceedings to suspend or

revoke the certification of operations

certified by the certifying agent. The

Administrator’s decision to suspend or

revoke a producer’s or handler’s

certification in light of the loss of its

certifying agent’s accreditation would be

made on a case-by-case basis. Actions

such as fraud, bribery, or collusion by

the certifying agent, which cause the

Administrator to believe that the

certifying agent’s clients do not meet the

standards of the Act or these

regulations, might require the

immediate initiation of procedures to

suspend or revoke certification from

some or all of its client base. Removal

of accreditation, regardless of the

reason, in no way affects the appeals

rights of the certifying agent’s clients.

Further, a certified operation’s

certification will remain in effect

pending the final resolution of any

proceeding to suspend or revoke its

certification.

A private-entity certifying agent must

furnish reasonable security for the

purpose of protecting the rights of

operations certified by such certifying

agent. This security is to ensure the

performance of the certifying agent’s

contractual obligations. As noted

elsewhere in this proposed rule, the

specific amount and type of security

that must be furnished by a private

certifying agent will be the subject of

future rulemaking by the Department.

We anticipate that the amount of the

security will be tied to the number of

clients served by the certifying agent

and the anticipated costs of certification

that may be incurred by its clients in the

event that the certifying agent’s

accreditation is suspended or revoked.

We anticipate that the security may be

in the form of cash, surety bonds, or

other financial instrument (such as a

letter of credit) administered in a

manner comparable to cash or surety

bonds held under the Perishable

Agricultural Commodities Act.

Certification—Changes Based on

Comments

This subpart differs from our first

proposal in several respects as follows:

(1) On-site Inspection Requirements.

We have amended the general

requirements provision concerning onsite inspections. The first proposal

required production and handling

operations to permit an annual on-site

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13565

inspection by the certifying agent. A few

commenters suggested that the term,

‘‘inspection,’’ be made plural and that

the section citations be amended to

include the section on additional

inspections. The section on additional

inspections addressed the certifying

agent’s authority to perform on-site

inspections in addition to the annual

on-site inspection.

The commenters believe that

‘‘inspection’’ should apply to all

situations when on-site inspections

must be or could be performed,

including the initial site inspection for

a new certification as well as, for

instance, compliance inspections.

Commenters believe that these changes

are needed to assure access to the

certified operation and that an

applicant’s agreement to permit any and

all necessary on-site inspections should

be clearly stated as a general

requirement for certification.

We had intended for the general

requirements provision concerning onsite inspections to include all instances

in which an on-site inspection might be

appropriate. Accordingly, we have

amended the requirement by replacing

the phrase, ‘‘an annual on-site

inspection,’’ with the phrase, ‘‘on-site

inspections.’’ This terminology would

cover initial, annual, and additional

inspections needed for certification,

continuation of certification, and to

determine whether the operation is in

compliance with program requirements.

To ensure complete access to the

production or handling operation for the

purpose of conducting on-site

inspections and determining

compliance with the requirements of the

National Organic Program (NOP), we

have added a requirement that the

operation permit complete access to the

production or handling operation,

including noncertified areas and

structures. The general requirements

provision on on-site inspections is

found at § 205.400(c).

(2) Providing Access to Records. We

have clarified the meaning of providing

access to the records that the certified

operation must maintain by adding

‘‘during normal business hours for

review and copying’’ to the regulation.

The first proposal required that certified

organic operations maintain records for

not less than 5 years from the date of

their creation. It also required the

certified operation to allow authorized

representatives of the Secretary, the

applicable governing State official, and

the certifying agent access to such

records to determine compliance with

the Act and regulations.

Several comments were received

regarding these recordkeeping

requirements. Most of these comments

were received from organic producer

organizations and certifying agents. A

few commenters questioned the

necessity of maintaining records for 5

years, requested a different period for

different records, and requested

clarification on the meaning of

providing access. Section 6511(d) of the

Act requires organic production or

handling operations to maintain records

for 5 years. Accordingly, we have made

no change to the retention period in this

proposal. The clarification on the

meaning of providing access to records

is found at § 205.400(d).

(3) Notification of Drift. We have

amended the requirement that

production and handling operations

immediately notify the certifying agent

concerning any application of a

prohibited substance by adding the

phrase, ‘‘including drift.’’ A few

commenters suggested adding a

requirement that the certified operation

notify the certifying agent when an

organically certified field is

contaminated by drift. They stated that

drift is the most common reason for

prohibiting the organic label on

otherwise organically produced

product.

We agree that the certified operation

should immediately report any drift of

a prohibited substance onto an organic

field to its certifying agent. Accordingly,

§ 205.400(f)(1) provides that an

applicant seeking to receive or maintain

organic certification must immediately

notify the certifying agent concerning

any application, including drift, of a

prohibited substance. This provision

applies to new applicants as well as to

ongoing certified operations.

Contamination by drift could occur

during the time period between

application for and approval of

certification. Accordingly, an applicant

for certification would be required to

notify the certifying agent of any contact

with a prohibited substance.

(4) Applicant Requirements. We have

added the requirement that applicants

for certification include other

information necessary to determine

compliance with the Act and

regulations. Commenters suggested that

the we add a provision to the

application regulations requiring

applicants for certification to submit

other information deemed necessary by

the certifying agent. They stated that

this authority is needed to assure that

applicants are fully cooperative and

responsive throughout the certification

process.

We believe the requested authority

would be helpful to certifying agents.

However, we believe the authority for

certifying agents to request other

information they deem necessary must

be qualified by the requirement that the

information be necessary to determine

compliance with the Act and

regulations. Accordingly, we have

provided certifying agents with the

authority to request other information

necessary to determine compliance with

the Act and regulations. This addition is

found at § 205.401(d).

(5) Requirement for Notification of

Noncompliance. We have replaced the

first proposal’s section on ‘‘preliminary

evaluation of an applicant for

certification’’ with a new section on

‘‘review of application.’’ We have

revised the section to clarify that

certifying agents will issue notices of

noncompliance only after the initial onsite inspection of an applicant’s

operations. We also allow applicants to

voluntarily withdraw their application

for certification at any time.

This change was in response to

comments on the first proposal’s

requirement that applicants for

certification report, to the certifying

agent with whom they have applied, the

receipt of a notice of noncompliance

received from another certifying agent.

A State organic growers association

stated that this requirement places a

stigma on applicants who, for example,

applied for certification before the

operation was ready to meet all

requirements for certification. This

commenter suggested that notification

of previous denial only be required after

an applicant has been denied

certification. The commenter went on to

say that, if the language in the original

proposal is maintained, there should be

a time limit of within the past 3 or 5

years of denial. Another commenter

suggested that certifying agents have the

option of recommending that

noncompliant applicants withdraw their

applications rather than be denied

certification. As an alternative, one of

the commenters suggested that denial of

certification to an unprepared applicant

should not have to be reported on a

subsequent application to another

certifying agent unless the first

noncompliance notice led to a denial of

certification.

We continue to believe that it is in the

best interest of the program and

consumers to require applicants to

report the receipt of notices of

noncompliance and denial of

certification to any certifying agent to

whom they make application. However,

we also believe that operations should

not be unnecessarily stigmatized

because they applied for certification

before the operation was ready to meet

all requirements for certification.

13566 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

Accordingly, this proposal requires that

an applicant report the receipt of a

notice of noncompliance or denial of

certification to any certifying agent to

whom application is made but allows

applicants to voluntarily withdraw their

application at any time.

An applicant that voluntarily

withdrew its application prior to the

issuance of a notice of noncompliance

would not be issued a notice of

noncompliance. Similarly, an applicant

that voluntarily withdrew its

application prior to the issuance of a

notice of certification denial would not

be issued a notice of certification denial.

(6) Residue Testing. We have revised

the verification of information

provisions to provide that the on-site

inspection of an operation must verify

that prohibited substances have not

been and are not being applied to the

operation. Verification would be

through means which, at the discretion

of the certifying agent, may include the

collection and testing of soil; water;

waste; seeds; plant tissue; and plant,

animal, and processed products

samples.

Comments from certifying agents

suggested adding a provision that would

allow a certifying agent to collect

samples of substances from the

operation for residue testing. They

stated that such testing is necessary to

detect unreported use or accumulation

of prohibited substances. Section

6506(a)(6) of the Act requires periodic

residue testing by certifying agents of

products produced by certified organic

operations. It is our intent that

collection of samples for residue testing

may be conducted as part of initial onsite inspections, as well as during onsite inspections of certified organic

operations. The inspector could collect

samples of soil; water; waste; seeds;

plant tissues; and plant, animal, and

processed products. Collection of such

samples would be at the discretion of

the certifying agent. To maintain the

integrity of the inspection process, it is

necessary that the certifying agent or

inspector collect such samples first

hand, rather than receive the samples

from the applicant. We have made the

requested addition at § 205.403(c)(3).

(7) Postinspection Conference

Requirements. We have amended the

postinspection conference requirements.

We have changed all references to

‘‘postinspection conference’’ to ‘‘exit

interview.’’ We have removed the

requirement that the inspector discuss

his or her observations regarding the

operation’s compliance or ability to

comply with the Act and regulations.

This requirement has been replaced

with the requirement that the inspector

confirm the accuracy and completeness

of inspection observations and

information gathered during the on-site

inspection. The inspector can use the

exit interview to request any additional

information necessary to establish

eligibility for certification. Finally, this

amendment requires the inspector to

raise and discuss during the exit

interview any known issues of concern.

Certifying agents commented that it

would be inappropriate for an inspector

to discuss observations and possible

violations of compliance at an exit

interview. They stated that requiring

exit interviews places the inspector in

the position of providing observations

and feedback to the applicant before the

inspector is able to confer with the

certifying agent. Some certifying agents

expressed concern that exit interviews

could result in inspectors providing

false or misleading information to the

applicant. Some commenters requested

that exit interviews be held only for the

purpose of checking the accuracy and

completeness of inspector observations

made and the information obtained

during the inspection. Other

commenters requested that the exit

interviews requirement be removed

from these regulations.

We believe that qualified inspectors

should be capable of competently

discussing an applicant’s compliance or

ability to comply with these regulations.

However, we also believe that a

certifying agent should have the

opportunity to decide whether to allow

its inspectors to discuss issues of

compliance at an exit interview.

Accordingly, we have amended the exit

interview requirements as noted above.

These amended requirements are found

at § 205.403(d).

(8) Additional Inspections. We have

added a new provision that additional

inspections may be announced or

unannounced at the discretion of the

certifying agent or as required by the

Administrator or State program’s

governing State official. This change

was made in response to commenters

who requested the addition of a

requirement that certifying agents

conduct unannounced site visits in

addition to the initial and annual

inspections. We believe that

unannounced on-site inspections are

appropriate and valuable in both

monitoring and investigating

compliance with the Act and

regulations. The requested addition is

found at § 205.403(a)(2)(iii).

(9) Requirements for Written

Inspection Reports. We have removed

the requirement that the certifying agent

require an inspector to prepare and

submit to the certifying agent, within 30

days of completing an inspection, a

written report that describes the

inspector’s observations and

assessments of the inspected operation’s

compliance or ability to comply with

the Act and regulations. A variety of

comments, pro and con, were received

on this requirement. Certifying agents

questioned whether the 30-day

timeframe was reasonable. Other

commenters suggested that, rather than

specifying a time period, the section

should stress the need for timely

reporting. A commenter suggested that

an inspector’s observations and

assessments on the inspected operation

include the inspector’s

recommendations on approval of

certification. Other commenters stated

that the requirement amounted to micro

management of a certifying agent’s

business. This latter group of

commenters believe that the setting of a

time period for inspector reporting

involves a policy matter that should be

determined by the certifying agent. We

agree with the commenters who stated

that setting deadlines for the filing of

inspection reports is an internal policy

matter better left to certifying agents.

We believe that policies and

procedures regarding inspector

reporting are the purview of the

certifying agent. Certifying agents would

be expected to develop and implement

inspector reporting requirements for onsite inspections internal to their own

operations. Such policies and

procedures and a certifying agent’s

performance in making timely

certification decisions would be subject

to review during accreditation and

reaccreditation of the certifying agent.

Accordingly, we have removed the

provision.

Removal of this requirement does not

eliminate the need for a written on-site

inspection report or the importance of

timely inspection reporting by an

inspector to the certifying agent.

Certifying agents are expected to make

timely decisions regarding whether to

certify an applicant and whether a

certified operation is in compliance

with the Act and regulations.

Applicants with complaints regarding

timeliness of service could forward their

complaints to the Administrator.

(10) Responsibilities of Certifier in the

Application Process. We have replaced

the list of requirements to be reviewed

by a certifying agent in determining an

applicant’s eligibility for certification

with a general statement on

determination of eligibility.

Commenters requested the addition of a

provision requiring certifying agents to

verify implementation of the organic

system plan. We agree that an on-site

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inspection of an ongoing operation must

include assessment of the operation’s

application of its organic system plan.

Because an on-site inspection of a new

applicant’s operation would be

conducted at a time when the operation

can demonstrate its organic capabilities,

the operation must be able to show that

it is satisfactorily carrying out its

organic system plan.

It was our intent that certifying agents

would verify implementation of the

applicant’s organic system plan during

the certifying agent’s review of the onsite inspection report and application.

However, our list of requirements to be

reviewed by a certifying agent in

determining an applicant’s eligibility for

certification did not specifically

reference verification of implementation

of the organic system plan. We have

decided to replace the list of

requirements to be reviewed with a

general statement on determination of

eligibility. This statement provides: ‘‘If

the certifying agent determines that the

organic system plan and all procedures

and activities of the applicant’s

operation are in compliance with the

requirements of this part and that the

applicant is able to conduct operations

in accordance with the plan, the agent

shall approve certification.’’ We believe

this general statement, in combination

with the requirement that the certifying

agent review the application, the on-site

inspection report, the results of any

analyses for substances conducted, and

any additional information requested

from or supplied by the applicant,

adequately addresses the commenters’

concerns. This revision to the approval

of certification requirements is found at

§ 205.404(a).

(11) Information Included on the

Certificate of Organic Operation. We

have amended the regulations

specifying what information must be

included on a certificate of organic

operation. Comments received from

organic operations, certifying agents,

and consumers recommended that

certifying agents provide additional

information on certificates of organic

operation. Specifically, they

recommended that all certificates

include: (1) The certifying agent’s name

and address; (2) an expiration date; (3)

the physical location of certified

operations, including separate fields

and facilities; (4) the name of the

certified operation’s contact person

responsible for compliance with

program requirements; (5) the name and

address of the certified operation; and

(6) the crops and products certified. The

commenters believe such information,

especially a date on which the

certificate expires, to be vital to assuring

accountability and compliance with the

program.

We believe it would be beneficial to

persons with concerns regarding a

certified production or handling

operation to have ready access to

information concerning the name,

address, and telephone number of the

certifying agent. Further, because the

certificate of organic operation would be

an official document of the certifying

agent, it would be appropriate for this

information to appear on every

certificate. Accordingly, we have added

the name, address, and telephone

number of the certifying agent to the

information which must be included on

every certificate. This addition is found

at § 205.404(b)(4).

We disagree with the commenters

who requested that certificates of

organic operation display an expiration

date. We believe annual expiration of a

certificate would place an unnecessary

burden on certifying agents and certified

operations. Annual expiration of

certificates is also inconsistent with the

fact that an operation’s certification

does not expire. In fact, once an

operation is certified as an organic

operation, its certification remains in

effect until surrendered by the certified

operation or suspended or revoked by

the certifying agent, the State program’s

governing State official, or the

Administrator. All certified operations

are required to annually update their

organic system plan. If the updated plan

causes information on the certificate to

be incorrect, the certifying agent will

issue a new certificate with the correct

information. This provides a mechanism

for ensuring that certificates are updated

as necessary on an annual bases. We

have not included the recommended

addition in this proposal.

For clarification, we have added

§ 205.404(c). This section provides that

once certified a production or handling

operation’s organic certification

continues in effect until surrendered by

the organic operation or suspended or

revoked by the certifying agent, the

State program’s governing State official,

or the Administrator.

We disagree with the commenters

who requested that certificates display

the physical location of certified

operations, including separate fields

and facilities, and the name of the

certified operation’s contact person

responsible for compliance with

program requirements. We believe that

the location of a certified operation’s

fields and facilities has no relationship

to the operation’s status as a certified

organic operation. Therefore, such

information should only be made

available with the written consent of the

certified operation. The name of the

certified operation’s contact person

would be releasable information. We

believe, however, that such detail is

unnecessarily burdensome to the

certifying agent and will only serve to

clutter the certificate. By requiring the

name, address, and telephone number of

the certifying agent, as noted above, the

certificate would provide interested

persons with a contact for obtaining

releasable information concerning the

certified operation. Further, the

certifying agent is the first line of

compliance under this program and, as

such, is the person to whom all

questions and concerns should be

addressed about certified operations.

We agree with the commenters who

requested that certificates display the

name and address of the certified

operation because such information is

potentially beneficial to consumers.

Accordingly, we have added the name

and address of the certified operation to

the information which must be included

on every certificate. This addition is

found at § 205.404(b)(1).

The first proposal required that the

certificate list the category(ies) and

type(s) of products produced by the

certified operation. Commenters were

apparently confused about the meaning

of category(ies) and type(s) of products.

We have, therefore, revised the

requirement to provide that a certificate

of organic operation would specify the

categories of organic operation,

including, crops, wild crops, livestock,

or processed products produced by the

certified operation. This revision is

found at § 205.404(b)(3).

(12) Certifiers Authority to Deny

Certification. We have added authority

for certifying agents to deny certification

to applicants who do not meet the

requirements for certification. The first

proposal required certifying agents to

forward their recommendations for

denial of certification to the

Administrator. Commenters stated that

authority for denial of certification

should rest with the certifying agents.

They also contended that referral to the

Administrator for denial of certification

establishes a bureaucratic process,

which would create unnecessary delays

to the denial process and increased cost

to applicants. Many commenters

suggested the appeals process is

sufficient to protect the interests of the

Secretary.

We have determined that it is

reasonable to authorize certifying agents

to deny certification. Denial by the

certifying agent would provide the

applicant with a more timely decision

on its eligibility for certification. A more

timely decision would provide an

13568 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

earlier opportunity for applicants to

appeal a denial of certification.

Authority for certifying agents to deny

certification to applicants who do not

meet the requirements for certification

is found at section 205.405.

This proposal requires certifying

agents to evaluate the applicant’s

corrective actions taken and supporting

documentation or written rebuttal

submitted in response to a notification

of noncompliance. Certifying agents are

authorized to perform on-site

inspections to verify corrections to

deficiencies or statements contained in

a rebuttal, if necessary, to assure full

compliance with the certification

requirements. The certifying agent will

issue the applicant a written notice of

denial of certification if the corrective

action or rebuttal is not sufficient for the

applicant to qualify for certification.

We believe the denial of certification

provisions should clearly state an

applicant’s options and rights upon

receiving a notice of denial of

certification. Accordingly,

§ 205.405(c)(1)(ii) provides that a notice

of denial of certification must state the

reasons for denial and the applicant’s

right to reapply for certification, request

mediation, or file an appeal. An

applicant who has received a written

notice of denial of certification may

apply for certification again at any time

with any certifying agent, may request

mediation to resolve a dispute with the

certifying agent, or may file an appeal

with the Administrator as outlined in

§ 205.663 for mediation and § 205.681

for appeals. Applicants subject to an

approved State program would seek

mediation or appeal in accordance with

the rules of the approved State program.

(13) Willful Misrepresentations or

False Statements by Applicants. We

have included authority for certifying

agents to deny certification if the agent

has reason to believe that the applicant

has willfully made a false statement or

otherwise purposefully misrepresented

its operation or compliance with the

certification requirements. Such false

statements would, in most cases, be

verified during an on-site inspection.

This authority was provided to

certifying agents in the first proposal

relative to certified operations. The first

proposal, however, did not reference an

applicant’s willful making of a false

statement or otherwise purposefully

misrepresenting its operation or

compliance with the certification

requirements. Certifying agents

commented that applicants for

certification also may make false

statements or misrepresent facts. They

suggested that the regulations reflect a

certifying agent’s authority in such

cases. We agree with the commenters

and have added § 205.405(f). This

section authorizes denial of certification

without first issuing a notification of

noncompliance when the certifying

agent has reason to believe that the

applicant has willfully made a false

statement or otherwise purposefully

misrepresented its operation or

compliance with the certification

requirements.

Certification—Changes Requested But

Not Made

This subpart retains from our first

proposal regulations on which we

received comments as follows:

(1) Timeliness of Applicant’s

Notification to Certifiers. A commenter

suggested that ‘‘immediately’’ in the

requirement that production and

handling operations immediately notify

the certifying agent concerning any

application of a prohibited substance be

replaced with ‘‘within 2 days.’’ No

justification was given for the

recommended change, and the change

has not been made. ‘‘Immediately

notify’’ means that the applicant or

certified operation must at once notify

its certifying agent upon learning that a

prohibited substance has come in

contact with any portion of its operation

or production. The certifying agent will

evaluate the circumstances surrounding

the event and decide whether the

certified operation acted within the

intent of this requirement. This

requirement is found at § 205.400(f)(1).

(2) Notification of Changes to

Certifying Agent. Commenters

questioned how the certified operation

would know what changes in its

certified operation or any portion of its

operation would require reporting to its

certifier. Certified operations are

responsible for being familiar with the

requirements of the Act and these

regulations. Further, they have an

obligation to contact their certifying

agent when they have questions

regarding compliance with this

program. As a rule, certified operations

should contact their certifying agent

whenever the change is not covered

under their approved organic system

plan. The requirement that a certified

operation notify its certifying agent

concerning any change in its certified

operation that may affect its compliance

with the Act and regulations is found at

§ 205.400(f)(2).

(3) Tests for Soil Fertility and

Irrigation Water. Certifying agents

suggested that applicants for

certification be required to submit test

results for soil fertility and irrigation

water quality to prove compliance with

the NOP. We recognize that increasing

soil fertility through organic production

practices is a goal of the organic

industry. However, soil fertility will not

qualify or disqualify an applicant for

organic certification. An applicant who

has independently had such tests

conducted may, but is not required to,

include them with the application.

While the Act requires that handlers

only use in their products water that

meets all Safe Drinking Water Act

requirements, no similar requirements

are placed on producers and the water

they use to irrigate their crops. For these

reasons, we are not requiring applicants

for certification to submit soil fertility or

irrigation water quality test results.

(4) Timeliness of On-site Inspection.

The first proposal required a certifying

agent to conduct an initial on-site

inspection within a reasonable time

following a favorable preliminary

evaluation of an application for

certification. Several commenters asked

what constitutes reasonable time

between submission of an application

and an on-site inspection. Others stated

that, when determining what constitutes

reasonable time, consideration should

be given to factors such as when the

application was submitted relative to

when activities demonstrating

compliance can be observed and when

the inspection can be scheduled to

assure the presence of the applicant.

We stated in the first proposal that we

did not specify a time within which an

inspection must be conducted because

the time would vary according to when

the application was submitted and the

type of operation to be inspected.

Timely service will be in the best

interest of certifying agents since

applicants may forward complaints

regarding service to the Administrator.

Such complaints could have an impact

on a certifying agent’s reaccreditation or

continued accreditation. Further, our

original position is consistent with

those commenters requesting flexibility

in determining what constitutes

reasonable time. Accordingly, we have

made no changes in this proposal

regarding what constitutes reasonable

time. This requirement is found at

§ 205.403(b).

(5) Additional On-site Inspections.

Some organic associations asked what

would trigger a decision to conduct an

additional on-site inspection.

Commenters expressed the concern that

certifying agents could conduct

additional, unneeded inspections at the

expense of operators who would have to

pay the costs of the inspections. Other

commenters asked who would pay for

the additional on-site inspections. Some

certifying agents suggested that

guidelines need to be established under

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13569

which additional inspections must be

conducted. A certifying agent suggested

that additional inspections could be

conducted based on the inspector’s

observations, the certifier’s

recommendation, and, possibly, thirdparty complaints.

The authority for on-site inspections

is necessary for monitoring and

compliance purposes at the discretion of

the certifying agent, the Administrator,

or a State program’s governing State

official. Such on-site inspections would

likely be precipitated by reasons to

believe that the certified operation was

operating in violation of one or more

requirements of the Act or these

regulations. The on-site inspection

would be conducted, as necessary, to

obtain information needed to determine

compliance with identified

requirements.

We believe policies and procedures

regarding additional inspections,

including how the costs of such

inspections are handled, are the

responsibility of each certifying agent.

Misuse of such authority would be

subject to review by the Department

during its evaluation of a certifying

agent for reaccreditation and at other

times in response to complaints.

Certified production and handling

operations could file complaints with

the Department at any time should they

believe a certifying agent abuses its

authority to perform additional

inspections. Accordingly, we have made

no changes in this proposal based on

these comments.

(6) Annual Renewal of Certification.

Commenters requested annual renewal

of certification rather than updates to a

continuing certification program. Other

commenters requested that the notice of

certification have an ending date or be

issued for an established period of time.

An industry association commented that

the proposed continuation of

certification regulations requires a

certified operation to annually certify

that it is complying with the Act and

these regulations. This commenter

stated that the proposed continuation of

certification procedures changes the

process of recertification to one more

closely resembling self-certification.

Another industry association stated that

certification until surrendered by the

certified operation or suspended or

revoked would make the assurance of

compliance extremely difficult, if not

impossible. This commenter further

stated that certifying agents will be

unable to effectively monitor applicants

or gain needed information. This

commenter recommended that renewal

paperwork include the items specified

in the continuation of certification

regulations but that certifying agents use

their own discretion as to the forms and

information needed. Similarly, a

certifying agent commented that

certification must be renewed with an

application on an annual basis and that

no operation can be certified for life.

This commenter recommended

requiring a yearly application and other

documentation deemed necessary by the

certifying agent.

We disagree with the commenters. We

prefer continuous certification due to

the very real possibility that the renewal

process might not always be completed

before expiration of the certification

period. Expiration of the certification

period would result in termination of

the operation’s certification. Even a

short period of interruption in an

operation’s organic status could have

severe economic ramifications. Further,

we believe that a regular schedule of

expiration of certification is

unnecessary inasmuch as all certified

operations are required to annually

update their organic system plan and

submit any changes to their certifying

agent. Accordingly, this proposal retains

the provision for continuous

certification.

(7) Timing of On-site Inspections. A

State certifying agent and an industry

organization stated that requiring an onsite inspection after receipt of the

renewal application is not consistent

with current practice. The State

certifying agent stated that it moved the

renewal date to January 1 of each year

to make the renewal process less

burdensome to its certified producers.

This commenter went on to say that the

annual inspection conducted during the

appropriate growing or processing

season is used to evaluate the organic

operation in the renewal process. The

State certifying agent further stated that

an additional inspection at renewal time

would not be useful if it was not an

appropriate time to observe production

practices at the organic operation. Both

commenters requested elimination of

the requirement that the certifying agent

arrange and conduct an on-site

inspection following receipt of the

operation’s annual submission of

information. These commenters also

requested that a determination of

noncompliance be based on on-site

inspections conducted during the

previous certification year and a review

of the information annually submitted

by the certified operation.

We disagree with the commenters.

Certifying agents are required to

schedule on-site inspections for a time

when land, facilities, and activities that

demonstrate the operation’s compliance

or capability to comply with the

applicable production or handling

provisions of the NOP may be observed.

Accordingly, the initial certification

must have followed an on-site

inspection performed when the

operation was able to demonstrate its

compliance or capability to comply. The

certified operation, therefore, should be

fulfilling its annual continuation of

certification obligations at a time when

it can demonstrate its compliance with

the Act and regulations. The

commenters’ recommendations are not

accepted.

Certification—Additional Provisions

Upon further review of the

certification provisions in the first

proposal, we have decided to propose

the following additions and changes.

(1) Requirements for Business

Information. We have revised the

business information required of all

applicants for certification as an organic

operation. First, the application must

include the name of the person who

completed the application. Certifying

agents will use this information when

following up on information within the

application. Second, we have removed

the requirement that the application

include the names of personnel

responsible for maintaining compliance

with the Act and regulations. We

believe this information is unnecessary

since the person responsible for

overseeing compliance is the certifying

agent. Third, we have added the

requirement that when the applicant is

a corporation, the application must

include the name, address, and

telephone number of the person

authorized to act on the applicant’s

behalf. Fourth, we have removed the

requirement that the applicant for

certification submit a statement of

compliance. We have also removed the

‘‘Statement of Compliance’’ section

which required the submission of a

statement of compliance with the

application for certification. We have

removed this requirement because we

have determined that it creates an

unnecessary burden upon applicants for

certification. Section 205.400(a) requires

that a person seeking to receive or

maintain organic certification must

comply with the Act and applicable

production and handling regulations.

Accordingly, it is unnecessary to require

a separate document through which the

applicant for certification agrees to

comply with the Act and regulations.

The requirements for the submission of

business information with the request

for certification are found at

§ 205.401(b).

(2) Disclosure of Previous

Applications. The first proposal

13570 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

2 ISO/IEC Guide 65 is available for viewing at

USDA–AMS, Transportation and Marketing

Programs, Room 2945-South Building, 14th and

Independence Ave., SW, Washington, DC, from 9:00

a.m. to 4:00 p.m., Monday through Friday (except

official Federal holidays). A copy may be obtained

from the American National Standards Institute, 11

West 42nd Street, New York, NY 10036; Website:

www.ansi.org; E-mail: ansionline@ansi.org;

Telephone: 212–642–4900; Facsimile: 212–398–

0023.

required that the request for certification

include the name(s) of any organic

certifying agent(s) to which application

had previously been made, the year(s) of

application, and the outcome of the

application(s) submission. We have

amended this requirement by adding

‘‘including a copy of any notification of

noncompliance or denial of certification

issued to the applicant for certification

and a description of the actions taken by

the applicant to correct the deficiencies

noted in the notification of

noncompliance, including evidence of

such correction.’’ We have added this

provision to clarify what we mean by

‘‘the outcome of the application(s)

submitted.’’ This provision is found at

§ 205.401(c).

(3) On-site Inspections. We have

combined the arranging for inspection,

verification of information,

postinspection conference, and

additional inspection regulations of the

first proposal into a new on-site

inspections section, § 205.403. We made

this change for the purposes of

clarification and the removal of

redundancies.

(4) Additional Inspections. We have

revised the on-site inspections

requirements to provide that a State

program’s governing State official may

require a certifying agent to conduct an

additional inspection of a production or

handling operation to determine the

operation’s compliance with the Act

and these regulations. We have

provided State program governing State

officials with authority to require

additional inspections because such

officials will have compliance

responsibilities under their State

programs and will need such authority

to carry out their responsibilities. These

requirements are found at § 205.403(a).

(5) Notifications of Noncompliance.

We have added at § 205.405(b) a

provision which identifies for

applicants for certification what their

options are when they receive a

notification of noncompliance. Such

applicants may correct the deficiencies

and submit a description and

supporting documentation of correction

to the certifying agent, correct the

deficiencies and submit a new

application to another certifying agent

along with the notification of

noncompliance and a description and

supporting documentation of correction,

or submit written information to the

certifying agent to rebut the

noncompliance described in the

notification of noncompliance.

(6) Reapplying After a Notice of

Noncompliance or Denial of

Certification. We have added a new

provision which requires a certifying

agent to treat an application for

certification as a new application when

such application includes a notification

of noncompliance or a notice of denial

of certification. While the new

application may contain the same

organic system plan and other

information provided in the

unsuccessful application for

certification, it must also provide any

new information or changes in

operations which may have occurred

since the filing of the unsuccessful

application. The updated information

concerning the applicant’s operation

must include a description of actions

taken, with supporting documentation,

to correct the deficiencies identified in

the notification of noncompliance. This

new provision is found at § 205.405(e).

Subpart F—Accreditation of Certifying

Agents

This subpart sets forth the

requirements for a national program to

accredit State and private entities as

certifying agents to certify domestic or

foreign organic production or handling

operations. This subpart also provides

that USDA will accept a foreign

certifying agent’s accreditation to certify

organic production or handling

operations if: (1) USDA determines,

upon the request of a foreign

government, that the standards under

which the foreign government authority

accredited the foreign certifying agent

meet the requirements of this part; or (2)

the foreign governmental authority that

accredited the certifying agent acted

under an equivalency agreement

negotiated between the United States

Government and the foreign

government.

This National Organic Program (NOP)

accreditation process will facilitate

national and international acceptance of

United States organically produced

agricultural commodities. The

accreditation requirements in these

regulations will replace the organic

assessment voluntary, fee-for-service

program, established by AMS under the

Agricultural Marketing Act of 1946.

That assessment program verifies that

State and private organic certifying

agents comply with the requirements

prescribed under the International

Organization for Standardization/

International Electrotechnical

Commission Guide 65, ‘‘General

Requirements for Bodies Operating

Product Certification Systems’’ (ISO

Guide 65).2 ISO Guide 65 provides the

general requirements that a certifying

agent would need to meet to be

recognized as competent and reliable.

That assessment program was originally

established to enable organic certifying

agents in the absence of a U.S. national

organic program to comply with

European Union (EU) requirements

beginning on June 30, 1999. That

assessment program verifies that State

and private organic certifying agents are

operating third-party certification

systems in a consistent and reliable

manner, thereby facilitating

uninterrupted exports of U.S. organic

agricultural commodities to the EU. ISO

Guide 65 is used as a benchmark in

developing the accreditation program

described in this proposed rule.

Certifying agents accredited under the

NOP that maintain compliance with the

Act and these regulations will meet or

exceed the requirements of ISO Guide

65; therefore, the organic assessment

program is no longer needed.

Participation in the NOP does not

preclude the accredited certifying agent

from conducting other business

operations, including the certification of

agricultural products, practices, and

procedures. An accredited certifying

agent may not, however, engage in any

business operations or activities which

would involve the agent in a violation

of or a conflict of interest under the

NOP.

Proposal Description

The Administrator will accredit

qualified domestic and foreign

applicants in the areas of crops,

livestock, wild crops, or handling or any

combination thereof to certify domestic

or foreign production or handling

operations as certified organic

operations. Qualified applicants will be

accredited for 5 years.

Application Process. Certifying agents

will apply to the Administrator for

accreditation to certify production or

handling operations operating under the

NOP. The certifying agent’s application

must include basic business

information, must identify each area of

operation for which accreditation is

requested and the estimated number of

each type of operation to be certified

annually, and must include a list of

each State or foreign country where it

currently certifies production or

handling operations and where it

intends to certify such operations.

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13571

Certifying agents must also submit

personnel, administrative, conflict of

interest, current certification, and other

documents and information to

demonstrate their expertise in organic

production or handling techniques,

their ability to comply with and

implement the organic certification

program, and their ability to comply

with the requirements for accreditation.

The administrative information

submitted by the applicant should

include copies of their procedures for

certifying operations, for ensuring

compliance of their certified operations

with the Act and regulation, for

complying with recordkeeping

requirements, and for making

information available to the public

about certified operations. The

procedures for certifying operations

encompass the processes used by the

certifying agent to evaluate applicants,

make certification decisions, issue

certification certificates, and maintain

the confidentiality of any business

information submitted by the certified

operation. The procedures for ensuring

compliance of the certified operations

would include the methods used to

review and investigate certified

operations, for sampling and residue

testing, and to report violations.

The personnel information submitted

with the application should

demonstrate that the applicant uses a

sufficient number of adequately trained

personnel to comply with and

implement the organic certification

program. The certifying agent will also

have to provide evidence that its

responsibly connected persons,

employees, and contractors with

inspection, analysis, and decisionmaking responsibilities have sufficient

expertise in organic production or

handling techniques to successfully

perform the duties assigned. They must

also show that these employees have

revealed existing or potential conflicts

of interest.

Applicants who currently certify

production or handling operations must

also submit a list of the production and

handling operations currently certified

by them. For each area in which the

applicant requests accreditation, the

applicant should furnish copies of

inspection reports and certification

evaluation documents for at least three

operations. If the applicant underwent

any other accrediting process in the year

previous to the application, the

applicant should also submit the results

of the process.

Certifying agents are prohibited from

providing advice concerning organic

practices or techniques to any

certification applicant or certified

operation for a fee, other than as part of

the fees under the certification program.

The Administrator will provide

oversight of the fees to ensure that the

schedule of fees filed with the

Administrator is applied uniformly and

in a nondiscriminatory manner. The

Administrator may inform a certifying

agent that its fees appear to be

unreasonable and require that the

certifying agent justify the fees. The

Administrator will investigate the level

of fees charged by an accredited

certifying agent upon receipt of a valid

complaint or under compelling

circumstances warranting such an

investigation. Certifying agents are

prohibited from providing advice

concerning organic practices or

techniques to any certification applicant

or certified operation for a fee, other

than as part of the fees under the

certification program.

Statement of Agreement. Upon receipt

of the certifying agent’s application for

accreditation, the Administrator will

send a statement of agreement to the

person responsible for the certifying

agent’s day-to-day operations for

signature. The statement of agreement

affirms that, if granted accreditation as

a certifying agent under this subpart, the

applicant will carry out the provisions

of the Act and the regulations in this

part. Accreditation will not be approved

until this statement is signed and

returned to the Administrator.

The statement of agreement will

include the applicant’s agreement to

accept the certification decisions made

by another U.S. Department of

Agriculture (USDA)-accredited

certifying agent as equivalent to its own

and the applicant’s agreement to refrain

from making false or misleading claims

about its accreditation status, the USDA

accreditation program, or the nature or

qualities of products labeled as

organically produced. Further, the

statement will include the applicant’s

agreement to pay and submit the fees

charged by AMS and to comply with,

implement, and carry out any other

terms and conditions determined by the

Administrator to be necessary.

Applicants are also required to affirm

through this statement of agreement that

they will: (1) Conduct an annual

performance appraisal for each

inspector used; (2) have an annual

program evaluation conducted of their

certification activities by their staff, an

outside auditor, or a consultant who has

expertise to conduct such evaluations;

and (3) implement measures to correct

any deficiencies in compliance with the

Act and regulations identified in an

inspector performance appraisal or

program evaluation.

A private entity certifying agent must

additionally agree to hold the Secretary

harmless for any failure on the agent’s

part to carry out the provisions of the

Act and regulations. A private entity

certifying agent’s statement will also

include an agreement to furnish

reasonable security for the purpose of

protecting the rights of operations

certified by such certifying agent. Such

security will be in an amount and

according to such terms as the

Administrator may by regulation

prescribe. A private entity certifying

agent must agree to transfer all records

or copies of records concerning its

certification activities to the

Administrator if it dissolves or loses its

accreditation. A private entity certifying

agent must also agree to make such

records available to any applicable State

program’s governing State official.

Approval of Accreditation. Upon

receiving all the required information,

including the statement of agreement,

and the required fee, the Administrator

will determine if the applicant meets

the requirements for accreditation. The

Administrator’s determination will be

based on a review of the information

submitted and, if necessary, a review of

the information obtained from a site

evaluation. The Administrator will

notify the applicant of approval of

accreditation in writing. The notice of

accreditation will state the area(s) for

which accreditation is given, the

effective date of the accreditation, and,

for a private-entity certifying agent, the

amount and type of security that must

be established.

Certifying agents who apply for

accreditation and do not meet the

requirements for accreditation will be

provided, in accordance with § 205.665,

with a notification of noncompliance

and given an opportunity to come into

compliance. After receipt of a

notification of noncompliance, the

applicant may submit a description of

the actions taken to correct the noted

deficiencies and evidence

demonstrating such corrections or file

an appeal with the Administrator. If the

applicant is successful in its appeal or

provides acceptable evidence

demonstrating correction of the

deficiencies, the Administrator will

notify the applicant of accreditation. If

the applicant fails to correct the

deficiencies, fails to report the

corrections by the date specified in the

notification of noncompliance, fails to

file an appeal by the date specified in

the notification of noncompliance, or is

unsuccessful in its appeal, the

Administrator will issue a written

notification of accreditation denial to

the applicant. An applicant who has

13572 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

received written notification of

accreditation denial may apply for

accreditation again at any time.

Once accredited, a certifying agent

may establish a seal, logo, or other

identifying mark to be used by certified

production and handling operations.

However, the certifying agent may not

require use of its seal, logo, or other

identifying mark on any product sold,

labeled, or represented as organically

produced as a condition of certification.

The certifying agent also may not

require compliance with any production

or handling practices other than those

provided for in the Act and regulations

as a condition for use of its identifying

mark. This provision does not apply to

States with more restrictive

requirements approved by the

Administrator or private-entity

certifying agents certifying operations

within such States.

Site Evaluations. One or more

representatives of the Administrator

will perform site evaluations for each

certifying agent in order to examine the

certifying agent’s operations and to

evaluate compliance with the Act and

regulations. Site evaluations will

include an on-site review of the

certifying agent’s certification

procedures, decisions, facilities,

administrative and management

systems, and production or handling

operations certified by the certifying

agent. A site evaluation of an

accreditation applicant will be

conducted before or within a reasonable

time after issuance of the applicant’s

notification of accreditation. Certifying

agents will be billed for each site

evaluation conducted in association

with an initial accreditation,

amendments to an accreditation, and

renewals of accreditation. Certifying

agents will not be billed by USDA for

USDA-initiated site evaluations

conducted to determine compliance

with the Act and regulations.

As noted above, a certifying agent

may be accredited prior to a site

evaluation. If the Administrator finds,

following the site evaluation, that an

accredited certifying agent is not in

compliance with the Act or regulations,

the Administrator will issue the

certifying agent a written notification of

noncompliance. If the certifying agent

fails to correct the deficiencies, report

the corrections by the date specified in

the notification of noncompliance, or

file an appeal by the date specified in

the notification of noncompliance, the

Administrator will begin proceedings to

suspend or revoke the accreditation. A

certifying agent that has had its

accreditation suspended may apply for

accreditation again at any time. A

private-entity certifying agent whose

accreditation is revoked will be

ineligible for accreditation for a period

of not less than 3 years following the

date of such determination.

Peer Review Panels. The

Administrator may establish a peer

review panel to assist in evaluating

applicants for accreditation. Peer review

panels will be used at the discretion of

the Administrator following the site

evaluation of a certifying agent, but

under no circumstances will the

Administrator convene a peer review

panel when the peer review pool does

not contain sufficient persons qualified

to peer review the certifying agent.

To be eligible to serve on a peer

review panel, the applicant for

membership in the peer review pool

must provide the Administrator with a

written description and, upon request,

supporting documentation of its

qualifications to conduct peer reviews.

The applicant for membership in the

peer review pool must address possible

limitations on availability to serve and

include information concerning

commercial interests with any person

who may seek to become or who is an

accredited certifying agent. No person

who has or has had a commercial

interest, including an immediate family

interest or the provision of consulting

services, in an applicant for

accreditation or renewal of accreditation

will be appointed to a panel evaluating

such applicant for accreditation or

renewal of accreditation. Persons

accepted to the pool may serve until

notified that their appointment has been

rescinded by the Administrator or until

they are no longer qualified, whichever

occurs first. Peer reviewers will serve

without compensation.

Peer review panels will consist of at

least three but no more than five

members. A Department representative

will preside over the panel. A peer

review panel will include no fewer than

two members who possess sufficient

expertise in the certifying agent’s areas

of accreditation. Peer review panels may

include up to two members with

expertise in other disciplines, including

organizational management and finance;

member(s) from the approved State

organic certification program when the

applicant is a private entity that will

operate within the State; and member(s)

from a foreign government’s organic

program when the applicant is a private

entity that will operate within the

country.

Each person on a peer review panel

must individually review the site

evaluation report prepared by the

Department’s evaluator(s) and any other

information that may be provided by the

Administrator relevant to continuing or

renewing the accreditation status of a

certifying agent. Information about the

certifying agent received as part of the

review process is confidential

information, and peer reviewers must

not release, copy, quote, or otherwise

use material from the information

received other than in the report

required to be submitted. Each peer

reviewer must agree to treat the

information received for review as

confidential.

A peer review panel meeting will be

held solely for the purposes of

exchanging information. Any meeting or

conference call will be conducted in a

manner that will ensure the actions of

panel members are carried out on an

individual basis with any opinions and

recommendations by a member being

made individually. We do not believe

that it is usual to have consensus in peer

review or that it is the best use of USDA

resources or the time of peer reviewers

to seek consensus under a single report.

Further, requiring a consensus report

may make peer review panels subject to

the Federal Advisory Committee Act,

which might stifle meaningful dialog

between reviewers, increase the cost

and time required of peer reviewers for

peer review service, and result in

problems obtaining volunteers for

service on peer review panels.

Peer review panel members will

prepare and submit individual reports,

including recommendations, to the

Administrator regarding a certifying

agent’s ability to conduct and perform

certification activities. The

Administrator will consider the reports

when determining whether to continue

or renew the certifying agent’s

accreditation. Copies of the peer review

panel reports will be provided, upon

request, to the certifying agent, and

written responses from the certifying

agent may be submitted for

consideration by the Administrator.

Copies of peer review panel reports may

be provided to any person requesting

such reports under the Freedom of

Information Act.

Continuing Accreditation. An

accredited certifying agent must submit

annually to the Administrator, on or

before the anniversary date of the

issuance of the notification of

accreditation, the following reports and

fees: (1) A complete and accurate update

of its business information, including its

fees, and information evidencing its

expertise in organic production or

handling and its ability to comply with

these regulations; (2) information

supporting any changes requested in the

areas of accreditation; (3) a description

of measures implemented in the

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13573

3 ISO/IEC Guide 61 is available for viewing at

USDA–AMS, Transportation and Marketing

Programs, Room 2945—South Building, 14th and

Independence Ave., SW, Washington, DC, from 9:00

a.m. to 4:00 p.m., Monday through Friday (except

official Federal holidays). A copy may be obtained

from the American National Standards Institute, 11

West 42nd Street, New York, NY 10036; Website:

www.ansi.org; E-mail: ansionline@ansi.org;

Telephone: 212–642–4900; Facsimile: 212–398–

0023.

previous year and any measures to be

implemented in the coming year to

satisfy any terms and conditions

specified in the most recent notification

of accreditation or notice of renewal of

accreditation; (4) the results of the most

recent inspector performance appraisals

and annual program evaluation and a

description of adjustments to the

certifying agent’s operation and

procedures implemented or to be

implemented in response to the

appraisals and evaluation; and (5) the

required AMS fees.

Certifying agents will keep the

Administrator informed of their

certification activities by: (1) Providing

the Administrator with a copy of any

notice of denial of certification,

notification of noncompliance,

notification of noncompliance

correction, notification of proposed

suspension or revocation, and

notification of suspension or revocation

issued simultaneously with its issuance;

and (2) on a quarterly calendar basis, the

name, address, and telephone number of

each operation granted certification.

One or more site evaluations will

occur during the 5-year period of

accreditation to determine whether an

accredited certifying agent is complying

with the Act and regulations. USDA will

establish an accredited certifying agent

compliance monitoring program, which

will involve no less than one randomly

selected site evaluation of each

certifying agent during its 5-year period

of accreditation. Larger and more

diverse operations, operations with

clients marketing their products

internationally, and operations with a

history of problems should expect more

frequent site evaluations by USDA.

Operations with clients marketing their

products internationally will be

annually site evaluated to meet the ISOGuide 61 3 requirement for periodic

surveillance of accredited certifying

agents. USDA may also conduct site

evaluations during investigations of

alleged or suspected violations of the

Act or regulations and in followup to

such investigations. Such investigations

will generally be the result of

complaints filed with the Administrator

alleging violations by the certifying

agent. Compliance site evaluations may

be announced or unannounced at the

discretion of the Administrator.

Certifying agents will not be billed by

USDA for USDA-initiated site

evaluations conducted to determine

compliance with the Act and

regulations.

An accredited certifying agent must

provide sufficient information to

persons seeking certification to enable

them to comply with the applicable

requirements of the Act and these

regulations. The certifying agent must

maintain strict confidentiality with

respect to its clients and not disclose to

third parties (with the exception of the

Secretary or the applicable State

program’s governing State official or

their authorized representatives) any

business-related information concerning

any client obtained while implementing

these regulations except as authorized

by regulation. A certifying agent must

make the following information

available to the public: (1) Certification

certificates issued during the current

and 3 preceding calender years; (2) a list

of producers and handlers whose

operations it has certified, including for

each the name of the operation, type(s)

of operation, and the effective date of

the certification, during the current and

3 preceding calender years; and (3) the

results of laboratory analyses for

residues of pesticides and other

prohibited substances conducted during

the current and 3 preceding calender

years. A certifying agent may make

other business information available to

the public if permitted in writing by the

producer or handler. This information

will be made available to the public at

the public’s expense.

An accredited certifying agent must

maintain records according to the

following schedule: (1) Records

obtained from applicants for

certification and certified operations

must be maintained for not less than 5

years beyond their receipt; (2) records

created by the certifying agent regarding

applicants for certification and certified

operations must be maintained for not

less than 10 years beyond their creation;

and (3) records created or received by

the certifying agent pursuant to the

accreditation requirements, excluding

any records covered by the 10-year

requirement must be maintained for not

less than 5 years beyond their creation

or receipt. Examples of records obtained

from applicants for certification and

certified operations include organic

production system plans, organic

handling system plans, application

documents, and any documents

submitted to the certifying agent by the

applicant/certified operation. Examples

of records created by the certifying agent

regarding applicants for certification

and certified operations include

certification certificates, notice of denial

of certification, notification of

noncompliance, notification of

noncompliance correction, notification

of proposed suspension or revocation,

notification of suspension or revocation,

correspondence with applicants and

certified operations, on-site inspection

reports, documents concerning residue

testing, and internal working papers and

memoranda concerning applicants and

certified operations. Examples of

records created or received by the

certifying agent pursuant to the

accreditation requirements include

operations manuals; policies and

procedures documents (personnel,

administrative); training records; annual

performance appraisals and supporting

documents; conflict of interest

disclosure reports and supporting

documents; annual program evaluation

working papers, memoranda, letters,

and reports; fee schedules; quarterly

reports of operations granted

certification; application materials

submitted to the NOP; correspondence

received from and sent to USDA; and

annual reports to the Administrator.

The certifying agent must make all

records available for inspection and

copying during normal business hours

by authorized representatives of the

Secretary and the applicable State

program’s governing State official. In the

event that the certifying agent dissolves

or loses its accreditation, it must

transfer to the Administrator and make

available to any applicable State

program’s governing State official all

records or copies of records concerning

its certification activities.

Certifying agents are also required to

prevent conflicts of interest and to

require the completion of an annual

conflict of interest disclosure report by

all personnel designated to be used in

the certification operation. Coverage of

the conflict of interest provisions

extends to immediate family members

of the certifying agent; responsibly

connected persons of the certifying

agent; and any employee, inspector,

contractor, or other personnel of the

certifying agent. A certifying agent may

not certify a production or handling

operation if the certifying agent or a

responsibly connected party of such

certifying agent has or has held a

commercial interest in the production or

handling operation, including an

immediate family interest or the

provision of consulting services, within

the 12-month period prior to the

application for certification. A certifying

agent may certify a production or

handling operation if any employee,

inspector, contractor, or other personnel

13574 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

of the certifying agent has or has held

a commercial interest, including an

immediate family interest or the

provision of consulting services, within

the 12-month period prior to the

application for certification. However,

any such person must be excluded from

work, discussions, and decisions in all

stages of the certification process and

the monitoring of the entity in which

they have or have held a commercial

interest. The acceptance of payment,

gifts, or favors of any kind, other than

prescribed fees, from any business

inspected is prohibited. However, a

certifying agent that is a not-for-profit

organization with an Internal Revenue

Code tax exemption or, in the case of a

foreign certifying agent, a comparable

recognition of not-for-profit status from

its government, may accept voluntary

labor from certified operations.

Certifying agents are also prohibited

from providing advice concerning

organic practices or techniques to any

certification applicant or certified

operation for a fee, other than as part of

the fees under the certification program.

No accredited certifying agent may

exclude from participation in or deny

the benefits of the NOP to any person

due to discrimination because of race,

color, national origin, gender, religion,

age, disability, political beliefs, sexual

orientation, or marital or family status.

Renewal of Accreditation. To avoid a

lapse in accreditation, certifying agents

must apply for renewal of accreditation

6 months prior to the fifth anniversary

of issuance of the notification of

accreditation and each subsequent

renewal of accreditation. The

accreditation of certifying agents who

make timely application for renewal of

accreditation will not expire during the

renewal process. The accreditation of

certifying agents who fail to make

timely application for renewal of

accreditation will expire as scheduled

unless renewed prior to the scheduled

expiration date. Certifying agents with

an expired accreditation must not

perform certification activities under the

Act and these regulations.

Following receipt of the certifying

agent’s annual report and fees, the

results of a site evaluation, and, when

applicable, the reports submitted by a

peer review panel, the Administrator

will determine whether the certifying

agent remains in compliance with the

Act and regulations and should have its

accreditation renewed. Upon a

determination that the certifying agent

is in compliance with the Act and

regulations, the Administrator will issue

a notice of renewal of accreditation. The

notice of renewal will specify any terms

and conditions that must be addressed

by the certifying agent and the time

within which those terms and

conditions must be satisfied. Renewal of

accreditation will be for 5 years. Upon

a determination that the certifying agent

is not in compliance with the Act and

regulations, the Administrator will

initiate proceedings to suspend or

revoke the certifying agent’s

accreditation. Any certifying agent

subject to a proceeding to suspend or

revoke its accreditation may continue to

perform certification activities pending

resolution of the proceedings to suspend

or revoke the accreditation.

Accreditation—Changes Based on

Comments

This subpart differs from our first

proposal in several respects as follows:

(1) Equivalency of Imported Organic

Products. We have removed the

regulations on equivalency of imported

organic products included in the first

proposal. In this proposal, we have

added foreign certifying agents as

entities eligible for accreditation as

certifying agents qualified to certify

domestic and foreign organic

production and handling operations. We

have also added to subpart A definitions

for private entity and State entity. We

have defined ‘‘private entity’’ as any

domestic or foreign nongovernmental

for-profit or not-for-profit organization

providing certification services. We

have defined ‘‘State entity’’ as any

domestic or foreign governmental

subdivision providing certification

services.

In commenting on the first proposal,

several commenters expressed

confusion as to how the Secretary

would determine equivalency of

imported organic products. They also

expressed confusion as to how the

Secretary would ensure that imported

products met the same requirements as

those produced domestically. We have

addressed these concerns by adding

foreign certifying agents as private or

state entities that may be accredited

under the NOP. We have also provided

that USDA will accept a foreign

certifying agent’s accreditation to certify

organic production or handling

operations if: (1) USDA determines,

upon the request of a foreign

government, that the standards under

which the foreign government authority

accredited the foreign certifying agent

meet the requirements of this part; or (2)

the foreign governmental authority that

accredited the certifying agent acted

under an equivalency agreement

negotiated between the United States

Government and the foreign

government. These changes ensure that

all certifying agents, including foreign

private and state certifying agents, will

be required to meet the same

requirements to be recognized as

qualified to certify organic production

or handling operations. This change

provides foreign private and state

certifying agents with transparent

standards for accreditation.

A commenter raised concerns that we

acted in violation of international

agreements and domestic policy by

proposing rules that were contrary to

internationally accepted organic

standards and, thus, created an

unacceptable barrier to trade. The Act

directs the Secretary to establish

national standards governing the

marketing of certain agricultural

products as organically produced

products. In accordance with our

international agreements, this proposal

ensures that, with respect to

accreditation under this subpart,

products imported from the territory of

any country are being accorded

treatment no less favorable than that

accorded to products of U.S. origin.

However, in accordance with our

international trade agreements and upon

implementation of this program, the

Administrator will give positive

consideration to accepting as equivalent

technical regulations of other countries,

even if these regulations differ from our

own, provided such regulations fulfil

the objectives of this proposed program.

Any such equivalency agreements will

be negotiated on a case-by-case basis,

and ample opportunity for public

comment will be provided before and

during the negotiation process.

Two commenters requested that the

Secretary recognize international

accreditation systems for foreign organic

certification programs and establish the

requirements for approval of such

systems in this proposal. We have

instead proposed for the purposes of

this rule that all certifying agents,

regardless of their country of origin,

meet the same requirements for

accreditation through the provisions of

this subpart.

One commenter requested that all

imported organic products be labeled by

their respective country of origin. The

purpose of this proposal is to provide

the requirements for the marketing of

agricultural products in the United

States that are labeled or sold as organic.

The issue of country-of-origin labeling

of imported products is not related to

this proposal or the Act. Further,

regulations pertaining to the labeling of

organic agricultural products should not

be used to enforce country-of-origin

labeling requirements.

Several commenters stated that the

first proposal did not take into account

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13575

the use of equivalency to ensure the

marketing of U.S. organic products in

foreign markets. The Department will

work to oppose other countries’ organic

regulations that would prohibit entry of

U.S. organic product produced under

the Act or these regulations. As

appropriate, the U.S. Government may

represent U.S. organic interests in

international government-to-government

bodies. However, neither of these

objectives is intended to be achieved by

this rule.

(2) Accreditation Requirements

Regarding Expertise of Employees. We

have added a new regulation to the

general requirements for accreditation.

This regulation requires that the

certifying agent ensure that its

responsibly connected persons,

employees, and contractors with

inspection, analysis, and decisionmaking responsibilities have sufficient

expertise in organic production or

handling techniques to sufficiently

perform the duties assigned. Certifying

agents were required under the first

proposal to use a sufficient number of

adequately trained personnel, including

inspectors. They were also required to

conduct an annual performance

appraisal of each inspector.

Commenters felt that the proposed

rule did not sufficiently ensure that

certifying agents would employ

qualified individuals. One of these

commenters requested that we require

organic certification inspectors to

participate in an inspector accreditation

program, such as that offered by the

Independent Organic Inspectors

Association. We believe that inspector

participation in an inspector

accreditation program should be left to

the discretion of the inspector and

certifying agent. However, we believe

that the new requirement combined

with the requirements from the first

proposal should ensure that responsibly

connected persons, employees, and

contractors of an accredited certifying

agent are qualified to perform their

inspection, analysis, and decisionmaking duties. This new regulation is

found at § 205.501(a)(5) of this proposal.

(3) Recordkeeping Requirements. We

have proposed a new § 205.510(b),

which identifies three categories of

records and their retention periods. This

new paragraph was added to address

commenter concern that the

requirement that an accredited

certifying agent maintain records about

all of its activities for 10 years was

excessive and unnecessary. Commenters

suggested a 5- to-7-year retention

period. We agree that for some records,

a retention period of 10 years may be

excessive. Accordingly, in this proposal,

we are proposing three retention

periods. First, records created by the

certifying agent regarding applicants for

certification and certified operations

would have to be maintained for not

less than 10 years beyond their creation.

We believe this retention period to be

consistent with the Act’s requirement

that the certifying agent maintain all

records concerning its activities for a

period of not less than 10 years. Second,

records obtained from applicants for

certification and certified operations

would have to be maintained for not

less than 5 years beyond their receipt.

This retention period is the same as that

required by the Act for the retention of

records by the certified operation. Since

the certified operation can dispose of its

records 5 years after their creation, the

certifying agent should also be able to

dispose of those records it receives from

the certified operation 5 years after their

receipt. Third, records created or

received by the certifying agent for

USDA accreditation would have to be

maintained for not less than 5 years

beyond their creation or receipt.

(4) Conflict of Interest Provisions. We

have made three changes which we

believe will strengthen the conflict of

interest provisions. We have made these

changes because we concur with the

comment from a research foundation

stating that the provisions for

preventing conflicts of interest needed

to be significantly strengthened. First,

we have added a new

§ 205.501(a)(11)(v), which requires the

completion of an annual conflict of

interest disclosure report by all

personnel designated to be used in the

certification of an operation, including

administrative staff, certification

inspectors, members of any certification

review and program evaluation

committees, contractors, and all parties

responsibly connected to the certifying

agent. Second, coverage of the conflict

of interest provisions has been extended

to immediate family members of the

certifying agent; responsibly connected

persons of the certifying agent; and any

employee, inspector, contractor (to be

used in the certification of an

operation), or other personnel of the

certifying agent. Immediate family

members would include the spouse;

minor children, including legally

adopted children; or blood relatives

who reside in the immediate household

of a certifying agent; responsibly

connected person of the certifying agent;

or any employee, inspector, contractor,

or other personnel of the certifying

agent. Third, this proposal lists

contractors among those persons who

are prohibited from accepting payment,

gifts, or favors of any kind, other than

regular fees from any business inspected

by the certifying agent. This addition,

which is found at § 205.501(a)(11), was

made to clarify that contractors,

including contract inspectors, are

prohibited from accepting payment,

gifts, or favors of any kind, other than

regular fees.

(5) Use of Voluntary Labor. We have

added an exception to the prohibition of

the acceptance of payment, gifts, or

favors of any kind. The exception

provides that any certifying agent that is

a not-for-profit organization with an

Internal Revenue Code tax exemption

or, in the case of a foreign certifying

agent, a comparable recognition of notfor-profit status from its government

may accept voluntary labor from

certified operations. Internal Revenue

Code tax exemption or, in the case of a

foreign certifying agent, a comparable

recognition from its government is

required as verification of the certifying

agent’s status as a not-for-profit

organization. This change was made to

clarify our original intent that not-forprofit certifying agents would be

allowed to accept volunteer labor from

persons certified by the certifying agent.

In the preamble to the first proposal,

we stated that we would not consider a

volunteer who performs services for a

not-for-profit certifying agent as

providing favors to any particular

individual in that agency and, therefore,

would not consider the certifying agent

as being in a conflict of interest

situation by accepting such services

from volunteers. We have made this

clarification because a commenter

expressed the belief that the certifying

agent should be allowed to receive

donations of time, food, and money

beyond any mandatory fees from

persons they certify. The Act prohibits

certifying agents from accepting

payments, gifts, or favors of any kind

from a business inspected, other than

prescribed fees. Accordingly, this

exception is limited to acceptance of

voluntary labor by not-for-profit

certifying agents. While

§ 205.501(a)(11)(iii) prohibits the

acceptance of payments, gifts, or favors

of any kind, other than prescribed fees,

from any business inspected for

certification as a producer or handler of

organic agricultural products, the

paragraph does not prohibit the

accredited certifying agent from

accepting payments, gifts, or favors of

any kind, including time, food, or

money, from persons for whom they do

not provide inspections for certification

as a producer or handler of organic

agricultural products.

13576 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

(6) Certification Fees. We have

removed the requirement that a

certifying agent charge only such fees to

applicants for certification and

operations it certifies that the Secretary

determines are reasonable. We have

made this change because we concur

with those commenters who expressed

the belief that certifying agents should

be permitted to set their own fees

without the approval of the Secretary.

However, we continue to believe that

the Administrator should retain

oversight of the fees, not for the purpose

of setting the fees or of dictating the

level of the fees, but for the purpose of

determining if any certifying agent’s fees

are so high as to be unreasonable and to

ensure that the schedule of fees filed

with the Administrator are applied

uniformly and in a nondiscriminatory

manner. The Administrator should also

retain the ability to inform a certifying

agent that its fees appear to be

unreasonable and to require a

justification for the level of fees set by

the certifying agent. We further believe

that the Administrator should retain the

ability to investigate the level of fees

charged by an accredited certifying

agent if a complaint is made or if

compelling circumstances warrant such

an investigation. Accordingly, we have

proposed at § 205.501(a)(15) that a

certifying agent must charge applicants

for certification and certified production

and handling operations only those fees

and charges that it has filed with the

Administrator. We have also included at

§ 205.642 regulations with respect to

fees charged by certifying agents to

producers and handlers. Section

205.642 is discussed under fees in

subpart G of this preamble.

(7) State Standards That Vary From

the National Organic Program. We have

added an exception to the regulation

which prohibited certifying agents from

requiring, as a condition for use of the

certifying agent’s identifying mark,

compliance with any farming or

handling requirements other than those

provided for in the Act and regulations.

The exception provides that the

requirement does not apply to States

with more restrictive requirements

approved by the Secretary or private

entity certifying agents certifying

production or handling operations

within States with more restrictive

requirements approved by the Secretary.

This change was made because we agree

with the State commenters who stated

that the prohibition on requiring

compliance with any farming or

handling requirements other than those

provided for in the Act and regulations

would prohibit States from requiring

that their more restrictive standards,

approved by the USDA, be met as a

requirement for use of the State’s logo

on organically produced products. We

did not intend to prohibit States from

requiring that their more restrictive

standards be met as a requirement for

use of the State’s logo on organically

produced products. Including this

exception in § 205.501(b)(2) will permit

States with more restrictive

requirements approved by the Secretary

and private entity certifying agents

certifying production or handling

operations within the borders of such

States to require that the State’s more

restrictive standards be met as a

requirement for use of their logo or

other identifying mark on organically

produced products.

Certifying agents may not require a

certified operation to meet production

or handling standards greater than those

established by the Department or, when

applicable, an approved State organic

certification program as a condition for

using its logo or other identifying mark.

However, a certifying agent may verify,

upon the request of a producer or

handler certified by the certifying agent,

that the producer or handler is meeting

contractual specifications which

include requirements in addition to

those of the Act and regulations.

(8) Time Period for Public Access to

Information. For the requirement that

certifying agents describe the

procedures they will use for making

information available to the public, we

have changed the time period from

‘‘during the 10-year period preceding

the receipt of the request from the

public’’ to ‘‘during the current and 3

preceding calendar years.’’ Commenters

stated that the required 10-year period

was excessive and unnecessary. The Act

requires public access to certification

documents and laboratory analyses that

pertain to certification. However, the

Act does not specify that a certifying

agent must provide access to its records

throughout their 10-year retention

period. We agree with the commenters

that public access to the records the

certifying agent is required to keep

should be limited to a reasonable period

short of the full retention period. Such

a reasonable period, we believe, would

be the current calendar year and the 3

calendar years preceding the calendar

year of the request. Accordingly,

§ 205.504(b)(5) requires certifying agents

to describe the procedures they will use

for making information available to the

public during the current and 3

preceding calendar years. This time

period will lessen the burden on

certifying agents while assuring

reasonable public access to such

records.

(9) Scope of Information for Public

Release. We have expanded the scope of

information for public release which

must be included in the list of

producers and handlers whose

operations the certifying agent has

certified. Specifically, certifying agents

will have to include the name of the

operation and type(s) of operation in its

list of producers and handlers it has

certified. This change is included in

section § 205.504(b)(5)(ii). Commenters

requested that the list be expanded to

include the name of the operation, its

physical location(s), certification

history, type(s) of operation, acreage

(when applicable), and person

responsible for organic regulation

compliance. While we agree that the

name of the operation and type(s) of

operation should be available to the

public, we believe that the certified

operation’s physical location(s),

certification history, and acreage are

confidential information which has no

relationship to the operation’s status as

a certified organic operation. Therefore,

such information should only be made

available with the written consent of the

certified operation. We also believe that

it is unnecessary to list a person

responsible for organic regulation

compliance since the applicant

ultimately has that responsibility.

Therefore, these requested additions

have not been made. We have also

removed the separate requirement that

certifying agents identify for the public

the organic agricultural products

produced by each certified operation.

We have taken this action because the

information is available on the

certificates and the list of producers and

handlers required to be released by the

certifying agent to the public. These

requirements are found at

§ 205.504(b)(5)(i) and (ii).

(10) Release of Nonconfidential

Business Information. We have removed

the requirement that certifying agents

provide a description of the procedures

to be used to make nonconfidential

business information, as permitted by

the producer or handler and approved

by the Secretary, available to the public.

This requirement has been replaced

with the requirement that the certifying

agent provide a description of the

procedures to be used to make other

business information, as permitted in

writing by the producer or handler,

available to the public. Commenters

objected to the requirement that the

Secretary approve the release of

nonconfidential business information

that the producer or handler had

authorized the certifying agent to

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release. They believed that this

requirement lacked justification and

created unnecessary costs. We concur

that this requirement is unnecessary.

However, we believe that the producer’s

or handler’s approval must be obtained

in writing, which is reflected in this

proposal at § 205.504(b)(5)(v).

(11) Submission of Applicant’s

Financial Policies and Procedures. We

have removed the requirement that a

certifying agent include with its

application for accreditation a

description of its policies and

procedures for collection and

disbursement of funds and documents

that identify anticipated sources of

income, including all fees to be

collected from producers and handlers.

Commenters stated that they did not

believe the submission of applicant

financial policies and procedures was

necessary. We have decided that the

information requested probably would

not fully meet our needs in determining

that certification decisions were not

influenced by the certifying agent’s

concern for the certification decision’s

financial impact on the certifying agent

or in determining compliance with the

conflict of interest provisions of the Act

and these regulations. Accordingly, this

requirement is not included in this

proposal.

(12) Submission of Information

Concerning Current Certification

Activities. We have changed the

voluntary submission of information

and documents concerning current

certification activities to a required

submission. Commenters stated that the

submission of a list of all farms, wildcrop harvesting operations, and

handling operations currently certified

by the applicant should be required.

They went on to say that the submission

of copies of the inspection reports and

certification evaluation documents for

production or handling operations

certified by the applicant during the

previous year should remain optional.

They also said the submission of results

from any accreditation process of the

applicant’s operation by an accrediting

body during the previous year for the

purpose of evaluating its certification

activities should remain optional.

We agree with the commenters that a

list of all operations currently certified

by the applicant should be a required

submission. We also believe that copies

of inspection reports, certification

evaluation documents, and

accreditation results should be a

required submission from all applicants

currently certifying production or

handling operations. Accordingly, at

§ 205.504(d) we have made the

submission of information and

documents concerning current

certification activities mandatory for

certifying agents currently certifying

production or handling operations.

This change has been made because of

the value such information and

documents would have in assisting the

Department in evaluating an applicant

for accreditation. However, we have

limited the submission of inspection

reports and certification evaluation

documents for production and handling

operations certified by the applicant.

The applicant is required to submit

copies of at least 3 different inspection

reports and certification evaluation

documents for production or handling

operations certified by the applicant

during the previous year for each area

of operation for which accreditation is

requested. We have limited the

submission to reduce the reporting

burden on certifying agents. The

Administrator may, however, require

that the certifying agent submit

additional inspection reports and

certification evaluation documents.

We recognize that a newly organized

certifying agent with no experience

would be unable to supply the

information. An applicant’s inability to

provide the information and

documentation required by the revised

paragraph due to lack of experience

would not be prejudicial to the

Department’s evaluation of the

application.

(13) Site Evaluations. We have revised

the site evaluation provisions to clarify

the scope of an evaluation, to specify

that the evaluation will be arranged and

conducted by a representative of the

Administrator, and to specify when

evaluations shall or may be conducted.

These changes are made in response to

commenters who suggested adding

details to the regulatory text regarding

the nature of site evaluations. The

revised section provides that site

evaluations of accredited certifying

agents shall: (1) Be conducted for the

purpose of examining the certifying

agent’s operations and evaluating its

compliance with the Act and

regulations; (2) include an on-site

review of the certifying agent’s

certification procedures, decisions,

facilities, administrative and

management systems, and production or

handling operations certified by the

certifying agent; (3) be conducted by a

representative(s) of the Administrator;

and (4) be conducted after application

for renewal of accreditation but prior to

the issuance of a notice of renewal of

accreditation. This revised section

provides that an initial site evaluation of

an accreditation applicant would be

conducted before or within a reasonable

period of time after issuance of the

applicant’s notification of accreditation.

Section 205.508 also provides that one

or more site evaluations will be

conducted during the period of

accreditation to determine whether an

accredited certifying agent is complying

with the general requirements for

accreditation.

(14) Eligibility for Peer Review Panels.

We have added a new regulation

addressing eligibility for peer review

panels. Commenters expressed concern

that peer review pool applicants be free

of conflicts of interest and possess the

necessary expertise in organic

production or handling. The first

proposal provided that candidates for

membership in the peer review panel

pool would be required to submit a

letter to the Program Manager of the

NOP requesting appointment,

describing their qualifications, and

identifying conflicts of interest. We

believe that there is value to the

applicants for membership in the peer

review panel pool and the general

public in addressing eligibility for peer

review panels in the regulatory text.

Accordingly, we have added a new

regulation at § 205.509(b) which

provides that applicants for membership

in the peer review panel pool must

provide the Administrator with a

written description and, upon request,

supporting documentation of their

qualifications to conduct peer reviews.

Such description must include

information concerning the applicant’s

training and expertise in organic

production or handling methods and in

evaluating whether production or

handling operations are using a system

of organic production or handling.

Applicants must also address their

possible limitations on availability to

serve. Further, applicants would be

required to include information

concerning their commercial interests

and those of their immediate family

members, within the 12-month period

prior to application, with any person

who may seek to become or who is an

accredited certifying agent. No person

who has or has had a commercial

interest, including an immediate family

interest or the provision of consulting

services, in an applicant for

accreditation or renewal of accreditation

will be appointed to or accept

appointment to a panel evaluating the

applicant. This provision was added for

the purpose of avoiding conflicts of

interest by peer reviewers. This new

regulation also provides that persons

accepted to the pool may serve until

notified that their appointment has been

rescinded by the Administrator or until

13578 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

they are no longer qualified, whichever

occurs first.

(15) Composition of Peer Review

Panels. We have revised the regulations

concerning the composition of peer

review panels. Commenters requested

that the peer review panel consist of at

least two members who are not USDA

employees, rather than not AMS

employees. We agree with this

suggested change, which clarifies what

had been our intent. This change is

included in § 205.509(c). Section

205.509(c) provides that peer review

panels shall consist of at least three but

no more than five members. This

section provides that peer review panels

must include a Department

representative who will preside over the

panel and no fewer than two members

from the peer review pool who possess

sufficient expertise in the relevant areas

of accreditation. Additionally, section

205.509(c) provides that peer review

panels may include up to two members

with expertise in other disciplines,

including organizational management

and finance; member(s) from the

approved State organic certification

program when the applicant is a private

entity seeking accreditation within the

State; and member(s) from a foreign

government’s organic program when the

applicant is a private entity that will

operate within the country. We have

added authorization for these additional

members to broaden the scope and

depth of expertise available to peer

review panels.

Commenters also expressed concern

that the peer review panels consist of at

least one member from a State organic

certification program. We do not believe

that the composition of peer review

panels regulations needs to be amended

to accommodate this concern. To the

extent possible, accredited private

certifying agents will peer review

private certifying agents, and accredited

State certifying agents will peer review

State certifying agents.

(16) Renewal of Accreditation. We

have revised the renewal of

accreditation provisions to, among other

things, require that an accredited

certifying agent’s application for

accreditation renewal be received 6

months prior to the fifth anniversary of

issuance of the notification of

accreditation and each subsequent

renewal of accreditation. The first

proposal provided that an accredited

certifying agent would request renewal

of accreditation on or before the fifth

anniversary of issuance of the notice of

confirmation of accreditation and each

subsequent renewal of accreditation.

Commenters expressed concern about

whether the accredited certifying agent’s

accreditation would lapse during the

renewal process. They suggested that

certifying agents should submit their

application for renewal of accreditation

6 months prior to the fifth anniversary

of issuance of the notice of

confirmation.

We believe that clarification regarding

the status of the certifying agent’s

accreditation during the renewal

process is appropriate. We also concur

with the commenters’ suggestion that

certifying agents should submit their

applications for renewal of accreditation

6 months prior to the fifth anniversary

of issuance of the notice of

confirmation. We have replaced ‘‘notice

of confirmation of accreditation,’’

however, with ‘‘notification of

accreditation’’ because this proposal

eliminates the section on confirmation

of accreditation. Accordingly, we have

provided in this proposal at § 205.510(c)

that: (1) An accredited certifying agent’s

application for accreditation renewal

must be received 6 months prior to the

fifth anniversary of issuance of the

notification of accreditation and each

subsequent renewal of accreditation; (2)

the accreditation of certifying agents

who make timely application for

renewal of accreditation will not expire

during the renewal process; (3) the

accreditation of certifying agents who

fail to make timely application for

renewal of accreditation will expire as

scheduled unless renewed prior to the

scheduled expiration date; (4) certifying

agents with an expired accreditation

must not perform certification activities

under the Act and regulations; and (5)

following receipt of the information

submitted by the certifying agent, the

results of any site evaluation, and, when

applicable, the reports submitted by a

peer review panel, the Administrator

will determine whether the certifying

agent remains in compliance with the

Act and regulations and should have its

accreditation renewed.

These changes would provide the

Department with sufficient time to fully

process the certifying agent’s

application for accreditation renewal

prior to the accreditation’s scheduled

date of expiration. This revised

regulation also clarifies that a certifying

agent’s accreditation will not expire

during the accreditation renewal

process if the certifying agent has made

timely application for renewal. It also

makes clear that the accreditation of

certifying agents who fail to make

timely application for renewal of

accreditation will expire as scheduled

unless renewed prior to the scheduled

expiration date. This regulation also

provides that certifying agents with an

expired accreditation must not perform

certification activities under the Act and

these regulations.

(17) Denial of Accreditation. We have

revised the denial of accreditation

regulations to clarify that after receipt of

a notification of noncompliance, the

applicant may submit a description of

the actions taken to correct the noted

deficiencies and evidence

demonstrating such corrections, rather

than submitting a new application. We

have taken this action because

commenters were confused by our

reference to a new application in the

denial of accreditation regulations. The

denial of accreditation regulations are

found at § 205.507 in this proposal.

Accreditation—Changes Requested But

Not Made

This subpart retains from our first

proposal regulations on which we

received comments as follows:

(1) Durations of Accreditation and

Reporting Requirements. Commenters

expressed concern regarding the

duration of accreditation and whether

the interval of required reporting is

adequate. An association expressed

concern regarding the economic impact

of accreditation on small certifying

agents. This commenter stated that

small certifying agents should not be

accredited more often than every 5

years. An international organic

federation expressed the belief that

accreditation for 5 years is too long. The

commenter went on to say that

certification bodies are expanding

rapidly and that annual reports cannot

be relied upon to fully convey the

consequent changes. This commenter

believes that many of the conditions of

accreditation may relate to operational

aspects that cannot be addressed in an

annual report.

Annual reporting by the certifying

agent, under this proposal, would

provide: (1) A complete and accurate

update of applicant information and

expertise and ability information

previously submitted; (2) information

supporting any changes being requested

in the areas of accreditation; (3) the

measures that were implemented in the

previous year and any measures to be

implemented in the coming year to

satisfy any terms and conditions

determined by the Administrator to be

necessary as specified in the most recent

notification of accreditation; and (4) the

results of the most recent inspector

performance appraisal and program

evaluation and adjustments to the

certifying agent’s operation and

procedures implemented and intended

to be implemented in response to the

appraisals and evaluations. This

proposal includes a requirement at

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13579

§ 205.501(a)(14) that the certifying agent

submit to the Administrator a copy of

each notification of: (1) Denial of

certification; (2) noncompliance; (3)

noncompliance correction; (4) proposed

suspension or revocation; and (5)

suspension or revocation,

simultaneously with its issuance.

We believe that these reporting

requirements, coupled with feedback

from applicants for certification,

certified operations, and other

interested parties, will provide the

Department with sufficient information

regarding the certifying agent and its

operation to determine whether a site

visit is necessary to evaluate the

certifying agent’s suitability to remain

accredited. Under this proposal, the

Department will conduct one or more

site evaluations during the period of

accreditation to determine whether the

accredited certifying agent is complying

with the requirements for accreditation.

Accordingly, we believe the duration of

accreditation period first proposed was

correct, and we are, therefore,

reproposing this time period at

§ 205.500(b).

(2) Performance Appraisals and

Program Evaluation. Comments from

State departments of agriculture and

some certifiers indicated that the annual

inspector performance appraisal and

annual program evaluation

requirements duplicated State

requirements. The commenters asked

what the required scope and depth of

evaluations was expected to be, whether

third party evaluators would be required

to be used to assess the performance of

the operation, and whether existing

performance appraisal and program

evaluation practices of a certifying agent

would be used to meet the annual

inspector performance appraisal and

program evaluation requirements.

We do not intend for States to develop

dual performance appraisal and

program evaluation programs. We

believe that performance appraisals and

program evaluations conducted to meet

State requirements will also meet the

requirements of this proposal. State and

private agency personnel performance

appraisals and program evaluations

would be expected to be consistent with

good management practices and

appropriate to the organization’s size

and structure. This could be different

for different organizations. Therefore,

we are not prescribing the specific

performance appraisal system or

instrument to be used to assess

inspector performance, the specific

program evaluation methods that must

be used, or that third parties must

conduct the required program

evaluation. Accordingly, we have not

changed the questioned provisions,

which appear at § §205.501(a)(6) and

(7). We have, however, revised

§ 205.501(a)(7) to clarify that the annual

program evaluation can be conducted by

the certifying agency staff, an auditing

entity, or a consultant who has expertise

to conduct program evaluations.

(3) ‘‘Open Records’’ Requirements.

Commenters expressed the belief that

confidentiality requirements for

certifying agents might conflict with

State requirements for ‘‘open records.’’

We recognize this potential for

conflicting requirements. Records

collected and maintained under the

NOP are subject to the confidentiality

provisions of the Act and these

regulations. However, a State-entity

certifying agent will be subject to its

State ‘‘open records’’ laws when such

laws conflict with the confidentiality

provisions of the Act and these

regulations. Records collected and

maintained under the NOP by a private

entity certifying agent will always be

subject to the confidentiality

requirements of the Act and these

regulations. Accordingly, pursuant to

the Act, we are reproposing the

confidentiality provisions at

§ 205.501(a)(10).

To clarify that authorized

representatives of the Secretary or the

applicable State program’s governing

State official may act on behalf of the

Secretary or the State program’s

governing State official and must be

given access to the records, we have

added the phrase, ‘‘or their authorized

representatives,’’ to § 205.501(a)(10).

Such representative could be a member

of the NOP staff, a Department

compliance officer, or other official.

This provision is standard practice and

is necessary for Government oversight of

a regulatory program.

(4) List of Confidential Records. One

commenter requested a definitive list of

the records that had to be kept

confidential. We cannot create such a

list because it is not possible to describe

every record that would be

characterized as a business-related

record. Such records would include,

however, organic production and

handling plans, records that are related

to trade secrets and commercial or

financial information obtained from

applicants for certification, and records

or information compiled for an

investigation into alleged

noncompliance with the Act and

regulations.

(5) Time Period for Prohibition of

Commercial Interest. We received many

comments regarding the prohibition of

commercial interest in an organic

production or handling operation

during the 12 months prior to

certification. Several States and industry

associations stated that the prohibition

of commercial interest should apply to

the 12 months after as well as the 12

months prior to certification. These

commenters offered no reasoning for

their position. A research foundation

recommended that the prohibition of

commercial interest should be for 3

years before and after the application for

certification. This commenter stated that

the conflict of interest provisions

needed significant strengthening. A

producer commenter stated that the

prohibition of commercial interest

should be for an indefinite period, not

for 12 months. Some commenters

recommended that certifying agents and

responsible parties and employees of

certifying agents be barred from

accepting employment for 1 to 3 years

from any certified production or

handling operation in which they

participated in any manner in the

operation’s certification. An

accreditation service stated it believed

there would be a conflict of interest

should a consulting or business

connection arise between an inspector

and a production or handling operation

following the site evaluation. This

commenter presented the example of an

inspector being offered employment

during the site evaluation but not taking

the position until 6 months after the site

evaluation. Many commenters, however,

supported our proposed prohibition of

commercial interest in an organic

operation during the 12 months prior to

certification.

We disagree with the

recommendations calling for a longer

precertification conflict of interest

prohibition period and with the

recommendations for a postcertification

prohibition period for those persons no

longer associated with the certifying

agent. Regarding the recommendations

for a longer precertification prohibition

period, we continue to believe that 12

months is a sufficient period to ensure

that any previous commercial interest

would not create a conflict of interest

situation for two reasons. First, this time

period is consistent with similar

provisions governing conflicts of

interest for government employees.

Second, we have added a new section,

205.501(a)(11)(v), which requires the

completion of an annual conflict of

interest disclosure report by all

personnel designated to be used in the

certification operation, including

administrative staff, certification

inspectors, members of any certification

review and program evaluation

committees, contractors, and all parties

13580 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

responsibly connected to the

certification operation. This

requirement will assist certifying agents

in complying with the requirements to

prevent conflicts of interest. We also

continue to believe that a longer

prohibition period would have the effect

of severely curtailing most certifying

agents’ ability to comply with the Act’s

requirement that they employ persons

with sufficient expertise to implement

the applicable certification program.

Accordingly, we have decided to

repropose the prohibition on

commercial interest in an applicant for

certification for a 12-month period prior

to the application for certification at

section § 205.501(a)(11).

Regarding the recommendations for a

postcertification prohibition period for

those persons no longer associated with

the certifying agent, we believe such a

period is unnecessary. We take this

position because certifying agents and

their responsibly connected parties,

employees, inspectors, contractors, and

other personnel are prohibited from

engaging in activities or associations at

any time during their affiliation with the

certifying agent which would result in

a conflict of interest. While associated

with the certifying agent, all employees,

inspectors, contractors, and other

personnel are expected to disclose to the

certifying agent any offer of employment

they have received and not immediately

refused. They are also expected to

disclose any employment they are

seeking and any arrangement they have

concerning future employment with an

applicant for certification or a certified

operation. The certifying agent would

then have to exclude that person from

work, discussions, and decisions in all

stages of the certification or monitoring

of the operation making the

employment offer. If a certifying agent

or a responsibly connected party of the

certifying agent has received and not

immediately refused an offer of

employment, is seeking employment, or

has an arrangement concerning future

employment with an applicant for

certification, the certifying agent may

not accept or process the application.

Further, certifying agents and

responsibly connected parties may not

seek employment or have an

arrangement concerning future

employment with an operation certified

by the certifying agent while associated

with that certifying agent. Certifying

agents and responsibly connected

parties must sever their association with

the certifying agent when such person

does not immediately refuse an offer of

employment from a certified operation.

Accordingly, we have decided not to

include a postcertification prohibition

period in this proposal.

(6) Conflicts of Interest. Some

commenters stated that they understood

the proposed conflict of interest

provisions to prohibit certifying agents

from certifying any organic operation

owned or operated by a member of the

certifying agent’s board of directors or

from certifying any organic operation

owned or operated by an employee of

the certifying agent. One commenter

stated that because certification arose

from the ranks of organic farmers, there

are many certification personnel,

including inspectors, who also farm or

have family who farm. This commenter

stated that it should be permissible for

a certifying agent to review and certify

an organic operation owned or operated

by a responsibly connected person or

employee, provided that the responsibly

connected person or employee is

excluded from the decision-making

process with respect to the organic

operation to be certified.

The commenters are correct in their

interpretation that the first proposal

prohibited certifying agents from

certifying an operation when the

certifying agent or a responsibly

connected party of such certifying agent

has or has held a commercial interest in

the operation. This prohibition is

limited, however, to the 12-month

period prior to the application for

certification. The first proposal did not

prohibit certifying agents from certifying

an operation when an employee of the

certifying agent has or has held a

commercial interest in the operation.

The first proposal prohibited a

certifying agent from using an employee

in any phase of the certification process

when such employee has or has held a

commercial interest in an operation

making application for certification

within the 12-month period prior to the

application for certification. A

responsibly connected party is any

person who is a partner, officer,

director, holder, manager, or owner of

10 percent or more of the voting stock

of an applicant for or a recipient of

certification or accreditation.

We believe that a certifying agent and

a responsibly connected party of such

certifying agent hold positions of power

and authority which preclude the

certification of an operation in which

they have or have held a commercial

interest during the 12-month period

prior to an application for certification.

The certifying agent’s control over the

employment of an agent’s employee

makes it unreasonable to expect an

employee of a certifying agent to

impartially carry out the employee’s

duties when the certifying agent or a

responsibly connected party of such

agent has an interest in the applicant.

Such is not true of an employee who is

subordinate to the certifying agent or a

responsibly connected party of the

certifying agent. Accordingly, we have

reproposed the requirement that a

certifying agent prevent conflicts of

interest by: (1) Not certifying a

production or handling operation if the

certifying agent or a responsibly

connected party of such certifying agent

has or has held a commercial interest

within the 12-month period prior to the

application for certification and (2)

excluding any person with a conflict of

interest from work, discussions, and

decisions in all stages of the

certification process and the monitoring

of certified production or handling

operations for all entities in which the

person has or has held a commercial

interest within the 12-month period

prior to the application for certification.

Both of these provisions are found in

§ 205.501(a)(11).

(7) Defining Commercial Interest. A

research foundation recommended that

the provisions for preventing conflicts,

found in this proposal at

§ 205.501(a)(11), be strengthened by

changing ‘‘a commercial interest in the

operation’’ to ‘‘a commercial interest in

the operation or the marketing or

distribution of its products.’’ We believe

that the recommended addition is

unnecessary because ‘‘commercial

interest’’ covers all business

transactions between the certifying

agent or responsibly connected parties,

employees, inspectors, contractors, or

other personnel of the certifying agent

and the applicant for certification or

certified operation. This interpretation

would not apply to voluntary labor

provided, in accordance with

§ 205.501(a)(11)(iii), by a certified

operation to a certifying agent that is a

not-for-profit organization with an

Internal Revenue Code tax exemption.

Further, this interpretation would not

apply to the providing of advice, in

accordance with § 205.501(a)(11)(iv),

concerning organic practices or

techniques to any certification applicant

or certified operation when such advice

is covered by fees under the applicable

certification program established under

the Act.

(8) Provision of Information to

Producers and Conflicts of Interest.

Commenters were concerned about the

effect that some of the conflict of

interest provisions would have on

certifying agents that provide producers

with information on organic practices

through forums such as in-house

publications, conferences, workshops,

informational meetings, and field days

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13581

for a fee. Specifically, they were

concerned about the impact of the

conflict of interest provision requiring

that certifying agents prevent conflicts

of interest by not providing advice

concerning organic practices or

techniques to any certification applicant

or certified organic production or

handling operation for a fee, other than

as part of the fees established under the

applicable certification program

established under the Act. These

commenters requested that the

paragraph be rewritten to clarify that

such activities would not be prohibited.

We also received a comment stating that

advice relating to improving production

yields, market access, etc., is not the

function of an inspector and can lead to

a nonmonetary conflict of interest. This

commenter stated that advice, where

given, should be restricted to issues

related to the understanding and

implementation of the standards.

Certifying agents have historically

provided advice concerning organic

practices or techniques to any

certification applicant or certified

organic production or handling

operation for a fee through forums such

as in-house publications, conferences,

workshops, informational meetings, and

field days. Such activities and their fees

would not be prohibited under the Act

or these regulations, provided that such

activities were not required as a

condition for production or handling

certification. Section 205.503(c) would

require that the applicant for

accreditation provide a copy of the

applicant’s schedule of fees for all

services to be provided under these

regulations by the applicant. We would

consider such activities to be voluntary

participation activities provided by the

certifying agent to producers, handlers,

and other interested persons under the

NOP. We also believe that it is

appropriate, as well as industry

practice, during an on-site inspection

for inspectors to provide advice on a

wide range of issues related to an on-site

inspection of a production or handling

operation. Accordingly, the conflict of

interest provisions found at

§ 205.501(a)(11) have not been rewritten

as requested by the commenters.

(9) Equivalency of Certification

Decisions. We received a variety of

comments suggesting changes to the

requirement that accredited certifying

agents accept the certification decisions

made by another USDA-accredited

certifying agent as equivalent to its own.

Several of these commenters asked

whether States with more restrictive

standards could challenge certification

decisions made by any accredited

certifying agents. A few commenters

representing State programs stated that

States should be able to maintain

control over which certifying agents

operate within their State. Other

commenters suggested that the

requirement be amended to: (1) Require

that a certifying agent accept the

certification decisions made by another

USDA-accredited certifying agent as

equivalent to its own only after the

certifying agent’s accreditation has been

confirmed by the Department; (2)

provide that if a certifying agent doubts

the accuracy of another certifying

agent’s determination, the certifying

agent questioning the accuracy can file

a complaint with the Secretary; and (3)

authorize an accredited certifying agent

to request additional documentation

from another certifying agent if

questions arise regarding the other

certifying agent’s certification activities

or the activities or product of a

production or handling operation

certified by the other certifying agent.

No organic product may be produced

or handled to organic standards lower

than the standards of the NOP. To

certify organic production or handling

operations to the national standards or

to more restrictive State standards

approved by the Secretary, the certifying

agent must be accredited by the

Administrator. While States may set

more restrictive standards than the

national organic standards for product

produced or handled within their State,

those requirements do not apply to

organic product produced or handled

outside of such State. Further, a State

government may not prevent the

marketing or sale in the State of organic

product produced in another State to

this program’s national organic

standards. State organic certification

programs approved by the Secretary

would be required to treat all accredited

certifying agents equally. Likewise

under this program, accredited

certifying agents in one State cannot

refuse to recognize another State’s

product which is certified to these

national organic standards.

We disagree with the suggestion to

allow certifying agents to challenge the

decisions of certifying agents that have

not yet had their accreditation

confirmed by the Department. We

believe that allowing a certifying agent

to challenge the certification decisions

made by a certifying agent that has not

had its site evaluation would create an

insurmountable barrier for persons

wanting to become accredited under the

NOP, especially persons establishing

new operations. The proposed

accreditation procedures are sufficiently

rigorous to permit a well-founded

assessment of the applicant’s

capabilities and qualifications and will

allow all eligible certifying agents to

receive timely accreditation. We will

only accredit certifying agents that we

believe possess the expertise and ability

to implement the proposed certification

program. This includes newly

established certifying agents who might

require a longer period of time between

accreditation and a site evaluation to

allow the certifying agent to perform

sufficient certification activities for the

Department to perform a meaningful site

evaluation.

Should questions arise regarding a

certifying agent’s certification activities,

a certified production or handling

operation’s activities, or the organic

status of a certified production or

handling operation’s product, the

questioning certifying agent could

report a complaint or allegation of

noncompliance, with the certification

provisions of this part, to the State

program’s governing State official or the

Administrator. As appropriate, the State

program’s governing State official or the

Administrator will investigate such

complaints or allegations. Certifying

agents are not authorized to investigate

allegations or suspicions of

noncompliance by other certifying

agents, nor are certifying agents allowed

to take unilateral action against an

accredited certifying agent, such as

refusal to recognize the certification

decisions made by another certifying

agent.

For the above reasons, we have not

changed the requirement that a

certifying agent accept the certification

decisions made by another USDAaccredited certifying agent as equivalent

to its own. This requirement is located

at § 205.501(a)(12).

(10) False or Misleading Claims.

Commenters objected to the

requirements that an accredited

certifying agent must refrain from

making false or misleading claims about

its accreditation status, the USDA

accreditation program for certifying

agents, or the nature or qualities of

products labeled as organically

produced. A few of these commenters

stated that the requirements exceed the

authority given by the Act by

introducing claims other than those

concerning representations of

nonorganic product as organic.

Additionally, a few commenters

believed that the term, ‘‘misleading,’’ is

too broad and could be interpreted to

mean that the certifying agent could

make no negative claims about the

USDA accreditation program. They

suggested that the requirements be

amended by removing the reference to

misleading claims. Another commenter

13582 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

believed that the phrase, ‘‘or the nature

or qualities of products labeled as

organically produced,’’ should be

deleted because it is vague and would

unduly limit the freedom of certifying

agents to share information with

consumers, farmers, processors, and

other interested parties regarding the

attributes of organic food and organic

production systems, including

nutritional properties, freshness, taste,

and less reliance on synthetic

substances.

We disagree with the commenters

who stated that the requirements exceed

the authority given by the Act by

introducing claims other than those

concerning representations of

nonorganic product as organic. Claims

regarding accreditation status, the

USDA accreditation program for

certifying agents, and the nature and

quality of products labeled as

organically produced all fall under the

authority of the Act. We believe that the

requirements are needed to prevent the

dissemination of inaccurate or

misleading information to consumers

about organically produced products.

We further believe that the changes

suggested by the commenters would

undermine the goal of a uniform NOP

by allowing certifying agents to make

claims that would state or imply that

organic products produced by

operations that they certify are superior

to those of operations certified by other

certifying agents. These requirements

would not prohibit certifying agents

from sharing factual information with

consumers, farmers, processors, and

other interested parties regarding

verifiable attributes of organic food and

organic production systems.

Accordingly, the requirements are

reproposed in this proposal without

change at § 205.501(a)(13).

(11) Notification of Status of Certified

Operations. Comments received on the

requirements addressing documentation

to be submitted by certifying agents to

the Department regarding the status of

certified operations suggested that: (1)

The public should have access to the

notification of certification status

documentation; (2) annual reporting by

certifying agents of the name of each

operation whose application for

certification has been approved is

sufficient; and (3) the required reporting

should only include the name of those

operations certified during the quarter

being reported rather than a listing of all

operations certified by the certifying

agent. First, we believe that the Freedom

of Information Act adequately provides

for public access to information.

Second, we need the required

information to facilitate oversight and to

ensure that we have relatively current

data for responding to inquiries

involving the granting of certifications

by certifying agents. It was not our

intent to have certifying agents update

their list of certified entities quarterly.

Our intent was to receive on a quarterly

basis a listing of all certifications

granted by the certifying agent during

the quarter being reported. Accordingly,

no changes have been made on the basis

of these comments to the requirements

found in this proposal at

§ 205.501(a)(14).

(12) Certifier Compliance With Terms

and Conditions Deemed Necessary.

Commenters objected to the requirement

that certifying agents must comply with

and implement other terms and

conditions deemed necessary by the

Secretary. This requirement is

consistent with § 6515(d)(2) of the Act,

which requires a certifying agent to

enter into an agreement with the

Secretary under which such agent shall

agree to such other terms and conditions

as the Secretary determines appropriate.

Accordingly, this requirement, found at

§ 205.501(a)(17), is unchanged in this

proposal except to change ‘‘Secretary’’

to ‘‘Administrator’’ since the

Administrator will be responsible for

administration of the NOP.

(13) Limitations on the Use of

Certifying Agent’s Marks. Private

certifying agents disagreed with the

provision that prohibited certifying

agents from requiring, as a condition of

use of the certifying agent’s identifying

mark, compliance with any production

or handling requirements other than

those provided for in the Act and

regulations. Private certifying agents

commented that they should be allowed

to use their identifying mark to

recognize additional achievements by

producers and handlers that exceed the

requirements proposed in the national

organic standards. The commenters’

position is the same as that suggested by

public input prior to publication of the

first proposal.

We believe that the private certifying

agents’ position advocating the use of

their identifying mark to recognize

additional achievements is inconsistent

with § 6501(2) of the Act, which

provides that a stated purpose of the Act

is to assure consumers that organically

produced products meet a consistent

national standard. Accordingly, we are

reproposing the provision prohibiting

certifying agents from requiring, as a

condition of use of the certifying agent’s

identifying mark, compliance with any

production or handling requirements

other than those provided for in the Act

and regulations or under an approved

State organic certification program. This

reproposed provision is found at

§ 205.501(b).

(14) Additional Requirements for

Private Certifying Agents. Commenters

expressed concern regarding the three

additional requirements for a certifying

agent who is a private person. First,

private certifying agents expressed

concern regarding the requirement that

private certifying agents hold the

Secretary harmless for any failure on

their part to carry out the provisions of

the Act and regulations. Their concern

focused on the fact that applicants for

certification can appeal a certifying

agent’s refusal to certify to the Secretary

and that a certifying agent’s

recommendation to suspend or revoke a

certification can be appealed to the

Secretary. They believe that, without the

authority to independently deny,

suspend, or revoke certification, the

certifying agent becomes liable for the

actions of the Secretary.

We disagree with the assertion that

the certifying agent becomes liable for

the actions of the Secretary. The

provision clearly states that private

certifying agents hold the Secretary

harmless for any failure on their part.

This in no way would make the

certifying agent responsible for any

failure on the part of the Department.

Further, the wording of this provision is

consistent with § 6515(e)(1) of the Act,

which provides that private certifying

agents shall agree to hold the Secretary

harmless for any failure on the part of

the certifying agent to carry out the

provisions of the Act. Accordingly, we

are reproposing this regulation at

§ 205.501(c)(1).

Second, commenters expressed

concern regarding the requirement that

certifying agents furnish reasonable

security, in an amount and according to

terms as the Secretary may by regulation

prescribe, for the purpose of protecting

the rights of production and handling

operations certified by such certifying

agent. The commenters expressed

concern regarding what would be the

dollar amount of the security, how the

dollar amount of the security would be

determined, and in what form the

security might be furnished. Several

commenters expressed concern over the

availability of errors and omissions

insurance. The commenters also

expressed a belief that guidance on what

reasonable security might entail will be

needed by accreditation applicants to

evaluate their costs for accreditation.

A private-entity certifying agent must

furnish reasonable security for the

purpose of protecting the rights of

operations certified by such certifying

agent. This security is to ensure the

performance of the certifying agent’s

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contractual obligations. As noted

elsewhere in this proposed rule, the

specific amount and type of security

that must be furnished by a private

certifying agent will be the subject of

future rulemaking by the Department.

Such rulemaking will provide for public

input and will occur prior to the call for

applications for accreditation. We

anticipate that the amount of the

security will be tied to the number of

clients served by the certifying agent

and the anticipated costs of certification

that may be incurred by its clients in the

event that the certifying agent’s

accreditation is suspended or revoked.

We anticipate that the security may be

in the form of cash, surety bonds, or

other financial instrument (such as a

letter of credit) administered in a

manner comparable to cash or surety

bonds held under the Perishable

Agricultural Commodities Act.

Accordingly, we are reproposing this

regulation at § 205.501(c)(2).

Third, commenters expressed concern

regarding the requirement that a private

person accredited as a certifying agent

must transfer to the Secretary and make

available to any applicable State

program’s governing State official all

records or copies of records concerning

the private certifying agent’s

certification activities in the event that

the certifying agent dissolves or loses its

accreditation. This requirement is

consistent with § 6515(c)(3) of the Act,

which provides that if any private

person that was certified under the Act

is dissolved or loses its accreditation, all

records or copies of records concerning

such person’s activities under the Act

shall be transferred to the Secretary and

made available to the applicable State

program’s governing State official. In

addition to being consistent with the

Act, we believe that this regulation is

necessary to ensure the continuity and

integrity of the NOP. Accordingly, we

are reproposing this regulation at

§ 205.501(c)(3).

(15) Public Access to Applicant

Information. The first proposal included

provisions regarding what information

had to be submitted by an accreditation

applicant. Commenters requested the

addition of a paragraph addressing

public access to this information about

the applicant’s organization and

intended certification activities. We

have not made this requested change

because the proposed recordkeeping

and availability requirements under this

program, coupled with the Freedom of

Information Act, adequately provide for

public access to information. The

regulations on applicant information are

found at § 205.503 and include two

additions to the provisions of the first

proposal. This proposal requires the

applicant to provide the name of the

person responsible for the certifying

agency’s day-to-day operations and to

submit a copy of its schedule of fees for

all services to be provided under these

regulations.

(16) Application Requirements for

States. Commenters stated that State

certifying agents should not be required

to submit documents and information

regarding personnel, administrative

policies and procedures, and financial

policies and procedures to demonstrate

evidence of expertise and ability. They

believe that the requirements should not

apply to States that have established

hiring procedures, standard

qualifications for job descriptions, and

statewide policies for training,

evaluating, and supervising personnel.

They also stated that administrative

policy and procedure review should be

limited to organic program

administration, not to agencywide

policies or procedures such as financial

policies.

We acknowledge that States have

established hiring procedures, standard

qualifications for job descriptions,

administrative procedures, and

statewide policies for training,

evaluating, and supervising personnel

and that such policies and procedures

would be applicable to State certifying

agents. This fact, however, does not

make States uniquely different from

private accreditation applicants who

would have similar policies and

procedures in exercising good business

practices. State certifying agents cannot

be exempt from these requirements

simply because they are a government

agency.

We anticipate that a State will submit

its established policies and procedures

to meet the requirements for

demonstrating its expertise in organic

production and handling techniques

and its ability to fully comply with and

implement the national organic

certification program. A stated purpose

of the Act is the establishment of

national standards. We believe such

national standards extend to uniform

requirements for State and private

certifying agents unless otherwise

provided by the Act. We further believe

the required information is essential to

enable the Administrator to make a

determination concerning approval of

an application for accreditation.

Accordingly, the requirements for

demonstrating expertise in organic

production and handling techniques

and an ability to fully comply with and

implement the national organic

certification program remain the same

for private and State certifying agents.

These requirements are found at

§ 205.504.

(17) Public Access to Information on

Certified Operations. Commenters

requested that the public be provided

information about a certified operation’s

farming practices, use of pesticides, and

livestock production practices. All

production and handling operations

must meet the requirements of the

national organic certification program to

be certified. An accredited certifying

agent will determine whether an

operation meets those requirements.

Certified operations can be held to no

other standards except, if applicable, the

requirements of an approved State

organic certification program.

Accordingly, we believe access to the

requested information is unnecessary.

We also believe the information to be

confidential business information that

should not be released to the public.

Therefore, we have made no changes to

the proposed rule to accommodate the

commenters’ request.

(18) Conflicts of Interest. The first

proposal required a description of

procedures intended to be implemented

to prevent the occurrence of conflicts of

interest. It also required the

identification of any food or agriculturerelated business interests of all

personnel intended to be used in the

certification operation, including

administrative staff, certification

inspectors, members of any certification

review and evaluation committees, all

parties responsibly connected to the

certification operation, and immediate

family members, that may result in a

conflict of interest. Commenters stated

that existing State policies should be

sufficient to prevent conflicts of interest.

They also stated that lists of the

business interests of all inspectors,

program staff, and their families are

unnecessary.

We agree with the commenters that

existing State policies should be

sufficient to prevent conflicts of interest.

However, we disagree with the

commenters’ assertion that lists of the

business interests of all inspectors,

program staff, and their families are

unnecessary. At § 6515(h), the Act

places responsibility for the prevention

of conflicts of interest with the

certifying agent. We, however, have

responsibility for ensuring that the

certifying agent complies with that

responsibility. We believe these

requirements will provide the

Administrator with information

essential to the identification of

conflicts of interest. A stated purpose of

the Act is the establishment of national

standards. We believe such national

standards extend to uniform conflict of

13584 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

interest requirements for State and

private certifying agents. Further, for

conflict of interest standards to achieve

their intended effectiveness, they must

be uniformly applied to both State and

private certifying agents. The required

information is also essential to the

Administrator’s determination of the

applicant’s suitability for accreditation.

As the commenters point out, States

have established conflict of interest

policies and procedures. Thus, the

required information should be readily

available for submission to the

Administrator with minimal

inconvenience to the certifying agent.

Accordingly, we have made no changes

in this proposal based on these

comments. Regulations concerning

conflicts of interest are found at

§§ 205.501(a)(11) and 205.504(c) in this

proposal.

(19) Accreditation Prior to Site

Evaluation. Commenters expressed

concern that applicants could be

accredited prior to a site evaluation of

the applicant’s facilities and operations.

Most, however, recognized the need for

accreditation decisions on written

materials as opposed to further delay to

program implementation. A few of the

commenters urged USDA to complete

the site evaluations during the

implementation phase. The first

proposal provided that an initial site

evaluation of the operation of each

certifying agent must be performed for

the purpose of verifying its compliance

with the Act and regulations. Two

restrictions concerning timing were

placed on the performance of an initial

site evaluation. First, the site evaluation

had to be performed within a reasonable

period of time after the date on which

the agent’s notice of approval of

accreditation was issued. Second, the

site evaluation had to be performed after

the agent had conducted sufficient

certification activities for the

Administrator to examine its operations

and evaluate its compliance with the

general requirements for accreditation.

We never intended that a site

evaluation be required prior to

accreditation. While site evaluations

could be conducted before approval, we

believe accreditation approval without a

site evaluation is appropriate. We

believe that the commenters’ concerns

are adequately addressed by the first

proposal, which provided for a wellfounded assessment of the applicant’s

qualifications and capabilities through a

sufficiently rigorous review of the

application and supporting

documentation. In cases where the

document review raises concerns

regarding the applicant’s qualifications

and capabilities and the Administrator

deems it necessary, a preapproval site

evaluation would be conducted.

As noted above, a site evaluation to

verify compliance with the Act and

regulations would be conducted within

a reasonable time period after the date

on which the agent’s notice of approval

of accreditation was issued. Following

the site evaluation, the certifying agent’s

accreditation would be continued

provided the certifying agent is in

compliance with the Act and

regulations. Should it be found that the

accredited certifying agent is not in

compliance with the Act and

regulations, the Administrator will issue

the certifying agent a notification of

noncompliance and afford the certifying

agent an opportunity to correct the

deficiencies. If the deficiencies are not

corrected, the Administrator will begin

proceedings to suspend or revoke the

certifying agent’s accreditation.

We also believe that: (1) Conducting

a site evaluation of a newly established

certifying agent before it had begun any

certification activities might not

contribute information that would be

useful for the Department’s evaluation;

(2) previously existing certifying agents

also would need time to make

adjustments in their operations to

comply with the NOP regulations; and

(3) requiring full site evaluations and

peer reviews to be conducted prior to

granting accreditation would further

delay implementation of the Act.

Accordingly, we have made no changes

to the application requirements found at

§ 205.502 or the site evaluation

requirements found at § 205.508 on the

basis of these comments.

(20) Conditional Accreditation.

Commenters suggested that the rule

provide for conditional accreditation of

certifying agents. We disagree with the

concept of conditional accreditation. We

believe accreditation before a site

evaluation to be the most effective

means of providing new certifying

agents with the opportunity to

participate in the NOP. New certifying

agents need to be unconditionally

accredited to sell their services to

potential organic clients. Such certifying

agents need organic clients to

demonstrate to the Administrator their

compliance with the Act and

regulations relative to the certification

of organic producers or handlers.

Furthermore, the Act does not provide

for conditional accreditation.

Accordingly, the proposed accreditation

program for initial accreditation

provides for: (1) Review and analysis of

the applicant’s application and evidence

of expertise and ability, (2) approval of

accreditation upon determination that

the applicant meets the requirements for

accreditation, and (3) site evaluation to

determine compliance with the Act and

regulations.

(21) Application Fees Incurred From

Notifications of Noncompliance.

Commenters questioned whether a new

application for accreditation, following

the correction of deficiencies identified

in the notification of noncompliance,

would require a second application fee.

The commenters stated that fees paid for

the initial application should cover

timely resubmission of the application

after correction of deficiencies. In this

proposal, we have replaced the flat fee

for accreditation with an hourly user fee

system, which will involve billing for

actual time used in the accreditation

process. Accordingly, there will be

additional costs to applicants who

submit a description of the actions taken

to correct the deficiencies noted in the

notification of noncompliance.

(22) Peer Review Panels. Comments

were received expressing various

opinions regarding the peer review

panel provisions of the first proposal.

First, commenters stated that peer

review panels should participate in site

evaluations. Prior to publishing the first

proposal, the Department received some

public input which also suggested the

use of peer reviewers in the site

evaluation process. As noted in the first

proposal, we did not provide for such

participation because we believed that

the use of peer reviewers could pose an

excessive burden on the certifying

agents, would increase the costs of

conducting site evaluations, and could

delay site evaluations and because AMS

staff are well qualified to perform the

site evaluations. We have made no

change to our proposal as a result of this

comment.

Second, commenters stated that peer

review panels should participate in the

initial review of an application for

accreditation. We believe this would not

be an effective use of panel members’

talents and expertise and would not be

cost effective. We have made no change

to our proposal as a result of this

comment.

Third, an industry association stated

that section 6516(a) of the Act clearly

states that the Secretary shall consider

a report, not three to five individual

reports, in determining whether to

approve an applicant for accreditation.

We do not agree that the Act requires a

single report, nor do we believe that it

is usual to have consensus in peer

review. We also believe that it is

impractical to bring peer reviewers

together for the purpose of reviewing

the information provided and drafting a

single report. The Administrator could

convene a peer review panel meeting or

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conference call if necessary. Such

meeting or conference call would be

conducted in a manner that would

ensure the actions of panel members are

carried out on an individual basis with

any opinions and recommendations by

a member being made individually. A

peer review panel meeting or conference

call will be held solely to give and

receive information. Such meeting or

conference call will not be held for the

purpose of achieving consensus by the

peer review panel. The written report of

each panel member would reflect the

particular knowledge, expertise, and

opinion that its author-member brings to

the panel. The Administrator will

consider all points in the individual

reports in making a determination as to

the continued operation of the

accredited certifying agent. We have

made no change to our proposal as a

result of this comment.

Fourth, commenters stated that the

peer review panel regulations should be

revised to specify what situations, other

than continuation or renewal of

accreditation, would trigger a peer

review; that a peer review panel should

be used in determining noncompliance

with accreditation requirements; and

that a peer review panel should be

convened to review any decision of

noncompliance prior to initiation of

proceedings to suspend or revoke a

certifying agent’s accreditation. The first

proposal provided that the

Administrator may convene a peer

review panel at any time for the purpose

of evaluating a certifying agent’s

activities under the Act and regulations.

This provision would provide flexibility

for the Administrator to seek

recommendations from peer reviewers

at other times when it may be necessary

to evaluate a certifying agent’s

compliance with the Act and

regulations. We do not believe that it is

practical or necessary to require the use

of peer review panels in determining

noncompliance and decisions to

suspend or revoke an accreditation. We

have made no change to our proposal as

a result of these comments.

(23) Purpose of Annual Reporting

Requirements. At least one commenter

was confused regarding the purpose for

having certifying agents submit annual

reports to the Administrator. The

reports would update information and

evidence of expertise and ability

previously submitted by the certifying

agent; support any changes being

requested in the areas of accreditation;

describe the measures that were

implemented in the previous year and

any measures to be implemented in the

coming year to satisfy any terms and

conditions determined by the

Administrator to be necessary, as

specified in the most recent notification

of accreditation or notice of renewal of

accreditation; and describe the results of

the most recent inspector performance

appraisals and program evaluation and

adjustments to the certifying agent’s

operation and procedures implemented

and intended to be implemented in

response to the appraisals and program

evaluation. The first proposal stated that

this information would be reviewed by

the Administrator to determine whether

the certifying agent was maintaining its

accreditation by satisfying the

requirements of the Act and regulations

and to assess the need for a site

evaluation. We believe that an annual

process of reviewing information

submitted by certifying agents is

necessary so that the Administrator can

be informed of any changes in the

procedures and personnel used by the

certifying agents. We have made no

change to our proposal as a result of this

comment.

Accreditation—Additional Provisions

Upon further review of the

accreditation provisions in the first

proposal, we have decided to propose

the following additions and changes.

(1) Access to Records. We have added

the requirement that the records

maintained by the certifying agent

under the Act and regulations be made

available for copying by authorized

representatives of the Secretary and the

applicable State program’s governing

State official. This addition is necessary

to ensure that authorized

representatives are able to obtain copies

of records applicable to a review or an

investigation regarding compliance with

the Act and regulations. This addition,

found at § 205.501(a)(9), is authorized

under section 6506 of the Act.

(2) Conflicts of Interest. A conflict of

interest regulation in the first proposal

required that certifying agents prevent

conflicts of interest by not certifying an

operation through the use of any

employee that has or has held a

commercial interest in the operation,

including the provision of consulting

services, within the 12-month period

prior to the application for certification.

This regulation was closely related to a

second regulation which required

certifying agents to prevent conflicts of

interest by not assigning an inspector to

perform an inspection of an operation if

the inspector has or has held a

commercial interest in the operation,

including the provision of consulting

services, within the 12 months prior to

conducting the inspection. For

clarification, this proposal combines the

regulations at § 205.501(a)(11)(ii). This

new regulation provides for excluding

any person, including contractors, with

conflicts of interest from work,

discussions, and decisions in all stages

of the certification process and the

monitoring of certified production and

handling operations for all entities in

which such person has or has held a

commercial interest, including an

immediate family interest or the

provision of consulting services, within

the 12-month period prior to the

application for certification. This

regulation would permit a certifying

agent to certify the operation of an

employee or contractor or an employee’s

or contractor’s immediate family

member provided the employee or

contractor was not used in certifying the

production or handling operation.

(3) Reporting Requirements for

Certifying Agents. The first proposal

required a certifying agent to submit to

the Administrator a copy of each

notification of noncompliance issued

simultaneously with its issuance to the

certification applicant or the certified

operation. It also required a certifying

agent to submit to the Administrator on

a quarterly calendar basis the name of

each operation certified. In this

proposal, we have expanded the

provision to provide that certifying

agents must submit to the

Administrator: (1) A copy of any notice

of denial of certification, notification of

noncompliance, notification of

noncompliance correction, notification

of proposed suspension or revocation,

and notification of suspension or

revocation issued simultaneously with

its issuance; and (2) on a quarterly

calendar basis, the name, address, and

telephone number of each operation

granted certification. This information is

needed to facilitate oversight and to

ensure that we have relatively current

data for responding to inquiries

involving the granting of certifications

by certifying agents. These changes are

included in § 205.501(a)(14).

We anticipate using the data collected

under § 205.501(a)(14) to establish and

maintain 2 Internet databases. The first

Internet database would be accessible to

the general public and would include

the names and other appropriate data on

certified organic production and

handling operations. The second

Internet database would be password

protected and only available to

accredited certifying agents and USDA.

This second database would include

data on production and handling

operations issued a notification of

noncompliance, noncompliance

correction, denial of certification,

certification, proposed suspension or

revocation of certification, and

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suspension or revocation of

certification. Certifying agents would

use the second Internet database during

their review of an application for

certification.

(4) Requirements for

Nondiscrimination. We have included

at § 205.501(d) the provision that no

private or State entity accredited as a

certifying agent under subpart F shall

exclude from participation in or deny

the benefits of the NOP to any person

due to discrimination because of race,

color, national origin, gender, religion,

age, disability, political beliefs, sexual

orientation, or marital or family status.

This regulation is consistent with USDA

regulations which prohibit

discrimination in its programs and

activities.

(5) Submission of Policies and

Procedures. The first proposal required

an applicant for accreditation as a

certifying agent to submit documents

and information to demonstrate the

applicant’s expertise in organic farming

or handling techniques, its ability to

fully comply with and implement the

organic certification program, and its

ability to comply with the requirements

for accreditation. Much of the

documentation and information

required involved submission of a

description of a policy or procedure to

be used by the certifying agent. In this

proposal we have changed the

requirement from submission of a

description of the policy or procedure to

submission of a copy of the actual

policy or procedure. This will facilitate

the Department’s determination of an

applicant’s eligibility for accreditation

by providing more complete

information. By requiring a copy of each

policy and procedure, which should

already be in the possession of the

applicant, rather than a description of

each, we have lessened the burden on

applicants for accreditation. This

change is found in § 205.504 of this

proposal.

(6) Public Access to Certification

Certificates. In this proposal, we have

added the requirement that certifying

agents make copies of certification

certificates issued during the current

and 3 preceding calendar years available

to the public. Such documents may be

useful to consumers wishing to verify

that an operation is certified to produce

and label agricultural products as

organic. Copies of certification

certificates will be especially valuable

in assisting handlers in assuring that the

products they receive labeled as organic

were produced and handled by certified

organic operations. This requirement is

found at § 205.504(b)(5)(i).

(7) Submission of Residue Testing

Procedures. We believe that applicants

for accreditation should provide

evidence of expertise and ability in

meeting the sampling and residue

testing requirements of these

regulations. Therefore, we have added

the requirement that applicants for

accreditation submit a copy of the

procedures to be used for residue

testing. This requirement is found at

§ 205.504(b)(6). Residue testing

requirements are found at § 205.670.

(8) Elimination of Section on

Confirmation of Accreditation. We have

amended the section on approval of

accreditation by adding the duration of

accreditation provision formerly

included in the first proposal’s section

on confirmation of accreditation. We

have also eliminated the section on

confirmation of accreditation. We have

taken this action to eliminate the

confusion created by having a section

on approval of accreditation and a

section on confirmation of accreditation.

(9) Denial of Accreditation. We have

amended the denial of accreditation

regulations and eliminated the section

on denial of confirmation of

accreditation. We have taken this action

to eliminate the confusion created by

having a section on denial of

accreditation and a section on denial of

confirmation of accreditation. We have

added to the denial of accreditation

regulations that a notification of

noncompliance can be issued based on

the findings of a site evaluation.

Under the first proposal’s denial of

accreditation regulations, the

Administrator could institute

proceedings to deny accreditation to an

applicant who did not correct the

deficiencies noted in a notification of

noncompliance within the time

specified. In this proposal, we have

amended these regulations to provide

that the Administrator will provide the

applicant with a written notification of

accreditation denial or begin

proceedings to suspend or revoke the

certifying agent’s accreditation if

accredited prior to a site evaluation.

Such action will be taken when the

applicant fails to correct the

deficiencies, report the corrections by

the date specified, or file an appeal by

the date specified in the notification of

noncompliance.

We have also clarified that an

applicant who has received written

notification of accreditation denial or

had its accreditation suspended may

apply for accreditation again at any

time. Additionally, we have provided

that a private certifying agent whose

initial accreditation is revoked

following an initial site evaluation will

be ineligible for accreditation for a

period of not less than 3 years following

the date of such determination. This

period of ineligibility is consistent with

section 6519(e) of the Act. These

changes are included in § 205.507.

A certifying agent accredited prior to

an initial site evaluation whose site

evaluation reveals that the certifying

agent is not properly adhering to the

provisions of the Act or these

regulations will be subject to suspension

of its accreditation. A private certifying

agent accredited prior to an initial site

evaluation who’s site evaluation reveals

that the certifying agent has violated the

provisions of the Act and these

regulations or that falsely or negligently

certifies any production or handling

operation that does not meet the terms

and conditions of this national organic

certification program as an organic

operation will be subject to revocation

of its accreditation. Section 205.660(b)

of subpart G provides that the Secretary

may initiate suspension or revocation

proceedings against a certified operation

upon initiation of suspension or

revocation proceedings against or upon

suspension or revocation of the certified

operation’s certifying agent’s

accreditation.

(10) Peer Review Panels. We have

removed the provision which provided

that the Administrator may convene a

peer review panel at any time for the

purpose of evaluating an applicant for

accreditation or a certifying agent’s

activities under the Act and regulations.

This change has been made because

peer review panels will only be used to

assist in the evaluation of applicants for

accreditation, amendment to an

accreditation, and renewal of

accreditation.

Subpart G—Administrative

The National List of Allowed and

Prohibited Substances

Proposal Description

This subpart contains criteria for

determining which substances and

ingredients are allowed or prohibited in

products to be sold, labeled, or

represented as ‘‘organic’’ or ‘‘made with

organic (specified ingredients).’’ It

establishes the National List of Allowed

and Prohibited Substances (National

List) and identifies specific substances

which may or may not be used in

organic production and handling

operations. Sections 6504, 6510, 6517,

and 6518 of the Organic Foods

Production Act (OFPA) of 1990 provide

the Secretary with the authority to

develop the National List. The contents

of the National List are based upon a

Proposed National List, with

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13587

annotations, as recommended to the

Secretary by the National Organic

Standards Board (NOSB). The NOSB is

established by the OFPA to advise the

Secretary on all aspects of the National

Organic Program (NOP). The OFPA

prohibits synthetic substances in the

production and handling of organically

produced agricultural products unless

such synthetic substances are placed on

the National List.

The first category of the National List

includes synthetic substances allowed

for use in organic crop production. The

second category includes nonsynthetic

substances prohibited for use in organic

crop production. The third category of

the National List includes synthetic

substances allowed for use in organic

livestock production. The fourth

category includes nonsynthetic

substances prohibited for use in organic

livestock production. The fifth category

of the National List includes

nonagricultural (nonorganic) substances

allowed as ingredients in or on

processed products labeled as ‘‘organic’’

or ‘‘made with organic (specified

ingredients).’’ The final category of the

National List includes nonorganically

produced agricultural products allowed

as ingredients in or on processed

products labeled as ‘‘organic’’ or ‘‘made

with organic (specified ingredients).’’

This subpart also outlines procedures

through which an individual may

petition the Secretary to evaluate

substances for developing proposed

National List amendments and

deletions.

National List (General)

The NOSB is responsible for making

the recommendation of whether a

substance is suitable for use in organic

production and handling. The OFPA

authorizes the NOSB to develop and

forward to the Secretary a Proposed

National List and any subsequent

proposed amendments. In March 1995,

the NOSB initiated a petition process to

solicit public participation in

identifying specific materials to be

added to the National List. The NOSB

convened a Technical Advisory Panel

(TAP) to review substances identified in

the petition process and made extensive

recommendations on a Proposed

National List during its meetings in

1995 and 1996. In 1999, the NOSB

selected materials left from the original

petition process to authorize a second

round of TAP reviews. The NOSB used

these updated TAP reviews to make

additional recommendations on the

Proposed National List at its October

1999 meeting. With the exception of

four substances on which the Secretary

did not concur with the NOSB

recommendations and minor formatting

changes, the National List in this

proposal corresponds to the

recommendations on allowed and

prohibited substances made by the

NOSB. The National List in this

proposal has also been developed in

consultation with the Food and Drug

Administration (FDA), the

Environmental Protection Agency

(EPA), and the Food Safety Inspection

Service (FSIS) of USDA. Additionally,

we have made changes in response to

public comment received on the first

proposal.

Nothing in this subpart alters the

authority of other Federal agencies to

regulate substances appearing on the

National List. FDA establishes safety

regulations on approved and prohibited

uses of substances in food production

and processing. FSIS has the authority

to determine efficacy and suitability

regarding the production and processing

of meat, poultry, and egg products. FDA

and FSIS restrictions on use or

combinations of food additives or

ingredients take precedence over the

approved and prohibited uses specified

in this proposal. Any combinations of

substances in food processing not

already addressed in FDA and FSIS

regulations must be approved by FDA

and FSIS prior to use. Use-of-substance

requirements are proposed by FDA and

FSIS in rulemaking actions and are

frequently updated with revised use

requirements. It is important that

certified organic producers and handlers

of both crop and livestock products

consult with FDA regulations in 21 CFR

parts 170 through 199 and FSIS

regulations in this regard. All feeds, feed

ingredients, and additives for feeds used

in the production of livestock in an

organic operation must comply with the

Federal Food, Drug, and Cosmetic Act

(FFD&CA). Animal feed labeling

requirements are published in 21 CFR

part 501, and new animal drug

requirements and a listing of approved

animal drugs are published in 21 CFR

parts 510–558. Food (feed) additive

requirements, a list of approved food

(feed) additives generally recognized as

safe substances (GRAS), substances

affirmed as GRAS, and substances

prohibited from use in animal food or

feed are published in 21 CFR parts 570–

571, 21 CFR part 573, 21 CFR part 582,

21 CFR part 584, and 21 CFR part 589,

respectively. Furthermore, the Food and

Drug Administration has worked closely

with the Association of American Feed

Control Officials (AAFCO) and

recognizes the list of additives and

feedstuffs published in the AAFCO

Official Publication, which is updated

annually.

National List—Changes Based On

Comments

This subpart differs from our first

proposal in several respects as follows:

(1) Genetically Engineered Organisms

(GEO’s). To solicit public comment on

the use of genetically engineered

organisms in organic production and

handling, we included two such

materials on the National List in the first

proposal. As discussed in Production

and Handling—Subpart C, we received

many thousands of comments opposing

the use of substances or organisms

produced through genetic engineering

in organic production and handling.

Many commenters expressed strong

concerns that GEO’s do not meet current

consumer expectations of organic

agriculture or an organically produced

product. They stated that existing

national and international organic

certification standards clearly and

consistently prohibit GEO’s.

Accordingly, this proposal prohibits

GEO’s and their derivatives and the

products of GEO’s and their derivatives

in any product or ingredient that is sold,

labeled, or represented as organic. As a

result of the prohibition, the National

List does not contain any materials

derived from GEO’s.

(2) Inclusion of Substances not

Recommended by the NOSB. The first

proposal allowed some synthetic

substances in organic crop production

and handling that the NOSB had not

included on the proposed National List.

Citing the statutory requirements of the

OFPA, commenters were

overwhelmingly opposed to adding

substances to the National List that had

not been recommended by the NOSB.

Every substance on the National List in

this proposal was favorably

recommended by the NOSB.

With four exceptions, the National

List included in this proposal contains

every substance that the NOSB

recommended to allow in organic

production and handling. The Secretary

has not accepted the NOSB

recommendations to allow sulfur

dioxide in the production of wine

labeled as ‘‘made with organic grapes.’’

Additionally, the Secretary has not

concurred with the NOSB

recommendation to allow the

antibiotics, Streptomycin and

Terramycin, in organic crop production

or to allow livestock producers to

administer synthetic Oxytocin for

approved organic veterinary practices.

The Secretary decided not to add sulfur

dioxide to the National List because its

use produces sulfites, which are

13588 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

prohibited in the OFPA. Streptomycin

and Terramycin were not added to the

National List for use in crop production

in order to be consistent with this

proposal’s prohibition on the use of all

antibiotics in animal production. The

Secretary’s decision not to allow

livestock producers to administer

synthetic Oxytocin is based on

extensive public comment that opposed

the use of animal drugs including

hormones in organic livestock

operations. Many certifying agencies

have allowed producers to administer

Oxytocin to animals that experience

severe complications resulting from

labor. While most of the public

comment strongly opposed the use of

synthetic hormones in organic dairy

production, Oxytocin has some uses

that do not involve lactation but are

instead related to an animal’s

postpartum survival. Not allowing

Oxytocin in organic operations is

responsive to the public comment

opposing the use of synthetic hormones

but does preclude the use of an animal

medication that some producers have

previously been able to use in

emergency situations.

(3) Prohibited Nonsynthetic

Substances. The National List in the

first proposal contained no prohibited

nonsynthetic (natural) substances. Many

commenters requested that the four

nonsynthetic substances which the

NOSB proposed to prohibit be added to

the National List. We agree with this

position, and this proposal lists ash

from manure burning, mined sodium

fluoaluminate, strychnine, and tobacco

dust as natural substances that are

prohibited in organic crop production

and handling. In addition, we have

included arsenic and lead salts on the

National List of prohibited natural

substances in accordance with

provisions of the OFPA.

(4) Annotations on National List

Substances. The National List in the

first proposal did not include all of the

annotations originally developed by the

NOSB for the materials it recommended

to include on the National List. The

OFPA stipulates that when basing the

National List upon the NOSB’s

recommendations, the Secretary shall

include ‘‘an itemization, by specific use

or application,’’ of each synthetic

substance permitted or natural

substance prohibited. This itemization,

commonly known within the organic

industry as an annotation, has been

used by existing State and private

certification agents to regulate the use of

allowed materials. Annotations can

establish allowable sources or

procedures for obtaining a substance,

specify the crops or conditions for

which it may be applied, establish use

restrictions based on environmental

monitoring, or create other conditions to

govern the use of a substance.

Many commenters stated that

removing annotations diminished the

NOSB’s role in advising the Secretary

on the content of the National List.

Commenters also stated that annotations

are essential for ensuring that

substances are used in a manner which

is consistent and compatible with a

system of organic production and

handling. Considering how annotations

have been applied in regulating the use

of allowed substances by State and

private certifying agents, we have

incorporated every feasible NOSBproposed annotation in this proposal.

(5) Incidental Additives. The first

proposal stated that a nonagricultural

synthetic substance occurring as an

incidental additive, including a

processing aid, could be used in organic

production and handling without

having to be added to the National List.

This position was based on FDA and

FSIS regulations which require that

active ingredients, but not incidental

additives, appear on a product label.

Because incidental additives were not

active ingredients in organically

processed food under these regulations,

the first proposal maintained that they

were not prohibited by the OFPA and

would not need to be added to the

National List.

Thousands of commenters responded

with varying opinions on this subject.

Many commenters approved of the

proposed approach, generally stating

that processing aids are essential and

needed for most agricultural products.

These commenters felt that eliminating

their use entirely would greatly limit

handlers’ ability to produce a wide

variety of organic products. However,

other commenters strongly opposed

allowing the use of any nonagricultural

synthetic substance that had not been

petitioned, reviewed, and recommended

by the NOSB; published for comment in

the Federal Register; and then added by

the Secretary to the National List. Some

commenters protested the use of any

synthetic incidental additives in organic

handling operations. They stated that

their use is not consistent with the

principles of organic agriculture and

that consumers currently do not believe

that such aids and additives are used in

organically processed products.

Prior to the first proposal, the NOSB

reviewed this issue and recommended

allowing both synthetic and

nonsynthetic incidental additives in

processed organic products. The

NOSB’s 1995 recommendation stated

that nonsynthetic, nonagricultural

products used as ingredients, processing

aids, or incidental food additives should

be categorically allowed in organically

processed products unless specifically

prohibited and that synthetic,

nonagricultural products should not be

used as ingredients, processing aids, or

incidental food additives unless

specifically included on the National

List. The NOSB applied these

recommendations to processed foods

labeled ‘‘organic’’ and ‘‘made with

organic (specified ingredients).’’

However, the OFPA does not allow the

categorical allowance for nonsynthetic,

nonagricultural products. Section

6510(a)(4) of the OFPA requires that any

nonorganically produced ingredient

added to an organic product must be

included on the National List.

The NOSB revisited this issue at its

February 1999 meeting when it adopted

criteria for accepting (adding to the

National List) a synthetic processing aid

or adjuvant. These criteria are an

interpretation and application of the

general evaluation criteria for synthetic

substances contained in the OFPA that

the NOSB will apply to processing aids

and adjuvants. To review the adopted

criteria, the public can visit the USDA

NOP website: www.ams.usda.gov/nop/

nosbfeb99.html or write Program

Manager, Room 2945 South Building,

U.S. Department of Agriculture, AMS,

Transportation and Marketing Programs,

NOP, PO Box 96456, Washington, DC

20090–6456. The NOSB adopted these

criteria as internal guidelines for

evaluating processing aids and

adjuvants. The adopted criteria do not

supercede the criteria contained in the

OFPA, or replace FDA’s authority to

regulate food additives.

We are proposing that to be used in

or on a processed product labeled as

‘‘organic’’ or ‘‘made with organic

(specified ingredients),’’ a

nonagricultural substance, whether

synthetic or nonsynthetic, must be

included on the National List. This

position supports the NOSB

recommendation that synthetic

substances be allowed in organic

processed foods but incorporates the

National List requirement reflected in

public comment. We have divided the

materials on this list (§ 205.605) in the

current proposal to reflect the

recommended distinction made by the

NOSB between synthetic and

nonsynthetic substances. This

distinction does not affect how the

substances may be used. We recognize

that many commenters, basing their

argument on the OFPA, objected to

allowing any synthetic substances in

processed organic products. However,

we believe that the OFPA does allow

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13589

synthetic substances, when added to the

National List, to be used in this manner.

The criteria utilized by the NOSB for

evaluating processing aids and

adjuvants are very restrictive and, if

applied to all incidental additives,

should minimize the number of

substances added to the National List.

(6) Inert Ingredients in Formulated

Products. The first proposal addressed

the presence of synthetic inert

ingredients in formulated products used

as production inputs in organic crop or

livestock operations. Formulated

products are multiingredient

compounds including pesticides,

fertilizers, and animal drugs and feeds.

In accordance with the OFPA, we

proposed that a formulated product

containing an inert ingredient could be

used, provided that the substance did

not appear on EPA’s List 1 as an Inert

of Toxicological Concern. We also

prohibited the use of synthetic inerts

not on EPA List 1 if the substance was

also used as an active ingredient that

had not been added to the National List.

To review or to receive the most current

listing of the EPA Inerts, the public can

visit EPA’s Internet home page at http:/

/www.epa.gov/opprd001/inerts/

lists.html, or write to Registration

Support Branch (Inerts), Registration

Division (Mail Code 7505C), Office of

Pesticide Programs, Environmental

Protection Agency, 401 M St., SW.,

Washington, DC 20460.

The first proposal interpreted the

statutory prohibition on EPA List 1

inerts as allowing the use of synthetic

inert ingredients that were not

specifically prohibited. This allowed the

use of products containing synthetic

inert substances (provided that they

were not also used as active substances)

included on the other EPA inert lists:

List 2, Potentially Toxic Inerts; List 3,

Inerts of Unknown Toxicity; and List 4,

Inerts of Minimal Concern. We also

applied the term, ‘‘inert,’’ to all

nonactive ingredients contained in any

formulated product used in organic

production. This meant that the

nonactive ingredients in animal feeds

(fillers or additives), animal drugs

(excipients), and fertilizers (carriers or

adjuvants) would only be prohibited if

they were classified by the EPA as List

1 inerts.

We received many comments stating

that our restrictions on inert ingredients

were too permissive and would result in

many traditionally prohibited materials

being used in organic production.

Commenters stated that the statutory

prohibition on EPA List 1 inerts did not

imply that all other inerts should be

allowed and argued that the NOSB had

the authority to prohibit additional

substances. Citing the uncertainty

associated with EPA List 2 (potentially

toxic) and EPA List 3 (unknown

toxicity) inert ingredients, they

questioned how such substances could

satisfy the criteria in OFPA for adding

synthetic substances to the National

List. Commenters also opposed

expanding the definition of inert to

include nonactive ingredients in all

formulated products. They stated that

the EPA classifies only those inerts used

in pesticides, and that many of the

substances routinely used in other types

of formulated products were not subject

to review. Therefore, substances not

used in pesticides would not appear on

any EPA list and would be allowed.

Finally, commenters cited the disparity

between the allowance for synthetic

inert ingredients in the first proposal

and the more restrictive substance

review procedures used by existing

organic certifying agents.

The NOSB responded to the

provisions for inert ingredients

contained in the first proposal. At its

meeting in March 1998, the NOSB

stated that synthetic compounds should

not be allowed in production inputs

unless they appear on the National List.

In February 1999, the NOSB voted to

prohibit EPA List 1 and 2 inerts,

prohibit EPA List 3 inerts unless

specifically allowed by the NOSB, and

allow EPA List 4 inerts unless

specifically prohibited. The NOSB also

recommended full disclosure of all

ingredients in formulated products,

called for an expedited review of EPA

List 3 inerts currently in common use in

organic production, and endorsed an 18-

month phase-out period for EPA List 3

inerts not ultimately allowed.

In this proposal, only EPA List 4

inerts are allowed as ingredients in

formulated products used in organic

production. This would not include

varieties of EPA List 4 substances such

as corn starch, lecithin, or citric acid

that are the product of excluded

methods. Additionally, the term inert is

restricted to nonactive ingredients in

pesticides. Synthetic nonactive

ingredients in formulated products used

as production inputs, including

fertilizers, animal drugs, and feeds,

must be included the National List.

While the OFPA prohibits using a

fertilizer containing synthetic

ingredients or a commercially blended

fertilizer containing prohibited

materials, the requirement does not

apply to synthetic substances included

on the National List. The NOSB

recommended and the Secretary

concurs that certain synthetic

substances used in fertilizer-formulated

products should be included on the

National List. We have retained the

provision from the first proposal

prohibiting the use of any formulated

product containing a EPA List 1 Inert.

Using the criteria established in the

OFPA for evaluating synthetic

substances, the NOSB may review inert

ingredients on EPA List 2 or 3 as well

as other synthetic, nonactive substances

used in formulated products for

inclusion on the Proposed National List

it forwards to the Secretary.

We recognize that inert ingredients in

pesticides and similar substances in

other formulated products pose one of

the most problematic examples of the

use of synthetic materials in organic

production. For example, verifying the

use of inerts and similar substances

such as fillers, carriers, additives, and

excipients has been difficult because

they are not required to appear on

ingredient labels, and formulators

typically treat product formulas as

confidential information. At times,

certifying agents have been unable to

determine the exact composition of

formulated products proposed for use in

organic production. In other instances,

organic producers have applied

formulated products containing inert

ingredients and similar substances that

are not specifically allowed. We are

challenged with balancing standard

practice with the strict statutory

requirement that producers and

handlers apply only those synthetic

substances added to the National List.

As sanctioned by OFPA, synthetic

substances can be used in organic

production as long as they appear on the

National List. The development and

maintenance of the National List has

been and will be designed to allow the

use of a minimal number of synthetic

substances that are acceptable to the

organic industry and meet the OFPA

criteria.

Two principles will be essential for

responding to this challenge: greater

disclosure of the contents of formulated

products and an expedited review of

inert ingredients and other nonactive

substances. The OFPA recognized the

need for disclosure by requiring the

NOSB to work with formulators to

obtain a complete list of ingredients in

their products. The NOSB has initiated

this work, and its effort is ongoing as of

the date of this publication. It is our

understanding from the comments,

hearings, and information considered by

the NOSB that the organic industry has

made considerable progress on

disclosure of inert ingredients since the

passage of OFPA. Formulators have

responded to the incentive to provide

products using EPA List 4 inert

ingredients, and certifying agents have

13590 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

gained greater access to information on

product composition. EPA has

expressed its willingness to expedite the

review of its List 2 and 3 inerts, which

the NOSB identifies as particularly

important in formulated products

widely used in organic operations. The

organic industry should clearly

understand that NOSB evaluation of the

wide variety of inert ingredients and

other nonactive substances will require

considerable coordination between the

NOP, the NOSB, and industry. Materials

review can be anticipated as the NOSB’s

primary activity during NOP

implementation. Considering the critical

nature of this task, the organic industry

should make a collaborative effort to

prioritize for NOSB review those

substances which are essential to

organic production and handling.

We recognize that more work is

needed for this policy to satisfy the

needs of organic producers and

handlers, product formulators, and

consumers. We are requesting comment

on the proposed requirements for inert

ingredients in formulated products. We

are sensitive that an abrupt prohibition

on synthetic substances which may

have knowingly or unknowingly been

used in the past but which are not

added to the National List may disrupt

many well-established and accepted

production systems. However, our

assessment is that the benefits of a clear

policy consistent with the OFPA, NOSB

recommendations, and public comment

outweigh the costs. The net effect will

be greater consumer confidence in

USDA’s organic label and more

products that are tailored to the needs

of organic producers.

(7) Use of Veterinary Medicines. The

OFPA prohibits certain routine uses of

veterinary medications (specifically

subtherapeutic doses of antibiotics) but

allows their administration in the

presence of illness. The first proposal

added antibiotics to the National List

because their use had been evaluated

and approved by applicable regulatory

agencies, pursuant to FDA

requirements, and because they had to

be included on the National List to be

used in organic livestock production.

We received many comments

opposing the use of antibiotics in

organic livestock production.

Commenters expressed general concern

over microbial resistance to antibiotics

and expressed a desire to source food

products without antibiotics. This

proposal removes antibiotics from the

National List of approved synthetic

substances for livestock use.

(8) Removal of Substances from the

National List. The first proposal

outlined a petition process for amending

the National List and included an

extensive list of information to be

provided for reviewing a substance.

Some commenters recommended that

this section be amended to include

procedures for deleting substances from

the National List. The OFPA and the

first proposal indicated that the NOSB

would review substances added to the

National List at least on a 5-year basis

and recommend to the Secretary any

substances that should be removed. We

concur with commenters that removal of

a substance should not have to wait for

such a review cycle. Thus, a petition to

remove a substance from the National

List may be filed at any time. The

information contained in the petition for

removal of a substance will be provided

by AMS upon request. The NOSB will

evaluate substance removal petitions

and forward a recommendation to the

Secretary. Commenters suggested that

any changes to the National List be

published in the Federal Register for

public comment. All proposed changes

to the National List will be published in

the Federal Register.

(9) Use of Sulfur Dioxide. The first

proposal allowed the use of sulfur

dioxide in crop production and as an

ingredient in or on organic processed

products. The NOSB had recommended

that sulfur dioxide be permitted in the

processing of organic wine and for

smoke bombs used underground to

control rodents. Numerous commenters

opposed the use of sulfur dioxide in

organic wine because its use produces

sulfites, which are prohibited in the

OFPA, as a by-product. We concur with

the commenters and further believe that

the trend in the organic industry, as

evidenced by the California Department

of Food and Agriculture’s Preliminary

Organic Materials List of September

1998, is to prohibit all uses of sulfur

dioxide except in underground rodent

control. Therefore, we are proposing to

allow sulfur dioxide for underground

control of rodents and to prohibit its use

as an ingredient in or processed food

including the production of organic

wine.

National List—Additional Provisions

Upon further review of the provisions

in the first proposal, we have decided to

propose the following additions and

changes.

(1) New Additions to the National

List. During the October 1999 meeting,

the NOSB reviewed substances and

made new recommendations to the

Proposed National List. The Secretary

concurs with the recommendations from

that meeting and this proposal adds

those substances with the applicable

annotations to the National List. These

substances are: Potassium Bicarbonate

(205.601(d)), Glycerin (2005.603(a)),

Phosphoric Acid (205.603(a) and

205.605(b)), Ivermectin (205.603(a)),

Chlorhexidine (205.603(a)), and

Ethylene (205.605(b)). This proposal

establishes conditions that allow

producers to administer the parasiticide

Ivermectin to breeder stock and dairy

stock in organic livestock operations.

Treating organically managed slaughter

stock with Ivermectin is prohibited.

These provisions are based on the

recommendations developed by the

NOSB at its October 1999 meeting. The

NOSB’s recommendations from that

meeting were derivative of many years

of work addressing how to establish and

enforce the conditions allowing use of

synthetic parasiticides. The OFPA

identifies livestock parasiticides as a

category of substances which may be

included on the National List and also

prohibits the use of synthetic internal

parasiticides on a routine basis. The

determination of what constitutes a

routine basis for parasiticide use has

been challenging given the diversity of

animals, production systems, and

environmental factors which are

covered by a national organic standard.

In this proposal, the conditions under

which Ivermectin may be used apply to

the health care history of the animal

prior to treatment and the certification

of products derived from the animal

after treatment. The pretreatment

conditions are designed to ensure that

the producer is using a comprehensive

management system to prevent the

introduction and transmission of

parasites among the animals in his or

her care. Producers must document in

their organic system plan preventative

practices such as quarantine and fecal

exams for all incoming stock,

appropriate pasture rotation and

management, culling of infested

livestock, and vector and intermediate

host control. A producer may

administer an allowed synthetic

parasiticide only after all applicable

management practices and nonsynthetic

treatments have been employed. A

producer must receive the approval of

their certifying agent before using a

synthetic parasiticide. In collaboration

with the NOSB, we will be developing

program manuals detailing preventive

management practices for specific

livestock species to assist producers and

certifying agents in determining when

the use of synthetic parasiticides is

allowable.

This proposal also contains

provisions addressing the posttreatment

condition of livestock which are

administered Ivermectin. These

conditions are included as an

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13591

annotation to Ivermectin on the

National List and are consistent with the

requirements contained in

§ 205.238(b)(1)(2) of the regulatory text

for administering any allowed synthetic

parasiticide. In compliance with the

recommendations of the NOSB, we are

proposing that a producer may not

administer Ivermectin to breeder stock

during the last third of gestation if the

progeny is to be sold, labeled, or

represented as organically produced.

Additionally, a producer must observe a

90-day withdrawal period before selling

milk or milk products produced from an

animal treated with Ivermectin as

organically produced. The Food and

Drug Administration exercises

responsibility for determining and

enforcing the withdrawal intervals for

animal drugs. No food safety arguments

are used or implied to support the use

of extended withdrawal periods. Rather,

we determined that extended

withdrawal periods are more compatible

with consumer expectations of

organically raised animals.

Ivermectin is the first synthetic

parasiticide that the Secretary has

proposed adding to the National List,

and allowing its use could significantly

affect organic management practices.

The FDA has approved 18 animal drugs

containing Ivermectin that are labeled

for use on one or more animals

including beef and dairy cattle, sheep,

swine, and several minor species. A

total of 11 of these drugs are not covered

by this proposed rule: three have

additional synthetic active ingredients

not on the National List and eight others

are labeled for nonfood uses. (They are

used on horses not for food use, dogs,

and cats.) While there are no approved

uses of Ivermectin on lactating dairy

animals, the remaining seven food-use

products could be administered to

breeder stock and dairy stock either

prior to lactation or during a dry period.

Future NOSB meetings will consider

new proposals of substances to be added

to the National List.

(2) Petition Process to Amend the

National List. We are modifying the

contents of the petition for amending

the National List that was contained in

the first proposal. We are proposing that

any person requesting a change in the

National List should request a copy of

the petition procedures from the NOP

Program Manager. The procedures will

include a list of information that has to

be provided for consideration of a

change in the National List. Under the

provisions in the first proposal, the NOP

would be required to go through

rulemaking every time it sought to

update contents of the petition. Under

this proposal, the NOP will amend the

requirements of the petition process and

publish the changes in the Federal

Register. This revised process will help

to expedite amending the National List

and keep the National List more current.

We anticipate that amendments to the

National List will be made on an annual

basis, depending upon the number of

substance petitions filed. Substances

petitioned for inclusion onto the

National List will be reviewed by the

NOSB, which will forward a

recommendation to the Secretary. All

amendments to the National List will be

published for comment in the Federal

Register.

State Organic Certification Programs

The Act provides that each State may

implement a certification program for

producers and handlers of agricultural

products that have been produced and

handled within the State, using organic

methods that meet the requirements of

this regulation. Each State organic

certification program must be approved

by the Secretary. A State organic

certification program’s organic

standards and requirements cannot

exceed these National Organic Program

(NOP) regulations unless the State

petitions for, and the Secretary

approves, more restrictive requirements.

The sections covering State programs,

beginning with § 205.620, establish: (1)

The requirements for a State organic

certification program and amending

such a program; and (2) the process for

initial approvals of programs and

program amendments. A process for

review and approval of a State’s organic

certification program every 5 years will

be addressed in subsequent rulemaking.

Proposal Description

There are a wide variety of organic

certification programs now operating in

different States. Approximately 31

States currently have, or are developing,

their own State organic certification

programs. At least 13 of those use State

government agencies or contracted

private certifying agents to certify

organic operations in the State. Thus, at

least 19 States do not have State organic

programs and approximately 37 States

do not have State Government or Statedesignated private certifying agents.

Under this proposal, States may utilize

these NOP standards and requirements

and not have State oversight or

responsibility for administration of the

NOP in the State. On the other hand, a

State may petition the Secretary for

approval to add its unique State

requirements to the NOP and agree to

administer the national program in the

State.

Requirements of a State Organic

Certification Program. Under the Act

and the NOP, a State, through the State

program’s governing State official, must

submit to the Secretary a copy of the

proposed State organic certification

program. The governing State official

must submit an affidavit or

memorandum of understanding agreeing

to meet the 11 general requirements of

an organic program, as specified in

section 6506(a) of the Act. Specifically,

the governing State official must agree

to: (1) Require that product sold or

represented as organic must be

produced and handled only by certified

organic operations; (2) require that

participating organic producers and

handlers establish organic plans for

their operations; (3) allow certified

producers and handlers to appeal

adverse decisions under appeal

provisions of these regulations; (4)

require that certified operations certify

annually that they have complied with

the NOP; (5) provide for annual on-site

inspections of certified operations by

certifying agents; (6) require periodic

residue testing by certifying agents; (7)

provide for appropriate and adequate

enforcement procedures which are

consistent with the NOP; (8) protect

against conflict of interests as specified

in these regulations; (9) provide for

public access to certification

documents; (10) provide for collection

of reasonable fees; and (11) require other

terms and conditions as may be

established by the Secretary. The NOP

will assume these responsibilities in

States that do not have an approved

State organic certification program.

Supporting materials must be

submitted addressing these general

requirements, including such

documentation as: authorizing State

statutes, program goals and objectives, a

description of the State’s organic

program office, codified compliance and

appeals processes, and other

information as may be requested by the

Secretary. Written material must assess

the State organic certification program’s

ability and willingness to administer the

11 general requirements for organic

programs. Administration of these

general requirements may require

development of a unique working

relationship between the State organic

program and the NOP.

With the approval of its State organic

certification program, the State must

assume responsibility for administration

of these 11 general requirements and

any approved, more restrictive

requirements in the State. For instance,

a State’s responsibilities will include

oversight of certified organic production

and handling operations to ensure that

13592 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

products sold or represented as organic

are produced and handled pursuant to

these regulations. A State’s organic

certification program must include

noncompliance and appeals procedures

similar in force and effect to those

outlined in the Compliance and Appeals

provisions of this subpart. We expect

that every State has in place official

compliance procedures and formal

appeal procedures which are used to

enforce the State’s regulatory programs.

Those procedures should provide

opportunity, as do the procedures in

this subpart, for entities that may not be

in compliance with State regulations, to

come into compliance with those

regulations. Such procedures should be

clearly addressed in the State’s organic

certification application.

A proposed State organic certification

program and any proposed amendment

to such a program must be approved by

the Secretary prior to being

implemented by the State. A State may

have other organic State sponsored

projects, such as research and

promotion programs, tax incentives, or

transition assistance for organic

producers within the State. Such

programs would not be subject to the

Secretary’s approval, provided they do

not conflict with the purposes of the

Act.

Under certain circumstances, a State

organic program may have more

restrictive requirements in the State

than corresponding NOP requirements

for production and handling of organic

product and certification of organic

production and handling operations.

These more restrictive requirements

must be based on unique environmental

conditions or specific production or

handling practices particular to the

State or portion of the State. Any

environmental condition cited in the

proposed amendment must be of a

nature that implementation of these

NOP regulations will be insufficient to

correct the condition. The

environmental condition must

necessitate use of more restrictive

practices or requirements rather than

the corresponding practices and

requirements provided in these

regulations. Any such condition that is

limited to a specific geographic area of

the State will be required of organic

production and handling operations

active only in that geographic area. If

approved by the Secretary, the more

restrictive requirements will become the

NOP regulations for appropriate organic

producers and handlers in the State or

area of the State.

We do not expect that a State’s

request for more restrictive

requirements will cover a wide range of

organic production and handling

standards. Rather, the increased

requirements are likely to be limited to

a specific production or handling

practice or a more restricted use of

approved National List substances to

address needs or critical conditions in a

specified geographic area(s). For

instance, to protect an endangered lake

or estuary, a State may have more

restrictive buffer zone requirements

than are provided in this regulation.

Such a State may request that its more

restrictive buffer zone requirements be

established as the minimum buffer zone

requirements of this regulation.

A State’s more restrictive standards

will not be applied to production and

handling activities outside the State or

a specified geographic area in the State.

Further, the more restrictive standards

do not apply to marketing of organic

product and, thus, will not be used to

restrict access of organic product

produced in other States.

Section 205.621 provides that a State

program’s governing State official will

submit to the Secretary a copy of a

proposed State organic program or

request for approval of any substantive

amendment to a State’s approved

program.

State Program Approval Process. We

envision the request and approval

process will occur during the period

between publication of the final rule

and the projected effective date of the

this national program (which will be

announced in the final rule). Because

requirements of a State organic program

cannot exceed the requirements of this

program unless warranted by unique

conditions in the State, some State

organic programs currently in effect may

elect to discontinue their programs

when the NOP becomes effective. Those

programs simply will not request

approval of their programs and their

State organic requirements, in effect

under the State program, will be

superseded on the effective date of the

NOP. State organic certification

programs which seek approval of their

programs will submit the required

material and continue operations until

the effective date of the NOP. We

envision that all approved State organic

certification programs will become

effective under the NOP on the day the

program becomes effective. A State

wishing to establish a new State organic

certification program under the NOP

may submit the State program request

and supporting material at any time.

New programs submitted after this

program becomes effective will be

subject to the same review and approval

process.

The submitted copy of the State

organic certification program must be in

its final form and ready for

implementation. It cannot be altered by

the State during the review process

unless the change is cleared with the

Secretary.

Amendments to State Programs. For

amendment of a State organic program,

the State program’s governing State

official must submit a copy of the

proposed amendments and justification

for them. The supporting material must

document the unique environmental or

ecological conditions or production

practices in the State that necessitate

use of more restrictive organic

requirements. The supporting material

must also explain how the more

restrictive requirements will address the

environmental condition. Likewise, the

supporting material must explain how

the increased requirements are better

suited to agricultural conditions in the

State.

Because State organic certification

program requirements cannot be less

restrictive than NOP requirements, any

amendment to lower such requirements

could only entail a relaxation of a more

restrictive requirement previously

approved by the Secretary. Thus, an

amendment to relax a State program’s

requirement also must be reviewed by

the Secretary. A decrease in a State

organic certification program’s more

restrictive requirements must be

justified, based on documented changes

in the unique conditions or practices

which warranted the increase in

requirements.

Written materials supporting an

amendment must assess how the more

restrictive requirements further the

purposes of and are consistent with the

Act and these regulations. The written

material should acknowledge that the

more restrictive State requirements will

not be used to limit or restrict access of

organic products produced in other

States or foreign countries to markets in

the State. Also, supporting materials

must explain how the amended

requirements would affect the State

program’s governing State official’s

ability to administer the 11 general

requirements. A request to relax a

requirement also must address these

issues.

The Secretary will review each State’s

application based on how closely it

complies with the purposes and intent

of the Act and the provisions of the NOP

and how well its administrative

capabilities and processes match up

with the needs of the State’s program.

The Act provides that the Secretary’s

review and determination of a new State

organic certification program or a

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13593

program amendment will take no more

than 6 months. AMS will notify the

public upon approval of each State

program. The public information will be

made available to national agricultural

news media and to all news media in

the State. AMS will identify, among

other things, any more restrictive

certification requirements that are

included in the approved State program.

A denial of a new program or program

amendment will include a written

explanation of why the proposal is

denied and what changes will be

needed for the program to be approved.

The State may implement needed

changes and submit a new program or

program amendment.

Section 205.622 establishes that State

organic certification programs will be

reviewed at least once every 5 years by

the Secretary and that a determination

will be made within 6 months of the

anniversary date as to continuation of

the State organic certification program.

We will issue appropriate procedures

regarding this requirement at a later

date, after AMS and the States have had

an opportunity to administer the NOP

and State programs.

State Programs—Changes Based On

Comments

There are no changes based on

comments.

State Programs—Changes Requested But

Not Made

(1) Allowing more restrictive State

standards. About a third of those

commenting on State organic

certification program provisions

complained that the first proposal gave

USDA complete control over State

organic standards. A few suggested that

a State with higher organic requirements

should be able to prohibit the in-State

sale of products certified only to the

NOP or other State organic program

requirements. Another commented that

the NOP should ‘‘defer’’ to other State

organic certification programs with

higher standards.

While paragraph (b)(1) of section 6507

of the Act provides that States may

establish more restrictive organic

certification requirements, paragraph

(b)(2) establishes parameters for those

requirements. More restrictive State

organic program requirements must:

Further the purposes of the Act; be

consistent with the Act; not

discriminate against other States’

agricultural commodities; and be

approved by the Secretary before

becoming effective. As noted above, we

expect that a State’s more restrictive

requirements are likely to cover specific

production or handling practices such

as more restricted use of approved

National List substances or farming

practices to address a State or area’s

particular environmental conditions.

The Secretary must employ some

consistent and common criteria for

approving States requests for more

restrictive State organic programs. The

criteria for establishing such

requirements must be consistent with

the purposes of the Act. We believe the

need to preserve, protect, and enhance

unique environmental or farming

conditions is a common criterion for all

States. We believe such criteria are

consistent with the stated goals of most,

if not all, State organic programs and

organic trade and farming organizations.

The more restrictive standards will

not be applied to production and

handling activities outside the

geographic area of the State. Further, the

more restrictive standards do not apply

to marketing of organic product and,

thus, will not be used to restrict access

of organic product produced in other

States. Clearly, prohibiting the sale of

other States’ products is prohibited by

the Act as well as other national laws

covering interstate commerce in the

United States. If some States were to

restrict access to State markets, the

purposes and the benefits of the

national program would be lost.

Discriminatory marketing practices

are prohibited under section

6507(b)(2)(c) of the Act. Thus, the

purpose of more restrictive State organic

requirements cannot be, as the

commenters suggest, to allow claims of

more organic or purer product. States

will not be able to promote their

products as being more organic because

their products were produced under

more restrictive State requirements.

More restrictive State organic

requirements will be authorized only as

needed to respond to special

environmental or production conditions

in the State which necessitate more

restrictive requirements. Any State’s

request for less restrictive or lower

organic standards than are required

under this program will not be approved

by the Secretary.

(2) Treatment of private and State

certifying agents. Some private

certifying agents commented that the

first proposal would permit accredited

State certifying agents to establish more

restrictive standards than these

regulations but prohibit private

certifying agents from establishing their

own more restrictive requirements.

Under this program, State certifying

agents will not unilaterally establish

organic standards or requirements in a

State. A State program’s governing State

official may, upon approval of the

Secretary, establish a State organic

certification program as an entity of the

State’s department of agriculture or

other similar State government agency.

The Act provides this authority to the

State government and does not provide

similar authority to private certifying

agents. Private certifying agents are not

government entities and have no official

regulatory or administrative authorities

over agricultural activities in the State.

State certifying agents as well as private

certifying agents will act as service

providers, certifying to national and,

where applicable, to particular State

organic requirements.

Again, commenters appear to miss an

essential point of this national program.

The only mandatory organic standards

and requirements are those of the NOP

and the unique requirements approved

for a State organic certification program

by the Secretary. A private certifying

agent may believe its more restrictive

requirements result in a more organic or

purer product and may want to certify

producers and handlers only to those

requirements. However, neither State

certifying agents nor private certifying

agents will be able to require that client

operations or organic product be

certified to more restrictive standards

than the standards of this program or

approved State standards. The only

other more restrictive requirements that

may be certified to may be requirements

made at the request of handlers or

manufacturers who are purchasing the

organic product or ingredient. For

example, a producer could request a

certifying agent to certify certain

production practices required for export

to a foreign manufacturer. Such

certification can be made only at the

request of the producer or handler being

certified. Both State and private

certifying agents may certify to the

requested more restrictive contract

requirements, provided those more

restrictive requirements are consistent

with these regulations and provided the

certifying agents have the necessary

technical qualifications to carry out the

certification.

Similarly, one commenter stated that

the NOP should not prevent a private

certifying agent from having and

advertising its own higher organic

standards. While a private certifying

agent may have the capability to certify

to certain higher organic requirements,

a handler certified by the certifying

agent may not claim on product labels

or in market information that its

products are more organic, purer, or

better than product certified by other

certifying agents or State organic

programs.

13594 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

In this regard, certifying agents,

whether they are State or private

certifying agents, may not use different

seals, logos, or other identifying marks

to distinguish between organic

operations certified to NOP

requirements and a State’s approved

more restrictive requirements, the

certifying agent’s preferred

requirements, or the client’s requested

higher requirements. We believe that if

certifying agents were allowed to use

more than one seal or identifying mark,

based on various standards certified to,

the marketplace would be inundated

with a variety of different certifying

agent seals, logos, and identifying

marks. This would add to consumer

confusion, complicate the marketplace,

and jeopardize benefits of this program.

(3) Private certifying agent concerns.

Several commenters expressed concern

that private certifying agents are at a

disadvantage vis-a-vis State certifying

agents. They stated that a State organic

program or a State certifying agent could

initiate policies that would limit the

activities or effectiveness of private

certifying agents. However, this

proposed program does not alter the

current situation in that State and

private certifying agents operate in the

same States. If a requested State organic

certification program proposes a

requirement or procedure that will have

a negative affect or discriminate against

private certifying agents operating in the

State, the Secretary will not approve the

requirement or procedure.

Some commenters asked whether

these national regulations will affect a

State’s accreditation of private certifying

agents operating in the State. A few

believe that States should be allowed to

continue or establish separate

accreditation programs for private

certifying agents.

We believe accreditation of certifying

agents is a core responsibility for USDA.

Establishment of a single national

accreditation program is an essential

part of the NOP. States will not accredit

private certifying agents. As stated

elsewhere in this proposal, any

accreditation responsibilities of a State’s

current organic certification program

will cease with implementation of this

program. Pursuant to the Compliance

provisions of this subpart, the governing

State official or designee charged with

compliance oversight under the State

program may investigate and notify the

NOP of possible compliance violations

on the part of certifying agents operating

in the State. However, the State may not

pursue compliance actions or remove

accreditation of any certifying agent

accredited by the Secretary. That

authority is the sole responsibility of the

Secretary.

If more restrictive State requirements

are approved by the Secretary, we will

review certifying agent qualifications in

the State and determine whether they

are able to certify to the approved, more

restrictive requirements. Our

accreditation responsibilities must

include oversight of both State and

private certifying agents, including any

foreign certifying agents that may

operate in a State, and to monitoring

their compliance with accreditation

requirements.

(4) Public comment on State

applications. One commenter suggested

that USDA publish for comment in the

Federal Register, a summary of each

State’s proposed organic program and

any requested program amendments.

The commenter claimed that an

approved State organic certification

program will effectively substitute the

State’s program for the NOP in the State.

Thus, the commenter contends, those

proposed State programs and program

amendments should be made available

for public comment. After consideration

of the implications of the comment, we

do not believe that the Federal Register

notification process is the proper venue

for receiving comments on a proposed

State program which is applicable only

to residents and business entities in the

State. We assume that the governing

State official is submitting the request

on behalf of the organic producers and

handlers in the State. Further, the

appropriateness of the State’s requested

more restrictive requirements should

stand on the merits of each proposal and

not on whether commenters in other

States believe the proposed

requirements are warranted. Certified

organic producers and handlers outside

the State will not be subject to the more

restrictive standards or requirements of

the State program. The more restrictive

standards will not be used to restrict

market access of organic product

produced in other States or countries.

Thus, there is no reason to receive

public comment on requested State

requirements from individuals not

directly affected by the proposed

requirements.

The commenter suggested that AMS

also publish a summary of each

proposed program and any amendments

to a program in a newspaper of general

circulation in the State. AMS will issue

a public information notices which will

announce each approved State organic

certification program and any approved

amendments of a State program. The

notices will identify the unique

characteristics of the approved State

program that warranted the more

restrictive organic production or

handling requirements. We also will

include a summary of the new program

on the NOP homepage.

(5) State program consistencies.

Several commenters asked for

clarification of the first proposal’s terms,

‘‘consistent’’ and ‘‘substantive

amendments,’’ used in regard to State

programs operating under the NOP.

Being ‘‘consistent’’ with the NOP means

that a State program’s written standards

or requirements must be at least equal

to the standards and requirements of the

NOP. This is provided for in the Act.

Further, in allowing State organic

programs to have more restrictive or

higher standards, the Act requires that

those more restrictive standards and

requirements be consistent with the

purposes of the Act. To be ‘‘consistent’’

with the purposes of the Act means that

the requested, more restrictive standards

or requirements are of such a nature that

they do not undermine the application

of uniform national organic standards.

Thus, if a request for more restrictive

State organic standards is determined to

not be consistent with uniform national

organic standards, the State program

will not be approved by the Secretary.

The administrative procedures used by

the State in administering the 11 general

requirements of the State’s organic

program should have the same force and

effect of the procedures use by AMS in

administering this program.

The same commenters asked for

clarification of the term, ‘‘substantive

amendments,’’ in obtaining USDA

approval of more strict amendments for

one State’s organic certification

program. ‘‘Substantive amendments’’

means changes that would increase the

quantitative or qualitative standards or

specific requirements for an operation’s

or a product’s certification under the

State organic program. Once this

national program is operating, if a

question arises as to whether a desired

change in a State organic certification

program is considered substantive or

not, the State program’s governing State

official should raise the issue with the

Secretary.

State Programs—Additional Provisions

(1) State program responsibilities.

This subpart establishes that a State

organic certification program which

petitions for approval by the Secretary

will have increased responsibilities

under the NOP. Our first proposal did

not suggest qualifying factors or other

information that had to be submitted by

the State program’s governing State

official. This proposal specifies the 11

general requirements, addressed above,

and the needs-based environmental

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13595

conditions or special production

practices for establishing more

restrictive requirements. Those factors

establish our revised position that a

State must agree to incurring increased

responsibilities and obligations to be

approved as a State organic certification

program under the NOP. For instance,

as discussed above, a State with an

approved organic certification program

will oversee compliance and appeals

procedures for certified organic

operations in the State. Those

procedures must provide due process

opportunities such as rebuttal,

mediation, and correction procedures in

this proposal. Once approved by the

Secretary, the State governing official or

designee must effectively administer the

State’s organic certification program in

a manner that is consistent and

equitable for the certified parties

involved in compliance actions.

A State’s organic certification program

may include other programs and

projects which the State government

may conduct to promote or increase

organic production and handling in the

State. Such programs may include

organic promotion and research

projects, transition assistance, a

directory of organic production and

handling operations in the State, a

consumer referral program, or

certifications given to retail operations

which market organic foods. This

proposal will not prohibit such State

activities, provided those activities do

not establish production or handling

standards that work against the

purposes of the NOP. Such programs

may not advertise, promote, or

otherwise infer that the State’s organic

products are more organic or better than

organic product produced in other

States. Such programs and projects

should be beyond the scope of this

national program and, if so, will not be

subject to the Secretary’s review.

(2) Renewal of State program. The

final section provides that reviews of

State organic certification programs will

be conducted at least once every 5 years,

as required in paragraph (c) of section

6507. The intent of the provision is not

changed in this proposal. We will

provide further information regarding

reviews of State programs before the

first 5-year period is completed. We

expect that, with experiences gained

from a few years of program operation,

we will be able to propose more

appropriate procedures, guidelines, and

requirements to assure proper reviews

of operating State organic programs.

Fees. This portion of subpart G sets

forth the regulations on fees and other

charges to be assessed for accreditation

and certification services under the

National Organic Program (NOP). These

regulations address the kinds of fees and

charges to be assessed by the

Department for the accreditation of

certifying agents, the level of such fees

and charges, and the payment of such

fees and charges. These regulations also

address general requirements to be met

by certifying agents in assessing fees

and other charges for the certification of

producers and handlers as certified

organic operations. Finally, these

regulations address the Secretary’s

oversight of a certifying agent’s fees and

charges for certification services.

Proposal Description

Fees and Other Charges for

Accreditation. Fees and other charges

will be assessed and collected from

applicants for initial accreditation and

accredited certifying agents submitting

annual reports or seeking renewal of

accreditation. Such fees will be equal as

nearly as may be to the cost of the

accreditation services rendered under

these regulations. Fees-for-service will

be based on the time required to render

the service provided calculated to the

nearest 15-minute period. Activities to

be billed on the basis of time used

include the review of applications and

accompanying documents and

information, evaluator travel, the

conduct of on-site evaluations, review of

annual reports and updated documents

and information, and the preparation of

reports and any other documents in

connection with the performance of

service. The hourly rate will be the same

as that charged by the Agricultural

Marketing Service (AMS), through its

Quality System Certification Program, to

certification bodies requesting

conformity assessment to the

International Organization for

Standardization ‘‘General Requirements

for Bodies Operating Product

Certification Systems’’ (ISO Guide 65).

Applicants for initial accreditation

and accredited certifying agents

submitting annual reports or seeking

renewal of accreditation during the first

18 months following the effective date

of subpart F will receive service without

incurring an hourly charge for such

service.

Applicants for initial accreditation

and renewal of accreditation must pay

at the time of application, effective 18

months following the effective date of

Subpart F, a nonrefundable fee of

$500.00. This fee will be applied to the

applicant’s fees-for-service account.

When service is requested at a place

so distant from the evaluator’s

headquarters that a total of one-half

hour or more is required for the

evaluator(s) to travel to such place and

back to the headquarters, or at a place

of prior assignment on circuitous

routing requiring a total of one-half hour

or more to travel to the next place of

assignment on the circuitous routing,

the charge for such service will include

all applicable travel charges. Travel

charges may include a mileage charge

administratively determined by the

Department, travel tolls, or, where the

travel is made by public transportation

(including hired vehicles), a fee equal to

the actual cost thereof. If the service is

provided on a circuitous routing the

travel charges will be prorated among

all the applicants and certifying agents

furnished the service involved on an

equitable basis. Travel charges will

become effective for all applicants for

initial accreditation and accredited

certifying agents on the effective date of

subpart F. The applicant or certifying

agent will not be charged a new mileage

rate without notification before the

service is rendered.

When service is requested at a place

away from the evaluator’s headquarters,

the fee for such service shall include a

per diem charge if the employee(s)

performing the service is paid per diem

in accordance with existing travel

regulations. Per diem charges to

applicants and certifying agents will

cover the same period of time for which

the evaluator(s) receives per diem

reimbursement. The per diem rate will

be administratively determined by the

Department. Per diem charges shall

become effective for all applicants for

initial accreditation and accredited

certifying agents on the effective date of

subpart F. The applicant or certifying

agent will not be charged a new per

diem rate without notification before the

service is rendered.

When costs, other than fees-forservice, travel charges, and per diem

charges are associated with providing

the services, the applicant or certifying

agent will be charged for these costs.

Such costs include, but are not limited

to, equipment rental, photocopying,

delivery, facsimile, telephone, or

translation charges incurred in

association with accreditation services.

The amount of the costs charged will be

determined administratively by the

Department. Such costs will become

effective for all applicants for initial

accreditation and accredited certifying

agents on the effective date of subpart F.

Payment of Fees and Other Charges.

Applicants for initial accreditation and

renewal of accreditation must remit the

nonrefundable fee along with their

application. Remittance must be made

payable to the Agricultural Marketing

Service, USDA, and mailed to: Program

Manager, USDA–AMS–TMP–NOP,

13596 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

Room 2945-South Building, PO Box

96456, Washington, DC 20090–6456 or

such other address as required by the

Program Manager. All other payments

for fees and other charges must be

received by the due date shown on the

bill for collection, made payable to the

Agricultural Marketing Service, USDA,

and mailed to the address provided on

the bill for collection. The

Administrator will assess interest,

penalties, and administrative costs on

debts not paid by the due date shown

on a bill for collection and collect

delinquent debts or refer such debts to

the Department of Justice for litigation.

Fees and Other Charges for

Certification. Fees charged by a

certifying agent must be reasonable, and

a certifying agent may charge applicants

for certification and certified production

and handling operations only those fees

and charges that it has filed with the

Administrator. The certifying agent

must provide each applicant with an

estimate of the total cost of certification

and an estimate of the annual cost of

updating the certification. The certifying

agent may require applicants for

certification to pay at the time of

application a nonrefundable fee of no

more than $250.00 which must be

applied to the applicant’s fees-forservice account. The certifying agent

must provide all persons inquiring

about the application process with a

copy of its fee schedule.

Fees—Changes Based on Comments.

This portion of subpart G differs from

our first proposal in several respects as

follows:

(1) Application and Administrative

Fees. We have removed the provisions

which required certifying agents to pay

application and administrative fees.

These fee provisions have been replaced

with provisions for the assessment of

fees for service equal as nearly as may

be to the cost of the accreditation

services rendered under these

regulations. In other words, we will be

assessing fees and charges only for

activities related to accreditation. These

fees and charges will be assessed and

collected from applicants for initial

accreditation and accredited certifying

agents submitting annual reports or

seeking renewal of accreditation. The

balance of costs incurred by the NOP

will be funded through appropriations.

We have retained the requirement, with

modification, that certifying agents

reimburse the Department for travel, per

diem, and related other costs associated

with providing accreditation services.

We have taken these actions in an

attempt to minimize the cost of this

program on certifying agents. Certifying

agents will be charged for the actual

time and travel expenses necessary for

the NOP to perform accreditation

services.

This proposed program is similar to

the Quality Systems Certification

Program (QSCP) established pursuant to

7 CFR part 54. The QSCP is an auditbased program administered by AMS

through its Livestock and Seed Program,

which provides meatpackers,

processors, producers, and other

businesses in the livestock and meat

trade with the opportunity to have

special processes or documented quality

management systems verified. Since the

procedures used for accrediting State

and private entities as accredited

organic certifying agents are similar to

those used to certify other types of

product or system certification programs

under the QSCP, we have decided to use

this existing program and its staff in

examining certifying agents’ operations

and evaluating their compliance with

the Act and these regulations. Using the

QSCP and its staff will enable the NOP

to provide the necessary services

without creating a separate bureaucracy.

Hourly fees to be charged for services

under this program will be the same as

those under the QSCP, currently

estimated at $95.00 per hour.

This fee of approximately $95.00 is

greater than the $42.20 base rate charged

under the voluntary user-fee-funded

program established by AMS to verify

that State and private organic certifying

agents in the United States comply with

the requirements prescribed under ISO

Guide 65. This program, administered

by the AMS Livestock and Seed

Program, applied the aggregate meat

grading rate for services to this ISO

Guide 65 verification program for State

and private organic certificating agents.

The grading rate of $42.20 was the only

rate for which AMS was authorized to

charge at the time that the program to

assess ISO Guide 65 conformity by

organic certifying agents was

implemented. This was not the actual

audit rate of approximately $95.00 for

such services. The AMS Livestock and

Seed Program will engage in rulemaking

to establish audit fees for its QSCP. As

noted above, those fees are expected to

be approximately $95.00 per hour. The

NOP will notify accredited certifying

agents of proposed rate changes and

final actions on such rates by AMS.

To minimize the economic impact of

implementing the NOP on certifying

agents, we have decided to provide

services for accreditation during the first

18 months following the effective date

of new subpart F without an hourly

charge for all applicants for initial

accreditation and accredited certifying

agents. This represents full

subsidization of the hourly costs for

accreditation by the Department during

the first 18 months of operation. This

18-month subsidization of the hourly

costs will prove especially beneficial to

any applicant for accreditation that

submits a substandard application or

has difficulty establishing eligibility for

accreditation. Certifying agents will be

charged for accreditation service at the

published hourly rate on the first day of

the nineteenth month following the

effective date of subpart F.

Over 15,000 comments were received

on fees, with all opposing the first

proposal’s fee provisions. In addition to

comments from consumers, comments

were received from State agencies,

organic growers, grower associations,

and certifying agents. Most of these

commenters expressed the belief that

the proposed fees would price small

certifying agents out of the organic

industry. Almost half of the over 15,000

comments suggested a sliding-scale fee

system, rather than the flat fee system in

the first proposal, to accommodate the

economic needs of small certifying

agents. We have not accepted the

concept of a sliding-scale fee system.

Rather, as noted above, we are

proposing that certifying agents be

charged for the actual time and travel

expenses necessary for the NOP to

perform accreditation services. Under

this fee system, smaller certifying agents

should pay less in hourly charges to

obtain and maintain certification than

larger certifying agents. This

assumption, however, is contingent on

the quality of all documentation

submitted to the Department, certifying

agent recordkeeping, and the efficiency

of the certifying agent in meeting the

requirements of this part. The fees and

other charges for accreditation

regulations are found in § 205.640.

(2) Payment by Certified Check. We

have removed the requirement that the

payment of fees and charges to the

Department be by certified check or

money order. We have made this change

because we agree with commenters that

this requirement is unnecessary and

potentially burdensome.

Nearly all industry commenters

opposed the form and method of

payments stated throughout the original

fee sections. Commenters stated that

payment by certified check or money

order was unnecessary and would create

an additional burden on individual

producers, handlers, and private

certifiers. A few State commenters

stated that it was insulting for the U.S.

Department of Agriculture (USDA) to

require a State government agency to

pay for its accreditation with a certified

check.

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13597

(3) Producer and Handler Fees to the

Department. We have removed the

provisions which required the payment

of certification fees by producers and

handlers to the Department. We have

taken this action because we believe

that the goal of recovering program costs

through fees and other costs charged to

producers and handlers for certification

as certified organic operations should be

balanced against the Act’s purpose to

facilitate interstate commerce in fresh

and processed food.

We received over 15,000 comments

all opposing the first proposal’s fee

provisions for producers and handlers.

Comments were received from

consumers, State agencies, organic

growers, grower associations, and

certifying agents. Most of these

commenters stated that the proposed

fees would price small producers and

handlers out of the organic industry.

Hundreds of these commenters stated

that the proposed fees favor large

production operations. Almost half of

the over 15,000 comments suggested a

sliding-scale fee system, rather than the

flat fee system proposed in the first

proposal, to accommodate the economic

needs of small producers and handlers.

Hundreds more suggested that small

producers and processors be exempt

from the payment of fees.

Most of the State agency, organic

grower, grower association, and

certifying agent (industry) commenters

spoke to the very small size and familyfarm nature of the average organic

production operation and how those

operations would be affected by the

proposed fees. Commenters from this

group who offered estimates suggested

that one-third to over one-half of organic

producers in their area or State are very

small organic producers operating at or

near the exemption level of $5,000 in

annual sales. They said those operating

just above the exemption level could be

forced out of organic production by the

extra fee and the increased certification

charges passed down by certifying

agents who would have to pay the

proposed accreditation charges.

Commenters, industry and consumer,

stated that, rather than encouraging

growth and new participation in organic

agriculture, the costs of certification

would stifle growth and discourage

small producer participation in organic

agriculture. An industry commenter

stated that exempt producers who might

want to be certified so they could

market their product as organic would

be dissuaded from doing so because of

the cost of certification. Industry

commenters also stated that the

additional USDA fee on small handlers

would make small organic handling

operations marginal. A few State

agencies commented that many small

organic producers also conduct their

own on-farm handling and that these

operations would be forced out of the

organic industry by the excessive

handler fee and reporting burdens.

The comment, that exempt producers

who might want to be certified so they

could market their product as organic

would be dissuaded from doing so

because of the cost of certification,

requires clarification. It may be true that

such producers would be dissuaded

from seeking certification because of the

cost of certification. It is not true,

however, that exempt producers must

be certified to sell or label their

production as organic. The Act exempts

small producers, those who produce no

more than $5,000 in agricultural

products, from the requirement that a

person may sell or label an agricultural

product as organically produced only if

such product is produced and handled

in accordance with the Act.

Industry commenters recommended

complete changes to the proposed fee

structure. Most, like the consumer

commenters, suggested a sliding scale

for fees based on either size or sales

volume. Several industry commenters

stated that the Act does not require that

USDA recover all program costs from

assessments on producers, handlers,

and certifying agents. They cited section

6522 of the Act as authorizing the use

of appropriated funds to carry out the

program. Some industry commenters

suggested that appropriated funds

should be used to cover all

administrative and overhead costs and

that fees collected from the industry

should only be used for specific

program activities such as accreditation.

A few industry commenters suggested

that organic farmers not be charged an

AMS fee but that each be required to

sign an affidavit of compliance with

program requirements.

After further discussions within the

Department and review of the

comments, we have determined that the

fee structure for the NOP should be

modified to reduce costs to all organic

sectors. We acknowledge that the fees

proposed in the first proposal might

have discouraged industry growth and

might not have facilitated interstate

commerce of organic products. Because

we believe that fees and other costs

charged to producers and handlers for

certification as certified organic

operations should be kept to a minimum

to encourage industry participation and

growth, we have removed the

regulations which provided for the

payment of fees to the Department by

certified production and handling

operations.

(4) Estimated Cost of Certification. We

have added, at § 205.642, the

requirement that the certifying agent

must provide each applicant with an

estimate of the total cost of certification

and an estimate of the annual cost of

updating the certification. Additionally,

the certifying agent must provide all

persons inquiring about the application

process with a copy of its fee schedule.

We have added these provisions to

ensure that producers and handlers

have early and ready access to the

information they need to consider cost

in selecting an agent to certify their

production or handling operation. We

consider this to be especially important

because, as noted in the preamble to

subpart F, we have removed the

requirement that the certifying agent

charge only such fees to applicants for

certification and operations it certifies

that the Secretary determines are

reasonable. We have removed this

requirement because we concur with

those commenters who expressed the

belief that certifying agents should be

permitted to set their own fees without

the approval of the Secretary. We have

also removed this requirement because

we concur with the commenters’ belief

that production and handling operations

are free to consider cost in selecting an

agent to certify their production or

handling operation.

Fees—Changes Requested But Not

Made. This subpart retains from our first

proposal regulations on which we

received comments as follows:

(1) Accreditation Charges Billed to

State Certifying Agents. Several State

certifying agents stated that State

certifying agents should not be assessed

accreditation charges. Commenters

stated that most State certifying agents

could face large accreditation costs

because they have many county or

regional offices which would be

considered subsidiaries of the

headquarters office. They stated that

these charges would have to be passed

on to producers and handlers or paid

with supplemental State funds. A few

State certifying agents stated that USDA

should pay the States, rather than vice

versa, because of the State organic

programs’ contributions to the national

program. At least one State

representative commented that

accreditation fees for State certifying

agents should be less than for private

certifying agents because State certifying

agents should require less review and

oversight by AMS.

We disagree with those commenters

who recommended that State certifying

agents not be assessed accreditation

13598 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

charges, be charged less for

accreditation, or be paid to certify

production or handling operations. We

view such actions as constituting

unacceptable preferential treatment of

State certifying agents to the detriment

of private-entity certifying agents.

Accordingly, under this proposal, Stateentity certifying agents will be assessed

fees for accreditation under the same fee

structure as private-entity certifying

agents.

(2) Subsidization. Some industry

commenters stated that national

governments in Europe provide direct

subsidies and other economic incentives

for their farmers to grow organic. A few

questioned why the organic industry

would be charged for services while

some USDA programs are provided

without cost to other agricultural

sectors, and USDA actually pays some

farmers not to grow some commodities.

Industry commenters and many

consumer commenters stated that it was

unfair for this proposed program to

charge all costs to a fledgling

agricultural industry composed mostly

of small, family farmers and marginal

operations. Finally, a few industry

commenters proposed the philosophical

argument that program fees penalize

those who protect the earth and that

USDA should charge traditional

producers who damage the earth with

chemical applications and

nonsustainable cultural practices.

AMS is primarily a user-fee-based

Federal agency. The Act at section

6506(a)(10) requires the collection of

fees from producers, handlers, and

certifying agents. We are, therefore,

unable to provide for the full

subsidization of producers, handlers,

and certifying agents as espoused by

some commenters. Accordingly, this

proposal provides for the payment of

fees by producers, handlers, and

certifying agents. We have, however,

proposed regulations in this proposal

which we believe will minimize the

economic impact of the NOP on

producers, handlers, and certifying

agents.

Fees—Additional Provisions. Upon

further review of the fee provisions in

the first proposal, we have decided to

propose the following additions.

(1) Certification Fees Charged by

Certifying Agents. We have added, at

§ 205.642, regulations addressing

general requirements to be met by

certifying agents in assessing fees and

other charges for the certification of

producers and handlers as certified

organic operations. First, fees charged

by a certifying agent must be reasonable,

and a certifying agent may charge

applicants for certification and certified

production and handling operations

only those fees and charges that it has

filed with the Administrator. This is a

general requirement for accreditation

and is also found at § 205.501(a)(15) in

subpart F on accreditation. This

regulation does not prohibit certifying

agents from providing and charging for

services outside the NOP. Services that

certifying agents might provide outside

the NOP include in-house publications,

conferences, workshops, informational

meetings, and field days. Certifying

agents cannot require participation in

such activities by certified operations or

applicants for certification as a

condition of certification.

Second, the certifying agent may

require applicants for certification to

pay at the time of application a

nonrefundable fee of no more than

$250.00 which must be applied to the

applicant’s fees-for-service account. We

believe that this fee will help ensure

that certifying agents are compensated

for certification services provided to an

applicant that is found to be not

qualified to receive certification as an

organic production or handling

operation.

(2) Fees Charged to Foreign Certifying

Agents. We have removed the

provisions which required the payment

of fees for import programs. We have

taken this action because this proposal

includes foreign State entities and

foreign private entities which provide

certification services under the

accreditation requirements of this part.

Accordingly, such entities are covered

under the fees for accreditation

provisions of § 205.640.

Compliance

This portion of subpart G sets forth

the enforcement procedures for the

National Organic Program (NOP). These

procedures describe the compliance

responsibilities of the Secretary, USDA,

and Agricultural Marketing Service

(AMS) officials acting on behalf of the

Secretary. These procedures also

describe responsibilities of State

programs’ governing State officials

(governing State officials) and State and

private certifying agents for compliance

under the NOP. The NOP is the AMS

office that reviews applications and

initiates approvals of accreditation of

new certifying agents, conducts

oversight of accredited certifying agents,

and reviews and recommends

continuation of accreditation of

certifying agents. These provisions also

address the rights of certified

production and handling operations and

accredited certifying agents operating

under the NOP. Approval or denial of

applications for certification and

accreditation are addressed under

subparts E and F, respectively.

Proposal Description

The Secretary is required under the

Act to review the operations of State

organic certification programs,

accredited certifying agents, and

certified production or handling

operations for compliance with the Act

and these regulations. The Program

Manager of the NOP may carry out

oversight of compliance proceedings on

behalf of the Secretary and the

Administrator. However, most reviews

and analyses of certification

noncompliance will be conducted by

the certifying agent which certified the

operation. With regard to certifying

agents, the Program Manager may

initiate proceedings to suspend or

revoke the accreditation of a certifying

agent for failure to conduct

accreditation activities or maintain

accreditation requirements pursuant to

subpart F of this regulation.

In States with an approved State

organic certification program, the State

program’s governing State official is

responsible for administration of the

State’s compliance program for certified

operations. Governing State officials

also may review and investigate

complaints of certifying agents

operating in the State who may not be

in compliance with the accreditation

requirements of the Act and these

regulations. They must notify the

Program Manager of such

noncompliance activities and make

information regarding the violation

available to the NOP for appropriate

action.

The Program Manager may initiate

proceedings to suspend or revoke a

certified operation’s certification if a

certifying agent or State program’s

governing State official fails to take

appropriate enforcement action or if an

operation is found to be erroneously

certified by a certifying agent whose

accreditation has been suspended or

revoked.

The compliance provisions of the

NOP are consistent with the

requirements of the Administrative

Procedure Act (APA) (5 U.S.C. 553–559)

in that this program provides for due

process including an opportunity for

hearing, appeal procedures, written

notifications of noncompliance, and

opportunities to demonstrate or achieve

compliance before any suspension or

revocation of organic certification or

accreditation is invoked. An exception

to the initial due process steps under

the APA is provided in instances of

willful violations. However, willful

violations may be appealed pursuant to

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the Appeals procedure in this subpart.

A compliance action regarding

certification carried out under an

approved State program’s compliance

procedures will have the same force and

effect as a certification compliance

action carried out under these NOP

compliance procedures. The notification

process for denying applications for

certification and applications for

accreditation is laid out in subparts E

and F respectively.

Noncompliance Procedure for

Certified Operations. The Act provides

for the enforcement of certified

operations. Statutory oversight of

production and handling operations by

certifying agents includes review of

organic plans, residue and tissue testing,

authority to conduct investigations, and

responsibility to report violations.

Applicants for certification must meet

certification requirements of the NOP,

as determined by certifying agents.

Notification of Noncompliance. As

noted above, the Program Manager or

the governing State official may review

and investigate a certified operation

based on complaints and may initiate

noncompliance proceedings established

in this subpart. However, we expect that

most compliance procedures will begin

with a certifying agent’s inspection,

review, or investigation of such certified

operation. Thus, this noncompliance

procedure is proposed based on that

process.

A written notification of

noncompliance will be sent to the

certified operation if a certifying agent’s

inspection, review, or investigation

reveals any noncompliance with the Act

or these regulations. Noncompliance

may include, among other things,

production or handling practices or

conditions, use of substances, or

labeling which are not in compliance

with subparts C, Production and

Handling, or E, Certification, of this

regulation. The results of a residue test

may trigger a noncompliance

notification. A noncompliance

notification may encompass the entire

operation or a portion of the operation.

For instance, a violation at one farm

may not warrant loss of certification at

other farms of the certified operation not

affected by the violation.

A notification of noncompliance will

provide: (1) A description of each

condition, action, or item of

noncompliance; (2) the facts upon

which the notification is based; and (3)

the date by which the certified

operation must rebut the notification or

correct the noncompliance. A certified

operation may continue to sell its

product as organic upon receiving a

notification of noncompliance and

throughout the noncompliance

proceeding and any appeal procedure

which might follow the compliance

proceeding.

All written notifications sent by

certifying agents and governing State

officials, as well as rebuttals, requests

for mediation, and notices of correction

of deficiencies sent by certified

operations will be sent to the

addressee’s place of business by a

delivery service which provides dated

return receipts. This will help assure

completed communications and timely

compliance procedures.

If a certified operation believes the

notification of noncompliance is

incorrect or not well-founded, the

operation may submit a rebuttal to the

certifying agent, providing supporting

data to refute the facts stated in the

notification. Rebuttals are provided to

allow certifying agents and certified

operations to informally resolve

noncompliance notices. Rebuttals

should be helpful in resolving

differences which may be the result of

misinterpretation of requirements,

misunderstandings, or incomplete

information. Alternatively, the certified

operation may correct the identified

deficiencies and submit proof of such

corrections. When the operation

demonstrates that each noncompliance

has been corrected or otherwise

resolved, the certifying agent will send

the certified operation a written

notification of noncompliance

resolution.

Proposed Suspension or Revocation of

Certification. If the noncompliance is

not resolved and is not in the process of

being resolved by the date specified in

the notification, the certifying agent will

send the certified operation a written

notification of proposed suspension or

revocation of certification for the entire

operation or a portion of the operation

affected by the noncompliance. The

notification will state: (1) The reasons

for the proposed suspension or

revocation; (2) the proposed effective

date of the suspension or revocation; (3)

the impact of the suspension or

revocation on the certified operation’s

future eligibility for certification; and (4)

that the certified operation has a right to

request mediation or to file an appeal.

The impact of a proposed suspension or

revocation may include the suspension

period or whether the suspension or

revocation applies to the entire

operation or to a portion or portions of

the operation. A governing State official

may not suspend or revoke certification

of an entity’s certified operations in

other States. Likewise, a certifying agent

may not suspend or revoke certification

of an entity’s operations which the

certifying agent does not certify.

If a certifying agent determines that

correction of a noncompliance is not

possible, the notification of

noncompliance and the proposed

suspension or revocation of certification

may be combined in one notification of

proposed suspension or revocation. The

certified operation will have an

opportunity to appeal that suspension

or revocation decision.

Mediation. A certified operation may

request mediation of any dispute

regarding denial of certification or

proposed suspension or revocation of

certification. Mediation is not required

prior to filing an appeal but is offered

as an option which may resolve the

noncompliance more quickly than the

next step, which is filing an appeal. If

a State program is in effect, the

mediation procedures established in the

State program, as approved by the

Secretary, must be followed. Mediation

will be requested in writing to the

applicable certifying agent. The dispute

will be mediated by a qualified mediator

mutually agreed upon by the parties to

the mediation. The parties to the

mediation will have no more than 30

days to reach an agreement following a

mediation session. If mediation is

unsuccessful, the certified operation

will have 30 days from termination of

mediation to appeal the proposed

suspension or revocation to the

Administrator.

Any agreement reached during or as

a result of the mediation process must

be in compliance with the Act and these

regulations. Also, the Secretary reserves

the right to review any mediated

settlement to assure that the terms of the

settlement conform with the

requirements of the Act and the NOP.

Suspension or Revocation. The

certifying agent will suspend or revoke

the certified operation’s certification

when the operation fails to resolve the

issue through rebuttal or mediation,

fails to complete needed corrections, or

does not file an appeal. The operation

will be notified of the suspension or

revocation by written notification. The

certifying agent must not send a

notification of suspension or revocation

to a certified operation that has

requested mediation or filed an appeal.

The decision to suspend or revoke

certification will be based on the

seriousness of the noncompliance and

on whether the noncompliance is a

willful action by the certified operation.

Such decisions must be made on a caseby-case basis. Section 6519 of the Act

establishes that willful violations

include making a false statement,

knowingly affixing a false label, or

13600 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

otherwise violating the purposes of the

Act. Certifying agents are responsible for

investigating whether a violation is a

willful act and advising the Program

Manager or governing State official of

the results of such investigation.

However, only the Program Manager or

governing State official may make the

final determination that a violation is

willful.

If a suspected willful noncompliance

is not a serious violation, a proposed

suspension rather than revocation may

be issued. Revocation is reserved for

serious instances of willful

noncompliance and other serious

violations.

The certifying agent may determine

that a lesser penalty of suspension is

warranted by the noncompliance. A

proposal to suspend certification may be

issued for violations that are inadvertent

or cannot be proven to be willful. A

suspension may be applicable only to

one area of operation or one field or

farm unit where the noncompliance

occurred.

A certified operation that has had its

certification revoked will not be eligible

to receive certification for an operation

in which such operation or person has

an interest for 5 years following the date

of revocation. If an individual is the

owner of a certified operation or is the

principal officer or director of

operations who is fully responsible for

complying with certification

requirements of this part, a suspension

or revocation could be issued in the

individual’s name. The effect would be

that another operation would be

ineligible for organic certification if that

individual is listed as a principal in the

operation. The Secretary may waive an

ineligibility period when it is in the best

interests of the certification program.

Noncompliance Procedure for

Certifying Agents. The Program

Manager, on behalf of the Secretary,

may initiate a compliance action against

an accredited certifying agent who fails

to carry out responsibilities entrusted to

the certifying agent or maintain

resources sufficient to meet

accreditation requirements in subpart F.

Compliance proceedings may be

initiated as a result of annual reviews

for continuation of accreditation, as a

result of site visits, or as a result of

investigations initiated in response to

complaints of noncompliant activities.

Compliance proceedings also may be

initiated on recommendation of a

governing State official.

A written notification of

noncompliance will be sent by the

Program Manager to an accredited

certifying agent when an inspection,

review, or investigation of such person

reveals any noncompliance with the Act

or these regulations. A notification of

noncompliance will provide a

description of each noncompliance

found and the facts upon which the

notification is based. Additionally, the

notification will provide the date by

which the certifying agent must rebut

the noncompliance notice or correct

each noncompliance described.

When documentation received by the

Program Manager demonstrates that

each noncompliance has been resolved,

the Program Manager will send the

certifying agent a written notification of

noncompliance resolution.

If a noncompliance is not resolved by

rebuttal or correction of violations, the

Program Manager will issue a proposed

suspension or revocation of

accreditation. The notification will state

whether the certifying agent’s entire

business, field office, or offices in a

geographic area or in a specified

technical field of accreditation are to be

suspended or revoked. For instance, if a

private certifying agent with field offices

in different geographic areas is cited for

a compliance violation in one area, the

Program Manager could determine that

only the accreditation of the

noncompliant operation should be

suspended or revoked.

If the Program Manager determines

that the noncompliance cannot be

immediately or easily corrected, the

Program Manager may combine the

notification of noncompliance and the

proposed suspension or revocation in

one notification. The notification of

proposed suspension or revocation of

accreditation will state the reasons and

effective date for the proposed

suspension or revocation. Such

notification will also state the impact of

a suspension or revocation on future

eligibility for accreditation and the

certifying agent’s right to file an appeal.

If the Program Manager has reason to

believe that a certifying agent has

willfully violated the Act or regulations,

the Program Manager may issue a

notification of proposed revocation of

accreditation. The proposed revocation

may be for the certifying agent’s entire

accreditation business, a particular field

office, or a specified technical area of

accreditation. This notification, because

it involves a willful violation, will be

sent without first issuing a notification

of noncompliance.

The certifying agent may file an

appeal of the Program Manager’s

determination, pursuant to § 205.681. If

the certifying agent fails to file an

appeal of the proposed suspension or

revocation, the Program Manager will

suspend or revoke the certifying agent’s

accreditation. The certifying agent will

be notified of the suspension or

revocation by written notification.

A certifying agent whose accreditation

is suspended or revoked must cease all

certification activities in each area of

accreditation and in each State for

which its accreditation is suspended or

revoked. Any certifying agent whose

accreditation has been suspended or

revoked must transfer to the Secretary

all records concerning its certification

activities that were suspended or

revoked. The certifying agent must also

make such records available to any

applicable governing State official. The

records will be used to determine

whether operations certified by the

certifying agent may retain their organic

certification.

A certifying agent whose accreditation

is suspended by the Secretary may at

any time submit a new request for

accreditation. Such request must be

accompanied by evidence

demonstrating correction of each

noncompliance and actions taken to

comply with and remain in compliance

with the Act and regulations. A

certifying agent whose accreditation is

revoked by the Secretary will be

ineligible to be accredited as a certifying

agent under the Act and regulations for

a period of not less than 3 years

following the date of revocation.

State Programs’ Compliance

Procedures. A State program’s governing

State official may initiate

noncompliance proceedings of certified

organic operations operating in the

State. Such proceedings may be

initiated for failure of a certified

operation to meet the production or

handling requirements of this part or the

State’s more restrictive requirements, as

approved by the Secretary. The

governing State official must attempt to

resolve the compliance violations

through State mediation and reviews of

corrections to operations.

The governing State official must

promptly notify the Program Manager of

commencement of enforcement

proceedings initiated against certified

operations. An enforcement proceeding,

brought by a governing State official

against a certified operation may be

appealed in accordance with the appeal

procedures of the State organic

certification program. There will be no

subsequent rights of appeal to the

Secretary.

Compliance—Changes Based On

Comments

This portion of subpart G differs from

our first proposal in several respects as

follows:

(1) Authority of certifying agents. We

have provided accredited certifying

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agents with authority to initiate

noncompliance proceedings which may

result in suspension or revocation of

producer and handler certifications. A

certifying agent’s notification of

proposed suspension or revocation of

certification provides an opportunity for

the certified operation to file an appeal

in accordance with the appeal

provisions of § 205.681. If a

noncompliance procedure initiated by a

certifying agent is not corrected,

remains unresolved, and is not

appealed, the certified operation’s

certification will be suspended or

revoked. If the certified operation files

an appeal, the action is turned over to

the Program Manager or applicable

governing State official for further

resolution. The suspension or

revocation will not become effective

unless upheld by a ruling on the appeal.

Commenters expressed opposition to

the notification of noncompliance with

certification requirements and

termination of certification provisions of

the first proposal. Those provisions

required a certifying agent to submit to

the Administrator a notice of its

recommendation to terminate the

certification of a certified operation or

any portion of a certified operation if

the certifying agent had reason to

believe the operation had ceased to

comply with the Act and regulations.

The commenters were opposed to the

Secretary assuming authority for

suspension or revocation of

certification. The commenters stated

that such decisions are the duty and

responsibility of certifying agents, with

the Secretary providing for appeals.

Some commenters expressed the belief

that the certifying agent’s position is

undermined by not having authority to

suspend or revoke a certification for

cause. Many commenters stated that

certifying agents must have such

authority in order to: (1) Achieve

producer and handler compliance with

the regulations; and (2) expedite the

enforcement process. They believe that

providing certifying agents with the

authority to suspend or revoke a

certification will preserve the NOP’s

integrity and increase consumer

confidence in the quality of the organic

products they purchase. Commenters

stressed that, in addition to providing

procedures for producer and handler

appeals, the Department provides a

system of checks and balances through

the accreditation program.

We agree that certifying agents should

have an important role to play in the

suspension or revocation of the

certification of production or handling

operation that they certify. This

proposal will enhance the certifying

agent’s authority to ensure that any

production or handling operation it

certifies is in compliance with the Act

and regulations. We also agree that

providing certifying agents with a more

direct role in suspension or revocation

proceedings will shorten the

compliance process.

Accordingly, as noted above, we have

provided accredited certifying agents

with increased authorities in

enforcement proceedings. They will

make determinations to accept or reject

rebuttals submitted in response to

notifications of noncompliance. They

will be responsible for defending their

determinations, which must be

consistent with the position of the NOP,

in mediation processes. Finally, their

decisions to propose suspension or

revocation of producer and handler

certifications will become effective

unless appealed by the certified

operation. Authority for certifying

agents to take enforcement actions

against certified operations is found in

§ 205.662.

(2) Mediation. We have added a new

section authorizing certified operations

to request mediation of any dispute

regarding denial of certification or

proposed suspension or revocation of

certification. This section addresses the

request for mediation, selection of the

mediator, the time period for reaching

an agreement, requirements of an

agreement, and appealing a

noncompliance decision if mediation is

unsuccessful. The parties in the

procedure must make administrative

arrangements for the mediation and

arrange for payment of any costs

involved in the mediation. The

Department will not finance or

participate in such mediation. This

additional provision is found at

§ 205.663.

Commenters requested that the

Department authorize the use of

alternative dispute resolution

procedures and mediation. We support

the idea of using mediation to resolve

disputes with respect to denial of

certification or proposed suspension or

revocation of certification. Some States

use mediation as a component of their

appeal process. We believe mediation

could prove effective in resolving many

of the possible disputes between

applicants for certification or certified

operations and certifying agents.

Without mediation, such disputes

would probably be referred to the

Administrator in the form of appeals.

Mediation in some cases, however, may

be of limited value because all

agreements reached during mediation or

as a result of the mediation process

must be in compliance with the Act,

these regulations, and any policies or

procedures governing the NOP. While

we presume a mediated settlement will

be in accordance with the Act, the

Secretary has authority to review and

overrule a mediated settlement if the

Secretary determines the settlement is

not in accordance with Act and these

regulations.

(3) State certification program.

Commenters generally requested that

States administer and enforce their own

organic certification programs. We have

added regulations in these provisions

addressing States’ enforcement of their

programs regarding certified producers

and handlers operating in the State.

These regulations clarify a State’s

responsibility to provide for

enforcement and appeal proceedings

which are consistent with these

regulations and for keeping the

Secretary informed of such proceedings.

We have added these regulations

because we believe that a State must

have the authority to initiate

compliance actions to enforce its

organic certification program. The

regulations are found at § 205.668.

Regarding accreditation authorities,

commenters stated that a State

program’s governing State official

should have authority to suspend or

revoke the accreditation of private

certifying agents operating within the

State. Sections 6515(j) and 6519(e) of

the Act address suspension and

revocation of accreditation by the

Secretary or governing State official.

While the Act may provide for the

possibility of such authority being used

by governing State officials, it also

requires the Secretary to establish a

workable accreditation program and it

grants sole authority to the Secretary to

accredit certifying agents. Therefore, the

Secretary must have sole authority to

suspend or revoke that accreditation.

This does not mean that governing

State officials are denied a role in

oversight of certifying agents operating

in their States. If a governing State

official believes a certifying agent

operating in the State is not in

compliance with the accreditation

requirements of the Act or is not

properly certifying producers or

handlers to NOP and the State’s

approved unique organic certification

requirements, the governing State

official must investigate the possible

noncompliance. If evidence of

noncompliance is found, the governing

State official must notify the Program

Manager of such noncompliance

activities and document those activities.

The Program Manager will investigate

such complaints of noncompliance.

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(4) Right of appeal. We have added

the requirement that any notification of

proposed suspension or revocation must

include a notice to the certified

operation’s or certifying agent’s of its

right to file an appeal. Commenters

requested that the notification of

proposed suspension or revocation

provisions for certifying agents

reference the appeals section. We agree

with the commenters’ request and add

that all recipients of a notification of

proposed suspension or revocation

should be made aware of their appeal

rights. Notification of appeal rights is

found in § 205.662 for certified

operations and § 205.665 for certifying

agents.

Compliance—Changes Requested But

Not Made

This subpart retains from our first

proposal regulations on which we

received comments as follows:

(1) Revocation period. Commenters

stated that a 5-year period of

ineligibility for certification after

revocation of certification is too harsh a

punishment to apply in all cases. Some

commenters suggested that ‘‘shall not be

eligible’’ should be replaced with ‘‘may

be deemed ineligible’’ so that the

penalty provision would be available for

flagrant violations of the Act but would

not have to be applied to all violations.

A commenter suggested a maximum

period of ineligibility of 3 years be

established for certified operations. The

commenter’s justification was that

organically produced agricultural

products must be produced on land to

which no prohibited substances have

been applied for 3 years prior to harvest.

This commenter also stated that the

ineligibility waiver should be a local

decision with notice to the

Administrator.

Section 6519(c) of the Act requires

certification ineligibility for 5 years

unless reduced or eliminated by the

Secretary. Revocation of a certification

is a serious action subject to due process

for the accused certified producer or

handler. We believe that any

noncompliance action, combination of

noncompliance actions, or history of

noncompliance activities deemed to

warrant the revocation of certification

also warrants ineligibility from

certification for 5 years unless reduced

or eliminated by the Secretary. If the

noncompliance is not significant

enough to warrant revocation of the

operation’s certification, the certifying

agent, State program’s governing State

official, or Secretary may choose to

suspend the operation’s certification for

a period of time less than the 5-year

revocation period. We disagree with the

suggestion that ineligibility waivers

should be decided at the local level.

Actions which are finalized by the

governing State official, Administrator,

or Secretary cannot be subject to

reversal or waivers by certifying agents.

Additionally, a national program such

as this must have uniformity in

application, which would be less likely

if individual certifying agents were

permitted to establish their own criteria

for ineligibility waivers. Accordingly,

the ineligibility and waiver provisions

are unchanged in this proposal.

(2) Accreditation sanctions.

Commenters stated that suspension and

revocation of accreditation should be

applied fairly to both private and State

certifying agents. Governing State

officials do not have any accreditation

authorities under this proposal—which

may reduce private certifying agents’

concerns of unfair or unequal treatment.

Accreditation compliance actions by the

Program Manager and the Administrator

will be conducted impartially and in

accordance with the Administrative

Procedure Act and Department policies.

Revocation would be based on a

determination that a private certifying

agent willfully violated the Act or these

regulations or falsely or negligently

certified a production or handling

operation as an organic operation. The

Act does not authorize the revocation of

a State certifying agent’s accreditation.

However, because suspension of such

entity can be established for any period

of time, a suspension can be effectively

equivalent to a revocation of

accreditation. Accordingly, this

proposal retains the provisions for the

suspension of accreditation for private

and State certifying agents and the

revocation of accreditation for private

certifying agents.

Compliance—Additional Provisions

Upon further review of the

accreditation provisions in the first

proposal, we have decided to propose

the following additions and changes.

(1) Enforcement rights of the

Secretary. We have added a general

section addressing specific enforcement

rights of the Secretary. First, this section

clarifies that the Program Manager on

behalf of the Secretary and the

Administrator may inspect and review

State organic certification programs,

accredited certifying agents, and

certified production or handling

operations for compliance with the Act

or regulations. The Program Manager

has this oversight authority in States

with State organic certification

programs as well as in States without

such programs.

Second, this section provides that the

Program Manager may initiate

proceedings to suspend or revoke a

certified operation’s certification when a

certifying agent or governing State

official fails to take appropriate

enforcement action against a certified

operation that is not in compliance with

the Act or these regulations. We have

added this provision because this

proposal provides certifying agents and

governing State officials with

enforcement authorities, including the

suspension and revocation of

certifications. However, we believe the

Secretary, through the Program

Manager, must have authority to take

such actions if a certifying agent or

governing State official fails to carry out

its responsibilities.

Third, this section provides that the

Program Manager may initiate

proceedings to suspend or revoke a

certified operation’s certification upon

suspension or revocation of the

operation’s certifying agent’s

accreditation. We have added this

provision to enable the Program

Manager to suspend or revoke

certification of any operation that a

certifying agent certified following

procedures or practices that are not in

compliance with the Act or these

regulations. This addition is found at

§ 205.660.

(2) Certifying agent investigations. We

have added a section to clarify that

certifying agents may investigate

complaints of noncompliance with the

Act or regulations concerning

operations that they have certified. This

section does not authorize a certifying

agent to investigate certified operations

that the certifying agent has not

certified. Such complaints should be

reported to the certifying agent that

certifies the operation in question. This

addition is found at § 205.661.

(3) Certified operation rebuttals. We

have added a certified operation’s right

to rebut any noncompliance described

in a notice of noncompliance. We

believe this provision is necessary to

clarify that certified operations should

be able to present facts or arguments

refuting the certifying agent’s findings.

We see this as an informal process

between the certified operation and the

certifying agent to clarify possible

misunderstandings or misinterpretation

of requirements, data, or information.

The APA requires such opportunities

prior to suspension or revocation.

Certified operations that successfully

refute a finding of noncompliance will

receive a notification of noncompliance

resolution. Any certified operation

unable to successfully refute a finding of

noncompliance must correct the

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noncompliance or face possible

suspension or revocation of its

certification. This addition is found at

§ 205.662(a)(3).

(4) Certifying agent rebuttals. We also

have added a certifying agent’s right to

rebut any accreditation noncompliance

described in a notice of noncompliance

issued by the Program Manager. This

also will be an informal process and is

consistent with the intent of the APA.

We believe this provision is necessary to

clarify that certifying agents should be

able to present facts or arguments

refuting the Program Manager’s

findings. Certifying agents that

successfully refute a finding of

noncompliance will receive a

notification of noncompliance

resolution. Any certifying agent unable

to successfully refute a finding of

noncompliance must correct the

noncompliance or face possible

suspension or revocation of its

accreditation. This addition is found at

§ 205.665(a)(3).

(5) Willful noncompliance. We have

also added authority for certifying

agents and governing State officials to

move directly to a notice of proposed

revocation if a certification

noncompliance is a willful, serious

violation of these regulations. This will

allow expedited action in dealing with

serious violations of certification. The

due process provisions of the APA

provide an exception in cases of willful

violations. Even though a

noncompliance may be a willful act, the

certified operation maintains the right to

file an appeal of a proposed suspension

or revocation of certification.

Revocation of certification is reserved

for serious instances of willful

noncompliance and other serious

violations. If a suspected willful

violation is deemed not serious, a

proposed suspension of certification

rather than revocation may be issued.

Inspection and Testing, Reporting, and

Exclusion From Sale

This portion of subpart G sets forth

the inspection and testing requirements

for agricultural products that have been

produced on organic production

operations or handled through organic

handling operations.

Based on comments received

regarding the first proposal, we have

modified and restructured our residue

testing requirements. Commenters were

concerned about the cost of residue

testing to certified operations and

certifying agents, the determination of

detectable levels of prohibited

substances, and the exclusion of

contaminated products from sale as

organically produced.

Residue testing plays an important

role in organic certification by providing

a means for monitoring compliance with

the National Organic Program (NOP)

and by discouraging the mislabeling of

agricultural products. This testing

program provides State programs’

governing State officials and certifying

agents with a tool for ensuring

compliance with three areas for testing:

(1) Preharvest residue testing, (2)

postharvest residue testing, and (3)

testing for unavoidable residual

environmental contamination levels.

Proposal Description

Under the residue testing

requirements of the NOP, we propose

that all agricultural products sold,

labeled, or represented as organically

produced be available for inspection by

the Administrator, State program’s

governing State official, or certifying

agent. Organic farms and handling

operations must be made available for

inspection under proposed Subpart E,

Certification. In addition, products from

the aforementioned organic operations

may be required by the State program’s

governing State official or certifying

agent to undergo preharvest or

postharvest testing when there is reason

to believe that agricultural products to

be sold or labeled as organically

produced have come into contact with

prohibited substances. The cost of such

testing will be borne by the applicable

certifying party and is considered a cost

of doing business. Accordingly,

certifying agents should make

provisions for the cost of preharvest or

postharvest residue testing when

structuring certification fees.

Preharvest and Postharvest Residue

Testing. The main objectives of the

residue testing program are to: (1)

Ensure that certified organic production

and handling operations are in

compliance with the requirements set

forth in this proposal; and (2) serve as

a means for monitoring drift and

unavoidable residue contamination of

agricultural products to be sold or

labeled as organically produced. Any

detectable residues of a prohibited

substance found in or on samples

during chemical analysis will serve as a

warning indicator to the State program’s

governing State official or certifying

agent.

The request for preharvest or

postharvest residue testing is based on

the Administrator’s, State program’s

governing State official’s, or certifying

agent’s belief that an agricultural

product has come into contact with one

or more prohibited substances. The

‘‘reason to believe’’ could be triggered

by various situations, for example: (1)

The applicable authority receiving

formal written complaint regarding the

practices of a certified organic

operation; (2) an open container of a

prohibited substance found on the

premises of a certified organic

operation; (3) the proximity of a

certified organic operation to a potential

source of drift; (4) suspected soil

contamination by historically persistent

substances; or (5) when the product

from a certified organic operation is

unaffected when neighboring fields or

crops are infested with pests. These

situations do not represent all of the

possible occurrences that would trigger

an investigation. Preharvest or

postharvest residue testing will occur on

a case-by-case basis.

In each case, an inspector

representing the Administrator,

certifying agent, or State program’s

governing State official will conduct

sampling. Testing for chemical residues

must be performed in an accredited

laboratory, defined as a laboratory that

has met and continues to meet the

requirements specified in the Food,

Agriculture, Conservation, and Trade

Act of 1990 (7 U.S.C. 138) (FACT Act)

for pesticide residue analyses of fresh

fruit and vegetables and/or pesticide

analysis of products derived from

livestock and fowl. AMS is currently

developing a regulation for the National

Laboratory Accreditation Program

(NLAP), which will accredit laboratories

under the FACT Act. We expect that the

NLAP will be implemented before or at

the same time as the NOP. When

conducting chemical analyses, the

laboratory must incorporate the

analytical methods described in the

16th edition of the Official Methods of

Analysis of the AOAC International or

other applicable validated methodology

for determining the presence of

contaminants in agricultural products.

When testing indicates that an

agricultural product to be sold or

labeled as organically produced

contains residues of prohibited

substances, certifying agents will

compare the level of detected residues

with a national mean of detection for

the specific commodity/pesticide

combination generated by the U.S.

Department of Agriculture’s (USDA)

Pesticide Data Program (PDP). This

national mean is defined as the mean

level of detected pesticide residues as

described in certain pesticide/

commodity pairs or combinations

established by USDA’s Pesticide Data

Program. The national mean for specific

commodity/pesticide combinations will

serve as a standard for the

Administrator, State programs’

governing State officials, and certifying

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agents to assist in monitoring for illegal

use violations. This information will be

made available by USDA to aid State

programs’ governing State officials and

certifying agents in making sound

evaluations and decisions regarding

detected levels of prohibited substances.

In addition, levels of unavoidable

residual environmental contamination

will be determined for crop-and sitespecific agricultural commodities to be

sold, labeled, or represented as ‘‘100

percent organic,’’ ‘‘organic,’’ or ‘‘made

with organic (specified ingredients).’’

These levels will represent limits at

which the Department may take

compliance action to suspend the use of

the contaminated area for organic

agricultural production. Initially,

unavoidable residual environmental

contamination levels will be set for

persistent prohibited substances (aldrin,

dieldrin, chlordane, DDE, etc.) in the

environment. In time, they may become

more inclusive of prohibited residues as

additional information becomes

available. Unavoidable residual

environmental contamination levels

will be based on the unavoidability of

the chemical substances and do not

represent permissible levels of

contamination where it is avoidable.

Historical residue data gathered from

Federal and State monitoring and

testing programs will be used to

determine these levels. They will be set

by the Administrator, in consultation

with the Food and Drug Administration

(FDA) and Environmental Protection

Agency (EPA).

After all tests and analyses have been

concluded, the results must be provided

to the Administrator. The results of

analyses and tests will be available, kept

on record, and reviewed by the

Department to evaluate concentration

levels of prohibited substances for

specific regions and agricultural crops.

Analyses and test results will also be

available for public access, unless the

residue testing is part of an ongoing

compliance investigation. Information

relative to an ongoing compliance

investigation will be confidential and

restricted to the public.

Detection of Prohibited Substances. In

the case of residue testing and the

detection of prohibited substances in or

on agricultural products to be sold,

labeled, or represented ‘‘100 percent

organic,’’ ‘‘organic,’’ or ‘‘made with

organic (specified ingredients),’’

detectable residues of prohibited

substances that exceed the national

mean of detection for the respective

commodity/pesticide combination or

unavoidable residual contamination

levels cannot be sold or labeled as

organically produced. When such an

agricultural crop is in violation of these

requirements, the certification of that

crop will be suspended for the period

that the crop is in production. Certifying

agents must follow the requirements

specified in §§ 205.662 and 205.663 of

Subpart G, Compliance. In addition,

when a State program’s governing State

official or a certifying agent detects a

prohibited substance in or on

agricultural products to be sold or

labeled as organically produced, the

State program’s governing State official

or certifying agent may conduct an

investigation to determine the cause of

the prohibited substance.

If the investigation into the cause of

a detectable residue level in a product

indicates that the residue was the result

of an intentional application of a

prohibited substance, the Administrator

is authorized to initiate proceedings to

revoke or suspend the certification

status of an operation or portion of that

operation. When testing indicates that

an agricultural product contains

prohibited substances that exceed either

the EPA tolerance level or FDA action

level, as applicable, for the prohibited

substance, the data revealing such

information will be promptly reported

to the appropriate regulatory health

agencies.

Emergency Pest Eradication or

Disease Treatment Programs. When a

prohibited substance is applied to an

organic production or handling

operation due to a Federal or State

emergency pest eradication or disease

treatment program and the organic

handling or production operation

otherwise meets the requirements of this

proposal, the certification status of the

operation shall not be affected as a

result of the application of the

prohibited substance, provided that: (1)

Any harvested crop or plant part to be

harvested that has contact with a

prohibited substance applied as the

result of a Federal or State emergency

pest eradication or disease treatment

program cannot be sold, labeled, or

represented as ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with organic

(specified ingredients)’; and (2) any

livestock that are treated with a

prohibited substance applied as the

result of a Federal or State emergency

pest or disease treatment program or

product derived from such treated

livestock cannot be sold, labeled, or

represented as ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with organic

(specified ingredients).’’

However, milk or milk products may

be labeled or sold as organically

produced beginning 12 months

following the last date that the dairy

animal was treated with the prohibited

substance. Additionally, the offspring of

gestating mammalian breeder stock

treated with a prohibited substance may

be considered organic if the breeder

stock was not in the last third of

gestation on the date that the breeder

stock was treated with the prohibited

substance.

Residue Testing—Changes Based on

Comments

This portion of subpart G differs from

our first proposal in several respects as

follows:

Residue Testing. (1) We have revised

the first proposal’s section on residue

testing and repositioned it under

§ 205.670(b).

Commenters disagreed with the

provisions in the first proposal which

required certifying agents to conduct

residue testing of products produced

and handled on operations that they had

certified not less frequently than every

5 years. They stated that the first

proposal’s requirements for residue

testing: (1) Were in excess of what the

Act actually requires; (2) were more

stringent than that of the industry norm;

(3) would create an unnecessary burden

on certifying agents and organic

production and handling operations;

and (4) would increase costs for

certified production and handling

operations. The commenters stated that

the NOP’s residue testing requirements

should utilize existing Federal and State

testing programs for the detection of

pesticide residues. They also stated that

residue testing should only be required

when it is known or suspected that

prohibited substances have been

applied to organic products.

We disagree with the commenters’

assertions regarding the first proposal’s

requirements for residue testing.

However, in an attempt to minimize the

burdens of residue testing, we have

proposed that State programs’ governing

State officials and certifying agents may

test agricultural inputs used for organic

production and require preharvest or

postharvest testing of any agricultural

product to be sold, labeled, or

represented as ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with organic

(specified ingredients)’’ when there is

reason to believe that the agricultural

product has come into contact with

prohibited substances. This change

allows State programs’ governing State

officials and certifying agents to perform

preharvest and postharvest residue

testing on a case-by-case basis.

Commenters requested that the rule

specify which laboratories are

authorized to perform residue testing

and what tests each laboratory would be

accredited to perform. We have defined

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an accredited laboratory as a laboratory

that has met and continues to meet the

requirements specified in the Food,

Agriculture, Conservation, and Trade

Act of 1990 (7 U.S.C. 138) for pesticide

residue analyses of fresh fruit and

vegetables and/or pesticide residue

analysis of products derived from

livestock and fowl. Any laboratory that

meets the specified requirements

therein may be used in conducting

residue tests. We have required that

accredited laboratories be used to

ensure consistency among data, testing

methodology, reporting procedures, and

other testing criteria needed to maintain

analytical uniformity in the residue

testing program. Validated analytical

methodologies for determining the

presence of contaminants in agricultural

products, such as those described in the

16th edition of the Official Methods of

Analysis of the AOAC International,

may be used.

Tolerance Levels for Pesticide

Residues. (2) We have prohibited the

sale and labeling of agricultural

products as organic when such products

have been tested for prohibited

substances and found to contain

residues of prohibited substances at

levels greater than the national mean of

detection for the specific commodity/

pesticide combination or levels greater

than the unavoidable residual

environmental contamination. Such

agricultural products cannot be sold,

labeled, or represented as ‘‘100 percent

organic,’’ ‘‘organic,’’ or ‘‘made with

organic (specified ingredients).’’ The

Administrator, State program’s

governing State official, or certifying

agent may conduct an investigation of

the applicable production or handling

operation to determine the cause of the

presence of any prohibited substance. If

the investigation reveals that the

presence of a prohibited substance was

the result of intentional application of

the prohibited substance, the

Administrator may initiate proceedings

to suspend or revoke the production or

handling operation’s certification.

(3) Commenters suggested that USDA

adopt a uniform standard for the

maximum allowable residue levels.

Some commenters expressed the belief

that it is impractical or too expensive to

establish site-specific, unavoidable

residual environmental contamination

levels for every commodity/pesticide

combination in every growing area.

Others argued that the cause of

contamination is irrelevant and that

crops that exceed the maximum residue

levels should not be allowed to be sold

as organic. Finally, others argued that a

single standard was needed because

contaminated products would not be

removed from the market immediately,

pending determination of cause.

Organic standards, including

provisions governing prohibited

substances, are based on the method of

production, not the content. The

primary purpose of the residue testing

approaches described in this proposal,

then, is to provide an additional tool for

State programs’ governing State officials

and certifying agents to use in

monitoring and ensuring compliance

with the NOP. We acknowledge that

consumers have a reasonable

expectation that organic products will

contain minimal residues of prohibited

substances. We are not allowing the use

of prohibited substances. We are making

provisions for the unavoidable

occurrences of prohibited substances

while ensuring that residue levels are

consistent with consumer expectations.

This proposal adopts PDP’s national

means of detected residue for specific

commodity/pesticide combinations and

the unavoidable residual environmental

contamination levels. Both standards

have been adopted for the purpose of

determining excessive prohibited

substances on agricultural products to

be sold, labeled, or represented as ‘‘100

percent organic,’’ ‘‘organic,’’ or ‘‘made

with organic (specified ingredients).’’

The national mean of detected residue

for a specific commodity/pesticide

combination is derived from detections

in the PDP monitoring program. As a

result of mean values being based on

conventional substances, we believe

that residue values that fall above this

mean, then, would be beyond

reasonable consumer expectations for

minimal residues. The situation is very

similar with respect to unavoidable

residual environmental contamination

levels. Even though the presence of

residues of certain persistent substances

may not be the result of intentional

application, we believe that excessive

residue levels would not be consistent

with the intentions of the Act.

Accordingly, when levels of a persistent

substance are detected above the

unavoidable residual environmental

contamination level, the product cannot

be sold or labeled as organically

produced.

Some commenters suggested that we

use a percentage of the EPA tolerance of

FDA action level, such as 5 or 10

percent, as a uniform standard for the

maximum allowable residue level. We

considered the comments but decided

not to adopt them for the following

reasons. The EPA tolerances for

pesticides are defined as the maximum

legal level of a pesticide residue in or on

a raw or processed agricultural

commodity, as set by the Environmental

Protection Agency under the Federal

Food Drug and Cosmetic Act, section

408. FDA action levels represent limits,

at or above which FDA will take legal

action against a food product to prevent

poisonous or deleterious substances

from entering the food supply. Both

EPA tolerances and FDA action levels

are public health-based standards. Our

rationale for residue testing, as a tool for

State programs’ governing State officials

and certifying agents to monitor

compliance with the NOP, is different

from these public health programs.

Accepting a percentage of EPA

tolerance or FDA action levels could

also pose a significant problem for

analytical laboratories trying to analyze

for prohibited substances. In some

cases, pesticides have tolerances that are

set near their analytical method’s Limit

of Quantification (LOQ). The LOQ is

defined as the lowest level where

analytical measurement becomes

quantitatively meaningful. If the EPA

tolerances are near the analytical

method LOQ’s, accurate determination

of the levels at 5 to 10 percent of the

tolerance may not be attainable for

analytical instrumentation currently

employed. Therefore, the Department

could be setting a level of concern

below the LOQ for some substances if it

adopted this recommendation. As a

fundamental principle, we have chosen

not to set an enforcement level that

could be below detection limits for

some substances. As an alternative, we

are proposing to use the PDP national

mean of detected residues for specific

commodity/pesticide combinations.

Other commenters suggested that

USDA adopt a ‘‘zero tolerance’’ for

residues of prohibited substances.

Under this suggestion, products

containing any detectable residues of a

prohibited substance would not be

allowed to be labeled as organically

produced. This proposal does not adopt

this suggestion. While standards strictly

prohibit use of any substance not found

on the approved National List, we

recognize that some minimal residues

may still be found in organic foods. We

believe our proposed residue testing

system and compliance provisions

should be adequate to protect the

integrity of agricultural products sold,

labeled, or represented as ‘‘100 percent

organic,’’ ‘‘organic,’’ or ‘‘made with

organic (specified ingredients).’’

Several commenters expressed

opposition to the first proposal not

requiring residue testing in the event of

drift. These commenters stated that

organic producers should report all

incidences of drift to their certifying

agent. The commenters further stated

that a crop should be tested for the

13606 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

presence of prohibited substances when

drift has or is suspected to have

occurred. They also stated that when the

test indicates levels of residues of

prohibited substances that exceed 5

percent of the EPA tolerance level, the

crop should be prohibited from being

sold or labeled as organically produced.

In response to commenters’ concern

about contamination from drift, we have

used some of their reasoning in the

development of our residue testing

program. Drift is defined as the physical

movement of prohibited substances

from the intended target site onto an

organic production operation or any

portion thereof. The National Organic

Standards Board (NOSB or Board)

recommended that agricultural products

exposed to drift not be sold, labeled, or

represented as ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with organic

(specified ingredients)’’ or fed to

livestock on organic operations. The

NOSB also recommended that

preharvest tissue testing of crops

suspected of receiving drift be required

to verify the presence or absence of

prohibited substances. This proposal

addresses the problem of drift through

the use of preharvest testing of crops

suspected of receiving drift of a

prohibited substance. Although drift

may occur, especially in those

agricultural regions where pesticide use

on nonorganic lands is routine and

heavy, exposure to drift does not

constitute use of a prohibited substance.

Therefore, preharvest testing provisions

have been established for State

programs’ governing State officials and

certifying agents to test when there is a

reason to believe that agricultural

products intended to be sold or labeled

as organically produced have come into

contact with prohibited substances. This

will allow a State program’s governing

State official or certifying agent to

determine whether the integrity of the

product has been affected. We believe

our proposed residue testing program

and compliance provisions should be

adequate to protect the integrity of

agricultural products.

Residue Testing—Changes Requested

but Not Made

(1) The original proposal provided

that land subject to a Federal or State

emergency disease or pest treatment

program should not lose its organic

certification and should not be required

to be withheld from organic production

for a period of 3 years. A few

commenters stated that a field treated

under such emergency situations should

lose its certification and should be

restricted for organic use for 3 years

following the emergency treatment. The

commenters stated this is necessary to

maintain consumer confidence in

organically produced products. We

believe the first proposal is consistent

with the requirements of the Act. The

proposal provided that crops and

livestock that had contact or been

treated with a prohibited substance

under such an official emergency

treatment program could not be sold or

labeled as organic. This proposal retains

that prohibition.

Commenters suggested that producers

work with the Federal or State agency

which requires an emergency treatment

program and arrange for use of materials

that are compatible with organic

production. While this may be possible

under certain emergency treatment

situations, it cannot be relied on as a

solution to every emergency treatment

situation. Appropriate alternative

treatments may not be available, or the

jurisdiction requiring the emergency

program may not grant alternative

treatments. Commenters also suggested

that producers avoid planting crops that

might be subject to pests or diseases

targeted by emergency treatment

programs to avoid emergency

treatments. We do not believe that is a

reasonable solution for producers.

Emergency treatment programs are used

in response to unforeseen infestations

and diseases. Only hindsight would

help organic producers determine

which crops to produce. Further, the

possibilities of damaging insect

infestations or plant or animal diseases

warranting an emergency treatment

program are so numerous that an

organic producer could be left with few

or no alternative crops or livestock to

produce. Cultural conditions and

market factors also would limit

selection of alternative organic

production. Accordingly, the

commenters’ recommendation that loss

of organic certification and an automatic

3-year prohibition on organic

production from land or livestock

treated under an official emergency

treatment program is not accepted.

Residue Testing. (2) Commenters

suggested that some of the responsibility

of residue testing be removed from

certifying agent responsibilities. They

also suggested that residue testing

requirements take into account current

Federal and State testing requirements

already in place for the detection of

pesticide residues.

We have not adopted language that

the Department would use current

Federal and State testing requirements

for the detection of pesticide residues in

the residue testing program. Although

State and Federal testing provide good

sources of data on pesticide residues,

the data may reflect criteria developed

for different sampling purposes,

showing wide variations in sample

selection and indicating different

laboratory capabilities and different

levels of quantification between and

within laboratories.

Residue Testing—Additional Provisions

Section 205.670(a) has been added. It

provides that the Administrator, the

State program’s governing State official,

and the applicable certifying agent have

access, for inspection purposes, to all

agricultural products being sold,

labeled, or represented as ‘‘100 percent

organic,’’ ‘‘organic,’’ or ‘‘made with

organic (specified ingredients).’’ In

addition, the organic products must be

made available for examination by said

authorities in the manner that they

prescribe.

Public comments did not suggest this

action. However, we believe it is

necessary to officially grant the

Administrator, the State program’s

governing State official, and the

applicable certifying agent the authority

to access all agricultural products

subject to inspection under this section.

This authority will help resolve

conflicts that may arise regarding

product accessibility during inspection

and testing.

Adverse Action Appeal Process. This

portion of subpart G sets forth the

general framework for an appeal process

for persons subject to compliance

determinations under the National

Organic Program (NOP). In this

proposal, we are empowering certifying

agents with the authority to make

decisions concerning denial of

certification and the suspension or

revocation of certified operations. This

empowerment of certifying agents

makes the appeal process very

important.

We envision two kinds of appeals will

be filed under these procedures: (1)

Producers and handlers appealing

denial of certification and proposed

suspension and revocation of

certification decisions by certifying

agents; and (2) certifying agents

appealing denial of accreditation and

proposed suspension and revocation

decisions by the NOP Program Manager.

The Administrative Procedure Act

(APA) (5 U.S.C. 553–559) provides that

entities such as certified operations and

accredited certifying agents have the

right to appeal any adverse actions

taken against their certification or

accreditation, respectively. Applicants

for certification and applicants for

accreditation who receive a denial of

certification or accreditation may appeal

that denial following this appeal

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procedure. The appeal process is the

same for applicants as for certified

operations and accredited certifying

agents.

The informal appeal process

described in this section is an extension

of the noncompliance proceeding

outlined in the Compliance section of

this subpart.

For certification proceedings, the NOP

and the Administrator will oversee

compliance proceedings and handle

certification appeals from operations in

States that do not have an approved

State organic certification program. The

Administrator will issue decisions to

sustain or deny appeals. If an appeal is

denied, the Secretary will initiate a

formal administrative review process,

which includes a hearing before an

administrative law judge and review by

the Department’s Judicial Officer. The

formal administrative review process

will be conducted pursuant to the

Department’s Uniform Rules of Practice,

7 CFR 1.130 through 1.151. The formal

administrative review will be the

Department’s final determination on the

noncompliance proceeding. That

decision may be appealed to the District

Courts. This section addresses the

informal appeal process which is used

to arrive at the Administrator’s decision

to sustain or deny an appeal.

In States with approved State organic

certification programs, the governing

State official or designee will oversee

certification compliance proceedings

and handle appeals from certified

operations in the State. The governing

State official or designated appeals

official will rule on appeals filed under

a State organic certification program.

Further appeal of that decision may be

made to the district court system.

Proposal Description

These appeal procedures provide that

persons subject to the Act who believe

that they are adversely affected by a

noncompliance decision of a certifying

agent, Program Manager, or governing

State official may appeal such decision

to the Administrator or to the applicable

State’s appeal process. Under

Compliance provision in this subpart,

accredited certifying agents initiate

noncompliance proceedings. If an

appeal of a certification decision is

filed, the process is referred to the

Administrator or governing State official

or designee, as applicable, to the State

where the applicant or certified

operation resides.

Certification Appeals

Applicants for certification may

appeal a certifying agent’s denial of

certification. Certified operations may

appeal a certifying agent’s notification

of proposed suspension or revocation of

the operation’s certification. These

appeals will be made to the

Administrator or to the applicable

governing State official or designated

official in the approved State organic

certification program.

Certification appeals may be filed

only after an applicant or a certified

operation has been given opportunity to

come into compliance with these

regulations or otherwise resolve the

specified noncompliance. Prior to filing

an appeal, the applicant or certified

operation must have failed in rebuttal,

refused to make specified corrections, or

made corrections which the certifying

agent subsequently determined to not

meet certification requirements of the

NOP.

If the Administrator or governing

State official sustains an appeal, the

applicant or certified operation will be

granted certification or continued

certification, as applicable to the

operation’s status. The applicant or

certified operation will not be required

to correct the actions or conditions cited

in the noncompliance notification. The

act of sustaining the appeal will not be

considered an adverse action and may

not be appealed by the certifying agent

which issued the notification.

If the Administrator or governing

State official denies an appeal, a formal

administrative proceeding will be

initiated to deny, suspend, or revoke the

certification. Such proceeding will be

conducted pursuant to the Department’s

Uniform Rules of Practice or pursuant to

the State’s formal appeal procedures.

Certified operations may continue to

operate throughout this informal

appeals process and the formal

administrative proceedings.

Accreditation Appeals

Pursuant to § 205.665 of this subpart,

all accredited certifying agents are

subject to the Program Manager’s review

of their operations and any

noncompliance actions resulting from

such reviews. As provided in § 205.668,

a State program’s governing State

official must advise the Program

Manager if an investigation of a

certifying agent reveals that the

certifying agent is not in compliance

with the Act or these regulations. The

appeal process for applicants is the

same as for accredited certifying agents.

An appeal may be filed with the

Administrator only after the certifying

agent fails to rebut the noncompliance

notice and fails to correct the

noncompliance specified. If the

Administrator sustains an appeal, the

applicant or certified operation will be

granted certification or continued

certification, as applicable to the

operation’s status. The applicant or

certified operation will not be required

to correct the actions or conditions cited

in the compliance notification. If the

appeal is denied, a formal

administrative proceeding will be

initiated to deny, suspend, or revoke the

accreditation.

The certifying agent may continue to

operate as a certifying agent throughout

the informal appeals process and the

formal administrative proceeding.

All appeals to the Administrator must

be filed in writing and sent to:

Administrator, USDA–AMS, Room

3071–S, PO Box 96456, Washington, DC

20090–6456. An appeal must include a

copy of the adverse decision to be

reviewed and a statement of the

appellant’s reasons for believing that the

decision was not proper and not made

in accordance with applicable program

regulations, policies, or procedures. A

certified operation must send a copy of

its appeal, to its certifying agent. All

written communications between

parties involved in appeal proceedings

must be sent to the recipient’s place of

business by a delivery service which

provides dated return receipts. Appeals

under a State’s procedure will be filed

pursuant to the State’s appeal process,

which should include addresses and

filing periods, etc.

An appeal must be filed within the

time provided in the letter of

notification or at least 30 days from the

date of receipt of the notice to deny,

suspend, or revoke certification or

accreditation. The appeal will be

considered ‘‘filed’’ on the date received

by the Administrator or, when

applicable, the State program’s

governing State official or such official’s

designee. The Administrator will notify

the appellant and the appellant’s

certifying agent that the appeal was

received. Unless appealed in a timely

manner, a notification to deny, suspend,

or revoke a certification or an

accreditation will become final. The

applicant, certified operation, or

certifying agent that does not file an

appeal in the time period provided

waives the right to further appeal of the

compliance proceeding.

Appeals—Changes Based On Comments

These appeal regulations differ from

our first proposal as follows:

(1) Decision-making. We have

clarified who will be making decisions

that may be appealed to the

Administrator. This proposal provides

that persons subject to the Act who,

during noncompliance proceedings

described in this subpart, believe that

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they are adversely affected by a

noncompliance decision of a certifying

agent, Program Manager, or governing

State official may appeal such decision

to the Administrator or the State’s

designated appeals official. This

clarification is found in § 205.680.

Commenters stated that the proposed

appeals procedures limited appeals to

decisions of the NOP staff. Commenters

requested that the appeals procedures

be available for decisions by the

Secretary, any representative of the

Secretary, and decisions by any

certifying agent. What we meant in the

first proposal was that appeals would be

filed on decisions made by the Program

Manager and certifying agents.

As noted above, we are empowering

certifying agents to make decisions

concerning denials of certification and

suspension or revocation of certified

operations’ certifications. Certifying

agents accredited under this program act

on behalf of the Secretary and the

Administrator to carry out certification

services, including noncompliance

actions. The Administrator or

designated governing State official will

make decisions to either sustain or deny

appeals by certification applicants and

certified operations, as applicable to the

State.

The Program Manager will make

decisions to deny applications for

accreditation and to suspend or revoke

certifying agents’ accreditations. The

Administrator will make all decisions to

either sustain or deny appeals by

accreditation applicants and certifying

agents.

(2) Appeal procedures. Commenters

requested detailed appeal procedures or

the use of citations to identify existing

Departmental appeal procedures which

would be used for appeals filed under

this program. We acknowledge that the

first proposal lacked detailed appeals

provisions. However, we believe this

explanation is more informative and

helpful for the commenters. The formal

administrative procedure following the

Department’s Uniform Rules of Practice

is required under the APA. The rules of

practice are not included in individual

rulemaking actions but may be found

under 7 CFR 1.130 through 1.151. The

combination of this informal appeal

procedure followed by the formal

administrative proceeding assures

applicants, certified operations, and

accredited certifying agents that they

will be given full opportunity to

respond to any noncompliance

proceeding brought against their

application or operation. Individual

State programs will have their own,

approved appeal procedures.

Commenters also recommended that

the Department should use an

independent USDA appeals division to

avoid conflict of interest by the Program

Manager or the Administrator in the

handling of appeals. We believe this

proposed appeal procedure ensures that

appeals will be administered by persons

not involved in the decision being

appealed. This appeals procedure is

consistent with the requirements of the

APA.

Paragraph (a)(1) of § 205.681 provides

that if the Administrator sustains an

applicant’s or certified operation’s

appeal of a certifying agent’s

noncompliance decision, the act of

sustaining the appeal shall not be an

adverse action subject to appeal by the

affected certifying agent. We have

included this provision because, as

noted above, certifying agents are

accredited by the Secretary to provide

certification services as agents of the

Secretary and the Administrator.

Therefore, if the Administrator

overrules a decision of an accredited

certifying agent, that certifying agent

cannot request an appeal of the

Administrator’s decision.

Appeals—Changes Requested But Not

Made

None.

Appeals—Additional Provisions

(1) State appeals procedures. We are

proposing that appeal proceedings in

States with organic certification

programs approved by the Secretary will

be carried out in accordance with the

official administrative appeal

proceedings in each State. A State’s

appeal process will be included as part

of the State’s organic certification

program. Because a State’s appeal

procedure is approved by the Secretary,

the final determination for a

certification appeal arrived at under that

procedure is considered to have the

effect of a decision by the Secretary.

Approved State appeal processes are

unique to each State and are not

included in this regulation.

Certification appeals are made to the

State program’s governing State official

or such official’s designee. The

governing State official or designee will

administer the appeal pursuant to

appeal procedures which have been

approved by the Secretary. Rulings on

such appeals, as noted in § 205.668, may

not be appealed to the Secretary. The

certification applicant or certified

operation may make subsequent appeal

to the Court of Appeals of the United

States for the circuit in which such

applicant or certified operation carries

on business or in the United States

Court of Appeals for the District of

Columbia Circuit.

(2) Accreditation appeals. This

proposal provides that the Program

Manager carries out all compliance

proceedings on accredited certifying

agents. The Secretary has sole authority

for accrediting certifying agents and,

therefore, must retain sole authority for

suspending or revoking that

accreditation. A State program’s

governing State official must investigate

any complaints of noncompliance on

the part of a certifying agent operating

in the State. If noncompliance activities

or conditions are found, the governing

State official must notify the Program

Manager of those compliance violations

or suspected compliance violations.

Miscellaneous

Section 205.690 provisions the Office

of Management and Budget control

number assigned to the information

collection requirements of these

regulations. Sections 205.691 through

205.699 are reserved.

List of Subjects in 7 CFR Part 205

Administrative practice and

procedure, Agriculture, Animals,

Archives and records, Foods, Imports,

Labeling, Organically produced

products, Plants, Reporting and

recordkeeping requirements, Seals and

insignia, Soil conservation.

For the reasons set forth in the

preamble, it is proposed that Title 7,

Chapter I of the Code of Federal

Regulations be amended as follows:

1. Parts 205 through 209 which are

currently reserved in subchapter K

(Federal Seed Act), are removed.

2. A new subchapter M consisting of

part 205 through 209 is added to read

as follows:

SUBCHAPTER M—ORGANIC FOODS

PRODUCTION ACT PROVISIONS

PART 205—NATIONAL ORGANIC

PROGRAM

Subpart A—Definitions

Sec.

205.1 Meaning of words.

205.2 Terms defined.

Subpart B—Applicability

205.100 What has to be certified.

205.101 Exemptions and exclusions from

certification.

205.102 Use of the term, ‘‘organic.’’

205.103 Recordkeeping by certified

operations.

205.104 Foreign applicants.

205.105–205.199 [Reserved]

Subpart C—Organic Crop, Wild Crop,

Livestock, and Handling Requirements

205.200 General.

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13609

205.201 Organic production and handling

system plan.

205.202 Land requirements.

205.203 Soil fertility and crop nutrient

management practice standard.

205.204 Seeds and planting stock practice

standard.

205.205 Crop rotation practice standard.

205.206 Crop pest, weed, and disease

management practice standard.

205.207 Wild-crop harvesting practice

standard.

205.208–205.235 [Reserved]

205.236 Origin of livestock.

205.237 Livestock feed.

205.238 Livestock health care practice

standard.

205.239 Livestock living conditions.

205.240–205.269 [Reserved]

205.270 Organic handling requirements.

205.271 Facility pest management practice

standard.

205.272 Commingling and contact with

prohibited substance prevention practice

standard.

205.290 Temporary variances.

Subpart D—Labels, Labeling, and Market

Information

205.300 Use of the term, ‘‘organic.’’

205.301 Product composition.

205.302 Calculating the percentage of

organically produced ingredients.

205.303 Packaged products labeled ‘‘100

percent organic’’ or ‘‘organic.’’

205.304 Packaged products labeled ‘‘made

with organic (specified ingredients).’’

205.305 Multiingredient packaged products

with less that 50 percent organic

ingredients.

205.306 Labeling of nonretail containers

used for only shipping or storage of raw

or processed agricultural products

labeled as ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with organic

(specified ingredients).’’

205.307 Agricultural products in a form

other than packages at the time of retail

sale that are labeled or represented as

‘‘100 percent organic’’ or ‘‘organic.’’

205.308 Agricultural products in a form

other than packages at the time of retail

sale that are sold, labeled, or represented

as ‘‘made with organic (specified

ingredients).’’

205.309 Agricultural products produced on

an exempt production operation.

205.310 USDA Seal.

Subpart E—Certification

205.400 General requirements for

certification.

205.401 Application for certification.

205.402 Review of application.

205.403 On-site inspections.

205.404 Approval of certification.

205.405 Denial of certification.

205.406 Continuation of certification.

205.407–205.499 [Reserved]

Subpart F—Accreditation of Certifying

Agents

205.500 Areas and duration of

accreditation.

205.501 General requirements for

accreditation.

205.502 Applying for accreditation.

205.503 Applicant information.

205.504 Evidence of expertise and ability.

205.505 Statement of agreement.

205.506 Approval of accreditation.

205.507 Denial of accreditation.

205.508 Site evaluations.

205.509 Peer review panel.

205.510 Annual report, recordkeeping, and

renewal of accredition.

205.511–205.599 [Reserved]

Subpart G—Administrative

The National List of Allowed and Prohibited

Substances

205.600 Allowed and prohibited

substances and ingredients in organic

production and handling.

≤205.601 Synthetic substances allowed for

use in organic crop production.

205.602 Nonsynthetic substances

prohibited for use in organic crop

production.

205.603 Synthetic substances allowed for

use in organic livestock production.

205.604 Nonsynthetic substances

prohibited for use in organic livestock

production. [Reserved]

205.605 Nonagricultural (nonorganic)

substances allowed as ingredients in or

on processed products labeled as

‘‘organic,’’ or ‘‘made with organic

(specified ingredients).’’

205.606 Nonorganically produced

agricultural products allowed as

ingredients in or on processed products

labeled as ‘‘organic’’ or ‘‘made with

organic ingredients.’’

205.607 Amending the National List.

State Programs

205.620 Requirements of State organic

certification programs.

205.621 Submission and determination of

proposed State organic certification

programs and amendments to approved

State organic certification programs.

205.622 Review of approved State organic

certification programs.

Fees

205.640 Fees and other charges for

accreditation.

205.641 Payment of fees and other charges.

205.642 Fees and other charges for

certification.

205.643–205.649 [Reserved]

Compliance

205.660 General.

205.661 Investigations of certified

operations.

205.662 Noncompliance procedure for

certified operations.

205.663 Mediation.

205.664 [Reserved]

205.665 Noncompliance prodcedures for

certifying agents.

205.666–205.667 [Reserved]

205.668 Noncompliance procudures under

State organic certification programs.

205.699 [Reserved]

Inspection and Testing, Reporting, and

Exclusion from Sale

205.670 Inspection and testing of

agricultural product to be sold or labeled

‘‘organic’’.

205.671 Exclusion from organic sale.

205.672 Emergency pest or disease

treatment.

205.673—205.679 [Reserved]

Adverse Action Appeal Process

205.680 General.

205.681 Appeals.

205.682—205.689 [Reserved]

Miscellaneous

205.690 OMB control number.

205.691—205.699 [Reserved]

Authority: 7 U.S.C. 6501–6522.

Subpart A—Definitions

205.1 Meaning of words.

For the purpose of the regulations in

this subpart, words in the singular form

shall be deemed to impart the plural

and vice versa, as the case may demand.

205.2 Terms defined.

Accredited laboratory. A laboratory

that has met and continues to meet the

requirements specified in the Food,

Agriculture, Conservation, and Trade

Act of 1990 (7 U.S.C. 138) for pesticide

residue analyses of fresh fruit and

vegetables and/or pesticide residue

analysis of products derived from

livestock and fowl.

Accreditation. A determination made

by the Secretary that authorizes a

private, foreign, or State entity to

conduct certification activities as a

certifying agent under this part.

Act. The Organic Foods Production

Act of 1990, as amended (7 U.S.C. 6501

et seq.).

Action level. The limit at or above

which the Food and Drug

Administration will take legal action

against a product to remove it from the

market. Action levels are based on

unavoidability of the poisonous or

deleterious substances and do not

represent permissible levels of

contamination where it is avoidable.

Administrator. The Administrator for

the Agricultural Marketing Service

(AMS), United States Departure of

Agriculture, or the representative to

whom authority has been delegated to

act in the stead of the Administrator.

Agricultural inputs. All substances or

materials used in the production or

handling of organic agricultural

products.

Agricultural product. Any agricultural

commodity or product, whether raw or

processed, including any commodity or

product derived from livestock that is

marketed in the United States for

human or livestock consumption.

Allowed synthetic. A substance that is

included on the National List of

synthetic substances allowed for use in

organic production, or handling.

Agricultural Marketing Service (AMS).

The Agricultural Marketing Service of

the United States Department of

Agriculture.

13610 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

Animal drug. Any drug as defined in

section 201 of the Federal Food, Drug,

and Cosmetic Act, as amended (21

U.S.C. 321), that is intended for use in

livestock, including any drug intended

for use in livestock feed but not

including such livestock feed.

Annual seedling. A plant grown from

seed that will complete its life cycle or

produce a harvestable yield within the

same crop year or season in which it

was planted.

Area of operation. The types of

operations: Crops, livestock, wild-crop

harvesting, handling, or any

combination thereof that a certifying

agent may be accredited to certify under

this part.

Audit trail. Documentation that is

sufficient to determine the source,

transfer of ownership, and

transportation of any agricultural

product labeled as ‘‘100 percent

organic,’’ the organic ingredients of any

agricultural product labeled as

‘‘organic’’ or ‘‘made with organic

(specified ingredients)’’ or the organic

ingredients of any agricultural product

containing less than 50 percent organic

ingredients identified as organic in an

ingredients statement.

Biodegradable. Subject to biological

decomposition into simpler biochemical

or chemical components.

Biologics. All viruses, serums, toxins,

and analogous products of natural or

synthetic origin, such as diagnostics,

antitoxins, vaccines, live

microorganisms, killed microorganisms,

and the antigenic or immunizing

components of microorganisms

intended for use in the diagnosis,

treatment, or prevention of diseases of

animals.

Breeder stock. Female livestock

whose offspring may be incorporated

into an organic operation at the time of

their birth.

Buffer zone. An area located between

a certified production operation or

portion of a production operation and

an adjacent land area that is not

maintained under organic management.

A buffer zone must be sufficient in size

or other features (e.g., windbreaks or a

diversion ditch) to prevent the

possibility of unintended contact by

prohibited substances applied to

adjacent land areas with an area that is

part of a certified operation.

Bulk. The presentation to consumers

at retail sale of an agricultural product

in unpackaged, loose form, enabling the

consumer to determine the individual

pieces, amount, or volume of the

product purchased.

Certification or certified. A

determination made by a certifying

agent that a production or handling

operation is in compliance with the Act

and the regulations in this part, which

is documented by a certificate of organic

operation.

Certified operation. A crop or

livestock production, wild-crop

harvesting, or handling operation or

portion of such operation that is

certified by an accredited certifying

agent as utilizing a system of organic

production or handling as described by

the Act and the regulations in this part.

Certifying agent. Any entity

accredited by the Secretary as a

certifying agent for the purpose of

certifying a production or handling

operation as a certified production or

handling operation.

Certifying agent’s operation. All sites,

facilities, personnel, and records used

by a certifying agent to conduct

certification activities under the Act and

the regulations in this part.

Claims. Oral, written, implied, or

symbolic representations, statements, or

advertising or other forms of

communication presented to the public

or buyers of agricultural products that

relate to the organic certification process

or the term, ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with organic

(specified ingredients),’’ or, in the case

of agricultural products containing less

than 50 percent organic ingredients, the

term, ‘‘organic,’’ on the ingredients

panel.

Commercially available. The ability to

obtain a production input in an

appropriate form, quality, or quantity to

fulfill an essential function in a system

of organic production or handling, as

determined by the certifying agent in

the course of reviewing the organic

plan.

Commingling. Physical contact

between unpackaged organically

produced and nonorganically produced

agricultural products during production,

transportation, storage or handling,

other than during the manufacture of a

multiingredient product containing both

types of ingredients.

Compost. The product of a carefully

managed process through which

microorganisms break down plant and

animal materials into more available

forms suitable for application to the soil.

Compost used in an organic operation

must be produced in a facility in

compliance with the Natural Resource

Conservation Service’s practice standard

for a composting facility (Code 317) and

must use methods to raise the

temperature of the raw materials to the

levels needed to stabilize nutrients and

kill pathogens.

Control. Any method that reduces or

limits damage by populations of pests,

weeds, or diseases to levels that do not

significantly reduce productivity.

Crop. A plant or part of a plant

intended to be marketed as an

agricultural product or fed to livestock.

Crop residues. The plant parts

remaining in a field after the harvest of

a crop, which include stalks, stems,

leaves, roots, and weeds.

Crop rotation. The practice of

alternating the annual crops grown on a

specific field in a planned pattern or

sequence in successive crop years, so

that crops of the same species or family

are not grown repeatedly without

interruption on the same field.

Perennial cropping systems employ

means such as alley cropping,

intercropping, and hedgerows to

introduce biological diversity in lieu of

crop sequencing.

Crop year. That normal growing

season for a crop as determined by the

Secretary.

Cultivation. Digging up or cutting the

soil to prepare a seed bed; control

weeds; aerate the soil; or work organic

matter, crop residues, or fertilizers into

the soil.

Cultural methods. Methods used to

enhance crop health and prevent weed,

pest, or disease problems without the

use of substances; examples include the

selection of appropriate varieties and

planting sites; proper timing and

density of plantings; irrigation; and

extending a growing season by

manipulating the microclimate with

green houses, cold frames, or wind

breaks.

Detectable residue. The amount or

presence of chemical residue or sample

component that can be reliably observed

or found in the sample matrix by the

current approved analytical

methodology.

Disease vectors. Plants or animals that

harbor or transmit disease organisms or

pathogens which may attack crops or

livestock.

Drift. The physical movement of

prohibited substances from the intended

target site onto an organic operation or

portion thereof.

Emergency pest or disease treatment

program. A mandatory program

authorized by a Federal, State, or local

agency for the purpose of controlling or

eradicating a pest or disease.

Employee. Any person providing paid

or volunteer services for a certifying

agent.

Estimated National Mean. The mean

level of detected pesticide residues as

described in certain pesticide/

commodity pairs or combinations

established by USDA’s Pesticide Data

Program.

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Excluded methods. Refers to a variety

of methods used to genetically modify

organisms or influence their growth and

development by means that are not

possible under natural conditions or

processes and are not considered

compatible with organic production.

Such methods would include

recombinant DNA, cell fusion, and

micro- and macroencapsulation. Such

methods would not include the use of

traditional breeding, conjugation,

fermentation, hybridization, in vitro

fertilization, or tissue culture.

Feed. Edible materials which are

consumed by livestock for their

nutritional value. Feed may be

concentrates (grains) or roughages (hay,

silage, fodder). The term, ‘‘feed,’’

encompasses all agricultural

commodities, including pasture

ingested by livestock for nutritional

purposes.

Feed Additive. A substance or

combination of substances added to feed

in micro quantities to fulfill a specific

nutritional need, i.e., nutrients in the

form of amino acids, vitamins, and

minerals.

Feed Supplement. A feed used with

another feed to improve the nutrient

balance or performance of the total

ration and intended to be:

(1) Diluted with other feeds when fed

to livestock;

(2) Offered free choice with other

parts of the ration if separately

available; or

(3) Further diluted and mixed to

produce a complete feed.

Fertilizer. A single or blended

substance containing one or more

recognized plant nutrient(s) which is

used primarily for its plant nutrient

content and which is designed for use

or claimed to have value in promoting

plant growth.

Field. An area of land identified as a

discrete unit within a production

operation.

Forage. Vegetable material in a fresh,

dried, or ensiled state (pasture, hay, or

silage) which is fed to livestock.

Handle. To sell, process, or package

agricultural products, except such term

shall not include the sale,

transportation, or delivery of crops or

livestock by the producer thereof to a

handler.

Handler. Any person engaged in the

business of handling agricultural

products, including producers who

handle crops or livestock of their own

production, except such term shall not

include final retailers of agricultural

products that do not process agricultural

products.

Handling operation. Any operation or

portion of an operation (except final

retailers of agricultural products that do

not process agricultural products) that

receives or otherwise acquires

agricultural products and processes,

packages, or stores such products.

Immediate family. The spouse, minor

children, or blood relatives who reside

in the immediate household of a

certifying agent or an employee,

inspector, contractor, or other personnel

of the certifying agent. For the purpose

of this part, the interest of a spouse,

minor child, or blood relative who is a

resident of the immediate household of

a certifying agent or an employee,

inspector, contractor, or other personnel

of the certifying agent shall be

considered to be an interest of the

certifying agent or an employee,

inspector, contractor, or other personnel

of the certifying agent.

Inert ingredient. Any substance (or

group of substances with similar

chemical structures if designated by the

Environmental Protection Agency) other

than an active ingredient which is

intentionally included in any pesticide

product used in organic crop or

livestock production and handling (40

CFR 152.3(m)).

Information panel. That part of the

label of a packaged product that is

immediately contiguous to and to the

right of the principal display panel as

observed by an individual facing the

principal display panel, unless another

section of the label is designated as the

information panel because of package

size or other package attributes (e.g.,

irregular shape with one usable surface).

Ingredient. Any substance used in the

preparation of an agricultural product

that is still present in the final

commercial product as consumed.

Ingredients statement. The list of

ingredients contained in a product

shown in their common and usual

names in the descending order of

predominance.

Inspector. Any person retained or

used by a certifying agent to conduct

inspections of certification applicants or

certified production or handling

operations.

Inspection. The act of examining and

evaluating the production or handling

operation of an applicant for

certification or certified operation to

determine compliance with the Act and

the regulations in this part.

Label. A display of written, printed,

or graphic material on the immediate

container of an agricultural product or

any such material affixed to any

agricultural product or affixed to a bulk

container containing an agricultural

product, except for package liners or a

display of written, printed, or graphic

material which contains only

information about the weight of the

product.

Labeling. All written, printed, or

graphic material accompanying an

agricultural product at any time or

written, printed, or graphic material

about the agricultural product displayed

at retail stores about the product.

Livestock. Any cattle, sheep, goat,

swine, poultry, or equine animals used

for food or in the production of food,

fiber, feed, or other agricultural-based

consumer products; wild or

domesticated game; or other nonplant

life, except such term shall not include

aquatic animals or bees for the

production of food, fiber, feed, or other

agricultural-based consumer products.

Lot. Any number of containers which

contain an agricultural product of the

same kind located in the same

conveyance, warehouse, or packing

house and which are available for

inspection at the same time.

Market information. Any written,

printed, audiovisual, or graphic

information, including advertising,

pamphlets, flyers, catalogues, posters,

and signs, distributed, broadcasted, or

made available outside of retail outlets

that are used to assist in the sale or

promotion of a product.

Mulch. Any material, such as wood

chips, leaves, straw, paper, or plastic

(on the National List), that serves to

suppress weed growth, moderate soil

temperature, or conserve soil moisture.

National List. A list of allowed and

prohibited substances as provided for in

section 6517 of the Act (7 U.S.C. 6517).

National Organic Program (NOP). The

program authorized by the Act for the

purpose of implementing its provisions.

National Organic Standards Board

(NOSB). A Board established by the

Secretary under 7 U.S.C. 6518 to assist

in the development of standards for

substances to be used in organic

production and to advise the Secretary

on any other aspects of the

implementation of the National Organic

Program.

Natural resources of the operation.

The physical, hydrological, and

biological features of a production

operation, including soil, water,

wetlands, woodlands, and wildlife.

Nonagricultural substance. A

substance that is not a product of

agriculture, such as a mineral or a

bacterial culture, that is used as an

ingredient in an agricultural product.

For the purposes of this part, a

nonagricultural ingredient also includes

any substance, such as gums, citric acid,

or pectin, that is extracted from, isolated

from, or a fraction of an agricultural

product, so that the identity of the

13612 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

agricultural product is unrecognizable

in the extract, isolate, or fraction.

Nonsynthetic (natural). A substance

that is derived from mineral, plant, or

animal matter and does not undergo a

synthetic process as defined in section

6502(21) of the Act (7 U.S.C. 6502(21)).

For the purposes of this part,

nonsynthetic is used as a synonym for

natural as the term is used in the Act.

Nontoxic. Not known to cause any

adverse physiological effects in animals,

plants, humans, or the environment.

Nonretail container. Any container

used for shipping or storage of an

agricultural product that is not used in

the retail display or sale of the product.

Organic. A labeling term that refers to

an agricultural product produced in

accordance with the Act and the

regulations in this part.

Organic matter. The remains,

residues, or waste products of any

organism.

Organic system plan. A plan of

management of an organic production or

handling operation that has been agreed

to by the producer or handler and the

certifying agent and that includes

written plans concerning all aspects of

agricultural production or handling

described in the Act and the regulations

in subpart C of this part.

Peer review panel. A panel of

individuals who have expertise in

organic production and handling

methods and certification procedures

and who are appointed by the

Administrator to assist in evaluating

applicants for accreditation as certifying

agents.

Person. An individual, group of

individuals, contractor, corporation,

association, organization, cooperative,

or other entity.

Pesticide. Any substance which alone,

in chemical combination, or in any

formulation with one or more

substances is defined as a pesticide in

section 2(u) of the Federal Insecticide,

Fungicide, and Rodenticide Act (7

U.S.C. 136(u) et seq).

Petition. A request to amend the

National List that is submitted by any

person in accordance with this part.

Planting stock. Any plant or plant

tissue, including rhizomes, shoots, leaf

or stem cuttings, roots, or tubers, used

in plant production or propagation.

Practice standard. The guidelines and

requirements through which a

production or handling operation

implements a required component of its

production or handling organic system

plan. A practice standard integrates a

series of allowed and prohibited actions,

materials, and conditions to establish a

minimum level performance for

planning, conducting, and maintaining

a function, such as livestock health care

or facility pest management, essential to

an organic operation.

Principal display panel. That part of

a label that is most likely to be

displayed, presented, shown, or

examined under customary conditions

of display for sale.

Private entity. Any domestic or

foreign nongovernmental for-profit or

not-for-profit organization providing

certification services.

Processing. Cooking, baking, curing,

heating, drying, mixing, grinding,

churning, separating, extracting, cutting,

fermenting, eviscerating, preserving,

dehydrating, freezing, or otherwise

manufacturing and includes the

packaging, canning, jarring, or otherwise

enclosing food in a container.

Producer. A person who engages in

the business of growing or producing

food, fiber, feed, and other agriculturalbased consumer products.

Production lot number/identifier.

Identification of a product based on the

production sequence of the product

showing the date, time, and place of

production used for quality control

purposes.

Prohibited substance. A substance

whose use in any aspect of organic

production or handling is prohibited or

not provided for in the Act or the

regulations of this part.

Records. Any information in written,

visual, or electronic form that

documents the activities undertaken by

a producer, handler, or certifying agent

to comply with the Act and regulations

in this part.

Residue testing. An official or

validated analytical procedure that

detects, identifies, and measures the

presence of chemical substances, their

metabolites, or degradations products in

or on raw or processed agricultural

products.

Responsibly connected. Any person

who is a partner, officer, director,

holder, manager, or owner of 10 percent

or more of the voting stock of an

applicant or a recipient of certification

or accreditation.

Retail food establishment. A

restaurant; delicatessen; bakery; grocery

store; or any retail outlet with an instore restaurant, delicatessen, bakery,

salad bar, or other eat-in or carry-out

service of processed or prepared raw

and ready-to-eat-food.

Routine use of parasiticide. The

regular, planned, or periodic use of

parasiticides.

Secretary. The Secretary of

Agriculture or a representative to whom

authority has been delegated to act in

the Secretary’s stead.

Sewage sludge. A solid, semisolid, or

liquid residue generated during the

treatment of domestic sewage in a

treatment works. Sewage sludge

includes, but is not limited to: domestic

septage; scum or solids removed in

primary, secondary, or advanced

wastewater treatment processes; and a

material derived from sewage sludge.

Sewage sludge does not include ash

generated during the firing of sewage

sludge in a sewage sludge incinerator or

grit and screenings generated during

preliminary treatment of domestic

sewage in a treatment works.

Slaughter stock. Any animal that is

intended to be slaughtered for

consumption by humans or other

animals.

Soil and water quality. Observable

indicators of the physical, chemical, or

biological condition of soil and water,

including the presence of environmental

contaminants.

State. Any of the several States of the

United States of America, its territories,

the District of Columbia, and the

Commonwealth of Puerto Rico.

State certifying agent. A certifying

agent accredited by the Secretary under

the National Organic Program and

operated by the State for the purposes

of certifying organic production and

handling operations in the State.

State entity. Any domestic, tribal

government, or foreign governmental

subdivision providing certification

services.

State organic certification program. A

State program that meets the

requirements of section 6506 of the Act,

is approved by the Secretary, and is

designed to ensure that a product that

is sold or labeled as organically

produced under the Act is produced

and handled using organic methods.

State program’s governing State

official. The chief executive official of a

State or, in the case of a State that

provides for the statewide election of an

official to be responsible solely for the

administration of the agricultural

operations of the State, such official,

who administers a State organic

certification program.

Synthetic. A substance that is

formulated or manufactured by a

chemical process or by a process that

chemically changes a substance

extracted from naturally occurring

plant, animal, or mineral sources,

except that such term shall not apply to

substances created by naturally

occurring biological processes.

System of organic production and

handling. A system that is designed to

produce agricultural products by the use

of methods and substances that

maintain the integrity of organic

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13613

agricultural products until they reach

the consumer. This is accomplished by

using, where possible, cultural,

biological, and mechanical methods, as

opposed to using substances, to fulfill

any specific function within the system

so as to: Maintain long-term soil

fertility; increase soil biological activity;

ensure effective pest management;

recycle wastes to return nutrients to the

land; provide attentive care for farm

animals; and handle the agricultural

products without the use of extraneous

synthetic additives or processing in

accordance with the Act and regulations

in this part.

Transplant. A seedling which has

been removed from its original place of

production, transported, and replanted.

Tolerance. The maximum legal level

of a pesticide residue in or on a raw or

processed agricultural commodity as set

by the Environmental Protection Agency

under FFDCA, Section 408.

Unavoidable residual environmental

contamination (UREC). Background

levels of naturally occurring or synthetic

chemicals that are present in the soil or

present in organically produced

agricultural products that are below

established tolerances.

Wild crop. Any plant or portion of a

plant that is collected or harvested from

an area of land that is not maintained

under cultivation or other agricultural

management.

Subpart B—Applicability

§ 205.100 What has to be certified.

(a) Except for operations exempt or

excluded in § 205.101, each production

or handling operation or specified

portion of a production or handling

operation that produces or handles

crops, livestock, livestock products, or

other agricultural products that are

intended to be sold, labeled, or

represented as ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with organic

(specified ingredients)’’ must be

certified according to the provisions of

subpart E of this part and must meet all

other applicable requirements of this

part.

(b) Any production or handling

operation that has been certified by a

certifying agent on the date that the

certifying agent first receives its

accreditation under this part shall be

considered certified to the national

standards until the operation’s

anniversary date of certification. Such

recognition shall only be available to

those operations certified by a certifying

agent that receives its accreditation

within 18 months from the date of

publication of the final rule

implementing this part.

§ 205.101 Exemptions and exclusions from

certification.

(a) Exemptions.

(1) A production or handling

operation that sells agricultural

products as ‘‘organic’’ but whose gross

agricultural income from organic sales

totals $5,000 or less annually is exempt

from certification under subpart E of

this part and from submitting an organic

system plan for acceptance or approval

under § 205.201 but must comply with

the applicable organic production and

handling requirements of subpart C of

this part and the labeling requirements

of § 205.309.

(2) A handling operation that is a

retail food establishment or portion of a

retail food establishment that handles

organically produced agricultural

products but does not process them is

exempt from the requirements in this

part.

(3) A handling operation or portion of

a handling operation that handles

agricultural products that contain less

than 50 percent organic ingredients by

total weight of the finished product

(excluding water and salt) is exempt

from the requirements in this part,

except:

(i) The provisions for prevention of

contact of organic products with

prohibited substances set forth in

§ 205.272 with respect to any

organically produced ingredients used

in an agricultural product;

(ii) The labeling provisions of

§ 205.309; and

(iii) The recordkeeping provisions in

paragraph (c) of this section.

(4) A handling operation or portion of

a handling operation that handles

agricultural products that contain at

least 50 percent organic ingredients by

total weight of the finished product

(excluding water and salt) that chooses

to not use the word, ‘‘organic,’’ on any

panel other than the information panel

is exempt from the requirements in this

part, except:

(i) The provisions for prevention of

contact of organic products with

prohibited substances set forth in

§ 205.272 with respect to any

organically produced ingredients used

in an agricultural product;

(ii) The labeling provisions of

§ 205.309; and

(iii) The recordkeeping provisions in

paragraph (c) of this section.

(b) Exclusions.

(1) A handling operation or portion of

a handling operation is excluded from

the requirements of this part, except for

the requirements for the prevention of

commingling and contact with

prohibited substances as set forth in

§ 205.272 with respect to any

organically produced products if such

operation or portion of the operation

only sells organic agricultural products

labeled as ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with organic

(specified ingredients)’’ that:

(i) Are packaged or otherwise

enclosed in a container prior to being

received or acquired by the operation;

and

(ii) Remain in the same package or

container and are not otherwise

processed while in the control of the

handling operation.

(2) A handling operation that is a

retail food establishment or portion of a

retail food establishment that processes

or prepares, on the premises of the retail

food establishment, raw and ready-toeat food from agricultural products that

are previously labeled as ‘‘100 percent

organic,’’ ‘‘organic,’’ or ‘‘made with

organic (specified ingredients)’’ is

excluded from the requirements in this

part, except:

(i) The requirements for the

prevention of contact with prohibited

substances as set forth in § 205.272; and

(ii) The labeling provisions of

§ 205.309.

(c) Records to be maintained by

exempt operations.

(1) Any handling operation exempt

from certification pursuant to paragraph

(a)(3) or (a)(4) of this section must

maintain records sufficient to:

(i) Prove that ingredients identified as

organic were organically produced and

handled; and

(ii) Verify quanities produced from

such ingredients.

(2) Records must be maintained for no

less than 3 years beyond their creation

and the operations must allow

representatives of the Secretary and the

applicable State program’s governing

State official access to these records for

inspection and copying during normal

business hours to determine compliance

with the applicable regulations set forth

in this part.

§ 205.102 Use of the term, ‘‘organic.’’

Any agricultural product that is sold,

labeled, or represented as ‘‘100 percent

organic,’’ ‘‘organic,’’ or ‘‘made with

organic (specified ingredients)’’ must be:

(a) Produced in accordance with the

requirements specified in § 205.101 or

§§ 205.202 through 205.207 or

§§ 205.236 through 205.239 and all

other applicable requirements of part

205;

(b) Handled in accordance with the

requirements specified in § 205.101 or

§§ 205.270 through 205.272 and all

other applicable requirements of this

part 205; and

(c) Produced and handled in

compliance with the Federal Meat

13614 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

Inspection Act (21 U.S.C. 601 et seq.),

the Poultry Products Inspection Act (21)

U.S.C. 451 et seq.), and the Egg Products

Inspection Act (21 U.S.C. 1031 et seq.),

concerning meat, poultry, and egg

products; the Federal Food, Drug, and

Cosmetic Act (21 U.S.C. 301 et seq.); the

Federal Insecticide, Fungicide, and

Rodenticide Act (7 U.S.C. 136 et seq.);

and any other applicable Federal statute

and its implementing regulations.

§ 205.103 Recordkeeping by certified

operations.

(a) A certified operation must

maintain records concerning the

production, harvesting, and handling of

agricultural products that are or that are

intended to be sold, labeled, or

represented as ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with organic

(specified ingredients).’’

(b) Such records must:

(1) Be adapted to the particular

business that the certified operation is

conducting;

(2) Fully disclose all activities and

transactions of the certified operation in

sufficient detail as to be readily

understood and audited;

(3) Be maintained for not less than 5

years beyond their creation; and

(4) Be sufficient to demonstrate

compliance with the Act and the

regulations in this part.

(c) The certified operation must make

such records available for inspection

and copying during normal business

hours by authorized representatives of

the Secretary, the applicable State

program’s governing State official, and

the certifying agent.

§ 205.104 Foreign applicants.

The regulations in this part, as

applicable, apply equally to domestic

and foreign applicants for accreditation,

accredited certifying agents, domestic

and foreign applicants for certification

as organic production or handling

operations, and certified organic

production and handling operations

unless otherwise specified.

§§ 205.105—205.199 [Reserved]

Subpart C—Organic Production and

Handling Requirements

§ 205.200 General.

The producer or handler of a

production or handling operation

wishing to sell, label, or represent

agricultural products as ‘‘100 percent

organic,’’ ‘‘organic,’’ or ‘‘made with

organic (specified ingredients)’’ must

comply with the applicable provisions

of this subpart. Practices implemented

in accordance with this subpart must

maintain or improve the natural

resources of the operation, including

soil and water quality.

§ 205.201 Organic production and

handling system plan.

(a) The producer or handler of a

production or handling operation,

except as exempt or excluded under

§ 205.101, wishing to sell, label, or

represent agricultural products as ‘‘100

percent organic,’’ ‘‘organic,’’ or ‘‘made

with organic (specified ingredients)’’

must develop an organic production or

handling system plan that is agreed to

by the producer or handler and an

accredited certifying agent. An organic

system plan must meet the requirements

set forth in this section to establish a

system of organic production or

handling. An organic production or

handling system plan must include:

(1) A description of practices and

procedures to be performed and

maintained, including the frequency

with which they will be performed;

(2) A list of each substance to be used

as a production or handling input,

indicating its composition, source, and

location(s) where it will be used;

(3) A description of the monitoring

practices and procedures to be

performed and maintained, including

the frequency with which they will be

performed, to verify that the plan is

effectively implemented;

(4) A description of the recordkeeping

system implemented to comply with the

requirements established in § 205.103;

(5) A description of practices and

procedures to prevent commingling of

organic and nonorganic products and to

prevent contact of organic production

and handling operations and products

with prohibited substances; and

(6) Additional information deemed

necessary by the certifying agent to

evaluate compliance with the

regulations.

(b) A producer may substitute a plan

prepared to meet the requirements of

another Federal, State, or local

government regulatory program for the

organic system plan: Provided, That, the

submitted plan meets all the

requirements of this subpart.

§ 205.202 Land requirements.

Any field or farm parcel from which

harvested crops are intended to be sold,

labeled, or represented as ‘‘100 percent

organic,’’ ‘‘organic,’’ or ‘‘made with

organic (specified ingredients)’’ must:

(a) Have been managed in accordance

with the provisions of §§ 205.203

through 205.206;

(b) Have had no prohibited

substances, as listed in § 205.600,

applied to it for a period of 3 years

immediately preceding harvest of the

crop; and

(c) Have distinct, defined boundaries

and buffer zones such as runoff

diversions to prevent the unintended

application of a prohibited substance to

the crop or contact with a prohibited

substance applied to adjoining land that

is not under organic management.

§ 205.203 Soil fertility and crop nutrient

management practice standard.

(a) The producer must select and

implement tillage and cultivation

practices that maintain or improve the

physical, chemical, and biological

condition of soil and minimize soil

erosion.

(b) The producer must budget and

supply crop nutrients by properly

utilizing manure or other animal and

plant materials, mined mineral

substances, and substances approved in

§ 205.601.

(c) The producer must manage animal

and plant waste materials to maintain or

improve soil organic matter content in

a manner that does not contribute to

contamination of crops, soil, or water by

plant nutrients, pathogenic organisms,

heavy metals, or residues of prohibited

substances. Animal and plant waste

materials include:

(1) Raw animal manure, which must

be composted unless it is:

(i) Applied to land used for a crop not

intended for human consumption;

(ii) Incorporated into the soil not less

than 120 days prior to the harvest of a

product whose edible portion has direct

contact with the soil surface or soil

particles; or

(iii) Incorporated into the soil not less

than 90 days prior to the harvest of a

product whose edible portion does not

have direct contact with the soil surface

or soil particles;

(2) Other uncomposted plant or

animal wastes, such as aged, fully

decomposed animal manure;

(3) A composted product produced in

a facility in compliance with the Natural

Resources Conservation Service’s

practice standard for a composting

facility (Code 317); and

(4) A composted or uncomposted

plant or animal waste material that has

been chemically altered by a

manufacturing process: Provided, That,

the material is included on the National

List of synthetic substances allowed for

use in organic crop production

established in § 205.601.

(d) In addition to crop rotations and

plant and animal waste materials, a

producer may supply soil and crop

nutrients by applying:

(1) A mined substance of low

solubility;

(2) A mined substance of high

solubility, when justified by soil or crop

tissue analysis;

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13615

(3) Ash obtained from the burning of

a plant or animal material, except as

prohibited in paragraph (e) of this

section: Provided, That, the material

burned has not been treated or

combined with a prohibited substance

or the ash is not included on the

National List of nonsynthetic substances

prohibited for use in organic crop

production; and

(4) A crop nutrient supplement

included on the National List of

synthetic substances allowed for use in

organic production, when justified by

soil or crop tissue analysis.

(e) The producer must not use:

(1) Any fertilizer or commercially

blended fertilizer or composted product

that contains a synthetic substance not

included on the National List of

synthetic substances allowed for use in

organic production;

(2) Sewage sludge (biosolids) as

defined in 40 CFR part 503; and

(3) Burning as a means of disposal for

crop residues produced on the

operation: Except, That, prunings from

perennial crops may be burned to

suppress the spread of disease.

§ 205.204 Seeds and planting stock

practice standard.

(a) The producer must use organically

grown seeds, annual seedlings, and

planting stock: Except, That,

(1) Nonorganically produced

untreated seeds and planting stock may

be used to produce an organic crop

when an equivalent organically

produced variety is not commercially

available;

(2) Nonorganically produced seeds

and planting stock that have been

treated with a substance included on the

National List of synthetic substances

allowed for use in organic crop

production may be used to produce an

organic crop when an equivalent

organically produced or untreated

variety is not commercially available;

(3) Nonorganically produced annual

seedlings may be used to produce an

organic crop when a temporary variance

has been granted in accordance with

§ 205.290(a)(2);

(4) Nonorganically produced planting

stock to be used to produce a perennial

crop may be sold, labeled, or

represented as organically produced

only after the planting stock has been

maintained under a system of organic

management for a period of no less than

1 year; and

(5) Seeds, annual seedlings, and

planting stock treated with prohibited

substances may be used to produce an

organic crop when the application of the

materials is a requirement of Federal or

State phytosanitary regulations.

(b) The producer of an organic

operation must not use seeds or planting

stock produced with excluded methods.

§ 205.205 Crop rotation practice standard.

The producer must implement a crop

rotation including, but not limited to,

sod, cover crops, green manure crops,

and catch crops that provide the

following functions that are applicable

to the operation:

(a) Maintain or improve soil organic

matter content;

(b) Provide for pest management in

annual and perennial crops;

(c) Manage deficient or excess plant

nutrients; and

(d) Provide erosion control.

§ 205.206 Crop pest, weed, and disease

management practice standard.

(a) The producer must use

management practices to prevent crop

pests, weeds, and diseases including,

but not limited to:

(1) Crop rotation and soil and crop

nutrient management practices, as

provided for in §§ 205.203 and 205.205;

(2) Sanitation measures to remove

disease vectors, weed seeds, and habitat

for pest organisms; and

(3) Cultural practices that enhance

crop health, including selection of plant

species and varieties with regard to

suitability to site-specific conditions

and resistance to prevalent pests, weeds,

and diseases.

(b) Pest problems may be controlled

through mechanical or physical

methods including, but not limited to:

(1) Augmentation or introduction of

predators or parasites of the pest

species;

(2) Development of habitat for natural

enemies of pests;

(3) Nonsynthetic, nontoxic controls

such as lures, traps, and repellents.

(c) Weed problems may be controlled

through:

(1) Mulching with fully biodegradable

materials;

(2) Mowing;

(3) Livestock grazing;

(4) Hand weeding and mechanical

cultivation;

(5) Flame, heat, or electrical means; or

(6) Plastic or other synthetic mulches:

Provided, That, they are removed from

the field at the end of the growing or

harvest season.

(d) Disease problems may be

controlled through:

(1) Management practices which

suppress the spread of disease

organisms; or

(2) Application of nonsynthetic

biological, botanical, or mineral inputs.

(e) When the practices provided for in

paragraphs (a) through (d) of this section

are insufficient to prevent or control

crop pests, weeds, and diseases, a

biological or botanical substance or a

substance included on the National List

of synthetic substances allowed for use

in organic production may be applied to

prevent, suppress, or control pests,

weeds, or diseases: Provided, That, the

producer implements measures to

evaluate and mitigate the effects of

repetitive use of the same or similar

materials on pest resistance and shifts in

pest, weed, or disease types, and the

substance is used in compliance with

the Federal Insecticide, Fungicide, and

Rodenticide Act.

(f) The producer or handler of an

organic operation must not use a pest,

weed, or disease control substance

produced through excluded methods.

§ 205.207 Wild-crop harvesting practice

standard.

(a) Any area from which a wild crop

that is intended to be sold, labeled, or

represented as organic is harvested must

have had no prohibited substance, as set

forth in § 205.600, applied to it for a

period of 3 years immediately preceding

the harvest of the wild crop.

(b) A wild-crop must be harvested in

a manner that ensures that such

harvesting or gathering will not be

destructive to the environment and will

sustain the growth and production of

the wild crop.

§§ 205.208—205.235 [Reserved]

§ 205.236 Origin of livestock.

(a) Livestock or edible livestock

products that are to be sold, labeled, or

represented as organic must be from

livestock under continuous organic

management from birth or hatching:

Except, That,

(1) Poultry. Poultry or edible poultry

products must be from poultry that has

been under continuous organic

management beginning no later than the

second day of life;

(2) Dairy Animals. Milk or milk

products must be from animals that

have been under continuous organic

management beginning no later than 1

year prior to the production of the milk

or milk products that are to be sold,

labeled, or represented as organic.

(3) Nonedible products. Nonedible

livestock products must be from animals

that have been under continuous

organic management not less than 1 year

prior to harvest of the nonedible

product.

(4) Breeder stock. Livestock used as

breeder stock may be brought from a

nonorganic operation onto an organic

operation at any time: Provided, That, if

such livestock are gestating and the

offspring are to be raised as organic

13616 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

livestock, the breeder stock must be

brought onto the facility prior to the last

third of pregnancy.

(b) The following are prohibited:

(1) Livestock or edible livestock

products that are removed from an

organic operation and subsequently

managed on a nonorganic operation may

be not sold, labeled, or represented as

organically produced.

(2) Breeder or dairy stock that has not

been under continuous organic

management since birth may not be

sold, labeled, or represented as organic

slaughter stock; and

(3) No organism produced by

excluded methods may be used for

breeding purposes or for the production

of livestock products intended to be

sold, labeled, or represented as organic.

(c) The producer of an organic

livestock operation must maintain

records sufficient to preserve the

identity of all organically managed

animals and edible and nonedible

animal products produced on the

operation.

§ 205.237 Livestock feed.

(a) The producer of an organic

livestock operation must provide

livestock with a total feed ration

composed of agricultural products,

including pasture and forage, that is

organically produced and, if applicable,

organically handled: Except, That,

nonagricultural products and synthetic

substances allowed under § 205.603

may be used as feed additives and

supplements.

(b) The producer of an organic

operation must not:

(1) Use animal drugs, including

hormones, to promote growth;

(2) Provide feed supplements or

additives in amounts above those

needed for adequate nutrition and

health maintenance for the species at its

specific stage of life;

(3) Feed plastic pellets for roughage;

(4) Feed formulas containing urea or

manure;

(5) Feed mammalian or poultry

slaughter by-products to mammals or

poultry; or

(6) Use feed, feed additives, and feed

supplements in violation of the Federal

Food, Drug, and Cosmetic Act.

§ 205.238 Livestock health care practice

standard.

(a) The producer must establish and

maintain preventive livestock health

care practices, including:

(1) Selection of species and types of

livestock with regard to suitability for

site-specific conditions and resistance to

prevalent diseases and parasites;

(2) Provision of feedstuffs sufficient to

meet nutritional requirements,

including vitamins, minerals, and other

additives or supplements;

(3) Establishment of appropriate

housing, pasture conditions, and

sanitation practices to minimize the

occurrence and spread of diseases and

parasites;

(4) Provision of conditions which

allow for exercise, freedom of

movement, and reduction of stress

appropriate to the species;

(5) Performance of physical

alterations as needed to promote the

animal’s welfare and in a manner that

minimizes pain and stress; and

(6) Administration of vaccines and

other veterinary biologics.

(b) When preventive practices and

veterinary biologics are inadequate to

prevent sickness, a producer may

administer synthetic medications:

Provided, That, such medications are

allowed under § 205.603. Parasiticides

allowed under § 205.603 may be used

on

(1) Breeder stock, when used prior to

the last third of gestation for progeny

that are to be sold, labeled, or

represented as organically produced;

and

(2) Dairy stock, when used a

minimum of 90 days prior to the

production of milk or milk products that

are to be sold, labeled, or represented as

organic.

(c) The producer of an organic

livestock operation must not:

(1) Sell, label, or represent as organic

any animal or edible product derived

from any animal treated with

antibiotics, any substance that contains

a synthetic substance not allowed under

§ 205.603, or any substance that

contains a nonsynthetic substance

prohibited in § 205.604.

(2) Administer any animal drug, other

than vaccinations, in the absence of

illness;

(3) Administer hormones;

(4) Administer synthetic parasiticides

on a routine basis;

(5) Administer synthetic parasiticides

to slaughter stock;

(6) Administer animal drugs in

violation of the Federal Food, Drug, and

Cosmetic Act; or

(7) Withhold medical treatment from

a sick animal in an effort to preserve its

organic status. All appropriate

medications must be used to restore an

animal to health when methods

acceptable to organic production fail.

Livestock treated with a prohibited

substance must be clearly identified and

shall not be sold, labeled, or represented

as organically produced.

§ 205.239 Livestock living conditions.

(a) The producer of an organic

livestock operation must establish and

maintain livestock living conditions

which accommodate the health and

natural behavior of animals, including:

(1) Access to shade, shelter, exercise

areas, fresh air, and direct sunlight

suitable to the species, its stage of

production, the climate, and the

environment;

(2) Access to pasture for ruminants;

(3) Appropriate clean, dry bedding. If

the bedding is typically consumed by

the animal species, it must comply with

the feed requirements of § 205.237;

(4) Shelter designed to allow for:

(i) Natural maintenance, comfort

behaviors, and opportunity to exercise;

(ii) Temperature level, ventilation,

and air circulation suitable to the

species; and

(iii) Reduction of potential for

livestock injury;

(b) The producer of an organic

livestock operation may provide

temporary confinement for an animal

because of:

(1) Inclement weather;

(2) The animal’s stage of production;

(3) Conditions under which the

health, safety, or well being of the

animal could be jeopardized; or

(4) Risk to soil or water quality.

(c) The producer of an organic

livestock operation must manage

manure in a manner that does not

contribute to contamination of crops,

soil, or water by plant nutrients, heavy

metals, or pathogenic organisms and

optimizes recycling of nutrients.

§§ 205.240—205.269 [Reserved]

§ 205.270 Organic handling requirements.

(a) Mechanical or biological methods,

including, but not limited to, cooking,

baking, heating, drying, mixing,

grinding, churning, separating,

extracting, slaughtering, cutting,

fermenting, eviscerating, preserving,

dehydrating, freezing, chilling, or

otherwise manufacturing, and the

packaging, canning, jarring, or otherwise

enclosing food in a container may be

used to process an agricultural product

intended to be sold, labeled, or

represented as ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with organic

(specified ingredients)’’ for the purpose

of retarding spoilage or otherwise

preparing the agricultural product for

market.

(b) Nonagricultural substances

allowed under § 205.605 and

nonorganically produced agricultural

products allowed under § 205.606 may

be used in or on a processed agricultural

product intended to be sold, labeled, or

represented as ‘‘organic’’ or ‘‘made with

organic (specified ingredients).’’

(c) The handler of an organic handling

operation must not use in or on an

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13617

agricultural product intended to be sold,

labeled, or represented as ‘‘100 percent

organic,’’ ‘‘organic,’’ or ‘‘made with

organic (specified ingredients)’’:

(1) Ionizing radiation for any purpose;

(2) An ingredient produced with

excluded methods; or

(3) A volatile synthetic solvent or any

other synthetic processing aid not

allowed under § 205.605 as ingredients

in or on processed products labeled as

organic or made with organic

ingredients.

§ 205.271 Facility pest management

practice standard.

(a) The producer or handler of an

organic facility must use management

practices to prevent pests, including,

but not limited to:

(1) Removal of pest habitat, food

sources, and breeding areas;

(2) Prevention of access to handling

facilities; or

(3) Management of environmental

factors, such as temperature, light,

humidity, atmosphere, and air

circulation to prevent pest reproduction.

(b) Pests may be controlled through:

(1) Augmentation or introduction of

predators or parasites for the pest

species;

(2) Mechanical or physical controls

including, but not limited to, traps,

light, or sound; or

(3) Nontoxic, nonsynthetic controls,

such as lures and repellents.

(c) If the practices provided for in

paragraphs (a) and (b) of this section are

not effective to prevent or control

facility pests, a nonsynthetic biological

or botanical substance or a synthetic

substance may be applied to prevent,

suppress, or control pests: Provided,

That, the substance is applied in the

manner consistent with its label as

approved by the Federal, State, and

local regulatory authorities.

(d) The handler of an organic

handling operation who applies a

nonsynthetic biological or botanical

substance or a synthetic substance for

the prevention or control of a pest must

include in the organic handling plan a

list of all measures taken or intended to

be taken to prevent contact between the

substance and any ingredient or

finished product intended to be sold,

labeled, or represented as ‘‘organic’’ or

‘‘made with organic (specified

ingredients).’’

(e) The handler of an organic handling

operation who applies a nonsynthetic

biological or botanical substance or a

synthetic substance for the prevention

or control of a pest must include in the

organic handling plan an evaluation of

the effects of repetitive use of the same

or similar materials on pest resistance

and shifts in pest types.

§ 205.272 Commingling and contact with

prohibited substance prevention practice

standard.

(a) The handler of an organic handling

operation must implement measures

necessary to prevent the commingling of

organic and nonorganic products and

protect organic products from contact

with prohibited substances.

(b) The following methods and

substances are prohibited for use in the

handling of any agricultural product

intended to be sold, labeled, or

represented as ‘‘100 per cent organic,’’

‘‘organic,’’ or ‘‘made with organic

(specified ingredients)’’:

(1) Packaging materials and storage

containers or bins that contain a

synthetic fungicide, preservative, or

fumigant;

(2) The use or reuse of any bag or

container that had previously been in

contact with any substance in such a

manner as to compromise the organic

integrity of any products unless, after

use for conventional products, the

reusable bin or container has been

thoroughly cleaned and poses no risk of

prohibited materials contacting the

organic product.

§§ 205.273—205.289 [Reserved]

§ 205.290 Temporary variances.

(a) Temporary variances from the

requirements in §§ 205.203 through

205.207, 205.236 through 205.239, and

205.270 through 205.272 may be

established by the Administrator for the

following reasons:

(1) Natural disasters declared by the

Secretary;

(2) Damage caused by wind, flood,

excessive moisture, tornado, earthquake,

fire, or other business interruption; and

(3) Practices used for the purpose of

conducting research or trials of

techniques, varieties, or ingredients

used in organic production or handling.

(b) A certifying agent may recommend

in writing to the Administrator a

temporary variance from a standard set

forth in subpart C of this part for organic

production or handling operations:

Provided, That, such variance may only

be recommended for the reasons listed

in paragraph (a) of this section.

(c) The Administrator will provide

written notification to certifying agents

upon establishment of a temporary

variance applicable to the certifying

agent’s certified production or handling

operations. When establishing a

temporary variance, the Administrator

shall specify the period of time it shall

remain in effect, subject to extension as

the Administrator deems necessary.

(d) A certifying agent, upon

notification from the Administrator of

the establishment of a temporary

variance, must notify each production

or handling operation it certifies within

the affected geographical area or the

individual organic production or

handling operation(s) to which the

temporary variance applies.

(e) Temporary variances may not be

requested for any practice, material, or

procedure otherwise prohibited in these

regulations.

Subpart D—Labels, Labeling, and

Market Information

§ 205.300 Use of the term, ‘‘organic.’’

(a) The term, ‘‘organic,’’ may only be

used on labels and in labeling of raw or

processed agricultural products,

including ingredients, that have been

produced and handled in accordance

with the regulations in this part.

(b) Products for export, produced and

certified to foreign national organic

standards or foreign contract buyer

requirements, may be labeled in

accordance with the organic labeling

requirements of the receiving country or

contract buyer: Provided, That, the

shipping containers and shipping

documents meet the labeling

requirements specified in § 205.306(c).

(c) Products produced in a foreign

country and exported for sale in the

United States must be certified pursuant

to subpart E of this part and labeled

pursuant to this subpart D.

§ 205.301 Product composition.

(a) Products sold, labeled, or

represented as ‘‘100 percent organic.’’ A

raw or processed agricultural product

sold, labeled, or represented as ‘‘100

percent organic’’ must contain (by

weight or fluid volume, excluding water

and salt) not less than 100 percent

organically produced raw or processed

agricultural product. No such product or

product ingredient may contain or be

created using excluded methods or be

produced using sewage sludge or

ionizing radiation. If labeled as an

organic food product, such product

must be labeled pursuant to § 205.303.

(b) Products sold, labeled, or

represented as ‘‘organic.’’ A raw or

processed agricultural product sold,

labeled, or represented as ‘‘organic’’

must contain (by weight or fluid

volume, excluding water and salt) not

less than 95 percent organically

produced raw or processed agricultural

product. Any remaining product

ingredients must consist of

nonagricultural substances or

nonorganically produced agricultural

products approved in the National List

of Allowed and Prohibited Substances

in subpart G of this part and must not

13618 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

contain or be created using excluded

methods or be produced using sewage

sludge or ionizing radiation. If labeled

as an organic food product, such

products must be labeled pursuant to

§ 205.303.

(c) Products sold, labeled, or

represented as ‘‘made with organic

(specified ingredients).’’ Multiingredient

agricultural product sold, labeled, or

represented as ‘‘made with organic

(specified ingredients)’’ must contain

(by weight or fluid volume, excluding

water and salt) at least 50 percent

organically produced agricultural

products which are produced and

handled pursuant to requirements in

subpart C of this part. The nonorganic

ingredients must not contain or be

created using excluded methods or be

produced using sewage sludge or

ionizing radiation. If labeled as an

organic food product, such products

must be labeled pursuant to § 205.304.

(d) Products with less than 50 percent

organic ingredients. The organic

ingredients in multiingredient

agricultural product containing less

than 50 percent organic ingredients (by

weight or fluid volume, excluding water

and salt) must be produced and handled

pursuant to requirements in subpart C of

this part. The nonorganic ingredients

may be produced and handled without

regard to the requirements of this part.

Multiingredient agricultural product

containing less than 50 percent

organically produced ingredients may

represent the organic nature of the

product only as provided in § 205.305.

(e) All ingredients identified as

‘‘organic’’ in the ingredient statement of

any product must not:

(1) Be produced using excluded

methods or products of excluded

methods as ingredients or processing

aids;

(2) Be produced using sewage sludge;

(3) Be processed using ionizing

radiation;

(4) Be processed using processing aids

not approved on the National List of

Allowed and Prohibited Substances in

subpart G of this part: Except, That,

products labeled as ‘‘100 percent

organic,’’ if processed, must be

processed using no processing aids;

(5) Contain sulfites, nitrates, or

nitrites added during the production or

handling process;

(6) Be produced using nonorganic

ingredients when organic ingredients

are not available; or

(7) Include organic and nonorganic

forms of the same ingredient.

§ 205.302 Calculating the percentage of

organically produced ingredients.

(a) The percentage of all organically

produced ingredients in an agricultural

product sold, labeled, or represented as

‘‘100 percent organic,’’ ‘‘organic,’’ or

‘‘made with organic (specified

ingredients),’’ or that include organic

ingredients must be calculated by:

(1) Dividing the total net weight

(excluding water and salt) of combined

organic ingredients by the total weight

(excluding water and salt) of the

finished product.

(2) Dividing the fluid volume of all

organic ingredients (excluding water

and salt) by the fluid volume of the

finished product (excluding water and

salt) if the product and ingredients are

liquid. If the liquid product is identified

on the principal display panel or

information panel as being reconstituted

from concentrates, the calculation

should be made on the basis of singlestrength concentrations of the

ingredients and finished product.

(3) For products containing organic

ingredients in both solid and liquid

form, dividing the combined weight of

the solid ingredients and the weight of

the liquid ingredients (excluding water

and salt) by the total weight (excluding

water and salt) of the finished product.

(b) The percentage of all organically

produced ingredients in an agricultural

product must be rounded down to the

nearest whole number and indicated on

the information panel above the

ingredient statement with the words,

‘‘contains X percent organic

ingredients.’’

(c) The percentage must be calculated

by the handler who affixes the label on

the consumer package and verified by

the certifying agent of the handler.

§ 205.303 Packaged products labeled ‘‘100

percent organic’’ or ‘‘organic.’’

(a) Agricultural products in packages

described in § 205.301(a) and (b) may

display, on the principal display panel,

information panel, and any other panel

of the package and on any labeling or

market information concerning the

product, the following terms:

(1) The term, ‘‘100 percent organic’’ or

‘‘organic,’’ as applicable, to modify the

name of the product;

(2) The USDA Seal;

(3) The seal, logo, or other identifying

mark of the certifying agent which

certified the production or handling

operation producing the finished

product and any other certifying agent

which certified production or handling

operations producing raw organic

product or organic ingredients used in

the finished product: Provided, That,

the handler producing the finished

product maintain records, pursuant to

this part, verifying organic certification

of the operations producing such

ingredients, and: Provided further, That,

such seals or marks are not,

individually, displayed more

prominently than the USDA Seal.

(b) Agricultural products in packages

described in § 205.301(a) and (b) must:

(1) On the information panel of

multiingredient products and consistent

with the labeling requirements of the

Food and Drug Administration, declare

the total percentage of organic

ingredients in the product.

(2) In the ingredient statement,

modify each organic ingredient of

multiingredient products with the word,

‘‘organic’’: Except, That, ingredients in

multiingredient products labeled ‘‘100

percent organic’’ are not required to

modified with the term ‘‘organic.’’ Any

water or salt included as an ingredient

will not be identified as organic.

(3) On the information panel, below

the information identifying the handler

or distributor of the product and

preceded by the statement, ‘‘Certified

organic by * * *,’’ or similar phrase,

identify the name of the certifying agent

that certified the handler of the finished

product: Except, That, the business

address or telephone number of the

certifying agent may be included in

such label.

§ 205.304 Packaged products labeled

‘‘made with organic (specified

ingredients).’’

(a) Agricultural products in packages

described in § 205.301(c) may display

on the principal display panel,

information panel, and any other panel

and on any labeling or market

information concerning the product:

(1) The statement, ‘‘made with organic

(specified ingredients)’’: Provided, That,

display of the statement is consistent

with labeling requirements of the Food

and Drug Administration and:

(i) Does not list more than three

organic ingredients;

(ii) Does not exceed one-half the size

of the largest type size on the panel; and

(iii) Appears in its entirety in the

same type size, style, and color without

highlighting; and

(2) The seal, logo, or other identifying

mark of the certifying agent that

certified the handler of the finished

product.

(b) Agricultural products in packages

described in § 205.301(c) must:

(1) On the information panel and

consistent with the labeling

requirements of the Food and Drug

Administration, declare the total

percentage of organic ingredients in the

product.

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13619

(2) In the ingredient statement,

modify each organic ingredient with the

word, ‘‘organic.’’ Any water or salt

included as an ingredient will not be

identified as organic.

(3) On the information panel, below

the information identifying the handler

or distributor of the product and

preceded by the statement, ‘‘Certified

organic by * * *,’’ or similar phrase,

identify the name of the certifying agent

that certified the handler of the finished

product: Except, That, the business

address or telephone number of the

certifying agent may be included in

such label.

(c) Agricultural products in packages

described in § 205.301(c) must not

display the USDA Seal.

§ 205.305 Multiingredient packaged

products with less than 50 percent organic

ingredients.

(a) Agricultural products with less

than 50 percent organic ingredients

must:

(1) On the information panel and

consistent with the labeling

requirements of the Food and Drug

Administration, declare the total

percentage of organic ingredients in the

product.

(2) In the ingredient statement,

modify each organic ingredient with the

word, ‘‘organic.’’

(b) Agricultural products with less

than 50 percent organic ingredients

must not display:

(1) The USDA Seal and

(2) Any certifying agent’s seal, logo, or

other identifying mark.

§ 205.306 Labeling of nonretail containers

used for only shipping or storage of raw or

processed agricultural products labeled as

‘‘100 percent organic,’’ ‘‘organic,’’ or ‘‘made

with organic (specified ingredients).’’

(a) Nonretail containers used only to

ship or store raw or processed

agricultural product labeled as

containing organic ingredients may

display the following terms or marks:

(1) The name and contact information

of the certifying agent which certified

the handler which assembled the final

product;

(2) Identification of the product as

‘‘organic product’’;

(3) Special handling instructions

needed to maintain the organic integrity

of the product;

(4) The USDA Seal;

(5) The seal, logo, or other identifying

mark of the certifying agent that

certified the organic production or

handling operation that produced or

handled the finished product.

(b) If not required under other Federal

labeling regulations, nonretail

containers used to ship or store raw or

processed agricultural product labeled

as containing organic ingredients must

display the production lot number of

the product, if applicable.

(c) Shipping containers of

domestically produced product labeled

as organic intended for export to

international markets may be labeled

consistent with any shipping container

labeling requirements of the foreign

country of destination or the container

labeling specifications of a foreign

contract buyer: Provided, That, the

shipping containers and shipping

documents accompanying such organic

product be clearly marked ‘‘For export

only’’ and: Provided further, That, proof

of such container marking and export

must be maintained by the handler,

consistent with recordkeeping

requirements for exempt and excluded

operations under § 205.101.

§ 205.307 Agricultural products in other

than packaged form at the point of retail

sale that are sold, labeled, or represented

as ‘‘100 percent organic’’ or ‘‘organic.’’

(a) Agricultural products labeled or

represented as ‘‘100 percent organic’’ or

‘‘organic’’ in retail display, labeling, and

display containers may use the term,

‘‘100 percent organic’’ or ‘‘organic,’’ as

applicable, to modify the name of the

product: Provided, That, such products

are assembled in a manufacturing

facility certified in accordance with the

requirements of this part; and, Provided

further, Than, the word, ‘‘organic,’’ is

used to modify the organic ingredients

listed in the ingredient statement of the

products.

(b) The retail display, labeling, and

display containers may use:

(1) The USDA Seal;

(2) The seal, logo, or other identifying

mark of the certifying agent that

certified the production or handling

operation producing the finished

product and any other certifying agent

which certified operations producing

raw organic product or organic

ingredients used in the finished

product: Provided, That, such seals or

marks are not, individually, displayed

more prominently than the USDA Seal.

§ 205.308 Agricultural products in other

than packaged form at the point of retail

sale that are sold, labeled, or represented

as ‘‘made with organic (specified

ingredients).’’

(a) Retail displays, display containers,

and market information of agricultural

products containing between 50 and 95

percent organic ingredients may use the

phrase, ‘‘made with organic (specified

ingredients)’’ Provided, That, such

products have been assembled at a

manufacturing facility certified in

accordance with the requirements of

this part, and:

(1) Such statement does not list more

than three organic ingredients, and

(2) In any such display of the

product’s ingredient statement, the

organic ingredients must be modified as

‘‘organic.’’

(b) Such agricultural products labeled

as ‘‘made with organic (specified

ingredients)’’ in retail displays, display

containers, and market information may

display the certifying agent’s seal, logo,

or other identifying mark.

§ 205.309 Agricultural products produced

on an exempt or excluded operation.

(a) An agricultural product

organically produced or handled on an

exempt or excluded operation must not:

(1) Display the USDA Seal or any

certifying agent’s seal or other

identifying mark which represents that

the production or handling operation as

a certified organic operation, or

(2) Be represented as a certified

organic product to any buyer.

(b) An agricultural product

organically produced or handled on an

exempt or excluded operation may be

identified as an organic product or

organic ingredient in a multiingredient

product produced by the exempt or

excluded operation. Such product or

ingredient must not be identified as

‘‘organic’’ in a product processed by

others.

(c) Such product is subject to labeling

requirements specified in paragraph (a)

of § 205.300, and paragraphs (e)(1)

through (e)(7) of § 205.301.

§ 205.310 USDA Seal.

(a) The USDA Seal described in

paragraphs (b) and (c) of this section

may be used only for agricultural

products (raw or processed) described

in § 205.301(a) and (b).

(b) The USDA Seal must replicate the

form and design of the example in figure

1 and must be printed legibly and

conspicuously:

(1) On a white, light colored, or

transparent background with contrasting

dark color words and shield outline or

on a dark colored background with

contrasting white or light colored words

and shield outline; or

(2) On a white background with dark

blue colored words and red shield

outline.

BILLING CODE 3410–02–P

13620 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

BILLING CODE 3410–02–C

Subpart E—Certification

§ 205.400 General requirements for

certification.

A person seeking to receive or

maintain organic certification under the

regulations in this part must:

(a) Comply with the Act and

applicable organic production and

handling regulations of this part;

(b) Establish, implement, and update

annually an organic production or

handling system plan that is submitted

to an accredited certifying agent as

provided for in § 205.200;

(c) Permit on-site inspections with

complete access to the production or

handling operation, including

noncertified areas and structures, by the

certifying agent as provided for in

§ 205.403;

(d) Maintain all records applicable to

the organic operation for not less than

5 years beyond their creation and allow

authorized representatives of the

Secretary, the applicable State

program’s governing State official, and

the certifying agent access to such

records during normal business hours

for review and copying to determine

compliance with the Act and the

regulations in this part, as provided for

in § 205.104;

(e) Submit the applicable fees charged

by the certifying agent; and

(f) Immediately notify the certifying

agent concerning any:

(1) Application, including drift, of a

prohibited substance to any field,

production unit, site, facility, livestock,

or product that is part of an operation;

and

(2) Change in a certified operation or

any portion of a certified operation that

may affect its compliance with the Act

and the regulations in this part.

§ 205.401 Application for Certification.

A person seeking certification of a

production or handling operation under

this subpart must submit a request for

certification to a certifying agent. The

request must include the following

information:

(a) An organic production or handling

system plan, as required in § 205.200;

(b) The name of the person

completing the application; the

applicant’s business name, address, and

telephone number; and, when the

applicant is a corporation, the name,

address, and telephone number of the

person authorized to act on the

applicant’s behalf.

(c) The name(s) of any organic

certifying agent(s) to which application

has previously been made, the year(s) of

application, and the outcome of the

application(s) submission, including a

copy of any notification of

noncompliance or denial of certification

issued to the applicant for certification

and a description of the actions taken by

the applicant to correct the deficiencies

noted in the notification of

noncompliance, including evidence of

such correction and;

(d) Other information necessary to

determine compliance with the Act and

the regulations in this part.

§ 205.402 Review of application.

(a) Upon acceptance of an application

for certification a certifying agent must:

(1) Review the application to ensure

completeness pursuant to § 205.401;

(2) Determine by a review of the

application materials whether the

applicant appears to comply or may be

able to comply with the applicable

requirements of subpart C of this part;

(3) Verify that an applicant who

previously applied to another certifying

agent and received a notification of

noncompliance, pursuant to

§ 205.405(a), has submitted

documentation to support the correction

of any deficiencies identified in such

notification, as required in § 205.405(b);

and

(4) Schedule an on-site inspection of

the operation to determine whether the

applicant qualifies for certification if the

review of application materials reveals

that the production or handling

operation may be in compliance with

the applicable requirements of subpart C

of this part.

(b) The certifying agent shall

communicate to the applicant its

findings on the review of application

materials specified in § 205.402(a).

(c) The applicant may withdraw its

application at any time. An applicant

who withdraws its application shall be

liable for the costs of services provided

up to the time of withdrawal of its

application. An applicant that

voluntarily withdrew its application

prior to the issuance of a notice of

noncompliance will not be issued a

notice of noncompliance. Similarly, an

applicant that voluntarily withdrew its

application prior to the issuance of a

notice of certification denial will not be

issued a notice of certification denial.

§ 205.403 On-site inspections.

(a) On-site inspections.

(1) A certifying agent must conduct an

initial on-site inspection of each

production unit, facility, and site that is

included in an operation for which

certification is requested and an on-site

inspection of each certified operation

annually thereafter, for the purpose of

determining whether to approve the

request for certification or whether the

certification of the operation should

continue.

(2)(i) A certifying agent may conduct

additional on-site inspections of

applicants for certification and certified

operations to determine compliance

with the Act and the regulations in this

part.

(ii) The Administrator or State

program’s governing State official may

require that additional inspections be

performed by the certifying agent for the

purpose of determining compliance

with the Act and the regulations in this

part.

(iii) Additional inspections may be

announced or unannounced at the

discretion of the certifying agent or as

required by the Administrator or State

program’s governing State official.

(b) Scheduling. The initial on-site

inspection must be conducted within a

reasonable time following a

determination that the applicant

appears to comply or may be able to

comply with the requirements of

subpart C of this part. On-site

inspections must be conducted when

the applicant or an authorized

representative of the applicant who is

knowledgeable about the operation is

present and at a time when land,

facilities, and activities that demonstrate

the operation’s compliance with or

capability to comply with the applicable

provisions of subpart C of this part can

be observed, except that this

requirement does not apply to

unannounced on-site inspections.

(c) Verification of information. The

on-site inspection of an operation must

verify:

(1) The operation’s compliance or

capability to comply with the Act and

the regulations in this part;

(2) That the information, including

the organic production or handling

system plan, provided in accordance

with §§ 205.401, 205.406, and 205.200,

accurately reflects the practices used or

to be used by the applicant for

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13621

certification or by the certified

operation;

(3) That prohibited substances have

not been and are not being applied to

the operation through means which, at

the discretion of the certifying agent,

may include the collection and testing

of soil; water; waste; seeds; plant tissue;

and plant, animal, and processed

products samples.

(d) Exit interview. The inspector must

conduct an exit interview with an

authorized representative of the

inspected operation to confirm the

accuracy and completeness of

inspection observations and information

gathered during the on-site inspection.

The inspector must also address the

need for any additional information as

well as any issues of concern.

§ 205.404 Approval of certification.

(a) Within a reasonable time after

completion of the initial on-site

inspection, a certifying agent must

review the on-site inspection report, the

results of any analyses for substances

conducted, and any additional

information requested from or supplied

by the applicant. If the certifying agent

determines that the organic system plan

and all procedures and activities of the

applicant’s operation are in compliance

with the requirements of this part and

that the applicant is able to conduct

operations in accordance with the plan,

the agent shall approve certification.

The approval may include restrictions

as a condition of continued certification.

(b) The certifying agent must issue a

certificate of organic operation which

specifies the:

(1) Name and address of the certified

operation;

(2) Effective date of certification;

(3) Categories of organic operation,

including crops, wild crops, livestock,

or processed products produced by the

certified operation; and

(4) Name, address, and telephone

number of the certifying agent.

(c) Once certified, a production or

handling operation’s organic

certification continues in effect until

surrendered by the organic operation or

suspended or revoked by the certifying

agent, the State program’s governing

State official, or the Administrator.

§ 205.405 Denial of certification.

(a) When the certifying agent has

reason to believe, based on a review of

the information specified in § 205.402 or

§ 205.404, that an applicant for

certification is not able to comply or is

not in compliance with the

requirements of this part, the certifying

agent must provide a written

notification of noncompliance to the

applicant pursuant to § 205.662(a).

When correction of a noncompliance is

not possible, a notification of

noncompliance and a notification of

denial of certification may be combined

in one notification.

(b) Upon receipt of such notification

of noncompliance, the applicant may:

(1) Correct deficiencies and submit a

description of the corrective actions

taken with supporting documentation to

the certifying agent;

(2) Correct deficiencies and submit a

new application to another certifying

agent: Provided, That, the applicant

must include a complete application,

the notification of noncompliance

received from the first certifying agent,

and a description of the corrective

actions taken with supporting

documentation; or

(3) Submit written information to

rebut the noncompliance described in

the notification of noncompliance.

(c) After issuance of a notification of

noncompliance, the certifying agent

must:

(1) Evaluate the applicant’s corrective

actions taken and supporting

documentation submitted or the written

rebuttal, conduct an on-site inspection if

necessary, and;

(i) When the corrective action or

rebuttal is sufficient for the applicant to

qualify for certification, issue the

applicant an approval of certification

pursuant to § 205.404; or

(ii) When the corrective action or

rebuttal is not sufficient for the

applicant to qualify for certification,

issue the applicant a written notice of

denial of certification.

(2) Issue a written notice of denial of

certification to an applicant who fails to

respond to the notification of

noncompliance.

(3) Provide notice of approval or

denial to the Administrator, pursuant to

§ 205.501(a)(14).

(d) A notice of denial of certification

must state the reason(s) for denial and

the applicant’s right to:

(1) Reapply for certification pursuant

to §§ 205.401 and 205.405(e);

(2) Request mediation pursuant to

§ 205.663 or, if applicable, pursuant to

a State program; or

(3) File an appeal pursuant to

§ 205.681 or, if applicable, pursuant to

a State program of the denial of

certification.

(e) An applicant for certification who

has received a written notification of

noncompliance or a written notice of

denial of certification may apply for

certification again at any time with any

certifying agent, in accordance with

§§ 205.401 and 205.405(e). When such

applicant submits a new application to

a certifying agent other than the agent

who issued the notification of

noncompliance or notice of denial of

certification, the applicant for

certification must include a copy of the

notification of noncompliance or notice

of denial of certification and a

description of the actions taken, with

supporting documentation, to correct

the deficiencies noted in the notification

of noncompliance.

(f) A certifying agent who receives a

new application for certification, which

includes a notification of

noncompliance or a notice of denial of

certification, must treat the application

as a new application and begin a new

application process pursuant to

§ 205.402.

(g) Notwithstanding paragraph (a) of

this section, if a certifying agent has

reason to believe that an applicant for

certification has willfully made a false

statement or otherwise purposefully

misrepresented the applicant’s

operation or its compliance with the

certification requirements pursuant to

this part, the certifying agent may deny

certification pursuant to paragraph

(c)(1)(ii) of this section without first

issuing a notification of noncompliance.

§ 205.406 Continuation of certification.

(a) To continue certification, a

certified operation must annually

submit the following information, as

applicable, to the certifying agent:

(1) An updated organic production or

handling system plan which includes:

(i) A summary statement, supported

by documentation, detailing any

deviations from, changes to,

modifications to, or other amendments

made to the previous year’s organic

system plan during the previous year;

and

(ii) Any additions or deletions to the

previous year’s organic system plan,

intended to be undertaken in the

coming year, detailed pursuant to

§ 205.200;

(2) Any additions to or deletions from

the information required pursuant to

§ 205.401(b); and (3) Other information

as deemed necessary by the certifying

agent to determine compliance with the

Act and the regulations in this part.

(b) Following the receipt of the

information specified in paragraph (a) of

this section, the certifying agent shall

arrange and conduct an on-site

inspection of the certified operation,

pursuant to § 205.403.

(c) If the certifying agent has reason to

believe, based on the on-site inspection

and a review of the information

specified in § 205.404, that a certified

operation is not complying with the

requirements of the Act and the

13622 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

regulations in this part, the certifying

agent shall provide a written

notification of noncompliance to the

operation in accordance with § 205.662.

(d) If the certifying agent determines

that the certified operation is complying

with the Act and the regulations in this

part and that any of the information

specified on the certificate of organic

operation has changed, the certifying

agent must issue an updated certificate

of organic operation pursuant to

§ 205.404(b).

§§ 205.407–205.499 [Reserved]

Subpart F—Accreditation of Certifying

Agents

§ 205.500 Areas and duration of

accreditation.

(a) The Administrator shall accredit a

qualified domestic or foreign applicant

in the areas of crops, livestock, wild

crops, or handling or any combination

thereof to certify a domestic or foreign

production or handling operation as a

certified operation.

(b) Accreditation shall be for a period

of 5 years from the date of approval of

accreditation pursuant to § 205.506.

(c) In lieu of accreditation under

paragraph (a) of this section, USDA will

accept a foreign certifying agent’s

accreditation to certify organic

production or handling operations if:

(1) USDA determines, upon the

request of a foreign government, that the

standards under which the foreign

government authority accredited the

foreign certifying agent meet the

requirements of this part; or

(2) The foreign government authority

that accredited the foreign certifying

agent acted under an equivalency

agreement negotiated between the

United States and the foreign

government.

§ 205.501 General requirements for

accreditation.

(a) A private or State entity accredited

as a certifying agent under this subpart

must:

(1) Have sufficient expertise in

organic production or handling

techniques to fully comply with and

implement the terms and conditions of

the organic certification program

established under the Act and the

regulations in this part;

(2) Demonstrate the ability to fully

comply with the requirements for

accreditation set forth in this subpart;

(3) Carry out the provisions of the Act

and the regulations in this part,

including the provisions of §§ 205.402

through 205.406 and § 205.670;

(4) Use a sufficient number of

adequately trained personnel, including

inspectors and certification review

personnel, to comply with and

implement the organic certification

program established under the Act and

the regulations in subpart E of this part;

(5) Ensure that its responsibly

connected persons, employees, and

contractors with inspection, analysis,

and decision-making responsibilities

have sufficient expertise in organic

production or handling techniques to

successfully perform the duties

assigned.

(6) Conduct an annual performance

appraisal for each inspector used by the

certifying agent and implement

measures to correct any deficiencies in

compliance with the Act and the

regulations in this part that are

identified in the appraisal;

(7) Have an annual program

evaluation of its certification activities

conducted by the certifying agent’s staff,

an outside auditor, or a consultant who

has expertise to conduct such

evaluations and implement measures to

correct any deficiencies in compliance

with the Act and the regulations in this

part that are identified in the evaluation;

(8) Provide sufficient information to

persons seeking certification to enable

them to comply with the applicable

requirements of the Act and the

regulations in this part;

(9) Maintain all records pursuant to

§ 205.510(b) and make all such records

available for inspection and copying

during normal business hours by

authorized representatives of the

Secretary and the applicable State

program’s governing State official;

(10) Maintain strict confidentiality

with respect to its clients under the

applicable organic certification program

and not disclose to third parties (with

the exception of the Secretary or the

applicable State program’s governing

State official or their authorized

representatives) any business-related

information concerning any client

obtained while implementing the

regulations in this part, except as

provided for in § 205.504(b)(5);

(11) Prevent conflicts of interest by:

(i) Not certifying a production or

handling operation if the certifying

agent or a responsibly connected party

of such certifying agent has or has held

a commercial interest in the production

or handling operation, including an

immediate family interest or the

provision of consulting services, within

the 12-month period prior to the

application for certification;

(ii) Excluding any person, including

contractors, with conflicts of interest

from work, discussions, and decisions

in all stages of the certification process

and the monitoring of certified

production or handling operations for

all entities in which such person has or

has held a commercial interest,

including an immediate family interest

or the provision of consulting services,

within the 12-month period prior to the

application for certification;

(iii) Not permitting any employee,

inspector, contractor, or other personnel

to accept payment, gifts, or favors of any

kind, other than prescribed fees, from

any business inspected, except that a

certifying agent that is a not-for-profit

organization with an Internal Revenue

Code tax exemption, or in the case of a

foreign certifying agent a comparable

recognition of not-for-profit status from

its government, may accept voluntary

labor from certified operations;

(iv) Not providing advice concerning

organic practices or techniques to any

certification applicant or certified

operation for a fee, other than as part of

the fees under the applicable

certification program established under

the Act; and

(v) Requiring all persons identified in

§ 205.504(a)(2) to complete an annual

conflict of interest disclosure report.

(12) Accept the certification decisions

made by another USDA-accredited

certifying agent as equivalent to its own;

(13) Refrain from making false or

misleading claims about its

accreditation status, the USDA

accreditation program for certifying

agents, or the nature or qualities of

products labeled as organically

produced;

(14) Submit to the Administrator:

(i) A copy of any notice of denial of

certification issued pursuant to

§ 205.405, notification of

noncompliance, notification of

noncompliance correction, notification

of proposed suspension or revocation,

and notification of suspension or

revocation sent pursuant to § 205.662,

simultaneously with its issuance and

(ii) On a quarterly calender basis, the

name, address, and telephone number of

each operation granted certification;

(15) Charge applicants for certification

and certified production and handling

operations only those fees and charges

that it has filed with the Administrator;

(16) Pay and submit fees to AMS in

accordance with § 205.640; and

(17) Comply with, implement, and

carry out any other terms and

conditions determined by the

Administrator to be necessary.

(b) A private or State entity accredited

as a certifying agent under this subpart

may establish a seal, logo, or other

identifying mark to be used by

production and handling operations

certified by the certifying agent to

indicate affiliation with the certifying

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13623

agent: Provided, That, the certifying

agent:

(1) Does not require use of its seal,

logo, or other identifying mark on any

product sold, labeled, or represented as

organically produced as a condition of

certification and

(2) Does not require compliance with

any production or handling practices

other than those provided for in the Act

and the regulations in this part as a

condition of use of its identifying mark:

Provided, That, this provision does not

apply to States with more restrictive

requirements approved by the Secretary

or private entity certifying agents

certifying production and handling

operations within States with more

restrictive requirements approved by the

Secretary.

(c) A private entity accredited as a

certifying agent must:

(1) Hold the Secretary harmless for

any failure on the part of the certifying

agent to carry out the provisions of the

Act and the regulations in this part;

(2) Furnish reasonable security, in an

amount and according to such terms as

the Administrator may by regulation

prescribe, for the purpose of protecting

the rights of production and handling

operations certified by such certifying

agent under the Act and the regulations

in this part; and

(3) Transfer to the Administrator and

make available to any applicable State

program’s governing State official all

records or copies of records concerning

the person’s certification activities in

the event that the certifying agent

dissolves or loses its accreditation.

(d) No private or State entity

accredited as a certifying agent under

this subpart shall exclude from

participation in or deny the benefits of

the National Organic Program to any

person due to discrimination because of

race, color, national origin, gender,

religion, age, disability, political beliefs,

sexual orientation, or marital or family

status.

§ 205.502 Applying for accreditation.

(a) A private or State entity seeking

accreditation as a certifying agent under

this subpart must submit an application

for accreditation which contains the

applicable information and documents

set forth in §§ 205.503 through 205.505

and the fees required in § 205.640 to:

Program Manager, USDA–AMS–TMP–

NOP, Room 2945–South Building, PO

Box 96456, Washington, DC 20090–

6456.

(b) Following the receipt of the

information and documents, the

Administrator will determine, pursuant

to § 205.506, whether the applicant for

accreditation should be accredited as a

certifying agent.

§ 205.503 Applicant information.

A private or State entity seeking

accreditation as a certifying agent must

submit the following information:

(a) The business name, primary office

location, mailing address, name of the

person(s) responsible for the certifying

agent’s day-to-day operations, contact

numbers (telephone, facsimile, and

Internet address) of the applicant, and,

for an applicant who is a private person,

the entity’s taxpayer identification

number;

(b) The name, office location, mailing

address, and contact numbers

(telephone, facsimile, and Internet

address) for each of its organizational

units, such as chapters or subsidiary

offices, and the name of a contact

person for each unit;

(c) Each area of operation (crops, wild

crops, livestock, or handling) for which

accreditation is requested and the

estimated number of each type of

operation anticipated to be certified

annually by the applicant along with a

copy of the applicant’s schedule of fees

for all services to be provided under

these regulations by the applicant;

(d) The type of entity the applicant is

(e.g., government agricultural office, forprofit business, not-for-profit

membership association) and for:

(1) A State entity, a copy of the

official’s authority to conduct

certification activities under the Act and

the regulations in this part,

(2) A private entity, documentation

showing the entity’s status and

organizational purpose, such as articles

of incorporation and by-laws or

ownership or membership provisions,

and its date of establishment; and

(e) A list of each State or foreign

country in which the applicant

currently certifies production and

handling operations and a list of each

State or foreign country in which the

applicant intends to certify production

or handling operations.

§ 205.504 Evidence of expertise and

ability.

A private or State entity seeking

accreditation as a certifying agent must

submit the following documents and

information to demonstrate its expertise

in organic production or handling

techniques; its ability to fully comply

with and implement the organic

certification program established in

§§ 205.100 and 205.101, §§ 205.201

through 205.203, §§ 205.300 through

205.303, §§ 205.400 through 205.406,

and §§ 205.661 and 205.662; and its

ability to comply with the requirements

for accreditation set forth in § 205.501:

(a) Personnel.

(1) A copy of the applicant’s policies

and procedures for training, evaluating,

and supervising personnel;

(2) The name and position description

of all personnel to be used in the

certification operation, including

administrative staff, certification

inspectors, members of any certification

review and evaluation committees,

contractors, and all parties responsibly

connected to the certifying agent;

(3) A description of the qualifications,

including experience, training, and

education in agriculture, organic

production, and organic handling, for:

(i) Each inspector to be used by the

applicant and

(ii) Each person to be designated by

the applicant to review or evaluate

applications for certification; and

(4) A description of any training that

the applicant has provided or intends to

provide to personnel to ensure that they

comply with and implement the

requirements of the Act and the

regulations in this part.

(b) Administrative policies and

procedures.

(1) A copy of the procedures to be

used to evaluate certification applicants,

make certification decisions, and issue

certification certificates;

(2) A copy of the procedures to be

used for reviewing and investigating

certified operation compliance with the

Act and the regulations in this part and

the reporting of violations of the Act

and the regulations in this part to the

Administrator;

(3) A copy of the procedures to be

used for complying with the

recordkeeping requirements set forth in

§ 205.501(a)(9);

(4) A copy of the procedures to be

used for maintaining the confidentiality

of any business-related information as

set forth in § 205.501(a)(10);

(5) A copy of the procedures to be

used for making the following

information available to any member of

the public upon request:

(i) Certification certificates issued

during the current and 3 preceding

calender years;

(ii) A list of producers and handlers

whose operations it has certified,

including for each the name of the

operation, type(s) of operation, and the

effective date of the certification, during

the current and 3 preceding calender

years;

(iii) The results of laboratory analyses

for residues of pesticides and other

prohibited substances conducted during

the current and 3 preceding calender

years; and

(iv) Other business information as

permitted in writing by the producer or

handler; and

13624 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

(6) A copy of the procedures to be

used for sampling and residue testing

pursuant to § 205.670.

(c) Conflicts of interest.

(1) A copy of procedures intended to

be implemented to prevent the

occurrence of conflicts of interest, as

described in § 205.501(a)(11).

(2) For each person identified in

§ 205.504(a)(2), a conflict of interest

disclosure report, identifying any foodor agriculture-related business interests,

including business interests of

immediate family members, that cause a

conflict of interest.

(d) Current certification activities. An

applicant who currently certifies

production or handling operations must

submit:

(1) A list of all production and

handling operations currently certified

by the applicant;

(2) Copies of at least 3, the

Administrator may require additional,

different inspection reports and

certification evaluation documents for

production or handling operations

certified by the applicant during the

previous year for each area of operation

for which accreditation is requested;

and

(3) The results of any accreditation

process of the applicant’s operation by

an accrediting body during the previous

year for the purpose of evaluating its

certification activities.

(e) Other information. Any other

information the applicant believes may

assist in the Administrator’s evaluation

of the applicant’s expertise and ability.

§ 205.505 Statement of agreement.

(a) A private or State entity seeking

accreditation under this subpart must

sign and return a statement of agreement

prepared by the Administrator which

affirms that, if granted accreditation as

a certifying agent under this subpart, the

applicant will carry out the provisions

of the Act and the regulations in this

part, including:

(1) Accept the certification decisions

made by another USDA accredited

certifying agent as equivalent to its own;

(2) Refrain from making false or

misleading claims about its

accreditation status, the USDA

accreditation program for certifying

agents, or the nature or qualities of

products labeled as organically

produced;

(3) Conduct an annual performance

appraisal for each inspector to be used

by the certifying agent and implement

measures to correct any possible

deficiencies identified in compliance

with the Act and the regulations in this

part;

(4) Have an annual internal program

evaluation conducted of its certification

activities by certifying agent staff, an

outside auditor, or a consultant who has

the expertise to conduct such

evaluations and implement measures to

correct any deficiencies identified in

compliance with the Act and the

regulations in this part;

(5) Pay and submit fees to AMS in

accordance with § 205.640; and

(6) Comply with, implement, and

carry out any other terms and

conditions determined by the

Administrator to be necessary.

(b) A private entity seeking

accreditation as a certifying agent under

this subpart must additionally agree to:

(1) Hold the Secretary harmless for

any failure on the part of the certifying

agent to carry out the provisions of the

Act and the regulations in this part;

(2) Furnish reasonable security, in an

amount and according to such terms as

the Administrator may by regulation

prescribe, for the purpose of protecting

the rights of production and handling

operations certified by such certifying

agent under the Act and the regulations

in this part; and

(3) Transfer to the Administrator and

make available to the applicable State

program’s governing State official all

records or copies of records concerning

the certifying agent’s certification

activities in the event that the certifying

agent dissolves or loses its accreditation.

§ 205.506 Approval of accreditation.

(a) Accreditation will be approved

when:

(1) The accreditation applicant has

submitted the information required by

§§ 205.503 through 205.505;

(2) The accreditation applicant pays

the required fee in accordance with

§ 205.640(c); and

(3) The Administrator determines that

the applicant for accreditation meets the

requirements for accreditation as stated

in § 205.501, as determined by a review

of the information submitted in

accordance with §§ 205.503 through

205.505 and, if necessary, a review of

the information obtained from a site

evaluation as provided for in § 205.508.

(b) On making a determination to

approve an application for

accreditation, the Administrator will

notify the applicant of approval of

accreditation in writing, stating:

(1) The area(s) for which accreditation

is given;

(2) The effective date of the

accreditation; and

(3) For a certifying agent who is a

private entity, the amount and type of

security that must be established to

protect the rights of production and

handling operations certified by such

certifying agent.

(c) The accreditation of a certifying

agent shall continue in effect until such

time as the certifying agent fails to

renew accreditation as provided in

§ 205.510(b), the certifying agent

voluntarily ceases its certification

activities, or accreditation is suspended

or revoked pursuant to § 205.665.

§ 205.507 Denial of accreditation.

(a) If the Administrator has reason to

believe, based on a review of the

information specified in §§ 205.503

through 205.505 or after a site

evaluation as specified in § 205.508, that

an applicant for accreditation is not able

to comply or is not in compliance with

the requirements of the Act and the

regulations in this part, the

Administrator shall provide a written

notification of noncompliance to the

applicant in accordance with

§ 205.665(a).

(b) The applicant may:

(1) File, with the Administrator, an

appeal of the deficiencies identified in

the notification of noncompliance; or

(2) Submit to the Administrator a

description of the actions taken to

correct the deficiencies identified in the

notification of noncompliance and

evidence demonstrating such

corrections.

(c) If an applicant fails to correct the

deficiencies, fails to report the

corrections by the date specified in the

notification of noncompliance, fails to

file an appeal of the notification of

noncompliance by the date specified, or

is unsuccessful in its appeal, the

Administrator will provide the

applicant with written notification of

accreditation denial. An applicant who

has received written notification of

accreditation denial may apply for

accreditation again at any time in

accordance with § 205.502.

(d) If the certifying agent was

accredited prior to the site evaluation

and the certifying agent fails to correct

the deficiencies, fails to report the

corrections by the date specified in the

notification of noncompliance, or fails

to file an appeal of the notification of

noncompliance by the date specified,

the Administrator will begin

proceedings to suspend or revoke the

certifying agent’s accreditation. An

applicant who has had its accreditation

suspended may apply for accreditation

again at any time in accordance with

§ 205.502. A private entity certifying

agent whose accreditation is revoked

will be ineligible for accreditation for a

period of not less than 3 years following

the date of such determination.

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13625

§ 205.508 Site evaluations.

(a) Site evaluations of accredited

certifying agents shall be conducted for

the purpose of examining the certifying

agent’s operations and evaluating its

compliance with the Act and the

regulations of this part. Site evaluations

shall include an on-site review of the

certifying agent’s certification

procedures, decisions, facilities,

administrative and management

systems, and production or handling

operations certified by the certifying

agent. Site evaluations shall be

conducted by a representative(s) of the

Administrator.

(b) An initial site evaluation of an

accreditation applicant shall be

conducted before or within a reasonable

period of time after issuance of the

applicant’s ‘‘notification of

accreditation.’’ A site evaluation shall

be conducted after application for

renewal of accreditation but prior to the

issuance of a notice of renewal of

accreditation. One or more site

evaluations will be conducted during

the period of accreditation to determine

whether an accredited certifying agent is

complying with the general

requirements set forth in § 205.501.

§ 205.509 Peer review panel.

The Administrator may establish a

peer review panel to assist in evaluating

applicants for accreditation, amendment

to an accreditation, and renewal of

accreditation as certifying agents. Peer

reviewers will serve without

compensation.

(a) Peer review panel(s).

(1) A peer review panel shall review

the documentation provided by the

Administrator after any site evaluation

performed pursuant to §§ 205.508 and

205.510.

(2) The Administrator shall consider

the reports received from each

individual member of a peer review

panel when determining whether to

continue or renew the accreditation of a

certifying agent.

(3) A peer review panel meeting shall

be held solely for the purposes of giving

and receiving information. Any meeting

or conference call shall be conducted in

a manner that will ensure the actions of

panel members are carried out on an

individual basis with any opinions and

recommendations by a member being

made individually.

(b) Eligibility for peer review panels.

(1) Applicants for membership in the

peer review panel pool must:

(i) Provide the Administrator with a

written description and, upon request,

supporting documentation of their

qualifications to conduct peer reviews.

Such description must include

information concerning the applicant’s

training and expertise in organic

production or handling methods and in

evaluating whether production or

handling operations are using a system

of organic production or handling.

(ii) Address possible limitations on

availability to serve.

(iii) Include information concerning

their commercial interests and those of

their immediate family members, within

the 12-month period prior to

application, with any person who may

seek to become or who is an accredited

certifying agent. No person who has or

has had a commercial interest,

including an immediate family interest

or the provision of consulting services,

in an applicant for accreditation or

renewal of accreditation within the

preceding 12-month period shall be

appointed to or accept appointment to

a panel evaluating such applicant for

accreditation or renewal of

accreditation.

(2) Persons accepted to the pool may

serve until notified that their

appointment has been rescinded by the

Administrator or until they are no

longer qualified, whichever occurs first.

(c) Composition of peer review panels.

(1) Peer review panels convened by

the Administrator shall consist of at

least three but no more than five

members.

(2) Peer review panels must include:

(i) A Department representative who

shall preside over the panel and

(ii) No fewer than two members,

drawn from the peer review pool, who

possess sufficient expertise, as

determined by the Administrator, in the

areas of accreditation described in the

application for accreditation or the

notice of approval of accreditation for

each certifying agent whose operations

and performance are to be reviewed.

(3) Peer review panels may include:

(i) Up to two members with expertise

in other disciplines, including

organizational management and finance;

(ii) Member(s) from the approved

State organic certification program

when the applicant is a private entity

that will operate within the State; and

(iii) Member(s) from a foreign

government’s organic program when the

applicant is a private entity that will

operate within the country.

(d) Duties and responsibilities of

panel members.

(1) Each person on a peer review

panel must individually review the site

evaluation report prepared by the

Department’s evaluator(s) and any other

information that may be provided by the

Administrator relevant to continuing or

renewing the accreditation status of a

certifying agent;

(2) Information about the certifying

agent received as part of the review

process is confidential information, and

peer reviewers must not release, copy,

quote, or otherwise use material from

the information received, other than in

the report required to be submitted;

(3) Each peer reviewer must agree to

treat the information received for review

as confidential; and

(4) Each person on a peer review

panel must provide an individual

written report, including

recommendations, to the Administrator

regarding a certifying agent’s ability to

conduct and perform certification

activities.

(e) Peer review panel reports. Copies

of the peer review panel reports will be

provided upon request to the certifying

agent, and written responses from the

certifying agent may be submitted for

consideration by the Administrator.

§ 205.510 Annual report, recordkeeping,

and renewal of accreditation.

(a) Annual report and fees. An

accredited certifying agent must submit

annually to the Administrator, on or

before the anniversary date of the

issuance of the notification of

accreditation, the following reports and

fees:

(1) A complete and accurate update of

information submitted pursuant to

§§ 205.503 and 205.504;

(2) Information supporting any

changes being requested in the areas of

accreditation described in § 205.500;

(3) A description of the measures

implemented in the previous year and

any measures to be implemented in the

coming year to satisfy any terms and

conditions determined by the

Administrator to be necessary, as

specified in the most recent notification

of accreditation or notice of renewal of

accreditation;

(4) The results of the most recent

inspector performance appraisals and

annual program evaluation and a

description of adjustments to the

certifying agent’s operation and

procedures implemented or to be

implemented in response to the

appraisals and evaluation; and

(5) The fees required in § 205.640(a).

(b) Recordkeeping. Certifying agents

must maintain records according to the

following schedule:

(1) Records obtained from applicants

for certification and certified operations

must be maintained for not less than 5

years beyond their receipt;

(2) Records created by the certifying

agent regarding applicants for

certification and certified operations

must be maintained for not less than 10

years beyond their creation; and

13626 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

(3) Records created or received by the

certifying agent pursuant to the

accreditation requirements of this

subpart F, excluding any records

covered by §§ 205.510(b)(2), must be

maintained for not less than 5 years

beyond their creation or receipt.

(c) Renewal of accreditation.

(1) An accredited certifying agent’s

application for accreditation renewal

must be received 6 months prior to the

fifth anniversary of issuance of the

notification of accreditation and each

subsequent renewal of accreditation.

The accreditation of certifying agents

who make timely application for

renewal of accreditation will not expire

during the renewal process. The

accreditation of certifying agents who

fail to make timely application for

renewal of accreditation will expire as

scheduled unless renewed prior to the

scheduled expiration date. Certifying

agents with an expired accreditation

must not perform certification activities

under the Act and these regulations.

(2) Following receipt of the

information submitted by the certifying

agent in accordance with paragraph (a)

of this section, the results of a site

evaluation, and, if applicable, the

reports submitted by a peer review

panel, the Administrator will determine

whether the certifying agent remains in

compliance with the Act and the

regulations of this part and should have

its accreditation renewed.

(d) Notice of renewal of accreditation.

Upon a determination that the certifying

agent is in compliance with the Act and

the regulations of this part, the

Administrator will issue a notice of

renewal of accreditation. The notice of

renewal will specify any terms and

conditions that must be addressed by

the certifying agent and the time within

which those terms and conditions must

be satisfied.

(e) Noncompliance. Upon a

determination that the certifying agent

is not in compliance with the Act and

the regulations of this part, the

Administrator will initiate proceedings

to suspend or revoke the certifying

agent’s accreditation.

§§ 205.511—205.599 [Reserved]

Subpart G—Administrative

The National List of Allowed and

Prohibited Substances

§ 205.600 Allowed and prohibited

substances and ingredients in organic

production and handling.

To be sold or labeled as ‘‘organic,’’ or

‘‘made with organic (specified

ingredients),’’ the product must be

produced and handled without the use

of:

(a) Synthetic substances and

ingredients, except as provided in

§ 205.601 and § 205.603.

(b) Nonagricultural substances used in

or on processed products, except as

otherwise provided in § 205.605;

(c) Nonsynthetic substances

prohibited in § 205.602 or § 205.604;

and

(d) Materials, processes, or techniques

prohibited in § 205.301.

§ 205.601 Synthetic substances allowed

for use in organic crop production.

In accordance with restrictions

specified in this section and § 205.102

and § 205.200 through § 205.207, the

following synthetic substances may be

used:

(a) As algicides, disinfectants and

sanitizers, including irrigation system

cleaning systems

(1) Alcohols

(i) Ethanol

(ii) Isopropanol

(2) Chlorine Materials—Except, That,

residual chlorine levels in the water

shall not exceed the maximum residual

disinfectant limit under the Safe

Drinking Water Act.

(i) Calcium Hypochlorite

(ii) Chlorine Dioxide

(iii) Sodium Hypochlorite

(3) Hydrogen Peroxide

(4) Soap-Based Algicides/Demossers

(b) As herbicides, weed barriers, as

applicable.

(1) Herbicides, Soap-Based—for use in

farmstead maintenance (roadways,

ditches, right of ways, building

perimeters) and ornamental crops

(2) Mulches

(i) Newspaper or other recycled paper,

without glossy or colored inks.

(ii) Plastic mulch and covers

(petroleum-based other than polyvinyl

chloride (PVC))

(c) As compost feedstocks—

Newspapers or other recycled paper,

without glossy or colored inks

(d) As animal repellents—Soaps,

Ammonium—for use as a large animal

repellant only, no contact with soil or

edible portion of crop

(e) As insecticides (including

acracides or mite control)

(1) Ammonium Carbonate—for use as

bait in insect traps only, no direct

contact with crop or soil

(2) Boric Acid—structural pest

control, no direct contact with organic

food or crops

(3) Elemental Sulfur

(4) Lime Sulfur—including calcium

polysulfide, fungicides, or insecticides

if no alternatives

(5) Oils, Horticultural—as dormant,

suffocating, and summer oils

(6) Petroleum-Based Oils—on woody

plants for dormant and summer pest

control, Except, That, a petroleum-based

material allowed as a pesticide is

prohibited for use as a herbicide.

Aromatic petroleum solvents as a

subclass of petroleum-based oils are

prohibited.

(7) Soaps, Insecticidal

(8) Sticky Traps/Barriers

(f) As insect attractants—Pheromones

(g) As rodenticides

(1) Sulfur Dioxide—underground

rodent control only (smoke bombs)

(2) Vitamin D3

(h) As slug or snail bait—[Reserved]

(i) As plant disease control

(1) Coppers, Fixed—Copper

Hydroxide, Copper Oxide, Copper

Oxychloride, Includes products

exempted from EPA tolerance, Except,

That, copper-based materials shall be

managed in a way that prevents

excessive accumulation in the soil and

shall not be used as herbicides.

(2) Copper Sulfate—Substance must

be used in a manner that minimizes

accumulation of copper in the soil.

(3) Hydrated Lime—not permitted for

soil application or to cauterize

mutilations or deodorize animal wastes

(4) Hydrogen Peroxide

(5) Oils, Horticultural, as dormant,

suffocating, and summer oils,

insecticides only

(6) Petroleum-Based Oils—Except,

That, aromatic petroleum solvents as a

subclass of petroleum-based oils are

prohibited.

(7) Potassium Bicarbonate

(8) Elemental Sulfur

(j) As plant or soil amendments.

(1) Aquatic Plant Extracts (other than

hydrolyzed)—Extraction process is

limited to the use of Potassium

Hydroxide or Sodium Hydroxide;

solvent amount used is limited to that

amount necessary for extraction.

(2) Humic Acids—naturally occurring

deposits, water and alkali extracts only

(3) Lignin Sulfonate—chelating agent,

dust suppressant, floatation agent

(4) Micronutrients—not to be used as

a defoliant, herbicide, or desiccant.

Those made from nitrates or chlorides

are not allowed. Soil deficiency must be

documented by soil or tissue test.

(i) Soluble Boron Products

(ii) Sulfates, carbonates, oxides, or

silicates of zinc, iron, magnesium,

manganese, molybdenum, selenium,

and cobalt

(5) Liquid Fish Products—can be pH

adjusted with sulfuric, citric or

phosphoric acid. The amount of acid

used shall not exceed the minimum

needed to lower the pH to 3.5

(6) Vitamins, B1, C, and E

(k) As plant growth regulators—

[Reserved]

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13627

(l) As floating agents in postharvest

handling

(1) Lignin Sulfonate

(2) Sodium Silicate—for tree fruit and

fiber processing

(m) As synthetic inert ingredients as

classified by the Environmental

Protection Agency (EPA), for use with a

synthetic substance listed in this section

and used as an active ingredient in

accordance with any limitations on the

use of such synthetic substances—EPA

List 4—Inerts of Minimal Concern

(n)–(z) [Reserved]

§ 205.602 Nonsynthetic substances

prohibited for use in organic crop

production.

(a) Ash from manure burning

(b) Arsenic

(c) Lead salts

(d) Sodium Fluoaluminate (Mined)

(e) Strychnine

(f) Tobacco Dust

(g)-(z) [Reserved]

§ 205.603 Synthetic substances allowed

for use in organic livestock production.

Any substance in the following

categories may be used in organic

livestock production in accordance with

any restrictions specified in this section

and § 205.102 and § 205.236 through

§ 205.239.

(a) As disinfectants, sanitizers, and

medical treatments as applicable

(1) Alcohols

(i) Ethanol—disinfectant and sanitizer

only, prohibited as a feed additive

(ii) Isopropanol—disinfectant only

(2) Aspirin—approved for health care

use to reduce inflammation

(3) Chlorine Materials—disinfecting

and sanitizing facilities and equipment.

Residual chlorine levels in the water

shall not exceed the maximum residual

disinfectant limit under the Safe

Drinking Water Act

(i) Calcium Hypochlorite

(ii) Chlorine Dioxide

(iii) Sodium Hypochlorite

(4) Chlorohexidine—Allowed for

surgical procedures conducted by a

veterinarian. Allowed for use as a teat

dip when alternative germicidal agents

and/or physical barriers have lost their

effectiveness

(5) Electrolytes—without antibiotics

(6) Glucose

(7) Glycerin—Allowed as a livestock

teat dip, must be produced through the

hydrolysis of fats or oils

(8) Iodine

(9) Hydrogen Peroxide

(10) Magnesium Sulfate

(11) Parasiticides—Ivermectin—

Prohibited in slaughter stock, allowed in

emergency treatment for dairy and

breeder stock when organic system

plan-approved preventive management

does not prevent infestation. Milk or

milk products from a treated animal

cannot be labeled as provided for in

subpart D of this part for 90 days

following treatment. In breeder stock,

treatment cannot occur during the last

third of gestation if the progeny will be

sold as organic

(12) Phosphoric Acid—allowed as an

equipment cleaner

(13) Vaccines and Biologics

(b) As topical treatment, external

parasiticide or local anesthetic as

applicable.

(1) Iodine

(2) Lidocaine—as a local anesthetic.

Use requires a withdrawal period of 90

days after administering to livestock

intended for slaughter and 7 days after

administering to dairy animals

(3) Lime, Hydrated—(Bordeaux

mixes)

(4) Mineral Oil—for topical use and as

a lubricant

(5) Procaine—as a local anesthetic,

use requires a withdrawal period of 90

days after administering to livestock

intended for slaughter and 7 days after

administering to dairy animals

(6) Copper Sulfate

(c) As feed supplements—Milk

Replacers—without antibiotics, as

emergency use only, no nonmilk

products or products from BST treated

animals

(d) As feed additives

(1) Trace Minerals, including:

(i) Copper Sulfate

(ii) Magnesium Sulfate

(2) Vitamins—accepted for

enrichment or fortification, limited to

those approved by the FDA for livestock

use

(e) As fillers and excipients

(f)–(z) [Reserved]

§ 205.604 Nonsynthetic substances

prohibited for use in organic livestock

production. [Reserved]

§ 205.605 Nonagricultural (nonorganic)

substances allowed as ingredients in or on

processed products labeled as ‘‘organic’’ or

‘‘made with organic (specified

ingredients).’’

The following nonagricultural

substances may be used only in

accordance with any restrictions

specified in this section and § 205.102,

§ 205.270, and § 205.300 through

§ 205.310.

(a) Nonsynthetics allowed:

(1) Agar-agar

(2) Acids

(i) Alginic

(ii) Citric—produced by microbial

fermentation of carbohydrate substances

(iii) Lactic

(3) Baking Powder—aluminum-free

(4) Bentonite

(5) Calcium Carbonate

(6) Calcium Chloride

(7) Carrageenan

(8) Cornstarch (Native)

(9) Dairy Cultures—non-EM

(10) Diatomaceous Earth—food

filtering aid only

(11) Enzymes—must be derived from

edible, nontoxic plants, nonpathogenic

fungi, or nonpathogenic bacteria

(12) Gums—Water extracted only

(arabic, guar, locust bean, carob bean)

(13) Kaolin

(14) Kelp—for use only as a thickener

and dietary supplement

(15) Lecithin—unbleached

(16) Nitrogen—Oil-free grades

(17) Oxygen—Oil-free grades

(18) Pectin (high-methoxy)

(19) Perlite—for use only as a filter

aid in food processing

(20) Potassium Chloride

(21) Potassium Iodide

(22) Sodium Bicarbonate

(23) Sodium Carbonate

(24) Yeast—Nonsynthetic, non-EM

(i) Autolysate

(ii) Bakers

(iii) Brewers

(iv) Nutritional

(v) Smoked—growth on

petrochemical substrate and sulfite

waste liquor prohibited. Nonsynthetic

smoke flavoring process must be

documented

(b) Synthetics allowed:

(1) Alginates

(2) Ammonium Bicarbonate—for use

only as a leavening agent

(3) Ammonium Carbonate—for use

only as a leavening agent

(4) Ascorbic Acid

(5) Calcium Citrate

(6) Calcium Hydroxide

(7) Calcium Phosphates (monobasic

and dibasic)

(8) Carbon Dioxide

(9) Chlorine Materials—disinfecting

and sanitizing food contact surfaces,

Except, That, residual chlorine levels in

the water shall not exceed the maximum

residual disinfectant limit under the

Safe Drinking Water Act.

(i) Calcium Hypochlorite

(ii) Chlorine Dioxide

(iii) Sodium Hypochlorite

(10) Ethylene—allowed for post

harvest ripening of tropical fruit

(11) Ferrous Sulfate—for iron

enrichment or fortification of foods

when required by regulation or

recommended (independent

organization)

(12) Glycerides (mono and di)—for

use only in drum drying of food

(13) Glycerin—produced by

hydrolysis of fats and oils

(14) Hydrogen peroxide

13628 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

(15) Lecithin—bleached

(16) Magnesium Carbonate—for use

only in agricultural products labeled

‘‘made with organic (specified

ingredients),’’ prohibited in agricultural

products labeled ‘‘organic’’

(17) Magnesium Chloride—derived

from sea water

(18) Magnesium Stearate—for use

only in agricultural products labeled

‘‘made with organic (specified

ingredients),’’ prohibited in agricultural

products labeled ‘‘organic’’

(19) Magnesium Sulfate

(20) Nutrient vitamins and minerals,

in accordance with 21 CFR 104.20,

Nutritional Quality Guidelines For

Foods

(21) Ozone

(22) Pectin (low-methoxy)

(23) Phosphoric Acid—cleaning of

food-contact surfaces and equipment

only

(24) Potassium Acid Tartrate

(25) Potassium Tartrate made from

Tartaric acid

(26) Potassium Carbonate

(27) Potassium Citrate

(28) Potassium Hydroxide—

prohibited for use in lye peeling of fruits

and vegetables

(29) Potassium Iodide—for use only in

agricultural products labeled ‘‘made

with organic (specified ingredients),’’

prohibited in agricultural products

labeled ‘‘organic’’

(30) Potassium Phosphate—for use

only in agricultural products labeled

‘‘made with organic (specific

ingredients),’’ prohibited in agricultural

products labeled ‘‘organic’’

(31) Silicon Dioxide

(32) Sodium Citrate

(33) Sodium Hydroxide—prohibited

for use in lye peeling of fruits and

vegetables

(34) Sodium Phosphates—for use only

in dairy foods

(35) Tocopherols—derived from

vegetable oil when rosemary extracts are

not a suitable alternative

(36) Xanthan gum

(c)–(z) [Reserved]

§ 205.606 Nonorganically produced

agricultural products allowed as ingredients

in or on processed products labeled as

organic or made with organic ingredients.

Any nonorganically produced

agricultural product may be used in

accordance with any restrictions

specified in this section and § 205.102,

§ 205.270, and § 205.300 through

§ 205.310.

§ 205.607 Amending the National List.

(a) Any person may petition the

National Organic Standard Board for the

purpose of having a substance evaluated

for recommendation to the Secretary for

inclusion on or deletion from the

National List in accordance with section

6517 of the Act.

(b) A person petitioning for

amendment of the National List should

request a copy of the petition

procedures from the USDA at the

address in § 205.607(c).

(c) A petition to amend the National

List must be submitted to: Program

Manager, USDA/AMS/TM/NOP, Room

2945 South Building, PO Box 96456,

Washington, DC 20090–6456.

(d) A substance may be added to the

National List only in the following

categories:

(1) Synthetic substances allowed for

use in organic crop or livestock

production;

(2) Nonsynthetic substances

prohibited for use in organic crop or

livestock production; or

(3) Nonagricultural substances

allowed for use as ingredients in or on

processed products labeled as ‘‘organic’’

or ‘‘made with organic (specified

ingredients).’’

State Programs

§ 205.620 Requirements of State organic

certification programs.

(a) A State may establish a State

organic certification program for

production and handling operations

within the State which produces and

handles organic agricultural products.

(b) A State organic certification

program must meet the general

requirements for organic programs

specified in the Act and be at least

equivalent to the regulations in this

part.

(c) A State organic certification

program may contain more restrictive

requirements based on unique

environmental conditions or specific

production or handling practices

particular to the State or region of the

United States, which necessitates the

more restrictive requirement. Such

additional requirements must further

the purposes and be consistent with the

Act and regulations in this part.

(d) A State organic certification

program must assume enforcement

obligations in the State for the

requirements of this part and any more

restrictive requirements approved by the

Secretary.

(e) A State organic certification

program and any amendments to such

program must be approved by the

Secretary prior to being implemented by

the State.

§ 205.621 Submission and determination

of proposed State organic certification

programs and amendments to approved

State organic certification programs.

(a) A State program’s governing State

official must submit to the Secretary a

proposed State organic certification

program and any proposed amendments

to such approved program.

(1) Such submission must contain

supporting materials that include

statutory authorities, program

description, a statement of acceptance of

the general requirements for organic

programs specified in the Act,

documentation of unique environmental

or ecological conditions or specific

production practices particular to the

State which necessitate more restrictive

requirements than the requirements of

this part, and other information as may

be required by the Secretary.

(2) Submission of a request for

amendment of an approved State

organic certification program must

contain supporting material that

includes an explanation and

documentation of the unique

environmental or ecological conditions

or specific production practices

particular to the State or region, which

necessitates the proposed amendment.

Supporting material also must explain

how the proposed amendment furthers

and is consistent with the purposes of

the Act and the regulations of this part.

(b) Within 6 months of receipt of

submission, the Secretary will:

(1) Publish in the Federal Register for

public comment, a summary of a

proposed State organic certification

program, and a summary of any

proposed amendment to such program.

(2) After review of materials and

documentation accompanying the

proposal and consideration of

comments received, notify the State

program’s governing State official of

approval or disapproval of the proposed

program or amendment of an approved

program and, if disapproved, the

reasons for the disapproval.

(c) After receipt of a notice of

disapproval, the State program’s

governing State official may resubmitt a

revised State organic certification

program or amendment of such a

program at any time.

§ 205.622 Review of approved State

organic certification programs.

The Secretary will review a State

organic certification program not less

than once during each 5-year period

following the date of the initial program

approval. The Secretary will notify the

State program’s governing State official

of approval or disapproval of the

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13629

program within 6 months after initiation

of the review.

Fees

§ 205.640 Fees and other charges for

accreditation.

Fees and other charges equal as nearly

as may be to the cost of the accreditation

services rendered under the regulations,

including initial accreditation, review of

annual reports, and renewal of

accreditation, shall be assessed and

collected from applicants for initial

accreditation and accredited certifying

agents submitting annual reports or

seeking renewal of accreditation in

accordance with the following

provisions.

(a) Fees-for-Service.

(1) Except as otherwise provided in

this section, fees-for-service shall be

based on the time required to render the

service provided calculated to the

nearest 15-minute period, including the

review of applications and

accompanying documents and

information, evaluator travel, the

conduct of on-site evaluations, review of

annual reports and updated documents

and information, and the time required

to prepare reports and any other

documents in connection with the

performance of service. The hourly rate

shall be the same as that charged by the

Agricultural Marketing Service (AMS),

through its Quality Systems

Certification Program, to certification

bodies requesting conformity

assessment to the International

Organization for Standardization

‘‘General Requirements for Bodies

Operating Product Certification

Systems’’ (ISO Guide 65).

(2) Applicants for initial accreditation

and accredited certifying agents

submitting annual reports or seeking

renewal of accreditation during the first

18 months following the effective date

of subpart F of this part shall receive

service without incurring an hourly

charge for service.

(3) Applicants for initial accreditation

and renewal of accreditation must pay

at the time of application, effective 18

months following the effective date of

subpart F of this part, a nonrefundable

fee of $500.00 which shall be applied to

the applicant’s fees-for-service account.

(b) Travel charges. When service is

requested at a place so distant from the

evaluator’s headquarters that a total of

one-half hour or more is required for the

evaluator(s) to travel to such place and

back to the headquarters or at a place of

prior assignment on circuitous routing

requiring a total of one-half hour or

more to travel to the next place of

assignment on the circuitous routing,

the charge for such service shall include

a mileage charge administratively

determined by the Department and

travel tolls, if applicable, or such travel

prorated among all the applicants and

certifying agents furnished the service

involved on an equitable basis or, where

the travel is made by public

transportation (including hired

vehicles), a fee equal to the actual cost

thereof. Travel charges shall become

effective for all applicants for initial

accreditation and accredited certifying

agents on the effective date of subpart F

of this part. The applicant or certifying

agent will not be charged a new mileage

rate without notification before the

service is rendered.

(c) Per diem charges. When service is

requested at a place away from the

evaluator’s headquarters, the fee for

such service shall include a per diem

charge if the employee(s) performing the

service is paid per diem in accordance

with existing travel regulations. Per

diem charges to applicants and

certifying agents will cover the same

period of time for which the evaluator(s)

receives per diem reimbursement. The

per diem rate will be administratively

determined by the Department. Per

diem charges shall become effective, for

all applicants for initial accreditation

and accredited certifying agents on the

effective date of subpart F of this part.

The applicant or certifying agent will

not be charged a new per diem rate

without notification before the service is

rendered.

(d) Other costs. When costs, other

than costs specified in paragraphs (a),

(b), and (c) of this section are associated

with providing the services, the

applicant or certifying agent will be

charged for these costs. Such costs

include, but are not limited to,

equipment rental, photocopying,

delivery, facsimile, telephone, or

translation charges incurred in

association with accreditation services.

The amount of the costs charged will be

determined administratively by the

Department. Such costs shall become

effective for all applicants for initial

accreditation and accredited certifying

agents on the effective date of subpart F

of this part.

§ 205.641 Payment of fees and other

charges.

(a) Applicants for initial accreditation

and renewal of accreditation must remit

the nonrefundable fee, pursuant to

§ 205.640(a)(3), along with their

application. Remittance must be made

payable to the Agricultural Marketing

Service, USDA, and mailed to: Program

Manager, USDA–AMS–TMP–NOP,

Room 2945–South Building, PO Box

96456, Washington, DC 20090–6456 or

such other address as required by the

Program Manager.

(b) Payments for fees and other

charges not covered under paragraph (a)

of this section must be:

(1) Received by the due date shown

on the bill for collection;

(2) Made payable to the Agricultural

Marketing Service, USDA; and

(3) Mailed to the address provided on

the bill for collection.

(c) The Administrator shall assess

interest, penalties, and administrative

costs on debts not paid by the due date

shown on a bill for collection and

collect delinquent debts or refer such

debts to the Department of Justice for

litigation.

§ 205.642 Fees and other charges for

certification.

Fees charged by a certifying agent

must be reasonable, and a certifying

agent shall charge applicants for

certification and certified production

and handling operations only those fees

and charges that it has filed with the

Administrator. The certifying agent

shall provide each applicant with an

estimate of the total cost of certification

and an estimate of the annual cost of

updating the certification. The certifying

agent may require applicants for

certification to pay at the time of

application a nonrefundable fee of no

more than $250.00, which shall be

applied to the applicant’s fees-forservice account. The certifying agent

shall provide all persons inquiring

about the application process with a

copy of its fee schedule.

§§ 205.643—205.649 [Reserved]

Compliance

§ 205.660 General.

(a) The National Organic Program’s

Program Manager, on behalf of the

Secretary, may inspect and review

certified production and handling

operations and accredited certifying

agents for compliance with the Act or

regulations in this part.

(b) The Program Manager may initiate

suspension or revocation proceedings

against a certified operation:

(1) When the Secretary has reason to

believe that a certified operation has

violated or is not in compliance with

the Act or regulations in this part.

(2) When a certifying agent or a State

program’s governing State official fails

to take appropriate action to enforce the

Act or regulations in this part; or

(c) The Program Manager may initiate

suspension or revocation of a certifying

agent’s accreditation if the certifying

agent fails to meet, conduct, or maintain

13630 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

accreditation requirements pursuant to

the Act or this part.

§ 205.661 Investigation of certified

operations.

(a) A certifying agent may investigate

complaints of noncompliance with the

Act or regulations of this part

concerning production and handling

operations certified as organic by the

certifying agent. A certifying agent must

notify the Program Manager of all

compliance proceedings and actions

taken pursuant to this part.

(b) A State program’s governing State

official may investigate complaints of

noncompliance with the Act or

regulations in this part concerning

organic production or handling

operations operating in the State.

§ 205.662 Noncompliance procedure for

certified operations.

(a) Notification. When an inspection,

review, or investigation of a certified

operation by a certifying agent or a State

program’s governing State official

reveals any noncompliance with the Act

or regulations in this part, a written

notification of noncompliance shall be

sent to the certified operation. Such

notification shall provide:

(1) A description of each

noncompliance;

(2) The facts upon which the

notification of noncompliance is based;

and

(3) The date by which the certified

operation must rebut or correct each

noncompliance and submit supporting

documentation of each such correction

when correction is possible.

(b) Resolution. When a certified

operation demonstrates that each

noncompliance has been resolved, the

certifying agent or the State program’s

governing State official, as applicable,

will send the certified operation a

written notification of noncompliance

resolution.

(c) Proposed suspension or

revocation. When rebuttal is

unsuccessful or correction of the

noncompliance is not completed within

the prescribed time period or is not

adequate to demonstrate that each

noncompliance has been corrected, the

certifying agent or State program’s

governing State official shall send the

certified operation a written notification

of proposed suspension or revocation of

certification of the entire operation or a

portion of the operation, as applicable to

the noncompliance. When correction of

a noncompliance is not possible, the

notification of noncompliance and the

proposed suspension or revocation of

certification may be combined in one

notification. The notification of

proposed suspension or revocation of

certification shall state:

(1) The reasons for the proposed

suspension or revocation;

(2) The proposed effective date of

such suspension or revocation;

(3) The impact of a suspension or

revocation on future eligibility for

certification; and

(4) The right to request mediation

pursuant to § 205.663 or to file an

appeal pursuant to § 205.681.

(d) Willfull violations.

Notwithstanding paragraph (a) of this

section, if a certifying agent or State

program’s governing State official has

reason to believe that a certified

operation has willfully violated the Act

or regulations in this part, the certifying

agent or State program’s governing State

official shall send the certified operation

a notification of proposed suspension or

revocation of certification of the entire

operation, or a portion of the operation,

as applicable to the noncompliance.

(e) Suspension or revocation.

(1) If the certified operation fails to

correct the noncompliance, to resolve

the issue through rebuttal or mediation,

or to file an appeal of the proposed

suspension or revocation of

certification, the certifying agent or

State program’s governing State official

shall send the certified operation a

written notification of suspension or

revocation.

(2) A certifying agent or State

program’s governing State official must

not send a notification of suspension or

revocation to a certified operation that

has requested mediation pursuant to

§ 205.663 or filed an appeal pursuant to

§ 205.681.

(f) Ineligibility. A certified operation

or a person responsibly connected with

an operation whose certification has

been revoked will not be eligible to

receive certification for a period of not

more than 5 years following the date of

such revocation, as determined by the

Secretary.

§ 205.663 Mediation.

Any dispute with respect to proposed

suspension or revocation of certification

under this part shall, at the request of

the applicant for certification or

certified operation, be mediated by a

qualified mediator mutually agreed

upon by the parties to the mediation. If

a State Program is in effect, the

mediation procedures established in the

State Program, as approved by the

Secretary, will be followed. Mediation

shall be requested in writing to the

applicable certifying agent. The parties

to the mediation shall have no more

than 30 days to reach an agreement

following a mediation session. If

mediation is unsuccessful, the applicant

for certification or certified operation

shall have 30 days from termination of

mediation to appeal the certifying

agent’s decision to the Administrator,

pursuant to § 205.681. Any agreement

reached during or as a result of the

mediation process shall be in

compliance with the Act and these

regulations. The Secretary may review

any mediated agreement for conformity

to the Act and these regulations.

§ 205.664 [Reserved]

§ 205.665 Noncompliance procedure for

certifying agents.

(a) Noncompliance. When an

inspection, review, or investigation of

an accredited certifying agent by the

Program Manager reveals any

noncompliance with the Act or

regulations in this part, a written

notification of noncompliance shall be

sent to the certifying agent, as

applicable. Such notification shall

provide:

(1) A description of each

noncompliance found;

(2) The facts upon which the

notification of noncompliance is based;

and

(3) The date by which the certifying

agent must rebut or correct each

noncompliance when correction is

possible.

(b) Resolution. When each

noncompliance has been resolved, the

Program Manager shall send the

certifying agent a written notification of

noncompliance resolution.

(c) Proposed suspension or

revocation. If rebuttal is unsuccessful or

if correction of the noncompliance is

not made within the prescribed time

period or is not adequate to demonstrate

that each noncompliance has been

corrected, the Program Manager shall

send a written notification of proposed

suspension or revocation of

accreditation to the certifying agent. The

notification of proposed suspension or

revocation shall state whether the

certifying agent’s accreditation or

specified areas of accreditation are to be

suspended or revoked. When correction

of a noncompliance is not possible, the

notification of noncompliance and the

proposed suspension or revocation may

be combined in one notification. The

notification of proposed suspension or

revocation of accreditation shall state:

(1) The reasons for the proposed

suspension or revocation;

(2) The proposed effective date of the

suspension or revocation;

(3) The impact of a suspension or

revocation on future eligibility for

accreditation; and

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13631

(4) The right to file an appeal

pursuant to § 205.681.

(d) Willfull violations.

Notwithstanding paragraph (a) of this

section, if the Program Manager has

reason to believe that a certifying agent

has willfully violated the Act or

regulations in this part, the Program

Manager shall send a written

notification of proposed suspension or

revocation of accreditation to the

certifying agent.

(e) Suspension or revocation. When

the accredited certifying agent fails to

file an appeal of the proposed

suspension or revocation of

accreditation, the Program Manager

shall send a written notice of

suspension or revocation of

accreditation to the certifying agent.

(f) Cessation of certification activities.

A certifying agent whose accreditation

is suspended or revoked must:

(1) Cease all certification activities in

each area of accreditation which its

accreditation is suspended or revoked.

(2) Transfer to the Secretary and make

available to any applicable governing

State official all records concerning its

certification activities that were

suspended or revoked.

(g) Eligibility.

(1) A certifying agent whose

accreditation is suspended by the

Secretary under this section may at any

time submit a new request for

accreditation, pursuant to § 205.502.

The request must be accompanied by

evidence demonstrating correction of

each noncompliance and corrective

actions taken to comply with and

remain in compliance with the Act and

the regulations in this part.

(2) A certifying agent whose

accreditation is revoked by the Secretary

shall be ineligible to be accredited as a

certifying agent under the Act and the

regulations in this part for a period of

not less than 3 years following the date

of such revocation.

§§ 205.666 and 205.667 [Reserved]

§ 205.668 Noncompliance procedures

under State organic certification programs.

(a) A State program’s governing State

official must promptly notify the

Secretary of commencement of any

enforcement proceeding against a

certified operation and forward to the

Secretary a copy of each notice issued.

(b) A noncompliance proceeding,

brought by a State program’s governing

State official against a certified

operation, shall be appealable pursuant

to the appeal procedures of the State

organic certification program. There

shall be no subsequent rights of appeal

to the Secretary. Final decisions of a

State may be appealed to the United

States District Court for the district in

which such certified operation is

located.

(c) A State program’s governing State

official may review and investigate

complaints of noncompliance with the

Act or regulations concerning

accreditation of certifying agents

operating in the State. When such

review or investigation reveals any

noncompliance, the State program’s

governing State official shall send a

written report of noncompliance to the

Program Manager. The report shall

provide a description of each

noncompliance and the facts upon

which the notification of

noncompliance is based.

§ 205.669 [Reserved]

Inspection and Testing, Reporting, and

Exclusion from Sale

§ 205.670 Inspection and testing of

agricultural product to be sold or labeled

organic.

(a) All agricultural products that are

to be sold, labeled, or represented as

‘‘100 percent organic,’’ ‘‘organic,’’ or

‘‘made with organic (specified

ingredients)’’ must be made accessible

by certified organic production or

handling operations for examination by

the Administrator, the applicable State

program’s governing State official, or the

certifying agent.

(b) The Administrator, applicable

State program’s governing State official,

or the certifying agent may require

preharvest or postharvest testing of any

agricultural input used or agricultural

product to be sold, labeled, or

represented as ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with organic

(specified ingredients)’’ when there is

reasonable cause to believe that the

agricultural input or product has come

into contact with a prohibited

substance. Such tests must be

conducted by the applicable State

program’s governing State official or the

certifying agent at the official’s or

certifying agent’s own expense.

(c) The preharvest or postharvest

tissue test sample collection pursuant to

paragraph (b) of this section must be

performed by an inspector representing

the Administrator, certifying agent, or

applicable State program’s governing

State official. Sample integrity must be

maintained in transit, and residue

testing must be performed in an

accredited laboratory. Chemical analysis

must be made in accordance with the

methods described in the 16th edition of

the Official Methods of Analysis of the

AOAC International or other applicable

validated methodology determining the

presence of contaminants in agricultural

products.

(d) Results of all analyses and tests

performed under this section:

(1) Must be provided to the

Administrator promptly upon receipt;

and

(2) Will be available for public access,

unless the testing is part of an ongoing

compliance investigation.

§ 205.671 Exclusion from organic sale.

(a) When residue testing detects

prohibited substances at levels that are

greater than the estimated national

mean of detected residues for specific

commodity/pesticide pairs, as

demonstrated by USDA’s Pesticide Data

Program, or unavoidable residual

environmental contamination, as

determined by the Administrator, the

agricultural product must not be sold,

labeled, or represented as organically

produced. The Administrator, the

applicable State program’s governing

State official, or the certifying agent may

conduct an investigation of the certified

operation to determine the cause of the

prohibited substance residue.

(b) If test results indicate a specific

agricultural product contains pesticide

residues or environmental contaminants

that exceed the Food and Drug

Administration’s or the Environmental

Protection Agency’s regulatory

tolerances, the data must be reported

promptly to the appropriate public

health agencies.

§ 205.672 Emergency pest or disease

treatment.

When a prohibited substance is

applied to a certified operation due to

Federal or State emergency pest

eradication or disease treatment

program and the certified operation

otherwise meets the requirements of this

part, the certification status of the

operation shall not be affected as a

result of the application of the

prohibited synthetic substance:

Provided, That:

(a) Any harvested crop or plant part

to be harvested that has contact with a

prohibited substance applied as the

result of a Federal or State emergency

pest eradication or disease treatment

program cannot not be sold, labeled, or

represented as organically produced;

and

(b) Any livestock that are treated with

a prohibited substance applied as the

result of a Federal or State emergency

pest or disease treatment program or

product derived from such treated

livestock cannot be sold, labeled, or

represented as organically produced:

Except, That:

(1) Milk or milk products may be sold,

labeled, or represented as organically

13632 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

produced beginning 12 months

following the last date that the dairy

animal was treated with the prohibited

substance; and

(2) The offspring of gestating

mammalian breeder stock treated with a

prohibited substance may be considered

organic: Provided, That, the breeder

stock was not in the last third of

gestation on the date that the breeder

stock was treated with the prohibited

substance.

§§ 205.673—205.679 [Reserved]

Adverse Action Appeal Process

§ 205.680 General.

Persons subject to the Act who believe

they are adversely affected by a

noncompliance proceeding decision of

the National Organic Program’s Program

Manager or a certifying agent may

appeal such decision to the

Administrator.

§ 205.681 Appeals.

(a) Certification appeals. An applicant

for certification may appeal a certifying

agent’s notice of denial of certification,

and a certified operation may appeal a

certifying agent’s notification of

proposed suspension or revocation of

certification to the Administrator:

Except, That, when the applicant or

certified operation is subject to an

approved State organic certification

program and the decision to deny,

suspend, or revoke a certification is

made by a certifying agent or a State

program’s governing State official, the

appeal must be made to the State

program’s governing State official or

such official’s designee who will carry

out the appeal pursuant to the State

program’s appeal procedures approved

by the Secretary.

(1) If the Administrator sustains a

certification applicant’s or certified

operation’s appeal of a certifying agent’s

decision, the applicant will be issued

organic certification, or a certified

operation will continue its certification,

as applicable to the operation. The act

of sustaining the appeal shall not be an

adverse action subject to appeal by the

affected certifying agent.

(2) If the Administrator denies an

appeal, a formal administrative

proceeding will be initiated to deny,

suspend, or revoke the certification.

Such proceeding shall be conducted

pursuant to the Department’s Uniform

Rules of Practice.

(b) Accreditation appeals. An

applicant for accreditation and an

accredited certifying agent may appeal a

Program Manager’s denial of

accreditation or proposed suspension or

revocation of accreditation to the

Administrator.

(1) If the Administrator sustains an

appeal, an applicant will be issued

accreditation, or a certifying agent will

continue its accreditation, as applicable

to the operation.

(2) If the Administrator denies an

appeal, a formal administrative

proceeding to deny, suspend, or revoke

the accreditation will be initiated. Such

proceeding shall be conducted pursuant

to the Department’s Uniform Rules of

Practice.

(c) An appeal of a noncompliance

decision must be filed within the time

period provided in the letter of

notification or at least 30 days from the

receipt of the notification. The appeal

will be considered ‘‘filed’’ on the date

received by the Administrator or by the

State program’s governing State official

or such official’s designee as provided

in the State’s approved appeal

procedures. A decision to deny,

suspend, or revoke certification or

accreditation will become final and

nonappealable unless the decision is

appealed in a timely manner.

(d) All appeals to the Administrator

must be filed in writing and addressed

to Administrator, USDA–AMS, Room

3071–S, PO Box 96456, Washington, DC

20090–6456, and be copied to the

certifying agent completely and

simultaneously with submission to the

Administrator. Appeals must include a

copy of the adverse decision and a

statement of the appellant’s position

that the decision was not made in

accordance with applicable program

regulations, policies, or procedures.

§§ 205.682—205.689 [Reserved].

Miscellaneous

§ 205.690 OMB control number.

The control number assigned to the

information collection requirements by

the Office of Management and Budget

pursuant to the Paperwork Reduction

Act of 1980, Public Law 96–511, is OMB

number 0581–0181.

§§ 205.691—205.699 [Reserved]

PARTS 206–209—[RESERVED]

Dated: March 3, 2000.

Kathleen A. Merrigan,

Administrator, Agricultural Marketing

Service.

Appendices to the Preamble

Appendix A.—Regulatory Impact

Assessment for Proposed Rules

Implementing the Organic Foods Production

Act of 1990 (Executive Order 12866)

The following regulatory assessment is

provided to fulfill the requirements of

Executive Order 12866. This assessment

consists of a statement of the need for the

proposed action, a description of the baseline

for the analysis, an examination of alternative

approaches, and an analysis of the benefits

and costs. Much of the analysis is necessarily

descriptive of the anticipated effects of the

proposed rule. Because basic market data on

the prices and quantities of organic goods

and services and the costs of organic

production are limited, it is not possible to

provide quantitative estimates of all benefits

and costs of the proposed rule. The cost of

fees and recordkeeping proposed by U.S.

Department of Agriculture (USDA) are

quantified, but the anticipated benefits are

not. Consequently, the analysis does not

estimate the magnitude or the direction

(positive or negative) of net benefits.

The Need for the Proposed Action

The Organic Foods Production Act of 1990,

Title XXI of the Food, Agriculture,

Conservation and Trade Act of 1990, U.S.C.

Title 7, mandates that the Secretary of

Agriculture develop a national organic

program. The OFPA states that the Secretary

shall establish an organic certification

program for farmers, wild-crop harvesters,

and handlers of agricultural products that

have been produced using organic methods

as provided for in the OFPA. In addition,

section 6514 of the OFPA requires the

Secretary to establish and implement a

program to accredit a State program’s

governing State official or any private person,

who meets the requirements of the Act, as a

certifying agent to certify that farm, wild-crop

harvesting, or handling operations are in

compliance with the standards set out in the

regulation. As stated by the OFPA in section

6501, the regulations are proposed for the

following purposes: (1) to establish national

standards governing the marketing of certain

agricultural products as organically produced

products; (2) to assure consumers that

organically produced products meet a

consistent standard; and (3) to facilitate

interstate commerce in fresh and processed

food that is organically produced.

The OFPA was introduced at the request of

the organic community after it experienced a

number of problems in the marketing of

organic products. Many consumers are

willing to pay price premiums for organic

food; hence, producers (farmers, ranchers,

and wild-crop harvesters) and handlers have

an economic incentive to label their products

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13633

organic. Because organic products cannot be

distinguished from conventionally produced

products by sight inspection, consumers rely

on verification methods, such as certification

by private entities or verification by retailers

to ensure that organic claims are true. Where

there has been no mandatory certification,

consumers have been unable to verify organic

product claims on their own, and may have

been vulnerable to fraud from the mislabeling

of organic products.

As organic production became better

established in the 1980’s, new certifying

agencies were formed, and some States

passed laws establishing standards for

organic production. However, the standards

for organic production, processing, handling,

and labeling were different to some degree,

causing disagreements between certifying

agents over whose standards would apply to

ingredients used in multi-ingredient organic

processed products. Disagreements about

standards also created sourcing problems for

handlers of these multiingredient products.

Certifying agents are able to negotiate and

maintain reciprocity agreements at some cost.

These reciprocity agreements specify the

conditions under which certifying agents

recognize each others’ standards. The current

system of variable standards has led the

organic industry to take on costs of private

accreditation or shipment-by-shipment

certification, required to gain access to some

foreign markets such as the European Union

(EU). These costs would be avoided if a

national program were in place.

Baseline

The organic industry is characterized by an

array of production and handling practices,

self regulation and state regulation, and

consumer perceptions. However, there are

commonalities throughout the industry.

Certification

The United States currently has 49

certifying agents. There are 36 private

certifying agencies and 13 States which have

certification programs. Private certifying

agents range from small nonprofit

associations that certify only a few growers

to large for-profit businesses operating in

numerous States and certifying hundreds of

producers. Typically, certifying agents

review producers’ organic production plans,

inspect the farm fields and facilities to be

certified, periodically reinspect, and may

conduct soil tests and tests for residues of

prohibited substances. In some cases,

certifying agents negotiate reciprocity

agreements with other agents.

State laws vary widely on organic

certification and registration. Some States

require only that an organic producer register

and make certification voluntary. California

is an example. Other States require

certification by the State’s own agents, while

others accept certification by a private

certifying agent. The least stringent

requirement among States with organic

legislation is that products marketed as

organic comply with their definition of

organic but both registration and certification

are voluntary. Approximately half of the

States have laws which regulate organic

production and processing. Thirteen States

operate programs to certify organic

production. In many States producers may

claim their product is organic but operate

without certification or well-defined

standards. On the other hand, many organic

producers operate in States with no program

and voluntarily secure third party

certification to well-defined standards.

Certification costs vary with farm size and

across certifying agents. Illustrative

certification costs are presented in Tables 2A

and 2B.

Very few certifying agents operate with an

external accreditation. There is no law which

requires them to be accredited: The price

may be unacceptably high in relation to

expected benefits; the certifying agent may be

unable to find an accrediting party willing to

accredit the particular organic program the

certifying agent is marketing; and State

programs may believe that their status as a

government entity obviates the need for

external accreditation.

In 1999 USDA began verifying certifying

agents to International Organization for

Standardization (ISO) Guide 65. It is a

valuable recognition that the certifying entity

satisfies the business capacity standards of

ISO Guide 65. European Union authorities

have accepted verification of certifying

agents to ISO Guide 65 as an interim measure

to facilitate exports pending the

establishment of a national organic program.

Organic Food Production

Organic production occurs in all States. An

estimated 12,000 organic producers are

operating in the United States. Most organic

producers are small both in terms of value of

sales and acreage. Small producers do not

necessarily farm full-time, and may not

depend solely on farm income for a

livelihood. Some organic production occurs

as a distinct part of a larger operation that

includes conventional production practices.

Key production practices followed by

certified organic producers include:

abstaining from use of certain crop chemicals

and animal drugs; ecologically based pest

and nutrient management; segregation of

organic fields and animals from nonorganic

fields and animals; following an organic

production plan with multiple goals,

including sustainability; and record keeping

to document practices and progress toward

the plan’s goals. Specific elements of organic

production will vary, but organic systems

generally share a core set of practices. For

example, the certification standards of

virtually all State and private U.S. certifying

agents prohibit the use synthetic chemical

herbicides and insecticides or animal growth

hormones. And most certification standards

include a three year ban on the use of

prohibited substances on cropland before

production can be certified as organic.

On the other hand, certification standards

for organic livestock production have been

more variable, for pasture, feed, and other

practices. Until 1999, the USDA Food Safety

and Inspection Service (FSIS) withheld

approval for the use of organic labels on meat

and poultry products pending the outcome of

this rulemaking. However, the Secretary

announced a change in policy in January

1999. Meat and poultry products may be

labeled ‘‘certified organic by (name of the

certifying agent)’’ if processors obtain prior

label approval from FSIS and the claim meets

certain basic criteria. However, many private

and State certifying programs have not

developed standards for livestock

production.

The provisions of the New Hampshire

organic program are summarized below to

illustrate key elements of current organic

standards. The New Hampshire program

provisions are not substantially different

from provisions in some State programs,

private programs, and mirror provisions of

USDA’s proposed national program. Soil

tests are required for initial certification and

every three years afterward. Soil testing

measures the quality of the soil for

agricultural production and is different from

residue testing. New Hampshire requires

residue testing ‘‘if the department believes

that the produce or soil which certified

produce was grown may have become

contaminated with prohibited substances.’’

(New Hampshire Rule AGR 906 Certification

of Organically Grown Food, Agr 906.05

Laboratory Analysis) Other production

standards include a written rotation plan,

tillage systems that incorporate organic

matter wastes into the topsoil, compliance

with limits on the sources of manure and the

timing of its application, prohibitions on the

use of certain substances (e.g., sewage sludge,

synthetic sources of nitrates, synthetic

growth regulators, and anhydrous ammonia),

a list of accepted and prohibited weed and

pest control practices, segregation of organic

and nonorganic production, record keeping

regarding fertilization, cropping, and pest

management histories, separate sales records

for organic and nonorganic production, and

records of all laboratory analyses.

The New Hampshire program requires

growers to pay a $100 annual inspection fee,

and to provide a written description of their

farm operation including the size of the farm,

a field map, a three-year history of crop

production, pest control, and fertilizer use, a

crop rotation and a soil management plan,

and a description of post-harvest storage and

handling methods. Applicants for

certification must also agree to comply with

regulations controlling the use of the New

Hampshire certified organic logo.

Organic Food Handling

In addition to growers, who actually

produce and harvest products to be marketed

as organic, there are handlers who transform

and resell the organic products. Not all

certifying agents have standards for handling

organic products. Some have standards for

parts of the food marketing system, such as

retail food establishments, that are not

explicitly covered by the OFPA or by the

proposed regulation.

Definitions of processing and handling

differ across certifying agents and State laws.

Some States, such as Washington, distinguish

between a processor and a handler,

specifying 21 actions which constitute

processing and defining a handler as anyone

who sells, distributes, or packs organic

products. Washington does not consider

retail grocery stores and restaurants to be

organic handlers or processors.

13634 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

Marketing of Organic Food—Domestic and

International

The marketing practices of organic

producers range from roadside stands

marketing directly to consumers, to

marketing through wholesale markets, to

direct marketing to restaurants and

supermarkets. USDA does not have official

national level statistics on organic retail

sales. An industry trade publication reported

estimates of retail sales of organic foods for

a number of years in the 1990’s (Table 1). The

last published estimate was $3.5 billion in

1996 ($3.6 billion in 1998 dollars). To put

this figure in context, total food expenditures

by families and individuals were $606 billion

in 1996 ($629 billion in 1998 dollars).

The United States is both an importer and

an exporter of organic foods. The United

States does not restrict imports of organic

foods. In fact, U.S. Customs accounts do not

distinguish between organic and

conventional products. The largest markets

for organic foods outside the United States

are in Europe, Japan, and Canada. There is

increasing pressure, particularly in Europe

and Japan, for U.S. exports to demonstrate

that they meet a national standard rather than

a variety of private and State standards.

The EU is the largest market for organic

food outside the United States. The organic

food market in the EU was estimated to be

worth $5.2 billion in 1997 (International

Trade Centre UNCTAD/WTO 1999). The

largest organic retail sales markets in the EU

in 1997 were Germany ($1.8 billion), France

($720 million), and Italy ($750 million).

Large organic markets outside the EU include

Canada and Australia, with approximately

$60 million and $68 million, respectively, in

organic retail sales in 1997 (Lohr 1998).

Import share of the organic food market in

Europe ranged from 10 percent in France to

70 percent in the United Kingdom, was 80

percent in Canada, and varied from 0 to 13

percent in various Australian states.

Japan is another important market for U.S.

organic products. Currently, Japan has

voluntary labeling guidelines for 6 categories

of non-conventional agricultural products:

organic, transitional organic, no pesticide,

reduced pesticide, no chemical fertilizer, and

reduced chemical fertilizer. Total sales,

including foods marketed as ‘‘no chemical,’’

and ‘‘reduced chemical’’ are forecast to jump

15 percent in 1999 to almost $3 billion.

Imports of organic agricultural products were

valued at $90 million in 1998. Given Japan’s

limited agricultural acreage, imports will

likely provide an increasingly significant

share of Japan’s organic food supply (USDA

FAS 1999a).

Recently, these markets have adopted or

are considering to adopt procedures that may

impede the importing of organic food. The

EU regulations establishing the basis for

equivalency in organic production among EU

members and for imports from outside the

EU were adopted in 1991 (Council

Regulation 2092/91). The EU regulations only

allow imports from non-EU countries whose

national standards have been recognized as

equivalent to the EU standards (Commission

Regulation 94/92).

The Ministry of Agriculture, Forestry, and

Fisheries (MAFF) in Japan recently

announced proposed standards and thirdparty certification requirements. Under

Japan’s proposed standards, certifying agents

from countries without national organic

standards administered by a federal

government will have to be accredited

(registered) with MAFF to obtain approval to

certify products destined for the Japanese

market. The Japanese proposal includes

provisions for country-to-country

equivalency recognition of other national

programs.

The Proposed Rule

The proposed rule follows the structure

established in the OFPA. By adopting this

alternative, the Department would follow

legislative direction in the OFPA. All

products marketed as organic will have to be

produced and handled as provided in the

OFPA and the regulations. Compared to

current organic practices, the proposed rule

sets a more stringent system of requirements.

Accreditation and Certification

The rule specifies the accreditation and

certification process. Persons providing

certification of organic production and

handling must be accredited by USDA

through the NOP. Applicants for

accreditation must document their abilities to

certify according to the national standards

and to oversee their clients’ compliance with

the requirements of the OFPA and NOP

regulations. Producers and handlers of

organic products must be certified by an

accredited certifying agent. Producers and

handlers are required to document their

organic plans and procedures to ensure

compliance with the OFPA.

All certifying agents would have to be

accredited, and certification by producers

and handlers would not be voluntary. The

exceptions are: (1) Growers and handlers

with gross organic sales of $5,000 or less

would be exempt from certification; and (2)

a handling operation may be exempt or

excluded from certification according to

provisions described in the rule’s subpart B,

Applicability. For example, a handling

operation that is a retail food establishment

or portion of a retail food establishment

would be exempt if it handles organically

produced agricultural products but does not

process them, and would be excluded from

the requirement to be certified if it processes

or prepares, on the premises of the retail food

establishment, raw and ready-to-eat-food

from agricultural products that are previously

labeled as ‘‘100 percent organic,’’ ‘‘organic,’’

or ‘‘made with organic (specified

ingredients).’’ However, this exemption does

not extend to other provisions of the

proposed rule such as prevention of contact

with prohibited substances.

USDA will charge applicants for

accreditation a $500 fee at the time of

application. USDA will also charge

applicants for costs over $500 for site

evaluation of the applicant’s business. The

applicant would be charged for travel costs,

per diem expenses, and any miscellaneous

costs incurred with a site evaluation. Review

of documents for renewal of accreditation

will be charged at an hourly rate.

Producers and handlers will not pay

certification fees to USDA. Certification fees

will be established by the accredited

certifying agents. USDA will not set fees. The

rule requires certifying agents to submit a

copy of their fee schedules to USDA, post

their fees, and provide applicants estimates

of the costs for initial certification and for

renewal of certification.

Production and Handling

The rule establishes standards for organic

production of crops and livestock and

handling of organic products. These

standards were developed from specific

requirements in the OFPA, recommendations

from the National Organic Standards Board

(NOSB), review of existing organic industry

practices and standards, public comments

received on the 1997 proposal and

subsequent issue papers, and public

meetings.

The proposed rule establishes a number of

requirements for producers and handlers of

organic food. These requirements will affect

farming operations, packaging operations,

processing operations and retailers. Some of

the major provisions are: (1) Land

requirements; (2) crop nutrient requirements;

(3) crop rotation requirements; (4) pest

management requirements; (5) livestock

management requirements; (6) processing

and handling requirements; and (7)

commingling requirements.

National List

The National List lists allowed synthetic

substances and prohibited non-synthetic

substances that may or may not be used in

organic production and handling operations.

The list identifies those synthetic substances,

which would otherwise be prohibited, that

may be used in organic production based on

the recommendations of the NOSB. Only

those substances on the National List may be

used. The National List also identifies those

natural substances that may not be used in

organic production, as determined by the

Secretary based on the NOSB

recommendations.

Testing

When certifying agents have reason to

believe organic products contain a prohibited

substance, they may conduct residue tests.

The rule incorporates the national mean of

detected residues for specific commodity/

pesticide pairs and clarifies how unavoidable

residual environmental contamination would

be used in residue testing.

Labeling

The rule also states how organic products

may be labeled and permitted uses of the

USDA organic seal. In addition to the USDA

seal and the certifying agent’s seal,

information on organic food content may be

displayed. It is important to note that small

businesses who are certified may use the

USDA seal.

Recordkeeping

The rule will require certifying agents,

producers, and handlers to keep certain

records. Certifying agents will be required to

file periodic reports with USDA. Producers

and handlers will be required to notify and

submit reports to their certifying agent. While

recordkeeping is a standard practice in

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13635

conventional and organic farming, the

proposal adds recordkeeping and reporting

requirements which do not exist for growers

and handlers operating without certification.

Similarly, certifying agents would face

additional recordkeeping and reporting

requirements, particularly those certifying

agents operating without external

accreditation. State and private certifying

agents regulate the use of organic seals and

logos. The proposed rule permits certifying

agent logos and requires the name of the

certifying agent on processed organic foods.

Alternatives to the Proposed Rule

As required by E.O. 12866, alternatives to

the proposed rule were considered. The

identified alternatives were the Status Quo

and Industry-Developed Standards. The costs

and benefits of each alternative were assessed

to the extent possible.

Status Quo: The Organic Market in the

Absence of Federal Regulation

This is the no program alternative. There

would be no national standard or national

program of accreditation and certification.

Certification would be voluntary and

certifying agents would not have third party

accreditation. Some producers and handlers

would operate with certification provided by

private organizations or State programs.

Other producers and handlers would

characterize their foods as organic but would

not be certified.

A mix of State and private programs may

continue to operate according to varying

standards. In States without organic laws or

States where certification is voluntary, goods

would be marketed as organic without third

party certification. Even under this scenario,

organic food produced in States with

production standards and certification may

be produced using similar practices because

most State standards follow similar

requirements: A 3 year transition, prohibited

use of certain substances (lists of substances

tend to overlap), practices which prevent

commingling with conventional products,

and where livestock standards exist, organic

feed.

In addition, at the time the OFPA was

enacted, the industry had been unable to

agree on organic standards. Recently, there

has been movement toward shared standards

partly in response to efforts to develop

national organic standards including the

1997 proposal and the public NOSB process.

The Organic Trade Association (OTA) has

developed ‘‘American Organic Standards’’

which the OTA Board recently ratified. The

OTA describes itself as ‘‘ * * * a national

association representing the organic industry

in Canada, the United States and Mexico.

Members include growers, shippers,

processors, certifying agents, farmer

associations, brokers, consultants,

distributors and retailers. Established in 1985

as the Organic Foods Production Association

of North America, the Organic Trade

Association works to promote organic

products in the marketplace and to protect

the integrity of organic standards.’’ (OTA

website). Although there is substantial

consensus on the draft standards, acceptance

is not unanimous.

The draft standards developed through

OTA correspond closely to many elements in

the proposed national organic program. OTA

envisions a system of accreditation and

certification of producers and handlers but

not restaurants and grocery stores. The list of

allowed and prohibited substances mirrors

the list developed by the NOSB. Production

practices for crops and livestock include the

common features in most State and private

programs—a 3 year transition, no

commingling, use of organic feed, limits on

the use of antibiotics, requirements for an

organic plan and recordkeeping. Hence, even

in the absence of a national program, the

organic industry may be moving toward a

common standard.

Under the status quo-no national program

alternative, producers and handlers who

chose to be certified, or who are required by

State laws to be certified, would pay fees that

would vary depending on the market for the

particular private certifying agent’s service

and whether a State certification program

was operating with subsidized fees.

No federal funds would be used, there

would be no transfer from federal taxpayers

at large to organic market participants, and

there would be no federal regulatory barriers

to entry into organic production and

handling.

International access for domestic organic

products may be very influential on

development of the organic industry in the

United States. A food trade publication (The

Natural Foods Merchandiser) tracked organic

sales for a while in the 1990s showing annual

growth in retail sales of 20–25 percent

between 1990 and 1996 (Table 1). This

growth took place in the absence of a

national program.

In the absence of national standards, U.S.

organic producers have been able to access

European markets only by obtaining specific

product permissions granted to individual

importers by organic regulatory authorities in

an EU member state (Byng, p. 27–28 1994).

This process has required the importer to

satisfy the authorities, through

documentation and possible site inspection,

that the product in question has been

certified to and produced under equivalent

standards of production and inspection. This

case-by-case process of approving imports

was intended as a temporary arrangement to

accommodate non-EU countries that had not

yet established government systems

regulating organic production and

certification. Another step State and private

organic certifying agencies have taken to

access international markets in the absence of

a national program has been a voluntary, feefor-service program to verify that they

comply with the requirements prescribed

under ISO Guide 65.

Governments in foreign markets and

foreign private processors and retailers are

expected to insist on additional verification

that goods have been produced to acceptable

organic standards. This would likely lead to

an increased use of private accreditation

services and of USDA’s ISO Guide 65

verification service. USDA’s ISO Guide 65

verification services are provided on a user

fee basis with full cost recovery. These

private accreditations and USDA’s

verifications would increase costs for

certifying agents and producers and handlers.

In addition, establishing reciprocity between

certifying agents in the domestic organic

market involves some cost and may stifle

growth in trade of organic products, although

the magnitude of these costs and their effects

on growth is unknown.

Under the proposed national program, all

applicants for accreditation will be assessed

against ISO Guide 65, eliminating the need

for a separate ISO Guide 65 assessment that

exists for those exporting to the EU in the

absence of a national program. Growth in the

trade of organic products, particularly

exports, may be jeopardized by a status quono program alternative because there would

be no national program upon which to

establish equivalency.

Industry-Developed Standards

As an alternative to the proposed national

program, another national program could

adopt industry-developed standards. For

example, USDA could adopt the standards

recently developed by the Organic Trade

Association or other consensus standards and

enforce those standards. Certification to these

standards could be performed as it is

currently, by private certifiers or by state

programs. There could be variation among

certifiers’ standards, but producers and

certifiers would not be able to prohibit use

of a product meeting the national standard

from the production of other ‘‘organic’’

products.

There are various enforcement mechanisms

that are available under this alternative. The

USDA could choose to enforce the adopted

standards. Enforcement could be left to other

federal agencies or State governments. For

example, the Federal Trade Commission

could regulate truth in advertising with

respect to organic food; the USDA Food

Safety Inspection Service could regulate

labeling of organic meat and poultry

products.

Adopting the industry standard as the

USDA standard, the USDA could provide an

acceptable national standard that would be

necessary in establishing equivalency to

access international organic markets, and

eliminate the problems associated with

establishing reciprocity in the domestic

organic market.

It is important to note that it may be

difficult to develop consensus industry

standards. For example, while standards

recently proposed by OTA were developed

with significant industry input they may not

represent the kind of consensus that is the

result of this proposed rule.

Number of Affected Parties and Projections

In assessing the impacts of the rule, we

have attempted to determine the number of

certifying agents, private and State, that are

currently operating, and considered the

factors likely to affect the number of

certifying agents after the rule is

implemented. We have attempted to

determine the number of currently operating

producers and handlers that would be

affected. And, we have considered the factors

which might affect the number of producers

and handlers after the program has been

implemented.

13636 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

For the analysis, the USDA assumes the

following:

1. Forty-nine domestic certifying agents

and ten foreign certifying agents will be

affected by the proposed regulation.

2. Approximately 12,200 certified and noncertified organic producers will be affected

by the proposed regulation. With the

assumed growth rate of 14% for certified

organic producers and approximately 8% for

non-certified organic producers, the number

of organic producers will grow to 17,150 in

2002.

3. Approximately 1,250 processors and

handlers of organic food will be affected by

the proposed action. This number will grow

to 2,150 by 2002.

4. The number of retailers affected by the

proposed action is not quantified.

Certifying Entities

We place the number of certifying agents

currently operating at 49, including 13 State

programs. The number of certifying agents

has remained fairly stable, between 40 and

50, for some years, with entries and exits

tending to offset each other. For purposes of

estimating the paperwork burden described

elsewhere, we assume no growth in the

number of domestic certifying agents but

project 10 foreign certifying agents in the first

3 years of the program.

Organic Producers

It is more difficult to establish the number

of organic producers. Organic farming was

not distinguished from conventional

agriculture in the 1997 Census of Agriculture.

Among the sources which give insight into

the number of producers, the Organic

Farming Research Foundation (OFRF) has

conducted nationwide surveys of certified

organic producers from lists provided by

cooperating certifying agents (OFRF 1999).

OFRF sent its 1997 survey to 4,638 organic

producers.

Because OFRF did not obtain lists from all

certifying organizations or their chapters (55

out of a total of 64 identified entities

provided lists), its list count of 4,638

producers is likely an underestimate of the

number of certified organic farms. If the

average producer-to-certifying agent ratio (55

certifying agents to 4,638 producers) holds

for the 9 certifying organizations that did not

provide the list (9 certifying agents out of a

64 certifying agents), then the number of

producer grows to 5,397 producers.

The different estimates of the number of

certifying agents should be noted. The USDA

estimates 49 certifying agents; the OFRF

estimates 64 certifying agents. The difference

stems from the USDA’s not counting different

chapters of certifying organizations

separately.

The California Department of Food and

Agriculture’s organic registration program

suggests that, at least for California, most

organic producers are not certified. For the

1994–95 reporting period, CDFA reported

that 1,372 farms registered as organic

producers but only 517 of these farms were

certified (Klonsky and Tourte, 1998a). Thus,

one approach to projecting national totals

from OFRF survey lists of certified producers

would be to apply the 1994–95 ratio between

producers registered and certified in

California to the OFRF 1997 list count. This

would suggest the number of non-certified

producers to be 8,918, resulting in the total

number of organic producers to be 14,315.

However, it is important to note that

California’s structure of organic production

may not be representative of the national

profile. The number of non-certified

producers may be higher or lower.

CDFA also reports the number of registered

and certified producers by sales class. Many

producers would likely be eligible for the

small farm (sales less than $5,000) exemption

provided for in the OFPA. Of 1,372 registered

organic farms in California, 907 had sales of

less than $10,000. Of the 517 certified farms,

188 had sales of under $10,000. If these ratios

are applied to the number of producers

calculated, then the number of certified

producers with sales under $10,000 would be

1,962, and the number of organic producers

in general with sales under $10,000 would be

9,463. Thus, there are potentially a large

number of farms which could be exempt

from certification requirements.

Dunn (1995a, 1995b, and 1997) has

estimated the number of certified organic

producers in the United States. Dunn (1995a,

1995b) estimated the number of certified

producers at 4,060 in 1994. Dunn (1997)

reported 4,856 certified organic farms in

1995. USDA’s 1997 proposal relied on

Dunn’s 1995 estimate of 4,060 total certified

producers. Dunn’s numbers have been used

because Dunn’s 1995 work was an official

USDA study. The methods used were

reviewed by USDA and the resulting

estimates are official USDA statistics.

Although Dunn’s 1997 estimates were not a

USDA study, the 1997 study used the same

approach as the 1995 study.

An adjustment is needed to account for the

number of producers who are practicing

organic agriculture but who are uncertified

and would be affected by this proposed rule.

We reject the idea of expanding by the

certified-to-registered ratio reported in

California for reasons previously stated. We

assume that the number of organic-but-notcertified producers in 1999 is about 4,000.

We adopt this figure recognizing that there

may be 1,000 such farms in California, given

that there were 855 in CDFA’s report on 1995

registrations. The total number of organic

farms for assessing the impact of the rule is

12,200 in 1999.

Data collected by AMS indicate that the

number of certified organic farmers increased

about 12 percent per year during the period

1990 to 1994. OFRF survey efforts indicate

that growth has continued, though it is not

clear whether the growth rate has changed.

We use the average growth rate from Dunn’s

time series from 1991–1994, which was about

14 percent. The true rate of growth could be

higher or lower. By applying the 14-percent

growth rate to Dunn’s (1995) estimate, the

number of certified organic producer

potentially affected in 1999 is 8,200 and

12,150 in 2002.

We have no national-level growth rates for

not-certified organic farms. The limited times

series from CDFA is of limited value in

estimating a growth rate. We suspect it is less

than the rate for certified farms because

certification has value and organic producers

would be expected to take advantage of the

marketing advantages of certification.

Furthermore, the emergence of State

certification programs that appear to have

lower certification fees than private

certification entities may have encouraged

more organic producers to be certified.

Therefore, for purposes of analyzing the

impacts of the rule for the Paperwork

Reduction Act, we assume growth of noncertified organic producers from 4,000 in

1999 to 5,000 non-certified farms by 2002,

making the total number of farms potentially

affected by the rule, 17,150 farms. However,

we request comment and/or data on the

number and the growth of certified and noncertified organic farms.

Organic Handlers

Little information exists on the number of

handlers. They include processors such as

organic soup manufacturers, organic food

packaging operations, and organic food

wholesalers. USDA has estimated that there

were 600 entities in this category in 1994

(Dunn 1995b). AMS estimated that the

growth rate was 11 percent from 1990

through 1994 (Dunn 1995b). More recent data

from CDFA registration records suggest a

growth rate of about 28 percent (California

Department of Health Services 1999). For

projection purposes, we use a growth rate of

20 percent, which makes the number of

handlers for 1999 1,250 and for 2002 2,150.

Reasons for growth include the general

increase in organic production and growth in

the market for processed organic foods,

including multiingredient products. Again,

these projections are based on limited data

from the early 1990’s, and growth may have

slowed or increased. We request comment

and/or data on the number and the growth

rate of processors and handlers in the organic

industry.

Retail Food Establishments

Retailers of organic food are grocery stores,

bakeries, restaurants and other

establishments that process or prepare raw

and ready-to-eat food. Most are not currently

subject to either voluntary practices or

mandatory standards of the organic industry.

Although they are excluded from the

certification requirements, they are subject to

other processing, handling, and other

production related requirements of the

proposed rule. Hence, a new stratum of the

organic industry will be regulated by the

proposed rule.

Dunn’s (1995a) estimates the number of

certified retailers to be 31 in 1995. It is not

clear whether Dunn’s (1995a) definition of

retailers and the proposed definition stated

above are consistent. Hence, the total number

of retailers that may be regulated remains

unknown. USDA’s Economic Research

Service (ERS) reports there were 161,707

grocery stores in 1997 (ERS website). Many

of these stores sell organic products and may

be affected by the proposed rule. The effect

of the proposed regulation on the growth of

retailers remains unknown. We request

comment and/or data on the number and the

growth rate on the retailers of organic food.

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13637

Foreign Entities

The discussion of the number of affected

parties has focused on domestic certifying

agents, producers, and handlers. We

recognize that foreign entities may apply for

accreditation and foreign producers and

handlers may be certified under the NOP.

Furthermore, upon request of a foreign

government, a foreign certifying agent may

meet the requirements for accreditation when

the Administrator determines that the

certifying agent meets the requirements of the

NOP.

At this time, we have no information

regarding the number of foreign entities

which may enter the NOP. We do not know

how many foreign producers and handlers

are marketing goods as organic, nor do we

know how many will seek to be certified

under the NOP. Accredited certifying agents

will be able to certify operations outside the

United States and foreign certifying agents

may become accredited by USDA. It is likely

that the costs for accreditation will be higher

for foreign applicants for accreditation.

Foreign applicants will face the same costs as

domestic applicants but the levels of cost

would reflect generally higher costs of

foreign travel and per diem expenses for site

evaluation and miscellaneous costs such as

for translation of documents. For purposes of

estimating the paperwork burden described

elsewhere, we assume 10 foreign certifying

agents in the first 3 years of the program. We

request comment and/or data on the number

and the growth rate of foreign entities that

may export to the U.S. organic market.

Benefits of the Proposed Rule

The benefits from implementation of the

proposed rule are: (1) Improved protection of

buyers from misleading claims and more

information on organic food; (2) reduced

administrative costs; and (3) improved access

to international organic markets. Not all

benefits that may arise from the rule are

quantifiable. Where economic data are

available, they may relate to costs and are

generally not adequate to quantify economic

benefits.

Information

Potential benefits to consumers as a result

of the proposed rule include more

information on organic food, and protection

from false and misleading organic food

claims. Consumers may be misled by labels

on processed and raw products claiming to

be organic. In particular, with processed

food, some of the ingredients may not be

organically produced, or the product may

contain less organic content than the

consumer assumes. The USDA organic seal

will provide consumers a quick tool to verify

that goods offered for sale as organic are in

fact organic. To the extent that consumers

view the seal as an important information

too, that is, product with the seal is perceived

as more desirable, they may enhance the

ability of producers to realize the price

premiums associated with certified products.

There is anecdotal evidence to suggest that

consumer fraud involving organic food does

occur (Mergentime 1997). Criminal

prosecutions involving felony pleas and fines

have taken place (Mergentime 1997).

However, we have no evidence to suggest

that this problem is wide-spread (Mergentime

1995). Also, it is important to recognize that

the organic industry’s effort to police itself

and the remedies provided by the judicial

system may be adequate to address consumer

fraud. Mergentime (1997) documents the

effect of litigating fraud cases on the

industry. However, we request comment and/

or data on the extent and the severity of

consumer fraud that may exist.

Some producers may have limited their

organic livestock production because of

uncertainty regarding the standards that

would be used in the NOP. By removing the

uncertainty, producers may increase

production, thereby increasing the quantity

of livestock products.

Reduced Administrative Costs

The proposed rule addresses the problem

of existing certifying agents using different

standards and not granting reciprocity to

other certifying agents. By accrediting

certifying agents, the rule would establish the

requirements and enforcement mechanisms

that would reduce inconsistent certification

services and lack of reciprocity between

certifying agents. In the current system, the

certifying agent of a final product is not

required to recognize the certification of an

intermediate product. Both primary farmers

and food handlers may face a risk of being

unable to sell a certified organic product

when more than one certifying agent is

involved. By imposing a uniform standard of

certification and production, costs associated

with establishing reciprocity between

certifying agents will be eliminated.

However, the magnitude of this benefit

cannot be gauged without quantification. In

particular, with the increasing consensus

within the organic industry, the benefit may

not be large.

It is important to distinguish between

consensus with respect to standards of

production and consensus with respect to

certifying agents practices. There is growing

consensus regarding crop standards,

livestock standards are more problematic.

And, consensus is least evolved regarding

standards of conduct and practice for

certifying agents. There is no consensus

regarding whether certifying agents should be

accredited or who the accrediting body

should be.

Industry-wide training costs may decrease.

The proposed uniform standards of

production, certification should enable

organic inspectors to move more easily from

one certifying agent to another than the

current system.

In addition, USDA accreditation of

certifying agents would present opportunities

for sharing information about standards,

practices, and the general requirements of the

program through the NOP staff. USDA will

undertake a number of outreach and

education efforts in connection with the

launch of the NOP. Compliance guides and

other printed material will be prepared

which will be more readily understood than

the Federal Register document. NOP staff

will participate at industry meetings and will

likely host public information exchange

meetings.

International Markets

The final national program rule is expected

to lead to EU acceptance of NOP certified

organic products. That is, it is anticipated

that the EU would determine that the NOP

is acceptable vis-a-vis EU regulation 2092/91.

Article 11 of EU Reg. 2092/91 establishes the

conditions under which organic products

may be imported from third countries and

addresses the framework for equivalency.

The NOP is a national program that should

be acceptable to the EU and other

governments. The result would be the

removal of trade restrictions, thereby

possibly increasing the growth in exports of

organic food products.

Currently, despite restricted access to the

European market, the United States is the

most important non-EU supplier of organic

products to EU countries (Foreign

Agriculture Service (FAS), 1995). Import

authorizations have been granted for a

number of raw and processed commodities,

including sunflowers, buckwheat, beans,

sugar, and apples. Demand is strong

throughout the European market, and the

organic market share was 1–2 percent of total

food sales in 1997 (Collins).

Lohr (1998) cites several growth

projections:

Annual growth rates of 25% to 30% have

been experienced in the EU, the United

States, and Japan for over five years, but

growth is already slowing in some product

categories (PSC, Scott) * * * Segger projects

that the EU market will reach $58 billion and

the U.S. market $47 billion by 2006. Ahmed

suggests that the Australian market could

grow to $571 million by 2000, whereas

LaFond projects that the value of Canadian

organics will reach $145 million by 2006.

Mergentime forecasts the Japanese market

will reach $2.6 billion by 2000 (Lohr, 1126).

Lohr further states that these projected

future growth rates are based on straight-line

extrapolations of current sales and growth

rates without understanding the underlying

market mechanisms and price elasticities

(Lohr 1998).

Foreign acceptance of the U.S. national

standard can be expected to expand the

universe of consumers for U.S. producers and

reduce costs of negotiating and documenting

shipment by shipment.

Costs of the Proposed Rule

The costs of the proposed regulation are

the direct costs of complying with the

specific standards. It is important to note that

while some costs associated with

accreditation and certification are quantified,

costs stemming from other provisions of the

proposed regulations are not. In addition,

this is a short-run analysis. The analysis

examines the costs that may be incurred from

1999 to 2002. It is not possible at this time

to conduct a longer-run analysis because we

do not know enough about the fundamental

supply and demand relationships to make

economically sound long run projections.

Accreditation Costs

USDA has identified 36 private certifying

agents and 13 State programs providing

certification. These 49 entities are considered

likely applicants during the first 18 months

13638 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

during which USDA will not charge

application fees or hourly fees for

accreditation. An unknown number of new

entrants to the certifying business may also

apply. However, over the last 10 years, the

number of certifying agents does not appear

to have grown significantly, with the net

effect of entries and exits maintaining a

population of certifying agents at about 40–

50.

The proposed rule would allow USDA to

collect fees from certifying agents for USDA

accreditation. Collecting fees from certifying

agents only is administratively simpler and

will enable State programs that want to keep

client costs low to do so.

Applicants for accreditation will be

required to submit a nonrefundable fee of

$500 at the time of application, which is

applied to the applicant’s fees for service

account. This means that the $500 fee paid

at the time of application is credited against

any subsequent costs of accreditation arising

from the site evaluation. The $500 fee is the

direct cost to applicants who are denied

accreditation based on the initial review of

the information submitted with their

application. Charges for the site evaluation

visit will cover travel costs from the USDA

employees’ duty station, per diem expenses

for USDA employees performing the site

evaluation, an hourly charge that we

anticipate will not exceed $95 per hour (per

each employee) for services during normal

working hours (higher hourly rates will be

charged for overtime and for work on

holidays), and other costs associated with

providing service to the applicant or

certifying agent.

The anticipated hourly rate is the rate that

USDA will charge for services under the

Quality Systems Certification Program

(QSCP). A separate rulemaking will establish

the precise hourly rate that will be charged.

Our preliminary estimate that the fee will be

no more than $95 per hour is presented to

give the public some indication of the rate

that will be charged following the 18-month

transition period. QSCP is an audit-based

program administered by AMS, which

provides meat packers, processors,

producers, and other businesses in the

livestock and meat trade with the

opportunity to have special processes or

documented quality management systems

verified. The procedures for accreditation

evaluation are similar to those used to certify

other types of product or system certification

programs under QSCP.

At present, the base per diem for places in

the United States is $80 ($50 for lodging and

$30 for meals and incidental expenses). Per

diem rates are higher than $80 in most large

cities and urbanized places. Travel costs will

depend on where the certifying agent is

located.

USDA estimates the costs of a site

evaluation visit after the transition period

will average $3,070–$4,850 depending on the

characteristics of the applicant. This estimate

is based on experience with the QSCP and

more limited experience performing audits

verifying that certifying agents meet ISO

Guide 65. The cost of a site evaluation visit

will vary with the cost of travel from the

USDA reviewer’s duty station to the

applicant’s place of business. In general,

more distant and more remote locations will

involve higher travel costs.

Accreditation will include verification of

adherence to ISO Guide 65. Recent

experience with USDA’s program to verify

organic certifying agents to ISO Guide 65

indicates that roughly 32 staff hours are

required. Although much of the accreditation

site evaluation will involve comparisons

against ISO Guide 65, additional hours will

be required because USDA will be evaluating

additional aspects of the applicant’s

operation to determine if the applicant is

qualified to perform as an accredited agent

for the NOP. Based on experience with ISO

Guide 65 verifications, we project that small

applicants with a simple business structure

will require 3 days and large applicants with

more complex business structure will require

5 days. Thus, the total number of hours to be

charged would range from 24 to 40 hours. At

the base rate of $95.00, the charge for hours

of service would be $2,280–$3,800.

Per diem costs would cover 3 to 5 days,

totaling $240–$400. A review of domestic

travel by USDA staff during fiscal year 1999,

indicates that transportation costs ranging

from $500–$600. Miscellaneous costs are

estimated to add another $50 to each site

visit. Thus, the total site visit cost would

range from $3,070 to $4,850.

During the 18-month transition period,

USDA intends to use 2 reviewers for site

evaluation visits. One reviewer will come

from the QSCP audit staff and will be

familiar with the ISO Guide 65 verification;

the other reviewer will come from the NOP

staff and will be familiar with requirements

of the organic program. The two will conduct

the site evaluation jointly. We anticipate only

one reviewer will be required after the

transition period. During the 18 month

transition period, applicants will be charged

for travel and per diem costs for two persons,

but not application fees or hourly fees. Thus,

the estimated expenditures (travel and per

diem) for these initial accreditations will be

$1,530–$2,050. Table 3 estimates the total

initial costs for an applicant to become

accredited.

Currently few private certifying agents are

operating with third party accreditation.

Fetter (1999) reports that in a sample of 18

certification programs four programs were

accredited and one had accreditation

pending. All of these were large, private

certifying agents. Those certifying agents

currently accredited by third parties will

likely pay less for USDA accreditation. In its

first proposal, USDA stated at FR 62:65860,

‘‘We are aware that certifiers currently may

pay in excess of $15,000 for accreditation by

a private organization.’’ Commenters thought

this figure was too high. One commenter,

which operates the International Federation

of Organic Agriculture Movements (IFOAM)

Accreditation Programme under license to

IFOAM, stated ‘‘It is possible that the largest

programme operating a chapter system with

activities in many countries (which is

included in their IFOAM evaluation) paid

this amount in their first year. On the other

hand the average cost to a medium sized

certifier works out at around $3000 to $4000

per year.’’ Another commenter stated ‘‘At the

present time IFOAM accreditation costs less

than $10,000/year for the largest certifier and

$3–5,000 for smaller certifiers.’’

The direct costs of accreditation, if all

currently operating certifying agents become

accredited during the first 18 months

following the final rule, is approximately

$75,000 to $100,000. This figure is derived

from the per firm costs in Table 3. After the

first 18 months, the direct cost for accrediting

49 certifying agents would be approximately

$150,000 to $238,000.

The 18 month period affects the

distribution of program costs between the

organic industry and the taxpayer. Some of

the costs of accreditation would be absorbed

by the NOP operation budget appropriated by

Congress. In effect, the taxpayers are

subsidizing the organic industry. Without

this subsidy, the total cost of accreditation

may approach $1 million.

Private certifying agents and state programs

that do not mirror the proposed regulation

may incur additional costs to change their

programs to adopt the proposed national

standards. The discussion on the effect of the

proposed regulation on existing state

programs is in ‘‘State Program Costs.’’ The

cost associated with changing existing

private certifying programs is not quantified.

Also, certifying agents who have been

operating without third party accreditation

will face new costs. Compared to the direct

costs of $3,000–$5,000 per year indicated by

the commenters, the direct costs of USDA

accreditation will be smaller. The direct costs

for certifying agents obtaining accreditation

during the first 18 months, when USDA will

not impose an application fee or hourly

charges, will be limited to travel and per

diem costs. Furthermore, USDA’s charges are

imposed every 5 years, not annually.

A national accreditation program may

shrink the market for a third-party

accreditation. Certifying agents will have

little incentive to maintain or seek a second

accreditation by a private organization unless

that accreditation sufficiently enhances the

market value of the certifying agent’s

services. Thus, the market will determine

whether other accrediting entities continue to

have a U.S. market for their services.

Training programs are currently offered by

the Independent Organic Inspectors

Association (IOIA), an organization of

approximately 165 organic certification

inspectors, and by some of the larger

certifying agents (IOIA, p. 1). Costs to

existing certifying agents to provide

additional training to other staff are difficult

to measure in the absence of information on

current staff skill levels or the existence of

formal training other than inspector training.

Some agencies rely on volunteer staff who

may have had no formal training, but the

extent of this practice is unknown. AMS

intends to offer assistance to certifying

agents, producers, and handlers by providing

guide books and other printed material that

would enable participants to better

understand the regulations. In addition, AMS

intends to continue open and frequent

communication with certifying agents and

inspectors to provide as much information as

possible to aid them in fulfilling the

requirements of the regulations.

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13639

The OFPA requires that private certifying

agents furnish reasonable security, such as a

bond, for the purpose of protecting the rights

of participants in the organic certification

program. Specifics requirements regarding

reasonable security have not yet been

established. It is expected that there will be

costs to certifying agents from these

requirements.

Certification Costs

State laws vary widely on organic

certification and registration. Some States

require only that an organic producer register

and make certification voluntary. Other

States require certification by the State’s own

agents, while others accept certification by a

private certifying agent. The least stringent

requirement among States with organic

legislation is that products marketed as

organic comply with their definition of

organic but both registration and certification

are voluntary. Thirteen States operate

programs to certify organic production. In

many States producers may claim their

product is organic but operate without

certification or well-defined standards. On

the other hand, many organic producers

operate in States with no program and

voluntarily secure third party certification to

well-defined standards.

Under the proposed rule, USDA will not

impose any direct fees on producers and

handlers. Certifying agents will establish a

fee schedule for their certification services

that will be filed with the Secretary.

Certifying agents will provide all persons

inquiring about the application process with

a copy of their fees. The certifying agent will

provide each applicant with an estimate of

the total cost of certification and an estimate

of the annual costs of updating the

certification. However, the certifying agent

may require applicants to pay at the time of

application a nonrefundable fee of no more

than $250 which must be applied to the

applicants’ fee-for-services account. The $250

limit is proposed as a reasonable figure

considering the interests of certifying agents

and applicants.

The proposed maximum nonrefundable fee

protects certifying agents by ensuring that

they receive some payment for their work for

applicants should the applicant lose interest

or be found unqualified for certification. For

the purposes of estimating the cost of the

paperwork burden on certifying agents,

USDA has valued their time at $27 per hour.

Thus, the $250 limit, if the certifying agent

chooses to require it, would cover

approximately 9 hours of work. The $250

limit protects applicants from paying large

fees up front when their ultimate eligibility

for certification is unknown. The $250 limit

is believed to be low enough to ensure

producers and handlers can afford to take the

first steps for certification but high enough to

ensure certifying agents will have an

incentive to initiate certification when the

prospects that the applicant will qualify are

unknown.

Some States charge minimal fees for

certification by subsidizing operating costs

from general revenues. The majority of

certifying agents structure their fee schedules

on a sliding scale based on a measure of size,

usually represented by the client’s gross sales

of organic products but sometimes based on

the acres operated (Fetter 1999 and Graf and

Lohr 1999). Some certifying agents charge an

hourly rate for inspection and audit services.

Graf and Lohr have applied fee schedules

provided by nine certifying agents to four

hypothetical farms—small, medium, large,

and a super farm. Tables 2A and 2B

summarizes the fees that Graf and Lohr found

by applying schedules of each certifying

agent to hypothetical farms. Total first-year

costs and subsequent (renewal) year costs for

certification are shown. The average cost for

each size class should be interpreted with

care because the reported average is not

weighted by the number of clients certified.

In their study, the Texas Department of

Agriculture program is the low-cost certifying

agent for all-size operations. The high-cost

certifying agent differs across farm sizes.

None of these certification programs

mentions costs for residue testing, which the

NOP will require in the form of preharvest

testing when there is reason to believe that

agricultural products have come in contact

with prohibited substances. Preharvest

testing is expected to be infrequent. Some

certifying agents currently require soil

nutrient testing and water quality testing.

The estimated total initial costs for a

producer or handler to become certified are

presented in Table 3.

We have not extended the average costs

reported in Tables 2A and 2B to aggregate

certification costs for all organic farms

because the number of organic farms is not

known with precision, nor is their geographic

location and there are no data to distribute

the population of organic farms across size

classes. Like conventional agriculture, the

largest percentage of farms would be

expected to fall in the smallest sales class.

Many of the smallest farms would qualify for

the small farm exemption from certification.

In addition, organic producers and

handlers would incur the costs associated

with becoming familiar with the national

program. We request comment and/or data

on the certification costs that may be

imposed on the organic producers, handlers,

processors, and retailers.

Production and Handling Costs

Producers and handlers currently active in

the organic industry may bear costs under the

proposed national standards. We believe that

while some provisions of the proposed

program mirror current industry practices,

others differ. In addition to the cost

associated with becoming familiar with the

national program, any adjustments stemming

from these differences will result in costs.

These costs are only qualitatively discussed.

This assessment does not include a

provision-by-provision analysis of possible

alternatives.

Producers

Producers of organic food will face

numerous provisions that will regulate their

production methods. As indicated in the

Baseline section, many of the requirements

are currently practiced by certified organic

farmers. Farming operations that are not

certified, but are registered with a State

government such as California, receive copies

of the State laws to which they must comply.

Some organic producers are neither certified

nor registered and therefore may not practice

the requirements proposed. Major provisions

are discussed to illustrate costs; other

provisions may also impose additional costs.

We request comment and/or data on the costs

that may be imposed on the producers of

organic products. In addition, we request

comment and/or data on the similarities and

differences between the current practices of

private and State programs and the proposed

requirements.

Land Requirement. The transition period,

which would specify the time during which

prohibited materials cannot be applied before

a field can be certified as organic, is included

in many private and State organic standards.

The OFPA specifies a required transition

period of 3 years before certifying a field. The

effect of this provision on the currently

certified organic farming operations may be

minimal. Certifying agents currently enforce

the 3 year transition period required by the

OFPA. Producers who are registered in States

requiring registration, receive copies of the

State laws governing organic production

which generally require a 3 year transition

period.

The effect on small farming operations that

are neither certified or registered may be

significant. Small farming operations that

have completed a 3 year transition period

and can document the transition will not be

affected by this requirement. To stay in the

organic industry, those who have not

completed the 3 year transition period must

comply with the transition period

requirement. They may incur the cost of

organic production for a significant length of

time, yet not be allowed to sell their products

as organic. Hence, some small organic

operations may exit the industry. We request

comment and/or data on the magnitude of

the cost associated with the provision. In

addition, we request comment and/or data on

the similarities and differences between the

current practices of private and state

programs and the proposed requirements.

Soil fertility and crop nutrients. Lacking

information, we have not quantified the cost

associated with this provision, but we

assume that it may have costs Organic

production historically rests on soil fertility

management. Private and State certifying

agents have well developed standards

addressing care and treatment of the soil. The

proposed rule includes requirements for the

use of manure and a practice standard for

composting which may impose additional

costs to producers. However, not all organic

farmers use manure for soil fertility and

many farmers use composting practices that

are consistent with the proposed rule. We

believe that this requirement will have

minimal impact on certified or registered

organic producers. We request comment and/

or data on the magnitude of the cost

associated with the provision. In addition,

we request comment and/or data on the

similarities and differences between the

current practices of private and State

programs and the proposed requirements.

Materials list. Lists of approved synthetic

materials, including soil amendments and

13640 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

pesticides, vary from one State program to

another. A detailed analysis of specific

differences in the various existing materials

lists shows them to be overlapping in most

cases. The impact of the national program

will be determined by how the national

standards differ from current certification

standards and from actual practice.

Farming operations, both certified and

registered, may need to adjust their

production methods to comply with the list.

These adjustments will impose costs on these

operations. However, most currently certified

operations and those operating under a State

program already adhere to a materials list.

These lists overlap in most cases with each

other and the National List in this proposal

which should mitigate the costs for these

operations. The magnitude of the costs

resulting from these adjustments is not

quantified. We request comment and/or data

on the magnitude of the costs associated with

the provision. In addition, we request

comment and/or data on the similarities and

differences between the current practices of

private and state programs and the proposed

requirements.

Animal drug use. Another common feature

of organic standards is the restricted use of

animal drugs for livestock. Where livestock

standards have been adopted by existing

State programs and by private certifying

agents, most prohibit the use of animal drugs

except for the treatment of a specific disease

condition, and use of animal drugs is

generally prohibited within 90 days prior to

the sale of milk or eggs as organic. Some

State and private certifiers allow the use of

animal drugs in animals for slaughter if the

producer extends the withholding period.

Others prohibit the use of animal drugs. The

standards in the proposed rule would

prohibit the sale as organic of an edible

products derived from an animal treated with

antibiotics or other unapproved substances.

The proposed standards may not differ

from existing State or private standards in

prohibiting the use of drugs on healthy

animals. However, the effect of this provision

may differ among certified and registered

organic farms. The effect on the certified

farming operations is unknown. We assume

that this provision may have costs, but the

magnitude of these costs is not quantified.

We request comment and/or data on the

magnitude of the costs associated with the

provision. In addition, we request comment

and/or data on the similarities and

differences between the current practices of

private and state programs and the proposed

requirements.

Other livestock requirements. Lacking

information, we have not quantified the cost

associated with this provision, but we

assume that this provision may have costs

due to the variability in current housing, feed

and health care practices. We request

comment and/or data on the magnitude of

the costs associated with the provision. In

addition, we request comment and/or data on

the similarities and differences between the

current practices of private and state

programs and the proposed requirements.

Residue Testing. Lacking information, we

have not quantified the cost associated with

this provision, but we assume that this

provision may have costs. We request

comment and/or data on the magnitude of

the costs associated with the provision. In

addition, we request comment and/or data on

the similarities and differences between the

current practices of private and state

programs and the proposed requirements.

Handling requirements. These

requirements prohibit a handler from using

ionizing radiation for any purpose, an

ingredient produced with excluded methods,

or a volatile synthetic solvent in or on a

processed agricultural product intended to be

sold, labeled, or represented as ‘‘100 percent

organic’’, ‘‘organic’’ or ‘‘made with organic

(specified ingredients).’’ We believe,

however, that the additional costs associated

with compliance may be small. We base this

assumption on the thousands of comments

on the first proposal, including comments

from the organic industry, indicating that

these practices are widely considered to be

inconsistent with organic production and

handling. Lacking information, we have not

quantified the cost associated with this

provision. We request comment and/or data

on the magnitude of the costs associated with

the provision In addition, we request

comment and/or data on the similarities and

differences between the current practices of

private and state programs and the proposed

requirements.

Handlers

Handlers of organic food may be defined

and regulated differently across different

certifying agents and States. Handlers may

incur some cost associated with complying

with the requirements of the proposed

regulation. We request comment and/or data

on the costs that may be imposed on the

retailers of organic products. In particular,

we request comment and/or data on costs

associated with excluded methods, residue

testing, and labeling. In addition, we request

comment and/or data on the similarities and

differences between the current practices of

private and state programs and the proposed

requirements.

Retail Food Establishments

Largely, retailers of organic food are not

regulated. However, they are still subject to

other requirements such as prevention of

contamination of organic products with

prohibited substances, and commingling

organic with non organic products.

Complying with these provisions may incur

some cost. We request comment and/or data

on the costs that may be imposed on the

retailers of organic products.

Labeling Costs

Certified handlers will have to comply

with requirements regarding the approved

use of labels. The estimated annual cost for

1,977 certified handlers to determine the

composition of 20 products to be reported on

labels is $948,960. This figure is based on an

average of 1 hour per product and an hourly

cost of $27. Similarly, certified handlers will

have to design their labels to comply with the

regulation. This is expected to take 1 hour

per label at $27 per hour for a compliance

cost of $948,960. Total label costs for

certified handlers are $1.9 million.

Any producers, processors, and retailers

who are not currently certified but who

package organic products are also subject to

the labeling requirements. Any changes to

existing labels and new labels that need to

conform to the proposed regulation will

incur a cost. The costs associated with these

activities are not quantified. Hence, the lower

bound on the labeling cost is approximately

$2 million. We request comment and/or data

on the extent the current labels will need to

change to conform to the proposed

regulation. In addition, we request comment

and/or data on the similarities and

differences between the current practices of

private and state programs and the proposed

requirements.

State Program Costs

A national program may impose additional

costs on States by requiring changes in their

existing programs. The proposed rule

encompasses most of the principles of

existing State programs. However, there are

also departures.

Where State standards are below Federal

standards or where elements of the Federal

standards are missing from a State program,

these States would be required to make

changes in their programs that they might

otherwise not make. Where State programs

have standards in addition to the Federal

standards and they are not approved by the

Secretary, States also would be required to

make changes in their programs. States

without organic standards or whose current

standards either would conform to those of

the national program or would be approved

by the Secretary would not incur additional

costs resulting from required changes.

Currently, USDA cannot predict which States

may be required to adjust their existing

programs.

States will be charged for accreditation,

something none of them pay for now. The

cost associated with this provision is

discussed in the Accreditation Section.

Enforcement Costs

Enforcement costs will fall upon USDA’s

NOP, States operating State programs, and on

certifying agents. Certifying agents will

review clients’ operations and will notify

clients of deficiencies. Certifying agents can

initiate suspension or revocation of

certification. Certifying agents will be aware

of these overhead costs and we assume that

they will establish fee schedules that will

cover these costs. Actual costs to certifying

agents for enforcement activities will depend

on the number of clients, how well informed

clients are of their obligations, and client

conduct. State programs will face the same

obligations and types of costs as private

certifying agents.

USDA’s enforcement costs are costs

associated with ensuring private certifying

agents and State programs fulfill their

obligations. USDA will bear costs of

investigating complaints, monitoring use of

the USDA organic seal and organic labeling,

and taking corrective action when needed.

USDA will bear costs related to reviewing an

applicant’s or certified operation’s appeal

and for administrative proceedings. We

request comment on the costs of the

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13641

enforcement provisions of the proposed

regulation.

Reporting and Recordkeeping Costs

The Paperwork Reduction Act of 1995

requires an estimate of the annual reporting

and recordkeeping burden of the proposed

NOP. Detailed descriptions of individual

elements of that burden are presented in the

proposal under the heading Paperwork

Reduction Act of 1995. The estimated annual

reporting and recordkeeping burden reported

is approximately $6.8 million. This figure

should be understood within the context of

the requirements of the Paperwork Reduction

Act. The Paperwork Reduction Act requires

the estimation of the amount of time

necessary for participants to comply with the

proposed regulation in addition to the

burden they currently have. Information

gathered by AMS in auditing activities in

conjunction with ISO Guide 65 verifications,

leads us to believe that the paperwork burden

on current certifying agents and certified

operators will be 10 to 15 percent greater

than their current business practices as a

result of this proposal.

Certifying Agents. The regulation will

impose administrative costs on certifying

agents for reporting and recordkeeping. The

actual amount of the additional

administrative costs that would be imposed

by the proposed rule is expected to be

different for those entities which would

begin their activities only after the national

program is implemented. Certifying agents

that currently are active in the organic

industry already perform most of these

administrative functions; therefore, the

additional costs to them would depend upon

the extent to which their current practices are

different from the requirements of the

proposed regulation. An estimate of the cost

of compliance is the annual reporting and

recordkeeping burden documented in the

Paperwork Reduction Act of 1995 analysis.

Table 4 shows the estimated annual costs for

State certifying agents and for private or

foreign certifying agents. Based on the

projected number of States agents (13) and

private or foreign agents (46) the total

reporting and recordkeeping cost, which

captures much of the compliance costs of the

rule, is $1,113,192.

The following list describes several of the

most significant proposed administrative

requirements or optional submissions and

the probable resources required for

compliance. Details on the reporting and

recordkeeping burdens estimated for each

item are in the paperwork analysis.

1. A list of farmers, wild crop harvesters

and handlers currently certified. This

information can be compiled from existing

records. After implementation, certifying

agents will be required to submit on a

quarterly basis a list of operations certified

during that quarter.

2. A copy of procedures used for

certification decisions, complying with

recordkeeping requirements, maintaining

confidentiality of clients’ business-related

information, preventing conflicts of interest,

sampling and residue testing, training and

supervising personnel, and public disclosure

of prescribed information concerning

operations they have certified and laboratory

analyses. These policies may have to be

created or modified to conform to the

regulation.

3. Documentation on the qualifications of

all personnel used in the certification

operation, annual performance appraisals for

each inspector and personnel involved in the

certification, and an annual internal program

evaluation. Existing certifying agents may

already perform these operations. New

certifying agents will have to establish

procedures to achieve these things.

4. Documentation on the financial capacity

and compliance with other administrative

requirements (e.g., fee structure, reasonable

security to protect the rights of the certifying

agents’ clients as provided in the NOP, and

business relationships showing absence of

conflicts of interest). Some of this

information can be compiled from existing

records, e.g., fee schedules, and some may be

generated from other sources.

5. Copies, submitted to USDA, of notices

issued involving denials of certification,

noncompliance, and suspension or

revocation of certification. This requirement

will be fulfilled simultaneously with sending

notices to applicants or clients.

6. An annual report to the Administrator

including an update of previously submitted

business information, information supporting

any requested changes in the areas of

accreditation, and steps taken to respond to

previously identified concerns of the

Administrator regarding the certifying agent’s

suitability for continued accreditation. The

annual report requirement will draw on

records created in the normal course of

business.

7. Retention of records created by the

certifying agent regarding applicants and

certified operations for not less than 10 years,

retention of records obtained from applicants

and certified operations for not less than 5

years, and retention of other records created

or received for USDA accreditation for not

less than 5 years. This activity requires

records and database management

capabilities and resources (storage space, file

cabinets, electronic storage, etc.). In an

informal inquiry, AMS found that most

existing certifying agents currently retain

records for at least 10 years and use both

electronic and paper storage. We believe that

this requirement will not pose an additional

burden on existing certifying agents.

8. Public access to certification records,

such as a list of certified farmers and

handlers, their dates of certification, products

produced, and the results of pesticide residue

tests. This requirement will have minimal

impact given the requirements for retaining

records.

9. Providing program information to

certification applicants. To comply with this

requirement, certifying agents may need to

modify existing standards and practices. The

criteria for qualified personnel in the

proposed rule may likely result in an

increase in labor costs for some existing

certifying agents and, initially, an increase in

training costs. The amount of additional costs

to these certifying agents would depend on

the level of expertise among current

certification agency staff, the extent to which

certifying agents currently rely on volunteers,

and the current costs of training certification

staff.

Producers and Handlers. The regulation

will impose administrative costs on

producers and handlers for reporting and

recordkeeping. The actual amount of the

additional administrative costs that would be

imposed by the final rule is expected to be

different for those entities that would begin

their activities only after the national

program is implemented. Producers and

handlers who currently are active in the

organic industry already perform most of

these administrative functions; therefore, the

additional costs to them would depend upon

the extent to which their current practices are

different from the requirements of the final

regulation. An estimate of the cost of

compliance is the annual reporting and

recordkeeping burden documented in the

Paperwork Reduction Act of 1995 analysis.

The following list describes several

proposed administrative requirements or

optional submissions and the probable

resources required for compliance.

1. Establish, implement, and update

annually an organic production or handling

plan. Organic plans are a standard feature in

the organic industry and are required by

certifying agents. Thus, producers and

handlers who are already involved in

organics, can rely on their current plan with

revisions as needed to meet elements of the

national program which are new to them or

differ from their current practice. Although

producers and handlers are generally aware

of the goals of organic plans, current practice

may fall short of the rigor that will be

required by the national program. New

producers and handlers will have higher

costs because they will have to prepare a

plan from scratch.

2. Maintain records pertaining to their

organic operation for at least 5 years and

allow authorized representatives of the

Secretary, the applicable State program’s

governing State official, and the certifying

agent access to records. Existing organic

producers and handlers maintain records.

New producers and handlers will have to

develop records systems. Access is expected

to be infrequent, will require little time of the

certified entity, and will not require

buildings or equipment other than what is

required for storing records.

3. Notify the certifying agent as required,

e.g., when drift of a prohibited substance may

have occurred, and complete a statement of

compliance with the provisions of the NOP.

Notifications are expected to be infrequent.

The total reporting burden includes

creation and submission of documents. It

covers the greatest amount of reporting

burden that might occur for any single

creation or submission of a document during

any one of the first 3 years following program

implementation, i.e., 2000, 2001, and 2002.

The total estimated reporting burden reflects

the average burden for each reporting activity

that might occur in 1 year of this 3-year

period.

The total recordkeeping burden is the

amount of time needed to store and maintain

records. For the purpose of measuring the

recordkeeping burden, the year 2002 is used

13642 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

as the reporting year for which the largest

number of records might be stored and

maintained. The annual reporting and

recordkeeping burdens on producers,

handlers, and certifying agents is

summarized in Table 4.

Certified operations. The annual burden on

certified producers is estimated at 10 hours

and $229. Certified handlers have an

estimated burden of 50 hours valued at

$1,189. Certifying agencies have an estimated

burden of 700 hours valued at roughly

$18,900.

Exempt operations. The burden on small

producers and handlers, who choose to

operate as exempt entities, is minimal, 0.5

hour of recordkeeping valued at $12. Exempt

operations are exempt from reporting and

recordkeeping burdens. However, small

producers and handlers will have to invest

some time and review documents to

determine whether they qualify for

exemption or exclusion. Exempt operations

that produce multiingredient products

containing less than 50 percent organic

ingredient will be required to maintain

records documenting the organic ingredients

purchased. Since records of purchases would

be part of the normal recordkeeping for

handlers, we do not consider this a

recordkeeping burden.

Based on the projected number of

producers (17,150) and handlers (2,150), the

total reporting and recordkeeping cost, which

captures much of the compliance costs of the

rule for this group, is $5,200,721. We request

comment and/or data on the costs that may

be imposed by the recordkeeping

requirements of the proposed regulation. In

addition, we request comment and/or data on

the similarities and differences between the

current practices of private and state

programs and the proposed requirements.

Barriers to Entry—Importers of Organic

Products

Currently, there are no federal restrictions

on importing organic products to the United

States in addition to those regulations

applying to conventional products. However,

some States require organic products sold

within the State to be produced according the

State’s standards. Thus, some State programs

are barriers to importers. The proposed

regulation imposes a national standard that

these importers must meet, and may incur

some cost. We request comment and/or data

on the extent of the organic food imports and

the costs that may be imposed on these

importers to meet the proposed standards.

Small Business Ramifications

USDA has proposed an 18-month period

during which applicants for accreditation

would not be billed for hourly services. The

rationale for this transition period is to

reduce the costs to certifying agents and,

thus, increase the prospect that certifying

agents, producers, and handlers will be able

to afford to participate in the national

program. The choice of 18 months is

intended to provide sufficient time for parties

desiring accreditation to submit their

application and prepare for a site evaluation.

USDA has proposed to operate the program

partially with appropriated funds, in effect

sharing the cost of the program between

taxpayers and the organic industry, to

respond to public concerns regarding the

effects of the proposed regulation on small

businesses. Thousands of comments were

received opposing the first proposal’s fee

provisions with most focusing on the

substantial impact on small certifying agents.

Congress has expressed public policy

concern with the impacts of regulations on

small entities generally and with the impacts

on the NOP regulations on small entities

particularly. The Small Business Regulatory

Enforcement Fairness Act of 1996 and the

Regulatory Flexibility Act express

Congressional concern regarding regulatory

burden on small businesses. The Report from

the Committee on Appropriations regarding

the Agriculture, Rural Development, Food

and Drug Administration, and Related

Agencies Appropriations Bill, 2000, includes

the following language (U.S. Senate 1999):

‘‘The Committee continues to recognize the

importance of organic markets for small

farmers and fishermen. The Committee

expects the Secretary to construct a national

organic program that takes into consideration

the needs of small farmers and fishermen.

* * * Furthermore, the Committee expects

that of the funding available for the National

Organic Program, necessary funds should be

used to offset the initial costs of accreditation

services, a subsidy necessary due to the lack

of expertise in the Department of Agriculture

in the areas of organic accreditation and

insufficient data on the industry.’’

Certifying agents applying for accreditation

during the first 18 months following the final

regulation will face lower direct costs than

subsequent applicants. The cost for later

applicants for accreditation will be higher

because they will have to pay a $500

application fee and hourly charges for

completing their site evaluation. The

requirement for accreditation was established

in the OFPA in 1990 and the proposed

accreditation program was part of the 1997

proposal. Because in this proposal USDA is

using appropriated funds to cover some of

the costs of initial accreditation during the

first 18 months of the program, certifying

agents may set lower fees initially benefitting

the producers and handlers who are certified

during this period.

It is important to note that many small

organic operations may not be certified

currently. In California, for example, many

small farms are registered, but not certified.

Even if certifying agents pass on the cost

savings of the 18 month period provision to

applicants for certification, the cost of

certification may be higher than the cost of

registration. Hence, becoming a certified

operation for small organic producers and

handlers may be more costly than the current

practices.

The costs imposed on small operations

may be mitigated by a $5000 certification

exemption to aid the smallest organic

operations. However, these operations are

still subject to other requirements of the

proposed regulation. To the extent that these

requirements differ from their current

practices, complying with the national

standards may be costly for exempt

operations.

In addition, the certification exemption

allowed under the proposed regulation

includes limits on what an exempt operation

may do. Without the certification, small

organic operations may not display the

USDA seal and may not use a certifying

agent’s seal. However, we are asking for

public comment on whether exempt

operations should have the marketing option

of selling their products to handlers who can

claim the products as organic in multiingredient products. If the consumers of

organic food view the seals as important

information tools on organic food, that is, if

consumers of organic products insist on only

certified organic products, the inability of

small operations to display these seals may

prevent them from realizing the price

premiums associated with certified organic

products.

Industry Composition

The imposition of the national standards

may change the composition of the organic

industry. Even with the small business

exemptions, some small organic operations

may choose to exit the industry and small

organic operations may also be discouraged

from entering the industry, resulting in a

higher concentration of larger firms. On the

other hand, it may be easier for small

operations to comply with certain NOP

standards, such as the livestock standards

which prohibit confinement production

systems and require 100 percent organic feed.

Conclusion

Ideally, the net benefits of the proposed

rule would be estimated by employing a

welfare analysis. In a welfare model, the

quantitative assessment of benefits would be

represented by net changes in consumer and

producer surplus, i.e., the difference between

the willingness to pay (or firm cost structure

in the case of producers) and the market

price of organic food. These net changes

would be estimated using information about

the cost structure of the industry, the demand

for organic food, and projected shifts in

supply and demand resulting from the

various factors discussed in the assessment.

Although researchers have conducted

numerous small-scale studies to determine

consumers’ willingness to pay for certain

organic products (primarily fresh produce)

and to identify reasons why conventional

food buyers do not choose organic food

products (Hammitt, 1990 and 1993; Jolly;

Misra et al.; Park and Lohr; Weaver et al.),

the available data are insufficient to support

a quantitative assessment of this type. A 1998

review of studies of consumer demand for

organic foods concluded, ‘‘Attitudes,

motives, and willingness to pay for organic

products have been measured, but apparently

no retail data have been available to estimate

own-price, cross-price, and income

elasticities.’’ (Thompson 1998).

USDA has identified the entities that may

be affected by the proposed rule and has

analyzed the anticipated business-associated

impacts on them of the rule based on our

knowledge of the industry and limited data.

We have drawn on industry studies,

including studies completed since the 1997

proposed rule was published, and

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13643

information provided in comments on the

1997 proposed rule.

The primary benefits from implementation

of the proposed rule are improved protection

of buyers from a reduction in market

confusion including protection from false

and misleading claims, and improved access

to markets from the reciprocity inherent in

national standards. These benefits have not

been quantified.

The costs of the proposed regulation are

the direct costs for accreditation and the

costs of complying with the specific

standards in the proposal including the

reporting and recordkeeping requirements.

Other than accreditation fees, recordkeeping

and reporting costs, we did not quantify the

magnitude of the compliance costs or the

costs of adhering to other provisions of this

regulation. We have also not quantified the

impact of all these provisions on small

business but we believe there impact to be

significant.

The direct costs of accreditation if all

currently operating certifying agents become

certified during the first 18 months following

the final rule is approximately $75,000 to

$100,000. After the first 18 months, the direct

cost for accrediting would be approximately

$150,000 to $238,000. During the 18-month

period during which the NOP is not

recovering the full costs of accreditation

services, the organic industry is being

subsidized with appropriated funded derived

from the taxpayers. For existing certifying

agents compliance costs include costs to

become familiar with and adopt NOP

standards. The aggregate cost of complying

with reporting and recordkeeping

requirements of the rule are approximately

$6.8 million. Appropriated NOP funds used

to operate the National Organic Program are

transfers from the taxpayers to the

participants in the organic sector.

References

Byng, John. 1994. UK and European

Community (EC) Legislation. In, Handbook

of Organic Food Processing and

Production. Simon Wright (ed.). pp. 17–30.

Glasgow: Blackie Academic and

Professional.

California Department of Health Services

(DHS). 1999. Report on the Registration of

California Organic Processed Food Firms.

Sacramento: State of California. September

1999. Figures obtained via personal

communication with DHS.

California Department of Health Services.

1995. Report on the Registration of

California Organic Processed Food Firms.

Sacramento: State of California.

Collins, Shane. 1999. ‘‘Rosy future forecast

for Europe’s organic market,’’ Eurofruit

Magazine, September.

Dunn, Julie Anton. 1995a. Organic Food and

Fiber: An Analysis of 1994 Certified

Production in the United States. U.S.

Department of Agriculture, Agricultural

Marketing Service.

Dunn, Julie Anton. 1995b. ‘‘Organic Foods

Find Opportunity in Natural Foods

Industry,’’ Food Review, Vol. 18, Issue 3,

Sep.–Dec.

Dunn, Julie Anton. 1997. AgriSystems

International Reports Certified Organic

production in the United States: Half a

Decade of Growth. AgriSystems

International: Wind Gap, PA.

Emerich, Monica. 1996. Industry Growth:

22.6%. Natural Foods Merchandiser

(June):1–39.

Fetter, Robert T. 1999. Economic Impacts of

Alternative Scenarios of Organic Products

Regulation. Senior Honors Thesis.

University of Massachusetts, Amherst, MA.

Graf, Anita and Luanne Lohr. 1999.

‘‘Analysis of certification program costs,’’

Working Paper, Fund for Rural America

project, Market Development for Organic

Agriculture Products, Grant No. 97–36200–

5.

Hammitt, James K. 1990. Risk Perceptions

and Food Choice: An Exploratory Analysis

of Organic—Versus Conventional-Produce

Buyers. Risk Analysis, Vol. 10, No. 3: 367–

374.

Hammitt, James K. 1993. Consumer

Willingness to Pay to Avoid Pesticide

Residues. Statistica Sinica, 3.

Independent Organic Inspectors Association.

1996. IOIA 1996 Membership Directory.

Winona, MN.

International Trade Centre UNCTAD/WTO.

1999. Organic Food and beverages: World

Supply and major European Markets.

Geneva: ITC, xiv, 271 p.

Jolly, Desmond A., Howard G. Schutz,

Katherine V. Diaz-Knauf, and Jagjeet Johal.

1989. Organic Foods: Consumer Attitudes

and Use. Food Technology (November):

60–66.

Jolly, Desmond A. 1991. Differences Between

Buyers and Nonbuyers of Organic Produce

and Willingness to Pay Organic Price

Premiums. Journal of Agribusiness

(Spring): 97–111.

Klonsky, Karen and Laura Tourte. 1995.

Statistical Review of California’s Organic

Agriculture, 1992–93. Report prepared for

the California Department of Food and

Agriculture Organic Program. Cooperative

Extension, Department of Agricultural

Economics, University of California, Davis.

Klonsky, Karen and Laura Tourte. 1998a.

Statistical Review of California’s Organic

Agriculture, 1992–95. Report prepared for

the California Department of Food and

Agriculture Organic Program. Cooperative

Extension, Department of Agricultural

Economics, University of California, Davis.

Klonsky, Karen and Laura Tourte. 1998b.

Organic Agricultural Production in the

United States: Debates and Directions.

Amer. J. Agr. Econ. Vol. 80, No. 5: 1119–

1124.

Lohr, Luanne. 1998. Implications of Organic

Certification for Market Structure and

Trade. Amer. J. Agr. Econ. Vol. 80, No. 5:

1125–1129.

Mergentime, Ken. 1997. ‘‘Organic Fraud Case

Deepens; Possible Link Causes OCIA

Turmoil’’, the Natural Foods Merchandiser,

March.

Mergentime, Ken and Monica Emerich. 1995.

Organic Sales Jump Over $2 Billion Mark

in 1994. Natural Foods Merchandiser

(June): 74–76.

Mergentime, Ken and Monica Emerich. 1996.

Widening Market Carries Organic Sales to

$2.8 Billion in 1995. Natural Foods

Merchandiser (June): 36–38.

Misra, Sukant, Chung L. Huang, and Stephen

L. Ott. 1991. Georgia Consumers’

Preference for Organically Grown Fresh

Produce. Journal of Agribusiness (Fall): 53–

65.

Natural Foods Merchandiser. 1995. Organic

Update: Reciprocity Controversies

Intensify, Exacerbating Certifier/

Manufacturer Tensions. April.

Organic Farming Research Foundation. 1999.

Final Results of the Third Biennial

National Organic Farmers’ Survey. E. Walz,

Program Coordinator. Santa Cruz, CA.

Park, Timothy A. and Luanne Lohr. 1996.

Supply and Demand Factors for Organic

Produce. American Journal of Agricultural

Economics, Vol. 78 (August): 647–655.

Thompson, Gary D. 1998. Consumer Demand

for Organic Foods: What We Know and

What We Need to Know. Amer. J. Agr.

Econ. Vol. 80, No. 5: 1113–1118.

Underhill, S. E. and E. E. Figueroa. 1993.

Consumer Preferences for NonConventionally Grown Produce. Paper

presented at the Valuing Food Safety and

Nutrition Conference, organized by the

NE–165 Regional Research Project.

Alexandria, VA, June 2–4.

USDA Foreign Agricultural Service. 1995.

Agricultural Situation: Agricultural

Highlights, Winter 1995. Report from

Austria. Code 24, Sequence No. 007.

USDA Foreign Agricultural Service. 1995.

Agricultural Situation: Organic Food.

Report from Germany. Code 24, Sequence

No. 011.

USDA Foreign Agricultural Service. 1996.

Agricultural Situation: Organic Food

Market Potential and Regulations. Report

from France. Code 24, Sequence No. 002.

USDA Foreign Agricultural Service. 1999a.

Report on organic agriculture in Japan.

Attache report JA91234. October 5.

USDA Foreign Agricultural Service. 1999b.

Report on organic agriculture in France.

Attache report FR9070. October 18.

U.S. Senate. 1999. Report 106–80.

Agriculture, Rural Development, Food and

Drug Administration, and Related Agencies

Appropriation Bill 2000. Committee on

Appropriations. Page 56.

Weaver, Robert D., David J. Evans, and A. E.

Luloff. 1992. Pesticide Use in Tomato

Production: Consumer Concerns and

Willingness-to-Pay. Agribusiness, Vol. 8

No. 2: 131–142. Table 1.

TABLE 1.—ORGANIC FOOD SALES

[$ billions]

Year Sales

Sales

(1998

dollars)

1990 .......................... 1.000 1.25

1991 .......................... 1.250 1.50

1992 .......................... 1.540 1.79

1993 .......................... 1.890 2.13

1994 .......................... 2.310 2.54

1995 .......................... 2.800 2.99

1996 .......................... 3.500 3.64

Source: Mergentime and Emerich in Natural

Foods Merchandiser.

13644 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

TABLE 2A.—FIRST YEAR CERTIFICATION COSTS, FROM GRAF AND LOHR ANALYSIS

[In dollars]

Certifying agent Small

farm

Medium

farm

Large

farm

Super

farm

CCOF ............................................................................................................................................... 750 1,650 4,750 51,150

FVO .................................................................................................................................................. 585 1,624 5,101 51,437

FOG ................................................................................................................................................. 325 845 2,525 25,525

NOFA-VT ......................................................................................................................................... 335 535 585 585

OTCO-In .......................................................................................................................................... 608 1,766 2,517 11,518

OTCO-Out ........................................................................................................................................ 568 1,498 2.352 11,353

OCIA-WI ........................................................................................................................................... 315 1,590 6,090 75,090

OCIA-VA .......................................................................................................................................... 258 320 495 1,745

TDA .................................................................................................................................................. 90 155 200 515

WSDA .............................................................................................................................................. 330 1,375 2,800 12,000

NC/SCS ........................................................................................................................................... n/a n/a n/a n/a

Average cost .................................................................................................................................... 416 1,136 2,742 24,092

Notes:

CCOF—California Certified Organic Farmers

FVO—Farm Verified Organic

FOG—Florida Certified Organic Growers & Consumers

NOFA–VT—Northeast Organic Farming Association-Vermont

OTCO–In—Oregon Tilth Certified Organic, inside Oregon

OTCO–Out—Oregon Tilth Certified Organic, outside Oregon

OCIA–WI—Organic Crop Improvement Association, Wisconsin chapter

OCIA–VA—Organic Crop Improvement Association, Virginia chapter

TDA—Texas Department of Agriculture

WSDA—Washington State Department of Agriculture

NC/SCS—NutriClean/Scientific Certification Systems

Small farm—25 acres with annual sales of $30,000.

Medium farm—150 acres with annual sales of $200,000.

Large farm—500 acres with annual sales of $800,000.

Super farm—3,000 acres with annual sales of $10,000,000.

TABLE 2B.—SUBSEQUENT YEAR CERTIFICATION COSTS, FROM GRAF AND LOHR ANALYSIS

[In dollars]

Certifying agent Small

farm

Medium

farm

Large

farm

Super

farm

CCOF ............................................................................................................................................... 425 1,300 4,350 50,550

FVO .................................................................................................................................................. 510 1,499 4,851 51,187

FOG ................................................................................................................................................. 325 845 2,525 25,525

NOFA-VT ......................................................................................................................................... 300 500 550 550

OTCO-In .......................................................................................................................................... 454 1,611 2,362 11,363

OTCO-Out ........................................................................................................................................ 424 1,353 2,207 11,208

OCIA-WI ........................................................................................................................................... 290 1,565 6,065 75,065

OCIA-VA .......................................................................................................................................... 233 295 470 1,720

TDA .................................................................................................................................................. 90 155 200 515

WSDA .............................................................................................................................................. 330 1,375 2,800 12,000

NC/SCS ........................................................................................................................................... 700 900 1,000 2,000

Average cost .................................................................................................................................... 371 1,036 2,489 21,971

Notes:

CCOF—California Certified Organic Farmers

FVO—Farm Verified Organic

FOG—Florida Certified Organic Growers & Consumers

NOFA–VT—Northeast Organic Farming Association—Vermont

OTCO-In—Oregon Tilth Certified Organic, inside Oregon

OTCO-Out—Oregon Tilth Certified Organic, outside Oregon

OCIA–WI—Organic Crop Improvement Association, Wisconsin chapter

OCIA–VA—Organic Crop Improvement Association, Virginia chapter

TDA—Texas Department of Agriculture

WSDA—Washington State Department of Agriculture

NC/SCS—NutriClean/Scientific Certification Systems

Small farm—25 acres with annual sales of $30,000.

Medium farm—150 acres with annual sales of $200,000.

Large farm—500 acres with annual sales of $800,000.

Super farm—3,000 acres with annual sales of $10,000,000.

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13645

TABLE 3.—COSTS OF ACCREDITATION

AND CERTIFICATION

Estimated costs to certifying agents during

first 18 months

Application fee 1 $0

Site evaluation costs

(two person team):.

Per diem (3 to 5

days).

$480 to $800

Travel (domestic) .... $1,000 to $1,200

Hourly charges (not

billed).

$0

Miscellaneous

charges (copying,

phone, and similar

costs).

$50

Total ..................... $1,530 to $2,050

Estimated costs to certifying agents for

initial accreditation after first 18 months

Application fee 1 .......... $500

Site evaluation costs

(one person):

Per diem (3 to 5

days).

$240 to $400

Travel (domestic) .... $500 to $600

Hourly charges (24

to 40 hours at

$95/hour)).

$2,280 to $3,800

TABLE 3.—COSTS OF ACCREDITATION

AND CERTIFICATION—Continued

Miscellaneous

charges (copying,

phone, and similar

costs).

$50

Total ..................... $3,070 to $4,850

Annual review fees for

certifying agents (2

to 8 hours at $95/

hour) 2.

$190 to $760

Estimated costs to producers for

certification 3

Certification fee (initial certification).$800

Certification fee (renewals).$730

Estimated costs to handlers for

certification 4

Certification fee (initial

certification).

$1,825

Certification fee (renewals).$1,665

1 Nonrefundable fee that will be applied to

the applicant’s fee for service account. 2 Certifying agents are required to submit

annual reports to USDA. Review of these reports is expected to range from 2 to 8 hours at

an approximate rate of $95 per hour.

3Estimated certification fees are calculated

from Graf and Lohr 1999 which, for a selection

of certification agents, provides certification

costs for four hypothetical farm sizes: (1)

Small Farm (‘‘Family Farm’’): 25 acres,

$30,000 annual sales, 5 hours to certify; (2)

Medium Farm (‘‘Cottage Industry’’): 150 acres,

$200,000 annual sales, 6 hours to certify; (3)

Large Farm (‘‘Commercial Farm’’): 500 acres,

$800,000 annual sales, 8 hours to certify; and

(4) Super Farm: 3,000 acres, $10,000,000 annual sales, 16 hours to certify. Our estimated

certification fees only include those charged

for small and medium farms, because most organic producers fall into these categories as

defined by Graf and Lohr. In the 1997 OFRF

survey, 90 percent of respondents had gross

organic farming income less than $250,000,

with 82 percent less than $100,000.

The average current certification cost for

most organic producers is about $775 for the

first year of certification ($416 for small and

$1,136 for medium farms) and about $705 for

subsequent years ($371 for small and $1,036

for medium farms). Approximately $25 is

added to cover the costs associated with the

National Organic Program for an estimated

first year certification fee of $800 and subsequent year certification fee of $730 for producers. Larger producers could expect higher

fees. 4Because Graf and Lohr do not estimate

certification fees for handlers, we estimate

these fees by applying a ratio of handler-toproducer certification fees from the regulatory

impact assessment from 1997. The ratio is

2.28 results in estimated fees of $1,825 and

$1,665, respectively.

TABLE 4.—ESTIMATED ANNUAL REPORTING AND RECORDKEEPING BURDEN

Type of respondent

Annual

hours per

respondent

Hourly rate Annual cost

Certified producer .................................................................................................................................... 10 $24 $229

Exempt producer ..................................................................................................................................... 0.5 24 12

Certified handler ...................................................................................................................................... 50 24 1,189

Exempt handler ........................................................................................................................................ 0.5 24 12

State certifying agency ............................................................................................................................ 696 27 18,778

Private or foreign certifying agency ......................................................................................................... 700 27 18,893

Note: Estimates derived from Paperwork Reduction Act of 1995 analysis.

Appendix B.—Unfunded Mandates Reform

Act

This proposed rule has been reviewed

under the Unfunded Mandates Reform Act

(P.L.104–4). The Act requires that agencies

prepare a qualitative and quantitative

assessment of the anticipated costs and

benefits before proposing any rule that may

result in annual expenditures by State, local,

and tribal governments, in the aggregate, or

by the private sector, of $100 million

(adjusted annually for inflation) in any one

year. According to the Act, the term Federal

mandate means any provision in legislation,

statute, or regulation that would impose an

enforceable duty upon State, local, or tribal

governments, or the private sector, except a

duty arising from participation in a voluntary

Federal program.

The National Organic Foods Production

Act (OFPA) of 1990 mandates that the

Secretary develop a National Organic

Program (NOP) to accredit eligible governing

State officials or private persons as certifying

agents who would certify producers or

handlers of agricultural products that have

been produced using organic methods as

provided for in the OFPA. The OFPA also

permits a governing State official to

voluntarily establish a State organic

certification program if the program is

approved by the Secretary and meets the

requirements of the OFPA. The OFPA does

not require that States establish their own

organic certification programs or that State,

local or tribal governments, or the private

sector, become accredited; therefore, the

OFPA is not subject to the Unfunded

Mandates Reform Act because it is a

voluntary program.

Although USDA has determined that this

proposed rule is not subject to the Unfunded

Mandates Reform Act, USDA has sought to

consider the rule’s impact on various entities.

USDA prepared a Regulatory Impact

Assessment (RIA) that is discussed in the

section titled ‘‘Executive Order 12866’’ (also

attached as an appendix to this proposed

regulation). The RIA consists of a statement

of the need for the proposed action, an

examination of alternative approaches, and

an analysis of the benefits and costs. Much

of the analysis is necessarily descriptive of

the anticipated impacts of the proposed rule.

Because basic market data on the prices and

quantities of organic goods and services and

the costs of organic production is limited, it

is not possible to provide quantitative

estimates of all benefits and costs of the

proposed rule. The cost of fees and

recordkeeping proposed by the USDA are

quantified, but the anticipated benefits are

not. Consequently, the analysis does not

contain an estimate of net benefits.

The analysis employed in reaching a

determination that this proposed rule is the

least costly and least burdensome to the

regulated parties is discussed in the sections

titled ‘‘The Regulatory Flexibility Act and the

Effects on Small Businesses’’ and

‘‘Paperwork Reduction Act of 1995.’’ The

13646 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

1Organic Farming Research Foundation. 1999.

Final Results of the Third Biennial National

Organic Farmers’ Survey. Santa Cruz, CA.

proposed rule has been designed to be as

consistent as possible with existing industry

practices, while satisfying the specific

requirements of the OFPA.

We have had numerous occasions to

communicate with various entities during the

development of the proposed rule; States, for

example. Currently there are 27 States with

some standards governing the production or

handling of organic food and 13 States with

organic certifying programs. Representatives

of State governments have participated in

public meetings with the NOSB, while the

NOP staff has made presentations, received

comments, and consulted with States and

local and regional organic conferences,

workshops, and trade shows. States have

been actively involved in training sessions

for organic inspectors; public hearings

concerning standards for livestock products

during 1994; a national Organic Certifiers

meeting on July 21, 1995; a USDA-hosted

meeting on February 26, 1996; a State

certifiers meeting in February 1999; and an

ISO 65 assessment training session for

certifiers in April-May 1999. It is unknown

at this time how many States, if any, might

voluntarily establish their own organic

certification programs pursuant to the OFPA

and the regulations.

Appendix C.—The Regulatory Flexibility Act

and the Effects on Small Businesses

The Regulatory Flexibility Act (5 U.S.C.

601 et seq.) (Act) requires agencies to

consider the economic impact of each

proposed rule on small entities and evaluate

alternatives that would accomplish the

objectives of the rule without unduly

burdening small entities or erecting barriers

that would restrict their ability to compete in

the market. The purpose is to fit regulatory

actions to the scale of businesses subject to

the action.

In the first proposal published in December

1997, the initial Regulatory Flexibility

Analysis (RFA), describing the impact of the

National Organic Program and evaluating the

alternatives, was written with guidance from

the U.S. Small Business Administration

(SBA). The RFA of this proposal was written

following consideration of comments

received in response to the first proposal,

other information that has become available

since the first proposal, the Regulatory

Impact Assessment (RIA) that is discussed in

the section entitled ‘‘Executive Order 12866’’

(also attached as an appendix to this

proposal), and the information collection

burden discussed in the section entitled

‘‘Paperwork Reduction Act of 1995’’ (PRA).

Reasons for Proposal

Currently, organic certification is voluntary

and self-imposed. Members of organic

industries across the U.S. have experienced

numerous problems marketing their

organically produced and handled

agricultural products. Inconsistent and

conflicting organic production standards may

have been an obstacle to the effective

marketing of organic products. There are

currently 36 private and 13 State organic

certification agencies (certifying agents) in

the United States, each with its own

standards and identifying marks.

Some existing private certifying agents are

concerned that States might impose

registration or licensing fees which would

limit or prevent private certification activities

in those States. Labeling problems have

confronted manufacturers of multi ingredient

organic food products containing ingredients

certified by different certifying agents

because reciprocity agreements have to be

negotiated between certifying agents.

Consumer confusion may exist because of the

variety of seals, labels, and logos used by

certifying agents and State programs. Also,

there is no industry wide agreement on an

accepted list of substances that should be

permitted or prohibited for use in organic

production and handling. Finally, a lack of

national organic standards may inhibit

organic producers and handlers in taking full

advantage of international organic markets

and may reduce consumer choices in the

variety of organic products available in the

marketplace.

To address these problems in the late

1980’s, the organic industry attempted to

establish a national voluntary organic

certification program. At that time, the

industry could not develop consensus on the

standards that should be adopted, so

Congress was petitioned by the Organic

Trade Association to establish national

standards for organic food and fiber products.

Recently, the Organic Trade Association

published American Organic Standards,

Guidelines for the Organic Industry (AOS).

However, not all participants in the organic

industry elected to participate in developing

the AOS. Many certifying agents preferred to

wait for implementation of the National

standards, and some certifying agents

disagree with portions of the AOS. For these

reasons, the USDA is proposing a regulation

for the National Organic Program.

Legal Basis for and Objectives of Proposal

In 1990, Congress enacted the Organic

Foods Production Act of 1990, as amended

(7 U.S.C. 6501 et seq.) (OFPA). The OFPA

requires all agricultural products labeled as

‘‘organically produced’’ to originate from

farms or handling operations certified by a

State or private agency that has been

accredited by USDA.

The purposes of the OFPA, set forth in

section 2102 (7 U.S.C. 6501), are to: (1)

Establish national standards governing the

marketing of certain agricultural products as

organically produced products; (2) assure

consumers that organically produced

products meet a consistent standard; and (3)

facilitate commerce in fresh and processed

food that is organically produced. The

National Organic Program, which this rule

proposes, is the result of the OFPA.

Applicability of Proposal

This proposal will directly affect three

sectors of the organic industry: certifying

agents, producers, and handlers. The OFPA

provides for the collection of reasonable fees

by USDA from producers, handlers, and

certifying agents who participate in the

national program. This proposal will impose

direct costs on certifying agents in the form

of a fee paid to the Federal Government for

USDA accreditation. This proposal does not

impose direct costs in the form of fees on

producers and handlers. Certifying agents

will establish a fee schedule for their

certification services for producers and

handlers. All three sectors are subject to

indirect costs of compliance.

The term, ‘‘certifying agent,’’ means the

chief executive officer of a State or, in the

case of a State that provides for the statewide

election of an official to be responsible solely

for the administration of the agricultural

operations of a State, such official and any

person (including private entities) who is

accredited by the Secretary as a certifying

agent for the purpose of certifying a farm or

handling operation as a certified organic farm

or handling operation. The term, ‘‘producer,’’

means a person who engages in the business

of growing or producing food or feed. The

term, ‘‘handler,’’ means any person engaged

in the business of handling agricultural

products, excluding final retailers of

agricultural products that do not process

agricultural products. Subpart B, section

205.101 in the proposed regulation provides

information about exemptions and

exclusions from certification.

According to the most complete data

available to USDA’s Agricultural Marketing

Service (AMS), there are 49 certifying agents

(36 private and 13 State) in the U.S. Over half

of the private and State certifying agents

certify both producers and handlers, while

the others certify only producers. Over threefourths of private and State certifying agents

each certify fewer than 150 producers and 20

handlers. The number of certifying agents has

remained fairly stable between 40 and 50 for

some years, with entries and exits tending to

offset each other. The National Organic

Program staff anticipates that, in addition to

the 49 domestic certifying agents, 10 foreign

certifying agents may seek accreditation

during the initial phase of the program.

It is more difficult to establish the number

of organic producers. Organic farming was

not distinguished from conventional

agriculture in the 1997 Census of Agriculture.

There are sources which give insight into the

number of producers. The Organic Farming

Research Foundation (OFRF), a Californiabased nonprofit organization, has conducted

three nationwide surveys of certified organic

producers from lists provided by cooperating

certifying agents. The most recent survey

applies to the 1997 production year.1 OFRF

sent its 1997 survey to 4,638 names and

received 1,192 responses. Because OFRF did

not obtain lists from all certifying

organizations or their chapters (55 out of a

total of 64 identified entities provided lists),

their list count is likely an understatement of

the number of certified organic producers.

Note that the estimated number of organic

producers includes only certified organic

farms. Comments filed in response to the first

proposal and studies indicate that the total

number of organic farms is higher.

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13647

2 Dunn, Julie Anton. 1995. Organic Food and

Fiber: An Analysis of 1994 Certified Production in

the United States. U.S. Department of Agriculture,

Agricultural Marketing Service.

3 Dunn, Julie Anton. 1997. AgriSystems

International Reports Certified Organic Production

in the United States: Half a Decade of Growth.

AgriSystems International: Wind Gap, PA.

4California Department of Health Services (DHS).

1995. Report on the Registration of California

Organic Processed Food Firms. Sacramento: State of

California. September 1999 figures obtained via

personal communication with California DHS.

Dunn has estimated the number of certified

organic producers in the U.S.2 3 Dunn’s 1995

work, a USDA study, estimated the number

of certified producers at 4,060 in 1994; this

estimate was used in the first proposal.

Dunn’s 1997 work reported 4,060 certified

organic farms in 1994 and 4,856 in 1995.

Data collected by AMS indicate that the

number of organic farmers increased about 12

percent per year and the number of organic

handlers increased at about 11 percent per

year during the period 1990 to 1994. OFRF

survey efforts indicate that growth has

continued, although it is not clear whether

the growth rate has changed. Similarly,

growth in retail sales, the addition of meat

and poultry to organic production, and the

possibility of increased exports suggest that

the number of operations has continued to

increase. Lacking an alternative estimate of

the growth rate for the number of certified

organic producers, we use the average growth

rate of about 14 percent from Dunn’s 1997

study. The true rate of growth could be

higher or lower. Applying the 14-percent

growth rate to Dunn’s estimate of certified

producers in 1995 gives an estimate of 8,200

organic producers for 1999.

An adjustment is needed to account for the

number of producers who are practicing

organic agriculture but who are not certified

and who would be affected by this proposal.

We assume that the number of organic but

not certified producers in 1999 is about

4,000. This assumption is based on very

limited information about the number of

registered but not certified organic producers

in California in 1995. Thus, the total number

of organic producers used in assessing the

impact of the rule is 12,176 in 1999.

Little information exists on the numbers of

handlers and processors. USDA has

estimated that there were 600 entities in this

category in 1994. In California, there were

208 registered organic processed food firms

in 1995 and 376 in 1999, a growth rate of 20

percent.4 We assume that this growth rate is

applicable to the U.S. and project 1,250

handlers in 1999. Again, the rate of growth

could be higher or lower.

SBA Definitions of Small Entities

Small business size standards, Standard

Industrial Code (SIC) (13 CFR part 121), are

developed by an inter-agency group,

published by the Office of Management and

Budget, and used by SBA to identify small

businesses. These standards represent the

number of employees or annual receipts

constituting the largest size that a for-profit

enterprise (together with its affiliates) may be

and remain eligible as a small business for

various SBA and other Federal Government

programs.

Small businesses in the agricultural

services sector, such as certifying agents,

include firms with average annual revenues

of less than $5 million (SIC Division A Major

Group 7). Producers with crop production

(SIC Division A Major Group 1) and annual

average revenues under $500,000 are small

businesses. Producers with livestock or

animal specialities are also considered small

if annual average revenues are under

$500,000 (SIC Division A Major Group 2),

with the exception of custom beef cattle

feedlots and chicken eggs, which are

considered small if annual average revenues

are under $1,500,000. In handling operations,

a small business has fewer than 500

employees (SIC Division D Major Group 20).

Based on SBA’s small business size

standards for the agricultural services sector,

it is not likely that many, if any, of the 49

domestic certifying agents have annual

revenue greater than $5 million. Based on

anecdotal information, only a few private,

for-profit, certifying agents might be

categorized as a large business. All private,

non profit, and State certifying agents would

be considered small by SBA’s standards.

Even if State certifying agents do not exceed

the revenue threshold, they would not be

considered to be small entities under the Act

if the agents are an arm of state government.

Only government jurisdictions with

populations under 50,000 are considered to

be small entities under section 601(5) of the

Act.

Based on SBA’s small business size

standards for producers, it is likely that

almost all organic producers would be

considered small. The OFRF survey asked for

the producer’s total gross organic farming

income during 1997. Only 35 (less than 3

percent) of the survey respondents reported

gross income greater than $500,000, the

SBA’s cutoff between small and large

businesses. Over 70 percent reported gross

income of less than $50,000. The OFRF

survey does caution readers about potential

survey ‘‘errors.’’ It is particularly important

to emphasize potential ‘‘non-response error,’’

that is, it is unknown if those who responded

to the survey accurately represent the entire

population of certified organic growers. Also,

some producers combine organic and

conventional production on the same

operation, some with total sales that may

exceed $500,000. However, it is likely that a

majority of organic producers would be

considered small.

It is also likely that the vast majority of

handlers would be considered small, based

on SBA’s small business size standards for

handlers. Based on informal conversations

with organic certifying agents, about 25

(about 2 percent) of the estimated 1,250

organic handlers have more than 500

employees. This includes firms that handle

or process both organic and conventional

foods.

Costs of This Proposal

Several requirements to complete this RFA

overlap with the RIA and the PRA. In order

to avoid duplication, we combine some

analyses as allowed in section 605(b) of the

Act. This RFA provides information specific

to small entities, while the RIA or PRA

should be referred to for more detail. For

example, the RFA requires an analysis of the

proposed rule’s costs to small entities. The

RIA provides an analysis of the benefits and

costs of this proposal. This RFA uses the RIA

information to estimate the impact on small

entities. Likewise, the RFA requires a

description of the projected reporting,

recordkeeping, and other compliance

requirements of the proposed rule. The PRA

section estimates the reporting and

recordkeeping (information collection)

requirements that would be required by this

proposal from individuals, businesses, other

private institutions, and State and local

governments. The burden of these

requirements is measured in terms of the

amount of time required of program

participants and its cost. This RFA uses the

PRA information to estimate the burden on

small entities.

The estimated direct costs of accreditation

for certifying agents and certification for

producers and handlers under the first

proposal issued in December 1997 and this

proposal are shown in table 1 and discussed

in the following sections. More specific

details regarding these costs are found in the

RIA.

TABLE 1.—ESTIMATED DIRECT COSTS OF ACCREDITATION AND CERTIFICATION

First proposal This proposal

1st year cost 2nd year cost 1st year cost 2nd year cost

Certifying Agents:

Accreditation application fee .................................................................... $640 $640 $0 $0

USDA administrative fee .......................................................................... 2,000 2,000 0 0

Estimated site evaluation fee ................................................................... 3,500 1 1,530 to

3 2,050

1

Annual review fee ..................................................................................... 2 2 190 to 760

13648 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

5 Graf, Anita and Luanne Lohr. 1999. Analysis of

certification program costs. Working Paper, Fund

for Rural America project, Market Development for

Organic Agriculture Projects, Grant No. 97–36200–

5.

TABLE 1.—ESTIMATED DIRECT COSTS OF ACCREDITATION AND CERTIFICATION—Continued

First proposal This proposal

1st year cost 2nd year cost 1st year cost 2nd year cost

Total Fees ......................................................................................... 6,140 min. 2,640 min. 1,530 min. 190

Producers:

Estimated certification fee 4 ...................................................................... 413 413 800 730

USDA fee .................................................................................................. 50 50 0 0

Total Fees ......................................................................................... 463 463 800 730

Handlers:

Estimated certification fee 4 ...................................................................... 943 943 1,825 1,665

USDA fee .................................................................................................. 500 500 0 0

Total Fees ......................................................................................... 1,443 1,443 1,825 1,665

1Should certifying agents wish to become accredited in additional areas for which they have not been accredited previously, site evaluation

fees will be charged. 2First proposal: Included in application and administrative fees. This proposal: Certifying agents are required to submit annual reports to

USDA. Review of these reports is expected to range from 2 to 8 hours at an approximate rate of $95 per hour. 3 During the first 18 months, site evaluation for initial accreditation will involve two reviewers. One reviewer would come from the Quality Systems Certification Program audit staff and would be familiar with ISO Guide 65 verification; the other reviewer would come from the National Organic Program staff and would be familiar with requirements of the organic program. The two would conduct the site evaluation jointly. We anticipate only one reviewer would be required after the 18-month transition period. The estimated site evaluation fee shown here includes per diem

and travel costs for two reviewers plus miscellaneous charges related to accreditation. Site evaluations for smaller certifying agents are estimated to take 3 days, with 5 days for larger certifying agents.

For the first 18 months after implementation of the NOP, hourly rates will not be charged to certifying agents for accreditation. The estimated

fee shown here includes only travel and per diem expenses. At an approximate rate of $95 per hour, hourly charges would add an estimated

$4,560 to $7,600 for 2 reviewers during the first 18 months, and $2,280 to $3,800 for 1 reviewer after the first 18 months or for renewal of accreditation. 4First proposal: Estimated certification fees at that time were based on the average of fees charged by a representative group of certifying

agents (private non-profit, private for-profit and a State agency).

This proposal: Estimated certification fees are calculated from a 1999 study by Graf and Lohr 5 which, for a selection of certification agents,

provides certification costs for four hypothetical farm sizes: (1) Small Farm (‘‘Family Farm’’): 25 acres, $30,000 annual sales, 5 hours to certify;

(2) Medium Farm (‘‘Cottage Industry’’): 150 acres, $200,000 annual sales, 6 hours to certify; (3) Large Farm (‘‘Commercial Farm’’): 500 acres,

$800,000 annual sales, 8 hours to certify; and (4) Super Farm: 3,000 acres, $10,000,000 annual sales, 16 hours to certify. Our estimated certification fees only include those charged for small and medium farms, because most organic producers fall into these categories as defined by

Graf and Lohr. In the 1997 OFRF survey, 90 percent of respondents had gross organic farming income less than $250,000, with 82 percent less

than $100,000.

The average current certification cost for most organic producers is about $775 for the first year of certification ($416 for small and $1,136 for

medium farms) and about $705 for subsequent years ($371 for small and $1,036 for medium farms). An estimated $25 is added to cover the

costs associated with the National Organic Program for an estimated first year certification fee of $800 and subsequent year certification fee of

$730 for producers. Larger producers could expect higher fees.

Because Graf and Lohr do not estimate certification fees for handlers, we estimate these fees by applying the December 1997 ratio of handlerto-producer certification fees, 2.28, to the estimated first and subsequent year certification fees for producers, resulting in fees of $1,825 and

$1,665, respectively.

Direct Costs to Certifying Agents

We have identified 36 private certifying

agents and 13 State programs providing

certification. These 49 domestic entities are

considered likely applicants during the first

12 months, as are an estimated 10 foreign

certifying agents. An unknown number of

new entrants to the certifying business may

also apply. However, over the last 10 years,

the number of certifying agents does not

appear to have grown significantly, with the

net effect of entries and exits maintaining a

population of U.S.-based certifying agents at

about 40 to 50. Of the 49 domestic certifying

agents, based on information discussed

previously, we estimate that the 36 private

certifying agents are small.

In order to identify the certifying agents

that might be expected to face more

significant impacts as a result of this

proposal, we analyzed the amount of

revenues from certification fees received by

certifying agents. Total certification fees

collected by the certifying agents in 1994

ranged from about $2,500 to about $400,000,

with most certifying agents clustered around

the low or high end of this range. This

amount is based on information collected by

AMS from a sample of 16 private and State

certifying agents for certification fees

collected in 1994. To determine a cutoff

point for small certifying agents, the State

certifying agents were eliminated from the

sample because these agents are an arm of

State government and are not considered

small entities. Of the remaining 11 private

certifying agents, 6 (or 55 percent) collected

less than $25,000 each in total certification

fees, and the other 5 (45 percent) each

collected more than $200,000. Based on this

information and knowledge of the organic

industry, for purposes of analyzing the cost

of accreditation, we estimate that about 55

percent of private certifying agents are small

with total annual revenue from certification

of less than $25,000.

Certification fees probably do not

constitute total income for most private

certifying agents and, thus, are not a

complete measure of economic size. Some

certifying agents also earn revenue from a

number of other sources, such as sale of

publications, membership dues, training

workshop and conference fees, farmers

markets, grants, or donations.

Certifying agents will be assessed for the

actual time and travel expenses necessary for

the National Organic Program to perform

accreditation services. The National Organic

Program will charge the same hourly fees as

are charged for the voluntary, fee-for-service

program provided by AMS to certification

bodies requesting conformity assessment to

the International Organization for

Standardization (ISO) Guide 65, ‘‘General

Requirements for Bodies Operating Product

Certification Systems.’’ We expect that at the

time the National Organic Program’s final

rule is implemented, the fees will be

approximately $95 per hour, with higher

overtime and holiday rates. Certifying agents

will be charged for travel, per diem, and

other related costs associated with

accreditation. Applicants for accreditation

will be required to pay at the time of

application a nonrefundable fee of $500,

which is applied to the applicant’s fee for

services account. This fee is credited against

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13649

6 During the first 18 months, site evaluation for

initial accreditation will be conducted jointly by

two reviewers. Two reviewers offers: (1) anticipated

faster turn-around; (2) different areas of expertise—

one reviewer would come from the Quality Systems

Certification Program audit staff and would be

familiar with ISO Guide 65 verification, while the

other reviewer would come from the National

Organic Program staff and would be familiar with

the requirements of the program; and (3)

consistency with the organic industry’s desire to

have reviewers from both areas of expertise during

ISO Guide 65 assessments. AMS would consider

sending one reviewer, rather than two, for the site

evaluation of small certification agents if an

individual possessing both reviewing skill and

knowledged of the NOP is available. We anticipate

only one reviewer would be required after the 18-

month transition period.

7Adequate advance notice will be given to

certifying agents to allow them the opportunity to

organize their records prior to the audit and

minimize the costs of accreditation.

8Fetter, Robert T. 1999. Economic Impacts of

Alternative Scenarios of Organic Products

Regulation. Senior Honors Thesis. University of

Massachusetts, Amhearst, MA.

any subsequent costs of accreditation arising

from the site evaluation.

During the first 18 months after the

National Organic Program has been

implemented, USDA will not impose hourly

charges on certifying agents. The direct costs

for certifying agents to obtain accreditation

will be limited to per diem and

transportation costs for the site evaluation,

which is required every 5 years. We estimate

these costs to be $1,530 for a small certifying

agent and $2,050 for a larger certifying agent.

These estimates are based on, for small and

larger certifying agents, two reviewers with 3

and 5 days of per diem, $500 to $600 in

transportation costs, and $50 in

miscellaneous charges related to

accreditation. 6 In subsequent years,

certifying agents will be required to submit

an annual report. Review of this report is

anticipated to range from 2 to 8 hours at the

ISO Guide 65 hourly rate. If certifying agents

wish to become accredited in additional

areas for which they were not accredited

previously, site evaluation fees will be

charged.

After the first 18 months of the National

Organic Program, USDA estimates that the

costs of a site evaluation visit, required every

5 years, could be $3,070 for small certifying

agents and $4,850 for larger certifying agents.

These estimates are based on, for small and

larger certifying agents, one reviewer with 3

and 5 days of per diem, $500 to $600 in

transportation costs, $50 in miscellaneous

charges related to accreditation, and 24 to 40

hours (3 to 5 work days) at an anticipated

maximum hourly rate under ISO Guide 65 of

$95. Higher hourly rates will be charged for

overtime and for work on holidays.

The cost of a site evaluation will vary with

the cost of travel from the auditor’s work

station to the applicant’s place of business.

Auditors live in different parts of the

country, and travel costs might be reduced

when the distance traveled is reduced. The

lowest cost airfare would be used whenever

possible. In some cases, site evaluations

might be grouped geographically in order to

reduce travel expenses. The per diem rate

will also vary depending on the rate set for

the certifying agent’s location as established

by the General Services Administration.

Several factors will influence the amount

of time needed to complete an accreditation

audit. An operation in which documents are

well organized and that has few

nonconformities within the quality system

will require less time for an audit than an

organization in which documents are

scattered and there are many

nonconformities.7 Similarly, in a follow up

audit, operations that lack organization in

their documents and that had a large number

of nonconformities during previous audits

will require a greater amount of time. The

scope of a follow up audit is to verify the

correction of nonconformities and to evaluate

the effectiveness of the corrections. Certifying

agents are able to control these cost factors

by making certain that documents are well

organized and by educating themselves about

quality systems.

The complexity of an certification agency’s

organization also will affect the time needed

to complete an audit. An agency with a

central office in which all certification

activities take place will require less time for

document review and site evaluation than a

chapter organization or a business structured

so that responsibility for making certification

decisions is delegated outside of the central

office. In the latter cases, the auditors’

document review would require additional

time and site evaluation that would extend

from the central office to one or more of the

chapters or to the site to which the

certification decision making is delegated.

Other factors determine the amount of time

needed to complete an accreditation audit.

For an agency with numerous clients,

auditors may need to spend more time

reviewing client files or examining business

operations than they would have to spend for

a smaller agency. Audit of an agency with a

large number of processor clients may require

an extended amount of time to follow audit

trails, confirm that organic ingredients

remain segregated from nonorganic

ingredients, and establish that foreignproduced ingredients originate from

approved entities. Finally, the complexity of

the agricultural practices certified could

influence the amount of time necessary to

complete an accreditation audit. An agency

whose certification covers only producers

who grow and harvest one crop per field per

year, such as wheat or sugar beets, could

quickly be audited. An agency whose

producers grow several different crops per

field per year or an agency that certifies

producers of crops and livestock as well as

handlers would require a greater amount of

time.

All of these factors will impact both small

and large certifying agents. A small certifying

agent could be assumed to have a less

complex organization or have fewer clients,

and, thus, potentially less time would be

necessary for review. However, other factors,

such as the degree of paperwork organization

or the complexity of the agricultural practices

certified, may influence the time needed for

review for any size of business.

Comments from the first proposal indicate

that the average accreditation cost for a

certifying agent may range from $3,000 to

$5,000 per year for small to medium-size

certifying agents to less than $10,000 per year

for the largest certifying agents.

Currently, relatively few certifying agents

have third party accreditation because

accreditation of certifying agents is

voluntary. Fetter reports that in a sample of

18 certification programs, selected to include

six large, private programs, six smaller

private programs, and six State programs,

four programs were accredited and one had

accreditation pending.8 All of these were

large private certifying agents. Three of the

certifying agents identified by Fetter as

accredited requested ISO Guide 65

assessments by USDA and have been

approved for selling organic products into

the international market. Those certifying

agents currently accredited by third parties

will likely pay less for USDA accreditation

because their documents are organized and

they have fewer nonconformities.

Those certifying agents who have been

operating without third party accreditation

will face new costs—the costs of

accreditation—under this proposal.

Compared to the direct costs of $3,000 to

$5,000 per year indicated by the commenters,

the direct costs of USDA accreditation will be

smaller, with estimated site evaluation fees

(covering 5 years) ranging from $3,070 to

$4,850 for the first year and an annual review

fee ranging from $190 to $760 for subsequent

years. Furthermore, the direct costs would be

substantially less for those certifying agents

obtaining accreditation during the first 18

months while USDA does not impose an

application fee or hourly charges and limits

direct costs to travel and per diem costs.

It is expected that all certifying agents will

set their fee schedule to recover costs for

their certification services, including the

costs of accreditation. The larger the number

of clients per certifying agent, the more fixed

costs can be spread out. It is possible,

however, that small certifying agents could

be significantly impacted by this proposal

and may not be able to continue in business

from a financial standpoint.

Projected Reporting, Recordkeeping, and

Other Compliance Requirements of Certifying

Agents

In addition to the direct costs, the

regulation will impose administrative costs

on certifying agents for reporting,

recordkeeping, residue testing, and other

compliance requirements. The actual amount

of the additional administrative costs that

would be imposed by the final rule is

expected to be different for those entities that

would begin their activities only after the

national program is implemented. Certifying

agents that currently are active in the organic

industry already perform most of these

administrative functions; therefore, the

additional costs to them would depend upon

the extent to which their current practices are

different from the requirements of the final

regulation. Projected reporting,

recordkeeping, and other compliance

requirements of certifying agents are

discussed in greater detail in the PRA and the

RIA.

13650 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

9We asked for comments on the first proposal as

to whether the current statutory limitation of $5,000

for exemption from certification should be raised to

$10,000 or to another amount and why such an

increased monetary limitation for exemption from

certification would be appropriate. Few

commenters offered recommendations as to a

maximum sales volume to exempt producers.

Amounts ranged from $2,000 to $50,000, with a few

suggesting $10,000 and $20,000 exemptions. These

proposed exemption levels and justifications in

comments received are not sufficiently consistent

enough for us to recommend changing the statute

requirement of the $5,000 maximum sales volume

exemption.

10California State law requires organic farmers to

register with the State. Certification is voluntary at

the current time.

11 Klonsky, Karen, and Laura Tourte. 1998.

Statistical Review of California’s Organic

Agriculture, 1992–95. Report prepared for the

California Department of Food and Agriculture

Organic Program. Cooperative Extension,

Department of Agricultural Economics, University

of California, Davis.

Costs to Producers and Handlers

Under this proposal, USDA will not

impose any direct fees on producers and

handlers. Certifying agents will establish a

fee schedule for their certification services

that will be filed with the Secretary and

posted in a place accessible to the public.

Certifying agents will provide all persons

inquiring about the application process with

a copy of their fees. The certifying agent may

only charge those fees that it has filed with

the Secretary. Furthermore, the certifying

agent will provide each applicant with an

estimate of the total cost of certification and

an estimate of the annual costs of updating

the certification. However, the certifying

agent may require applicants to pay at the

time of application a nonrefundable fee of no

more than $250 which must be applied to the

applicant’s fee for services account.

Currently, supply and demand for

certification services determine the fees

charged in most areas. Some States charge

minimal fees for certification and instead

subsidize operating costs from general

revenues. According to separate studies by

Fetter, and Graf and Lohr, the majority of

certifying agents structure their fee schedules

on a sliding scale based on a measure of size,

usually represented by the client’s gross sales

of organic products but sometimes based on

the acres operated. Some certifying agents

charge an hourly rate for inspection and

audit services.

Graf and Lohr have applied fee schedules

provided by nine certifying agents to four

hypothetical farms—small, medium, large,

and a super farm. They define ‘‘small’’ as a

25-acre farm with annual sales of $30,000

that would take 5 hours to certify. Note that

our alternative definition of small (under

$5,000) is different. Table 2 shows the total

first-year cost and subsequent-year cost for

certification for small farms; the RIA shows

detail on other size farms.

TABLE 2.—CERTIFICATION COSTS AMONG A SELECTION OF CERTIFYING AGENTS

[For a small farm: 25 acres, $30,000 annual sales, 5 hours to certify]

Certifying agent

Total cost to

certify in first

year

Total cost to

certify in subsequent years

California Certified Organic Farmers ....................................................................................................................... $750 $425

Farm Verified Organic ............................................................................................................................................. 585 510

Florida Certified Organic Growers and Consumers ................................................................................................ 325 325

Northeast Organic Farming Association—Vermont ................................................................................................ 335 300

Oregon Tilth Certified Organic:

—Inside Oregon ............................................................................................................................................... 608 454

—Outside Oregon ............................................................................................................................................. 568 424

Organic Crop Improvement Association:

—Wisconsin chapter ......................................................................................................................................... 315 290

—Virginia chapter ............................................................................................................................................. 258 233

Texas Department of Agriculture ............................................................................................................................. 90 90

Washington State Department of Agriculture .......................................................................................................... 330 330

NutriClean/Scientific Certification Systems ............................................................................................................. n/a 700

Average cost ............................................................................................................................................................ 416 371

The Texas Department of Agriculture

program is the low-cost certifying agent. The

high-cost certifying agent differs from firstyear to subsequent-year certification. Graf

and Lohr’s study indicates that even small

farms require significant time for the

certification process and this time does not

increase proportionately as farm size

increases. None of these certification

programs mentions costs for residue testing

which the National Organic Program will

require in the form of preharvest testing

when there is reason to believe that

agricultural products have come in contact

with prohibited substances. Preharvest

testing is expected to be infrequent. Certifiers

will recover the costs of preharvest testing

through explicit charges to the producer

whose crop is tested, or through a generally

higher fee structure that spreads the expected

costs of tests over all clients.

Certifying agents will continue to set their

own fee schedules under the organic

program. Certifying agents will have to set

fees to cover any net additional costs of doing

business under the National Organic

Program. Accreditation and administrative

costs are incremental costs to existing

certifying agents’ businesses. Some certifying

agents might drop their third party

accreditation saving perhaps $3,000 to $5,000

per year, but most certifying agents are not

currently paying for accreditation.

This proposal imposes no requirements

that would cause certifying agents that are

presently using a sliding scale type fee

schedule to abandon their current fee system.

Certifying agents could recover their net

additional costs by increasing their flat fee

component, their incremental charges, or

both. Because accreditations are renewed

only every 5 years, certifying agents will have

5 years to recover their net new costs.

Certifying agents who become accredited

during the first year of the program would

have fewer direct costs to recover, because

they will not be charged the application fee

and hourly charges for accreditation services.

The OFPA established a small farmer

exemption from certification and submission

of organic plans for small producers with a

maximum of $5,000 in gross sales of organic

products. For purposes of the exemption, the

OFPA defines a ‘‘small farmer’’ as those who

sell no more than $5,000 annually in value

of agricultural products. In this proposal, we

have clarified that the exemption applies to

those who sell no more than $5,000 annually

in value of organic products.9 According to

the OFRF survey, 27 percent of currently

certified farms that responded to the survey

would fall under this exemption. This

percentage does not take into account those

organic farms that are not currently certified

by a private or State certifying agent. A study

of California organic farms found that, of all

organic farms 10 in 1994–95, about 66 percent

have revenues less than $10,000.11 If

California is representative and the

distribution within the sub-$10,000 category

is uniform, then a third of the farms would

be classified as small for purposes of the

statutory exemption with annual sales less

than $5,000. Based on the California study

and the OFRF survey results, we estimate

that between 25 and 33 percent of organic

producers are small and would qualify for

exemption from the certification

requirements.

We have estimated that there are between

3,000 and 4,000 small organic producers that

will be exempt from certification. These

producers would be required to comply with

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13651

the production and handling standards and

labeling requirements set forth under the

National Organic Program. We anticipate that

this exemption will be used primarily by

small market gardeners and hobbyists who

sell produce and other agricultural products

at farmers markets and roadside stands to

consumers within their communities. By

being exempt from certification, the current

certification costs (table 2) estimated at an

average $416 for the first year and an average

$370 for subsequent years have been

eliminated.

Exempt producers will be allowed to

market their products as organically

produced without being certified by a

certifying agent. Products marketed by

exempt producers cannot be represented as

certified organic or display the USDA organic

seal. Products produced or handled on an

exempt operation may be identified as

organic ingredients in a multiingredient

product produced by the exempt operation,

but they may not be identified as organic in

a product processed by others. These

limitations may discourage some small

producers from seeking exemption, who

instead may choose to become certified. In

this case, the costs of certification would

apply. The value associated with having

organic certification may outweigh the costs

of certification.

Those currently receiving voluntary

certification will likely see a modest increase

as the certifying agent passes on its cost

incurred under the National Organic

Program. Those not currently receiving

certification and producing over $5,000

annually in organic products will be required

to become certified, and they will incur the

actual costs of certification.

We have estimated that there about 98

percent of the 1,250 organic handlers are

small. A handling operation or a portion of

a handling operation is exempt from

certification requirements if it has annual

gross sales of less than $5,000; is a retail food

establishment that handles organically

produced agricultural products but does not

process them; handles agricultural products

that contain less than 50 percent organic

ingredients by weight of finished product; or

does not use the word, ‘‘organic,’’ on any

package panel other than the information

panel if the agricultural product contains at

least 50 percent organic ingredients by

weight of finished product. A handling

operation or specific portion of a handling

operation is excluded from certification if it

handles packaged certified organic products

that were enclosed in their packages or

containers prior to being acquired and

remain in the same package and are not

otherwise processed by the handler, or it is

a retail food establishment that processes or

prepares on its own premises raw and readyto-eat food from certified organic products.

Otherwise, to be certified organic, handlers

must pay for certification fees estimated at

$1,800 per year and fulfill recordkeeping

requirements.

In order to identify handlers that might be

expected to face more significant impacts as

a result of this proposal, we attempted to

analyze handlers’ revenue from organic sales.

Sales data indicate that gross sales of organic

production total less than $500,000 per firm

for most certified handlers. Information from

the California DHS, where State law requires

organic processors to register, gives some

indication of the size distribution. Of the 208

processors registered with the State in 1995,

80 firms (38 percent) reported gross sales of

$50,000 or less, and 50 firms (24 percent) had

gross sales exceeding $500,000. In midSeptember 1999, 376 processors were

registered with the State, with 107 firms (28

percent) reporting gross sales of $50,000 or

less and 112 firms (30 percent) reporting

gross sales exceeding $500,000. We use this

California information to estimate that 25 to

30 percent of handlers have gross sales of

$50,000 or less and could be significantly

impacted by this proposal. Information

needed to estimate the number of exempt or

excluded handlers is not available.

Some States, such as Texas and

Washington, charge producers and handlers

nominal fees for certification, and it is

possible that more States might provide

certification services as the National Organic

Program is implemented. Other States, such

as Minnesota, have cost-share programs to

help offset costs for organic producers.

Projected Reporting, Recordkeeping, and

Other Compliance Requirements for

Producers and Handlers

In addition to the fees for certification, the

regulation will impose administrative costs

on producers and handlers for reporting,

recordkeeping, residue testing, and other

compliance requirements. The actual amount

of the additional administrative costs that

would be imposed by the final rule is

expected to be different for those entities that

would begin their activities only after the

national program is implemented. Producers

and handlers who currently are active in the

organic industry already perform most of

these administrative functions; therefore, the

additional costs to them would depend upon

the extent to which their current practices are

different from the requirements of the final

regulation. Projected reporting,

recordkeeping, and other compliance

requirements of certifying agents are

discussed in greater detail in the PRA and the

RIA.

Federal Rules

No other burdens are expected to fall upon

the organic industry as a result of

overlapping Federal rules. This proposed

regulation would not duplicate, overlap or

conflict with any existing Federal rules. In

preparing this proposed regulation, AMS

consulted other Federal agencies such as the

Food and Drug Administration (FDA), the

Environmental Protection Agency (EPA), the

Bureau of Alcohol, Tobacco and Firearms

(ATF), and the USDA’s Food Safety and

Inspection Service (FSIS) to ensure that this

proposed regulation would complement

existing regulations.

Alternatives to This Proposal

We believe that our proposed regulation

could have a significant impact on a

substantial number of small businesses.

However, we have considered several options

with the intention of mitigating negative

economic impacts of the fees. We did not

consider alternatives, beyond the previously

discussed exemptions, that would mitigate

the indirect costs of this rule on small

entities. The following options were

considered by AMS prior to and during the

development of this proposal:

Option 1: First Proposal Issued December

1997

The first proposal suggested a fee for direct

services model which combined a fixed fee

for all farmers, handlers, and certifying

agents, with a variable fee for certain direct

services provided by AMS in the

accreditation of certifying agents.

Table 1 includes estimated direct costs of

accreditation and certification for the first

proposal and this proposal; the fees in this

proposal are discussed in prior sections of

this RFA. The fee provisions in this proposal

have been changed significantly, due in large

part to comments received regarding the first

proposal.

In overall design, the first proposal is

similar to this proposal. USDA would

accredit certifying agents who would in turn

certify producers and handlers. USDA

proposed to charge certifying agents a $640

application fee, costs for a site evaluation fee

that were estimated at $3,500, and a $2,000

administrative fee. Producers would be

charged a $50 USDA fee in addition to the

fees imposed by the certifying agent.

Handlers would be charged a $500 USDA fee

on top of the certifying agent’s fees. The fee

structure was intended to recover the full

costs of operating the National Organic

Program, which was estimated at $1 million

annually. Producers with $5,000 or less in

annual gross sales of agricultural products

and handlers with annual gross sales of less

than $5,000 were exempt from certification

as provided for in the OFPA.

The OFPA permitted but did not obligate

USDA to charge fees. The first proposal

sought to set fees to recover the full costs of

the National Organic Program. Public

comment generally stressed that the fees

were too high. Most certifying agents have

operated without third party accreditation.

Thus, USDA fees were a substantial increase

in the costs of doing business for most

certifiers. For producers the direct fee of $50

was a 12 percent increase over the estimated

average fee paid for certification. For

certifying agents the $500 fee would have

been a 53 percent increase over estimated

average certification fees. To the extent the

program raised certifying agent costs, these

costs would have been passed through to

producers and handlers. Commenters stated

that many certifying agents had few clients

and to pass through the estimated direct costs

of accreditation ($6,140) would make the

costs of certification higher than producers

could afford.

Comments were received opposing fee

provisions in the first proposal. Most of these

commenters expressed the belief that the

proposed fees would price small farmers,

handlers, and certifying agents out of the

organic industry. Many commenters stated

that the proposed fees favored large farming

operations and suggested a sliding scale fee

system, rather than the flat fee system

discussed in the first proposal, to

13652 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

accommodate the economic needs of small

farmers, handlers, and certifying agents. Most

suggested that small farmers and processors

be exempt from the payment of fees. A more

comprehensive review of the comments

appears in subpart G entitled

‘‘Administrative’’ of this proposal.

Additional comments were received that

specifically referred to the section entitled

‘‘Regulatory Flexibility Act and Effects on

Small Businesses’’ in the first proposal. Most

of these commenters expressed the belief that

costs were understated and benefits were

overstated. Commenters thought the

proposed fees were excessive, unacceptable,

and burdensome and would price many

small farmers, handlers, and certifying agents

out of the organic industry. Some thought

that this appeared to be the actual intent of

the first proposal. They also supported a

sliding scale fee system, rather than the flat

fee system originally proposed. Some stated

that the $5,000 exemption level was much

too low. Producers objected to having to pay

the certification and inspection fees prior to

knowing whether they would actually set a

crop, if the crop would grow, or what

percentage of the crop might be harvested.

Compared to this proposal, the first

proposal would have been more costly to the

organic industry in terms of direct costs for

accreditation, and to producers and handlers

in terms direct fees and the costs which

certifying agents would have attempted to

pass through. However, the current proposal

has not set fees at levels to recover all

program costs and during an 18 month

transition period will not require application

fees or charge for hourly services. Costs that

are not recovered through fees will be

covered by appropriated funds, meaning that

taxpayers at large will bear some of the costs

of the proposed organic program. Thus, in

terms of fees and other direct costs, the first

proposal was more burdensome on the

organic industry.

The first proposal also contained new

information collection requirements, a

description of those requirements, and an

estimate of the annual economic burden on

the organic industry. We received responses

specifically referring to the information

collection requirements of the first proposal.

Among the comments made were that the

requirements would be unaffordable by small

businesses and that paperwork requirements

should be kept small, simple, and to a bare

minimum, especially for small producers.

Recordkeeping requirements for certifying

agents in the first proposal that required

certifying agents to maintain all records

concerning their activities for 10 years have

been changed to reduce the burden.

Commenters expressed concern that this

requirement was excessive and unnecessary.

We agree and are instead proposing that there

be three categories of records with retention

periods: (1) Records created by certifying

agents regarding applicants for certification

and certified operations to be maintained 10

years, consistent with OFPA requirement for

maintaining all records concerning activities

of certifying agents; (2) records obtained from

applicants for certification and certified

operations to be maintained 5 years, the same

as OFPA requirement for the retention of

records by certified operations; and (3) other

records created or received by certifying

agents to be maintained for five years.

Option 2: Fee per Certification Model

A fee per certification model was

considered but not used. This model would

have based accreditation fees on the numbers

of farmers and handlers certified.

Specifically, certifying agents would pay a

fee to USDA for each certification performed.

The smallest one-half of certifying agents,

who certify about 10 percent of organic

operations, would pay about 10 percent of

the estimated costs associated with

accreditation. The largest 10 percent of

certifying agents, who certify about 45

percent of organic operations, would pay

about 45 percent of accreditation costs. The

remaining 40 percent of certifying agents in

the middle would pay 45 percent of the costs.

The fee per certification would be fixed,

regardless of the size of the operation being

certified. This feature has the potential to

create a barrier to market access for the

smaller operations. Certifying agents who

charge farmers and handlers for certification

based on size and scope of the operation

would maximize their profits by certifying

only the larger farmers and handlers from

whom they would realize a higher return. If

certifying agents were to discriminate in this

manner in favor of larger operations, smaller

farmers and handlers would find the

certification services available to them to be

relatively limited and possibly more

expensive than under the fee for direct

services model that includes a variable fee for

site visits. A fixed fee per certification also

would not take into account, in the

distribution of costs, the large difference in

size between processors and primary

producers. Processors are generally much

larger than primary producers in terms of

both total output and total revenue.

Option 3: Exemption of Small Certifying

Agents From Accreditation

Small certifying agents (those with annual

revenues of $25,000 or less) may not have the

resources to meet all of the requirements of

the rule, such as accreditation fees,

administrative and personnel requirements,

and conflict of interest restrictions, based on

their current structure and revenues.

Therefore, exempting the smallest certifying

agents from the accreditation requirement,

similar to small producers being exempt from

certification requirements, could mitigate any

potential adverse impact of the rule on this

group. This option, however, would require

a legislative amendment to the OFPA.

The exemption of the smaller certifying

agents from accreditation would carry with it

many of the limitations resulting from the

absence of Federal oversight. International

trade would likely be limited to products

certified by accredited certifying agents.

Protecting domestic consumers from

inappropriate organic claims on the labels of

products certified by exempt certifying

agents would likely lead to greater confusion

over labels in the marketplace. Federal

enforcement agencies such as the FDA, the

ATF, and FSIS might wish to distinguish

accredited certifying agents from those

certifying agents who are exempt, perhaps by

requiring accredited certifying agents’ clients

to include the USDA seal on their product

labels.

One of the purposes of the OFPA described

in the statute is to assure consumers that

organically produced products meet a

consistent standard. Without Federal

oversight of certifying agents, it would be

difficult to ensure that one national standard

of production and handling for agricultural

products would be employed. The result

could be the continuation of reciprocity

agreements between small, exempt certifying

agents and large accredited ones. This could

result in a cost for small entities, while

providing less benefit to certified producers

and handlers than would be provided them

by accreditation of all certifying agents.

We request comments from all interested

parties, particularly small businesses, as to

whether a small certifier exemption would be

beneficial or practical given the constraints

explained in this option.

Option 4: This Proposal

The new proposal includes provisions that

will mitigate the impact of the National

Organic Program, especially for small

businesses. Fixed administration fees for

producers, handlers and certification agents

have been eliminated. The fixed application

fee for accreditation also has been

eliminated. This will positively affect small

producers and handlers because fixed fees

expend a larger percentage of a smaller

operation’s total revenue.

As indicated earlier in this discussion,

certifying agent evaluation fees would reflect

actual costs for the time and travel required

to do the evaluation. It is anticipated that

smaller certification agents would benefit

because they are small and less complex than

larger certification agents. The proposed

accreditation costs would be proportional to

the actual time required to perform the

service. Several small operations could be

grouped by area to reduce travel expenses of

the evaluators.

The new labeling requirements that allow

the use of a certification agent’s seal on the

principal display panel and on the

information panel of processed product

labels also may benefit small operations.

Certification agents that have an established

consumer base may benefit by displaying

their identifying seal. Small certification

agents, whose clients more likely produce

ingredients for processed products, could

also be identified and thus share in this

benefit. Certification agents also may wish to

expand their operation by offering

verification of truthful labeling claims which

will be allowed under this proposal.

This proposal has three elements of

flexibility that are advantageous to small

entities: performance-based production and

handling standards and certifying agent

requirements; production and handling

standards that contain a range of allowable

practices; and temporary variances.

The standards in this proposal are

performance standards based on the results

of a management system, rather than

prescriptive or design standards that

prescribe specific technology or a precise

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13653

procedure for compliance. Performance

standards allow for flexibility in compliance,

which is especially important to organic

farmers, handlers and certifying agents with

limited resources. Performance standards

promote innovation and the development of

new technologies which would help the

industry as a whole be more efficient.

Finally, they provide a less costly means of

compliance than design standards. Small

entities, in particular, benefit because

compliance with performance standards

allows for the adaptation of existing systems

without costly capital investment.

This proposal allows for flexibility by

providing a range of production and handling

practices that can be used to maintain the

organic integrity of the operation. The use of

an allowed practice or substance must be

described in the organic plan as a record for

consideration by the certifying agent during

a certification review. The proposal provides

temporary variances in the case of natural

disasters, damage from wind, floods and the

like, and for research trials. The benefit of

variances is that a producer or handler would

not lose its investment in an organic

operation because of certain conditions that

are beyond the producer or handler’s control.

Variances also enhance performance

standards by allowing additional innovation

and experimentation. This is especially

important to producers and handlers who

depend on the organic price premium.

Conclusion

USDA has identified the entities that may

be affected by this proposal and has analyzed

the anticipated impacts of the proposal on

them based on our knowledge of the industry

and limited data. We have drawn on industry

studies, including studies completed since

the first proposal was published in 1997, as

well as information provided in comments

on the first proposal. However, we lack data

to thoroughly and quantitatively describe the

existing organic industry and quantitatively

analyze the effects of this proposal.

Whether using SBA’s small business size

standards by SIC or the alternative

definitions created for this analysis, we

believe that this proposal could have a

significant impact on a substantial number of

small businesses. Even with the flexibility

proposed in the regulation and the expanded

market opportunities brought about by

implementation of the National Organic

Program, some small certifying agents may

choose not to become accredited to provide

certifying services, and some small producers

and handlers may choose not to continue

being certified organic because the proposed

fees would be passed down to them as

certification fees. We invite comments about

the expected benefits and costs to small

entities as presented in this analysis.

Specifically, we invite comments regarding

the impact of the proposed National Organic

Program on small certifying agents,

producers, and handlers so that we might

uncover potential unintended negative

impacts on small entities.

The proposed structure of user fees

outlined in this proposal attempts to

minimize the burden of administrative costs

which will be assumed by small-scale

organic certifying agents and the producers

and handlers who use these certification

services. Certifying agents already performing

organic certification services in a State or

private capacity on the date that the

proposed national accreditation program for

organic certification is implemented will not

be required to pay the administrative costs of

applying for initial national accreditation

status; the administrative costs involved in

evaluating the accreditation status of these

agents will be absorbed by a portion of the

National Organic Program operating budget

appropriated by Congress. They will be

required to pay travel expenses for the

reviewers. New applicants seeking national

accreditation for organic certification services

will be charged a fee to cover the

administrative costs of evaluating their

suitability for accreditation, their application

fees will be structured to reflect the actual

hourly costs of having an AMS evaluator

conduct a site visit (including travel time to

and from the evaluator’s duty station and per

diem travel expenses). The departures from

the first proposal—which would have

imposed a uniform flat fee on all applicants

for national accreditation—along with the

adoption of an application fee structure

which attempts to relate the imposition of

fees to the actual costs involved in

administering the national accreditation

program, should contribute to a less

burdensome and more equitable distribution

of administrative costs across all segments of

the organic industry.

Appendix D—Paperwork Reduction Act of

1995

The Paperwork Reduction Act of 1995

(PRA) (44 U.S.C. 3506 and 3507) is designed

to minimize the burden of reporting and

recordkeeping (information collection

requirements) required by Federal

regulations on individuals, businesses, other

private institutions, and State and local

governments. The burden is an estimate of

the amount of time and the cost required of

program participants to fulfill the

information collection requirements.

Information collection requirements must

have Office of Management and Budget

(OMB) review and approval before they can

become effective. They must also be made

available for public comment, and the

comments become part of the public record.

This notice requests comments on the

proposed information collection

requirements of this proposal.

Title: National Organic Program.

OMB Number: New collection.

Expiration Date of Approval: Three years

from date of approval.

Type of Request: New.

Abstract: The Organic Foods Production

Act (OFPA) of 1990 mandates that the

Secretary develop a National Organic

Program (NOP) to accredit eligible State

program’s governing State officials or private

persons as certifying agents who would

certify producers or handlers of agricultural

products that have been produced using

organic methods as provided for in the

OFPA. This regulation is proposed: (1) To

establish national standards governing the

marketing of certain agricultural products as

organically produced products; (2) to assure

consumers that organically produced

products meet a consistent standard; and (3)

to facilitate interstate commerce in fresh and

processed food that is organically produced.

The OFPA was requested by the organic

community because of problems encountered

in the marketing of organic products. First,

there was fraudulent use of the term,

‘‘organic,’’ resulting in the mislabeling of

products, caused in part because many

consumers are willing to pay premium prices

for organic foods. Second, there was a lack

of uniformity in standards defining organic

production, causing trade disruption and

confusion among buyers, sellers, and users of

organic products. Third, there was constraint

on market growth due to the prohibition on

labeling meat and poultry products as

organic. After implementation of the NOP,

any agricultural product labeled ‘‘organic’’

will have to be from a production or handling

operation that is certified by a certifying

agent who is accredited by the U.S.

Department of Agriculture (USDA).

A proposed rule to implement the OFPA

was published in December 1997. It

contained information collection

requirements, an estimate of the annual

economic burden on the organic industry,

and a request for comments about the

burden. A few general comments were

received about the burden and they were

considered when this proposal was prepared.

Also taken into account was other

information about existing industry practices

and documents, the Initial Regulatory

Flexibility Analysis that is discussed in the

section entitled ‘‘Regulatory Flexibility Act

and the Effects on Small Businesses,’’ and the

Regulatory Impact Assessment (RIA) that is

discussed in the section entitled ‘‘Executive

Order 12866.’’ The numbers of entities

affected by this proposal are estimated in the

RIA. The RIA is attached as an appendix to

this proposal.

Reporting and recordkeeping are essential

to the integrity of the organic certification

system. They create a paper trail that is a

critical element in carrying out the mandate

of the OFPA. They serve the Agency mission,

program objectives, and management needs

by providing information on the efficiency

and effectiveness of the program. The

information affects decisions because it is the

basis for evaluating compliance with the

OFPA and the regulations, for administering

the program, for management decisions and

planning, and for establishing the cost of the

program. It supports administrative and

regulatory actions in response to

noncompliance with the OFPA and the

regulations.

In general, the information collected will

be used by USDA, State program’s governing

State officials, and certifying agents. It will be

created and submitted by State and foreign

program officials, peer review panel

members, accredited certifying agents,

organic inspectors, certified organic

producers and handlers, those seeking

accreditation or certification, and parties

interested in changing the National List.

Additionally, it will necessitate that all of

these entities have procedures and space for

recordkeeping.

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The burden on each entity is discussed

below. One major estimate made about each

entity is the number of entities likely to

participate in the NOP. The information

collection burden attempts to incorporate the

burden that will be in addition to the burden

that current organic marketers have with the

burden required of new entrants into the

field.

USDA. USDA will be the accrediting

authority. USDA will accredit domestic and

foreign certifying agents who will certify

domestic and foreign organic producers and

handlers, using information from the agents

documenting their business operations and

program expertise. USDA will also permit

State program’s governing State officials to

establish their own organic certification

programs after the programs are approved by

the Secretary, using information from the

States documenting their ability to operate

such programs and showing that such

programs meet the requirements of the OFPA

and the regulations.

States. State program’s governing State

officials may operate their own organic

certification programs. State officials will

obtain the Secretary’s approval of their

programs by submitting information to USDA

documenting their ability to operate such

programs and showing that such programs

meet the requirements of the OFPA and the

regulations. More than half of the States

currently have some standards governing the

production, handling, or labeling of organic

food and 13 States have organic certifying

programs. These programs require reporting

and recordkeeping burdens similar to those

required by the NOP. It is unknown at this

time how many States, if any, will establish

their own organic certification programs

pursuant to the OFPA and the regulations.

Estimates: 13 States will operate their own

certification programs. The annual burden for

each State will be an average of 52.308 hours

or if calculated at a rate of $27 per hour,

(rounded up to the next dollar), it would be

$1,413.

Peer review panels. Panels will assist the

Agricultural Marketing Service (AMS)

Administrator in evaluating applicants for

accreditation as certifying agents. Individuals

will apply to USDA for membership in a pool

from which the panels are selected,

submitting to USDA information

documenting their qualifications to conduct

such reviews. This will be a new burden for

those serving on the panels. Estimates: 40

people will participate in peer review panels.

The annual burden for each panel member

will be an average of 10 hours or if calculated

at and $27 per hour, it would be $270.

Certifying agents. Certifying agents may be

State program’s governing State officials,

private entities, or foreign entities who are

accredited by USDA to certify domestic and

foreign producers and handlers as organic in

accordance with the OFPA and the

regulations. Each entity wanting to be an

agent will seek accreditation from USDA,

submitting information documenting its

business operations and program expertise.

Accredited agents will determine if a

producer or handler meets organic

requirements, using detailed information

from the operation documenting its specific

practices and on-site inspection reports from

organic inspectors. Estimates: 59 entities are

expected to apply for certification (13 State

programs, 36 private entities, 10 foreign

entities). The annual burden for each State

program will be an average of 695.428 hours

or if calculated at $18,778. The annual

burden for each private or foreign entity will

be 699.678 hours or $27 per hour (rounded

up to the next dollar) it would be $18,893.

Administrative costs for reporting,

disclosure of information, and recordkeeping

are expected to vary among certifying agents.

Entities which begin their activities only after

the national program is implemented would

be expected to incur the greatest cost as they

set up an operation that conforms to the

OFPA and the regulations. For agents who

are currently active in the organic industry,

follow ISO guidelines, and already perform

many of these administrative functions, costs

will vary depending upon the extent to

which their current practices are different

from requirements in the OFPA and the

regulations. Agents will be expected to

provide the public with information

concerning their clients. Efforts were made to

incorporate existing industry practices and

documents into this proposal. A list of

several proposed administrative

requirements and the probable resources

required for compliance is included in the

Regulatory Impact Assessment.

When an entity applies for accreditation as

a certifying agent, it must provide a copy of

its procedures for complying with

recordkeeping requirements (§ 205.504(b)(3)).

Once certified, agents will have to make their

records available for inspection and copying

by authorized representatives of the Secretary

(§ 205.501(a)(9)). USDA will charge certifying

agents for the time required to do these

document reviews. Audits will require less

time if the documents are well organized and

centrally located, than if they are in disarray

and in several locations. Certifying agents

will have control over these conditions, but

making documents accessible to the public

may bring about a substantial change in the

way some agents currently operate.

Recordkeeping requirements for certifying

agents in the first proposal were changed to

reduce the burden. They required certifying

agents to maintain all records concerning

their activities for 10 years. Commenters

expressed concern that this requirement was

excessive and unnecessary. We agree and are

instead proposing three categories of records

with varying retention periods: (1) records

created by certifying agents regarding

applicants for certification and certified

operations, maintain 10 years, consistent

with OFPA’s requirement for maintaining all

records concerning activities of certifying

agents; (2) records obtained from applicants

for certification and certified operations,

maintain 5 years, the same as OFPA’s

requirement for the retention of records by

certified operations; and (3) records created

or received by certifying agents regarding

accreditation, maintain 5 years, consistent

with OFPA’s requirement for renewal of

agent’s accreditation (§ 205.510(b)).

Residue testing requirements in the first

proposal were changed to reduce the burden.

They required certifying agents to undertake

residue testing every 5 years to determine if

products from certified operations contained

a detectable residue level of a prohibited

substance and to report such findings to

appropriate authorities. Commenters

expressed concern that the requirement was

too costly. We agree and are instead

proposing that the State program’s governing

State officials or certifying agents may

conduct testing at their own expense only if

they suspect a crop has come into contact

with a prohibited substance. Test results

must be submitted to the Administrator

(§ 205.672(b)).

Organic inspectors. Inspectors will conduct

on-site inspections for the certifying agents of

each applicant for certification and annually

of each certified operation. They will

determine whether or not certification should

continue and will report this finding to the

certifying agent. Inspectors will be the agents

themselves, employees of the agents, or

individual contractors. We estimate that

about half will be certifying agents and their

employees and half will be individual

contractors. Individuals who apply for

positions as inspectors will submit to the

agents information documenting their

qualifications to conduct such inspections.

Estimates: 293 inspectors (147 certifying

agents and their employees, 146 individual

contractors) will be used. The annual burden

for each inspector will be an average of

48.304 hours or if calculated at $27 per hour

(rounded up to the next dollar), it would be

$1,305.

Producers and handlers. Producers and

handlers, domestic and foreign, will apply to

certifying agents for organic certification, to

renew their certification, or to report changes

in their practices, submitting to the agents

detailed information documenting their

specific practices. Producers include farmers,

livestock and poultry producers, and wild

crop harvesters. Handlers include those who

transport or transform food and may include

millers, bulk distributors, food

manufacturers, processors, repackagers, or

packers. Some handlers may be part of a

retail operation that processes organic

products in a location other than the

premises of the retail outlet.

The OFPA requires certified operators to

maintain their records for 5 years. Estimates:

19,300 total operators (14,153 certified and

5,147 exempt), including 17,150 producers

(12,176 certified and 4,974 exempt) and

2,150 handlers (1,977 certified and 173

exempt). We do not have an estimate of the

number of foreign producers and handlers

that will apply for organic certification. The

annual burden for each domestic operator

will be: certified producer—average of 9.521

hours or if calculated at $24 per hour, it

would be $229; certified handler—average of

49.521 hours or if calculated at $24 per hour,

it would be $1,189; exempt/excluded

operator—average of 0.5 hour or if calculated

at $24. per hour, it would be $12.

The proposed regulation exempts certain

operations from certification: (1) Producers

and handlers whose gross agricultural

income from organic sales totals $5,000 or

less annually; (2) handlers selling only

agricultural products that contain less than

50 percent organic ingredients by total

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13655

weight of the finished product; (3) handlers

that handle agricultural products that contain

at least 50 percent organic ingredients and

choose to use the word ‘‘organic’’ only on the

information panel of a packaged product; and

(4) handlers that are retail food

establishments that handler organic food but

do not process it. The proposed regulation

also excludes certain operations from

certification: (1) Handlers selling only

agricultural products labeled as organic or

made with organic ingredients that are

enclosed in a container prior to being

received, remain in the same container, and

are not otherwise processed while in the

control of the operation; and (2) handlers that

are retail food establishments that process or

prepare, on the premises, raw and ready-toeat food from organic agricultural products.

Administrative costs for reporting and

recordkeeping are expected to vary among

certified operators. Entities which begin their

activities only after the national program is

implemented would be expected to incur the

greatest cost as they set up an operation that

conforms to the OFPA and the regulations.

For operators who are currently active in the

organic industry and already perform many

of these administrative functions, costs

would vary depending upon the extent to

which their current practices are different

from requirements in the OFPA and the

regulations. Efforts were made to incorporate

existing industry practices and documents

into this proposal. A list of several proposed

administrative requirements and the probable

resources required for compliance is

included in the Regulatory Impact

Assessment.

Research studies have indicated that

operations using product labels containing

the term ‘‘organic’’ handle an average of 19.5

labels annually, that there are about 16,000

products with the term organic on the label,

and that the number of such products

increased by 250 annually from 1994 through

1996. We estimate that by the year 2001,

17,000 products will be marketed with the

term ‘‘organic’’ on the label. This proposal

includes an estimate of the time needed to

develop labels for products sold, labeled, or

represented as ‘‘100 percent organic,’’

‘‘organic,’’ ‘‘made with organic (specified

ingredients),’’ or which use the term organic

to modify an ingredient in the ingredients

statement. Also included is the time spent

deciding about use of the USDA seal, a State

emblem, or the seal, logo, or other identifying

marks of a private certifying agent

(§ 205.300–§ 205.310). Because the labeling

requirements in this proposal are in addition

to FDA and FSIS requirements, the burden

measurement does not include the hours

necessary to develop the entire label. For

purposes of calculating the burden, it was

estimated that each handler will develop 20

labels annually.

Interested parties. Any interested party

may petition the NOSB for the purpose of

having a substance evaluated for

recommendation to the Secretary for

inclusion on or deletion from the National

List. Estimates: 25 interested parties may

petition the NOSB. The annual burden for

each interested party will be an average of

104 hours and $2,496 ($24 per hour).

Cost. The following table shows the salary

rates used to calculate the cost of the burden.

We believe the increased rates for this

proposal over the first proposal are more

realistic in terms of the responsibilities and

requirements of each entity.

Estimated hourly rates First

proposal

This

proposal

Certified and exempt operators, interested parties ......................................................................................................... $10 $24

State program’s governing State officials, peer review panel members, certifying agents, organic inspectors ............ 20 27

Annual Reporting and Recordkeeping

Burden: 

Estimated Number of Respondents: 19,730.

Total Annual Hours: 269,622.

Total Cost: $6,780,348.

Comments. Comments are requested on

these proposed information collection

requirements. Comments are specifically

invited on: (1) Whether the proposed

collection of information is necessary for the

proper performance of the functions of

USDA, including whether the information

would have practical utility; (2) the accuracy

of USDA’s estimate of the burden of the

proposed collection of information, including

the validity of the methodology and

assumptions used; (3) ways to enhance the

quality, utility, and clarity of the information

to be collected; and (4) ways to minimize the

burden of the collection of information on

those who are to respond, including the use

of appropriate automated, electronic,

mechanical, or other technological collection

techniques or other forms of information

technology.

Comments should be submitted by the date

stated in the section entitled DATES at the

beginning of this proposal. However, they

should be sent to (1) Office of Management

and Budget, New Executive Office Building,

725 17th Street, NW, Room 725, Washington,

D. C. 20503, Attention: Desk Officer, and to

(2) Clearance Officer, USDA–OCIO, Room

404W, Jamie Whitten Building, STOP 7602,

1400 Independence Avenue, SW,

Washington, D.C. 20250–7602. Additionally,

comments may be sent by fax to (202) 690–

4632 or submitted via the Internet through

the National Organic Program’s homepage at

http://www.ams.usda.gov/nop.

Appendix E.—Executive Order 12988, Civil

Justice Reform

Executive Order 12988, Civil Justice

Reform, instructs each executive agency to

adhere to certain requirements in the

development of new and revised regulations

in order to avoid unduly burdening the court

system. The first proposal was reviewed

under this Executive Order. No comments

were received on that review and no

additional related information has been

obtained since then. This rule is not intended

to have retroactive effect.

States and local jurisdictions are

preempted under section 2115 of the OFPA

(7 U.S.C. 6514) from creating programs of

accreditation for private persons or State

officials who want to become certifying

agents of organic farms or handling

operations. A governing State official would

have to apply to the USDA to be accredited

as a certifying agent, as described in section

2115(b) of the OFPA (7 U.S.C. 6514(b)).

States also are preempted under sections

2104 through 2108 of the OFPA (7 U.S.C.

6503 through 6507) from creating

certification programs to certify organic farms

or handling operations unless the State

programs have been submitted to, and

approved by, the Secretary as meeting the

requirements of the OFPA.

Pursuant to section 2108(b)(2) of the OFPA

(7 U.S.C. 6507(b)(2)), a State organic

certification program may contain additional

requirements for the production and

handling of organically produced agricultural

products that are produced in the State, and

for the certification of organic farm and

handling operations located within the State,

under certain circumstances. Such additional

requirements must: (a) Further the purposes

of the OFPA; (b) not be inconsistent with the

OFPA; (c) not be discriminatory towards

agricultural commodities organically

produced in other States; and (d) not be

effective until approved by the Secretary.

Pursuant to section 2120(f) of the OFPA (7

U.S.C. 6519(f)), this proposal would not alter

the authority of the Secretary under the

Federal Meat Inspection Act (21 U.S.C. 601

et seq.), the Poultry Products Inspections Act

(21 U.S.C. 451 et seq.) or the Egg Products

Inspection Act (21 U.S.C. 1031 et seq.),

concerning meat, poultry, and egg products,

nor any of the authorities of the Secretary of

Health and Human Services under the

Federal Food, Drug and Cosmetic Act (21

U.S.C. 301 et seq.), nor the authority of the

Administrator of the Environmental

Protection Agency (EPA) under the Federal

Insecticide, Fungicide and Rodenticide Act

(7 U.S.C. 136 et seq.).

Section 2121 of the OFPA (7 U.S.C. 6520)

provides for the Secretary to establish an

expedited administrative appeals procedure

under which persons may appeal an action

of the Secretary, the applicable governing

State official, or a certifying agent under this

title that adversely affects such person or is

inconsistent with the organic certification

program established under this title. The Act

also provides that the U.S. District Court for

the district in which a person is located has

jurisdiction to review the Secretary’s

decision.

Appendix—Executive Order 13132,

Federalism

This proposal has been reviewed under

Executive Order 13132, Federalism. This

13656 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

Order requires that regulations that have

federalism implications provide a federalism

impact statement that: (1) Demonstrates the

Agency consulted with the State and local

officials before developing the proposed

regulation, (2) summarizes State concerns, (3)

provides the Agency’s position supporting

the need for the regulation, and, (4) describes

how the concerns of State officials have been

met. The Order indicates that where National

standards are required by Federal statutes,

Agencies shall consult with appropriate State

and local officials in developing those

standards. Further, Agencies are required to

interpret Federal statutes to preempt State

law only where the statute contains an

express preemption provision. In such a case,

any regulatory preemption of State law shall

be restricted to the minimum necessary to

meet the objectives of the statute.

The Organic Foods Production Act (OFPA)

of 1990 (7 U.S.C. 6514) establishes national

standards regarding the marketing of

agricultural products as organically

produced, assures consumers that organically

produced products meet a consistent

standard, and facilitates interstate commerce

in fresh and processed food that is

organically produced. In carrying out these

purposes, the Act contemplates a significant

role for the States and, in fact, envisions a

partnership between the States and the

Federal Government in meeting the

requirements of the Statute. The Act specifies

the State role and gives States recognition for

their activities in organic agriculture in

several ways. First, 7 CFR 6507 provides that

States may establish a State organic

certification program consistent with the

national program. Second, these programs

may contain more restrictive requirements

than the National Organic Program

established by the Secretary of Agriculture.

To be more restrictive, State Organic

programs are required to: further the

purposes of the Act, be consistent with the

Act, not discriminate against organic

products of another State, and be approved

by the Secretary. Third, States can choose to

be accredited as certifying agents under the

Act and carry out a State organic program.

Fourth, the Act allows the States to

determine the manner in which they choose

to be involved in the organic program. States

may choose to carry out the requirements of

the Act by establishing a State program and

becoming accredited as certifying agents,

they may establish a State program and

utilize private certifying agents to implement

the program, or they may choose to utilize

the national organic program as implemented

by the Secretary.

In recognition of their role in carrying out

the provisions of OFPA, the Department has

reached out to States and actively sought

their input throughout the entire process of

developing the proposed organic rule. The

Department drew extensively on the organic

expertise of States and the organic industry

by working closely with the National Organic

Standards Board. The National Organic

Standards Board, established under Section

2119 of the OFPA (7 CFR 6518), has provided

a broad and inclusive forum for public

participation in developing the

recommendations and concepts that

underpin the proposed organic rule. Section

2104(c) of the OFPA (7 CFR 6503(c)) requires

the Secretary to consult with the National

Organic Standards Board in developing the

organic program and the National List set

forth in Section 2118 of the OFPA (7 CFR

6517).

The Secretary has received extensive input

from the Board, interested persons, and the

States regarding the establishment of the

National Organic Program and this

reproposal. The Board met 12 times before

publication of the proposed rule on

December 16, 1997, and has met five times

during 1998 and 1999. States were invited to

attend each of these meetings, and official

State certifier representatives participated in

Board deliberations in meetings held in July

1998 and July 1999. Public input sessions

were held at each meeting to gather

information from all interested persons,

including State and local jurisdictions.

Section 2110(g) of the OFPA (7 U.S.C.

6509(g)) requires the Secretary to hold public

hearings to gather information to guide

development of standards for livestock

products. Four hearings were held during

1994 in Washington, D.C.; Rosemont, IL;

Denver, CO; and, Sacramento, CA. States

were invited to participate in each of these

hearings.

National Organic Program staff also

received comments and consulted with

States at public events. They made

presentations, received comments, and

consulted with States at local and regional

organic conferences and workshops and at

national and international organic and

natural food shows.

Further, States were provided the

opportunity to comment specifically on State

issues at a National Organic Certifiers

meeting held on July 21, 1995, to discuss

accreditation issues; a meeting held on

February 26, 1996, to discuss the role of

States in the National Organic Program; and

a February 1999 State Certifiers meeting to

discuss State issues. Further, States were

consulted in training sessions held for

organic inspectors, as well as numerous

question and answer sessions at speaking

engagements of the Agricultural Marketing

Service Administrator, the National Organic

Program Program Manager, and the staff.

On publication of the first proposal on

December 16, 1997, an announcement and

information packet summarizing the first

proposal were sent to over 1,000 interested

parties, including State governors and State

department of agriculture secretaries,

commissioners, or directors. Subsequent to

publication of the first proposal, State and

local jurisdictions had the opportunity to

provide input at four listening sessions held

in February–March 1998 on the first proposal

in Austin, TX; Ames, IA; Seattle, WA; and

New Brunswick, NJ.

Finally, States had the opportunity to

comment on the first proposal. More than

275,000 comments were received on the first

proposal, including State commenters.

Through this extensive outreach and

consultation process, States identified a

number of issues with the first proposal.

States expressed several specific concerns

regarding accreditation requirements as they

affect State programs. These issues are

described below, along with the

Department’s response in the reproposal.

(1) Under OPFA 2108 (7 CFR 6507), States

may establish additional standards, approved

by the Secretary. First, State commenters

objected to the provision in the first proposal

that would have prohibited States from

requiring compliance with these additional

standards as a condition for use of the

organically produced State logo on products

within the borders of such State. We agree

with the commenters, as we did not intend

to prohibit States from requiring that these

more restrictive standards be met as a

requirement to the State’s logo on organically

produced products. Accordingly, this

proposal will permit States with more

restrictive requirements approved by the

Secretary and private certifiers certifying

production and handling operations within

these States to require that the State’s more

restrictive standards be met in order to use

the State logo.

(2) The first proposal required annual

organic inspector performance appraisal and

annual program evaluations for certifying

agents. State commenters objected that these

requirements would duplicate State

requirements. We do not intend for States to

develop dual performance appraisal and

program evaluation systems because we

believe that programs already conducted by

the States will meet the requirements of this

proposal. These programs would be expected

to conform with good management practices

appropriate to an organization’s size and

structure. The questioned provisions have

not been changed, but this proposal has been

revised to clarify that the annual program

evaluation can be conducted by the certifying

agency staff, an auditing entity, or a

consultant with appropriate expertise.

(3) The first proposal set forth

confidentiality requirements for certifying

agents. Commenters stated that these

confidentiality requirements might conflict

with State requirements for ‘‘open records.’’

While we recognize this potential for

conflicting requirements, records collected

under the National Organic Program would

be subject to the requirements of the Act.

Where the Act and State requirements

conflict, the Act would take precedence.

There is no change to the confidentiality

provision.

To clarify that authorized representatives

of the Secretary or the applicable Stae

program’s governing State official may act on

their behalf and must be given access to the

records, this proposal adds the phrase ‘‘and

their authorized representatives.’’

(4) This proposal will require that

accredited certifying agents accept

certification decisions made by another

USDA-accredited certifying agent as

equivalent. State commenters said that States

should be able to control which certifying

agents operate within their State.

The first proposal provided that accredited

certifying agents accept the certification

decisions made by another USDA-accredited

certifying agent as equivalent to their own.

Commenters representing State programs

said that States should be able to control

which certifying agents operate within their

Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13657

State. Several commenters asked whether

States with more restrictive standards could

challenge certification decisions made by

other accredited certifying agents. Under the

Act, no organic product may be produced or

handled to organic standards lower than the

standards of the National Organic Program. A

State Government may not prevent the

marketing or sale within a given State of

organic product produced in another State

according to this proposal. While States may,

with the approval of the Secretary, set more

restrictive standards than the national

organic standards for product produced or

handled within their State, these

requirements do not apply to products

produced or handled in another State.

State programs approved by the Secretary

will be required to treat all accredited

certifying agents equally, and accredited

certifying agents in one State cannot refuse

to recognize another State’s product certified

to national standards. Accordingly, the

requirement remains unchanged that a

certifying agent accept certification decisions

by another USDA-accredited certifying agent

as equivalent.

(5) The first proposal required all certifying

agents to submit documents and information

on personnel, administrative, and financial

policies and procedures to demonstrate

organic expertise and ability to implement

the National Organic Program. States

commented that State certifying agents

should not be required to submit such

information, stating that these requirements

should not apply to States with established

personnel, administrative, and financial

procedures. They also indicated that the

review should be limited to organic program

administration only, not to agencywide

policies and procedures. We recognize that

States have established personnel,

administrative, and financial procedures and

that these procedures would apply to State

certifying agents. However, a stated purpose

of the Act is establishment of national

standards. Such standards should extend to

uniform requirements for State and private

certifying agents unless otherwise provided

in the Act. Further, such information is

necessary for the Administrator to make a

determination on approval of an application

for accreditation. Accordingly, the

requirements for demonstrating organic

expertise and ability to implement the

National Organic Program remain the same

for private and State certifying agents.

(6) The first proposal required a certifying

agents to provide a description of procedures

to prevent conflicts of interest and the

identification of any food or agriculturerelated business interests of all personnel

intended to be used in the certifying

operation. Commenters stated that existing

State policies should be sufficient to prevent

conflicts of interest for a State certifying

agent and that lists of the business interests

of all inspectors, program staff, and their

families are not necessary.

We agree that existing State policies should

be sufficient to prevent conflicts of interest

but disagree that lists of the business

interests of all inspectors, program staff, and

their families are unnecessary. The Act (CFR

6515(h)) places responsibility for the

prevention of conflicts of interest with the

certifying agent. However, the Department is

responsible for ensuring that the certifying

agent complies with that responsibility. The

requirement to provide such a listing

provides the Administrator information

essential to identifying conflicts of interest.

In addition, a stated purpose of the Act is to

establish uniform national standards. These

uniform standards should extend to uniform

conflict of interest requirements for State and

private certifying agents. The commenters

have said that most States already have

established conflict of interest policies and

procedures so that the required information

should be easily available for submission to

the Administrator. Accordingly, no change

has been made in this proposal.

Certification, the process of qualifying a

producer or handler to sell agricultural

products labeled as organic, raised several

issues for States.

(1) The first proposal required an applicant

for certification to supply required

documentation to provide information

necessary to allow a certifying agent to

evaluate the application. State commenters

suggested a provision be added to allow a

certifying agent to require documentation

from applicants in addition to that required

by the first proposal.

A certifying agent can, if necessary, follow

up on an initial application with requests for

additional information, provided that

information is needed to evaluate the

application and determine compliance with

the Act and regulations. We did not make the

suggested change, as the existing language

already allows the certifying agent to request

additional information necessary to

determine compliance with the Act and

regulations.

(2) The first proposal laid out a

certification program that provided for

updates to a continuous organic certification.

To meet continuation of certification

requirements, the first proposal required an

on-site inspection after receipt of the update

to the application. A State certifying agent

objected, saying that an on-site inspection

after receipt of a renewal application is not

consistent with current practice. Currently,

on-site inspections conducted during the

prior year are used to determine compliance

with certification requirements at the time of

renewal, along with a review of information

submitted by the certified operation. The

State certifying agent stated that an

additional inspection at renewal time would

not be useful if it was not an appropriate time

to observe the certified unit in operation.

We disagree with the commenters, since

certifiers are required to schedule on-site

inspections when the certified operation can

be observed for its compliance or ability to

comply with the provisions of the National

Organic Program. The initial certification,

therefore, should have been granted when the

on-site inspection verified compliance with

certification requirements. The certified

operation should be fulfilling its annual

continuation of certification at a time when

it can demonstrate its compliance with the

Act.

States commented on several compliance

issues included in the first proposal.

(1) The Administrator had sole authority to

suspend or revoke the accreditation of

certifying agents in the first proposal.

Commenters indicated that State program’s

governing State officials should have the

authority to suspend or revoke the

accreditation of private certifying agents.

We agree that in a State with a program

approved by the Secretary, the State

program’s governing State official should be

authorized to suspend or revoke an

accreditation granted by the Secretary to

certifying agents operating within the State.

We concur because of the Department’s role

in providing oversight to the State program,

including its enforcement procedures, and

have made that change in this proposal.

(2) Many commenters stated that the first

proposal lacked adequate enforcement

provisions, including enforcement by States

with an approved State program.

We agree with the commenters that

additional enforcement provisions are

necessary for the National Organic Program.

The following changes have been made in

this proposal.

(a) As noted above, the State program’s

governing State official will now be

authorized to suspend or revoke

accreditation granted by the Secretary to

certifying agents operating in the State.

(b) An enforcement proceeding brought by

a State program’s governing State official

against a certified operation or certifying

agent shall be appealable pursuant to the

appeal procedures of the State program with

no subsequent appeal rights to the Secretary.

States commented on several fees

provisions in the first proposal.

(1) The first proposal required that

payment of fees and charges to the

Department be by certified check or money

order. State commenters objected, saying it

was insulting for USDA to require a State

government agency to pay for its

accreditation with a certified check.

Accordingly, we have removed this

requirement, simply requiring that payments

for fees and other charges for accreditation

must be made payable to the Agricultural

Marketing Service.

(2) Several State agencies objected to the

fee provisions in the first proposal,

expressing the belief that the proposed fees

would price small producers and handlers

out of the organic industry. Some State

agencies commented that those small organic

producers conducting their own on-farm

handling would be forced out of the organic

industry by the excessive handler fee and

reporting burdens.

After review of the comments, we

acknowledge that the fees charged in the first

proposal may have discouraged industry

growth and may not have facilitated

interstate commerce of organic product. We

have thus, modified the fee structure to

reduce costs to all organic sectors and have

removed the requirement that provided for

payment of fees to the Department by

certified production and handling operations.

Instead, the Department will charge

certifying agents only for fees and charges

related to accreditation, with the balance of

the costs of the program to be funded through

appropriations.

13658 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

(3) Some State certifying agents

commented that State certifying agents

should not be assessed accreditation fees.

They stated that most State certifying agents

could face large accreditation costs because

they have many county or regional offices

which would be considered subsidiaries,

adding that these costs would be passed on

to producers and handlers or paid with

supplemental State funds. A few State

certifying agents asserted that USDA should

pay the States because of the State’s

contribution to the national program. One

State representative said that accreditation

fees for State certifying agents should be less

than for private certifying agents, as State

certifying agents should involve less AMS

review and oversight.

We disagree with those commenters who

say that State certifying agents should not be

assessed accreditation charges, be charged

less, or be paid to certify production and

handling operations. These actions would

constitute unacceptable preferential

treatment of State certifying agents to the

detriment of private certifying agents. This

proposal will assess State certifying agents

the same fees for accreditation under the

same fee structure as private certifying

agents.

We invite States and local jurisdictions to

comment on the issues raised in this

Federalism impact statement. We also

encourage States and local jurisdictions to

review and comment on this proposal as it

relates to the operation of State organic

programs.

[FR Doc. 00–5723 Filed 3–7–00; 10:42 am]

BILLING CODE 3410–02–P