80548 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 205

[Docket Number: TMD–00–02–FR]

RIN 0581–AA40

National Organic Program

AGENCY: Agricultural Marketing Service,

USDA.

ACTION: Final Rule with request for

comments.

SUMMARY: This final rule establishes the

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 will facilitate domestic and

international marketing of fresh and

processed food that is organically

produced and assure consumers that

such products meet consistent, uniform

standards. This program establishes

national standards for the production

and handling of organically produced

products, including a National List of

substances approved for and prohibited

from use in organic production and

handling. This final rule establishes a

national-level 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 final rule

includes requirements for labeling

products as organic and containing

organic ingredients. This final rule also

provides for importation of organic

agricultural products from foreign

programs determined to have equivalent

organic program requirements. This

program is authorized under the

Organic Foods Production Act of 1990,

as amended.

EFFECTIVE DATE: This rule becomes

effective February 20, 2001.

Comments: Comments on specified

aspects of the final regulations must be

submitted on or before March 21, 2001.

ADDRESSES: Interested persons are

invited to submit written comments on

specified aspects of the final regulation

to: Keith Jones, Program Manager,

National Organic Program, USDA–

AMS–TMP–NOP, Room 2945–So., Ag

Stop 0275, P.O. Box 96456, Washington,

DC 20090–6456. Comments may also be

filed via the Internet through the

National Organic Program’s homepage

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

comments on specified aspects of the

final regulations should be identified

with the docket number TMD–00–02–

FR. 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.

It is our intention to have all

comments to this final rule, whether

mailed or submitted via the Internet,

available for viewing on the NOP

homepage in a timely manner.

Comments submitted in response to this

final rule will be available for viewing

at USDA–AMS, Transportation and

Marketing Programs, Room 2945–South

Building, 14th and Independence

Avenue, SW., Washington, DC, from 9

a.m. to 12 noon and from 1 p.m. to 4

p.m., Monday through Friday (except

for official Federal holidays). Persons

wanting to visit the USDA South

Building to view comments received in

response to this final rule 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–

TMP–NOP, Room 2510–So., P.O. Box

96456, Washington, DC 20090–6456;

Telephone: (202) 205–7806; Fax: (202)

205–7808.

SUPPLEMENTARY INFORMATION:

Prior Documents in This Proceeding

This final 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 final rule

replaces the proposed rule published in

the Federal Register March 13, 2000.

The public submitted 40,774 comments

on the proposed rule. Comments to the

proposed rule were considered in the

preparation of this final rule.

The following notices related to the

National Organic Standards Board

(NOSB) and the development of this

proposed regulation have been

published in the Federal Register. Six

notices of nominations for membership

on the NOSB were published between

April 1991 and June 2000 (56 FR 15323,

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

64 FR 33240, 65 FR 35317). 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).

Twenty notices of meetings of the NOSB

were published between March 1992

and November 2000 (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,

65 FR 11758, 65 FR 33802, 65 FR

64657). One notice of public hearings on

organic livestock and livestock products

was published on December 30, 1993

(58 FR 69315). Two notices specifying a

procedure for submitting names of

substances for inclusion on or removal

from the National List of Approved and

Prohibited Substances were published

on March 27, 1995 (60 FR 15744), and

July 13, 2000 (65 FR 43259). 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). A rule

proposing the NOP was published on

March 13, 2000 (65 FR 13512). A notice

of public meeting and request for

comments on organic production and

handling of aquatic animals to be

labeled as organic was published on

March 23, 2000 (65 FR 15579). One

advance notice of proposed rulemaking

and request for comments on reasonable

security for private certifying agents was

published on August 9, 2000 (65 FR

48642).

This preamble includes a discussion

of the final rule and supplementary

information, including the Regulatory

Impact Assessment, Unfunded

Mandates Reform Act Statement,

Regulatory Flexibility Act Analysis,

Federalism Impact Statement, and Civil

Justice Impact Statement. The Civil

Rights Impact Analysis is not included

as an attachment but may be obtained

by writing to the address provided

above or via the Internet through the

National Organic Program’s homepage

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

Approval of Paperwork Reduction Act

Requirements for This Final Rule

The reporting requirements and

recordkeeping burden imposed by this

rule were published in the March 13,

2000, Federal Register for public

comment. The Agency addressed these

comments in the final rule to ensure

that the least amount of the burden is

placed on the public. The information

collection and recordkeeping

requirements have been reviewed and

approved by the Office of Management

and Budget under OMB Number 0581–

0191, National Organic Program.

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80549

National Organic Program Overview

Subpart A—Definitions

Description of Regulations

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

proposed rule where necessary to make

their wording consistent with the

language used in this final rule. We

have revised the definitions of the

following words for greater clarity:

person, practice standard, inert

ingredient, processing, tolerance. We

have removed the definitions for the

following terms because the terms are

not used in this final rule or have been

determined to be unnecessary:

accredited laboratory, estimated

national mean, system of organic

production and handling. We received

comments on some of these definitions

that have been deleted. We have not

addressed those comments here because

the relevant definitions have been

deleted.

Definitions—Changes Based on

Comments

This subpart differs from the

proposed rule in several respects as

follows:

(1) Many commenters requested

changes to the definition of ‘‘excluded

methods.’’ Comments included requests

to use the more common term,

‘‘genetically modified organisms

(GMO)’’; to include the products of

excluded methods/GMO’s in the

definition; to more closely follow the

NOSB definition by adding gene

deletion, doubling, introduction of a

foreign gene, and changing gene

position; to include that excluded

methods are prohibited by the Act and

by the regulations in this part; to change

the wording of the reference to

‘‘recombinant DNA’’; and to add that the

definition of excluded methods only

covers ‘‘intentional use.’’

We have accepted some of the

comments and have modified the

definition accordingly. Specifically, we

have included reference to the

‘‘methods’’—gene deletion, gene

doubling, changing positions of genes,

and introducing foreign genes—that

were included in the original NOSB

definition. This will make the definition

even more closely parallel the NOSB

recommendation. We also refer to

recombinant DNA technology, which is

technically more accurate than the

proposed rules reference to recombinant

DNA as a ‘‘method.’’

We have not accepted the comments

that requested adding the products of

excluded methods to the definition. The

emphasis and basis of these standards is

on process, not product. We have

specifically structured the provisions

relating to excluded methods to refer to

the use of methods. Including the

products of excluded methods in the

definition would not be consistent with

this approach to organic standards as a

process-based system. For the same

reason, we have retained the term,

‘‘excluded methods,’’ to reinforce that

process-based approach.

We have also rejected comments

requesting that we include the

prohibition on excluded methods in the

definition and, likewise, those

requesting that we refer to ‘‘intentional

use’’ of excluded methods. The final

rule maintains and clarifies the

prohibition on the use of excluded

methods in organic production systems.

The prohibition is most properly

addressed in the appropriate provisions

of the regulations, particularly in

Section 205.105, and not in the

definition. Similarly, although we

recognize that a distinction between

intentional and unintentional use of

excluded methods may be meaningful,

particularly as it pertains to issues of

drift, this is an issue that is best handled

in the sections of the regulation

governing use of excluded methods, not

in the definition. The definition for

‘‘excluded methods’’ now reads:

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 include cell

fusion, microencapsulation and

macroencapsulation, and recombinant

DNA technology (including gene

deletion, gene doubling, introducing a

foreign gene, and changing the position

of genes when achieved by recombinant

DNA technology). Such methods do not

include the use of traditional breeding,

conjugation, fermentation,

hybridization, in vitro fertilization, or

tissue culture.’’

(2) Many commenters objected to the

definition of ‘‘compost’’ in the proposed

rule because it required that compost

must be produced in a facility that was

in compliance with the Natural

Resource Conservation Service’s (NRCS)

practice standard for a composting

facility. We agree with these

commenters and removed the

requirement to comply with the NRCS

practice standard. However, the final

rule incorporates new requirements for

the production of compost that are

included in the definition. The final

rule requires that compost must be

produced through a process that

combines plant and animal materials

with an initial C:N ratio of between 25:1

and 40:1. Furthermore, producers using

an in-vessel or static aerated pile system

must maintain the composting materials

at a temperature of between 131°F and

170°F for 3 days. Producers using a

windrow system must maintain the

composting materials at a temperature

between 131°F and 170°F for 15 days,

during which time, the materials must

be turned a minimum of five times. We

developed the requirements in the final

rule for producing an allowed

composted material by integrating

standards used by the Environmental

Protection Agency (EPA) and USDA’s

Natural Resources Conservation Service

(NRCS). The requirements for the

carbon-to-nitrogen (C:N) ratio for

composting materials is the same as that

found in the NRCS practice standard for

a composting facility. The time and

temperature requirements for in-vessel,

static aerated pile, and window

composting systems are consistent with

those which EPA regulates under 40

CFR 503 for the production of Class A

sewage sludge. Additionally, AMS

reviewed these compost production

requirements with USDA’s Agricultural

Research Service (ARS). This subject is

discussed further under subpart C, Crop

Production, Changes Based on

Comment.

(3) Some commenters stated that

allowing nonagricultural or synthetic

substances as feed supplements

contradicted the definition for ‘‘feed

supplement’’ in the proposed rule.

These commenters stated that the

definition stipulated that a feed

supplement must, itself, be a feed

material and that the proposed

definition for ‘‘feed’’ did not include

nonagricultural or synthetic substances.

These commenters stated that the

definition of ‘‘feed supplement’’ needed

to be amended to accommodate

nonagricultural or synthetic substances,

or such substances should not be

allowed. We agree with these

commenters and amended the definition

for ‘‘feed supplement’’ to read ‘‘a

combination of feed nutrients added to

livestock feed to improve the nutritional

balance or performance of the total

ration.’’ One commenter recommended

modifying the definition of ‘‘feed

additive’’ to ‘‘a substance added to feed

in micro quantities to fulfill a specific

nutritional need; i.e., essential nutrients

in the form of amino acids, vitamins,

80550 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

and minerals.’’ We agree that this

modification provides a more precise

description of ‘‘feed additive’’ and have

included the change. The changes to the

definitions for ‘‘feed supplement’’ and

‘‘feed additive’’ are further discussed

under item (4) of Livestock

Production—Changes Based on

Comments.

(4) One commenter stated that the

definition for ‘‘forage’’ inaccurately

described it as ‘‘vegetable matter,’’ and

suggested that ‘‘vegetative matter’’ was a

more suitable description. We agree

with the suggestion and have

incorporated the change.

(5) Some commenters stated that the

definition for ‘‘mulch’’ implied that all

mulch materials must either be organic

or included on the National List. These

commenters maintained that, if this was

the intent of the proposed rule, the

provision was too restrictive. They

recommended revising the definition to

clarify that natural but nonorganic plant

and animal materials, if managed to

prevent contamination from prohibited

substances, could be used as mulch

without being added to the National

List. This was the intent in the proposed

rule, and we have modified the

definition to make this provision

clearer.

(6) Many commenters stated that the

final rule should include a definition of

‘‘organic production’’ that required that

certified operations must preserve or

protect biodiversity. These commenters

stated that the preservation of

biodiversity is a requirement in many

existing organic certification standards,

including the Codex guidelines. They

also stated that the NOSB had included

the requirement to preserve biodiversity

in its definition of organic. We agree

with the intent of these comments but

prefer the term, ‘‘conserve,’’ to

‘‘preserve’’ because it reflects a more

dynamic, interactive relationship

between the operation and biodiversity

over time. We included a definition for

organic production as ‘‘a production

system that is managed in accordance

with the Act and regulations in this part

to respond to site-specific conditions by

integrating cultural, biological, and

mechanical practices that foster cycling

of resources, promote ecological

balance, and conserve biodiversity.’’ We

deleted the definition for ‘‘organic

system of production and handling’’ in

the final rule.

(7) Several commenters, including the

NOSB, were concerned that the

definition for ‘‘planting stock’’ as ‘‘any

plant or plant tissue, including

rhizomes, shoots, leaf or stem cuttings,

roots, or tubers, used in plant

production or propagation’’ was

sufficiently broad to be applied to

annual seedlings. We agree that it is

important to establish that annual

seedlings are not covered by the

definition of ‘‘planting stock’’ and

amended the definition to exclude

them. The definition for planting stock

in the final rule states ‘‘any plant or

plant tissue other than annual seedlings

but including rhizomes, shoots, leaf or

stem cuttings, roots, or tubers, used in

plant production or propagation.’’ The

final rule retains the definition for

‘‘annual seedling’’ from the proposed

rule.

(8) Several commenters recommended

that the definition of ‘‘processing’’

should be amended to include

‘‘distilling’’ as an allowed practice. We

agree with this comment and added

distilling as an allowed processing

practice.

(9) Several commenters recommended

that the final rule include a definition

for ‘‘processing aid’’ that is consistent

with the definition proposed by the

NOSB and used by the Food and Drug

Administration (FDA). We agree with

these commenters and have included a

definition for processing aid that is the

same as the definition used by FDA and

found in 21 CFR Part 101.100(a)(3)(ii).

(10) Many commenters questioned

whether the term, ‘‘State organic

certification program,’’ in the proposed

rule included organic programs from

States that did not offer certification

services. These commenters stated that

the final rule should include provisions

for all State organic programs regardless

of whether they functioned as certifying

agents. We agree with these commenters

and have amended the final rule by

incorporating the term, ‘‘State organic

program,’’ as ‘‘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.’’

The term, ‘‘State organic program,’’

encompasses such programs whether

they offer certification services or not.

(11) One commenter stated that the

definition for ‘‘wild crop’’ only referred

to a plant or part of a plant that was

harvested from ‘‘an area of land.’’ This

commenter was concerned that the

definition would preclude the

certification of operations that produce

wild aquatic crops, such as seaweed,

and stated that the OFPA does allow for

certifying such operations. We agree

with this commenter and changed the

definition to refer to a plant or part of

a plant harvested from a ‘‘site.’’

(12) Many commenters stated that the

soil fertility and crop nutrient

management practice standard lacked a

definition for ‘‘manure.’’ These

commenters maintained that the

different provisions contained in the

practice standard for ‘‘manure’’ and

‘‘compost’’ would be difficult to enforce

without clear definitions to differentiate

between the two materials. We agree

with these comments and added a

definition for manure as ‘‘feces, urine,

other excrement, and bedding produced

by livestock that has not been

composted.’’

(13) Some commenters stated that the

National List in the final rule should

include an annotation for narrow range

oils to limit their use to a specific subset

of such materials recommended by the

NOSB. We agree with this comment but,

rather than add an annotation, we have

included the specifications

recommended by the NOSB in a new

definition for narrow range oils. Narrow

range oils are defined as ‘‘petroleum

derivatives, predominately of paraffinic

and napthenic fractions with a 50-

percent boiling point (10 mm Hg)

between 415°F and 440°F.

(14) Many commenters maintained

that the final rule needed a definition of

the term, ‘‘pasture,’’ to describe the

relationship between ruminants and the

land they graze. These commenters

stated that a meaningful definition of

‘‘pasture’’ must incorporate the

nutritional component that it provides

livestock, as well as the necessity to

manage the land in a manner that

protects the natural resources of the

operation. We agree with these

commenters and have added a

definition of ‘‘pasture’’ as ‘‘land used for

livestock grazing that is managed to

provide feed value and maintain or

improve soil, water, and vegetative

sources.’’

(15) Many commenters stated that a

definition for ‘‘split operation’’ was

necessary to prevent commingling

between organic and nonorganic

commodities on operations that

produced or handled both forms of a

commodity. We agree with these

comments and have included a

definition for ‘‘split operation’’ as ‘‘an

operation that produces or handles both

organic and nonorganic agricultural

products.’’

Definitions—Changes Requested But

Not Made

This subpart retains from the

proposed rule terms and their

definitions on which we received

comments as follows:

(1) Many commenters objected to the

definition of ‘‘sewage sludge’’ because it

excluded ash generated in a sewage

sludge incinerator and grit and

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80551

screenings generated during preliminary

treatment of domestic sewage in

treatment works. We have not changed

the definition for ‘‘sewage sludge’’

because it provides the most

comprehensive and enforceable

description of the types of materials that

commenters wanted to prohibit. The

definition for ‘‘sewage sludge’’ in the

proposed rule arose in response to

significant public comment on the first

proposed rule for national organic

standards (62 Federal Register, No. 241)

that recommended prohibiting biosolids

in organic production. When

incorporating those comments into the

proposed rule, we did not use the term,

‘‘biosolids,’’ because it does not have a

standardized definition under Federal

regulations. The term, ‘‘biosolids,’’ is

commonly used to refer to ‘‘sewage

sludge,’’ which is the regulatory term

established in 40 CFR part 503. We

incorporated the precise definition from

40 CFR part 503, even though it does

not include ash, grit, or screenings,

because it provided the clearest

description of the types of materials

identified in public comment.

While commenters are correct that

ash, grit, or screenings from the

production of sewage sludge are not

prohibited by this definition, these

materials are prohibited elsewhere in

the regulation. The soil fertility and

crop nutrient management practice

standard in section 205.203 establishes

the universe of allowed materials and

practices. These allowed materials and

practices are crop rotations, cover crops,

plant and animal materials (including

their ash), nonagricultural, natural

materials, and, under appropriate

conditions, mined substances of low

and high solubility and synthetic

materials included on the National List.

Ash, grit, or screenings from the

production of sewage sludge cannot be

included in any of these categories and,

therefore, cannot be used in organic

production. We retained the definition

of ‘‘sewage sludge’’ because it most

clearly conveys the wide array of

commercially available soil

amendments that might be considered

for organic production but that the final

rule expressly prohibits. We have not

added specific exclusions for sewage

sludge, ash, grit, or screenings because

these materials are prohibited through

other provisions in the practice

standard.

(2) The proposed rule prohibited the

handler of an organic handling

operation from using ionizing radiation

for any purpose. The vast majority of

commenters agreed with this

prohibition and further recommended

that the term, ‘‘ionizing radiation,’’

should be defined to identify the

specific applications that are prohibited.

Most commenters supported a

definition based on the FDA

requirements in 21 CFR part 179.26 for

the treatment or processing of food

using ionizing radiation. While agreeing

with the prohibition on ionizing

radiation, these commenters favored

allowing certain forms of irradiation

such as the use of X-rays to inspect for

debris such as stones that were

inadvertently commingled with

organically handled food. Other

commenters recommended a

prohibition on all forms of irradiation,

which would include X-rays for

inspection purposes, ultraviolet light,

and microwaves in addition to ionizing

radiation. Finally, a number of

commenters stated that ionizing

radiation is a safe and effective process

for handling food and, therefore, should

not be prohibited in organic handling.

We have not added a definition for

‘‘ionizing radiation’’ to the final rule

because we have incorporated specific

references to the applications that are

prohibited in the regulatory text. The

final rule prohibits the handler of an

organic handling operation from using

ionizing radiation as specified under 21

CFR part 179.26. These are the FDAapproved uses of ionizing radiation that

commenters most frequently

recommended that we prohibit in

organic handling operations. They

include the use of cobalt-60, cesium137, and other sources of radiation for

the purpose of controlling microbial

contaminants, pathogens, and pests in

food or to inhibit the growth and

maturation of fresh foods. At its June

2000 meeting, the NOSB recommended

prohibiting ionizing radiation for the

purpose of controlling microbial

contaminants, pathogens, parasites, and

pests in food, preserving a food, or

inhibiting physiological processes such

as sprouting or ripening. The final rule

does not prohibit the handler of an

organic handling operation from using

the FDA-approved applications of Xrays for inspecting food. The prohibition

on ionizing radiation in the final rule is

based solely on consumer preference as

reflected in the overwhelming public

comment stating that organically

handled foods should not be treated in

that manner.

(3) Some commenters recommend

that the final rule incorporate

definitions for the terms, ‘‘food

additives,’’ ‘‘extraction methods,’’

‘‘incidental additive,’’ and

‘‘substantially transform.’’ However,

these terms are not used in the final rule

and do not require a definition.

Definitions—Clarifications

Following our review of the

definitions provisions in the proposed

rule, we decided to further clarify the

following provision in the final rule:

We were concerned that ‘‘State

entity,’’ the meaning of which

encompasses both domestic and foreign

political subdivisions, may be confused

with ‘‘State,’’ the meaning of which is

limited to the States of the United

States, its territories, the District of

Columbia, and Puerto Rico. To avoid

any possible confusion as to which

provisions in this final rule apply to

States and which apply to the broader

political subdivisions, we have replaced

the term, ‘‘State entity,’’ with the term,

‘‘governmental entity,’’ while retaining

the same definition language in the

proposed rule.

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’; addresses

recordkeeping by certified production

and handling operations; and addresses

allowed and prohibited substances,

methods, and ingredients in organic

production and handling.

Description of Regulations

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 or food

group(s))’’ must be certified. Certified

operations must meet all applicable

requirements of these regulations.

This final rule becomes effective 60

days after its publication in the Federal

Register and will be fully implemented

18 months after its effective date.

Eighteen months after the effective date,

all agricultural products that are sold,

labeled, or represented as ‘‘100 percent

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

* * *’’ must be produced and handled

in compliance with these regulations.

Products entering the stream of

commerce prior to the effective date will

not have to be relabeled. The U.S.

Department of Agriculture (USDA) seal

may not be affixed to any ‘‘100 percent

organic’’ or ‘‘organic’’ product until 18

months after the final rule’s effective

date.

We anticipate that certifying agents

and production and handling operations

80552 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

will move as quickly as possible after

the effective date of the final rule to

begin operating under the national

organic standards. Certifying agents

must begin certifying organic

production and handling operations to

the national standards upon receipt of

their accreditation from the

Administrator. Any production or

handling operation or specified portion

of a production or handling operation

that has been already certified by a

certifying agent on the date that the

certifying agent receives its

accreditation under this part shall be

deemed to be certified under the Act

until the operation’s next anniversary

date of certification. We have taken this

approach because we believe that such

certifying agents will, upon the effective

date 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 also believe this

approach will provide relief to certified

operations which might 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

effective date of the final rule.

Certifying agents can apply for

accreditation anytime after the effective

date of the rule. Applications will be

processed on a first-come, first-served

basis. Those certifying agents who apply

for accreditation within the first 6

months after the effective date of the

final rule and are determined by the

Administrator to meet the requirements

for accreditation will be notified of their

status approximately 12 months after

the final rule’s effective date. 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.

Exempt and Excluded Operations

This regulation establishes several

categories of exempt or excluded

operations. An exempt or excluded

operation does not need to be certified.

However, operations that qualify as

exempt or excluded operations can

voluntarily choose to be certified. 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

annual income from organic sales is

exempt from certification. This

exemption is primarily designed for

those producers who market their

product directly to consumers. It will

also permit such producers to market

their products direct to retail food

establishments for resale to consumers.

The exemption is not restricted to U.S.

producers. However, as a practical

matter, we do not envision any

significant use of the exemption by

foreign producers because: (1) the

products from such operations cannot

be used as ingredients identified as

organic in processed products produced

by another handling operation, and (2)

it is unlikely that such operations will

be selling their products directly to

consumers in the United States.

An exempt producer or handler must

comply with the labeling requirements

of section 205.310 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 of section

205.310 and the applicable production

requirements in sections 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 only

agricultural products containing less

than 70 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 section 205.101(c); the

provisions for prevention of contact of

organic products with prohibited

substances in section 205.272; and the

labeling regulations in sections 205.305

and 205.310. 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) A handling operation or portion of

a handling operation that uses the word,

‘‘organic,’’ only on the information

panel is exempt from the requirements

in these regulations, except the

recordkeeping provisions of section

205.101(c); the provisions for

prevention of contact of organic

products with prohibited substances as

provided in section 205.272; and the

labeling regulations in sections 205.305

and 205.310. 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 section 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 * * *’’ 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

section 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 on the premises of the

retail food establishment raw and readyto-eat food from certified agricultural

products labeled as ‘‘100 percent

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

* * *’’ is excluded from the

requirements in these regulations,

except for the provisions for prevention

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80553

of contact of organic products with

prohibited substances as provided in

section 205.272 and the labeling

regulations in section 205.310. 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.

There is clearly a great deal of public

concern regarding the handling of

organic products by retail food

establishments. We have not required

certification of retail food

establishments at this time because of a

lack of consensus as to whether retail

food establishments should be certified,

a lack of consensus on retailer

certification standards, and a concern

about the capacity of existing certifying

agents to certify the sheer volume of

such businesses. Retail food

establishments, not exempt under the

Act, could at some future date be subject

to regulation under the NOP. Any such

regulation would be preceded by

rulemaking with an opportunity for

public comment.

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 per

violation under this program.

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 * * *’’ 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 by

authorized representatives of the

Secretary, the applicable State organic

program’s (SOP) 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 SOP’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.

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.

Allowed and Prohibited Substances

A certified operation must only use

allowed substances, methods, and

ingredients for the production and

handling of agricultural products that

are sold, labeled, or represented as ‘‘100

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

with * * *’’ for these products to be in

compliance with the Act and the NOP

regulations. Use of ionizing radiation,

sewage sludge, and excluded methods

are prohibited in the production and

handling of organic agricultural

products.

Applicability—Changes Based on

Comments

This subpart differs from the proposal

in several respects as follows:

(1) Violations of the Act or

Regulations. We have amended section

205.100 by adding a new paragraph (c),

which addresses violations of the Act

and these regulations. A number of

commenters advocated for provisions

within the final rule describing what

legal proceedings USDA would conduct

against operations or persons that

violate the NOP. We agree that this rule

should include provisions addressing

violations of the Act and these

regulations. Accordingly, we have

added at section 205.100 the misuse of

label provisions and false statement

provisions of section 2120 (7 U.S.C.

6519) of the Act. Specifically, section

205.100(c) provides that persons not in

compliance with the labeling

requirements of the Act or these

regulations are subject to a civil penalty

of not more than $10,000 per violation

and that persons making false

statements under the Act to the

Secretary, a governing State official, or

an accredited certifying agent shall be

subject to the provisions of section 1001

of Title 18, United States Code. The

provisions of the Act and these

regulations apply to all operations or

persons that sell, label, or represent

their agricultural product as organic.

80554 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

(2) Prohibition on Use of Excluded

Methods. We have moved section

205.600 from subpart G, Administrative,

to subpart B, Applicability, and

replaced paragraph (d), which referred

the reader to section 205.301, with new

paragraphs (d) through (g). As amended,

this section, redesignated as section

205.105, includes all of the provisions

covered under old section 205.600.

The vast majority of commenters

strongly supported the prohibition on

the use of excluded methods in organic

production and handling but raised

concerns that they could not point to

one provision that prohibited use of

excluded methods in all aspects of

organic production and handling. To

close what they perceived to be

‘‘loopholes’’ in the prohibition,

commenters made several suggestions

for inclusion of new provisions

prohibiting use of excluded methods in

particular aspects of organic production

and handling that they believed were

not covered in the proposed rule. Other

commenters pointed to inconsistencies

in the way the prohibition on use of

excluded methods was described in

different sections, raising concerns that

these apparent inconsistencies may

create confusion for organic operations,

certifiers, and consumers.

Although we intended that use of

excluded methods would be prohibited

in all aspects of organic production and

handling, the structure of the proposed

rule may not have made that clear. We

also share the concerns that, in

attempting to identify all aspects of

organic production and handling where

excluded methods might be used, we

may inadvertently have left out some

provisions, creating confusion for

organic operations, certifying agents,

and consumers and creating doubt as to

the scope of the prohibition on use of

excluded methods. Similarly, to the

extent that the prohibition on excluded

methods may have been described

differently in various sections of the

proposed rule, we also share the

concern that these inconsistencies could

create confusion.

As a result of these concerns, we have

created a new provision in section

205.105 that prohibits the use of

excluded methods (and ionizing

radiation and sewage sludge) generally.

This provision should alleviate

perceptions that some areas of organic

production may not have been covered

by the prohibitions in the proposed rule.

It also allows us to eliminate from the

regulation most of the individual

references to the prohibition on use of

these methods, thereby eliminating any

potential confusion where these

provisions may have appeared

inconsistent. These changes do not lift

the prohibition on use of these methods

in those sections. In fact, the purpose of

this new provision is to make clear that

use of these methods is prohibited in

the production and handling of organic

products.

(3) Animal Vaccines. The proposed

rule specifically asked for public

comment on the potential impact of the

prohibition on use of excluded methods

as it relates to animal vaccines. A

number of commenters raised concerns

that there may be some critical vaccines

that are only available in forms

produced using excluded methods.

Several commenters requested that we

prohibit use of animal vaccines

produced using excluded methods but

that we provide for a temporary

exemption until such time as vaccines

produced without using excluded

methods are approved for use on the

National List. Other commenters

requested that we prohibit use of

vaccines produced using excluded

methods without exception.

We have concluded that the potential

impact of prohibiting vaccines produced

using excluded methods on animal

production systems is still unknown.

We do not know of any critical animal

vaccine that is only available in a form

produced using excluded methods, but

it is unclear whether producers and

certifying agents are tracking the

possible use of such vaccines. There

also appears to be no international

consensus on the use in organic

production systems of animal vaccines

produced using excluded methods,

although there is precedent for such an

exemption. European Union regulations,

for example, allow for use of animal

vaccines produced using excluded

methods.

Based on comments received and

because the potential impact of the

prohibition on use of excluded methods

is still uncertain, we have created the

possibility at section 205.105(e) for the

NOSB to exercise one very narrow

exception to allow use of animal

vaccines produced using excluded

methods but only if they are explicitly

approved on the National List. We

believe the issue of animal vaccines

requires further deliberation and that it

is most appropriate to consider it

through the National List process,

which mandates review by the NOSB

and Technical Advisory Panels.

Consideration of animal vaccines

produced using excluded methods is

appropriate for the National List review

process because animal vaccines, we

believe, are most appropriately

considered synthetic materials. That is

why the provision is structured so that

vaccines produced using excluded

methods could only be used in organic

production if they are affirmatively

included on the National List. We do

not believe that a broad-based

exemption of the type suggested in some

comments, even if only temporary, is

appropriate.

The Act allows use of animal vaccines

in organic livestock production. Given

the general prohibition on the use of

excluded methods, however, we believe

that animal vaccines produced using

excluded methods should not be

allowed without an explicit

consideration of such materials by the

NOSB and without an affirmative

determination from the NOSB that they

meet the criteria for inclusion on the

National List. It is for that reason that

we have not granted this request of

commenters but, rather, provided an

opportunity for review of this narrow

range of materials produced using

excluded methods through the National

List process.

It is important to make clear,

however, that this provision does not

open all potential applications of

excluded methods to a case-by-case

review in the context of the National

List, nor are we proposing that any

particular vaccines be reviewed for

inclusion on the National List at this

time. The prohibition on use of

excluded methods applies across the

board to all phases of organic

production and handling. We are simply

responding to comments suggesting that

a narrow exception for animal vaccines

may be appropriate and providing for

the possibility that such an exception

could be invoked upon thorough review

and recommendation by the NOSB.

Applicability—Changes Requested But

Not Made

This subpart retains from the

proposed rule regulations on which we

received comments as follows:

(1) Exemption of Handling Operations

Producing Multiingredient Products.

Some commenters asserted that only

certified handling operations should be

allowed to identify ingredients in

multiingredient products as organic.

These commenters believe that

consumers will be misled if noncertified

handling operations are allowed to

identify ingredients as organic even if

the organic claim is limited to the

information panel. We do not agree with

these assertions and have retained the

proposed rule provisions that do not

require handler certification when a

product only identifies ingredients as

organic within the information panel.

Although handling operations only

making organic claims on the

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80555

information panel are exempt from

certification, these operations are

required to use organic product from

certified operations. They are also

required to prevent contact of organic

products with prohibited substances as

set forth in section 205.272, adhere to

the labeling provisions of sections

205.305 and 205.310, and maintain

records in accordance with section

205.101(c). We believe consumers will

understand the distinction between

products that have the organic nature of

the product stated on the principal

display panel and those that merely

identify an ingredient as organic on the

information panel.

(2) Retailer Exclusion from

Certification. Many commenters

objected to the provisions of section

205.101(b)(2) which exclude retail food

establishments from certification. These

commenters assert that only final

retailers that do not process agricultural

products should be excluded from

certification. There is clearly a great

deal of public concern regarding the

handling of organic products by retail

food establishments. We have not

required certification of retail food

establishments at this time because of a

lack of consensus as to whether retail

food establishments should be certified,

a lack of condenses on retailer

certification standards, and a concern

about the capacity of existing certifying

agents to certify the sheer volume of

such businesses. In addition, most

existing certification programs do not

include retail food establishments, and

we do not believe there is sufficient

consensus to institute such a significant

expansion in the scope of certification at

this time. However, since a few States

have established procedures for

certifying retail food establishments, we

will assess their experience and

continue to seek consensus on this issue

of establishing retailer provisions under

the NOP. Any such change would be

preceded by rulemaking with an

opportunity for public comment. The

exclusion of nonexempt retail food

establishments from this final rule does

not prevent a State from developing an

organic retail food establishment

program as a component of its SOP.

However, as with any component of an

SOP, the Secretary will review such

components on a case-by-case basis.

(3) Producer Exemption Level. Several

commenters advocated for an increase

in the producer exemption level above

the $5,000 limit. Comments supporting

the exemption suggested increasing the

statutory limit for qualifying for the

exemption to as high as $75,000. Other

commenters stated that all producers

should be certified and opposed the

exemption even though it is required by

the Act. These commenters were

concerned about maintaining the

integrity of the organic product and

about the lack of verification of the

exempt operations.

We have not increased or removed the

$5,000 producer exemption because the

exemption is mandated by section

2106(d) (7 U.S.C. 6505(d)) of the Act.

Our purpose is to limit the financial

burdens of certification on such

operations but not to exempt them from

the standards for organic production

and handling. Accordingly, exempt

production and handling operations

must comply with the applicable

organic production and handling

requirements of subpart C and the

labeling requirements of section

205.310.

Some of the commenters wanting a

change in the producer exemption level

suggested that the NOP add provisions

for restricting these producers to

marketing at farmers markets or

roadside stands. We disagree with these

comments. While we believe that most

producers qualifying for the exemption

are indeed likely to be small producers

who market their products directly to

consumers, we do not believe it is in the

best interest of these producers to

restrict their market opportunity to a

specific sales method.

A few comments suggested that we

establish a sliding-scale certification fee

based upon either the size of the

operation or sales of agricultural

product instead of the exemption. The

NOP does not establish fees for

certification. Certifying agents may

establish a sliding-scale system as long

as their fees are reasonable and applied

in a consistent and nondiscriminatory

manner.

Finally, some commenters expressed

concern that exempt operations were

forbidden from certification. 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) Handler exemption. Many

commenters disagreed with the

proposed rule provision providing for

an exemption of $5,000 to handlers.

These commenters asked the NOP to

remove the phrase, ‘‘or handlers,’’ from

the exemption provision. The

commenters argue that the handler

exemption is not authorized by the Act.

We disagree with the commenters, and

we have retained the handler exemption

in the final rule. The Act states that the

exemption is available to ‘‘persons’’

selling not more than $5,000 annually in

value of agricultural products. The Act’s

definition of ‘‘persons’’ includes

handlers. Thus, handlers grossing

$5,000 or less qualify for the exemption.

(5) Categories of Income to Qualify for

an Exemption. Some commenters want

the $5,000 producer/handler exemption

to include all sales of agricultural

products, not just sales of organic

agricultural products. These

commenters perceive this provision to

be a loophole for large, split operations.

We disagree with these commenters,

and we have retained the $5,000

producer/handler exemption based

upon total sales of organic agricultural

products. We do not believe there is a

significant number of split operations

which only gross $5,000 in annual sales

of organic products and, therefore,

qualify for this exemption. In setting the

exemption levels, the Department

sought to maximize the benefits to small

producers afforded by the Act while

setting a threshold level that minimizes

the potential of product mislabeling.

(6) Limiting Handler Exclusions.

Many commenters argued that brokers,

distributors, warehousers, and

transporters should not be excluded

from certification. We do not agree with

these commenters. Brokers, distributors,

warehousers and transporters do not

alter the product and, in many cases, do

not take title to the product. Certifying

these handlers would be an unnecessary

burden on the industry. Traditionally,

distributors and trucking companies

have been excluded from State and

private certification requirements.

(7) Recordkeeping Requirements for

Excluded Operations. Several

commenters argued that excluded

operations should be required to comply

with the same recordkeeping

requirements as exempt operations.

Some commenters expressed concern

over the inability to verify compliance

for either exempt or excluded

operations and asked that exempt or

excluded operations be subject to

additional recordkeeping requirements.

We disagree with these commenters and

have retained the provisions from the

proposed rule on recordkeeping for

excluded operations. Given the nature

of these excluded operations, for

example, operations that only sell

prepackaged organic products, we

believe that extensive recordkeeping

requirements would be an unwarranted

regulatory burden.

(8) Recordkeeping Burden on Small

Certified Operations. Some commenters

questioned whether small certified

operations have the ability to implement

a recordkeeping system which complies

with the provisions of section 205.103.

80556 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

These commenters argue that

recordkeeping requirements must be

tailored to the scale of the operation. We

do not believe that the recordkeeping

requirements as described in section

205.103 conflict with the suggestions of

the commenters. The recordkeeping

requirements provide that the records

must be adapted to the particular

business that the certified operation is

conducting and be sufficient to

demonstrate compliance with the Act

and regulations. It is USDA’s intent that

each production and handling operation

decide for itself what recordkeeping

scheme is appropriate, given the

complexity and scope of the individual

business. These provisions provide

considerable latitude for each

production and handling operation to

decide what records are necessary to

demonstrate its compliance with the Act

and the NOP regulations.

(9) Public Access to Records. Several

commenters asked that the public have

full access to any certifying agent record

on organic production and/or handling

operations. Other commenters

expressed concerns about certifying

agents divulging confidential business

information and asked that records

containing confidential business

information not be taken from the

business’ physical location.

We have not changed this provision.

The recordkeeping requirements are

designed to seek a balance between the

public’s right to know and a business’s

right to retain confidential business

information. Certifying agents must

have access to certain records during

their review of the operation to

determine the operation’s compliance

with the NOP. However, certifying

agents are required to protect an

operation’s confidential business

information. Requiring full public

access could compromise a business’

competitive position and place an unfair

burden on the organic industry.

(10) Fair Labor Practices on Organic

Farms. Many commenters asked the

NOP to develop fair labor practice

standards as a part of the final rule. We

have not adopted these comments.

Other statutes cover labor and worker

safety standards. The Act does not

provide the authority to include them in

these regulations. However, these

regulations do not prohibit certifying

agents from developing a voluntary

certification program, separate from

organic certification, that address fair

labor and worker safety standards.

(11) ‘‘Transitional Organic’’ Label.

Several commenters requested that the

NOP adopt regulations on the

conversion of operations to organic

production and create a ‘‘transitional

organic’’ label. We have not included

provisions within the final rule that

provide for ‘‘transitional organic’’

labeling. Although many commenters

requested that we provide for transition

labeling, there does not appear to be

sufficient consensus to establish such a

standard at this time. Given this lack of

consensus, it is unclear what

marketplace value such a label might

have, and we are concerned that

allowing such a label at this point might

lead to greater consumer confusion

rather than providing clarity.

Applicability—Clarifications

Clarification is given on the following

issues raised by commenters as follows:

(1) ‘‘Genetic’’ drift. Many commenters

raised issues regarding drift of the

products of excluded methods onto

organic farms. These commenters were

concerned that pollen drifting from

near-by farms would contaminate crops

on organic operations and that, as a

result, organic farmers could lose the

premium for their organic products

through no fault of their own. Many

commenters argued that we should use

this rule to somehow shift the burden to

the technology providers who market

the products of excluded methods or the

nonorganic farming operations that use

their products. Some, for example,

suggested that this regulation should

require that the nonorganic operations

using genetically engineered varieties

plant buffer strips or take other steps to

avoid drift onto organic farms. Others

suggested that the regulation could

provide for citizens’ right to sue in cases

of drift.

While we understand the concerns

that commenters have raised, the kind

of remedies they suggested are outside

the scope of the Act and this regulation.

The Act only provides for the regulation

of organic operations. We cannot use

this regulation to impose restrictions,

such as requiring buffer strips or other

measures, on operations that are not

covered by the Act. Similarly, while

citizens may have the ability to bring

suit under other laws, the Act itself does

not provide for the right to bring suit as

a Federal cause of action, and we could

not grant it through this regulation.

Drift has been a difficult issue for

organic producers from the beginning.

Organic operations have always had to

worry about the potential for drift from

neighboring operations, particularly

drift of synthetic chemical pesticides.

As the number of organic farms

increases, so does the potential for

conflict between organic and

nonorganic operations.

It has always been the responsibility

of organic operations to manage

potential contact of organic products

with other substances not approved for

use in organic production systems,

whether from the nonorganic portion of

a split operation or from neighboring

farms. The organic system plan must

outline steps that an organic operation

will take to avoid this kind of

unintentional contact.

When we are considering drift issues,

it is particularly important to remember

that organic standards are process

based. Certifying agents attest to the

ability of organic operations to follow a

set of production standards and

practices that meet the requirements of

the Act and the regulations. This

regulation prohibits the use of excluded

methods in organic operations. The

presence of a detectable residue of a

product of excluded methods alone does

not necessarily constitute a violation of

this regulation. As long as an organic

operation has not used excluded

methods and takes reasonable steps to

avoid contact with the products of

excluded methods as detailed in their

approved organic system plan, the

unintentional presence of the products

of excluded methods should not affect

the status of an organic product or

operation.

Issues of pollen drift are also not

confined to the world of organic

agriculture. For example, plant breeders

and seed companies must ensure

genetic identity of plant varieties by

minimizing any cross-pollination that

might result from pollen drift. Under

research conditions, small-scale field

tests of genetically engineered plants

incorporate various degrees of biological

containment to limit the possibility of

gene flow to other sexually compatible

plants. Federal regulatory agencies

might impose specific planting

requirements to limit pollen drift in

certain situations. Farmers planting

nonbiotechnology-derived varieties may

face similar kinds of questions if crosspollination by biotechnology-derived

varieties alters the marketability of their

crop. These discussions within the

broader agricultural community may

lead to new approaches to addressing

these issues. They are, however, outside

the scope of this regulation by

definition.

(2) Additional NOP Standards for

Specific Production Categories. Many

commenters asked that the NOP include

in the final rule certification standards

for apiculture, greenhouses,

mushrooms, aquatic species, culinary

herbs, pet food, and minor animal

species (e.g., rabbits) food. The NOP

intends to provide standards for

categories where the Act provides the

authority to promulgate standards.

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80557

During the 18-month implementation

period, the NOP intends to publish for

comment certification standards for

apiculture, mushrooms, greenhouses

and aquatic animals. These standards

will build upon the existing final rule

and will address only the unique

requirements necessary to certify these

specialized operations.

Some of the other questions raised by

commenters are already addressed in

the final rule. For example, feed for

minor species is covered by livestock

feed provisions within subpart C and

the livestock feed labeling provisions

within subpart D. The production and

utilization of culinary herbs, including

herbal teas, is covered by the provisions

of the final rule. We do not envision

needing to do additional rulemaking on

these two categories.

Other requests by commenters have

not been addressed. We have not

addressed the labeling of pet food

within this final rule because of the

extensive consultation that will be

required between USDA, the NOSB, and

the pet food industry before any

standards on this category could be

considered.

(3) Standards for Cosmetics, Body

Care Products, and Dietary

Supplements. A few commenters asked

that the NOP include in the final rule

certification standards for cosmetics,

body care products, and dietary

supplements. Producers and handlers of

agricultural products used as

ingredients in cosmetics, body care

products, and dietary supplements

could be certified under these

regulations. Producers and handlers of

these ingredients might find an

increased market value for their

products because of the additional

assurance afforded by certification. The

ultimate labeling of cosmetics, body

care products, and dietary supplements,

however, is outside the scope of these

regulations.

(4) Private Label Products. Many

commenters asked about the

certification status of so-called ‘‘private

label products.’’ Private label products

are items for which a retailer contracts

with a processor to produce the product

to the retailer’s specifications and to be

sold under the retailer’s name.

Commenters believe the proposed rule

was unclear on the certification

requirements for these products. Any

product labeled as ‘‘100 organic,’’

‘‘organic,’’ or ‘‘made with * * *’’ must

be certified regardless of the business

arrangements under which the product

was produced. 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

complying with the applicable organic

production or handling regulations.

(5) State Oversight of Exempt and

Excluded Operations. Many

commenters asked for clarification on

the State’s enforcement responsibility

for exempt and excluded operations.

The NOP is ultimately responsible for

the oversight and enforcement of the

program, including oversight of exempt

and excluded operations and cases of

fraudulent or misleading labeling. We

expect, however, that States would want

to monitor for false claims or misleading

labeling under these regulations and

would forward any complaints to the

NOP. States that have an approved SOP

which includes regulation of operations

excluded under the NOP would be

required to enforce those provisions.

(6) Nonedible Fibers Products in the

NOP. Some commenters asked the NOP

to clarify the certification status of fibers

such as cotton and flax. The final rule

allows for certification of organically

produced fibers such as cotton and flax.

However, the processing of these fibers

is not covered by the final rule.

Therefore, goods that utilize organic

fibers in their manufacture may only be

labeled as a ‘‘made with * * *’’

product; e.g., a cotton shirt labeled

‘‘made with organic cotton.’’

(7) Recordkeeping for Operations That

Produce Organic and Nonorganic

Product. Several commenters

recommended that ‘‘split operations,’’

which are operations producing organic

and nonorganic agricultural products,

be required to maintain separate

records. These commenters believe that

the proposed rule did not provide

adequate provision for the maintenance

of separate recordkeeping. The

provisions within section 205.103(b)(1)

and (b)(2) do indicate that operations

which produce both organic and

nonorganic agricultural products must

maintain a recordkeeping system that

differentiates the organic portion of the

operations from the records related to

other portions of operations.

(8) NOP Program Manual. A few

commenters, particularly States, noted

that the proposed rule made several

references to program manuals as a

mechanism for further clarifying certain

portions of the rule. These commenters

asked whether certifying agents should

consider information contained in these

manuals as enforceable regulations.

NOP program manuals cannot be and

are not intended to be the equivalent of

regulations. Rather, the NOP envisions

development of a program manual to

serve as guidance for certifying agents

regarding implementation- and

certification-related issues. Material

contained within the program manual

will be designed to address the organic

agriculture principles of each final rule

section, as appropriate, and to offer

information that certifying agents

should consider in making certification

decisions that will be reliably uniform

throughout the country. The use of

program manuals as guidance to assist

in developing uniform certification

decisions is a standard industry

practice, and the NOP has compiled

examples of program manuals from both

large and small certifiers. Because the

NOP intends to use the examples it has

acquired as the basis for any NOP

guidance manual, we believe that most

certifying agents will find such NOP

manual, when developed, familiar and

useful. Additionally, we will use the

NOSB public meeting process to seek

guidance from industry and the public

on what information would be useful in

a program manual and to provide input

on the program manual as it is

developed. Of course, if in developing

program guidance, it appears that

modifications or changes in the NOP

final rule are required, such

modifications would be made through

notice and comment rulemaking.

(9) Use of Products from Exempt

Operations as Organic Ingredients. A

few commenters responded to the

question in the proposed rule in which

we asked whether handlers should be

allowed to identify organically

produced products produced by exempt

production operations as organic

ingredients. The proposed rule provided

that all ingredients identified as organic

in a multiingredient product must have

been produced by a production or

handling operation certified by an

accredited certifying agent.

The commenters supported this

position. These commenters believe that

the potential for mislabeling outweighed

any financial benefit that might accrue

to exempt producers through expanded

market opportunities. We concur, and,

therefore, have retained the prohibition

on using products produced by an

exempt production or handling

operation as organic ingredients.

(10) Exemption of Handling

Operations Producing Multiingredient

Products. We have amended section

205.101(a)(3) by changing ‘‘50 percent’’

to ‘‘70 percent’’ to make it consistent

with the amendments to the labeling

provisions. We have also edited section

205.101(a)(4) for clarification purposes.

Additionally, we amended sections

205.101(a)(3) and 205.101(a)(4) by citing

the labeling requirements of section

205.305. These amendments have been

made to clarify that handling operations

exempted under these sections are

80558 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

subject to the labeling requirements of

section 205.305.

(11) Production and Handling in

Compliance with Federal Statutes. We

have amended section 205.102 by

removing paragraph (c). This paragraph

provided that 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 compliance with applicable

Federal statutes and their implementing

regulations. We have taken this action

because the provision is an identical

restatement of section 2120(f) (7 U.S.C.

6519(f)) of the Act. The Act makes clear

that all production and handling

operations are to comply with all

applicable Federal statutes and their

implementing regulations. Therefore, it

is unnecessary to repeat the requirement

in these regulations.

(12) Foreign Applicants. We have

removed section 205.104, which

provided that 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.

These regulations, as written, apply

equally to all applicants for

accreditation, accredited certifying

agents, applicants for organic

certification, and certified organic

operations. Accordingly, we have

determined that section 205.104 is not

necessary.

Subpart C—Organic Crop, Wild Crop,

Livestock, and Handling Requirements

Description of Regulations

General Requirements

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 or food

group(s)).’’ The producer or handler of

an organic production or handling

operation must comply with all

applicable provisions of subpart C. Any

production 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 (SOP). 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.

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, including the

documentation of commercial

availability, as applicable. 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 management practices and physical

barriers established to prevent

commingling of organic and nonorganic

products on a split operation and to

prevent contact of organic production

and handling operations and products

with prohibited substances. 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, the final rule requires an

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,

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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. A producer and handler

who bases the selection of seed and

planting stock material under section

205.204 or an agricultural ingredient

under section 205.301 on the

commercial availability of that

substance must provide documentation

in the organic system plan.

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.

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

management practices and physical

barriers established 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.

The specific requirements to be

included in an organic system plan are

not listed here. 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

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 sections 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. The

producer must manage crop nutrients

and soil fertility through rotations, cover

crops, and the application of plant and

animal materials. The producer must

manage plant and animal 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. Plant

and animal materials include raw

animal manure, composted plant and

animal materials, and uncomposted

plant materials. 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 materials must be produced

through a process that establishes an

initial carbon-to-nitrogen (C:N) ratio of

between 25:1 and 40:1 and achieves a

temperature between 131°F and 170°F.

Composting operations that utilize an

in-vessel or static aerated pile system

must maintain a temperature within that

range for a minimum of 3 days.

Composting operations that utilize a

windrow composting system must

maintain a temperature within that

range for a minimum of 15 days, during

which time the materials must be turned

five times.

In addition to these practices and

materials, a producer may apply a crop

nutrient or soil amendment included on

the National List of synthetic substances

allowed in crop production. The

producer may apply a mined substance

of low solubility. A mined substance of

high solubility may only be applied if

the substance is used in compliance

with the annotation on the National List

of nonsynthetic materials prohibited in

crop production. 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. A plant or animal

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.

The producer may not use any fertilizer

or composted plant and animal material

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 is prohibited, except that

burning may be used to suppress the

spread of disease or to stimulate seed

germination.

The producer must use organically

grown seeds, annual seedlings, and

planting stock. The producer may use

untreated nonorganic seeds and

planting stock when equivalent organic

varieties are not commercially available,

except that organic seed must be used

for the production of edible sprouts.

Seed and planting stock treated with

substances that appear on the National

List 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

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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.

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

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 conditions for using the

substance are documented in the

organic system plan. The producer must

not use lumber treated with arsenate or

other prohibited materials for new

installations or replacement purposes

that comes into contact with soil or

livestock.

A wild crop that is to be sold, labeled,

or represented as ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with organic

(specified ingredients or food group(s))’’

must be harvested from a designated

area that has had no prohibited

substances applied to it for a period of

3 years immediately preceding the

harvest of the wild crop. 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

Any livestock product to be sold,

labeled, or represented as organic must

be maintained under continuous organic

management from the last third of

gestation or hatching with three

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

have been under continuous organic

management beginning no later than 1

year prior to the production of such

products, except for the conversion of

an entire, distinct herd to organic

production. For the first 9 months of the

year of conversion, the producer may

provide the herd with a minimum of 80-

percent feed that is either organic or

produced from land included in the

organic system plan and managed in

compliance with organic crop

requirements. During the final 3 months

of the year of conversion, the producer

must provide the herd feed in

compliance with section 205.237. Once

the herd has been converted to organic

production, all dairy animals shall be

under organic management from the last

third of gestation. 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 gestation.

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 the last third of

gestation may not be sold, labeled, or

represented as organic slaughter stock.

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.

Except for nonsynthetic substances

and synthetic substances included on

the National List that may be used as

feed supplements and additives, 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 a

feed ration including vitamins,

minerals, protein, and/or amino acids,

fatty acids, energy sources, and, for

ruminants, fiber. 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

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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 or

during lactation 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.

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 for growth

promotion 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.

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. These

standards 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.

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 the outdoors,

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;

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

Mechanical or biological methods can

be used to process an agricultural

product intended to be sold, labeled, or

represented as ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with organic

ingredients’’ for the purpose of retarding

spoilage or otherwise preparing the

agricultural product for market.

Processed multiingredient products

labeled ‘‘100 percent organic,’’ may only

use wholly organic ingredients,

pursuant to paragraph (a) of section

205.301. Nonagricultural substances

that are allowed for use on the National

List and nonorganically produced

agricultural products may be used in or

on ‘‘organic’’ and ‘‘made with * * *’’

products pursuant to paragraphs (b) and

(c) of section 205.301, respectively.

Documentation of commercial

availability of each substance to be used

as a nonorganic ingredient in products

labeled ‘‘organic’’ must be listed in the

organic handling system plan in

accordance with section 205.201.

Handlers are prohibited from using:

(1) Ionizing radiation for the treatment

or processing of foods; (2) ingredients

produced using excluded methods; or

(3) volatile synthetic solvents in or on

a processed product or any ingredient

which is sold, labeled, or represented as

organic. The prohibition on ionizing

radiation for the treatment or processing

of foods is discussed under

Applicability, section 205.105. This rule

does not prohibit an organic handling

operation from using Food and Drug

Administration (FDA)-approved X-rays

for inspecting packaged foods for

foreign objects that may be

inadvertently commingled in the

packaged product.

The two paragraphs on excluded

methods and ionizing radiation in

section 205.270(c) of the proposed rule

are replaced with new paragraph (c)(1)

which cross-references those practices

under paragraphs (e) and (f) of section

205.105. New section 205.105 clearly

specifies that ionizing radiation and

excluded methods are two practices that

handlers must not use in producing

organic agricultural products and

ingredients. The prohibition on the use

of volatile synthetic solvents, also

included under paragraph (c) of section

205.270 does not apply to nonorganic

ingredients in ‘‘made with * * *’’

products.

The practice standard for facility pest

management under section 205.271

requires the producer or handler

operating a facility to use management

practices to control and prevent pest

infestations. Prevention practices in

paragraph (a) include removing pest

habitats, 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 in paragraph (b) include

mechanical or physical controls, such as

traps, light, or sound. Lures and

repellents using nonsynthetic

substances may be used as pest controls.

Lures and repellents with synthetic

substances that are allowed on the

National List also may be used.

Prevention and control practices in

paragraphs (a) and (b) may be used

concurrently.

If the practices in paragraphs (a) and

(b) are not effective, amended paragraph

(c) provides that handlers may then use

a nonsynthetic or synthetic substance

consistent with National List. If the

measures and substances provided

under paragraphs (a), (b), and (c) are not

80562 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

effective, synthetic substances not on

the National List may be used to control

pest infestations. Under new paragraph

(d), the handler and the operation’s

certifying agent, prior to using such a

substance, must agree on the substance

to be used to control the pest, measures

to be taken to prevent contact with

organically produced product, and

ingredients that may be in the handling

facility.

This rule recognizes that certain local,

State, and Federal laws or regulations

may require intervention with

prohibited substances before or at the

same time substances allowed in

paragraphs (b) and (c) are used. To the

extent that this occurs, this rule permits

the handler to follow such laws and

regulations to market a product as

organically handled, provided that the

product does not come into contact with

the pest control substance used.

The extent of pest infestation cannot

be foreseen when an organic plan is

submitted by the certified operation and

approved by the certifying agent. A

handler who uses any nonsynthetic or

synthetic substance to control facility

pests must update its organic handling

system plan to address all measures

taken or intended to be taken to prevent

contact between the substance and any

organically produced ingredient or

finished product.

Section 205.272 provides additional

practice standards that must be followed

by an organic handling operation to

prevent the commingling of organic and

nonorganic products and to 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 certified organic

operations may receive temporary

variances from the production and

handling provisions of this subpart. The

Administrator may establish temporary

variances due to: (1) Natural disasters

declared by the Secretary; (2)

unavoidable business interruption

caused by natural catastrophes such as

drought, wind, fire, flood, excessive

moisture, hail, tornado, or earthquake;

or (3) to conduct research on organic

production and handling techniques or

inputs. An SOP’s governing State

official or a certifying agent may

recommend that the Administrator

establish a temporary variance for

various reasons including an

unavoidable business interruption. The

Administrator will determine how long

a temporary variance will be in effect at

the time it is established, subject to such

extension as the Administrator deems

necessary. Temporary variances may not

be issued to allow use of any practice,

material, or procedure which is

prohibited under section 205.105.

The proposed rule inadvertently

omitted the SOP’s governing State

official as having authority to

recommend a temporary variance to the

Administrator. We have added that

authority in paragraph (b) of section

205.290.

Upon notification by the

Administrator that a temporary variance

has been established, the certifying

agent must inform each production and

handling operation it certifies that may

be affected by the temporary variance.

For example, if a drought causes a

severe shortage of organically produced

hay, a dairy operation may 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 nonorganic hay used

and the timeframe needed to restore the

total feed ration to organic sources. The

certifying agent may require that the

next organic plan include contingency

measures to avoid the need to resort to

nonorganic feed in case of a future

shortage.

General—Changes Based on Comments

This subpart differs from the proposal

in several respects as follows:

(1) Maintain or Improve Provision for

Production Operations Only. A number

of commenters questioned whether the

requirement in the proposed rule that an

operation must ‘‘maintain or improve

the natural resources of the operation,

including soil and water quality’’

applied to handling as well as

production operations. They stated that

handling operations are not integrated

into natural systems the way that

production systems are. As a result,

these commenters were uncertain how

handlers could fulfill the ‘‘maintain or

improve’’ requirement.

The ‘‘maintain or improve’’

requirement addresses the impact of a

production operation on the natural

resource base that sustains it and, as

such, does not apply to handling

operations. We have modified the final

rule in section 205.200 by limiting the

‘‘maintain or improve’’ requirement to

production practices.

(2) Management Practices and

Physical Barriers to Prevent

Commingling. Many commenters,

including numerous certifying agents,

stated that the proposed provisions for

an organic system plan were not

adequate for the task of certifying an

operation that produces both organic

and nonorganic products. The

commenters requested that the final rule

incorporate the provisions established

in the OFPA for certifying these split

operations. These provisions include

separate recordkeeping for the organic

and nonorganic operations and the

implementation of protective practices

to prevent the commingling of product

and the unintentional contact of organic

product with prohibited substances. We

have amended the provisions for an

organic system plan in section

205.201(a)(5) to require greater

accountability regarding the segregation

of organic and nonorganic products in a

split operation. The changes we made

incorporate language from the OFPA

(‘‘physical facilities, management

practices’’) to provide clear criteria for

producers, handlers and certifying

agents to agree upon an organic system

plan that protects the integrity of

organic product.

(3) Commercial Availability. The

proposed rule required that a raw or

processed agricultural product sold,

labeled, or represented as organic must

contain not less than 95 percent

organically produced raw or processed

agricultural product. Additionally,

section 205.606 of the proposed rule

allowed any nonorganically produced

agricultural product to be used in the 5

percent nonorganic component of an

agricultural product sold, labeled, or

represented as organic. Many

commenters objected to these provisions

and recommended that nonorganically

produced agricultural products should

only be allowed in an organic product

when the organically produced form

was not commercially available.

Commenters stated that allowing

nonorganically produced agricultural

products within the 5 percent would

significantly weaken demand for many

organically produced commodities,

especially herbs and spices. These

commenters stated that herbs and spices

often constitute less than 5 percent of

the ingredients in a raw or processed

agricultural product and that handlers

producing an organic product would

instinctively seek out the less expensive

nonorganic variety. They also indicated

that the 5 percent component is an

important market for many products

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80563

produced from organically produced

livestock, such as milk derivatives and

meat by-products, that are not typically

marketed directly to consumers.

Commenters stated that the

preponderance of current certification

programs use the commercial

availability criterion when determining

whether a nonorganically produced

agricultural product may be used within

the 5 percent component. Commenters

cited the National Organic Standards

Board’s (NOSB) recommendation that

organic agricultural products be used in

this 5 percent component unless they

are commercially unavailable and

requested that the final rule incorporate

the criteria for determining commercial

availability that accompanied that

NOSB recommendation.

We agree with commenters that a

preference for organically produced

agricultural commodities, when

commercially available, can benefit

organic producers, handlers, and

consumers in a variety of ways. We

believe that the commercial availability

requirement may allow consumers to

have confidence that processed

products labeled as ‘‘organic’’ contain

the highest feasible percentage of

organic ingredients. Some producers

may benefit from any market incentive

to supply organically produced minor

ingredients that handlers need for their

processed products. We recognize that

the provision does impose an additional

requirement on handlers who must

ascertain whether the agricultural

ingredients they use are commercially

available in organic form. The NOSB

recommended that the final rule contain

a commercial availability provision

based upon the guidelines developed by

the American Organic Standards project

of the Organic Trade Association. For

these reasons, we have amended the

final rule to require that an agricultural

commodity used as an ingredient in a

raw or processed product labeled as

organic must be organic when the

ingredient is commercially available in

an organic form.

While recognizing the potential

benefits of applying the commercial

availability standard to all agricultural

ingredients in a processed product, we

are concerned that enforcing this

provision could impose an excessive

burden on handlers. Although many

commenters stated that some existing

certifying agents apply a commercial

availability standard, we do not have

complete information on the criteria

used by these certifying agents, and we

are unsure whether a consensus exists

on criteria for commercial availability

within the organic community.

Additionally, we are concerned that,

unless the standard is clearly articulated

and consistently interpreted and

enforced, it will not be effective.

Disagreement among certifying agents

regarding when and under what

circumstances an ingredient is

commercially available would

undermine our intent to create an

equitable and enforceable standard.

AMS is soliciting additional comment

and information on a number of issues

concerning the development of

standards for the commercial

availability of organically produced

agricultural commodities used in

processed products labeled as

‘‘organic.’’ On the basis of these

comments and information and

additional recommendations that the

NOSB may develop, AMS will develop

a commercial availability standard for

use in implementing the final rule. AMS

intends to develop the commercial

availability standard and incorporate it

within the final rule prior to the

commencement of certification

activities by accredited certifying

agents. This approach will provide

organic handlers and certifying agents

the standard necessary to incorporate

the consideration of commercial

availability of ingredients in an organic

system plan at the time that the USDA

organic standard comes into use.

Specifically, AMS requests comments

and information addressing the

following questions:

What factors, such as quantity,

quality, consistency of supply, and

expense of different sources of an

ingredient, should be factored into the

consideration of commercial

availability? What relative importance

should each of these factors possess,

and are there circumstances under

which the relative importance can

change?

What activities and documentation

are sufficient to demonstrate that a

handler has taken appropriate and

adequate measures to ascertain whether

an ingredient is commercially available?

How can AMS ensure the greatest

possible degree of consistency in the

application of the commercial

availability standard among multiple

certifying agents?

Could potentially adverse effects of a

commercial availability standard, such

as uncertainty over the cost and

availability of essential ingredients,

impact or impede the development of

markets for organically processed

products?

What economic and administrative

burdens are imposed by the commercial

availability standards found in existing

organic certification programs?

How would producers benefit from

market incentives to increase use of

organic ingredients that result from a

commercial availability standard?

Would lack of a commercial

availability standard provide a

disincentive for handlers of products

labeled ‘‘organic’’ to seek out additional

organic minor ingredients? What

impacts could this have on producers of

minor ingredients?

AMS welcomes any new or

unpublished research results or

information that exists concerning a

commercial availability standard. AMS

specifically invites comment from

establishments which currently operate

using commercial availability or a

comparable provision in the conduct of

their business. AMS will receive

comment on this issue until 90 days

after publication of the final rule.

(4) Conservation of Biodiversity. Many

commenters recommended amending

the definition of organic production to

include the requirement that an organic

production system must promote or

enhance biological diversity

(biodiversity). Commenters stated that

the definitions for organic production

developed by the NOSB and the Codex

Commission include this requirement.

We agree with these commenters and

have amended the definition of organic

production to require that a producer

must conserve biodiversity on his or her

operation. The use of ‘‘conserve’’

establishes that the producer must

initiate practices to support biodiversity

and avoid, to the extent practicable, any

activities that would diminish it.

Compliance with the requirement to

conserve biodiversity requires that a

producer incorporate practices in his or

her organic system plan that are

beneficial to biodiversity on his or her

operation.

General—Changes Requested But Not

Made

This subpart retains from the

proposed rule regulations on which we

received comments as follows:

Organic Plan Excessively Restrictive.

One organic inspector was concerned

that the requirements of the organic

system plan were too prescriptive and

would create an excessive paper work

burden for producers and handlers. The

commenter stated that the excessive

specificity of certain requirements

(composition and source of every

substance used), combined with the

ambiguity of others (soil and tissue

testing required but with no mention of

the frequency), would confuse the

working relationship between a

producer or handler and his or her

certifying agent. The commenter was

80564 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

concerned that strict adherence to the

specifications in the organic system

plan would compromise the ability of

producers and handlers to run their

businesses. While agreeing that

flexibility in the development of the

organic system plan was valuable, the

commenter stated that producers and

handlers, not the certifying agent, must

retain the primary managerial role for

their operation. Other commenters

maintained that the organic system plan

requirements were too ambiguous and

would inhibit certifying agents’ efforts

to review necessary information. For

example, a trade association commented

that the absence of specific

recordkeeping requirements for

livestock feed materials, medications,

and health care activities would impair

compliance monitoring.

The provisions for an organic system

plan were one of the most significantly

revised components of the proposed

rule, and, with minor changes related to

split operations, we have retained them

in the final rule. These provisions

provide ample discretion for producers,

handlers, and certifying agents to

perform their duties while recognizing

that mutual consent is a prerequisite for

them to meet their responsibilities. The

organic system plan enables producers

and handlers to propose and certifying

agents to approve site and operationspecific practices that fulfill all

applicable program requirements.

Producers and handlers retain the

authority to manage their operations as

they deem necessary, but any actions

they undertake that modify their organic

system plan must be approved by the

certifying agent. With regard to

recordkeeping, certifying agents are

authorized to require the additional

information, such as the livestock

records mentioned in the comment, that

they deem necessary to evaluate

compliance with the regulations.

One certifying agent stated that the

requirement to maintain or improve the

natural resources of the operation was

worthy in principle but unreasonable to

achieve. This commenter stated that the

long-term consequences of an organic

system plan could not be foreseen and

recommended requiring that producers

‘‘must endeavor’’ to maintain or

improve the operation’s natural

resources. We have not changed this

requirement because the vast majority of

commenters supported an organic

system plan that mandated the

‘‘maintain or improve’’ principle. A

good working relationship between the

producer and his or her certifying agent,

including the annual inspection and

accompanying revisions to the organic

system plan, can rectify the unforeseen

and unfavorable conditions that arise.

Crop Production—Changes Based on

Comments

This subpart differs from the proposal

in several respects as follows:

(1) Crop nutrient management. The

fundamental requirement of the soil

fertility and crop nutrient management

practice standard, that tillage,

cultivation, and nutrient management

practices maintain or improve the

physical, chemical, and biological

condition of the soil and minimize

erosion, remains unaltered. The

proposed rule required that a producer

budget crop nutrients by properly

utilizing manure or other animal and

plant materials, mined substances of

low or high solubility, and allowed

synthetic amendments. Many

commenters disagreed with using the

term, ‘‘budget,’’ which they considered

too limiting to characterize nutrient

management in organic systems. These

commenters recommended that the

practice standard instead emphasize the

diverse practices used in organic

systems to cycle nutrients over extended

periods of time.

We agree with these commenters and

have amended the final rule to require

that producers manage crop nutrients

and soil fertility through the use of crop

rotations and cover crops in addition to

plant and animal materials.

Additionally, we clarified that

producers may manage crop nutrients

and soil fertility by applying mined

substances if they are used in

compliance with the conditions

established in the National List. Finally,

we removed the word, ‘‘waste,’’ from

our description of animal and plant

materials in the proposed rule to

emphasize the importance of these

resources in organic soil fertility

management.

(2) Compost Practice Standard. The

proposed rule required that a composted

material used on an organic operation

must be produced at a facility in

compliance with the Natural Resource

Conservation Service (NRCS) practice

standard. While many commenters

agreed with the need for greater

oversight of the feedstocks and

procedures used to produce compost,

most stated that the NRCS practice

standard would not be suitable for this

purpose. Commenters stated that the

requirements in the NRCS practice

standard were not designed for organic

operations and would prohibit many

established, effective composting

systems currently used by organic

producers. For example, adoption of the

NRCS practice standard would prevent

producers from using nonfarm wastes as

compost feedstocks. Materials such as

food processing by-products and leaves

from curbside collection programs have

long been used with beneficial results.

Commenters also stated that the

minimum acceptable requirements for

the design, construction, and operation

of a composting facility contained in the

practice standard were appropriate for a

voluntary cost share program but were

excessive as a compliance requirement

for organic certification. Commenters

questioned whether producers could

justify the investment of time and

resources needed to comply with the

multiple design and operation criteria

specified in the NRCS practice standard.

We agree with commenters who

stated that, given the diversity of

composting systems covered by a

national organic standard, requiring full

compliance with the NRCS practice

standard would be overly prescriptive.

We maintain, however, that

implementation of the OFPA requires a

rigorous, quantitative standard for the

production of compost. The OFPA

contains significant restrictions on

applying raw manure that are reflected

in the soil fertility and crop nutrient

management practice standard. These

restrictions pertain to raw manure and

do not apply once fresh animal

materials are transformed into a

composted material. An organic

producer using a composted material

containing manure must comply with

the nutrient cycling and soil and water

conservation provisions in his or her

organic system plan but is not

constrained by the restrictions that

apply to raw manure. Therefore,

producers intending to apply soil

amendments will require clear and

verifiable criteria to differentiate raw

manure from composted material. We

developed the requirements in the final

rule for producing an allowed

composted material by integrating

standards used by the Environmental

Protection Agency (EPA) and USDA’s

Natural Resources Conservation Service

(NRCS). The requirements for the

carbon-to-nitrogen (C:N) ratio for

composting materials are the same as

that found in the NRCS practice

standard for a composting facility. The

time and temperature requirements for

in-vessel, static aerated pile, and

windrow composting systems are

consistent with that EPA regulates

under 40 CFR Part 503 for the

production of Class A sewage sludge.

Additionally, AMS reviewed these

compost production requirements with

USDA’s Agricultural Research Service

(ARS).

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80565

The conditions in the final rule for

producing an allowed composted

material begin with the selection of

appropriate feedstocks. The producer’s

first responsibility is to identify the

source of the feedstocks used in the

composting system. This requirement

ensures that only allowed plant and

animal materials are included in the

composting process, that they are not

contaminated with prohibited materials,

and that they are incorporated in

quantities suitable to the design of the

composting system. Certifying agents

will exercise considerable discretion for

evaluating the appropriateness of

potential feedstock materials and may

require testing for prohibited substances

before allowing their use. For example,

a certifying agent could require a

producer to monitor off-farm inputs

such as leaves collected through a

municipal curbside program or organic

wastes from a food processing facility.

Monitoring may be necessary to protect

against contamination from residues of

prohibited substances, such as motor oil

or heavy metals, or gross inert materials

such as glass shards that can enter the

organic waste stream.

The final rule further requires that the

producer adhere to quantitative criteria

when combining and managing the

plant and animal materials that are

being composted. When combining

feedstocks to initiate the process,

producers must establish a C:N ratio of

between 25:1 and 40:1. This range

allows for very diverse combinations of

feedstock materials while ensuring that,

when properly managed, the

composting process will yield high

quality material. While some

commenters maintained that specifying

any C:N ratio in the final rule would be

too restrictive, it would be far more

problematic not to establish a range. The

25:1 to 40:1 range ensures that

producers will establish appropriate

conditions under which the additional

requirements in this practice standard,

most notably the time and temperature

criteria, can be achieved with minimal

producer oversight. Composting

operations using a C:N ratio lower than

25:1 require increasingly intensive

management as the ratio drops due to

the risk of putrefaction. Operations in

excess of the 40:1 range may achieve the

minimum temperature but are likely to

drop off quickly and result in a finished

material that is inadequately mature and

deficient in nitrogen. The producer is

not required to perform a physical

analysis of each feedstock component if

he or she can demonstrate that an

estimated value is reliable. For example,

estimates of the carbon and nitrogen

content in specific manures and plant

materials are generally recognized.

Other feedstocks of consistent quality

may be tested once and assumed to

approximate that value.

The producer must develop in his or

her organic system plan the

management strategies and monitoring

techniques to be used in his or her

composting system. To produce an

allowed composted material, the

producer must use an in-vessel, static

aerated pile, or windrow composting

system. Producers using an in-vessel or

static aerated pile system must

document that the composting process

achieved a temperature between 131°F

and 170°F and maintained that level for

a minimum of 3 days. Producers using

a windrow composting system must

document that the composting process

achieved a temperature between 131°F

and 170°F and maintained that level for

a minimum of 15 days. Compost

produced using a windrow system must

be turned five times during the process.

These time and temperature

requirements are designed to minimize

the risk from human pathogens

contained in the feedstocks, degrade

plant pathogens and weed seeds, and

ensure that the plant nutrients are

sufficiently stabilized for land

application.

The final rule does not contain

provisions for the use of materials

commonly referred to as ‘‘compost

teas.’’ A compost tea is produced by

combining composted plant and animal

materials with water and a concentrated

nutrient source such as molasses. The

moisture and nutrient source contribute

to a bloom in the microbial population

in the compost, which is then applied

in liquid form as a crop pest or disease

control agent. The microbial

composition of compost teas are

difficult to ascertain and control and we

are concerned that applying compost

teas could impose a risk to human

health. Regulation of compost teas was

not addressed in the proposed rule. The

National Organic Program (NOP) will

request additional input from the NOSB

and the agricultural research

community before deciding whether

these materials should be prohibited in

organic production or whether

restrictions on their use are appropriate.

In addition to managing crop

nutrients with raw manure and

composted plant and animal materials,

a producer may use uncomposted plant

materials. These are materials derived

exclusively from plant sources that a

producer manages in a manner that

makes them suitable for application in

a cropping system. For example, plant

materials that are degraded and

stabilized through a vermicomposting

process may be used as a soil fertility

and crop nutrient amendment.

(3) Mined Substances of High

Solubility. The proposed rule treated

mined substances of high solubility as a

single category of soil amendment and

allowed their use where warranted by

soil and crop tissue testing. Many

commenters objected to the general

allowance for this category of

substances and were particularly

disappointed that the NOSB annotations

on two such materials, sodium (Chilean)

nitrate and potassium chloride, were not

included. Commenters cited the

potential detrimental effects of these

highly soluble and saline substances on

soil quality and stated that several

international organic certification

programs severely prescribe or prohibit

their use. One certifying agent

recommended that natural substances of

high solubility and salinity be handled

comparably to similar synthetic

materials such as liquid fish products

and humic acids that appear on the

National List, complete with their

original NOSB annotations.

At its June 2000 meeting, the NOSB

recommended that the NOP delete

general references to mined substances

of high solubility from the final rule,

and incorporate the NOSB’s specific

annotations for materials of this nature.

We have adopted this recommendation

by retaining a place for mined

substances of high solubility in the soil

fertility and crop nutrient management

practice standard but restricting their

use to the conditions established for the

material as specified on the National

List of prohibited natural substances.

Under this approach, mined substances

of high solubility are prohibited unless

used in accordance with the annotation

recommended by the NOSB and added

by the Secretary to the National List. We

deleted the provision from the proposed

rule that use of the substance be

‘‘justified by soil or crop tissue

analysis.’’ The final rule contains two

materials—sodium nitrate and

potassium chloride—that may be used

in organic crop production with the

annotations developed by the NOSB.

While ‘‘mined substances of high

solubility’’ is not a discrete, recognized

category such as crop nutrients, the

proposed rule mentioned sodium

nitrate, potassium chloride, potassium

nitrate (niter), langbeinite (sulfate of

potash magnesia), and potassium sulfate

in this context. Based on the

recommendation of the NOSB, the final

rule would prohibit use of these

materials, unless the NOSB developed

recommendations on conditions for

their use and the Secretary added them

80566 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

to the National List. The NOP would

welcome further guidance from the

NOSB on these materials.

(4) Burning crop residues. The

proposed rule prohibited burning as a

means of crop disposal, except for

burning prunings from perennial crops

to suppress the spread of disease. Many

commenters supported the principle

behind the prohibition but maintained

that the proposed language was too

restrictive and would preclude certain

beneficial agronomic practices. Several

producers stated that the proposed rule

would prevent them from collecting and

burning residues from diseased annual

crops, which they felt was an effective

and beneficial practice. Other producers

cited their use of prescriptive burning as

a management practice for certain native

or wild crops. As evidenced by the

allowance for burning to suppress

disease with perennial crops, the

proposed rule was not designed to

preclude the selective use of fire in

organic production. We agree with the

commenters that a more flexible

allowance for the practice is warranted,

and we have amended the provision to

allow burning of annual and perennial

crop residues for the suppression of

disease and to stimulate seed

germination. Producers must establish

their need and procedures for burning

in their organic system plan, and the

practice cannot be used solely to remove

crop debris from fields.

(5) Requirement for Organic Seed in

Sprout Production. The proposed rule

allowed nonorganically produced seeds

for all purposes, including sprout

production, when the certifying agent

concurred with the producer that

organically produced seeds were not

commercially available. While

commenters predominately supported

this approach with seed used for

planting, they were virtually unanimous

in stating that it is never appropriate to

allow nonorganically produced and

handled seeds in organic sprout

production. Commenters cited the

NOSB’s June 1994 recommendation that

seed used for the production of edible

sprouts shall be organically produced

and stated that existing certification

standards do not provide an exemption

based on commercial availability. We

agree with these commenters and have

modified the final rule to require that

organic seed must be used for the

production of edible sprouts.

(6) Mitigating the Effects of a

Biological, Botanical, or Synthetic

Substance. The proposed rule required

that producers who used a biological or

botanical substance or an allowed

synthetic substance to control crop

pests, weeds, or disease evaluate and

mitigate the effects of repetitive use of

the same or similar substances. While

agreeing that pest resistance and shifts

in pest populations were important

considerations, commenters stated that

managing these issues was beyond the

ability of individual operations.

Commenters recommended that the

NOP develop principles and practices

for managing pest resistance and shifts

in pest types that would apply to all

production operations. We agree with

these comments and have deleted the

requirement to evaluate and mitigate the

effects of using the same or similar crop

pest, weed, or disease control

substances. The final rule requires that

producers document the use of such

substances in their organic systems

plans, subject to the approval of their

certifying agent.

(7) Prohibition on Use of Treated

Lumber. The proposed rule did not

specifically address the use of lumber

that had been treated with a prohibited

substance, such as arsenic, in organic

production. Citing the explicit

prohibition on these substances in

existing organic standards, many

commenters felt that treated lumber

should be excluded in the final rule.

Commenters also cited the NOSB’s

recommendation to prohibit the use of

lumber treated with a prohibited

substance for new construction and

replacement purposes effective upon

publication of the final rule. We have

included a modified version of the

NOSB’s recommendation within the

crop pest, weed, and disease

management practice standard. This

provision prohibits the use of lumber

treated with arsenate or other prohibited

materials for new installations or

replacement purposes in contact with

an organic production site. We included

this modification to clarify that the

prohibition applies to lumber used in

direct contact with organically

produced and handled crops and

livestock and does not include uses,

such as lumber for fence posts or

building materials, that are isolated

from production. The prohibition

applies to lumber used in crop

production, such as the frames of a

planting bed, and for raising livestock,

such as the boards used to build a

farrowing house.

(8) Greater Rigor in the Wild Harvest

Production Organic System Plan. A

number of commenters stated that the

wild-crop harvesting practice standard

was insufficiently descriptive and that

the proposed rule failed to apply the

same oversight to wild harvest

operations as it did to those producing

crops and livestock. Some commenters

maintained that the proposed rule did

not require a wild harvest producer to

operate under an approved organic

system plan. These commenters

proposed specific items, including maps

of the production area that should be

required in a wild harvest operation’s

organic system plan. One commenter

recommended that the definition for

‘‘wild crop’’ be modified to allow the

harvest of plants from aquatic

environments.

We amended the practice standard for

wild-crop harvesting to express the

compliance requirements more clearly.

Wild-crop producers must comply with

the same organic system plan

requirements and conditions, as

applicable to their operation, as their

counterparts who produce crops and

livestock. Wild harvest operations are

production systems, and they must

satisfy the general requirement that all

practices included in their organic

system plan must maintain or improve

the natural resources of the operation,

including soil and water quality. We

modified the practice standard to

emphasize that wild harvest production

is linked to a designated site and expect

that a certifying agent would

incorporate mapping and boundary

conditions into the organic system plan

requirements. Finally, we changed the

definition of ‘‘wild crop’’ to specify that

harvest takes place from a ‘‘site’’ instead

of ‘‘from land,’’ thereby allowing for

aquatic plant certification.

Crop Production—Changes Requested

But Not Made

This subpart retains from the

proposed rule regulations on which we

received comments as follows:

(1) Application of Raw Manure. The

soil fertility and crop nutrient

management practice standard in the

proposed rule permitted the application

of raw manure to crops not intended for

human consumption and established

restrictions for applying it to crops used

for human food. For human food crops,

the proposed rule required a 120-day

interval between application and

harvest of crops whose edible portion

had direct contact with the soil or soil

particles, and a 90-day interval for crops

that did not. These provisions reflected

the recommendations developed by the

NOSB at its June 1999 meeting. The

practice standard also required that raw

manure must be applied in a manner

that did not contribute to the

contamination of crops, soil, or water by

plant nutrients, pathogenic organisms,

heavy metals, or residues of prohibited

substances.

The majority of commenters

supported the provisions for applying

raw manure. Some commenters stated

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80567

that the provisions effectively balanced

the benefits of applying raw manure to

the soil with the environmental and

human health risks associated with its

use. These commenters stated that the

lengthy intervals between application

and harvest would not impose an

unreasonable or unfeasible burden on

organic producers. The NOSB strongly

supported the provisions in the

proposed rule, emphasizing that raw

manure contributed significant benefits

to soil nutrient, structure, and biological

activity that other soil fertility practices

and materials do not provide. Other

commenters stated that the provisions

were consistent with the requirements

in existing organic standards and added

that the restrictions were justifiable

because they reflected responsible

management practices.

For differing reasons, a number of

commenters disagreed with the

proposed provisions. Some commenters

cited the human health risks associated

with pathogenic organisms found in raw

manure and stated that the proposed

intervals between application and

harvest were not adequately protective.

These commenters recommended that

the NOP conduct more extensive risk

assessment procedures before

determining what, if any, intervals

between application and harvest would

adequately protect human health. Some

of these commenters identified the risk

assessment methodology and pathogen

treatment procedures governing the

production and use of sewage sludge as

the most suitable precedent for guiding

the additional work required in this

area. Conversely, a number of

commenters stated that the provisions

in the proposed rule were excessive

because they exceeded the minimum

60-day interval between application and

harvest established in the OFPA. Many

of these commenters recommended

eliminating the distinction between

crops that come into contact with soil or

soil particles and those that don’t and

applying a uniform 60-day interval

between harvest and application for any

crop to which raw manure had been

applied. Some commenters stated that

the 120-day interval severely limited the

flexibility of producers who operated in

regions such as the Northeast where the

growing season lasted only slightly

longer. Other commenters maintained

that the practice standard did not

address specific practices, such as

applying raw manure to frozen fields,

that they maintained should be

expressly prohibited.

The responsibility to use raw manure

in a manner that is protective of human

health applies to all producers, whether

organic or not, who apply such

materials. We acknowledge the

commenters who noted that the OFPA

cites food safety concerns relative to

manure use and, therefore, that food

safety considerations should be

reflected in the practice standard for

applying raw manure in the final rule.

Some of the commenters favored more

extensive risk assessment procedures or

lengthening the interval between

application and harvest. We have not,

however, changed the provisions for

applying raw manure.

Although public health officials and

others have identified the use of raw

manure as a potential food safety

concern, at the present time, there is no

science-based, agreed-upon standard for

regulating the use of raw manure in crop

production. The standard in this rule is

not a public health standard. The

determination of food safety demands a

complex risk assessment methodology,

involving extensive research, peer

review, and field testing for validation

of results. The only comparable

undertaking in Federal rulemaking has

been EPA’s development of treatment

and application standards for sewage

sludge, an undertaking that required

years of dedicated effort. The NOP does

not have a comparable capacity with

which to undertake a comprehensive

risk assessment of the safety of applying

raw manure to human food crops. To

delegate the authority to determine what

constitutes safe application of raw

manure to certifying agents would be

even more problematic. A certifying

agent cannot be responsible for

establishing a Federal food safety

standard. Therefore, the standard in this

rule is a reflection of AMS’ view and of

the public comments that this standard

is reasonable and consistent with

current organic industry practices and

NOSB recommendations for organic

food crop production. Should additional

research or Federal regulation regarding

food safety requirements for applying

raw manure emerge, AMS will ensure

that organic production practice

standards are revised to reflect the most

up-to-date food safety standard.

Neither the identification of food

safety as a consideration in the OFPA

nor the inclusion of this practice

standard in the final rule should be

construed to suggest that organically

produced agricultural products are any

safer than nonorganically produced

ones. USDA has consistently stated that

certification is a process claim, not a

product claim, and, as such, cannot be

used to differentiate organic from

nonorganic commodities with regard to

food safety. National organic standards

for manure use cannot be used to

establish a food safety standard for

certified commodities in the absence of

as uniform Federal regulation to ensure

the safety of all human food crops to

which raw manure has been applied.

The OFPA was designed to certify a

process for informational marketing

purposes.

Neither have we changed the practice

standard in response to comments that

the requirement in the final rule should

not exceed the 60-day interval

contained in the OFPA. The OFPA

clearly establishes that the interval must

be no less than 60 days and does not

preclude a longer standard. The NOSB

has strongly supported the proposed 90-

and 120-day intervals, and the vast

majority of commenters indicated that

these provisions would be feasible for

virtually all organic cropping systems.

The requirement in the practice

standard that raw manure must be

applied in a manner that does not

contribute to the contamination of

crops, soil, or water by plant nutrients,

pathogenic organisms, heavy metals, or

residues of prohibited substances

provides certifying agents the discretion

to prohibit specific practices that would

not be in compliance. With this

discretion, a certifying agent could

prohibit practices, such as applying

manure to frozen ground or too close to

water resources, that many commenters

stated were not appropriate for organic

production.

(2) No Prohibition on Manure from

Nonorganic Operations. The proposed

rule identified animal and plant waste

materials as important components in

soil fertility and crop nutrient

management without providing criteria

for distinguishing allowed and

prohibited sources. A large number of

commenters objected to this provision

and stated that manure from nonorganic

sources may contain residues from

prohibited substances, including animal

medications. These commenters

maintained that some of these residues,

such as antibiotics, may remain active

for extended intervals, and others, such

as heavy metals, could accumulate on

the organic operation. Commenters

stated that if either or both conditions

prevailed, the integrity of the organic

operation would be jeopardized. Many

producers and certifying agents

emphasized that the proposed rule

conflicted with the Codex guidelines

that prohibit the use of manure from

factory farms. These commenters were

concerned that failure to restrict the use

of manure from nonorganic operations

would put their products at a

competitive disadvantage, particularly

in European markets. When raising this

issue, most commenters requested that

the final rule either prohibit the use of

80568 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

manure from factory farms or state that

certifying agents could regulate the

practice by requiring residue testing and

restrictions on application.

We have not changed the provisions

for using manure from nonorganic

operations in the final rule. In many

discussions on the subject throughout

the years, the NOSB has never

recommended that manure from

nonorganic farms be prohibited.

Existing organic certification standards

routinely permit the use of manure from

nonorganic operations with appropriate

oversight, and the final rule

incorporates a similar approach. Under

the final rule, a certifying agent can

require residue testing when there is

reasonable concern that manure, either

raw or as a component of compost,

contains sufficient quantities of

prohibited materials to violate the

organic integrity of the operation.

Providing certifying agents the

discretion to require screening for

prohibited materials will minimize the

risk of introducing contaminants while

maintaining the ecologically important

practice of recycling organic material

from nonorganic operations.

Additionally, the final rule requires that

producers apply manure and compost in

a manner that maintains or improves the

soil and water quality of their operation.

This provision provides an additional

safeguard that certifying agents may use

to ensure that the application of any

form of manure protects the natural

resources of the operation.

(3) Rotating a Field in and out of

Organic Production. Some commenters

stated that a producer should not be

allowed to rotate fields on their

operation in and out of organic

production. These commenters were

concerned that producers could apply

prohibited substances that persisted for

many years, such as soil fumigants, and

begin harvesting organically produced

crops after 3 years. They stated that,

without a prohibition on the rotation of

fields in this manner, organic producers

could effectively use a prohibited

substance on their operation.

We have not amended the final rule

to prohibit the rotation of a field on an

operation in and out of organic

production. The statutory prohibition

on the application of a prohibited

substance is 3 years, and this

requirement is contained in section

205.202(b). This prohibition restricts the

application of a prohibited substance,

not its residual activity. If AMS receives

evidence that the rotation of fields in

this manner threatens to compromise

organic production, the NOP and NOSB

will collaborate on developing

standards to remedy it.

(4) Use of Seed Treatments on the

National List. The seed and planting

stock practice standard in the proposed

rule generated a very diverse array of

responses that, while largely favorable,

highlighted a potentially disruptive

impact on organic producers. The

practice standard favored organic seed

and planting stock over nonorganically

produced but untreated varieties and

nonorganically produced, untreated

seed and planting stock over

nonorganically produced seeds and

planting stock treated with an allowed

synthetic substance. Producers could

use the less preferable seed or planting

stock variety if they demonstrated to

their certifying agent that an equivalent

variety in the preferred form was not

commercially available. Most

commenters endorsed the principle of

requiring organic seed and planting

stock and agreed that the proposed

provisions were a workable approach to

enforcement. They stated that the

provisions created an incentive for seed

and planting stock providers to develop

supplies for organic markets, yet

enabled producers who made a good

faith effort but failed to locate seed or

planting stock in the preferred form the

ability to continue producing

organically. Most commenters indicated

that this approach would support the

existing market for organic seed and

planting stock while fostering its

continued development.

A number of commenters, however,

stated that the seed and planting stock

practice standard was unreasonable and

unworkable and would adversely affect

organic producers. These effects would

include significantly reduced planting

options due to the nonavailability of

seed in any allowed form and higher

seed costs, which represent a significant

percentage of the total production cost

for some commodities. These

commenters maintained that the three

categories of seed and planting stock

allowed in the order of preference could

not reliably provide producers with

many commercial varieties currently

being planted. They pointed out that

there were no synthetic seed treatments

on the National List in the proposed

rule, thereby eliminating the use of

treated seed in organic production.

Commenters stated that producers often

rely upon seed and planting stock

varieties that are uniquely well adapted

for their growing conditions or

marketing requirements and that these

particular varieties would very often not

be available in untreated form. These

commenters concluded that the

proposed practice standard would

compel many producers to abandon

many tried and true varieties of seed

and planting stock and perhaps phase

out organic production entirely. One

commenter maintained that the

proposed rule’s stated intention of using

the practice standard to stimulate

production of organic seed and planting

stock was not within the purpose of the

OFPA.

We have not changed the seed and

planting stock practice standard in

response to these commenters because

the prohibition on using synthetic

materials not on the National List is a

requirement of the OFPA. The final rule

cannot allow producers to use synthetic

seed treatments that have not been

reviewed, favorably recommended by

the NOSB, and added to the National

List by the Secretary. The practice

standard creates incentives for

producers to seek out seed and planting

stock inputs that are the most

compatible with organic production, yet

includes allowances when preferred

forms are not commercially available.

While no seed treatments are included

on the National List in the final rule,

individuals may petition the NOSB for

review of such substances. Additionally,

the practice standard creates an

incentive for seed and planting stock

producers and suppliers to develop

natural treatments suitable for organic

systems that would not need to appear

on the National List. The objectives of

spurring production of organically

grown seed and promoting research in

natural seed treatments are compatible

with the OFPA’s purpose of facilitating

commerce in organically produced and

processed food. We designed the

practice standard to pursue these

objectives while preventing the

disruption that an ironclad requirement

for organically produced seed and

planting stock may have caused.

(5) Practice Standard for Maple

Syrup. Many commenters stated that the

proposed rule lacked production and

handling standards for operations that

produce maple syrup. Commenters

stated that maple syrup production is a

significant enterprise for many organic

producers and that the absence of a

practice standard in the final rule would

adversely affect existing markets for

organic products. Many commenters

recommended that the final rule

incorporate the maple syrup practice

standard from an existing certification

program or the American Organic

Standards.

We have not included a practice

standard for the production and

handling of maple syrup because the

final rule contains sufficient provisions

for the certification of these types of

operations. After reviewing existing

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practice standards for maple syrup, we

determined that the standards in the

final rule for crop production, handling

operations, and allowed and prohibited

materials on the National List provided

comparable guidance.

Crop Production—Clarifications

Clarification is given on the following

issues raised by commenters:

(1) Applicability of Crop Rotation

Requirement to all Operations. One

State program commented that the crop

rotation practice standard in the

proposed rule was unreasonable for

producers who operated in regions

where limited rainfall and irrigation

resources or unique soil conditions

made cover cropping impractical. This

commenter stated that certain dryland

cropping systems, such as aloe vera

production, function as ‘‘semiperennial’’ systems that do not include

rotations, yet fulfill the objectives of the

crop rotation practice standard. A

certifying agent expressed a similar

concern by suggesting that the crop

rotation practice standard be changed by

adding ‘‘may include, but is not limited

to’’ prior to the list of allowed

management practices. This commenter

felt that the ‘‘may include’’ clause

afforded individual growers greater

discretion by acknowledging that not

every allowed management practice

would be applicable to all operations.

We have retained the language from

the proposed rule because it already

provides the flexibility to develop sitespecific crop rotation practices

requested by these commenters. The

regulation as originally written includes

the ‘‘ but not limited to’’ clause that

allows producers to include alternative

management practices in their organic

system plan. Additionally, the

regulation states that the producer must

implement a crop rotation that provides

the required functions ‘‘that are

applicable to the operation.’’ This

further establishes that the crop rotation

component of an organic system plan

must be considered within the context

of site-specific environmental

conditions including climate,

hydrology, soil conditions, and the

crops being produced. The final rule

requires implementation of a crop

rotation, but the producer and certifying

agent will determine the specific crops

and the frequency and sequencing of

their use in that rotation. Crop rotations

must fulfill the requirements of this

practice standard—to maintain or

improve soil organic matter content,

provide for pest management, manage

deficient or excess plant nutrients, and

control erosion—and are not obligated

to use any specific management

practice. We structured this and other

practice standards, as well as the

requirements of the organic system plan,

to enable producers and certifying

agents to develop organic system plans

adapted to natural variation in

environmental conditions and

production systems.

(2) Excluding Annual Seedlings from

Planting Stock. The proposed rule

allowed a producer to use

nonorganically produced seeds and

planting stock if organically produced

equivalent varieties were not

commercially available. Several

commenters, including the NOSB, were

concerned that the definition of planting

stock as ‘‘any plant or plant tissue,

including rhizomes, shoots, leaf or stem

cuttings, roots, or tubers, used in plant

production or propagation’’ was

sufficiently broad to be applied to

annual seedlings. While many

commenters, including the NOSB,

supported the commercial availability

exemption in the case of seeds and

planting stock, they objected to

extending it to annual seedlings. The

proposed rule did not intend to include

annual seedling within the definition of

planting stock and included a separate

definition of ‘‘annual seedling’’ as ‘‘a

plant grown from seed that will

complete its life cycle or produce a

harvestable crop yield within the same

crop your or season in which it is

planted.’’ The proposed rule addressed

annual seedlings as a distinct category

within the seed and planting stock

practice standard. There was no

allowance for using nonorganically

produced annual seedlings based on

commercial availability, and such

seedlings can only be used when a

temporary variance has been issued due

to a catastrophic business interruption.

The growth of markets for organically

produced annual seedlings, unlike those

for seeds and planting stock, obviates

the need for the commercial availability

provision. We have retained this

approach in the final rule.

Livestock Production—Changes Based

on Comments

This subpart differs from the proposal

in several respects as follows:

(1) Whole Herd Conversion. The

proposed rule required that livestock

receive 1 year of continuous organic

management prior to the milk or milk

products they produce being labeled as

organic. Based on the feed provisions in

that proposal, producers would be

required to provide a 100-percent

organic feed ration (exclusive of

National List substances allowed as feed

supplements and additives) for that

entire year. Many producers,

consumers, State certification programs,

and certifying agents commented that

the full year organic feed requirement

created an insurmountable barrier for

small and medium-size dairy operations

wishing to convert to organic

production. They maintained that the

added expense of a full year, 100-

percent organic feed requirement was

economically prohibitive. These

commenters stated that ‘‘new entry’’ or

‘‘whole herd’’ conversion provisions in

existing certification standards have

been instrumental in enabling

established nonorganic dairies to make

the transition to organic production.

Commenters stated that these provisions

typically allow producers to provide

livestock 80-percent organic or selfraised feed for the first 9 months of a

herd’s transition, before requiring 100-

percent organic feed for the final 3

months. Some commenters stated that

many current organic dairies had

capitalized on this whole herd

conversion provision and that the

consistent growth in demand for organic

milk and milk products reflected

consumer acceptance of the principle.

At its June 2000 meeting, the NOSB

reiterated its prior endorsement of the

conversion principle for operations that

jointly convert dairy herds and the land

on which they are raised. The NOSB

recommended allowing a producer

managing an entire, distinct herd to

provide 80-percent organic or self-raised

feed during the first 9 months of the

final year of conversion, and 100-

percent organic feed for the final 3

months. The recommendation further

required that dairy animals brought onto

an organic dairy must be organically

raised form the last third of gestation,

except that feed produced on land

managed under an organic system plan

could be fed to young stock up to 12

months prior to milk production.

While the preponderance of

comments supported the whole herd

conversion provision, a significant

number of individuals, certifying agents,

and State certification programs

opposed it. Some commenters felt that

requiring less than 1 full year of 100-

percent organic feed would not satisfy

consumer expectations for an

organically managed dairy. Other

commenters stated that the whole herd

conversion merely favored one segment

of organic producers over another. They

maintained that the full year, 100-

percent organic feed requirement would

stimulate markets for organically

produced hay and grain, thereby

rewarding good row crop rotation. One

certifying agent was concerned that the

conversion provision would create a

permanent exemption and that split

80570 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

operation dairies could use it repeatedly

to bring nonorganic animals into the

organic operation.

The final rule contains a provision for

whole herd conversion that closely

resembles those found in the NOSB

recommendation and the existing

certification standards. The final rule

requires that an entire, distinct dairy

herd must be under organic

management for 1 year prior to the

production of organic milk. During the

first 9 months of that year, the producer

must provide a feed ration containing a

minimum of 80-percent organic feed or

feed that is raised from land included in

the organic system plan and managed in

compliance with organic crop

requirements. The balance of the feed

ration may be nonorganically produced,

but it must not include prohibited

substances including antibiotics or

hormones. The producer must provide

the herd 100-percent organic feed for

the final 3 months before the production

of organic milk. The producer must

comply with the provisions in the

livestock health and living conditions

practice standard during the entire year

of conversion. After the dairy operation

has been certified, animals brought on

to the operation must be organically

raised from the last third of gestation.

We did not incorporate the NOSB’s

recommendation to provide young stock

with nonorganic feed up to 12 months

prior to the production of certified milk.

By creating an ongoing allowance for

using nonorganic feed on a certified

operation, this provision would have

undermined the principle that a whole

herd conversion is a distinct, one-time

event.

We anticipate that the provisions

added to the final rule will address the

concerns of commenters who objected

to the conversion principle. Consumers

have embraced milk and milk products

from dairies certified under private

whole herd conversion provisions

essentially identical to that in the final

rule. While the conversion provision

may temporarily reduce demand for

organic feed materials, it encourages

producers to develop their own supplies

of organic feed. The conversion

provision also rewards producers for

raising their own replacement animals

while still allowing for the introduction

of animals from off the farm that were

organically raised from the last third of

gestation. This should protect existing

markets for organically raised heifers

while not discriminating against closed

herd operations. Finally, the conversion

provision cannot be used routinely to

bring nonorganically raised animals into

an organic operation. It is a one-time

opportunity for producers working with

a certifying agent to implement a

conversion strategy for an established,

discrete dairy herd in conjunction with

the land resources that sustain it.

(2) Organic Management for Livestock

from the Last Third of Gestation. The

proposed rule required that organically

managed breeder and dairy stock sold,

labeled, or represented as organic

slaughter stock must be under

continuous organic management from

birth. Many commenters stated that this

requirement was an inappropriate

relaxation of most existing organic

standards, which require organic

management for all slaughter stock from

the last third of gestation. These

commenters cited the NOSB’s 1994

recommendation that all slaughter stock

must be the progeny of breeder stock

under organic management from the last

third of gestation or longer. Commenters

also recommended extending the

organic management provision to cover

the last third of gestation to make it

consistent with the requirements in

section 205.236(a)(4) for the organically

raised offspring of breeder stock. We

agree with the argument presented by

commenters and have changed the final

rule to require that breeder or dairy

stock be organically raised from the last

third of gestation to be sold as organic

slaughter stock.

(3) Conversion Period for Nonedible

Livestock Products. The proposed rule

required that livestock must be under

continuous organic management for a

period not less than 1 year before the

nonedible products produced from them

could be sold as organic. Several

commenters questioned the basis for

creating different origin of livestock

requirements based on whether the

operation intended to produce edible or

nonedible products. These commenters

stated that the OFPA does not sanction

such a distinction, nor is it contained in

existing certification standards. They

questioned why the proposed rule

created such a provision in the absence

of a favorable NOSB recommendation.

We agree that the creation of a separate

origin of livestock requirement for

animals intended to provide nonedible

products could be confusing. We have

changed this provision in the final rule

to require that nonedible products be

produced from livestock that have been

organically managed from the last third

of gestation.

(4) Provisions for Feed Supplements

and Feed Additives. The proposed rule

provided that nonagricultural products

and synthetic substances included on

the National List could be used as feed

additives and supplements. Many

commenters stated that allowing

nonagricultural products and synthetic

substances as feed supplements

contradicted the definition for ‘‘feed

supplement’’ found in the proposed

rule. That definition stipulated that a

feed supplement must, itself, be a feed

material, and the definition for ‘‘feed’’

in the proposed rule precluded using

nonagricultural products and synthetic

substances. These commenters

requested that either the definition of

‘‘feed supplement’’ be changed to make

it consistent with the allowance for

nonagricultural products and synthetic

substances or else that the term be

dropped from the final rule. The Food

and Drug Administration (FDA)

recommended modifying the definitions

for ‘‘feed additive’’ and ‘‘feed

supplement’’ and further specifying the

components required in a feed ration

under the livestock health care practice

standard.

We amended the definition in the

final rule to state that a feed supplement

is ‘‘a combination of feed nutrients

added to livestock feed to improve the

nutritional balance or performance of

the total ration.’’ We retained the second

component of the proposed definition,

which described how a feed supplement

could be offered to livestock. We

amended the definition of ‘‘feed

additive’’ to ‘‘a substance added to feed

in micro quantities to fulfill a specific

nutritional need; i.e., essential nutrients

in the form of amino acids, vitamins,

and minerals.’’ The definitions for ‘‘feed

supplement’’ and ‘‘feed additive’’ in the

proposed rule were originally

recommended by the NOSB. While our

intent in the proposed rule was to

codify as fully as possible the

recommendations of the NOSB, we

agree with commenters that the

proposed definitions were incompatible

with the overall provisions for livestock

feed. The definitions in the final rule are

consistent with the NOSB’s objective to

create clear distinctions between feed,

feed supplements, and feed additives

while clarifying the role for each within

an organic livestock ration. We also

incorporated FDA’s recommendation to

include protein and/or amino acids,

fatty acids, energy sources, and fiber for

ruminants as required elements of a feed

ration in the livestock health care

practice standard. These additions make

the livestock health care practice

standard more consistent with the

National Research Council’s Committee

on Animal Nutrition’s Nutrient

Requirement series, which we cited in

the proposed rule as the basis for feed

requirements.

Many commenters addressed

provisions in the proposed rule to allow

or prohibit specific materials and

categories of materials used in livestock

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80571

feed. Among these, some commenters

questioned whether enzymes were

defined as a feed additive and,

therefore, allowed. One certifying agent

requested guidance on the status of

supplementing livestock feed with

amino acids. At its October 1999

meeting, the NOSB discussed the

Technical Advisory Panel (TAP)

reviews on the use of enzymes and

amino acids in livestock feed. The

NOSB determined that natural sources

of enzymes exist and that their use

should be allowed in organic

production. Their discussion of natural

sources of enzymes concluded that

enzymes derived from edible, nontoxic

plants and nonpathogenic bacteria or

fungi that had not been genetically

engineered should be allowed as a

nonorganic feed additive. The NOSB

did not take a position on amino acids

during this meeting but indicated that it

would revisit the subject in the near

future. Based on these

recommendations, the final rule allows

the use of natural enzymes but not

amino acids as nonorganic feed

additives. The NOSB’s recommendation

that natural sources of enzymes existed

and were compatible with organic

livestock production supports allowing

them without adding them to the

National List. Some commenters

discussed the animal welfare and

environmental benefits associated with

providing amino acids in livestock feed

and supported allowing them. However,

without a recommendation from the

NOSB that amino acids are natural or

should be added to the National List as

a synthetic, the final rule does not allow

their use.

Commenters questioned whether

nonsynthetic but nonagricultural

substances, such as ground oyster shells

and diatomaceous earth, would be

allowed in agricultural feed. In 1994,

the NOSB recommended that natural

feed additives can be from any source,

provided that the additive is not

classified as a prohibited natural on the

National List. We agree with this

recommendation and have amended the

final rule to allow such materials as feed

additives and supplements. The only

additional constraint on these materials

is that every feed, feed additive, and

feed supplement be used in compliance

with the Federal Food, Drug, and

Cosmetic Act, as stated in section

205.237(b)(6).

The NOSB recommended that

ruminants maintained under temporary

confinement must have access to dry,

unchopped hay. Although this position

was an NOSB recommendation and not

part of the proposed rule, several

commenters responded to it. Most of

these commenters stated that the

language was too restrictive and could

preclude the use of many suitable forage

products. One dairy producer stated that

the requirement would not be practical

for operations that mix hay with other

feed components. We agree that the

NOSB’s proposed language is too

prescriptive and have not included it in

the final rule.

(5) Provisions for Confinement. The

proposed rule established the health,

nutritional, and behavioral needs of the

particular species and breed of animal

as the primary considerations for

determining livestock living conditions.

The proposed rule also identified

essential components of the practice

standard, including access to shade,

shelter, exercise areas, fresh air, and

direct sunlight, while stating that

species-specific guidelines would be

developed in conjunction with future

NOSB recommendations and public

comment. Finally, the proposed rule

outlined the conditions pertaining to

animal welfare and environmental

protection under which producers could

temporarily confine livestock.

While supportive of the underlying

principles of this practice standard, the

vast majority of commenters stated that

the actual provisions suffered from a

lack of clarity and specificity. Many

commenters were concerned that the

proposed rule did not adequately ensure

access to the outdoors for all animals.

While supportive of the access to

pasture requirement for ruminant

production, commenters stated that the

final rule needed a clear definition of

pasture to make the provision

meaningful. Conversely, some

commenters supported the less

prescriptive approach adopted in the

proposed rule. The NOSB added

considerably to its earlier

recommendations on livestock living

conditions during its June 2000 meeting.

Many commenters stated that the

criteria identified as required elements

in the provisions for livestock living

conditions did not specifically include

access to the outdoors. One commenter

stated that the requirement that animals

receive direct sunlight could be

interpreted to simply require windows

in livestock confinement facilities.

Commenters were virtually unanimous

that, except for the limited exceptions

for temporary confinement, all animals

of all species must be afforded access to

the outdoors. Commenters also

maintained that the outdoor area must

accommodate natural livestock

behavior, such as dust wallows for

poultry and, in the case of ruminants,

provide substantial nutrition. Many

commenters specifically opposed dry

lots as an allowable outdoor

environment. The NOSB recommended

that the final rule state that all livestock

shall have access to the outdoors. As a

result of these comments, we have

revised the final rule to establish that

access to the outdoors is a required

element for all organically raised

livestock.

We further amended the final rule to

include a definition of ‘‘pasture.’’ The

definition of ‘‘pasture’’ we included

emphasizes that livestock producers

must manage their land to provide

nutritional benefit to grazing animals

while maintaining or improving the soil,

water, and vegetative resources of the

operation. The producer must establish

and maintain forage species-appropriate

for the nutritional requirements of the

species using the pasture.

Numerous commenters requested

clarification on species-specific living

conditions, such as the use of cages for

poultry and confinement systems for

veal production. The use of continuous

confinement systems including cages for

poultry and veal production is

incompatible with the requirement that

organically raised livestock receive

access to the outdoors and the ability to

engage in physical activity appropriate

to their needs. There will be times when

producers must temporarily confine

livestock under their care, but these

instances must be supported by the

exemptions to the outdoor access

requirement included in the final rule.

Other commenters requested additional

guidance on whether confinement for

the purpose of finishing slaughter stock

would be allowed, and, if so, how long

that confinement could last.

Commenters who supported an

allowance for finishing most often

recommended that, in the case of cattle,

confinement should not exceed 90 days.

The final rule does not include a

specific length of time that cattle or

other species may be confined prior to

slaughter. We will seek additional input

from the NOSB and public comment

before developing such standards.

Several commenters questioned

whether a Federal, State, or local

regulation that required confinement

would supersede the requirement for

outdoor access. These commenters were

aware of county ordinances that

prohibited free ranging livestock

production to protect water quality.

Organic operations must comply with

all Federal, State, and local regulations.

At the same time, to sell, label, or

represent an agricultural commodity as

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

‘‘made with * * *’’ the producer or

handler must comply with all the

applicable requirements set forth in this

80572 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

regulation. Federal, State, or local

regulations that prohibit a required

practice or require a prohibited one will

essentially preclude organic

certification of the affected commodity

within that jurisdiction.

(6) Prohibition on Parasiticides

During Lactation. The proposed rule

provided that breeder stock could

receive synthetic parasiticides included

on the National List, provided that the

treatment occurred prior to the last third

of gestation for progeny that were to be

organically managed. Many commenters

supported this principle but were

concerned that the wording would

allow producers to administer

parasiticides to lactating breeder stock

while the offspring were still nursing.

These commenters felt that such an

allowance violated the intent of the

provision because offspring could be

exposed to systemic parasiticides or

their residues through their mother’s

milk. The NOSB recommended a

prohibition on using allowed synthetic

parasiticides during lactation for

progeny that are organically managed.

We agree with these commenters and

have modified the final rule to prohibit

the treatment of organically managed

breeder stock with allowed synthetic

parasiticides during the last third of

gestation or lactation.

Livestock Production—Changes

Requested But Not Made

This subpart retains from the

proposed rule regulations on which we

received comments as follows:

(1) Prohibition on Factory Farms.

Many commenters requested that the

final rule prohibit the certification of

‘‘factory farms.’’ These commenters

stated that factory farms are dependent

upon practices and materials that are

inconsistent with or expressly

prohibited in the OFPA. The final rule

does not contain such a prohibition

because commenters did not provide a

clear, enforceable definition of ‘‘factory

farm’’ for use in the final rule. All

organic operations, regardless of their

size or other characteristics, must

develop and adhere to an approved

organic system plan that complies with

these regulations in order to be certified.

(2) Nonorganic Feed Protocol. The

proposed rule required that, except for

nonagricultural products and synthetic

substances included on the National

List, a producer must provide livestock

with a total feed ration composed of

agricultural feed products, including

pasture and forage, that is organically

produced and, if applicable, handled. It

also included provisions for temporary

variances that, under very limited

circumstances and with the approval of

the certifying agent and the

Administrator, would provide an

exemption from specific production and

handling standards. The preamble of the

proposed rule described an emergency

resulting in the unavailability of organic

agricultural feed products as an example

of a situation in which a temporary

variance could be issued. Many

commenters recommended that the final

rule require a producer who received a

temporary variance for a feed emergency

to follow the order of preference for

noncertified organic feed developed by

the NOSB. This order of preference

requires a producer to procure

agricultural feed products from sources

that are as close to complying with the

standards for organic certification as

possible. Commenters stated that

adherence to the order of preference

would most closely conform with the

expectation of consumers that

organically raised livestock received

organic feed and would create an

incentive for livestock feed producers to

pursue certification.

We have not included the NOSB’s

feed emergency order of preference in

the final rule because it would be too

prescriptive and difficult to enforce

during an emergency. Receiving a

temporary variance categorically

exempts a producer from the provision

for which it was issued, although that

producer may not substitute any

practice, material, or procedure that is

otherwise prohibited, although that

producer may not substitute any

practice, material, or procedure that is

otherwise prohibited under section

205.105. Additionally, certified organic

feed is far more available in terms of

quantity and affordability than when the

NOSB developed its order of preference

in 1994. We anticipate that producers

whose original supply of organic

agricultural feed products is interrupted

will be able to fill the shortfall through

the marketplace.

(3) Prohibition on Physical

Alterations. The proposed rule required

that producers perform physical

alterations as needed to promote animal

welfare and in a manner that minimizes

pain and stress. This provision was one

component of the health care practice

standard that required producers to

establish and maintain preventive

livestock health care practices. We

stated in the preamble that there was

insufficient consensus from previous

public comment to designate specific

physical alterations as allowed or

prohibited and envisioned working with

producers, certifying agents, and

consumers to achieve that goal. We

requested comment on techniques to

measure animal stress that could be

used to evaluate whether specific

physical alterations were consistent

with the conditions established in the

proposed rule.

We received significant numbers of

comments both opposing and

supporting the provision in the

proposed rule for performing physical

alterations. Many commenters opposed

any allowance for physical alterations

and argued that such practices are cruel

and debilitating to animals. These

commenters maintained that

modifications in breed selection,

stocking densities, and the configuration

of living conditions could achieve

results similar to physical alterations

without harming the animal. They

stated that by adapting their production

systems to promote the physical and

psychological welfare of animals,

producers could obviate the need for

physical alterations. In particular,

commenters cited physical alterations to

the beaks and feet of poultry as

unnecessary due to the availability of

alternative production systems. Many

commenters expressed concern that the

allowance for physical alterations

would facilitate the certification of large

confinement operations. Commenters

also stated that performing physical

alterations was inconsistent with Codex

guidelines and objected to the

allowance before full public

deliberation on the subject through the

NOSB process.

A large number of commenters stated

that, if reasonable guidelines could be

established, the allowance for physical

alterations would be a beneficial, and

even necessary, condition for organic

livestock production. These commenters

maintained that producers engage in

physical alterations for the overall

welfare of the flock or herd and that the

pain and stress of performing them must

be weighed against the pain and stress

of not doing so. For example, these

commenters cited the traumatic effect of

cannibalism on poultry flocks that had

not undergone beak trimming or the

injuries caused by animals whose horns

had not been removed. Many of these

commenters stated that producers could

reduce but not eliminate the need for

physical alterations through alternative

production practices such as breed

selection and stocking densities. The

NOSB supported the provision as

written in the proposed rule, stating that

it met the animal welfare requirements

while allowing practices necessary for

good animal husbandry. We have

retained the proposed provision for

physical alterations without taking any

further position on whether specific

practices are allowed or prohibited. We

did not receive substantial new

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80573

guidance on techniques to measure

stress in animals due to physical

alterations and have made no revisions

in that regard. The final rule establishes

that, when appropriately performed and

within the context of an overall

management system, specific physical

alterations are allowed. It also mandates

that, as an element of a preventative

health care program, physical

alterations must benefit the ultimate

physical and psychological welfare of

the affected animal.

(4) Withdrawal for Synthetic

Parasiticides in Lactating Livestock. The

proposed rule required a 90-day

withdrawal period before milk and milk

products produced from livestock

treated with an allowed synthetic

parasiticide could be labeled as organic.

Referencing the statement in the

preamble to the proposed rule that the

90-day withdrawal period was

attributable to ‘‘consumer expectations

of organically raised animals,’’ a dairy

producer commented that the provision

ignored animal welfare and farm

economic sustainability considerations.

The commenter considered the 90-day

withdrawal period capricious and

problematic since, for bovine dairy

operations, it would compel producers

to either shorten an animal’s natural

drying off period, or lose 30 days of

organic milk production. The

commenter stated that the optimal

extended withdrawal period for this

situation would be 60 days since this is

the approximate duration of a dairy

cow’s natural dry period. Under this

approach, livestock requiring treatment

could receive an allowed synthetic

parasiticide at the time of drying off,

thus allowing the withdrawal period to

coincide with the natural 60-day period

when the livestock were not lactating.

Livestock could complete the

withdrawal period prior to the birth of

their offspring in approximately 60

days, at which time the mother’s milk

could again be sold as organic. The

commenter maintained that the 60-day

period would satisfy consumer

expectation for an extended withdrawal

period after treatment with an allowed

synthetic parasiticide without imposing

an unnecessary constraint on the

producer.

We have retained the 90-day

withdrawal period in the final rule. The

provisions in the final rule for treating

livestock with an allowed synthetic

parasiticide reflect the 90-day

withdrawal period recommended by the

NOSB at its October 1999 meeting. The

NOSB has the authority to reconsider

this issue and propose an alternative

annotation for the Secretary’s

consideration.

(5) Delineation of Space Requirements

for Animal Confinement. The proposed

rule did not establish space

requirements for livestock living

conditions but stated that a producer

must accommodate the health and

natural behavior of animals under his or

her care. Some commenters stated their

preference for space requirements

because they are more uniform and

enforceable. These commenters stated

that some existing certification

standards include space requirements in

standards for livestock living conditions

and that Codex guidelines support this

approach. While not disagreeing that

space requirements could be an effective

certification tool for organic livestock

production systems, we have not

incorporated any such provisions in the

final rule. We anticipate that additional

NOSB recommendations and public

comment will be necessary for the

development of space requirements. At

its June 2000 meeting, the NOSB agreed

that it would be premature to include

space requirements in the final rule.

(6) Access to pasture versus pasturebased. Commenters stated that the

proposed rule’s requirement that

ruminants receive ‘‘access to pasture’’

did not sufficiently characterize the

relationship that should exist between

ruminants and the land they graze.

Many of these commenters

recommended that the final rule require

that ruminant production be ‘‘pasturebased.’’ Many commenters stated that

the final rule needed a more explicit

description of the relationship between

livestock and grazing land. The NOSB

shared this perspective and

recommended that the final rule require

that ruminant production systems be

‘‘pasture-based.’’ In contrast, an organic

dairy producer maintained that a

uniform, prescriptive definition of

pasture would not be appropriate in a

final rule. This commenter stated that

the diversity of growing seasons,

environmental variables, and forage and

grass species could not be captured in

a single definition and that certifying

agents should define pasture on a caseby-case basis. This commenter also

disagreed with the ‘‘pasture-based’’

requirement, stating that pasture should

be only one of several components of

balanced livestock nutrition. Singling

out pasture as the foundation for

ruminant management would distort

this balance and deprive other

producers of the revenue and rotation

benefits they generate by growing

livestock feed.

We retained the ‘‘access to pasture’’

requirement because the term, ‘‘pasturebased,’’ has not been sufficiently

defined to use for implementing the

final rule. The final rule does include a

definition for pasture, and retention of

the ‘‘access to pasture’’ provision

provides producers and certifying

agents with a verifiable and enforceable

standard. The NOP will work with the

NOSB to develop additional guidance

for managing ruminant production

operations.

(7) Stage of Production. The proposed

rule contained provisions for temporary

confinement, during which time

livestock would not receive access to

the outdoors. Many commenters were

concerned that the stage-of-production

justification for temporary confinement

could be used to deny animals access to

the outdoors during naturally occurring

life stages, including lactation.

Commenters overwhelmingly opposed

such an allowance and stated that the

stage of production exemption should

be narrowly applied. One commenter

stated that a dairy operation, for

example, might have seven or eight

distinct age groups of animals, with

each group requiring distinct living

conditions. Under these circumstances,

the commenter maintained that a

producer should be allowed to

temporarily house one of these age

groups indoors to maximize use of the

whole farm and the available pasture. At

its June 2000 meeting, the NOSB stated

that the allowance for temporary

confinement should be restricted to

short-term events such as birthing of

newborn or finish feeding for slaughter

stock and should specifically exclude

lactating dairy animals.

We have not changed the provision in

the final rule for the stage-of-production

allowance in response to these

comments. The NOSB has supported the

principle of a stage-of-production

allowance but has not provided

sufficient guidance for determining, on

a species-specific basis, what conditions

would warrant such an allowance.

Without a clearer foundation for

evaluating practices, we have not

identified any specific examples of

practices that would or would not

warrant a stage-of-production

allowance. We will continue to explore

with the NOSB specific conditions

under which certain species could be

temporarily confined to enhance their

well-being.

In the final rule, temporary

confinement refers to the period during

which livestock are denied access to the

outdoors. The length of temporary

confinement will vary according to the

conditions on which it is based, such as

the duration of inclement weather. The

conditions for implementing temporary

confinement for livestock do not

minimize the producer’s ability to

80574 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

restrain livestock in the performance of

necessary production practices. For

example, it is allowable for a producer

to restrain livestock during the actual

milking process or under similar

circumstances, such as the

administration of medication, when the

safety and welfare of the livestock and

producer are involved.

Handling—Changes Based on

Comments

The following changes are made

based on comments received.

(1) Commercial Availability. A large

number of commenters, including

organic handlers and certifying agents,

stated that ‘‘commercial availability’’

must be included as a requirement for

the 5 percent of nonorganic ingredients

that are used in products labeled

‘‘organic.’’

We agree and have added a

commercial availability requirement as

part of a handler’s organic system plan

under section 205.201 of this subpart.

Up to 5 percent (less water and salt) of

a product labeled ‘‘organic,’’ may be

nonorganic agricultural ingredients.

However, handlers must document that

organic forms of the nonorganic

ingredients are not commercially

available before using the nonorganic

ingredients.

(2) Prohibited Practices. Commenters

were unclear about the extent of the

prohibition on use of excluded methods

and ionizing radiation. To make that

prohibition clear, we have moved the

handling prohibitions in proposed rule

sections 205.270 (c) to 205.105,

Applicability, subpart B. Paragraphs

(c)(1) and (c)(2) which listed excluded

methods and ionizing radiation in the

proposed rule are combined into

paragraph (c)(1) that cross-references

new section 205.105.

(3) Use of Predator Pests and

Parasites. Paragraph (b)(1) of section

205.271 proposed that predator pests

and parasites may be used to control

pests in handling facilities. Under

FDA’s Good Manufacturing Practice, 21

CFR part section 110.35(c), it states that

‘‘No pests shall be allowed in any area

of a food plant.’’ Some commenters

believed use of predator pests in

handling facilities is prohibited by the

FDA regulation. Other commenters

stated that predator pests could be used

in certain handling facilities under the

FDA regulation. One commenter

claimed that the FDA regulation in 21

CFR part 110.19 allows exemptions for

certain establishments that only harvest,

store, or distribute raw agricultural

product. Another commenter suggested

that use of predator pests should be

allowed when FDA does not prohibit

their use.

We do not intend to be inconsistent

with the FDA requirement and, thus,

have removed proposed paragraph (b)(1)

of section 205.271. Use of predator pests

in various organic handling and storage

areas is subject to FDA’s Good

Manufacturing Practice. Paragraphs

(b)(2) and (b)(3) are redesignated.

(4) Use of Synthetic Pheromone Lures.

Proposed paragraph (b)(3) provided for

use of nonsynthetic lures and repellant.

A few handlers and certifying agents

commented that nearly all pheromone

lures use synthetic substances. Because

pheromone lures do not come into

contact with products in a handling

facility, commenters argued that such

lures should be allowed, provided that

the synthetic substance used is on the

National List.

We agree and have added ‘‘synthetic

substances’’ to redesignated paragraph

(b)(2) for use in lures and repellents.

The synthetic substances used must be

consistent with the National List.

(5) Restrict Initial Use of Synthetics to

National List Substances. Paragraph (c)

in the proposed rule provided for use of

any synthetic substance to prevent or

control pests. Several handlers and

certifying agents stated that use of

nonsynthetic and synthetic substances

should initially be limited first to

substances which are allowed on the

National List. This would mean that

substances not allowed for use on the

National List could not be used initially

to control or prevent pest infestations.

We agree with these comments. Use of

allowed substance before use of other

substances is a fundamental principle of

organic agriculture. Therefore, if

preferred practices under paragraphs (a)

and (b) are not successful in preventing

or controlling pest infestations, handlers

may then use, under amended

paragraph (c), only nonsynthetic or

synthetic substances which are allowed

for use on the National List.

We have removed the proviso that

applications of a pest control substance

must be consistent with the product’s

label instructions. This requirement is

readily understood and does not need to

be explicitly stated in the regulations.

Because paragraph (c) now provides

for use only of allowed National List

substances, a new paragraph (d) is

added to allow for use of other synthetic

substances, including synthetic

substances not on the National List, to

prevent or control pest infestations.

These substances may be used only if

the practices in paragraphs (a), (b), and

(c) are ineffective. Before the substance

is used, the handler and the operation’s

certifying agent must agree on the

synthetic substance to be used and the

measures to be taken to prevent contact

of the substance with organic products

and ingredients in the facility. We

expect that this communication can be

accomplished with telephone calls or by

electronic means.

This regulation does not preempt

Federal, State, or local health and

sanitation requirements. We recognize

that inspectors who monitor compliance

with those regulations may require

immediate intervention and use of

synthetic substances, not on the

National List, before or at the same time

as the methods specified in paragraphs

(b) and (c). Therefore, to make this clear,

we have added a new paragraph (f). To

ensure that the use of the substances

does not destroy a product’s organic

integrity, we are requiring that the

handler take appropriate measures to

prevent contact of the product with the

pest control substance used.

(6) Preventing Contact with Prohibited

Substances. Commenters recommended

that, if prohibited substances are

applied by fogging or fumigation, the

organic product and packaging material

must be required to be completely

removed from the facility and reentry of

the product or packaging be delayed for

a period three times longer than that

specified on the pesticide label.

Commenters believed removal and

reentry should be mandatory, regardless

of the organic product or container.

We understand the commenters’

concerns. However, their

recommendations are not appropriate

for all pest infestations. We believe that

measures needed to be taken to prevent

contact with a synthetic substance must

be determined on a case-by-case basis

by the handler and certifying agent. As

stated earlier, new paragraph (d) of

section 205.271 requires a handler and

certifying agent to agree on control and

prevention measures prior to

application of a synthetic substance. We

believe that such an agreement will help

safeguard a product’s organic integrity.

Use of a synthetic substance in fogging

or fumigation should be based on,

among other things, location of the pest

relative to the organic products in the

facility; the extent of the pest

infestation; the substance and

application method to be used; the state

of the organically produced product or

ingredient (raw, unpackaged bulk,

canned, or otherwise sealed); and health

and sanitation requirements of local,

State, and Federal authorities.

Paragraph (e) is changed to clarify that

an operation’s organic handling plan

must be updated to document all

measures taken to prevent contact

between synthetic pest control

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80575

substances and organically produced

products and ingredients.

(7) Repetitive Use of Pest Control

Measures. One commenter suggested a

change in the paragraph (e) requirement

that handlers’ organic plans must

include ‘‘an evaluation of the effects of

repetitive use’’ of pest prevention and

control materials. The commenter

believed that the requirement was

excessive and beyond what should be

expected of handlers. The commenter

indicated that handlers’ organic plans

should address the ‘‘techniques that will

be used to minimize’’ the negative

effects of repetitive use of pest control

materials.

We agree that ‘‘an evaluation of the

effects of repetitive use’’ is more than

what is reasonable to expect of handlers

in their organic plans. We do not agree,

however, that an organic plan should be

required to address the ‘‘techniques’’

used to minimize the effects of

repetitive use of pest control materials.

However, we believe that handlers

should update their organic handling

plans to account for the use of pest

control or prevention substances,

particularly if the substances are

prohibited substances. The update

should include a description of the

application methods used and the

measures taken to prevent contact

between the substance used and the

organic product. We have added these

requirements in redesignated paragraph

(e). Proposed paragraph (e) of section

205.271 is removed.

Handling—Changes Requested But Not

Made

(1) Exceptions to Handling Processes.

A commenter stated that many herbal

products are extracted from organically

produced herbs but that the extraction

of those products ‘‘can employ

significantly different methods than

those used in the manufacture of more

traditional foods.’’ To be labeled as

‘‘organic’’ ingredients, substances such

as herbs, spices, flavorings, colorings,

and other similar substances, must be

derived from a certified organic source

and be extracted without the use of

prohibited substances.

(2) Allowed Synthetics Used in

Packaging Materials and Storage

Containers. A State department of

agriculture commented that section

205.272(b)(1) prohibits use of synthetic

fungicides, preservatives, or fumigants

in packaging materials and storage

containers or bins. The comment stated

that it is inconsistent to permit use of

allowed substances as ingredients in

processed products but prohibit their

use as a preservative or fumigant in the

packaging materials and storage

containers and bins. The commenter

suggested that paragraph (b)(1) be

amended to permit use of National Listallowed substances in section 205.605,

particularly carbon dioxide and ozone,

in packaging materials and storage

containers or bins.

We understand the commenter’s

concern. However, section 6510(a)(5) of

the Act specifically prohibits use of any

packaging materials, storage containers,

or bins that contain synthetic

fungicides, preservatives, or fumigants.

(3) Additional Measures to Prevent

Product Contamination. A few

commenters suggested changing

paragraph (e) of section 205.271 to

require that handlers’ organic handling

plans specify measures that would be

taken to prevent contact between a pest

control substance and ‘‘packaging

materials.’’ This would be in addition to

measures preventing contamination of

‘‘any ingredient or finished product’’ in

the handling facility.

We understand the commenters’

objective. However, for the reasons

stated earlier in regard to commenters’

request that mandatory removal of

product during pest control treatment be

required, we believe that such a

requirement should not be mandatory

for all packaging materials. Measures to

prevent contamination of packaging

material should be left to the handler

and certifying agent to specify in the

handling plan.

Handling—Clarifications

Clarification is given on the following

issues raised by commenters.

(1) Use of Nonorganic Ingredients in

Processed Products. We have corrected

paragraph (c) of section 205.270 to

clarify what must not be used in or on

organically produced ingredients and

nonorganically produced ingredients

used in processed organic products. The

prohibition on use of ionizing radiation,

excluded methods, and volatile

synthetic solvents applies to all

organically produced ingredients. The 5

percent of nonorganic ingredients in

products labeled ‘‘organic,’’ also are

subject to the three prohibited practices.

The nonorganic ingredients in products

labeled ‘‘made with organic

ingredients’’ must not be produced

using ionizing radiation or excluded

methods but may be produced using

volatile synthetic solvents. The

nonorganic ingredients in products

containing less than 70 percent

organically produced ingredients may

be produced and processed using

ionizing radiation, excluded methods,

and synthetic solvents.

(2) Water Quality Used in Processing.

A handler questioned whether public

drinking water containing approved

levels of chlorine, pursuant to the Safe

Drinking Water Act, is acceptable for

use in processing products labeled ‘‘100

percent organic.’’ Water meeting the

Safe Drinking Water Act may be used in

processing any organically produced

products.

Temporary Variances—Changes Based

on Comments

Additional Causes for Issuing

Temporary Variance. A few State

department of agriculture commenters

suggested that ‘‘drought’’ should be

added to the regulatory text as a natural

disaster warranting a temporary

variance from regulations.

We agree and have added drought to

the regulatory text in paragraph (a)(2) of

section 205.290. We have also added

‘‘hail’’ as a natural disaster warranting a

temporary variance. Both drought and

hail were mentioned in the preamble of

the proposed rule but were

unintentionally left out of the regulatory

text.

Temporary Variances—Changes

Requested But Not Made

Allowance of Temporary Variances. A

few commenters suggested that SOP’s

governing State officials should be able

to authorize temporary variances due to

local natural disasters which may occur

in a State. We do not agree that with

these comments. For consistency of

application, we believe that only the

Administrator should have the authority

to grant a temporary variance. Citing

local conditions, an SOP’s governing

State official and certifying agents may

recommend a temporary variance to the

Administrator. We are committed to

providing quick responses to such

recommendations.

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 (pdp), information panel,

ingredient statement, and on other

package panels. Labeling requirements

also are established for organically

produced livestock feed, for containers

used in shipping and storing organic

80576 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

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 established. Finally, this

subpart provides for a USDA seal and

regulations for display of the USDA seal

and the seals, logos, or other identifying

marks of certifying agents.

The intent of these sections is to

ensure that organically produced

agricultural products and ingredients

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 other Federal

labeling regulations. The Food and Drug

Administration (FDA) regulates the

placement of information on food

product packages in 21 CFR parts 1 and

101. USDA’s Food Safety and Inspection

Service’s (FSIS) Federal Meat Inspection

Act, Poultry Products Inspection Act,

and Egg Products Inspection Act have

implementing regulations in 9 CFR part

317 which must be followed in the

labeling of meat, poultry, and egg

products. The Federal Trade

Commission (FTC) regulations under

the Fair Packaging and Labeling Act

(FLPA) in 16 CFR part 500 and the

Alcohol Tobacco and Firearms (ATF)

regulations under the Federal Alcohol

Administration Act (FAA) in 27 CFR

parts 4, 5, and 7, also must be followed,

as applicable to the nature of the

product. The labeling requirements

specified in this subpart must be

implemented in a manner so that they

do not conflict with the labeling

requirements of these and other Federal

labeling requirements.

While this regulation does not require

labeling of an organic product as

organic, we assume that producers and

handlers choose to label their organic

products and display the USDA seal to

the extent allowed in these regulations.

They do this to improve the

marketability of their organic product.

Under the National Organic Program

(NOP), the assembly, packaging, and

labeling of multiingredient organic

products 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. Based on comments received,

several important labeling changes from

the proposed rule are made in this final

rule. (1) The term, ‘‘organic,’’ cannot be

used in an agricultural product name if

it modifies an ingredient that is not

organically produced (e.g., ‘‘organic

chocolate ice cream’’ when the

chocolate flavoring is not organically

produced). (2) The 5 percent or less of

nonorganic ingredients in products

labeled ‘‘organic’’ must be determined

not ‘‘commercially available’’ in organic

form. (3) Display of a product’s organic

percentage is changed from required to

optional for ‘‘organic’’ and ‘‘made with

* * *’’ products. (4) The minimum

organic content for ‘‘made with * * *’’

products is increased from 50 percent to

70 percent. (5) In addition to listing

individual ingredients, the ‘‘made with

* * *’’ label may identify a food group

on the label (‘‘made with organic fruit’’).

(6) A new section is added to provide

labeling of livestock feed that is

organically produced. (7) Finally, a

revised design for the USDA seal is

established. In addition to these

changes, we have made a few changes

in the regulatory text for clarity and

consistency purposes. These do not

change the intent of the regulation.

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

produce and label organic ingredients

and/or assemble multiingredient

products composed of 70 percent or

more organic ingredients must be

certified as an organic handling

operation. Handlers of products of less

than 70 percent organic ingredients do

not have to be certified unless the

handler actually produces one or more

of the organic ingredients used in the

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

an organic product package are subject

to recordkeeping requirements which

show proof that the product purchased

prior to relabeling was, indeed,

organically produced and handled.

Distributors which receive and transport

labeled product to market are not

subject to certification or any labeling

requirements of this regulation.

Many commenters appealed for

‘‘transition’’ or ‘‘conversion’’ labeling.

This issue is discussed under

Applicability in subpart B. Transition

labeling is not provided for in the Act

or the proposed rule and is not provided

for in this regulation.

Description of Regulations

General Requirements

The general labeling principle

employed in this regulation is that

labeling or identification of the organic

nature of a product increases 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 establish

the three percentage categories for

organic content and basic labeling

requirements in those categories.

Section 205.300 specifies the general

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

labels and market information.

Paragraph (a) establishes that the term,

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

and in market information as a modifier

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 or in market

information for any purpose other than

to modify or identify the product or

ingredient in the product that is

organically produced and handled.

Food products and ingredients that are

not organically produced and handled

cannot be modified, described, or

identified with the term, ‘‘organic,’’ on

any package panel or in market

information in any way that implies the

product is organically produced.

Section 6519(b) of the Act provides

the Secretary with the authority to

review use of the term, ‘‘organic,’’ in

agricultural product names and the

names of companies that produce

agricultural products. While we believe

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

name context does not inherently imply

an organic production or handling claim

and, thus, does not inherently constitute

a false or misleading statement, we

intend to monitor the use of the term in

the context of the entire label. We will

consult with the FTC and FDA

regarding product and company names

that may misrepresent the nature of the

product and take action on a case-bycase basis.

Categories of Organic Content

Section 205.301 establishes the

organic content requirements for

different labeling provisions specified

under this program. The type of labeling

and market information that can be used

and its placement on different panels of

consumer packages and in market

information is based on the percentage

of organic ingredients in the product.

The percentage must reflect the actual

weight or fluid volume (excluding water

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80577

and salt) of the organic ingredients in

the product. Four categories of organic

content are established: 100 percent

organic; 95 percent or more organic; 70

to 95 percent organic; and less than 70

percent organic.

100 Percent Organic

For labeling and market information

purposes, this regulation allows a ‘‘100

percent organic’’ label on: (1)

agricultural products that are composed

of a single ingredient such as raw,

organically produced fruits and

vegetables and (2) products composed of

two or more organically produced

ingredients, provided that the

individual ingredients are, themselves,

wholly organic and produced without

any nonorganic ingredients or additives.

Only processing aids which are,

themselves, organically produced, may

be used in the production of products

labeled ‘‘100 percent organic.’’ With the

exception of the description phrase

‘‘100 percent’’ on the pdp, the labeling

requirements for ‘‘100 percent organic’’

products are the same as requirements

for 95 percent organic products

specified in section 205.303.

Organic

Products labeled or represented as

‘‘organic’’ must 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. Up to 5 percent

of the ingredients may be

nonagricultural substances (consistent

with the National List) and, if not

commercially available in organic form

pursuant to section 205.201, nonorganic

agricultural products and ingredients in

minor amounts (hereinafter referred to

as minor ingredients) (spices, flavors,

colorings, oils, vitamins, minerals,

accessory nutrients, incidental food

additives). The nonorganic ingredients

must not be produced using excluded

methods, sewage sludge, or ionizing

radiation.

Made with 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

and salt) between 70 and 95 percent

organic agricultural ingredients. The

organic ingredients must be produced in

accordance with subpart C and subpart

G. Such products may be labeled or

represented as ‘‘made with organic

(specified ingredients or food

group(s)).’’ By ‘‘specified,’’ we mean the

name of the agricultural product(s) or

food group(s) forming the organic

ingredient(s). Up to three organically

produced ingredients or food groups

may be named in the phrase.

If one or more food groups are

specified in the phrase, all ingredients

in the product which belong to the food

group(s) identified on the label must be

organically produced. For the purposes

of this labeling, the following food

groups may be identified as organically

produced on a food package label:

beans, fish, fruits, grains, herbs, meats,

nuts, oils, poultry, seeds, spices,

sweeteners, and vegetables. In addition,

processed milk products (butter, cheese,

yogurt, milk, sour creams, etc.) also may

be identified as a ‘‘milk products’’ food

group. For instance, a vegetable soup

made with 85 percent organically

produced and handled potatoes,

tomatoes, peppers, celery, and onions

may be labeled ‘‘soup made with

organic potatoes, tomatoes, and

peppers’’ or, alternatively, ‘‘soup made

with organic vegetables.’’ In the latter

example, the soup may not contain

nonorganic vegetables. For the purposes

of this labeling provision, tomatoes are

classified, accordingly to food use, as a

vegetable.

To qualify for this organic labeling,

the nonorganic agricultural ingredients

must be produced and handled without

use of the first three prohibited practices

specified in paragraph (f) of section

205.301, but may be produced or

handled using practices prohibited in

paragraphs (f)(4) through (f)(7).

Because of the length of the labeling

phrase ‘‘made with organic (specified

ingredients or food group(s)),’’ such

products are referred to in this preamble

as ‘‘made with * * * ’’ products. The

labeling requirements for ‘‘made with

* * *’’ products are specified in section

205.304.

Product With Less Than 70 Percent

Organic Ingredients

The final labeling category covers

multiingredient products with less than

70 percent organic ingredients (by

weight or fluid volume, excluding water

and salt). The organic ingredients must

be produced in accordance with

subparts C and G. The remaining

nonorganic ingredients 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 section

205.305.

Products that fail to meet the

requirements for one labeling category

may be eligible for a lower labeling

category. For example, if a product

contains wholly organic ingredients but

the product formulation requires a

processing aid or less than 5 percent of

a minor ingredient that does not exist in

organic form, the product cannot be

labeled ‘‘100 percent organic’’ and must

be labeled as ‘‘organic.’’ If a

multiingredient product is 95 percent or

more organic but contains a prohibited

substance in the remaining 5 percent,

the product cannot be labeled as

‘‘organic,’’ because of the presence of

the prohibited substance, but may be

labeled as a ‘‘made with * * *’’

product. Further, a handler who

produces a ‘‘100 percent organic’’ or

‘‘organic’’ product but chooses not to be

certified under this program may only

display the organic percentage on the

information panel and label the

ingredients as ‘‘organic’’ on the

ingredient statement. The handler must

comply with recordkeeping

requirements in subpart E.

Livestock Feed

All agricultural ingredients used in

raw and processed livestock feed that is

labeled as ‘‘100 percent organic’’ and

‘‘organic’’ must be organically produced

and handled in accordance with the

requirements of these regulations. The

difference between the two labels is that

feed labeled as ‘‘100 percent organic’’

must be composed only of organically

produced agricultural ingredients and

may not contain nonorganic feed

additives or supplements. The

agricultural portion of livestock feed

labeled as ‘‘organic’’ must contain only

organically produced raw and processed

agricultural ingredients and may

contain feed additives and supplements

in conformance with the requirements

of section 205.237. Additionally,

labeling of livestock feed containers

must follow State livestock feed labeling

laws.

Prohibited Practices

The labeling of whole products or

ingredients as organic is prohibited if

those products or ingredients are

produced using any of the following

production or handling practices: (1)

Ingredients or processing aids produced

using excluded methods; (2) ingredients

that have been produced using

applications of sewage sludge; (3)

ingredients that have been processed

with ionizing radiation; (4) synthetic

substances not 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

(except the use of sulfites in the

80578 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

production of wine); (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.

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, shows how use of the seven

prohibited practices affects the labeling

of organically produced products and

ingredients used in those products.

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

Organic and use label Use excluded

methods

Use sewage

sludge

Use ionizing

radiation

Use substances not

on National

List

Contain

added sulfites, nitrates,

nitrites

Use nonorganic ingredients and

label ‘‘when

available’’

Use both

organic and

nonorganic

forms of

same

ingredient

‘‘100 percent organic’’: Single/

multiingredients completely

organic.

NO ................ NO ................ NO ................ NO ................ 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 ingredients’’:

Organic ingredients (70–

95%).

NO ................ NO ................ NO ................ NO ................ NO—except

wine.

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

Nonorganic ingredients

(30% or less).

NO ................ NO ................ NO ................ OK ................ OK ................ NA* ............... NA*

Less-than 70% organic ingredients:

Organic ingredients (30%

or less).

NO ................ NO ................ NO ................ NO ................ NO—except

wine.

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

Nonorganic ingredients

(70% or more).

OK ................ OK ................ OK ................ OK ................ OK ................ NA* ............... NA*

* Not applicable, provided that the nonorganic ingredient is not labeled as ‘‘organic’’ on the ingredient statement and is not counted in the calculation of the product’s organic percentage.

Calculating the Percentage of Organic

Ingredients

Section 205.302 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

calculation is made by the handler at

the time the finished product is

assembled.

The organic percentage of liquid

products and liquid ingredients is

determined based on the fluid volume

of the product and ingredients

(excluding water and salt). When a

product is identified on the pdp or the

information panel as being reconstituted

with water from a concentrate, the

organic content is calculated on the

basis of a single-strength concentration.

For products that contain organically

produced dry and liquid ingredients,

the percentage of total organic

ingredients is based on the 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 such 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.

At the discretion of the handler, the

total percentage of all organic

ingredients in a food product may be

displayed on any package panel of the

product with the phrase, ‘‘contains X

percent organic ingredients,’’ or a

similar phrase. If the total percentage is

a fraction, it must be rounded down to

the nearest whole number. The

percentage of each organic ingredient is

not required to be displayed in the

ingredient statement.

A certified operation that produces

organic product may contract with

another operation to repackage and/or

relabel the product in consumer

packages. In such cases, the repacker or

relabeler may use information provided

by the certified operation to determine

the percentage of organic ingredients

and properly label the organic product

package consistent with the

requirements of this subpart.

Labeling ‘‘100 Percent Organic’’ and

‘‘Organic’’ Products

Section 205.303 includes optional,

required, and prohibited practices for

labeling agricultural products that are

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

Products that are composed of wholly

organic ingredients may be identified

with the label statement, ‘‘100 percent

organic,’’ on any package panel.

Products composed of between 95 and

100 percent organic ingredients may be

identified with the label statement

‘‘organic’’ on any package panel, and the

handler must identify each organic

ingredient in the ingredient statement.

The handler may display the

following information on the pdp, 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;

and (2) for products labeled ‘‘organic,’’

the percentage of organic ingredients in

the product. The size of the percentage

statement must not exceed one-half the

size of the largest type size on the panel

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80579

on which the statement is displayed. It

also must appear in its entirety in the

same type size, style, and color without

highlighting; (3) the USDA seal; and (4)

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 finished product 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.

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.

If a product is labeled as ‘‘100 percent

organic’’ the ingredients may be

identified with the term, ‘‘organic,’’ but

will 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, each organically

produced ingredient listed in the

ingredient statement must be identified

with the term, ‘‘organic,’’ or an asterisk

or other mark to indicate that the

ingredient is organically produced.

Water and salt cannot be identified as

‘‘organic’’ in the ingredient statement.

The handler of these products also

must display on the information panel

the name of the certifying agent which

certified the handling operation that

produced the finished product. The

handler may include the business

address, Internet 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 or food group(s))’’

With regard to agricultural products

‘‘made with * * *’’—those products

containing between 70 and 95 percent

organic ingredients—this rule

establishes, in section 205.304, the

following optional, required, and

prohibited labeling practices.

Under optional practices, the ‘‘made

with * * *’’ statement is used to

identify the organically produced

ingredients in the product. The

statement may be placed on the pdp and

other panels of the package. The same

statement can also be used in market

information representing the product.

However, the following restrictions are

placed on the statement: (1) The

statement may list up to three

ingredients or food group commodities

that are in the product; (2) the

individually specified ingredients and

all ingredients in a labeled food group

must be organically produced and must

be identified as ‘‘organic’’ in the

ingredient statement on the package’s

information panel; (3) 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

pdp; and (4) the statement and optional

display of the product’s organic

percentage must appear in their entirety

in the same type size, style, and color

without highlighting.

The following food groups can be

specified in the ‘‘made with’’ labeling

statement: fish, fruits, grains, herbs,

meats, nuts, oils, poultry, seeds, spices,

sweeteners, and vegetables. In addition,

organically produced and processed

butter, cheeses, yogurt, milk, sour

cream, etc., may be identified as a ‘‘milk

products’’ food group. For the purposes

of this labeling, tomatoes are considered

as vegetables, based on their use in a

product. As noted immediately above,

all of a product’s ingredients that are in

the specified food group(s) must be

organically produced.

Display of the ‘‘made with * * *’’

statement on other panels must be

similarly consistent with the size of

print used on those panels. These

restrictions are in accordance with FDA

labeling requirements and similar to the

recommendations of the National

Organic Standards Board (NOSB). This

provision helps assure that the ‘‘made

with * * *’’ statement is not displayed

in such a manner as to misrepresent the

actual organic composition of the

product.

The USDA seal may not be displayed

on the pdp of products labeled ‘‘made

with organic ingredients.’’ However, at

the handler’s option and consistent with

any contract agreement between the

organic producer or handler and the

certifying agent, the certifying agent’s

seal or logo may be displayed on the

pdp and other package panels.

Packages of ‘‘made with * * *’’

products may display on the pdp,

information panel, or any package

panel, the total percentage of organic

ingredients in the product. Any

organically produced ingredient,

including any ingredient that is a

member of a food group listed on the

‘‘made with * * *’’ statement, must be

identified in the ingredient statement

with the term, ‘‘organic.’’ Alternatively,

an asterisk or other mark may be placed

beside each organically produced

ingredient in the ingredients statement

with an explanation that the mark

indicates the ingredient is organically

produced.

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. The

handler may include the business

address, Internet address, or telephone

number of the certifying agent which

certified the handler of the finished

product.

If the percentage of organic

ingredients in the product is displayed,

the handler who affixes the label to the

product package is responsible for

determining the percentage. The

handler may use information provided

by the certified operation in

determining the percentage. As part of

the certifying agent’s annual

certification of the handler, the certifier

must verify the calculation and labeling

of packages.

Labeling Products With Less Than 70

Percent Organic Ingredients

Section 205.305 covers the final

labeling category of packaged

multiingredient agricultural products

containing less than 70 percent organic

ingredients.

Handlers of ‘‘less than 70 percent’’

multiingredient products, who choose

to declare the organic nature of their

product, may do so only in the

ingredient statement by identifying the

organically produced ingredients with

the term, ‘‘organic,’’ or with an asterisk

or other mark. If the handler identifies

the ingredients that are organically

produced, the handler also may declare

the percentage of organic content in the

product. The percentage may only be

placed on the information panel so that

it can be viewed in relation to the

ingredient statement.

Processed products composed of less

than 70 percent organic content cannot

display the USDA seal or any certifying

agent’s organic certification seal or logo

anywhere on the product package or in

market information.

Handlers of such products are subject

to this regulation in the following ways.

Those handlers who only purchase

organic and nonorganic ingredients and

80580 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

assemble a finished product of less than

70 percent organic content do not have

to be certified as organic handlers.

However, they are responsible for

appropriate handling and storage of the

organic ingredients (section

205.101(a)(3)) and for maintaining

records verifying the organic

certification of the ingredients used in

the product (section 205.101(c)). To the

extent that the packaging process

includes affixing the label to finished

product package, those handlers are

responsible for meeting the labeling

requirements of this subpart. The

nonorganic ingredients may be

produced, handled, and assembled

without regard to the requirements of

this part.

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’’ (optional).

USDA seal and certifying

agent seal(s) (optional).

‘‘100% organic’’ (optional)

Certifying agent name (required); business/Internet address, tele. No.

(optional).

If multiingredient product,

identify each ingredient

as ‘‘organic’’ (optional).

‘‘100 percent organic’’ (optional).

USDA seal and certifying

agent seal(s) (optional).

‘‘Organic’’ (95% or more

organic ingredients).

‘‘Organic’’ (plus product

name) (optional).

‘‘X% organic’’ (optional)

USDA seal and certifying agent seal(s) (optional).

‘‘X% organic’’ (optional) ....

Certifying agent name (required); business/Internet address, tele. No.

(optional).

Identify organic ingredients

as ‘‘organic’’ (required if

other organic labeling is

shown).

‘‘X% organic’’ (optional).

USDA seal and certifying

agent seal(s) (optional).

‘‘Made with Organic Ingredients’’ (70 to 95% organic ingredients).‘‘made with organic (ingredients or food group(s))’’

(optional).

‘‘X% organic’’ (optional) ....

Certifying agent seal of

final product handler

(optional).

Prohibited: USDA seal ......

‘‘X% organic ingredients’’

(optional).

Certifying agent name (required); business/Internet address, tele. No.

(optional).

Prohibited: USDA seal ......

Identify organic ingredients

as ‘‘organic’’ (required if

other organic labeling is

shown).

‘‘made with organic (ingredients or food group(s))’’

(optional) ‘‘X% organic’’

(optional).

Certifying agent seal of

final product handler

(optional).

Prohibited: USDA seal.

Less-than 70% organic ingredients.Prohibited: Any reference

to organic content of

product.

Prohibited: USDA seal &

certifying agent seal.

‘‘X% organic’’ (optional) ....

Prohibited: USDA seal &

certifying agent seal.

Identify organic ingredients

as ‘‘organic’’ (optional)

(required if % organic is

displayed).

Prohibited: USDA seal &

certifying agent seal.

Misrepresentation in Labeling of

Organic Products. The labeling

requirements of this final rule 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. If terms or phrases are 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.

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 may misrepresent 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 labeled.

Moreover, ‘‘pure,’’ ‘‘healthy,’’ and

other similar terms are regulated by

FDA and FSIS. These terms may be used

only in accordance with the labeling

requirements of FDA and FSIS. The

prohibition on use of these terms to

modify ‘‘organic’’ does not otherwise

preclude their use in other labeling

statements as long as such statements

are in accordance with other applicable

regulations. Representations made in

market information for organic products

are also subject to the requirements and

restrictions of other Federal statutes and

applicable regulations, including the

Federal Trade Commission Act, 15

U.S.C. 45 et seq.

Labeling Organically Produced

Livestock Feed Products

New section 205.306 is added to

provide for labeling of the two

categories of livestock feed that are

organically produced under this

regulation. Feed labeled ‘‘100 percent

organic’’ may contain only organically

produced agricultural product. Such

feed must not contain feed additives,

supplements, or synthetic substances.

Feed labeled ‘‘organic’’ must contain

only organically produced agricultural

products and may contain feed

additives and supplements in

accordance with section 205.237,

Livestock Feed, and section 205.603 of

the National List. This rule does not

limit the percentage of such additives

and supplements in organic feed

products, which may be required under

various State laws.

Livestock feed labeled ‘‘100 percent

organic’’ and ‘‘organic’’ may, at the

handler’s option, display the USDA seal

and the seal or logo of the certifying

agent. The organic ingredients listed on

the ingredient statement may be

identified with the word, ‘‘organic,’’ or

other reference mark. The name of the

certifying agent must be displayed on

the information panel. The business

address, Internet address, and other

contact information for the certifying

agent may be displayed. These are the

only labeling options to indicate that

livestock feed that is organically

produced.

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80581

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 (EU) organic

standards. Such factual statements

regarding the organic nature of the

product are 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 are 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 in accordance

with the requirements of the NOP may

be shipped to international markets

without marking the shipping

containers ‘‘for export only.’’

Organically produced products

imported into the United States must be

labeled in accordance with the

requirements of this subpart. Labeling

and market representation of the

product cannot imply that the product

is also certified to other organic

standards or requirements that differ

from this national program.

Labeling Nonretail Containers

Section 205.307 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 * * *’’ Labeling

nonretail containers as containing

organically produced product should

provide 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 labeling

provisions are not intended for shipping

or storage containers that also are used

in displays at the point of retail sale.

Retail containers must meet labeling

provisions specified in section 205.307.

Containers used only for shipping and

storage of any organic product labeled

as containing 70 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

available to handlers if they 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 product. Much of this

information may overlap information

that the handler normally affixes to

shipping and storage containers or

information that is required under other

Federal labeling regulations. There are

no restrictions on size or display of the

term, ‘‘organic,’’ or the certifying agent

seal unless required by other Federal or

State statutes.

Labeling Products at the Point of Retail

Sale

Section 205.308 applies to organically

produced ‘‘100 percent organic’’ and

‘‘organic’’ products that are not

packaged prior to sale and are presented

in a manner which allows the consumer

to select the quantity of the product

purchased.

The terms, ‘‘100 percent organic’’ and

‘‘organic,’’ as applicable, may be used to

modify the name of the product in retail

displays, labeling, and market

information. The ingredient statement of

a product labeled ‘‘organic’’ displayed at

retail sale must identify the organic

ingredients. If the product is prepared in

a certified facility, 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.

Section 205.309 addresses ‘‘made

with * * *’’ products that are not

packaged prior to sale and are presented

in a manner which allows the consumer

to select the quantity of the product

purchased. These products include, but

are not limited to, multiingredient

products containing between 70 and 95

percent organic ingredients. The ‘‘made

with * * *’’ label may be used to

modify the name of the product in retail

displays, labeling, and market

information. Up to three organic

ingredients or food groups may be

identified in the statement. If such

statement is declared in market

information at the point of retail sale,

the ingredient statement and market

information must identify the organic

ingredients. Retail display and market

information of bulk products cannot

display the USDA seal but may, if the

product is prepared in a certified

facility, display the seal or logo of the

certifying agent which certified the

finished product. The certifying agent’s

seal or logo may be displayed at the

option of the retail food establishment.

Products containing less than 70

percent organic ingredients may not be

identified as organic or containing

organic ingredients at retail sale. The

USDA seal and any certifying agent seal

or logo may not be displayed for such

products.

Labeling Products Produced in Exempt

or Excluded Operations

Section 205.310 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. These operations are

discussed more thoroughly in subpart B,

Applicability.

Any such operation that is exempt or

excluded from certification or which

chooses not to be certified may not label

its organically produced products in a

way which indicates that the operation

has been certified as organic. Exempt

producers may market whole, raw

organic product directly to consumers,

for example, at a farmers market or

roadside stand as ‘‘organic apples’’ or

‘‘organic tomatoes.’’ Exempt producers

may market their products to retail food

establishments for resale to consumers.

However, no terms may be used which

indicate that such products are

‘‘certified’’ as organic. Finally, exempt

organic producers cannot sell their

product to a handler for use as an

ingredient or for processing into an

ingredient that is labeled as organic on

the information panel.

These provisions are truth in labeling

provisions because display of a

certification seal indicates that the

product has been certified. We believe

this requirement helps differentiate

between certified and uncertified

products and helps maintain the

integrity of certified products while

providing organic labeling opportunities

for exempt and excluded operations.

USDA Organic Seal

This final rule establishes a USDA

seal that can be placed on consumer

packages, displayed at retail food

80582 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

establishments, and used in market

information to show that certified

organic products have been produced

and handled in accordance with these

regulations. The USDA seal can only be

used to identify raw and processed

products that are certified as organically

produced. It cannot be used for products

labeled as ‘‘made with organic

ingredients’’ (70 to 95 percent organic

ingredients) or on products with less

than 70 percent organic ingredients.

The USDA seal is composed of an

outer circle around two interior half

circles with an overlay of the words

‘‘USDA Organic.’’ When used, the

USDA seal must be the same form and

design as shown in figure 1 of section

205.311 of this regulation. The USDA

seal must be printed legibly and

conspicuously. On consumer packages,

retail displays, and labeling and market

information, the USDA seal should be

printed on a white background in earth

tones with a brown outer circle and

separate interior half circles of white

(upper) and green (lower). The term,

‘‘USDA,’’ must appear in green on the

white half circle. The term, ‘‘organic,’’

must appear in white on the green half

circle. The handler may print the USDA

seal in black and white, using black in

the place of green and brown. Size

permitting, the green (or black) lower

half circle may have four light lines

running from left to right and

disappearing at the right horizon, to

resemble a cultivated field. The choice

between these two color schemes is left

to the discretion of the producer,

handler, or retail food establishment.

Labeling—Changes Based on Comments

The following changes are made

based on comments received.

(1) Use of ‘‘Organic’’ in Product

Names. The NOSB, State organic

program (SOP) managers, certifying

agents, and a large number of individual

commenters strongly recommended that

USDA prohibit use of the term,

‘‘organic,’’ to modify an ingredient in a

product name if the ingredient, itself, is

not produced organically. The examples

offered were ‘‘organic chocolate ice

cream’’ and ‘‘organic cherry sweets’’ in

which the ice cream and candy are at

least 95 percent organic but the

chocolate and cherry flavoring is not

organically produced.

We agree with commenters that such

product names can be misleading and

would be a violation of section

205.300(a). In the examples, the word,

‘‘organic,’’ precedes the words,

‘‘chocolate’’ and ‘‘cherry,’’ and clearly

implies that those ingredients are

organically produced. The chocolate

and cherry flavorings must be

organically produced to be used in this

way. If the product is at least 95 percent

organically produced but the flavoring

is nonorganic, the word sequence must

be reversed or the word, ‘‘flavored,’’

must be added to the name; e.g.,

‘‘chocolate organic ice cream’’ or

‘‘chocolate flavored organic ice cream.’’

A sentence has been added to section

205.300(a) to specify that the term,

‘‘organic,’’ may not be used in a product

name to identify an ingredient that is

not organically produced.

A similar comment was received

asking how a single product with two

separately wrapped components can be

labeled if one of the components is

organically produced and the other is

not. The commenter’s example was a

carrot and dip snack pack in which the

carrots are organically produced and the

dip is a conventional product. Another

example is ready-to-eat tossed green

salad in which the salad greens are

organically produced but the separately

pouched salad dressing is a nonorganic

component of the product.

Such products also must be labeled in

accordance with section 205.300(a). It

would be misleading to label the snack

pack ‘‘organic carrots and dip’’ or

‘‘organic green salad and ranch

dressing,’’ if the dip and ranch dressing

are not produced with organic

ingredients. The salad may be labeled

‘‘organic green salad with ranch

dressing.’’

Section 6519(b) of the Act provides

the Secretary with the authority to take

action against misuse of the term,

‘‘organic.’’ USDA will monitor use of

the term, ‘‘organic,’’ in product names

and will restrict use of the term in

names that are determined to be

deliberately misleading to consumers.

Such determinations must be made on

a case-by-cases basis.

(2) Labeling Livestock Feed. In the

definition of ‘‘agricultural product,’’ the

Act includes product marketed for

‘‘livestock consumption.’’ This means

that NOP regulations have applicability

to livestock feed production. The

Association of American Feed Control

Officials (AAFCO) and a few States

departments of agriculture commented

that the proposed provisions conflict

with widely followed standards for

livestock feed labeling. AAFCO’s

‘‘Model Bill and Regulation’’ standards

are incorporated in many State feed

laws. The commenters claimed that the

requirement to identify organic

ingredients in the ingredient statement

conflicts with feed regulations which

prohibit reference to an ingredient’s

‘‘quality or grade.’’ They also claimed

that the percentage of organic content

requirement is a quantitative claim that

must be verified by independent sources

(e.g., sources other than the certifying

agent). The commenters suggested that a

provision be added to address labeling

of commercial livestock feed.

We have added new paragraph (e) of

section 205.301 which provides for two

kinds of feed that can be labeled as

‘‘organic.’’ The first is feed that contains

only organically produced agricultural

ingredients and contains no added

nutrients or supplements. The second

organic feed category also must contain

only organically produced agricultural

ingredients but may contain feed

additives and supplements that are

needed to meet the nutritional and

health needs of the livestock for which

the feed is intended. Feed labeled as

‘‘organic’’ must conform with the

requirements of section 205.237,

Livestock feed. That section provides

that feed additives and supplements

produced in conformity with section

205.603 of the National List may be

used. The NOP requires that livestock

under organic management must only

be fed organically produced agricultural

ingredients.

We also have added new section

205.306 to address commenters’ labeling

concerns. The new section provides for

optional display of a feed’s organic

percentage and optional identification

of the feed ingredients that are

organically produced. The labeling

requirements are not intended to

supersede the general feed labeling

requirements established in the FFDCA

and those found under various State

laws. Handling processes, feed

formulations and recordkeeping must be

sufficient to meet the requirements of

applicable State regulations.

We believe the provisions in new

paragraph (e) of section 205.301 on feed

content and new section 205.306 on

labeling will allow livestock feed

producers to produce and label organic

livestock feed that is in accordance with

these regulations and State

requirements.

(3) Organic Processing Aids. Several

industry leaders and SOP managers

questioned whether the proposed rule

intended to exclude the use of certified

organic processing aids in the creation

of ‘‘100 percent organic’’ products.

Commenters pointed out that a handler

should be able to use organically

produced processing aids to create

products that are labeled as ‘‘100

percent organic.’’ The processing aid

can be a by-product of an organic

agricultural product; e.g., a filter made

of rice hulls from organically produced

rice. AMS concurs. Accordingly, a

change is made in paragraph (f)(4) of

section 205.301 to provide for use of

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80583

organically produced processing aids in

products labeled ‘‘100 percent organic.’’

To help clarify this and correct an

incomplete reference in the proposed

rule preamble, we have changed the

column heading of the fourth prohibited

practice in the preamble table 1.

(4) Content of ‘‘100 Percent Organic

Products.’’ Certifying agents and several

industry commenters called attention to

the regulatory text of section 205.301(a)

describing 100 percent organic

products. They argued that the proposed

rule would allow products with one or

more 95 percent-plus ‘‘organic’’

ingredients to be combined as

components and have the resulting

product be labeled as ‘‘100 percent

organic.’’

We did not intend to allow any

ingredient that is less than 100 percent

organic to be used in a product labeled

‘‘100 percent organic.’’ To leave no

doubt as to the nature of any product

labeled ‘‘100 percent organic,’’ we have

changed the wording of paragraph (a) of

section 205.301 to clarify that a

multiingredient ‘‘100 percent organic’’

product must be comprised entirely of

100 percent organic ingredients.

(5) Labeling of Organic Percentage.

We received many comments requesting

clearer display of a product’s percentage

of organic content. Most suggested that

any product containing less than 100

percent organic ingredients should be

required to display the organic

percentage on the pdp. They argued that

display of the organic percentage on the

front of the package would enable

consumers to more easily determine

organic content, compare competing

products, and make better purchase

decisions. The NOSB did not

recommend display of organic

percentage on the pdp for all products

containing organic ingredients.

We also received several comments

from handlers concerned that the

required display of a product’s organic

percentage can be a burden on handlers.

They stated that, to save packaging and

printing costs, handlers order bulk

quantities of printed packages, labels,

and other printed marketing materials.

When printed in advance of a growing

season and harvest, the handler may not

be able to assemble a product that is

exactly consistent with the preprinted

labeling information, particularly the

percentage of organic content. One

commenter representing a commodity

association opposed the required

percentage labeling because the

association believes consumers will not

understand any organic claim if a

percentage of less than 100 percent is

displayed.

We believe that display of the

percentage of organic content is

important product information that can

be very helpful to consumers in their

purchase decisions. We also believe that

the opportunity to display the

percentage content of organically

produced ingredients can be a positive

factor in encouraging handlers to use

more organic ingredients in their

multiingredient products. At the same

time, we understand the financial

commitment involved in preprinting

bulk quantities of packages and labels

well in advance of harvests, which

determine availability of needed

ingredients.

This final rule implements changes in

sections 205.303 and 205.304 for

products labeled ‘‘organic’’ and ‘‘made

with organic ingredients.’’ The

requirement to display the percentage of

organic content on the information

panel is removed. That requirement is

replaced with optional labeling of the

product’s organic percentage on the pdp

or any other package panels. This will

allow those handlers to display the

percentage of their product’s organically

produced contents on the pdp where it

will be most immediately visible to

consumers. Handlers who cannot, with

certainty, display their product’s

organic percentage or who choose not to

display the percentage, are not required

to do so.

This revised labeling provision also

removes the requirement in section

205.305 that products with less than 70

percent organic content display the

product’s organic percentage on the

information panel. Under this final rule,

that percentage labeling is optional but

is still restricted to the information

panel. The percentage of a less than 70

percent organic product may not be

displayed on the pdp and may not be

displayed if the organic ingredients are

not identified in the ingredient

statement.

(6) Designation of Organically

Produced Ingredients. A certifying agent

suggested that identification of organic

ingredients in ingredient statements

should be allowed to be made with an

asterisk or similar mark, with the

asterisk defined on the information

panel. The commenter stated that the

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

may cause space problems on some

small packages and that use of a mark

is a common industry practice. We agree

with the comment and have changed

sections 205.303(b)(1), 205.304(b)(1),

and 205.305(a)(i) of the regulatory text

accordingly. Thus, organic ingredients

may be identified in the ingredient

statement with either the term,

‘‘organic,’’ or an asterisk or other mark,

provided that the asterisk or other mark

is defined on the information panel

adjacent to the ingredient statement.

(7) Minimum Organic Percentage for

Labeling. In the proposed rule’s

preamble, we asked for public comment

on whether the 50 percent minimum

organic content for pdp labeling should

be increased. The 50 percent minimum

content was established in section

6505(c) of the Act. However, the Act

also provides the Secretary with the

authority to require such other terms

and conditions as are necessary to

implement the program. Thus, the

minimum organic content level for pdp

labeling could be changed if the change

would further the purposes of the Act.

Comments to the first (1997) proposal

and to the revised proposed rule

suggested that the minimum organic

content for labeling purposes should be

increased. All comments received,

including comments from certifying

agents, a leading organic association, the

EU and other international commenters

recommended that the minimum

organic content to qualify for pdp

labeling should be raised to 70 percent,

which is the EU’s minimum. All

comments stated that the increase is

necessary to make the NOP standards

consistent with international organic

standards. Commenters also pointed to

advances in organic production and

processing technologies and to increases

in the availability of organically

produced products and processed

ingredients. These factors should make

it easier for handlers to assemble food

products with higher organic content.

We concur with the comments. We

view this as a tightening of labeling

requirements in that pdp labeling now

requires a higher percentage of organic

ingredients and makes the U.S. standard

consistent with international norms.

In the proposed rule’s preamble, we

also asked for specific public comment

on whether a minimum percentage of

total product content should be required

for any single organic ingredient that is

included in the pdp statement ‘‘made

with organic (specified ingredients).’’

No commenters responded to this

question. Therefore, no required

minimum percentage for a single

organic ingredient in ‘‘made with

* * *’’ products is established.

(8) ‘‘Made With Organic (Specified

Food Groups).’’ Several industry

organizations suggested that, as an

alternative to listing up to three organic

ingredients in the ‘‘made with * * *’’

label, the rule should also allow for

identification of food ‘‘groups’’ or

‘‘classes’’ of food in the ‘‘made with’’

label. Commenters suggested, for

instance, that a soup (with 70 percent or

80584 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

more organic ingredients, less water and

salt) containing organically produced

potatoes, carrots, and onions may be

labeled as ‘‘soup made with organic

potatoes, carrots, and onions’’ or,

alternatively, ‘‘soup made with organic

vegetables.’’

We agree that this label option offers

handlers of such multiingredient

products with more flexibility in their

labeling. All ingredients in the

identified food group must be

organically produced and must be

identified in the ingredient statement as

‘‘organic.’’ In the above example, if soup

also contains conventionally produced

cauliflower, only ‘‘soup made with

organic potatoes, carrots, and onions’’

can be displayed.

We also believe that some parameters

must be established as to what are

considered as food groups or classes of

food. For the purposes of this

regulation, products from the following

food groups may be labeled as ‘‘organic’’

in a ‘‘made with * * *’’ label: beans,

fruits, grains, herbs, meats, nuts, oils,

poultry, seeds, spices, and vegetables. In

addition, organically produced and

processed butter, cheeses, yogurt, milk,

sour cream, etc. may be combined in a

product and identified as ‘‘organic milk

products.’’ Organically produced and

processed sugar cane, sugar beets, corn

syrup, maple syrup, etc. may be used in

a product and identified as ‘‘organic

sweeteners.’’

Finally, to be consistent with the

‘‘made with * * *’’ labeling for

individual ingredients, up to three food

groups can be identified in the ‘‘made

with * * *’’ statement. Section 205.304

is changed accordingly.

(9) Labeling Products from Exempt

and Excluded Operations. A change is

made in redesignated section 205.310

which provides for labeling of organic

products produced by exempt and

excluded operations. SOP managers and

an organic handler pointed out that the

preamble suggested restrictions on

labeling that would prevent exempt and

excluded operations from identifying

their products as ‘‘organic.’’ After

review of the proposed rule, we have

revised redesignated section 205.310 to

more clearly specify labeling

opportunities for exempt operations.

The regulatory text more clearly states

that such operations may not label or

represent their organic products as

being ‘‘certified’’ as organic and that

such exempt and excluded operations

must comply with applicable

production and handling provisions of

subpart C. Labeling must be consistent

with the four labeling categories based

on the product’s organic content.

A State organic advisory board

recommended that proposed section

205.309 be revised to apply to exempt

and excluded operations which choose

to be certified under this program. We

do not believe it is necessary to provide

separate regulatory text for exempt and

excluded operations that are certified.

An exempt operation is not precluded

from organic certification, if qualified.

(10) Redesigned USDA Seal. Leading

industry members, certifying agents,

SOP managers, and many individual

commenters opposed the proposed

wording and design of the USDA seal.

Comments generally stated the

following points: (1) The proposed Seal

wording indicates that USDA is the

certifying agent rather than accredited

certifiers; (2) international Organization

for Standardization (ISO) Guide 61

prohibits government bodies from acting

or appearing as certifying agents; and (3)

The shield or badge design indicates a

certification of product ‘‘quality’’ and

assurance of safety which is

inconsistent with the NOP’s claim to be

a certification of ‘‘process’’ only.

Commenters suggested several

alternative seal statements, including:

‘‘Certified Organic—USDA Accredited,’’

‘‘Certified Organic—USDA Approved,’’

‘‘USDA Certified Organic Production,’’

‘‘Meets USDA Organic Production

Requirements.’’

Based on comments received, we are

implementing a revised USDA seal

which is shown in the regulatory text

under section 301.311. It is a circular

design with the words, ‘‘USDA

Organic.’’ The color scheme is a white

background, brown outer circle, white

and green inner semicircles, and green

and white words. A black and white

color scheme also may be used if

preferred by the handler.

Some commenters suggested changing

the shape of the USDA seal to a circle

or triangle which, they state, is more in

keeping with recognized recycling and

sustainability logos. We did not choose

a triangle design because processors

have commented that triangle designs

may cause tears in shrink wrap

coverings at the points of the triangle.

Labeling—Changes Requested But Not

Made

(1) ‘‘Organic’’ in Company Names.

Many commenters stated that the term,

‘‘organic,’’ must not be used as part of

a company name if the company does

not market organically produced foods.

They are concerned that the term in a

company name would incorrectly imply

that the product, itself, is organically

produced.

While we understand commenter

concerns, we do not know the extent of

the problem. We do not believe those

concerns require such a prohibition in

the regulations at this time. These

regulations may not be the best

mechanism to address the issue. Section

6519(b) of the Act provides the

Secretary with the authority to take

action against misuse of the term,

‘‘organic.’’ USDA will monitor use of

the term, ‘‘organic,’’ in company names

and will work with the FTC to take

action against such misuse of the term.

These determinations must be made on

a case-by-case basis. The proposed rule

did not specifically address this issue.

We have added a sentence to paragraph

(a) of section 205.300 to this effect.

(2) The ‘‘100 Percent Organic’’ Label.

A large number of commenters opposed

the ‘‘100 percent organic’’ label for

different reasons. A few claimed that the

label is not authorized under the Act.

Several commenters suggested that

consumers will not understand the

difference between multiingredient

products labeled ‘‘100 percent organic’’

and ‘‘organic.’’ Others raised the

concern that the ‘‘100 percent organic’’

phrase to modify raw, fresh fruits and

vegetables in produce sections and

farmers markets may be confusing to

consumers.

Regarding the first comment, the term

is not specifically provided for in the

Act. However, the Secretary has the

authority under section 6506(a)(11) to

require other terms and conditions as

may be necessary to develop a national

organic program. When a product is

wholly organic, pursuant to the

production and handling requirements

of the NOP, we believe the handler

should have the option to differentiate

it from products which, by necessity,

are less than 100 percent organic. We

believe the label meets the purposes of

the Act.

Regarding consumer confusion, we

believe consumers will understand the

difference between the two kinds of

organic products and will make their

organic purchases accordingly.

Regarding the labeling of raw, fresh

product as ‘‘100 percent organic,’’

organically produced products can be

labeled to a lower labeling category.

Raw, fresh fruits and vegetables which

qualify for a ‘‘100 percent organic’’ label

may be labeled simply as ‘‘organic,’’ if

the producer or retail operator believes

that label is best for marketing purposes.

(3) Explain Why Product Is Not 100

Percent Organic. A large number of

commenters also suggested any

‘‘product that is less than 100 percent

organic should carry that information on

the main display panel * * *’’ By ‘‘that

information,’’ we assume the

commenters are referring to the reasons

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80585

why a product cannot be certified as

‘‘100 percent organic.’’

AMS believes such a labeling

requirement is impractical. Products

may fail to qualify for a ‘‘100 percent

organic’’ label for very technical, or

little understood, reasons.

Contemporary food processing often

uses ingredients, processing

technologies, and product formulations

that are complicated, technical, and

probably not of interest to the general

organic consumer. Such information is

not required on nonorganically

produced products for the simple reason

that it is not considered useful to

consumers. Explanations of the different

processing technologies used in food

products would be cumbersome and

would interfere with other product

labeling.

We believe the optional display of the

organic percentage and required

identification of organic ingredients on

the information panel provides

sufficient information for consumers to

make purchase decisions. Other

descriptive information regarding

processing substances and procedures

may, of course, be provided at the

handler’s option and placed in

accordance with other Federal labeling

requirements.

(4) Check the Appropriate Organic

Category. One commenter suggested that

packages of organically produced

product display a small box listing the

four organic label categories and a check

mark beside the category which fits the

product.

We understand the simplicity and

comparative nature of such a

standardized organic label that allows

easy comparison of similar products.

However, we believe that the optional

display of the product’s organic

percentage and required identification

of organic ingredients will be more

helpful to consumers and makes the

grid box redundant.

(5) Nonorganic Ingredients in Organic

Products. A large number of comments

were received on the composition and

use of nonorganic ingredients in

products labeled ‘‘made with * * *’’

and on conventional products with less

than 50 (now 70) percent organic

ingredients. Several industry

commenters suggested that nonorganic

ingredients in ‘‘made with * * *’’

products must be ‘‘natural’’

(nonsynthetic agricultural substances)

and not be artificially produced.

Commenters argued that all ingredients

in ‘‘made with * * *’’ and less than 70

percent products should be produced in

accordance with the prohibited

practices under sections 205.105 and

205.301(f). A significant number of

commenters opposed identification of

organic ingredients in what they called

‘‘natural food’’ products.

First, we do not agree that the

nonorganic ingredients in ‘‘made with

* * *’’ products must be restricted to

only ‘‘natural’’ products. Such

restrictions on the composition of

nonorganic ingredients would

significantly reduce handlers’ options in

producing those products and, thus,

reduce consumers’ options in

purchasing products with organic

ingredients.

Regarding prohibited practices, this

rule implements the strong industry and

consumer demand that the prohibited

practices found under section 205.105

(excluded methods, irradiation, and

sewage sludge) not be used in

nonorganic ingredients in ‘‘made with

* * *’’ products. However, we do not

believe that restrictions on use of the

other prohibited practices, found in

section 205.301(f), would further the

purposes of the Act. Application of all

prohibited practices on the nonorganic

ingredients in the ‘‘made with * * *’’

and less-than 70 percent organic

products would essentially require that

those products be organically produced.

The Act allows for products that are not

wholly organic. We believe the ‘‘made

with * * *’’ label and the labeling

restrictions on the less-than 70 percent

organic products clearly states to

consumers that only some of the

ingredients in those products are

organically produced.

If accepted, these comments would

unnecessarily restrict a handler’s ability

to truthfully represent and market a

conventionally produced agricultural

product with some organic ingredients.

A handler should not be prohibited

from making a truthful claim about

some ingredients in a less than 70

percent organic product.

(6) Alternative ‘‘Made With * * *’’

Labels. A few SOP managers

commented that the phrase, ‘‘made with

* * *,’’ is confusing. They stated that

many processed foods contain at least

50 percent organic ingredients but do

not make an organic claim on the pdp.

They believe the label would be less

confusing if it stated a minimum organic

percentage rather than identifying the

organic ingredients. They suggest the

labeling category be changed to

‘‘contains at least 50 percent organic

ingredients (or, as revised in this rule,

‘‘contains at least 70 percent organic

ingredients’’).

We disagree. Identification of up to

three organically produced ingredients

or food groups on the pdp gives

consumers useful, specific information

about the product’s organic ingredients.

This label, combined with the optional

display of the percentage content on the

pdp and required identification of

organic ingredients, should provide

enough information for consumers to

make good decisions.

A few commenters contended that the

statement ‘‘made with organic (specified

ingredients)’’ is unclear and ‘‘open

ended’’ and that consumers may assume

the entire product is organically

produced. The ‘‘made with * * *’’

labeling claim refers only to the organic

ingredients and not to the whole

product. We do not believe that

consumers will be confused by the

label.

(7) Use of Other Terms as

Synonymous for ‘‘Organic’’. A few

commenters representing international

organic standards suggested that use of

the terms, ‘‘biologic’’ and ‘‘ecologic,’’

which are synonymous with ‘‘organic’’

in other countries, should be allowed

under the NOP. Commenters claimed

these terms are approved by Codex and

their inclusion in this regulation would

facilitate international trade and

equivalency agreements.

These terms were addressed in the

proposed rule and are not accepted.

Under the NOP, these terms may be

used as eco-labels on a product package

but may not be used in place of the

term, ‘‘organic.’’ Although such terms

may be considered synonymous with

‘‘organic’’ in other countries, they are

not widely used or understood in this

country. We believe their use as

synonymous for ‘‘organic’’ would only

lend to consumer confusion. Regarding

the Codex labeling standard, we point

out that Codex also provides that terms

commonly used in a country may be

used in place of ‘‘biologic’’ and

‘‘ecologic.’’ Thus, the use of ‘‘organic’’

in the United States is consistent with

Codex standards.

With regard to the commenters’ claim

that the alternate labels would facilitate

international trade, this regulation

allows alternative labeling of products

which are being shipped to

international markets. Thus, a certified

organic operation in the United States

may produce a product to meet

contracted organic requirements of a

foreign buyer, label the product as

‘‘biologic’’ or ‘‘ecologic’’ on the pdp

consistent with the market preferences

of the receiving country, and ship the

product to the foreign buyer.

Other terms were suggested by

commenters as alternatives to the term,

‘‘organic,’’ including ‘‘grown by age-old,

natural methods,’’ ‘‘grown without

chemical input,’’ and ‘‘residue Free.’’

These phrases may be consumer

friendly but clearly do not convey the

80586 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

extensive and complex nature of

contemporary organic agriculture. These

phrases may be used as additional, ecolabels, provided they are truthful

labeling statements. They are not

permitted as replacements for the term,

‘‘organic.’’

(8) Reconstituted Organic

Concentrates. A certifying agent

objected to paragraph (a)(2) of section

205.302, which allows labeling of an

organically produced concentrate

ingredient which is reconstituted with

water during assembly of the processed

product. The commenter claimed that

this provision gives consumers the

message that reconstituted juice is

equivalent to fresh juice when, the

commenter claims, it is not the same.

AMS disagrees. This labeling is

consistent with current industry

practices. The Act does not prohibit

such labeling of concentrates. We

believe it is in the interest of the

program to allow labeling of organically

produced concentrates, provided that

the process to produce the concentrate

and the reconstitution process is

consistent with organic principles and

the National List.

(9) Calculating Reconstituted Versus

Dehydrated Weight. Several comments

were received regarding specific

problems encountered in the calculation

of the percentage of organic content as

provided under section 295.302. A

handler claimed the reconstituted

weight of an organically produced spice

should be counted in the percentage

calculation rather than the dehydrated

weight of the spice used in the

formulation. A similar comment was

received from a food cooperative

suggesting that, if an organically

produced concentrate (in powdered

form) is added to the same organically

produced ingredient in its organic

liquid form (not from concentrate), then

the product’s organic percentage should

be calculated based on the concentrate’s

single-strength reconstituted weight

plus the weight of the natural organic

liquid.

AMS disagrees with these comments.

This regulation provides for an

ingredient’s weight to be calculated,

excluding added water and salt. If an

organically produced spice is added to

a product in its natural form, the weight

of the spice is calculated. If the spice

ingredient is in dehydrated, powdered

form when added in the product

formulation, the dehydrated weight of

the spice must be the basis for its

percentage of content calculation. If an

organically produced dehydrated spice

is reconstituted with water prior to

product assembly, the spice must still

be calculated at its dehydrated weight

because percentage calculations are

based on the ingredient weight,

excluding water and salt. It would be

misleading to calculate the weight of the

concentrate ingredient in its

reconstituted form.

Likewise, if a powdered ingredient is

added to the same organically produced

ingredient in its natural, liquid form, the

weight of the powdered ingredient must

be used. Using the reconstituted weight

of the powdered ingredient would

increase the percentage of the ingredient

above the actual weight of the

ingredient in the product. We believe

that if the comment were accepted, the

handler would be able to use less

natural organic liquid than the organic

percentage and ingredient statement

indicates.

(10) Calculate Organic Percentage in

Tenths of a Percent. A trade

organization suggested that the organic

percentage be rounded to tenths of one

percent to accommodate products that

may contain a minor ingredient or

additive that comprises less than 1

percent of the product. The example

provided was Vitamin D in milk. The

comment suggested that it is misleading

to consumers to suggest that 1 percent

of a milk product is nonorganic when

the Vitamin D additive may be comprise

only a few tenths of one percent of the

product.

AMS disagrees. Rounding down the

percentage to a whole number is

sufficient for consumer information and

does not misrepresent the product’s

organic content. A handler may add a

qualifying statement regarding the

minor ingredient’s weight in relation to

the whole product weight.

(11) Verifying Calculations. A State

department of agriculture comment

suggested that the paragraph (c) of

section 205.302 be revised slightly to

provide that percentage calculations

must be verified ‘‘to the satisfaction’’ of

the certifying agent. The commenter

believes that the suggested language

allows the handler the flexibility to

determine the number calculations that

need to be checked in order to verify

that the organic percentage calculation

is correct.

We do not believe the suggested

change is necessary. We assume that

any use of a certifying agent’s seal on a

product means that the certifying agent

has checked and approves of the

method of calculating the product’s

organic percentage. If the calculations

are not to the certifying agent’s

satisfaction, the agent would not certify

the handling process.

While we appreciate the point made

by the commenter, we do not believe the

suggested change means what the

commenter intends. Paragraph (c) of

section 205.302 does not specify the

number and methods of calculations

that need to be carried out by a

certifying agent because that will

depend on the handling process being

certified and the ingredients in the

product. We leave that to the discretion

of the certifying agent. Also, the basis

for a product’s organic percentage

calculation should be clarified in the

organic plan. It is assumed that the

certifying agent will either be satisfied

that the methodology for calculating

organic percentage is correct or the

methodology will be changed.

(12) Labeling Nonretail Shipping

Containers. A few State departments of

agriculture commented that shipping

and storage containers with organic

products should be required to be

labeled as containing organic product.

Other commenters recommended that

shipping containers be required to

display the name of the grower and the

certifying agent. They cite these

requirements as current industry

practice.

This regulation does not require

organic labeling on shipping and storage

containers because those containers are

not used in the marketplace. The only

information required by the NOP is the

production lot number of the product, if

a lot number exists for the particular

product. Product content and shipper

information may be displayed, as

required by other Federal or State

regulations or at the discretion of the

handler. Proper identification of the

organic nature of a product with special

instructions for shipment or storage

could prevent exposure to prohibited

substances that would lead to

subsequent loss of the shipment as an

organic product.

(13) Disclaimers on Organic Products.

Several commenters complained that

consumers are misled by the organic

labeling and the NOP. They claimed

that when science-based technologies

(genetic engineering, irradiation,

chlorination, etc.) are not used on

products, the food is less safe than

conventionally produced foods. Some of

the commenters suggested that a

disclaimer regarding food safety and

nutritional value be required on

packages with organic labeling.

AMS disagrees. The USDA seal

indicates only that the product has been

certified to a certain production and/or

handling ‘‘process’’ or ‘‘system.’’ The

seal does not convey a message of food

safety or more nutritional value. The

NOP prohibitions on use of excluded

methods, ionizing radiation, sewage

sludge, and some substances and

materials are not intended to imply that

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80587

conventionally produced products made

by those methods or containing those

prohibited substances are less safe or

nutritious than organically produced

products. We do not believe that organic

food packages or labeling should carry

disclaimers of what the USDA seal or a

certifying agent’s seal does not

represent. Other Federal and State seals

and marketing claims are placed on

consumer products, including food

products, without disclaimers regarding

those seals and claims. A disclaimer

displayed in relation to USDA seal or a

certifying agent’s seal would confuse

consumers. Finally, disclaimer

statements also would present space

problems on small product packages.

Labeling—Clarifications

Clarification is given on the following

issues raised by commenters:

(1) Certification Is to an Organic

Process, Not Organic Product. Several

commenters suggested that the final rule

more clearly state that the NOP provides

for certification of an organic process or

system of agriculture and not

certification of products, themselves, as

‘‘organic.’’ They stated that the phrase

‘‘* * * contain or be created using

* * *’’ in paragraphs (a), (b), and (c) of

section 205.301 implies certification of

the product’s content and not to the

processed-based, organic system of

agriculture.

We agree and have revised the

wording in those paragraphs to clarify

that such products must be organically

produced in accordance with organic

production and handling requirement of

this regulation.

(2) Phasing Out Use of Old Labels and

Packages. Citing FDA regulations, the

NOSB, certifying agents, and some State

agencies suggested a minimum 18-

month period for handlers to use up

their current supplies of packages and

labels before complying with the new

labeling requirements.

This rule provides for an interim

period of 18 months between

publication of the final rule and the

implementation date of the program.

Publication of this final rule serves

notice to certified producers and

handlers that they should begin

planning for phasing out use of labels

that are not in accordance with these

requirements.

The implementation process is

discussed in Applicability, subpart B.

An organic operation will automatically

be certified under this program when its

certifying agent is accredited by AMS.

At that time, the operation may begin

following these labeling requirements

but may not display the new USDA seal

until the implementation date. AMS

assumes that certifying agents and their

client certified operations will maintain

frequent contact as to the status of the

agent’s application for accreditation so

that the certified operation may

schedule the phasing out of old labels

and purchase of new labels and

packages. AMS expects to accredit all

currently operating certifying agents by

the implementation date of this

regulation. Stick-on labels to comply

with the new requirements are

acceptable.

Newly established organic operations

certified for the first time must

immediately begin using labels in

accordance with this program.

(3) Labeling of Products With Minor

Ingredients. Several commenters

questioned how the minor ingredients

(spices, flavors, colorings, preservatives,

oils, vitamins, minerals, accessory

nutrients, processing aids, and

incidental food additives) needed for

formulation or processing of many

multiingredient products will be treated

under the ‘‘100 percent organic’’ and

‘‘organic’’ labeling categories. Because

minor ingredients may not exist or are

difficult to obtain in organic form, their

use in a product can affect the labeling

of the product, even though the

percentage of the ingredient is

extremely small compared to the rest of

the product’s ingredients.

Minor ingredients and processing aids

must be treated as any other ingredient

or substance which is used as an

ingredient in or in the processing of an

organically produced product. To be

added as an ingredient or used in the

processing of a product labeled ‘‘100

percent organic,’’ a minor ingredient

must be extracted from a certified

organic source without the use of

chemicals or solvents. To be added as

an ingredient or used in the processing

of a product labeled ‘‘organic,’’ a minor

ingredient must be from an organic

agricultural source, if commercially

available. If not commercially available,

the ingredient must be an agricultural

product or a substance consistent with

the National List.

(4) Reusing Containers. A commenter

complained that small producers should

not be subjected to costly packaging and

labeling requirements when their

products are sold directly to the public

at farmers markets and roadside stands.

The commenter requested that small

producers be able to reuse retail boxes

and labels. The commenter did not

specify which labeling provisions

presented burdensome costs on small

entities.

We agree that costs for exempt

operations, indeed all organic

operations, should be kept to a

minimum. NOP does not prohibit reuse

of containers provided their labeling

does not misrepresent product and does

not allow organic product to come into

contact with prohibited substances from

the container’s previous contents.

(5) Clarifying Prohibited Labeling

Practices. Commenters identified a few

inconsistencies between the preamble

and regulatory text regarding the seven

prohibited production and processing

practices now specified in section

205.301(f). We have made the following

changes to clarify the intent of the

regulation.

A commenter correctly pointed out

that the regulatory text of paragraph (f)

incorrectly refers only to ingredients

that cannot be produced using the seven

prohibited production and handling

practices listed in the paragraph. That

text is not consistent with the preamble,

which correctly states that whole

products, as well as ingredients, labeled

as ‘‘organic’’ cannot be produced or

processed using the seven prohibited

practices. The term, ‘‘whole products,’’

is added to the introductory sentence of

new section 205.301(f).

A few commenters pointed out that

all seven practices are prohibited in the

production of nonorganic ingredients

used in products labeled as ‘‘organic.’’

The second sentence of proposed

paragraph (b) of section 205.301

(products labeled ‘‘organic’’) incorrectly

listed only the first three prohibited

practices. A phrase is added to the

introductory sentence of new paragraph

(f) to specify that the 5 percent or less

of nonorganic ingredients in products

labeled as ‘‘organic’’ may not be

produced or handled using any of the

seven prohibited practices.

Finally, with the addition of the

commercial availability requirement in

section 205.201, a conforming change is

needed in section 205.301(f)(6)

regarding use of nonorganic ingredients

when organically produced ingredients

are available.

(6) Consistency with State Labeling

Requirements. One State organic

association commented that the State’s

law requires identification of the

certifying agent if the term, ‘‘certified

organic,’’ appears on the label. The

comment was not clear about where on

the package the certifier must be

identified; e.g., with the ‘‘certified

organic’’ term on the pdp or anywhere

on the package. The commenter did not

specifically suggest changing the

labeling provisions to include the

certifying agent on the pdp.

This regulation allows a handler the

option of displaying the certifying

agent’s seal or logo on the pdp for

products with 70 percent or more

80588 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

organically produced ingredients. This

regulation also requires identification of

the certifying agent on the information

panel of all products containing 70

percent or more organically produced

ingredients. The identification must

include an address or contact

information and be placed adjacent to

identification of the manufacturer,

required by FDA. We believe these

provisions are sufficient to meet the

State’s labeling requirements. The NOP

will be available to consult with States

regarding alternative labeling required

to be used in the State.

(7) Clarifying Labeling of Products in

Other Than Packaged Form. We have

modified sections 205.308 and 205.309

to clarify that products in other than

packaged form at the point of retail sale

that are prepared by an exempt or

excluded operation may be labeled as

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

‘‘made with * * *’’ as appropriate.

Consistent with the general restrictions

on the labeling of products from such

operations, which are found in section

205.310, such products may not display

the USDA seal or any certifying agent’s

seal or other identifying mark or

otherwise be represented as a certified

organic product.

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. This

certification process will be carried out

by accredited certifying agents.

Description of Regulations

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 production and handling

areas, structures, and offices.

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 or food

group(s))’’ 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

organic program’s (SOP) 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 an application for

certification to an accredited certifying

agent. The application 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. A certifying

agent must accept all production and

handling applications that fall within its

area(s) of accreditation and certify all

qualified applicants to the extent of its

administrative capacity to do so. In

other words, a certifying agent may

decline to accept an application for

certification when the certifying agent is

not accredited for the area to be certified

or when the certifying agent lacks the

resources to perform the certification.

However, the certifying agent 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 noncompliances

identified in a previously received

notification of noncompliance or denial

of certification. We anticipate that at a

future date the certifying agent 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, which shall be conducted

within a reasonable time, 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 initial inspection may

be delayed for up to 6 months to comply

with the requirement that the inspection

be conducted when the land, facilities,

and activities that demonstrate

compliance or capacity to comply can

be observed.

The certifying agent will conduct an

initial on-site inspection of each

production unit, facility, and site that

produces or handles organic products

and that is included in the applicant’s

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80589

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 42d Street, New York, NY 10036; Website:

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

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

0023.

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 an authorized

representative of the operation 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 operation who is

knowledgeable about 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. At the time of the

inspection, the inspector shall provide

the operation’s authorized

representative with a receipt for any

samples taken by the inspector. There

shall be no charge to the inspector for

the samples taken.

The certifying agent shall, within a

reasonable time, provide the inspected

operation with a copy of the on-site

inspection report, as approved by the

certifying agent, for any on-site

inspection performed and provide the

operation with a copy of the test results

for any samples taken by an inspector.

Notification of Approval

A certifying agent will review the onsite 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

grant 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 grant certification and issue

a ‘‘certificate of organic operation.’’ The

certification may include requirements

for the correction of minor

noncompliances within a specified time

period 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 SOP’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. The notification of

noncompliance will describe each

noncompliance, the facts on which the

notification is based, and the date by

which rebuttal or correction of each

noncompliance must be made.

Applicants who receive a notification of

noncompliance may correct the

noncompliances 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

noncompliances and supporting

documentation. Applicants may also

submit, by the date specified, written

information to the issuing 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

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, when available, 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 noncompliances noted in the

notification of noncompliance. When a

certifying agent receives such an

application, the certifying agent will

treat the application as a new

80590 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

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 and pay the certification fees 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. The certified

operation must also provide an update

on the correction of minor

noncompliances previously identified

by the certifying agent as requiring

correction for continued certification.

Following receipt of the certified

operation’s updated information, the

certifying agent will, within a

reasonable time, arrange and conduct an

on-site inspection of the certified

operation. When it is impossible for the

certifying agent to conduct the annual

on-site inspection following receipt of

the certified operation’s annual update

of information, the certifying agent may

allow continuation of certification and

issue an updated certificate of organic

operation on the basis of the

information submitted and the most

recent on-site inspection conducted

during the previous 12 months.

However, the annual on-site inspection

must be conducted within the first 6

months following the certified

operation’s scheduled date of annual

update. 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 section 205.662.

In addition to annual inspections, a

certifying agent may conduct additional

on-site inspections of certified

operations that produce or handle

organic products to determine

compliance with the Act and

regulations. The Administrator or SOP’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 USDA during its

evaluation of a certifying agent for

reaccreditation and at other times in

response to complaints. Certified

production and handling operations can

file complaints with USDA 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 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 USDA. 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 the proposal

in several respects as follows:

(1) Access to Production and

Handling Operation. We have amended

section 205.400(c) by changing

‘‘noncertified areas and structures’’ to

‘‘noncertified production and handling

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80591

areas, structures, and offices.’’ A

commenter requested that section

205.400(c) be amended to allow for

access to farm-related structures only.

The commenter believes that the

requirements of section 205.400(c)

could be interpreted as giving inspectors

access to residential property. We agree

with the commenter that residential

privacy should be maintained. However,

if a certified operation conducts

business from or stores records at a

residential property, the certified

operation will be considered to be

maintaining an office at the residential

property. The records in such office

shall be made accessible for review and

copying. Accordingly, we have

amended section 205.400(c) to further

clarify which areas and structures are to

be made accessible during an on-site

inspection.

(2) Application for Certification. We

have amended the first paragraph of

section 205.401 by replacing the word,

‘‘request,’’ each time it occurred with

the word, ‘‘application.’’ A commenter

recommended that we amend the first

paragraph of section 205.401 by

replacing the word, ‘‘request,’’ with

‘‘application.’’ We have accepted the

commenter’s recommendation because

the amendment makes the language in

the first paragraph consistent with the

title and the requirements of the section.

(3) Verification of Correction of

Noncompliances. To make section

205.402(a)(3) consistent with section

205.401(c) we have amended the

language in section 205.402(a)(3) to

require that the certifying agent verify

that an applicant who previously

applied to another certifying agent and

received a notification of denial of

certification has submitted

documentation to support the correction

of any noncompliances identified in the

notification of denial of certification. A

commenter recommended that section

205.402(a)(3) be amended by inserting

‘‘or denial of certification’’ after the

phrase, ‘‘notification of

noncompliance.’’ We have accepted the

commenter’s recommended amendment

because it is consistent with the

requirements of section 205.401(c).

Section 205.401(c) requires an applicant

for certification to include 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. The applicant is also

required to include, when available, a

copy of any notification of

noncompliance or denial of certification

issued to the applicant for certification.

The words, ‘‘when available,’’ have been

added to this requirement in this final

rule to satisfy concerns regarding the

status of applicants who cannot find or

no longer have a copy of any

notification of noncompliance or denial

of certification previously received. We

see no down side to relaxing this

requirement since the applicant must

still comply with each of the other

provisions in section 205.401(c),

including the requirement that the

applicant include a description of the

actions taken to correct the

noncompliances noted in any

notification of noncompliance or denial

of certification, including evidence of

such correction. Further, the certifying

agent will be using USDA’s database of

certification actions during its review of

an application for certification.

(4) Timely Communication to the

Applicant. We have amended section

205.402(b), by requiring at paragraph

(b)(1) that the certifying agent, within a

reasonable time, review the application

materials received and communicate its

findings to the applicant. A commenter

requested that we amend section

205.402(b) which required a certifying

agent to communicate to the applicant

its findings on the review of application

materials submitted by the applicant.

Specifically, the commenter requested

that section 205.402(b) be amended by

adding to the end thereof, ‘‘in a timely

manner so as to prevent the avoidable

tillage of native habitat that had been

identified in the application as lands for

organic production.’’

We concur that certification decisions

should be timely. There are many

reasons (e.g., financial and contractual)

for why certification must be timely. It

would be impractical, however, to

attempt to address all of the reasons for

timely certification in these regulations.

We have, therefore, amended section

205.402(b) as noted above. This

amendment is consistent with the

requirement in section 205.402(a) that

the certifying agent, upon acceptance of

an application for certification, review

the application for completeness,

determine by a review of the application

materials whether the applicant appears

to comply or may be able to comply

with the requirements for certification,

and schedule an on-site inspection. The

‘‘upon acceptance’’ requirement

necessitates that the certifying agent

review the application for certification

and provide feedback to the applicant in

a timely manner.

(5) On-site Inspections. We have

amended section 205.403(a)(1) by

specifying that the initial and annual

on-site inspections of each production

unit, facility, and site in an operation

applies to those units, facilities, and

sites that produce or handle organic

products. A commenter recommended

that section 205.403(a)(1) be amended to

specify that on-site inspections of each

production unit, facility, and site will

include just those that produce or

handle organic products. The

commenter stated that this change was

necessary because some retail

corporations choose to certify all store

locations regardless of whether the

location sells organic products. The

commenter went on to say that, if a

location does not stock any organic

products, the certifying agent should

have the discretion to modify the

inspection requirement.

We have excluded all retail food

establishments from certification. The

exclusion is found in section

205.101(b)(2). Accordingly, the

commenter’s recommendation is not

applicable to retail food establishments.

We have, however, made the

recommended amendment to section

205.403(a)(1) because of its potential

applicability to other operations which

may apply for certification.

(6) Scheduling Initial On-site

Inspection. We have amended section

205.403(b) to provide that the initial

inspection may be delayed for up to 6

months to comply with the requirement

that the inspection be conducted when

the land, facilities, and activities that

demonstrate compliance or capacity to

comply with the organic production and

handling requirements can be observed.

We received a comment stating that if

an application is received in January for

a crop that will be planted in May, it

would be necessary to delay the

inspection until late May or June to

observe the crop in the field. The

commenter went on to say that the

alternative would be to conduct the

initial inspection before the crop is

planted, in order to meet the ‘‘within a

reasonable time’’ requirement, and then

conduct a reinspection during the

growing season. The commenter

recommended amending section

205.403(b) to allow the certifying agent

to delay the initial on-site inspection

until the land, facilities, and activities

that demonstrate compliance or capacity

to comply can be observed.

We have accepted the

recommendation because there may be

situations where a later on-site

inspection will prove mutually

beneficial to the certifying agent and the

operation to be inspected. However,

certifying agents are reminded that the

operation may be certified following a

demonstration that the operation is able

to comply with the organic production

and handling requirements found in

subpart C of these regulations.

Accordingly, certifying agents should

80592 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

not unnecessarily delay the certification

of an organic production or handling

operation by insisting that the

inspection only be performed when the

operation can demonstrate its actual

compliance with the organic production

and handling requirements. Applicants

who believe that the certifying agent is

abusing its authority to delay the on-site

inspection may file a complaint with the

Administrator.

We have also amended the second

sentence in section 205.403(b) by

inserting the word, ‘‘all,’’ and removing

both references to ‘‘applicant’’ to clarify

that the provision applies to all on-site

inspections.

(7) Exit Interview. We have amended

section 205.403(d) by requiring that the

inspector conduct an exit interview

with ‘‘an authorized representative of

the operation who is knowledgeable

about the inspected operation’’ rather

than ‘‘an authorized representative of

the inspected operation’’ as required in

the proposed rule. This amendment is

consistent with the requirement in

section 205.403(b) that an on-site

inspection be conducted when an

authorized representative of the

operation who is knowledgeable about

the operation is present.

A commenter requested that we

define ‘‘authorized representative.’’

Another commenter recommended

changing the term, ‘‘authorized

representative,’’ to ‘‘responsible

executive.’’ Our amendment of section

205.403(d) responds to both of these

comments by clarifying the

qualifications of an authorized

representative.

A third commenter stated that an exit

interview is not a practical requirement

and that an initial interview is often

preferred. The commenter stressed that

verification that the inspector has

correctly understood what is presented

is ongoing. This commenter also

expressed the belief that there may be

times when it may not be appropriate

for the inspector to address issues of

concern and that such issues may be

best left to the certifying agent. The

commenter recommended that the

requirement for an exit interview be

deleted or presented as an option.

Another commenter suggested that

issues of concern are often identified

and discussed with the operation’s

representative during the course of the

inspection. This commenter believes

that it is unnecessarily confrontational

to require an exit interview during

which these issues of concern are

repeated. This commenter

recommended replacing the required

exit interview with a communications

provision that would require the

inspector to discuss the need for any

additional information as well as any

issues of concern. The recommended

provision would also authorize the

certifying agent to provide the applicant

with a summary of the inspector’s areas

of concern.

While we agree that the language in

section 205.403(d) needed clarification,

we do not agree that the exit interview

is impractical or unnecessarily

confrontational. The exit interview is

intended to give the inspector an

opportunity to confirm the accuracy and

completeness of inspection observations

and information gathered during the onsite inspection, to request any

additional information necessary to

establish eligibility for certification, and

to raise and discuss any known issues

of concern. Issues of concern that may

involve compliance issues will be

handled as authorized by the certifying

agent. The exit interview is also

intended to give the inspected

operation’s authorized representative

general information concerning the

inspector’s observations. Such exit

interviews are required under ISO

Guide 10011–1. Accordingly, requiring

exit interviews is consistent with ISO

standards and our expectation, as stated

earlier in this preamble, that certifying

agents benchmark their on-site

inspection procedures to ISO Guide

10011–1.

(8) On-site Inspection Documentation.

We have amended section 205.402(b) by

adding the requirements that the

certifying agent: (1) provide the

applicant with a copy of the on-site

inspection report, as approved by the

certifying agent, for any on-site

inspection performed and (2) provide

the applicant with a copy of the test

results for any samples taken by an

inspector. We have also amended

section 205.403 by adding a new

paragraph (e) that requires the inspector,

at the time of the inspection, to provide

the operation’s authorized

representative with a receipt for any

samples taken by the inspector. This

new paragraph also addresses the

requirement that the certifying agent

provide the operation inspected with a

copy of the inspection report and any

test results. Having the certifying agent

issue the on-site inspection report to the

operation inspected is consistent with

ISO Guide 65, section 11(b).

Several commenters recommended

that section 205.403 be amended to

require that the inspector issue a copy

of the on-site inspection report to the

operation at the exit interview. They

also recommended that the inspector be

required to provide the operation with

a receipt for samples collected for

testing. The commenters, further,

recommended that the certifying agent

be required to provide the operation

with a written report on the results of

the testing performed on the samples

taken. A commenter also recommended

that the operation be paid for any

samples taken. One of the commenters

recommended that section 205.403 be

amended by adding protocol for an exit

interview.

We concur that the applicant for

certification and certified operations

should be provided with a copy of the

on-site inspection report, a receipt for

samples taken, and a copy of the test

results for samples taken. Accordingly,

we have amended sections 205.402(b)

and 205.403 as noted above.

The protocol for an exit interview will

be set forth in the certifying agent’s

procedures to be used to evaluate

certification applicants, make

certification decisions, and issue

certification certificates. The NOP is

available to respond to questions and to

assist certifying agents in the

development of these procedures which

are required under section

205.504(b)(1). Accordingly, AMS is not

amending the section to include a

protocol for exit interviews. AMS is also

not including a requirement that the

certifying agent pay the applicant for

samples taken, since such charges

would just be charged back to the

applicant as a cost for processing the

applicant’s application for certification.

(9) Granting Certification. We have

amended the last sentence of section

205.404(a) by removing the word,

‘‘restrictions,’’ and replacing it with

‘‘requirements for the correction of

minor noncompliances within a

specified time period.’’ A commenter

suggested that the last sentence of

section 205.404(a) be amended to read:

‘‘The approval may include restrictions

or requirements as a condition of

continued certification, which includes

a time line for fulfilling the

requirement.’’ Another commenter

requested that we define ‘‘restrictions.’’

This commenter also recommended

amending section 205.404(a) to clarify

the meaning of ‘‘restrictions’’ and to

require corrective action by the operator

within a specific time period. We agree

with the commenters that the last

sentence of section 205.404(a) was in

need of further clarification. We also

agree that it is appropriate for the

regulations to require that the

requirements for correction include a

specified time period within which the

corrections must be made. Accordingly,

we amended section 205.404(a) as noted

above. The certifying agent will make

the determination of whether a violation

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80593

of the Act and regulations is minor.

Minor noncompliances are those

infractions that, by themselves, do not

preclude the certification or continued

certification of an otherwise qualified

organic producer or handler. The

certifying agent would be free to modify

the time period for correction should it

believe it to be appropriate.

We have also made editorial changes

to section 205.404(a) consistent with

suggestions we received on section

205.506. In the title to section 205.404

we have replaced ‘‘Approval of’’ with

‘‘Granting.’’ In section 205.404(a) we

have replaced ‘‘approve’’ with ‘‘grant’’

and ‘‘approval’’ with ‘‘certification.’’

This change makes the language in

section 205.404 consistent with ISO

Guide 65, section 4.6, which addresses

the granting of certification.

(10) Payment of Fees. We have

amended the introductory statement

within section 205.406(a) by adding the

requirement that, to continue

certification, a certified operation

annually pay the certifying agent’s

certification fees. A commenter

recommended amending section

205.404(c) by adding a sentence

providing that a certified operation’s

failure to pay the certifying agent’s

certification fees may be a cause for

suspension or revocation of

certification. We agree that the issue of

payment of fees should be addressed but

not in section 205.404(c), which deals

with the duration of a certified

operation’s certification. We believe the

issue of payment of certification fees is

more appropriately addressed in section

205.406, which deals with continuation

of certification. Accordingly, we have

amended section 205.406(a) to require

payment of the certifying agent’s fees as

a condition of continued certification.

This addition would allow a certifying

agent to initiate suspension or

revocation proceedings against any

operation that fails to pay the required

fees. The certifying agent is not required

to initiate suspension or revocation

proceedings for failure to pay the fees.

In fact, the certifying agent is

encouraged to use one or more of the

legal debt collection alternatives

available to it.

(11) Denial of Certification. We have

amended section 205.405 to include

noncompliance and resolution

provisions originally included by crossreference to section 205.662(a). We have

made this amendment in response to a

comment that these regulations do not

provide an opportunity for a hearing

upon denial of certification. We disagree

with the commenter’s assessment but

have amended section 205.405(a) to

eliminate confusion that may result

from the cross-reference to section

205.662(a). We have determined that

section 205.662(a) may cause confusion

for certification applicants because the

section does not specifically address

applicants.

As amended, section 205.405(a)

required a written notification of

noncompliance that describes each

noncompliance, the facts on which the

noncompliance is based, and the date by

which the applicant must rebut or

correct each noncompliance and submit

supporting documentation of each such

correction when correction is possible.

Section 205.405(b) lists the options

available to the applicant, including the

options of correcting the noncompliance

or submitting written information to

rebut the noncompliance. Successful

correction or rebuttal will result in an

approval of certification. When the

corrective action or rebuttal is not

sufficient for the applicant to qualify for

certification, the certifying agent will

issue a written notice of denial of

certification. This notice will state the

reason(s) for denial and the applicant’s

right to request mediation in accordance

with section 205.663 or to file an appeal

in accordance with section 205.681.

(12) Rebuttal of a Noncompliance. We

have amended section 205.405(b)(3) to

clarify that rebuttal of a noncompliance

shall be submitted to the certifying

agent that issued the notification of

noncompliance. We made this

amendment in response to a

commenter’s question about who has

authority to evaluate a written rebuttal.

(13) Correction of Minor

Noncompliances. We have amended

section 205.406(a) by adding a new

paragraph (3) which requires the

certified operation to include with its

annual reporting an update on the

correction of minor noncompliances

previously identified by the certifying

agent as requiring correction for

continued certification. A commenter

recommended adding at 205.406(a) a

requirement that the certified operation

address any restrictions that have been

applied to its certification under

205.404(a). We agree with the

commenter that the annual reporting by

the certified operation should include

an update addressing the certified

operation’s compliance with the

certifying agent’s requirements for the

correction of minor noncompliances.

Accordingly, we amended section

205.406(a) as noted above and

redesignated paragraph (3) as paragraph

(4). The certifying agent will make the

determination of whether a violation of

the Act and regulations is minor. Minor

noncompliances are those infractions

that, by themselves, do not preclude the

certification or continued certification

of an otherwise qualified organic

producer or handler.

(14) Scheduling Annual On-site

Inspections. We have amended section

205.406(b) to provide that, when it is

impossible for the certifying agent to

conduct the annual on-site inspection

following receipt of the certified

operation’s annual update of

information, the certifying agent may

allow continuation of certification and

issue an updated certificate of organic

operation on the basis of the

information submitted and the most

recent on-site inspection conducted

during the previous 12 months. The

annual on-site inspection, required by

section 205.403, must, however, be

conducted within the first 6 months

following the certified operation’s

scheduled date of annual update.

A commenter expressed the belief that

the requirement for an on-site

inspection after receipt of the certified

operation’s annual update of

information would have required that

all annual on-site inspections be

performed at the same time of the year.

The commenter went on to express the

belief that, to avoid inspecting certified

operations twice a year, certifying

agents would have to schedule the

annual update to occur during the

growing season in order to comply with

the requirement for timing inspections

when normal production activities can

be observed. The commenter stated that

certifying agents should be given more

flexibility for scheduling inspections

and conducting their certification

programs according to management

procedures best suited to their agency.

The commenter recommended

amending section 205.406(b) by adding

to the end thereof: ‘‘or base the decision

regarding eligibility for renewal on an

on-site inspection conducted during the

previous 12 months.’’

We agree with the commenter that

certifying agents should be given more

flexibility for scheduling on-site

inspections so as to best meet the

management needs of the certifying

agent. Accordingly, we have amended

section 205.406(b) to allow continuation

of certification and issuance of an

updated certificate of organic operation

on the basis of the information

submitted and the most recent on-site

inspection conducted during the

previous 12 months. This option will be

available to the certifying agent when

renewal is scheduled for a time when it

is impossible to conduct the annual onsite inspection following receipt of the

annual update and at a time when land,

facilities, and activities that demonstrate

the operation’s compliance or capability

80594 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

to comply can be observed. This change

does not affect the requirement in

section 205.403(a)(1) that the certifying

agent conduct an annual on-site

inspection of each certified operation.

Further, the annual on-site inspection

must be conducted within the first 6

months following the certified

operation’s scheduled date of annual

update.

Certification—Changes Requested But

Not Made

This subpart retains from the

proposed rule regulations on which we

received comments as follows:

(1) Number of On-site Inspections. A

commenter recommended that section

205.403(a)(1) be amended by adding a

requirement that production operations

be under active organic management for

the last year of the 3-year land

conversion period and that two on-site

inspections be performed prior to

organic certification.

Section 205.403(a)(1) provides that

the certifying agent must conduct an

initial on-site inspection of each

production unit, facility, and site that

produces or handles organic products

and that is included in an operation for

which certification is requested. The

requirement does not preclude a

certifying agent from conducting

additional on-site inspections, if

necessary, to establish the applicant’s

eligibility for certification. The Act

requires a 3-year period immediately

preceding harvest, during which the

production operation must be free from

the application of prohibited

substances. The Act does not, however,

require that land be under active organic

management during this period, and we

do not believe such a requirement in

these regulations is necessary. Such a

requirement, for example, would

necessitate some process for verifying

that an operation is under active organic

management, which would, in effect,

require a certification-type decision a

year before certification is granted and

the operation can begin to label

products as certified organic.

Accordingly, we disagree with the

commenter’s recommendation that an

operation be under active organic

management for the last year of the 3-

year land conversion and that two onsite inspections be required.

(2) Unannounced Inspections. A

commenter recommended that section

205.403(a)(2)(iii) be amended to require

additional unannounced inspections

either by defining the circumstances

under which the inspections should be

undertaken or by setting a minimum

percentage of unannounced inspections.

The commenter claimed that 5 percent

is a common percentage adopted by

certifying agents around the world.

Section 205.403 requires an initial onsite inspection, annual on-site

inspection, and additional on-site

inspections to determine compliance

with the Act and regulations, to verify

that information provided reflects actual

practices, and to verify, through testing

if necessary, that prohibited substances

are not used by the operation. Because

of the widely disparate nature of

certified operations, we believe the

certifying agent is in the best position to

determine the need for additional onsite inspections. Accordingly, we have

rejected the commenter’s request that

the regulations require additional

unannounced visits either by defining

the circumstances under which these

should be undertaken or by setting a

minimum percentage.

(3) Timeliness of Certifying Agent

Review Information. A commenter

requested that section 205.404(a) be

amended to specify a timeframe of 60

days rather than ‘‘Within a reasonable

time’’ as the time by which the

certifying agent must review the on-site

inspection report, the results of any

analyses for substances, and any

additional information requested from

or supplied by the applicant.

Section 205.404(a) requires the

certifying agent, within a reasonable

time after completion of the initial onsite inspection, to 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.

Section 205.504(b)(1) requires the

certifying agent to submit a copy of the

procedures to be used to evaluate

certification applicants, make

certification decisions, and issue

certification certificates. Such

procedures and the certifying agent’s

performance in making timely

certification decisions will be subject to

review during accreditation and

reaccreditation of 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.

Accordingly, timely service will be in

the best interest of certifying agents

since such complaints could have an

impact on their reaccreditation or

continued accreditation. Further, our

original position is consistent with

those commenters requesting flexibility

in determining what constitutes

reasonable time. Accordingly, we have

not amended section 205.404(a) as

requested.

(4) Categories of Organic Operation.

We received a variety of comments

regarding the requirement that the

certifying agent issue a certificate of

organic operation which specifies the

categories of organic operation,

including crops, wild crops, livestock,

or processed products produced by the

certified operation. One commenter

recommended that section 205.404(b)(3)

be amended, with regard to processing,

to only require a processing category to

be specified on the certificate, such as

food processing or feed processing. The

commenter stated that it should not be

necessary to list every product on the

certificate. Specifically, the commenter

recommended amending section

205.404(b)(3) by inserting the words,

‘‘general categories of,’’ immediately in

front of the word, ‘‘processed.’’ Another

commenter recommended amending

section 205.404(b)(3) to require the

identity of specific crops and the

specific processing operations certified.

Still another commenter requested that

section 205.404(b) be amended by

adding a new paragraph requiring that

the certificate include the number of

livestock of each species produced on

the certified operation. This same

commenter also recommended the

addition of a new paragraph requiring

that the certificate identify the specific

location of each certified organic field

and handling operation. We also

received support for section

205.404(b)(3) as written. This

commenter does not support the

addition of information regarding the

number of livestock or the location of

fields.

We disagree with the suggestion that

the certificate list every crop, wild crop,

livestock, or processed product

produced by the certified operation. We

believe that listing categories of organic

operation is sufficient. This does not,

however, prevent the certifying agent, in

cooperation with the certified operation,

from listing specific crops, livestock, or

processed products on the certificate.

Such information could always be listed

on the certificate when requested by the

certified operation. We also disagree

with the commenter who requested that

certifying agents display the number of

livestock of each species produced by

the certified operation and the specific

location of each certified organic field

and handling operation. We do not

believe it is necessary to list the

quantity of product to be produced or

handled at a certified operation, nor do

we believe it is necessary to list the

location of a certified operation’s fields

or facilities. Such information may,

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80595

however, be listed on the certificate

upon the written request of the certified

operation. By requiring the name,

address, and telephone number of the

certifying agent, 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.

(5) Annual Renewal of Certification.

Numerous commenters requested that

section 205.404(b)(2) be amended to

provide for the placement of an

expiration date on the certificate of

organic operation. The commenters

want yearly expiration of certification

and yearly expiration of the certificate

of organic operation. Commenters also

requested that section 205.404(c) be

amended to provide that once certified,

a production or handling operation’s

organic certification continues in effect

until the expiration date on the

certificate, until surrendered by the

organic operation, or until suspended or

revoked by the certifying agent, the

SOP’s governing State official, or the

Administrator. Some commenters

recommended the addition of a new

paragraph 205.406(e) that would

provide for automatic suspension of a

certification if the certified operation

did not provide the information

required in paragraph 205.406(a) by the

expiration date to be placed on the

certificate of organic operation.

We disagree with the commenters

who have requested annual renewal of

certification and that the certified

operation’s certification and its

certificate of organic operation expire

annually. 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. More importantly, unlike

accreditation, where the Act provides

for expiration and renewal, the Act does

not provide for an expiration or renewal

of certification. Therefore, it is also our

position that once granted certification

the production or handling operation

retains that certification until

voluntarily surrendered or removed,

following due process, for violation of

the Act or these regulations.

(6) Denial of Certification. A

commenter recommended that section

205.405(e) be amended to place a time

restriction on reapplication for

certification after denial of certification.

The commenter suggested a 3-year

period. We disagree with this

recommendation because the reasons for

denial include a wide range of

noncompliances. The ability to correct

noncompliances will vary as will the

time needed to correct the

noncompliances.

(7) Production and Handling

Operation Certification Following

Suspension or Revocation of Certifying

Agent Accreditation. A few commenters

requested amendment of section

205.406 through the addition of a new

paragraph (f). Specifically, the

commenters requested provisions that

would provide for USDA notification of

certified operations regarding the

suspension or revocation of their

certifying agent’s accreditation. Some of

these commenters requested that the

provisions also allow the affected

certified operation to use current market

labels for a maximum period of 12

months, provided the certified operation

made application for certification with

another USDA-accredited certifying

agent within 3 months of being notified

of their certifying agent’s suspension or

revocation of accreditation. Another

commenter requested that the new

paragraph provide that the affected

certified operation will continue to

operate as if certified by the USDA and

will be allowed to use current market

labels for a maximum period of 12

months. The commenter stated that this

amendment would provide the certified

operation with the time needed to

obtain recertification by an accredited

certifying agent and to prepare new

labels.

We disagree with the

recommendations. USDA does not

perform organic certification activities

under any circumstance, including

upon surrender, suspension, or

revocation of an accredited certifying

agent’s accreditation. Operations

certified by a certifying agent that

surrenders or loses its USDA

accreditation will be notified by USDA

and given an opportunity to

immediately begin seeking certification

by the USDA-accredited certifying agent

of their choice. Certified operations

shall not affix the seal or other

representation of a certifying agent to

any product that they produce after the

certifying agent has surrendered or had

its accreditation revoked. The certified

operation may use the USDA organic

seal. In the case of suspension of the

certifying agent, the reasons for the

suspension and the terms of the

suspension will determine whether the

certifying agent’s certified operations

will have to seek recertification or stop

affixing the certifying agent’s seal or

other representation to their products.

USDA will announce the suspension or

revocation of a certifying agent’s

accreditation, and the announcement

will address the status of operations

certified by the certifying agent.

Certification—Clarifications

Clarification is given on the following

issues raised by commenters as follows:

(1) Recordkeeping. A commenter

stated that most computerized

recordkeeping systems used at retail and

wholesale are set up to save the data for

a maximum of 2 years; adding 3

additional years to that requirement

would be extremely costly as systems

modifications and additional hardware

and support would be required to meet

the mandate. The commenter suggested

that since food product is generally sold

and consumed within a matter of

months (if not weeks), shortening this

requirement to 2 years should meet the

goal for tracking of any product through

the distribution system. This commenter

was referring to the requirement in

section 205.400(d) that records be

maintained for not less than 5 years

beyond their creation.

Section 205.103 requires that a

certified operation maintain records;

that the records 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 as

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 the regulations in this part; and that

the certified operation must make such

records available for inspection and

copying during normal business hours

by authorized representatives of the

Secretary, the applicable SOP’s

governing State official, and the

certifying agent. The requirements do

not state in what form (i.e., paper,

electronic, film) that the records must be

maintained. Therefore, in answer to the

commenter’s concern, database records

more than 2 years old could be stored

in any form, including on an electronic

storage device, which would permit

retrieval upon request.

(2) Application Fees. A commenter

recommended that section 205.401 be

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amended by adding a new paragraph (e)

which would require an applicant for

certification to include, along with the

other required application information,

the application fees required by the

certifying agent.

The requested language is

unnecessary because section 205.400(e)

requires submission of the applicable

fees charged by the certifying agent as

a general requirement for certification.

(3) Applicant Identification. In

reference to section 205.401(c) a

commenter stated that an applicant that

is a corporation could easily change the

name of the corporation in order to

avoid having to report applications

submitted and denied under the

previous name. The commenter went on

to state that there must be a database

available to certifying agents that

includes names and location addresses

of operations that have received a

notification of noncompliance, denial of

certification, or a suspension or

revocation of certification.

Section 205.401(b) requires the

applicant to include in its application

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.

As we stated in the preamble to the

proposed rule, we anticipate using the

data collected under section

205.501(a)(15) to establish and maintain

two 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

suspension or revocation of

certification. Certifying agents would

use the second Internet database during

their review of an application for

certification.

(4) Withdrawal of Application.

Several commenters expressed the belief

that allowing an applicant to voluntarily

withdraw its application will be used as

a tool to avoid denial of certification.

They expressed concern that voluntary

withdrawal before denial of certification

will allow the applicant to make

application with a different certifying

agent with a clean record. These

commenters were responding to the

provision in section 205.402(e) which

allows an applicant for certification to

withdraw its application at any time.

We continue to believe that

operations should not be unnecessarily

stigmatized because they applied for

certification before the operation was

ready to meet all requirements for

certification. While some operations

may use voluntary withdrawal as a

means to avoid the issuance of a

notification of noncompliance or a

notice of denial of certification, this

should not adversely affect the National

Organic Program (NOP) because all

certifying agents are responsible for

using qualified personnel in the

certification process and for ensuring an

applicant’s eligibility for certification.

Further, all applicants for certification

are required under section 205.401(c) to

include in their application 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.

(5) On-site Inspections. Section

205.403(a)(2)(ii) provides that the

Administrator or SOP’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. In

commenting on this provision, a

commenter asked, ‘‘Who is running this

program: State or Federal officials?’’

This is a national organic program

administered by the Agricultural

Marketing Service of the United States

Department of Agriculture. States may

administer their own organic program.

However, all SOP’s are subject to USDA

approval. The National Organic

Standards and a State’s organic

standards under a USDA-approved SOP

are the National Organic Standards for

that State. The State, under USDA’s

approval of the SOP, has enforcement

responsibilities for the Federal and State

components of the organic program

within the State.

(6) Verification of Information. A

commenter stated that section

205.403(c) is insufficiently

comprehensive. The commenter stated

that organic inspection is assessment of

a process evaluated against

comprehensive standards and, as such,

it requires specific rules to provide

confidence in the quality of the

inspection. The commenter

recommended amending section

205.403(c) by including requirements on

minimum verification methods.

Section 205.403(c) identifies what

must be verified during the on-site

inspection. The details on how the

verification will be accomplished will

be set forth in the certifying agent’s

procedures to be used to evaluate

certification applicants, make

certification decisions, and issue

certification certificates and the

certifying agent’s procedures for

reviewing and investigating certified

operation compliance with the Act and

regulations. The NOP is available to

respond to questions and to assist

certifying agents in complying with the

on-site inspection requirements,

including those for the verification of

information.

(7) Notifying Customers of Change in

Certification Status. A commenter stated

that the regulations do not indicate

when a certified organic producer must

stop using the organic seal or whether

they must notify customers of their

denial of certification. The commenter

recommended amending section

205.405 to include a provision for

notifying customers of a certified

operation’s change in certification

status.

Any producer or handler who plans to

sell, label, or represent its product as

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

‘‘made with * * *’’ must be certified

unless exempted under the small

operation exemption under section

205.101(a)(1) or not regulated under the

NOP (i.e., a producer of dog food). Only

certified operations may represent

themselves as certified. Operations

denied certification may not represent

their products as ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with * * *’’

Operations that have had their

certification suspended or revoked will

be subject to the terms and conditions

of their suspension or revocation

relative to the labeling of product

produced prior to the suspension or

revocation. No product produced by an

operation after suspension or revocation

of certification may be sold, labeled, or

represented as ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with * * *’’

Buyers of organic product can request

to see the producer’s or handler’s

certificate of organic operation.

Operations that have lost their organic

status will be unable to obtain an

updated certificate. Buyers with

questions regarding an operation’s

organic status may also contact the

certifying agent identified on a

certificate of organic operation. Further,

as previously noted, we anticipate using

the data collected under section

205.501(a)(15) to establish and maintain

an Internet database accessible to the

general public that will include the

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80597

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 42d Street, New York, NY 10036;

Website: www.ansi.org; E-mail:

ansionline@ansi.org; Telephone: 212–642–4900;

Facsimile: 212–398–0023.

names and other appropriate data on

certified organic production and

handling operations.

(8) Continuation of Certification. A

few commenters recommended

amending section 205.406 to include a

safety net for producers who are

certified by a certifying agent that does

not become accredited by USDA. They

stated that the rule must clearly state

that a certified organic producer will

have the full 18-month implementation

period starting from the effective date of

the final rule to get recertified if their

certifying agent is not accredited. One of

the commenters stated that because the

NOP anticipates that the accreditation

process will require 12 months,

producers will, in effect, have 6 months

to be certified by a new certifying agent

should the producer’s certifying agent

not be accredited.

Certification under the NOP will

become mandatory 18 months after the

effective date of the final rule.

Applications for accreditation will be

processed on a first-come, first-served

basis. Accreditations will be announced

approximately 12 months after the

effective date of the final rule for those

qualified certifying agents who apply

within the first 6 months following the

effective date and for any other

applicants that AMS determines

eligible. Certifying agents will begin the

process of certifying organic production

and handling operations to the national

standards upon receipt of their USDA

accreditation. 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. This

phase-in period will only be available to

those certified operations certified by a

certifying agent that receives its

accreditation within 18 months from the

effective date 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. Operations certified

by a certifying agent, which fails to

apply for or fails to meet the

requirements for USDA accreditation

under the NOP, must seek and receive

certification by a USDA-accredited

certifying agent before they can sell,

label, or represent their products as

organic, effective 18 months after the

effective date of the final rule.

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

U.S. organically produced agricultural

commodities. The accreditation

requirements in these regulations will,

upon announcement of the first group of

accredited certifying agents, replace the

voluntary fee-for-service organic

assessment 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 was used as a benchmark in

developing the accreditation program

described in this final 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 to standards that do not

make an organic claim. An accredited

certifying agent may not, however,

engage in any business operations or

activities which would involve the

agent in a violation of or in a conflict

of interest under the NOP.

Description of Regulations

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. 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.

Certifying agents planning to certify

production or handling operations

within a State with an approved State

organic program (SOP) must

demonstrate their ability to comply with

the requirements of the SOP.

The administrative information

submitted by the applicant must include

copies of its procedures for certifying

operations, for ensuring compliance of

its certified operations with the Act and

regulations, for complying with

recordkeeping requirements, and for

making information available to the

80598 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

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

will 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 must 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 decision-making responsibilities

have sufficient expertise in organic

production or handling techniques to

successfully perform the duties

assigned. They must also show that all

persons who review applications for

certification perform on-site

inspections, review certification

documents, evaluate qualifications for

certification, make recommendations

concerning certification, or make

certification decisions and that all

parties responsibly connected to the

certifying agent 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

giving advice or providing consultancy

services to certification applicants or

certified operations for overcoming

identified barriers to certification. This

requirement does not apply to voluntary

education programs available to the

general public and sponsored by the

certifying agent.

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.

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 certifying agent accredited or

accepted by USDA pursuant to section

205.500 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 evaluation of all persons

who review applications for

certification, perform on-site

inspections, review certification

documents, evaluate qualifications for

certification, make recommendations

concerning certification, or make

certification decisions and implement

measures to correct any deficiencies in

certification services; and (2) have an

annual program review conducted of

their certification activities by their

staff, an outside auditor, or a consultant

who has expertise to conduct such

reviews and implement measures to

correct any noncompliances with the

Act and the regulations in this part that

are identified in the 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. This requirement for the

transfer of records does not apply to a

merger, sale, or other transfer of

ownership of a certifying agent. A

private entity certifying agent must also

agree to make such records available to

any applicable SOP’s governing State

official.

Granting 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 the granting of accreditation in

writing. The notice of accreditation will

state the area(s) for which accreditation

is given, the effective date of the

accreditation, any terms or conditions

for the correction of minor

noncompliances, and, for a privateentity 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 with a notification of

noncompliance which will describe

each noncompliance, the facts on which

the notification is based, and the date by

which the applicant must rebut or

correct each noncompliance and submit

supporting documentation of each such

correction when correction is possible.

If the applicant is successful in its

rebuttal or provides acceptable evidence

demonstrating correction of the

noncompliances, the NOP Program

Manager will send the applicant a

written notification of noncompliance

resolution and proceed with further

processing of the application. If the

applicant fails to correct the

noncompliances, fails to report the

corrections by the date specified in the

notification of noncompliance, fails to

file a rebuttal by the date specified in

the notification of noncompliance, or is

unsuccessful in its rebuttal, the Program

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80599

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 42d Street, New York, NY 10036;

Website: www.ansi.org; E-mail:

ansionline@ansi.org; Telephone: 212–642–4900;

Facsimile: 212–398–0023.

Manager will issue a written notification

of accreditation denial to the applicant.

An applicant who has received written

notification of accreditation denial may

apply for accreditation again at any time

or file an appeal of the denial of

accreditation with the Administrator by

the date specified in the notification of

accreditation denial.

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. However, certifying agents

certifying production or handling

operations within a State with more

restrictive requirements, approved by

the Administrator, shall require

compliance with such requirements as a

condition of use of their identifying

mark by such operations.

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 Program Manager

finds, following the site evaluation, that

an accredited certifying agent is not in

compliance with the Act or regulations,

the Program Manager will issue the

certifying agent a written notification of

noncompliance. If the certifying agent

fails to correct the noncompliances,

report the corrections by the date

specified in the notification of

noncompliance, or file a rebuttal 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

at any time, unless otherwise stated in

the notification of suspension, submit a

request to the Secretary for

reinstatement of its accreditation. 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

regulations. A 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 shall establish a

peer review panel pursuant to the

Federal Advisory Committee Act

(FACA) (5 U.S.C. App. 2 et seq.). The

peer review panel shall be composed of

not fewer than three members who shall

annually evaluate the NOP’s adherence

to the accreditation procedures in

subpart F of these regulations and ISO/

IEC Guide 61,3 General requirements for

assessment and accreditation of

certification/registration bodies, and the

NOP’s accreditation decisions. This will

be accomplished through the review of:

(1) accreditation procedures, (2)

document review and site evaluation

reports, and (3) accreditation decision

documents or documentation. The peer

review panel shall report its finding, in

writing, to the NOP Program Manager.

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

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 performance evaluations and

annual program review and a

description of adjustments to the

certifying agent’s operation and

procedures implemented or to be

implemented in response to the

performance evaluations and program

review; and (5) the required AMS fees.

Certifying agents will keep the

Administrator informed of their

certification activities by providing the

Administrator with a copy of: (1) 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) a list, on January 2 of each year,

including the name, address, and

telephone number of each operation

granted certification during the

preceding year.

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 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.

80600 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules 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 SOP’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, products produced, 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, notices 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

memorandums 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 evaluations and supporting

documents; conflict of interest

disclosure reports and supporting

documents; annual program review

working papers, memorandums, letters,

and reports; fee schedules; annual

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 SOP’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 SOP’s governing State

official all records or copies of records

concerning its certification activities.

This requirement for the transfer of

records does not apply to a merger, sale,

or other transfer of ownership of a

certifying agent.

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 persons who review applications for

certification, perform on-site

inspections, review certification

documents, evaluate qualifications for

certification, make recommendations

concerning certification, or make

certification decisions and all parties

responsibly connected to the certifying

agent. Coverage of the conflict of

interest provisions extends to

immediate family members of persons

required to complete an annual conflict

of interest disclosure report. 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

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,

such persons 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 giving advice or providing

consultancy services to certification

applicants or certified operations for

overcoming identified barriers to

certification. To further ensure against

conflict of interest, the certifying agent

must ensure that the decision to certify

an operation is made by a person

different from the person who

conducted the on-site inspection.

The certifying agent must reconsider

a certified operation’s application for

certification when the certifying agent

determines, within 12 months of

certifying the operation, that a person

participating in the certification process

and covered under section

205.501(c)(11)(ii) has or had a conflict of

interest involving the applicant. If

necessary, the certifying agent must

perform a new on-site inspection. All

costs associated with a reconsideration

of an application, including onsite

inspection costs, shall be borne by the

certifying agent. When it is determined

that, at the time of certification, a

conflict of interest existed between the

applicant and a person covered under

section 205.501(c)(11)(i), the certifying

agent must refer the certified operation

to a different accredited certifying agent

for recertification. The certifying agent

must also reimburse the operation for

the cost of the recertification.

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.

Accredited certifying agents must accept

all production and handling

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80601

applications that fall within their areas

of accreditation and certify all qualified

applicants, to the extent of their

administrative capacity to do so,

without regard to size or membership in

any association or group.

Renewal of Accreditation

To avoid a lapse in accreditation,

certifying agents must apply for renewal

of accreditation at least 6 months prior

to the fifth anniversary of issuance of

the notification of accreditation and

each subsequent renewal of

accreditation. The Administrator will

send the certifying agent a notice of

pending expiration of accreditation

approximately 1 year prior to the

scheduled date of expiration. 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 and the

results of a site evaluation, 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.

Amending Accreditation

An accredited certifying agent may

request amendment to its accreditation

at any time. The application for

amendment must be sent to the

Administrator and must contain

information applicable to the requested

change in accreditation, a complete and

accurate update of the certifying agent’s

application information and evidence of

expertise and ability, and the applicable

fees.

Accreditation—Changes Based on

Comments

This subpart differs from the proposal

in several respects as follows:

(1) Advice and Consultancy Services.

We have amended section

205.501(a)(11)(iv) to clarify that

certifying agents are to prevent conflicts

of interest by not giving advice or

providing consultancy services to

applicants for certification and certified

operations for overcoming identified

barriers to certification. This

amendment has been made in response

to a commenter who stated that the

provisions of section 205.501(a)(11)(iv),

as proposed, seemed to preclude the

providing of advice and educational

workshops and training programs. It

was not our intent to prevent certifying

agents from sponsoring in-house

publications, conferences, workshops,

informational meetings, and field days

for which participation is voluntary and

open to the general public. The

provisions as originally proposed and as

amended are intended to prohibit

certifying agents from telling applicants

and certified operations how to

overcome barriers to certification

identified by the certifying agent. It

would be a conflict of interest for a

certifying agent to tell an operation how

to comply inasmuch as the certifying

agents impartiality and objectivity will

be lost should the advice or consultancy

prove ineffective in resolving the

noncompliance. The provisions of

section 205.501(a)(11)(iv) are consistent

with ISO Guide 61.

To further clarify this issue, we have

also amended section 205.501(a)(16) by

adding ‘‘for certification activities’’ after

the word, ‘‘charges.’’

(2) Conflicts of Interest—Persons

Covered. We have amended section

205.501(a)(11)(v) to limit the completion

of annual conflict of interest disclosure

reports to all persons who review

applications for certification, perform

on-site inspections, review certification

documents, evaluate qualifications for

certification, make recommendations

concerning certification, or make

certification decisions and all parties

responsibly connected to the certifying

agent. A commenter recommended

amending section 205.501(a)(11)(v) to

have it apply to all persons with direct

oversight of or participation in the

certification program rather than all

persons identified in section

205.504(a)(2). Section 205.504(a)(2)

includes 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. We

have decided that completion of annual

conflict of interest disclosure reports by

persons not involved in the certification

process or responsibly connected to the

certifying agent is unnecessary. As

amended, section 205.501(a)(11)(v)

includes all persons with the

opportunity to influence the outcome of

a decision on whether to certify a

specific production or handling

operation. Completed conflict of interest

disclosure reports will be used by

certifying agents to identify persons

with interests in applicants for

certification and certified operations

that may affect the impartiality of such

persons.

(3) Reporting Certifications Granted.

We have amended section

205.501(a)(15)(ii) (formerly section

205.501(a)(14)(ii)) by replacing ‘‘a

quarterly calendar basis’’ with ‘‘January

2 of each year.’’ A commenter stated

that the requirement that certifying

agents report certifications that they

have granted on a quarterly basis to the

Administrator is burdensome. The

commenter requested that section

205.501(a)(14)(ii) be amended to require

a midyear or end-year reporting. Section

205.501(a)(15)(ii) now requires the

certifying agent to submit a list, on

January 2 of each year, including the

name, address, and telephone number of

each operation granted certification

during the preceding year. Certifying

agents can fulfill this requirement by

providing an up-to-date copy of the list

of producers and handlers required to

be made available to the public by

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

(4) Notification of Inspector. We have

added a new section 205.501(a)(18)

requiring the certifying agent to provide

the inspector, prior to each on-site

inspection, with previous on-site

inspection reports and to notify the

inspector of the certifying agent’s

decision relative to granting or denying

certification to the applicant site

inspected by the inspector. Such

notification must identify any

requirements for the correction of minor

noncompliances. We have made this

addition because we agree with the

commenter that such information

should be provided to the inspector and

because the requirements are consistent

with ISO Guide 61.

(5) Acceptance of Applications. We

have added a new section 205.501(a)(19)

requiring the certifying agent to accept

all production or handling applications

80602 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

for certification that fall within the

certifying agent’s areas of accreditation

and to certify all qualified applicants, to

the extent of their administrative

capacity to do so, without regard to size

or membership in any association or

group. We have made this addition

because we agree with the many

commenters who requested that

certifying agents be required to certify

all qualified applicants. We recognize,

however, that there may be times when

the certifying agent’s workload or the

size of its client base might make it

necessary for the certifying agent to

decline acceptance of an application for

certification within its area of

accreditation. This is why we have

included the proviso, ‘‘to the extent of

their administrative capacity to do so.’’

We have included ‘‘without regard to

size or membership in any association

or group’’ to address commenter

concerns about discrimination in the

providing of certification services. This

addition is consistent with ISO Guide

61.

(6) Ability to Comply with SOP. We

have added a new section 205.501(a)(20)

requiring the certifying agent to

demonstrate its ability to comply with

an SOP, to certify organic production or

handling operations within the State.

This change, as pointed out by a State

commenter, is necessary to clarify that

a certifying agent must be able to

comply with an SOP to certify

production or handling operations

within that State.

(7) Performance Evaluation. We have

amended section 205.501(a)(6) by

replacing ‘‘appraisal’’ with ‘‘evaluation’’

and expanding the coverage from

inspectors to persons who review

applications for certification, perform

on-site inspections, review certification

documents, evaluate qualifications for

certification, make recommendations

concerning certification, or make

certification decisions. Corresponding

amendments have also been made to

section 205.510(a)(4). Further, we have

amended section 205.501(a)(6) to clarify

that the deficiencies to be corrected are

deficiencies in certification services. We

changed ‘‘appraisal’’ to ‘‘evaluation’’ at

the request of a State commenter who

pointed out that State inspectors

generally perform other duties in

addition to the inspection of organic

production or handling operations. We

concur that this change will help

differentiate between the State’s

employee performance appraisal for all

duties as a State employee and the

evaluation of certification services

provided under the NOP. Expanding the

coverage from inspectors to all persons

involved in the certification process

makes the regulation consistent with

ISO Guide 61. Sections 205.505(a)(3)

and 205.510(a)(4) have been amended to

make their language consistent with the

changes to section 205.501(a)(6).

(8) Annual Program Evaluation. We

have amended section 205.501(a)(7) by

replacing ‘‘evaluation’’ with ‘‘review’’

and by replacing ‘‘evaluations’’ with

‘‘reviews.’’ A commenter suggested

amending section 205.501(a)(7) by

replacing the requirement of an annual

program evaluation with an annual

review of program activities. We agree

that ‘‘review’’ is a more appropriate

term than ‘‘evaluate’’ since to review is

to examine, report, and correct while

evaluate is more in the nature of

assessing value. We have not, however,

accepted that portion of the

commenter’s suggestion which would

have removed the reference to the

review being conducted by the

certifying agent’s staff, an outside

auditor, or a consultant who has the

expertise to conduct such reviews. We

have not accepted this suggestion

because the comment would have

limited the review to being conducted

by the certifying agent with no

requirement that the certifying agent be

qualified to conduct the review.

Another commenter wanted to change

the requirement to an annual

assessment of the quality of the

inspection system. We have not

accepted this suggestion because it can

be interpreted as narrowing the scope of

the review from the full certification

program to just the inspection

component of the certification program.

This commenter would also have

limited the review to being conducted

by the certifying agent with no

requirement that the certifying agent be

qualified to conduct the review. We

believe that narrowing the scope of the

review would be inconsistent with ISO

Guide 65. It is also inconsistent with our

intent that the entire certification

program be reviewed annually. We also

received a comment stating that it is a

violation of ISO Guide 65 to have staff

perform an internal review. We disagree

with this commenter. ISO Guide 65

provides that the certification body shall

conduct periodic internal audits

covering all procedures in a planned

and systematic manner. Sections

205.505(a)(4) and 205.510(a)(4) have

been amended to make their language

consistent with the changes to section

205.501(a)(7).

(9) Certification Decision. We have

added a new section 205.501(a)(11)(vi)

that requires the certifying agent to

ensure that the decision to certify an

operation is made by a person different

from the person who carried out the onsite inspection. Commenters requested

that this provision be added to the

requirement that certifying agents

prevent conflicts of interest. We concur

with the request because it clearly

separates the act of inspecting an

organic operation from the act of

granting certification. This addition is

also consistent with ISO Guide 65,

section 4.2(f), which requires that the

certification body ensure that each

decision on certification is taken by a

person different from those who carried

out the evaluation.

(10) Determination of Conflict of

Interest. We have added a new section

205.501(a)(12) addressing situations

where a conflict of interest present at

the time of certification is identified

after certification. Several commenters

requested the addition of a provision

that, if a conflict of interest is identified

within 12 months of certification, the

certifying agent must reconsider the

application and may reinspect the

operation if necessary. We agree with

the commenters that the issue of

conflicts of interest present at the time

of certification but identified after

certification need to be addressed in the

regulations. Accordingly, we have

provided that an entity accredited as a

certifying agent must reconsider a

certified operation’s application for

certification and, if necessary, perform a

new on-site inspection when it is

determined, within 12 months of

certifying the operation, that any person

participating in the certification process

and covered under section

205.501(a)(11)(ii) has or had a conflict of

interest involving the applicant.

Because the certifying agent is

responsible for preventing conflicts of

interest, all costs associated with a

reconsideration of application,

including onsite inspection costs, must

be borne by the certifying agent.

Further, a certifying agent must refer a

certified operation to a different

accredited certifying agent for

recertification when it is determined

that any person covered under section

205.501(a)(11)(i) at the time of

certification of the applicant had a

conflict of interest involving the

applicant. Because the certifying agent

is responsible for preventing conflicts of

interest, the certifying agent must

reimburse the operation for the cost of

the recertification. Sections

205.501(a)(12) through 205.501(a)(17)

have been redesignated as sections

205.501(a)(13) through 205.501(a)(18),

respectively.

(11) Financial Security. We published

an advanced notice of proposed

rulemaking and request for comments

regarding financial security in the

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80603

August 9, 2000, issue of the Federal

Register. We issued a news release

announcing the Federal Register

publication on August 9, 2000.

Numerous commenters expressed

concern about reasonable security

relative to its amount and impact on

small certifying agents. A few

commenters requested a definition for

reasonable security. Others stated that

the formula for determining the amount

of security should be published in the

Federal Register. The March 13, 2000,

NOP proposed rule stated that the

amount and terms of reasonable

financial security would be the subject

of additional rulemaking. The August 9,

2000, advanced notice of proposed

rulemaking solicited comments on all

aspects of reasonable security and

protection of the rights of program

participants. We requested comments

from any interested parties, including

producers and handlers of organic

agricultural products, certifying agents,

importers and exporters, the

international community, and any other

person or group. Six questions were

provided to facilitate public comment

on the advanced notice of proposed

rulemaking. Comments addressing other

relevant issues were also invited. The

questions posed in the advanced notice

of proposed rulemaking were:

(a) From what risks or events might a

customer of a private certifying agent

require reasonable security?

(b) What are the financial

instrument(s) that could provide the

reasonable security to protect customers

from these events?

(c) What dollar amounts of security

would give reasonable protection to a

customer of a private certifying agent?

(d) What are the financial costs to

private certifiers, especially small

certifiers, of providing reasonable

security?

(e) Do the risks or events provided in

response to question #1 necessarily

require financial compensation?

(f) Are there situations in which

reasonable security is not needed?

Following analysis of the comments

received, we will publish a proposed

rule on reasonable security in the

Federal Register. The public will again

be invited to submit comments. The

proposed rule will include the proposed

regulation, an explanation of the

decision-making process, an analysis of

the costs and benefits, the effects on

small businesses, and an estimate of the

paperwork burden imposed by the

regulation.

(12) Use of Identifying Mark. We have

amended section 205.501(b)(2) to clarify

that all certifying agents (private and

State) certifying production or handling

operations within a State with more

restrictive requirements, approved by

the Secretary, shall require compliance

with such requirements as a condition

of use of their identifying mark by such

operations. Numerous commenters

stated that they wanted USDA to permit

higher production standards by private

certifying agents. See also item 17 under

Accreditation—Changes Requested But

Not Made. This amendment is intended

to further clarify our position that no

certifying agent (State or private) may

establish or require compliance with its

own organic standards. It is an SOP, not

a State certifying agent, that receives

approval from the Secretary for more

restrictive requirements. See also item 7

under Accreditation—Clarifications.

(13) Transfer of Records. To address

the issues of a merger, sale, or other

transfer of ownership, we have added

the following to the end of section

205.501(c)(3); ‘‘Provided, That, such

transfer shall not apply to a merger, sale,

or other transfer of ownership of a

certifying agent.’’ Commenters

suggested amending section

205.501(c)(3) to provide for the transfer

of records accumulated from the time of

accreditation to the Administrator or his

or her designee, another accredited

certifying agent, or an SOP’s governing

State official in a State where such

official exists. It was also stated that this

section needs to take into account a

certifying agent’s decision to merge or

transfer accounts to another certifying

agent in the case of loss of accreditation.

Under the NOP, should a certifying

agent dissolve or lose its accreditation,

its certified operations will be free to

seek certification with the accredited

certifying agent of their choice.

Accordingly, it would be inappropriate

to automatically transfer an operation’s

records to another certifying agent as

requested by the commenters. However,

in analyzing the comments, we realized

that a provision was needed for a

merger, sale, or other transfer of

ownership of a certifying agent; thus,

the amendment to section 205.501(c)(3).

Section 205.505(b)(3) has been amended

to make its language consistent with the

changes to section 205.501(c)(3).

(14) Fees for Information. We have

amended section 205.504(b)(5) by

inserting ‘‘including any fees to be

assessed’’ after the word, ‘‘used.’’ This

change is made in response to the

question of whether fees may be charged

for making information available to the

public. It is our intent that certifying

agents may charge reasonable fees for

document search time, duplication, and,

when applicable, review costs. We

anticipate that review costs will most

likely be incurred when the information

requested is located within documents

which may contain confidential

business information.

(15) Information Available to the

Public. We have amended section

205.504(b)(5)(ii) by adding products

produced to the information to be

released to the public. This addition

responds in an alternate way to

commenters who wanted the

information included on certificates of

organic operation. That request was

denied; see item 4, Changes Requested

But Not Made, under subpart E,

Certification. This addition is consistent

with ISO Guide 61.

(16) Equivalency of Certification

Decisions and Statement of Agreement.

We have amended sections

205.501(a)(12) (redesignated as

205.501(a)(13)) and 205.505(a)(1) by

deleting the words, ‘‘USDA accredited’’

and ‘‘as equivalent to its own,’’ and

adding to the end thereof: ‘‘accredited or

accepted by USDA pursuant to section

205.500.’’ We have made this

amendment to clarify that the provision

applies to certification decisions by

domestic certifying agents as well as

foreign certifying agents accredited or

accepted by USDA pursuant to section

205.500.

There were many comments in

support of section 205.501(a)(12) as

written. However some did not agree

that certifying agents should have to

recognize another agent’s decision as

equivalent to their own. These

commenters want to maintain the right

and ability not to use their seal on a

product that does not meet their

standards. The most strongly voiced

comment stated: ‘‘delete section

205.501(a)(12) and section 205.505(a)(1).

The requirements constitute a ‘‘taking’’

in violation of the Fifth Amendment

and are unnecessary to accomplish the

goal of establishing a consistent

standard and facilitating trade.’’

We do not concur with the

commenters who want to change

sections 205.501(a)(12) and

205.505(a)(1). We also do not agree with

the comment that sections

205.501(a)(12) and 205.505(a)(1)

constitute a taking in violation of the

Fifth Amendment and are unnecessary

to accomplish the goal of establishing a

consistent standard and facilitating

trade. We believe that, to accomplish

the goal of establishing a consistent

standard and to facilitate trade, it is vital

that an accredited certifying agent

accept the certification decisions made

by another certifying agent accredited or

accepted by USDA pursuant to section

205.500. All domestic organic

production and handling operations,

unless exempted or excluded under

80604 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

section 205.101, must be certified to

these national standards and, when

applicable, any State standards

approved by the Secretary. All domestic

certified operations must be certified by

a certifying agent accredited by the

Administrator. No USDA-accredited

certifying agent, domestic or foreign,

may establish or require compliance

with its own organic standards.

Certifying agents are not required to

have an identifying mark for use under

the NOP. However, if a certifying agent

is going to use an identifying mark

under the NOP, the use of such mark

must be voluntary and available to all of

the certifying agent’s clients certified

under the NOP. Accordingly, we have

not changed the requirement that a

certifying agent accept the certification

decisions made by another USDAaccredited certifying agent. We have,

however, as noted above, amended both

sections to require that USDAaccredited certifying agents accept the

certification decisions made by another

certifying agent accredited or accepted

by USDA pursuant to section 205.500.

(17) Granting Accreditation. We have

made editorial changes to section

205.506 consistent with the suggestion

that we replace ‘‘approval of

accreditation’’ with ‘‘granting of

accreditation.’’ In the title to section

205.506, we have replaced ‘‘Approval

of’’ with ‘‘Granting.’’ In section

205.506(a), we have replaced

‘‘approved’’ with ‘‘granted,’’ and in

section 205.506(b), we have replaced

‘‘approval’’ with ‘‘the granting.’’ We

have made these change because, under

the NOP, we grant accreditation rather

than approve accreditation.

(18) Correction of Minor

Noncompliances. We have added a new

section 205.506(b)(3) providing that the

notification granting accreditation will

state any terms and conditions for the

correction of minor noncompliances.

Commenters requested the addition of

language to section 205.506(b) which

would clarify that the Administrator

may accredit with required corrective

actions for minor noncompliances. In

the proposed rule, we addressed

accreditation subject to the correction of

minor noncompliances at section

205.510(a)(3). We agree with

commenters that, for the purposes of

clarity, this issue should also be

addressed in section 205.506 on the

granting of accreditation. Accordingly,

we have added new section

205.506(b)(3) as noted above. We have

also retained the provisions of section

205.510(a)(3), which requires certifying

agents to annually report on actions

taken to satisfy any terms and

conditions addressed in the most recent

notification of accreditation or notice of

renewal of accreditation. Section

205.506(b)(3) has been redesignated as

section 205.506(b)(4).

(19) Denial of Accreditation. We have

amended section 205.507 to include

noncompliance and resolution

provisions originally included by crossreference to section 205.665(a). This

cross-reference created confusion for

commenters, regarding section 205.665’s

applicability to applicants for

accreditation because the section does

not specifically address applicants.

Rather than specifically identifying

applicants within section 205.665, we

believe the issue is best clarified by

addressing noncompliance and

resolution within section 205.507. As

amended, section 205.507 now states in

paragraph (a) that the written

notification of noncompliance must

describe each noncompliance, the facts

on which the notification is based, and

the date by which the applicant must

rebut or correct each noncompliance

and submit supporting documentation

of each such correction when correction

is possible. This rewrite of paragraph (a)

also enabled us to eliminate paragraph

(b) since its provisions are addressed in

amended paragraph (a). The section also

provides, at new paragraph (b), that

when each noncompliance has been

resolved, the Program Manager will

send the applicant a written notification

of noncompliance resolution and

proceed with further processing of the

application. We have also clarified the

applicant’s appeal rights by adding ‘‘or

appeal the denial of accreditation in

accordance with section 205.681 by the

date specified in the notification of

accreditation denial’’ to the end of

paragraph (c).

(20) Reinstatement of Accreditation.

We have amended section 205.507(d) by

removing the requirement that a

certifying agent that has had its

accreditation suspended reapply for

accreditation in accordance with section

205.502. In its place, we provide that

the certifying agent may request

reinstatement of its accreditation. Such

request may be submitted at any time

unless otherwise stated in the

notification of suspension. Amended

section 205.507(d) also provides that the

certifying agent’s 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. We have made

this change because unlike revocation,

suspension does not terminate a

certifying agent’s accreditation.

Accordingly, requiring a new

application for accreditation is

unnecessary and burdensome on the

certifying agent. This change is

consistent with changes to sections

205.662(f) and 205.665(g)(1), which

were made based on comments received

on section 205.662(f).

(21) Ineligible for accreditation. We

have amended section 205.507(d) by

deleting ‘‘private entity’’ from the third

sentence. The amended sentence

provides that ‘‘A 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.’’ Several

commenters recommended deletion of

‘‘private entity’’ so that private

certifying agents would be regulated on

an equivalent basis with State certifying

agents. It is our intent to regulate private

and State certifying agents on an

equivalent basis. Accordingly, we made

the recommended change.

(22) Peer Review. We have amended

section 205.509. As amended, the

section requires that the Administrator

establish a peer review panel pursuant

to FACA (5 U.S.C. App. 2 et seq.). The

peer review panel will be composed of

not less than 3 members who will

annually evaluate the NOP’s adherence

to the accreditation procedures in

subpart F of these regulations and ISO/

IEC Guide 61, General requirements for

assessment and accreditation of

certification/registration bodies, and the

NOP’s accreditation decisions. This will

be accomplished through the review of

accreditation procedures, document

review and site evaluation reports, and

accreditation decision documents and

documentation. The peer review panel

will report its finding, in writing, to the

NOP’s Program Manager. We developed

this approach to peer review as a means

of addressing the suggestions of the

commenters and the need for

administration of an effective and

timely accreditation program.

Many commenters wanted the

opening language in the first sentence of

section 205.509 changed from ‘‘The

Administrator may’’ to the ‘‘The

Administrator shall’’ establish a peer

review panel to assist in evaluating

applicants for accreditation, amendment

to an accreditation, and renewal of

accreditation as certifying agents. One of

the most frequent comments, including

a comment by the NOSB, was that peer

reviewers should be compensated for

their time and expenses. Many

commenters believe also that the peer

review process should be collaborative.

Some commenters who wanted this

change recognized that a collaborative

process where confidential information

was shared could run into problems

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80605

because FACA (P.L. 92–463, 5 U.S.C.

App.) meetings are open to the public.

They advised creating a FACA panel but

restricting public access during

discussion of confidential business

information based on 5 U.S.C. Section

522b(c)(4) of the Government in the

Sunshine Act.

As requested, amended section

205.509 requires the formation of a peer

review panel. Also as requested, peer

reviewers, who will serve as a FACA

committee, will be reimbursed for their

travel and per diem expenses. The

reviewers will also work collaboratively.

We have not, however, provided for

collaborative review of each applicant

for accreditation by the peer review

panel because of the administrative

burden that an outside collaborative

review process would place on the NOP.

Currently, there are 36 private and 13

State certifying agencies. It is, therefore,

likely that USDA will receive

approximately 50 applications for

accreditation the first year of the

program. Given the need to make

accreditation decisions in a timely,

organized fashion, it would be infeasible

to convene a panel of peers for each

applicant for accreditation prior to

rendering a decision on accreditation.

However, as noted above, we have

provided that a peer review panel will

annually evaluate the NOP’s adherence

to the accreditation procedures in

subpart F of these regulations and ISO/

IEC Guide 61, General requirements for

assessment and accreditation of

certification/registration bodies, and

validate the NOP’s accreditation

decisions.

We have also amended current

section 205.510(c)(3) by removing the

reference to reports submitted by a peer

review panel to make that section

consistent with the rewrite of section

205.509.

(23) Expiration of accreditation. We

have added a new section 205.510(c)(1)

which provides that the Administrator

shall send the accredited certifying

agent a notice of pending expiration of

accreditation approximately 1 year prior

to the scheduled date of expiration. A

commenter suggested USDA notification

of certifying agents at least 1 year prior

to the scheduled expiration of

accreditation. We have made the

suggested change because we believe

notification about 1 year prior to

expiration will facilitate the timely

receipt of applications for renewal. We

have redesignated sections 205.510(c)(1)

and 205.510(c)(2) as 205.510(c)(2) and

205.510(c)(3), respectively.

(24) Amendments to Accreditation.

We have added a new section 205.510(f)

to provide that an amendment to an

accreditation may be requested at any

time. The application for amendment

must be sent to the Administrator and

must contain information applicable to

the requested change in accreditation.

The application for amendment must

also contain a complete and accurate

update of the information submitted in

accordance with section 205.503,

Applicant information; and section

205.504, Evidence of expertise and

ability. The applicant must also submit

the applicable fees required in section

205.640. We have added this new

section because we agree with the

commenter who expressed concern that

the regulations were not clear regarding

amendments to accreditation. This

addition is consistent with section

205.510(a)(2) which allows certifying

agents to request amendment of their

accreditation as part of their annual

report to the Administrator.

Accreditation—Changes Requested But

Not Made

This subpart retains from the

proposed rule, regulations on which we

received comments as follows:

(1) Accreditation by USDA. A

commenter stated that ISO/IEC Guide 61

specifies, but the proposed rule did not

specify, the requirements for USDA to

assess and accredit certifying agents.

The commenter questioned USDA’s

acceptance internationally as a

competent accreditation body. A few

commenters requested that USDA

provide certifying agents with assurance

of international trade acceptance of the

USDA’s accreditation program prior to

implementation of the final rule. We do

not believe that it is necessary to

include in these regulations detailed

procedures by which USDA will operate

its accreditation program. USDA has

developed its accreditation and

certification programs with the intent

that they meet or exceed international

guidelines. Every country will make its

own decision regarding acceptance of

this accreditation program. Accordingly,

while we do not anticipate problems

with acceptance of our accreditation

program, we cannot provide assurance

against problems as requested by the

commenters.

(2) Equivalency at the European

Community (EC) Level. A commenter

requested confirmation that an

equivalency agreement would be

negotiated at the EC level since the EC

legislation provides for the basic rules

while accreditation of certifying agents

is a task for each member state. Another

commenter pointed out that because

Switzerland has the same regulations as

the EC, equivalency would have to be

done in close coordination with the EC.

The commenter went on to say that

according to Swiss and European

practice, not only the organic product,

but also the bodies involved will be

mutually accepted. This commenter also

stated that, due to Swiss import

provisions, brokers must be subject to a

certain control. Equivalency will be

negotiated between the United States

and the foreign government authority

seeking the equivalency agreement.

(3) Period of Accreditation. It was

suggested that accreditation should be

for a 4-year period with full

reevaluation occurring once every 4

years and annual surveillance visits in

the intervening years. We do not concur

with changing the period of

accreditation from 5 years to 4 years as

suggested. The 5-year period that we

have provided that accreditation is

consistent with the Act, which provides

that accreditation shall be for a period

of not to exceed 5 years. The commenter

claims that the international norm is for

full reevaluations to take place once

every 4 years with annual surveillance

visits in the intervening years. ISO

Guide 61, section 3.5.1, provides that

the accreditation body shall have an

established documented program,

consistent with the accreditation

granted, for carrying out periodic

surveillance and reassessment at

sufficiently close intervals to verify that

its accredited body continues to comply

with the accreditation requirements. We

believe that accreditation for 5 years is

a reasonable period of time. Further, we

believe that a 5-year period of

accreditation is consistent with ISO

Guide 61 inasmuch as we require an

annual evaluation of the certification

program; annual review of persons

associated with the certification process,

including inspectors; annual reporting

with a complete and accurate update of

information required for accreditation;

and one or more site evaluations during

the period of accreditation in addition

to the initial site evaluation for the

period of accreditation. Accordingly, we

have not made the recommended

change.

(4) Accreditation by Private-Sector

Accreditation Bodies. Numerous

commenters wanted language added to

section 205.500(c) that would allow

private sector accreditation bodies to

accredit foreign certifying agents. For

example, several commenters suggested

adding a provision reading as follows:

‘‘The foreign certifying agent is

accredited by a private accreditation

body recognized by the USDA as

defined by an equivalency agreement

negotiated between the USDA and the

accreditation body.’’ Commenters also

wanted us to amend section 205.502(a)

80606 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

to recognize accreditation by private

accreditation programs.

USDA is the accrediting body for all

accreditations under the NOP. USDA

will not recognize nongovernmental

accrediting bodies. USDA will recognize

foreign certifying agents accredited by a

foreign government authority when

USDA determines that the foreign

government’s standards meet the

requirements of the NOP or when an

equivalency agreement has been

negotiated between the United States

and a foreign government.

(5) Requirements for Accreditation.

Some commenters requested more

specificity in the requirements for

accreditation. For example, one

recommended that section 205.501(a)(1)

should include the requirement that

inspectors demonstrate completion of a

specified training program or internship

or ongoing education and/or licensing.

Another commenter wanted baseline

criteria for denying an application due

to expertise. Still others wanted a

definition for (1) ‘‘experience and

training pertaining to organic/

sustainable agricultural methods and

their implementation on farm or in

processing facilities,’’ (2) ‘‘trained

certifying agent personnel,’’ and (3)

‘‘reasonable time.’’ Finally, one wanted

recordkeeping and evaluative

parameters. AMS does not believe that

it is necessary to present the

requirements for accreditation to the

extent of detail requested by the

commenters. The intent is to provide

flexibility to the certifying agents such

that they can tailor their policies and

procedures to the nature and scope of

their operation. The NOP is available to

respond to questions and to assist

certifying agents in complying with the

requirements for accreditation.

(6) Volunteer Board Members. Some

commenters suggested amending

section 205.501(a)(5) to include a

reference to committees and to expand

‘‘sufficient expertise’’ to ‘‘sufficient

balance of interests and expertise.’’ The

commenters proposed the amendment

to create a firewall between those

persons involved in decision making

and the volunteer board members.

However, the purpose of section

205.501(a)(5) is to ensure that the

persons used by the certifying agent to

assume inspection, analysis, and

decision-making responsibilities have

sufficient expertise in organic

production or handling techniques to

successfully perform the duties

assigned. Therefore, we have not made

the suggested changes. Conflict of

interest guidelines are found at section

205.501(a)(11).

(7) Confidentiality. A commenter

stated that Texas law prevents the Texas

Department of Agriculture from

guaranteeing confidentiality to its

clients. Accordingly, the commenter

requested that section 205.501(a)(10) be

amended by adding to the end thereof:

‘‘or as required by State statutes.’’ We

have not made the suggested change

because the Act requires that the

certifying agent maintain strict

confidentiality with respect to its clients

under the NOP and not disclose any

business-related information concerning

such client obtained while

implementing the Act. To be accredited

under the NOP, certifying agents must

fully comply with the requirements of

the Act and these regulations. Further,

no SOP will be approved which does

not comply with the NOP.

(8) Certifying Agent Fees. Several

commenters requested that the

regulations prohibit royalty formulas

(i.e., fees from every certified sale) for

certifying agent fees. It is not our intent

to regulate how a certifying agent sets its

fees beyond their being reasonable and

nondiscriminatory.

(9) Conflicts of Interest. We received

numerous comments stating that section

205.501(a)(11)(i) was too restrictive and

unnecessary due to the provisions of

section 205.501(a)(11)(ii) to prevent

conflicts of interest. Some argued that

these conflict of interest provisions are

beyond ISO requirements and place an

undue burden on membership based

certifying agents and the entities they

serve. They requested a conflict of

interest policy enabling membershipbased certification organizations to

continue operating. A commenter

suggested that section 205.501(a)(11) be

amended to require that a certifying

agent’s board members sign an affidavit

listing potential conflicts of interest,

identify issues where an organization

decision might help them personally,

and exclude themselves from decisionmaking that would assist them

personally. This commenter proposed

the amendment for the purpose of

creating a firewall between those

persons involved in certification

decision-making and the volunteer

board members.

We do not believe that the conflict of

interest provisions are too restrictive.

These provisions are very similar to

conflict of interest provisions under

other USDA programs involving publicprivate partnerships (e.g., grain

inspection). The certifying agent and its

responsibly connected parties,

including volunteer board members,

hold positions of influence over the

certifying agent’s employees and

persons with whom the certifying agent

contracts for such services as

inspection, sampling, and residue

testing. Therefore, we continue to

believe that avoiding such conflicts of

interest is necessary to maintain the

integrity of the organic certification

process.

(10) Conflicts of Interest and

Prohibition on Certification. A

commenter requested that we include

an ‘‘or’’ between sections

205.501(a)(11)(i) and 205.501(a)(11)(ii).

We have not made the recommended

change because both sections must be

complied with; they are not mutually

exclusive. Section 205.501(a)(11)(i)

prohibits the certification of an

applicant when the certifying agent or a

responsibly connected party of such

certifying agent has or has held a

commercial interest in the applicant for

certification, including an immediate

family interest or the provision of

consulting services, within the 12-

month period prior to the application

for certification. When the certifying

agent and its responsibly connected

persons are free of any conflict of

interest involving the applicant for

certification, the applicant may be

certified if qualified. However, section

205.501(a)(11)(ii) requires the certifying

agent to exclude any person (employees

and contractors who do not meet the

definition of responsibly connected),

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.

(11) Gifts and Contributions.

Commenters recommended that section

205.501(a)(11)(iii) be amended to allow

not-for-profit organizations to accept

gifts and contributions from certified

operations for those programs not

directly related to the certifying agent’s

organic certification activities. They also

wanted it clarified that not-for-profit

organizations can accept voluntary labor

from certified operations for those

programs not directly related to the

certifying agent’s organic certification

activities. We have not made the

requested changes. First, the acceptance

of gifts and contributions would

constitute a conflict of interest and

would be contrary to ISO Guide 61.

Certifying agents must have the

financial stability and resources to

perform their certification duties

without relying on gifts and

contributions from those they serve.

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80607

Second, we have not added the

requested provision on voluntary labor

because section 205.501(a)(11)(iii)

already addresses the acceptance of

voluntary labor by not-for-profit

organizations from certified operations.

(12) Conflicts of Interest—

Determination Period. Commenters

wanted to increase the conflict

determination period from 12 months to

24 months. Some also wanted the

period to extend for 2 years after, with

the exception of those who have left the

employ of the certifying agent or are no

longer under contract with the certifying

agent.

We disagree with the

recommendations calling for a longer

precertification conflict of interest

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, section

205.501(a)(11)(v) 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

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 not made the

recommended change.

The change recommended by the

commenters who requested that the

conflict of interest determination period

extend for 2 years after certification is

unnecessary. 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 final rule.

(13) False and Misleading Claims. A

commenter asked who will determine

what is a misleading claim about the

nature or qualities of products labeled

as organically produced. This same

commenter recommended amending

section 205.501(a)(13) by removing the

prohibition against making false or

misleading claims about the nature or

qualities of products labeled as

organically produced.

We disagree with this

recommendation. 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. Accordingly, USDA will

determine what is a misleading claim.

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

change suggested by the commenter

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, we have not made the

recommended change to what is now

section 205.501(a)(14).

(14) Certifying Agent Compliance

With Terms and Conditions Deemed

Necessary. A commenter recommended

that we remove section 205.501(a)(17).

This section requires that certifying

agents comply with and implement

other terms and conditions deemed

necessary by the Secretary. This

requirement is consistent with section

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, we have not accepted the

commenter’s recommendation. This

requirement is located at current section

205.501(a)(21).

(15) Limitations on the Use of

Certifying Agent’s Marks. Numerous

commenters stated that they wanted

USDA to permit higher production

standards by private certifying agents. A

common argument for allowing higher

standards was that practitioners must be

allowed to ‘‘raise the bar’’ through

superior ecological on-farm practices or

pursuit of other social and ecological

goals. Some commenters recommended

that the language in section

205.501(b)(2) be replaced with

provisions that would allow certifying

agents to issue licensing agreements

with contract specifications that clearly

establish conditions for use of the

certifying agent’s identifying mark.

We believe the positions advocated by

the commenters are inconsistent with

section 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. We believe that, to

accomplish the goal of establishing a

consistent standard and to facilitate

trade, it is vital that an accredited

certifying agent accept the certification

decisions made by another certifying

agent accredited or accepted by USDA

pursuant to section 205.500. All organic

production and handling operations,

unless exempted or excluded under

section 205.101 or not regulated under

the NOP (i.e., a producer of dog food),

must be certified to these national

standards and, when applicable, any

State standards approved by the

Secretary. All certified operations must

be certified by a certifying agent

accredited by the Administrator. No

accredited certifying agent may

establish or require compliance with its

80608 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

own organic standards. Accredited

certifying agents may establish other

standards outside of the NOP. They may

not, however, refer to them as organic

standards nor require that applicants for

certification under the NOP or

operations certified under the NOP

comply with such standards as a

requirement for certification under the

NOP. Use of the certifying agent’s

identifying mark must be voluntary and

available to all of its clients certified

under the NOP. However, a certifying

agent may withdraw a certified

operation’s authority to use its

identifying mark during a compliance

process. The certifying agent, however,

accepts full liability for any such action.

The national standards implemented

by this final rule can be amended as

needed to establish more restrictive

national standards. Anyone may request

that a provision of these regulations be

amended by submitting a request to the

NOP Program Manager or the

Chairperson of the NOSB. Requests for

amendments submitted to the NOP

Program Manager will be forwarded to

the NOSB for its consideration. The

NOSB will consider the requested

amendments and make its

recommendations to the Administrator.

When appropriate, the NOP will

conduct rulemaking on the

recommended amendment. Such

rulemaking will include an opportunity

for public comment.

(16) Evidence of Expertise and Ability.

A commenter stated that section

205.504, which addresses the

documentation necessary to establish

evidence of expertise and abilities,

requires too much paperwork. We

believe the amount of paperwork is

appropriate for the task at hand,

verifying a certifying agent’s expertise in

and eligibility for accreditation to certify

organic production and handling

operations to the NOP. We further

believe that the level of paperwork is

necessary to meet international

guidelines for determining whether an

applicant is qualified for accreditation

as a certifying agent.

(17) Procedures for Making

Information Available to the Public.

Comments on section 205.504(b)(5)

were mixed. Some commenters felt that

the proposal fell short of the OFPA

requirement to ‘‘Provide for public

access to certification documents and

lab analysis.’’ Others thought that too

much confidential information would

be released.

The Act requires public access, at

section 2107(a)(9), to certification

documents and laboratory analyses

pertaining to certification. Accordingly,

we disagree with those commenters who

requested that such documents not be

released to the public. We also disagree

with the commenters who contend that

the requirement for public disclosure

falls short of what is required by the

Act. Section 205.504(b)(5) meets the

requirements of the Act by requiring the

release of those documents cited in

section 2107(a)(9) of the Act. The

section also authorizes the release of

other business information as

authorized in writing by the producer or

handler.

(18) Accreditation Prior to Site

Evaluation. Numerous commenters

recommended that we require site visits

prior to accreditation. Some

commenters cited ISO Guide 61, section

2.3.1, in their arguments for site visits

prior to accreditation. ISO Guide 61,

section 2.3.1., provides that the decision

on whether to accredit a body shall be

made on the basis of the information

gathered during the accreditation

process and any other relevant

information. Section 3.3.2 of ISO Guide

61 provides that the accreditation body

shall witness fully the on-site activities

of one or more assessments or audits

conducted by an applicant body before

an initial accreditation is granted.

We do not concur with the

commenters. These regulations provide

for assessment of the applicant’s

qualifications and capabilities through a

rigorous review of the application and

supporting documentation. Following

this review, an initial site evaluation

shall be conducted before or within a

reasonable period of time after issuance

of the applicant’s ‘‘notification of

accreditation.’’ 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 will be conducted. We have

further provided that a site evaluation

shall be conducted after application for

renewal of accreditation but prior to

renewal of accreditation.

Our purpose in allowing for initial

accreditation prior to a site evaluation is

to facilitate implementation of the NOP

and to provide a means for newly

established certifying agents to obtain a

client base to demonstrate that they can

meet the requirements of the NOP

regulations. We believe this is

consistent with the intent of ISO Guide

61, section 2.3.1. and fits within its

‘‘and any other relevant information’’

provision. Accordingly, we restate our

position that accreditation approval

without a site evaluation is appropriate,

necessary in the case of established

certifying agents that may need to make

adjustments in their operations to

comply with the NOP regulations, and

necessary in the case of newly

established certifying agents who will

have to obtain a client base to

demonstrate beyond the paperwork that

they can meet the requirements of the

NOP regulations.

(19) Ineligibility After Revocation of

Accreditation. Section 205.507(d)

provides that a 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. A

commenter stated that the 3-year period

of ineligibility is overly long and

effectively puts the certifying agent out

of business. The commenter suggested

that a 6- to 12-month period might be

reasonable. We have not accepted the

suggested 6- to 12-month ineligibility

period because the Act requires a period

of ineligibility of not less than 3 years

following revocation of accreditation.

(20) Qualifications of the Site

Evaluator. A commenter recommended

amending section 205.508(a) to indicate

the required qualifications of the site

evaluator. We have not accepted the

recommendation. We do not believe that

it is necessary to specify the required

qualifications of site evaluators in these

regulations. All USDA employees who

will perform site evaluations under the

NOP are quality systems auditors

trained in accordance with

internationally recognized protocols.

(21) Complaint Process. A commenter

recommended that section 205.510

include a complaint process for

complaints by certified operations

regarding the performance of a

certifying agent or inspector. The

commenter also recommended that

section 205.510 include a complaint

process for the public should they feel

that a certifying agent is not in

compliance.

We do not believe that it is necessary

to include a complaint process in the

regulations. All interested parties are

free to file a complaint with an

accredited certifying agent, SOP’s

governing State official, or the

Administrator at any time. We will

provide guidance to accredited

certifying agents and SOP’s governing

State officials regarding the type of

information to gather when receiving a

complaint. SOP’s governing State

officials will include in their request for

approval of their SOP information on

their collection of complaint

information. Certifying agents will

include details regarding the collection

of complaint information and the

investigation of complaints involving

certified operations in their procedures

for reviewing and investigating certified

operation compliance (section

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80609

205.504(b)(2)). This will include

maintaining records of complaints and

remedial actions relative to certification

as well as documentation of followup

actions. Further, certifying agents will

include details regarding the collection

of complaint information and the

investigation of complaints involving

inspectors and other personnel

employed by or contracted by the

certifying agents in their policies and

procedures for training, evaluating, and

supervising personnel (section

205.504(a)(1)).

(22) Recordkeeping by Certifying

Agents. A commenter stated that the 10-

year recordkeeping requirement of

section 205.510(b)(2) for records created

by the certifying agent regarding

applicants for certification and certified

operations is excessive. The commenter

recommended a 5-year retention period.

We have not accepted the recommended

5-year records retention period for

records created by the certifying agent

regarding applicants for certification

and certified operations because the Act

requires the retention of such records

for 10 years.

(23) Reaccreditation. A commenter

recommended that section 205.510(c)(1)

be amended to require reaccreditation

every 3 years. We have provided that

accreditation will be for a period of 5

years. This is consistent with the Act

which provides that accreditation shall

be for a period of not to exceed 5 years.

The commenter believes that a 5-year

period is not consistent with ISO Guide

61, section 3.5.1, which provides that

the accreditation body shall have an

established documented program,

consistent with the accreditation

granted, for carrying out periodic

surveillance and reassessment at

sufficiently close intervals to verify that

its accredited body continues to comply

with the accreditation requirements. We

believe that accreditation for 5 years is

a reasonable period of time. Further, we

believe that a 5-year period of

accreditation is consistent with ISO

Guide 61 inasmuch as we require an

annual evaluation of the certification

program; annual review of persons

associated with the certification process,

including inspectors; annual reporting

with a complete and accurate update of

information required for accreditation;

and one or more site evaluations during

the period of accreditation in addition

to the initial site evaluation for the

period of accreditation. Accordingly, we

have not made the recommended

change. This requirement is located at

current section 205.510(c)(2).

(24) Notice of Renewal of

Accreditation. A commenter

recommended that section 205.510(d) be

amended to include a timeframe within

which the Administrator must notify an

applicant of its renewal of accreditation.

We believe that a mandated timeframe

for notifying the applicant of renewal of

accreditation is inappropriate. We plan

to process all applications for renewal of

accreditation in the order in which they

are received, to confirm the receipt of

each application, and to establish a

dialog with the applicant upon

confirmation of receipt of an application

for renewal of accreditation. The length

of the renewal process will depend in

large part on the nature of the operation

seeking renewal of accreditation. To

minimize the chances that an

accreditation will expire during the

renewal process, we have: (1) provided

that the Administrator shall send the

accredited certifying agent a notice of

pending expiration of accreditation

approximately 1 year before the date of

expiration of the certifying agent’s

accreditation, (2) required that an

application for renewal of accreditation

must be received at least 6 months prior

to expiration of the certifying agent’s

accreditation, and (3) provided that the

accreditation of a certifying agent who

makes timely application for renewal of

accreditation will not expire during the

renewal process. Accordingly, we have

not made the recommended

amendment.

Accreditation—Clarifications

Clarification is given on the following

issues raised by commenters as follows:

(1) Accreditation of Foreign Certifying

Agents. A commenter suggested that

section 205.500 be amended to provide

that if there is a government system

operating in a foreign country then the

government is the appropriate pathway

for that country to apply for

accreditation.

USDA will accept an application for

accreditation to perform certification

activities under the NOP from any

private entity or governmental entity

certifying agent and accredit such

applicant upon proof of qualification for

accreditation. USDA will provide for

USDA accreditation of certifying agents

and acceptance of a foreign

government’s accreditation of certifying

agent within the same country. This

maximizes opportunity for certifying

agents without the potential for

confusion and overlap in

documentation. Further, we believe

these requirements facilitate world

trade.

(2) State Approval of Product From

Foreign Countries. A commenter stated

that any product making claims of

organic agricultural ingredients to be

sold in California shall fall under the

jurisdiction of the California Organic

Program for enforcement, inspection,

and certification direction. The

commenter further stated that, should

any foreign certifying agents be

accepted, they too shall be subject to the

sovereign rights of the State of

California to protect and enforce the

laws of the State of California and to

protect agricultural claims in this State.

Any organic program administered by

a State will have to be approved by the

Secretary. Approval of an SOP will be

contingent upon the State’s agreeing to

accept the certification decisions made

by certifying agents accredited or

accepted by USDA pursuant to section

205.500.

(3) Equivalency. A commenter stated

that USDA should declare in section

205.500 that there are no alternative

methods of production that meet the

Congressional purpose ‘‘to assure

consumers that organically produced

products meet a consistent standard.’’

The commenter went on to state that, if

USDA proceeds with equivalency then

the regulations should be amended to

provide for: (1) No importing until final

determination, (2) no final

determination until Federal Register

publication and public comment, (3)

audit of foreign agency and production

sites, and (4) revocation of accreditation

for violations. The commenter also

recommended that foreign certifying

agents be reviewed with the same

frequency as State certifying agents.

We disagree that there are no

alternative methods of production that

assure consumers that organically

produced products meet a consistent

standard. Accordingly, we will negotiate

equivalency agreements with foreign

governments. A final equivalency

agreement will be required before

affected product may be imported into

the United States and sold, labeled, or

represented as organic. Equivalency

agreements will be announced to the

public through a notice in the Federal

Register and a news release. Site

evaluations are a possibility. Foreign

certifying agents that receive USDA

accreditation, rather than recognition

through their government, will have to

fully comply with the NOP and will be

treated the same as domestic accredited

certifying agents.

(4) Evaluation of Equivalency.

Commenters asked how equivalency

would be evaluated and recommended

basing equivalency, not on a check of

formalities, but on the finding of

substantive equivalence and equivalent

effectiveness of certifying systems.

The negotiation of an equivalency

agreement will involve meetings

between representatives of the foreign

80610 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

government seeking equivalency and

representatives of USDA’s Agricultural

Marketing Service and Foreign

Agricultural Service. Support will be

provided by the Office of the U.S. Trade

Representative. The process will also

include the review of documents and

possibly one or more site evaluations.

Equivalency agreements will be

announced to the public through a

notice in the Federal Register and a

news release.

(5) Treatment of Certifying Agents

Operating in More Than One Country. A

few commenters requested that we

amend section 205.500(c) by adding a

provision to clarify the issue of how the

international activities of foreign or

domestic certifying agents will be

treated when they operate in more than

one country.

We believe that the requested

provision is unnecessary. Certifying

agents, domestic and foreign, accredited

under the NOP will be expected to

comply fully with the requirements of

the NOP regardless of where they

operate. The only exception would be

when they operate in a country in

which the Secretary has negotiated an

equivalency agreement.

(6) Accreditation of Foreign Certifying

Agents. A commenter requested that we

amend section 205.500(c) to exempt

foreign applicants from having to be

accredited certifying agents in USDA’s

program if the exporting country’s

national organic program meets

international standards; e.g, Codex

guidelines.

We have provided for USDA

accreditation of qualified foreign

certifying agents upon application. We

have also provided that USDA will

accept a foreign certifying agent’s

accreditation to certify organic

production or handling operations if it

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. We have further provided

that USDA will accept a foreign

certifying agent’s accreditation to certify

organic production or handling

operations if the foreign government

authority that accredited the foreign

certifying agent acted under an

equivalency agreement negotiated

between the United States and the

foreign government. These recognitions

of foreign government programs,

however, do not extend to international

standards such as Codex guidelines. In

either case, we are recognizing the

ability of a foreign government’s

program to meet U.S. standards, not

some other international standard.

(7) States with an Organic Statute. A

commenter stated that a State with an

organic statute or regulations that does

not certify organic producers or organic

handlers should not have to be

accredited.

The NOP requires the Secretary’s

approval of SOP’s whether or not the

State has a State certifying agent. A

State may have an SOP but not have a

State certifying agent. In this case the

SOP must be approved by the Secretary.

A State may have a State certifying

agent but no SOP. In this case, the State

certifying agent must apply for and

receive accreditation to certify organic

production or handling operations.

Finally, a State may have an SOP and

a State certifying agent. In this case, the

SOP must be approved by the Secretary,

and the State certifying agent must

apply for and receive accreditation to

certify organic production or handling

operations.

(8) Nondiscriminatory Services. A

commenter wanted the addition of a

provision in section 205.501(a)

requiring certifying agents to provide

nondiscriminatory services. We have

not included the suggested addition in

this final rule because the provision

already exists in section 205.501(d).

(9) Release of Information. A few

commenters requested that we amend

section 205.501(a)(10) to include a

general exclusion allowing the release of

any information with the client’s

permission. We have not included the

suggested addition in this final rule

because section 205.504(b)(5)(iv)

already addresses the allowed release of

other business information as permitted

in writing by the producer or handler.

(10) Use of the Term, ‘‘Certified

Organic.’’ In commenting on section

205.501(b)(1), a commenter stated that if

the term, ‘‘certified organic,’’ is

included on a label, it must state by

whom, according to Maine State law.

We do not believe that the requirements

of section 205.501(b)(1) would preclude

a certified operation from complying

with a State law requiring identification

of the certifying agent on a product sold,

labeled, or represented as ‘‘certified

organic.’’ Further, these regulations do

not require a certified operation to use

the word, ‘‘certified,’’ on its label.

(11) Holding the Secretary Harmless.

In commenting on the requirements of

section 205.501(c)(1), a commenter

stated that certifying agents are

responsible for representing USDA but

seem to have no recourse. Another

commenter asked, what happens if a

certifying agent is found in violation of

the Act but the violation was due to

information or direction that came from

USDA?

Under the NOP, accredited certifying

agents are required to comply with and

carry out the requirements of the Act

and these regulations. If they fail to do

so, they are responsible for their actions

or failures to act. This would not be true

if the action or failure to act was at the

direction of the Secretary.

(12) Self-evaluation of Ability to

Comply. A commenter requested that

section 205.504 be amended to provide

clarity on the baseline requirements that

would allow a certifying agent to

conduct a self-evaluation to determine

its ability to comply. The commenter

stated that there should be some type of

baseline acceptance of expertise and

ability. The commenter wants details

regarding the ‘‘training’’ or ‘‘experience’’

requirements necessary to qualify for

accreditation. This commenter also

stated that criteria for inspector and

reviewer training should be added and

enlarged.

We do not believe that it is necessary

to present the requirements for

accreditation to the extent of detail

requested by the commenter. The intent

is to provide flexibility to the certifying

agents such that they can tailor their

policies and procedures to the nature

and scope of their operation. The NOP

is available to respond to questions and

to assist certifying agents in complying

with the requirements for accreditation.

(13) Evidence of Expertise and Ability.

Commenters stated that important

elements of ISO Guide 65 are missing

from section 205.504. They cite the

maintenance of a complaints register

and a register of precedents and

provisions for subcontracting and a

documents control policy or a document

register.

Certifying agents grant certification,

deny certification, and take enforcement

action against a certified operation’s

certification. Certifying agents are

required to maintain records applicable

to all such actions and to report such

actions to the Administrator. Certifying

agents may contract with qualified

individuals for the performance of

services such as inspection, sampling,

and residue testing. Certifying agents are

required to submit personnel

information (employed and contracted)

and administrative policies and

procedures to the Administrator. All

such documents must be updated

annually. The regulations also require

the maintenance of records according to

specified retention periods. All of these

factors will be considered in granting or

denying accreditation. We believe these

requirements meet or exceed the ISO

Guide 65 guidelines.

(14) Personnel Evidence of Expertise.

A commenter inquired about the

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80611

frequency at which the personnel

information, required by section

205.504(a) and used to establish

evidence of expertise and ability, is to

be updated. Section 205.510 requires

that the certifying agent annually submit

a complete and accurate update of the

information required in section 205.504.

(15) Responsibly Connected. A

commenter stated that the term,

‘‘responsibly connected,’’ as used in

section 205.504(a)(2) is a broad sweep.

The commenter believes the term would

include everyone they do business with.

Section 205.504(a)(2) requires the

certifying agent to provide the name and

position description of all personnel to

be used in the certification operation.

The section assists the certifying agent

in meeting the requirement by

identifying categories of persons

covered by the requirement including

persons responsibly connected to the

certifying agent. Responsibly connected

does not include everyone that the

certifying agent does business with.

Responsibly connected is defined in the

Definitions subpart of this final rule as

‘‘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.’’ This

definition has not changed.

(16) Independent Third-Party

Inspectors. A commenter recommended

amending section 205.504(a)(3)(I) to

provide for the use of independent

third-party inspectors. We believe that

this recommended amendment is

unnecessary since nothing in these

regulations precludes a certifying agent

from contracting with independent third

parties for inspection services.

(17) Response to Accreditation

Applicant. A commenter requested that

section 205.506(a)(3) be amended to

provide a timeframe within which the

Administrator has to respond to the

accreditation application. While section

205.506(a)(3) identifies the information

to be reviewed by the Administrator

prior to the granting of accreditation, we

assume the commenter is seeking a

specific time limit by which the

Administrator will acknowledge receipt

of an application for accreditation. In

the alternative, the commenter may

have been seeking a specific time limit

by which the Administrator must grant

or deny accreditation. We believe that a

regulation-mandated timeframe for

notifying the applicant of receipt of an

application or for granting or denying

accreditation is unnecessary. We plan to

process all applications in the order in

which they are received, to confirm the

receipt of each application upon receipt,

and to establish a dialog with the

applicant upon confirmation of receipt

of an application for accreditation. We

will work with each applicant to

complete the accreditation process as

expeditiously as possible. A firm

timeframe, however, cannot be set for

granting or denying accreditation due to

the anticipated uniqueness of each

applicant and its application for

accreditation.

(18) Duration of Accreditation and

Certification. A commenter asked, ‘‘How

can certification be essentially in

perpetuity and accreditation have a time

restraint?’’ The commenter’s question

does not indicate a preference for

certification or accreditation longevity.

The commenter correctly points out that

certification and accreditation, both of

which must be updated annually, are

granted for different time periods. The

Act limits the period of accreditation to

5 years but does not establish a limit to

the period of certification. We believe

the requirement that the certified

operation submit an annual update of its

organic plan negates the need for a

certification expiration date.

(19) Denial of Accreditation. In

commenting on section 205.507, a

commenter stated that the regulations

need to address what happens to a

certifying agent’s clients when the

certifying agent fails to qualify for

accreditation on its first attempt.

Section 205.507(c) provides that an

applicant who has received written

notification of accreditation denial may

apply for accreditation again at any time

in accordance with section 205.502.

Upon implementation of the

certification requirements of the NOP,

production and handling operations

planning to sell, label, or represent their

products as organic must be certified by

a USDA-accredited certifying agent

before selling, labeling, or representing

their products as organic. If a producer’s

or handler’s choice of certifying agents

does not receive USDA accreditation,

the producer or handler must seek and

receive certification under the NOP

from a USDA-accredited certifying agent

before selling, labeling, or representing

their products as organic. Producers and

handlers not so certified may not sell,

label, or represent their products as

organic. Any producer or handler who

violates this requirement will be subject

to prosecution under section 2120 of the

Act.

(20) Loss of Accreditation After Initial

Site Visit. Commenting on section

205.508(b), a commenter stated the

belief that accreditation before a site

visit may cause problems if the

certifying agent does not meet the

requirements and, subsequently, loses

its accreditation. We believe the

problems will be no greater than will

occur at any other time when it becomes

necessary to revoke a certifying agent’s

accreditation, including when it

becomes necessary to initiate

proceedings to suspend or revoke the

certification of one or more of the

certifying agent’s certified operations.

However, just because revocation of a

certifying agent’s accreditation may be

justified, it may not be necessary to

suspend or revoke the certification of

one or more of its clients. An operation

certified by a certifying agent that has

lost its accreditation must make

application with a new certifying agent

if it is going to continue to sell, label,

or represent its products as organic.

(21) Prohibition on Certification After

Expiration of Accreditation. A

commenter stated that, ‘‘USDA should

allow certifying agents to apply the

same provisions to expiration of

certification of a certified operation.’’

The provision referenced by the

commenter is the section 205.510(c)(1)

(current section 205.510(c)(2))

requirement that certifying agents with

an expired accreditation must not

perform certification activities under the

Act and these regulations. We have not

accepted the commenter’s request that

the same prohibition be applied to

production and handling operations

with an expired certification because

certification does not expire.

(22) Expiration of Accreditation.

Many commenters requested that we

amend section 205.510(c)(1) to require

annual reports and ‘‘minivisits.’’ The

commenters cited ISO Guide 61, section

3.5.1. We do not believe that annual

‘‘minivisits’’ are necessary to meet the

requirements of ISO Guide 61 or to

assure compliance with the NOP. One

or more site evaluations will be

conducted during the period of

accreditation. The certifying agent’s

annual report will be used as a

determining factor in whether to

conduct a site evaluation. A request for

amendment to a certifying agent’s area

of accreditation will also result in a site

evaluation. This requirement is located

at current section 205.510(c)(2).

(23) Update and Review of Inspector

Lists. In commenting on section

205.510(c)(1) (current section

205.510(c)(2)) several commenters

stated that updating and review of

inspector lists must occur more

frequently than every 5 years. They

cited ISO Guide 61, section 3.5.1.

Section 205.510(a)(1) requires that the

certifying agent annually update the

information required in section 205.504.

This includes the inspector information

required by paragraphs 205.504(a)(2)

and 205.504(a)(3)(i).

80612 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

Subpart G—Administrative

The National List of Allowed and

Prohibited Substances

Description of Regulations

General Requirements

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 or food

group(s)).’’ 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

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.

Substances appearing on the National

List are designated using the following

classifications:

1. Synthetic substances allowed for

use in organic crop production

2. Nonsynthetic substances prohibited

for use in organic crop production

3. Synthetic substances allowed for

use in organic livestock production

4. Nonsynthetic substances prohibited

for use in organic livestock production

5. Nonagricultural (nonorganic)

substances allowed as ingredients in or

on processed products labeled as

‘‘organic’’ or ‘‘made with organic

(specified ingredients or food group(s))

6. Nonorganically produced

agricultural products allowed as

ingredients in or on processed products

labeled as organic’’ or ‘‘made with

organic (specified ingredients or food

group(s))

This subpart also outlines procedures

through which an individual may

petition the Secretary to evaluate

substances for developing proposed

National List amendments and

deletions.

The NOSB is responsible for making

the recommendation of whether a

substance is suitable for use in organic

production and handling. The OFPA

allows the NOSB to develop substance

recommendations and annotations and

forward to the Secretary a Proposed

National List and any subsequent

proposed amendments. We have made

every effort to ensure the National List

in this final rule corresponds to the

recommendations on allowed and

prohibited substances made by the

NOSB. In developing their

recommendations, the NOSB evaluates

synthetic substances for the National

List utilizing the criteria stipulated by

the Act. Additionally, criteria for

evaluating synthetic processing

ingredients have been implemented by

the NOSB. 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. The NOSB adopted these

criteria as internal guidelines for

evaluating processing aids and

adjuvants. The adopted criteria do not

supersede the criteria contained in the

OFPA or replace the Food and Drug

Administration’s (FDA) regulations

related to food additives and generally

recognized as safe (GRAS) substances.

The NOSB has also provided

recommendations for the use of

synthetic inert ingredients in formulated

pesticide products used as production

inputs in organic crop or livestock

operations. The Environmental

Protection Agency (EPA) regulates and

maintains the EPA Lists of Inert

ingredients used for pesticide. In this

final rule, EPA Inerts List 1 and 2 are

prohibited, EPA List 3 is also prohibited

unless specifically recommended as

allowed by the NOSB, and EPA List 4

Inerts are allowed unless specifically

prohibited.

In this final rule, only EPA List 4

Inerts are allowed as ingredients in

formulated pesticide products used in

organic crop and livestock production.

The allowance for EPA List 4 Inerts only

applies to pesticide formulations.

Synthetic ingredients in any formulated

products used as organic production

inputs, including pesticides, fertilizers,

animal drugs, and feeds, must be

included on the National List. As

sanctioned by OFPA, synthetic

substances can be used in organic

production and handling as long as they

appear on the National List. 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 one of the NOSB’s

primary activities 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 that are essential to organic

production and handling. 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.

We expect the maintenance of the

National List to be a dynamic process.

We anticipate that decisions on

substance petitions for the inclusion on

or deletion from the National List will

be made on an annual basis. Any person

seeking a change in the National List

should request a copy of the petition

procedures that were published in the

Federal Register (65 Fed Reg 43259—

43261) on July 13, 2000, from the NOP.

The National List petition process

contact information is: Program

Manager, National Organic Program,

USDA/AMS/TMP/NOP, Room 2945–S,

Ag Stop 0268, P.O. Box 96456,

Washington, DC 20090–6456 or visit the

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

Substances petitioned for inclusion on

the National List will be reviewed by

the NOSB, which will forward a

recommendation to the Secretary. Any

amendments to the National List will

require rulemaking and must be

published for comment in the Federal

Register.

Nothing in this subpart alters the

authority of other Federal agencies to

regulate substances appearing on the

National List. FDA issues regulations for

the safe use of substances in food

production and processing. USDA’s

Food Safety and Inspection Service

(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 GRAS substances

take precedence over the approved and

prohibited uses specified in this final

rule. In other words, 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. FDA and FSIS

regulations can be amended from time

to time under their rulemaking

procedures, and conditions of safe use

of food additives and GRAS substances

can be revised by the amendment. 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

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80613

production of livestock in an organic

operation must comply with the Federal

Food, Drug, and Cosmetic Act (FFDCA).

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,

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.

Under the Federal Insecticide,

Fungicide, and Rodenticide Act

(FIFRA), EPA regulates the use of all

pesticide products, including those that

may be approved for use in the NOP. In

registering a pesticide under FIFRA,

EPA approves the uses of each pesticide

product. It is a violation of FIFRA to use

a registered product in a manner

inconsistent with its labeling. The fact

that a substance is on the National List

does not authorize use or a pesticide

product for that use if the pesticide

product label does not include that use.

If the National List and the pesticide

labeling conflict, the pesticide labeling

takes precedence and may prohibit a

practice allowed on the National List.

National List—Changes Based On

Comments

This subpart differs from the proposal

in several respects as follows:

(1) Comprehensive Prohibition on

Excluded Methods. Many commenters

supported a comprehensive prohibition

on the use of excluded methods in

organic production and handling. These

commenters stated that the proposed

language on excluded methods could

have allowed some uses since the

general prohibition described in section

205.301 of the proposed rule could be

interpreted as applying only to

multiingredient products. In order to

provide a comprehensive prohibition on

the use of excluded methods, we

incorporated a new provision within

section 205.105. A more comprehensive

discussion of this issue is found in

subpart B, Applicability.

(2) Substance Evaluation Criteria for

the National List. Commenters stated

that the final rule should include in the

regulation text the evaluation criteria

utilized by the NOSB for the

development of substance

recommendations. We agree, and we

have inserted the substance evaluation

criteria developed by the NOSB for

processing ingredients and cited the

criteria within the Act (7 U.S.C.

6518(m)) for crops and livestock

production as new provisions for

section 205.600, which is now entitled

‘‘Evaluation criteria for allowed and

prohibited substances, methods, and

ingredients.’’

(3) Substances Approved for Inclusion

on the National List. Commenters stated

that the National List did not contain all

of the substances recommended by the

NOSB for inclusion on the National List

of Allowed and Prohibited Substances.

We agree and have added the following

substances consistent with the most

recent NOSB recommendations:

Crop Production

Lime sulfur as a plant disease control

substance

Elemental sulfur as a plant or soil

amendment

Copper as a plant or soil micronutrient

Streptomycin sulfate as plant disease

control substances with the

annotation ‘‘ for fire blight control in

apples and pears only’’

Terramycin (oxytetracycline calcium

complex) as a plant disease control

substance with the annotation ‘‘for

fire blight control only’’

Magnesium sulfate as a plant or soil

amendment with the annotation

‘‘allowed with a documented soil

deficiency’’

Ethylene as a plant growth regulator,

with the annotation ‘‘for regulation of

pineapple flowering’’

We have added sodium nitrate and

potassium chloride to the National List

as nonsynthetic substances prohibited

for use in crop production unless used

in accordance with the substance

annotations. Sodium nitrate is

prohibited unless use is restricted to no

more than 20 percent of the crop’s total

nitrogen requirement. Potassium

chloride is prohibited unless derived

from a mined source and applied in a

manner that minimizes chloride

accumulation in the soil. These

additions are discussed further in item

3 under Changes Based on Comments,

subpart C.

Livestock Production

Oxytocin with the annotation ‘‘for use

in postparturition therapeutic

applications’’

EPA List 4 inert ingredients as synthetic

inert ingredients for use with

nonsynthetic substances or synthetic

substances allowed in organic

livestock production.

Several commenters recommended

that the final rule should specify which

nonsynthetic substances are prohibited

for use in livestock production. These

commenters stated that the proposed

rule prohibited six such substances for

use in crop production and maintained

that an analogous list for livestock

operations would be beneficial. Of the

six nonsynthetic substances in the

proposed rule prohibited for use in crop

production, four were based on NOSB

recommendations (strychnine, tobacco

dust, sodium fluoaluminate (mined),

and ash from burning manure) and two

were based on statutory provisions in

the OFPA (arsenic and lead salts). After

reviewing these substances and the

NOSB recommendations, we

determined that the prohibition for one,

strychnine, also applies to livestock

production. Individuals may petition

the NOSB to have additional

nonsynthetic substances prohibited for

use in organic crop and livestock

production.

Organic Handling (Processing)

Tribasic calcium phosphate

Nonsynthetic colors

Flavors, with the annotation

‘‘nonsynthetic sources only and must

not be produced using synthetic

solvents and carrier systems or any

artificial preservatives’’

Nonsynthetic waxes, carnauba wax,

wood resin

Cornstarch (native), gums, kelp, lecithin

and pectin were moved from section

205.605 to section 205.606

(4) Substance Removed from the

National List. Commenters stated that

certain substances on the National List

in the proposed rule had not been

recommended by the NOSB. We agree

with the comment that the NOSB did

not recommend that magnesium should

be allowed as a plant or soil

micronutrient and have removed it from

the National List.

(5) Changes in Substance Annotations

on the National List. Commenters stated

that certain annotations in the proposed

rule did not capture the precise

recommendations of the NOSB. We

agree and have amended the

annotations within the National List as

follows:

The annotation for hydrated lime as a

plant disease control substance now

states, ‘‘must be used in a manner that

minimizes accumulation of copper in

the soil.’’

The annotation for horticultural oils

as an insecticide substance and as a

plant disease control substance now

80614 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

states, ‘‘Narrow range oils as dormant,

suffocating, and summer oils.’’

The annotation for hydrated lime in

livestock production now states, ‘‘not

permitted for soil application or to

cauterize physical alterations or

deodorize animal wastes.’’

The annotation for the allowed

synthetic parasiticide Ivermectin has

been modified to state that the

substance may not be used during the

lactation period of breeding stock.

The annotation for trace minerals and

vitamins allowed as feed additives has

been modified and now states, ‘‘used for

enrichment or fortification when FDA

approved.’’

The annotation for magnesium sulfate

in organic handling now states,

‘‘nonsynthetic sources only.’’

The annotation for EPA List 4 Inerts

allowed in crop and livestock

production has been modified to state,

‘‘ * * * for use with nonsynthetic

substances or synthetic substances

listed in this section * * *’’

(6) Sulfur Dioxide for Organic Wines.

Many commenters recommended that

this final rule should allow for the use

of sulfur dioxide in wine labeled ‘‘made

with organic grapes.’’ They argued that

sulfur dioxide is necessary in organic

wine production and that prohibiting its

use would have a negative impact on

organic grape production and wineries

that produce wine labeled ‘‘made with

organic grapes.’’ The prohibition on the

use of sulfur dioxide in the proposed

rule was based upon the requirement in

the Act that prohibited the addition of

sulfites to organically produced foods.

However, a change in the Act now

allows the use of sulfites in wine

labeled as ‘‘made with organic grapes.’’

Therefore, we have added sulfur dioxide

to the National List with the annotation,

‘‘for use only in wine labeled ‘‘made

with organic grapes,’’ Provided, That,

total sulfite concentration does not

exceed 100 ppm.’’ The label for the

wine must indicate the presence of

sulfites. This addition to the National

List is also in agreement with the NOSB

recommendation for allowing the use of

sulfur dioxide in producing wine to be

labeled as ‘‘made with organic grapes.’’

National List—Changes Requested But

Not Made

This subpart retains from the

proposed rule regulations on which we

received comments as follows:

(1) Restructuring the National List.

Commenters requested a restructuring of

the National List to improve its clarity

and ease of use. Some of the

commenters asked for minor changes

involving the wording of section titles.

Other commenters were opposed to the

categories used in the National List

because the categories are not in

compliance with the Act. In its June

2000 meeting, the NOSB asked the NOP

to review a proposal from a research

institute proposing that processing

materials for the National List be

categorized according to industry

standards. This proposal recommended

including new sections for substances

used in ‘‘made with * * *’’ and

substances used in the 5-percent

nonorganic portion of ‘‘organic’’

multiingredient products. We agree that

the present structure of the National List

may not have optimum clarity and ease

of use. However, extensive restructuring

of the National List without additional

NOSB consideration and public

discussion would be a significant

variation from the policy that

established the National List for this

final rule. The NOP will work with the

NOSB and the public to refine the

National list consistent with industry

norms and public expectations.

(2) Use of EPA List 4 Inerts. The

proposed rule allowed EPA List 4 Inerts

to be used as synthetic inert ingredients

with allowed synthetic active

ingredients in crop production. Some

commenters stated that certain

substances among the EPA List 4 inerts

should not be allowed in organic

production. Some commenters went

further and recommended that the

allowance for synthetic inert ingredients

should be limited to the subset of

materials that the EPA designates as List

4A. We do not agree with these

commenters and have retained the

allowance for all inerts included on EPA

List 4. List 4 inerts are classified by EPA

as those of ‘‘minimal concern’and, after

continuing consultation with EPA, we

believe there is no justification for a

further restriction to List 4A. If

commenters believe that a particular

List 4 inert should not be allowed in

formulated products used in organic

production, they can petition the NOSB

to have that substance prohibited.

(3) Removing Vaccines from the

National List. Some commenters

asserted that vaccines should not be

included on the National List because

the NOSB had never favorably

recommended their use in livestock

production. However, the OFPA

authorizes the use of vaccines, and in

1995, the NOSB recommended allowing

their use. The NOSB stated that use of

vaccines may be necessary to ensure the

health of the animal and to remain in

compliance with Federal, State, or

regional regulations. We agree with the

NOSB’s recommendation and have

retained vaccines as an allowed

substance in livestock medication.

(4) Adding Amino Acids to the

National List. Some commenters

recommended that amino acids should

be added to the National List as allowed

synthetic substances for livestock

production. We have not added amino

acids to the National List because the

NOSB has not recommended that they

should be allowed. This subject is

discussed further in item 4, Livestock—

Changes Based on Comments, subpart C.

(5) Creating a Category for Prohibited

Nonsynthetic Seed Treatments. A

commenter stated that the National List

of nonsynthetic substances prohibited

for use in crop production should

include provisions for seed treated with

a nonsynthetic substance. This

commenter stated that the final rule

should acknowledge that a nonsynthetic

seed treatment could be prohibited on

the National List. We do not believe it

is necessary to include a separate

category for seed treatments under the

prohibited nonsynthetic section of the

National List. An individual may

petition the NOSB to have a particular

nonsynthetic seed treatments placed on

the prohibited list without creating a

new category for seed treatments.

(6) Creating a Category for Treated

Seed and Toxins Derived from Bacteria.

Commenters stated that the National

List of synthetic substances allowed in

crop production should include

categories for treated seed and toxins

derived from bacteria. These

commenters stated that these categories

are sanctioned by the OFPA, and failure

to consider them would place a

significant burden on organic producers.

We believe it is unnecessary to include

these categories on the National List.

Specific substances from these

categories could be incorporated in

existing categories that reflect their

function, such as plant disease control

or insecticide. An individual may

submit petitions to the NOSB to have

specific substances from these

categories considered for inclusion on

the National List.

(7) Remove Categories for Feed

Supplements. A commenter stated that

it was inappropriate for the National

List of synthetic substances allowed in

livestock production to contain

categories for feed supplements and

feed additives because they are not

authorized in the OFPA. We disagree

with this commenter because the

identification of categories on the

National List does not mean that all

substances within that category are

allowed. The categories help to clarify

which types of materials may be

included on the National List. The

substances included under the

categories of feed supplements and feed

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80615

additives were recommended by the

NOSB and added to the National List

with the Secretary’s approval.

(8) Neurotoxic Substances on the

National List. Many commenters

requested that the NOP remove

particular substances from section

205.605 of the National List. They stated

these substances were sources of

neurotoxic compounds that negatively

effect human health. The substances

cited were yeast (autolysate and

brewers), carrageenan, and enzymes.

Moreover, these commenters argued

against including on the National List

some amino acids or their derivatives

which the commenters claim have

neurotoxic side effects. These

commenters requested that amino acids

should be prohibited from the National

List due to the possibility that

neurotoxic substances could be utilized

for either organic agricultural

production or handling.

We do not agree with the requests of

the commenters and we have not made

the requested changes. There are no

amino acids currently on the National

List; therefore, synthetic sources of

amino acids are prohibited. Unless

recommended for use by the NOSB,

synthetic amino acids will not be

included on the National List. The NOP

has established a petition process for

substances to be evaluated for inclusion

on or removal from the National List of

Allowed and Prohibited Substances in

organic production and handling.

Anyone seeking to have a particular

substance removed from the National

List may file a substance petition to

amend the National List.

(9) EPA List 4 Inerts for Organic

Processing. A few commenters

recommended that substances in EPA

List 4 inerts that are allowed for use in

crop production also be allowed for use

as processing materials. We do not

agree, and we have not included EPA

List 4 Inerts on the National List for

organic handling. Inerts listed on EPA

List 4 have been evaluated and

approved for use in pesticide

formulations, not for use as processing

materials. Inerts that are included on

EPA List 4 would have to be further

evaluated to determine whether such

materials meet the criteria for inclusion

on the National List.

(10) Modifying Annotations of

Organic Processing Substances. One

commenter requested that the

Department modify the annotation for

phosphoric acid to include its use as a

processing aid. We have not made the

suggested change. Any change in the

annotation of a substance can only

occur through an NOSB

recommendation. Individuals or groups

can use the petition process to submit

substance petitions to the NOSB for the

evaluation to be included on or removed

from the National List.

(11) Nutritional Supplementation of

Organic Foods. Some commenters

asserted that 21 CFR 104.20 is not an

adequate stand-alone reference for

nutritional supplementation of organic

foods. As a result, these commenters

recommended that the final rule include

as additional cites 21 CFR 101.9(c)(8) for

FDA-regulated foods and 9 CFR

317.30(c), 318.409(c)(8) for foods

regulated by FSIS to support 21 CFR

104.20. We did not implement the

suggested changes of the commenters.

Section 205.605(b)(20) in the proposed

rule allowed the use of synthetic

nutrient vitamins and minerals to be

used in accordance with 21 CFR 104.20,

Nutritional Quality Guidelines For

Foods, as ingredients in processed

products to be sold as ‘‘organic’’ or

‘‘made with * * *.’’ The commenters

recommended cites, 21 CFR 101.9(c)(8)

for FDA-regulated foods and 9 CFR

317.30(c); section 318.409(c)(8) did not

provide provisions for nutritional

supplementation of foods. Instead, these

suggested cites were particularly aimed

toward: (1) The declaration of nutrition

information on the label and in labeling

of a food; (2) labeling, marking devices,

and containers; (3) entry into official

establishments; and (4) reinspection and

preparation of products. The NOP, in

consultation with FDA, considers 21

CFR 104.20 to be the most appropriate

reference regarding nutritional

supplementation for organic foods.

(12) National List Petition Process as

Part of the Final Rule.

Commenters have requested that the

National List Petition Process, approved

by the NOSB at its June 2000 meeting

(and published in the Federal Register

on July 13, 2000), be included in the

final rule. We do not agree with the

commenters, and we have retained the

National List Petition Process regulation

language from the proposed rule. We

have separated the specific petition

process from the regulation to provide

for maximum flexibility to change and

clarify the petition process to

accommodate new considerations

developed during the NOP

implementation. If this process were

part of this final rule, updates to the

petition process would require notice

and comment rulemaking. Any changes

in the National List that may be a result

of the petition process, however, would

require notice and comment

rulemaking.

(13) Nonapproved Substance

Amendments to the National List.

Commenters also requested to have

many substances that are not on the

National List and that have not been

recommended by the NOSB for use in

organic production and handling be

added to the National List. We do not

agree. Amendments to the National List

must be petitioned for NOSB

consideration, must have an NOSB

recommendation, and must be

published for public comment in the

Federal Register.

National List—Clarifications

Clarification is given on the following

issues raised by commenters as follows:

(1) Inerts Use in Botanical or

Microbial Pesticides. Commenters

expressed concern that the prohibition

on the use of EPA List 3 inerts would

prevent organic producers from using

certain botanical or microbial

formulated products that are currently

allowed under some certification

programs. These commenters requested

that the NOP and the NOSB expedite

the evaluation of List 3 inerts used in

nonsynthetic formulated products to

prevent the loss of certain formulated

products. The prohibition of List 3

inerts was based on the

recommendation of the NOSB to add

only those substances from List 4 to the

National List. The NOSB also

recommended that individual inert

substances included on List 3 could be

petitioned for addition to the National

List. The NOP has requested that the

NOSB identify for expedited review

those List 3 inerts that are most

important in formulated products used

in organic production. Individuals may

petition to have these inerts considered

for inclusion on the National List.

Additionally, the NOP will work with

the EPA and the registrants of

formulated products to expedite review

of List 3 inerts currently included in

formulated products used in organic

production. Unless List 3 inerts are

moved to List 4 or individually added

to the National List, they are prohibited

for use in organic production.

(2) Prohibiting Ash, Grit, and

Screenings Derived from Sewage Sludge.

Many commenters recommended that

the ash, grit, and screenings derived

from the production of sewage sludge

should be added to the National List as

nonsynthetic materials prohibited for

use in crop production. While the use

of sewage sludge, including ash, grit,

and screenings, is prohibited in organic

production, we did not add them to the

National List as prohibited nonsynthetic

substances. This subject is discussed

further under subpart A, Definitions—

Changes Requested But Not Made.

(3) Allowed Uses for Pheromones.

Some commenters were concerned that

80616 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

the annotation for using pheromones as

‘‘insect attractants’’ was too limiting and

would not include uses such as mating

disruption, trapping, and monitoring.

The annotation for pheromones does not

preclude any use for a pheromone that

is otherwise allowed by Federal, State,

or local regulation.

(4) Nonagricultural Products as

Livestock Feed Ingredients. Some

commenters questioned whether

nonsynthetic, nonagricultural

substances such as fishmeal and

crushed oyster shell needed to be added

to the National List to be used in

livestock feed. Nonsynthetic substances

do not have to appear on the National

List and may be used in organic

livestock feed, provided that they are

used in compliance with the FFDCA.

This subject is discussed further under

item 4, Livestock—Changes Based on

Comments, subpart C.

(5) Chlorine Disinfectant Limit

Annotation for Organic Production and

Handling. Some commenters requested

clarification on the annotation for using

chlorine materials as an allowed

synthetic substance in crop and

handling operations. The annotation in

the proposed rule, which has been

retained in the final rule, stated that

‘‘residual chlorine levels in the water

shall not exceed the maximum residual

disinfectant limit under the Safe Water

Drinking Act.’’ With this annotation, the

residual chlorine levels at the point

where the waste water stream leaves the

production or handling operation must

meet limits under the Safe Drinking

Water Act.

(6) Tobacco Use in Organic

Production. One commenter questioned

whether forms of tobacco other than

tobacco dust, such as water extracts or

smoke, were prohibited nonsynthetic

substances. The technical advisory

panel (TAP) review on which the NOSB

based its recommendation to prohibit

tobacco dust identified nicotine sulfate

as the active ingredient. Therefore, any

substance containing nicotine sulfate as

an active ingredient is prohibited in

crop production.

(7) Nonsynthetic Agricultural

Processing Aids on the National List. A

commenter requested clarification from

the NOP on whether processing aids (e.g.,

defoaming agents), which are

nonsynthetic and nonorganic

agricultural substances (e.g., soybean

oil), must appear on the National List

when used in processing. In the

regulation, a nonsynthetic and

nonorganic agricultural product, such as

soybean oil, used as a processing aid

does not have to appear on the National

List. Such products are included in the

provision in section 205.606 that

nonorganically produced agricultural

products may be used in accordance

with any applicable restrictions when

the substance is not commercially

available in organic form.

(8) Transparency of the National List

Petition Process. Some commenters

stated the petition process for amending

the National List appears to have

limited public access and should be

more transparent. These commenters

advocate that any amendments to the

National List should be subject to notice

and comment. They also requested

clarity on how petitions are prioritized

and reviewed and the timeframes for

review. Additionally, these commenters

asked the NOP to expedite the review of

materials for the National List. On July

13, 2000, AMS published in the Federal

Register (Vol. 65, 43259–43261)

guidelines for submitting petitions for

the evaluations of substances for the

addition to or removal from the National

List. In this notice, the NOP stated that

most petition information is available

for public inspection with the exception

of information considered to be

‘‘confidential business information.’’

The notice also specified that any

changes to the National List must be

published in the Federal Register for

public comment. The published petition

notice has also provided an indication

to the industry about the urgency of the

need for substance review and that the

industry should provide pertinent

information to the NOSB to expedite the

review of materials not on the National

List.

State Organic Programs

The Act provides that each State may

implement an organic program for

agricultural products that have been

produced and handled within the State,

using organic methods that meet the

requirements of the Act and these

regulations. The Act further provides

that a State organic program (SOP) may

contain more restrictive requirements

for organic products produced and

handled within the State than are

contained in the National Organic

Program (NOP). All SOP’s and

subsequent amendments thereto must

be approved by the Secretary.

A State may have an SOP but not have

a State certifying agent. A State may

have a State certifying agent but no SOP.

Finally, a State may have an SOP and

a State certifying agent. In all cases, the

SOP’s must be approved by the

Secretary. In all cases, the State

certifying agent must apply for and

receive accreditation to certify organic

production or handling operations

pursuant to subpart F.

In States with an approved SOP, the

SOP’s governing State official is

responsible for administering a

compliance program for enforcement of

the NOP and any more restrictive

requirements contained in the SOP. The

SOP governing State officials may

review and investigate complaints of

noncompliance involving organic

production or handling operations

operating within their State and, when

appropriate, initiate suspension or

revocation of certification. The SOP

governing State officials may also

review and investigate complaints of

noncompliance involving accredited

certifying agents operating within their

State. They must report the findings of

any review and investigation of a

certifying agent to the NOP Program

Manager along with any

recommendations for appropriate

action. States that do not have an SOP

will not be responsible for compliance

under the NOP, except that an

accredited State certifying agent

operating within such State will have

compliance responsibilities under the

NOP as a condition of its accreditation.

The sections covering SOP’s,

beginning with section 205.620,

establish: (1) The requirements for an

SOP and amending such a program and

(2) the process for approval of an SOP

and amendments to the SOP’s. Review

and approval of an SOP will occur not

less than once during each 5-year

period. Review related to compliance

matters may occur at any time.

Description of Regulations

State Organic Program Requirements

A State may establish an SOP for

production and handling operations

within the State that produces and

handles organic agricultural products.

The SOP and supporting documentation

must demonstrate that the SOP meets

the requirements for organic programs

specified in the Act.

An SOP may contain more restrictive

requirements governing the production

and handling of organic products within

the State. Such requirements must be

based on environmental conditions or

specific production or handling

practices particular to the State or

region of the United States, which

necessitates the more restrictive

requirement. More restrictive

requirements must be justified and

shown to be consistent with and to

further the purposes of the Act and the

regulations in this part. Requirements

necessitated by an environmental

condition that is limited to a specific

geographic area of the State should only

be required of organic production and

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80617

handling operations operating within

the applicable geographic area. If

approved by the Secretary, the more

restrictive requirements will become the

NOP regulations for organic producers

and handlers in the State or applicable

geographical area of the State. All

USDA-accredited certifying agents

planning to operate within a State with

an SOP will be required to demonstrate

their ability to comply with the SOP’s

more restrictive requirements.

No provision of an SOP shall

discriminate against organic agricultural

products produced by production or

handling operations certified by

certifying agents accredited or accepted

by USDA pursuant to section 205.500.

Specifically, an SOP may not

discriminate against agricultural

commodities organically produced in

other States in accordance with the Act

and the regulations in this part. Further,

an SOP may not discriminate against

agricultural commodities organically

produced by production or handling

operations certified by foreign certifying

agents operating under: (1) Standards

determined by USDA to meet the

requirements of this part or (2) an

equivalency agreement negotiated

between the United States and a foreign

government.

To receive approval of its SOP, a State

must assume enforcement obligations in

the State for the requirements of this

part and any more restrictive

requirements included in the SOP and

approved by the Secretary. Specifically,

the State must ensure compliance with

the Act, the regulations in this part, and

the provisions of the SOP by certified

production and handling operations

operating within the State. The SOP

must include compliance and appeals

procedures equivalent to those provided

for under the NOP.

An SOP and any amendments thereto

must be approved by the Secretary prior

to implementation by the State.

State Organic Program Approval

Process

An SOP and subsequent amendments

thereto must be submitted to the

Secretary by the SOP’s governing State

official for approval prior to

implementation. A request for approval

of an SOP must contain supporting

materials that include statutory

authorities, program descriptions,

documentation of environmental or

ecological conditions or specific

production and handling 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. A request for amendment of

an approved SOP must contain

supporting materials that include an

explanation and documentation of the

environmental or ecological conditions

or specific production practices

particular to the State or region, which

necessitate 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 in this part.

Each request for approval of an SOP

or amendment to an SOP and its

supporting materials and

documentation will be reviewed for

compliance with the Act and these

regulations. Within 6 months of

receiving the request for approval, the

Secretary will notify the SOP’s

governing State official of approval or

disapproval. A disapproval will include

the reasons for disapproval. A State

receiving a notice of disapproval of its

SOP or amendment to its SOP may

submit a revised SOP or amendment to

its SOP at any time.

Review of State Organic Programs

SOP’s will be reviewed at least once

every 5 years by the Secretary as

required by section 6507(c)(1) of the

Act. The Secretary will notify the SOP’s

governing State official of approval or

disapproval of the program within 6

months after initiation of the review.

State Organic Programs—Changes

Based on Comments

This portion of subpart G differs from

the proposal in several respects as

follows:

(1) Publication of SOP’s and

Consideration of Public Comments.

Some commenters assert that the USDA

should not publish SOP provisions for

public comment in the Federal Register.

These commenters argued that it is not

appropriate for the NOP to have

nonresidents commenting on a

particular State program as nearly all

States have a mechanism to ensure full

public participation in their regulation

promulgation. They believe the

comment process set forth in the

proposed rule is a redundant and

unacceptable intrusion on State

sovereignty.

We will not publish for public

comment the provisions of SOP’s under

review by the Secretary in the Federal

Register. We have removed the

provision from this final rule, described

in section 205.621(b), requiring the

Secretary to publish in the Federal

Register for public comment a summary

of the SOP and a summary of any

amendment to such a program.

Alternatively, we will announce which

SOP’s are being reviewed through the

NOP website. The NOP will issue public

information notices that will announce

each approved SOP and any approved

amendments to an existing State

program. The notices will identify the

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 website.

(2) NOP Oversight of SOP’s. Several

commenters stated that, in the proposed

rule, the provisions did not provide a

comprehensive description of organic

programs operated by States that would

be under NOP authority. Some

commenters implied that the proposed

rule would only include States with

organic certification programs, while

other commenters inquired whether the

sections 205.620 to 205.622 included

other SOP activities beyond

certification.

To address the commenters’ concerns,

we have modified the section heading

by adding the term, ‘‘organic,’’ and

removing the term, ‘‘certification,’’ from

the description and definition of SOP’s.

We have taken this action to clarify that,

while certification is one component of

the requirements, it does not define the

extent of evaluation of State programs

that will be conducted by the NOP.

SOP’s can choose not to conduct

certification activities under their

existing organic program. State

programs whose provisions fall within

the scope of the eleven general

provisions described in the Act (7

U.S.C. 6506) will require Departmental

review.

States may conduct other kinds of

organic programs that will not need

review and approval by the NOP.

Examples of these other programs may

include: organic promotion and research

projects, marketing; transition assistance

or cost share programs, registration of

State organic production and handling

operations, registration of certifying

agents operating within the State, or a

consumer referral program. The NOP

will not regulate such State activities.

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 would be beyond

the scope of this national program and

will not be subject to the Secretary’s

review.

State Organic Programs—Changes

Requested But Not Made

(1) Limitations on SOP More

Restrictive Requirements. Commenters

expressed concern that limiting a State’s

80618 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

ability to craft a regulation designated as

a more restrictive requirement to

environmental conditions or specific

production and handling practices

would hinder the ongoing development

of SOP’s. They were concerned that any

State legislation modifying the SOP

would need to be preapproved by the

Secretary.

We have retained the provision

limiting the scope of more restrictive

requirements States can include in their

organic program as described in section

205.620(c). We believe the language

contained in the provision is broad

enough to facilitate the development of

SOP’s without hindering development

or State program implementation and

enforcement. Section 6507(b)(1) of the

Act provides that States may establish

more restrictive organic certification

requirements; paragraph (b)(2)

establishes parameters for those

requirements. More restrictive SOP

requirements must: further the purposes

of the Act, be consistent with the Act,

not discriminate against other State’s

agricultural commodities, and be

approved by the Secretary before

becoming effective. We expect that a

State’s more restrictive requirements are

likely to cover specific organic

production or handling practices to

address a State’s specific environmental

conditions. The Secretary will approve

State’s requests for more restrictive State

requirements that are consistent with

the purposes of the Act. However, we

believe requests from States for more

restrictive requirements will be rare.

Although SOP’s can impose additional

requirements, we believe States will be

reluctant to put their program

participants at a competitive

disadvantage when compared to

producers and handlers in other States

absent compelling environmental

conditions or a compelling need for

special production and handling

practices. While preapproval of State

legislation modifying an existing SOP is

not required, the NOP envisions a close

consultation with States with existing

programs to ensure consistency with the

final rule.

(2) SOP Enforcement Obligations.

Some commenters expressed concern

about States having adequate resources

available to implement enforcement

activities that they are obligated to

conduct under the NOP. A few of these

commenters argue that the enforcement

obligation will result in their State

programs being discontinued. A few

commenters cited a lack of federal

funding to support State enforcement

obligations and suggested the NOP

provide funding for enforcement

activities.

The proposed rule indicated that

States with organic programs must

assume enforcement obligations for this

regulation within their State. We have

retained this enforcement obligation in

section 205.620(d). Many States

currently have organic programs with

the kind of comprehensive enforcement

and compliance mechanisms necessary

for implementing any State regulatory

program. Assuming those enforcement

activities are consistent with the NOP,

this final rule adds no additional

regulatory burden to the SOP’s. The

costs associated with the enforcement

activities of an approved SOP should be

similar to the enforcement costs

associated with the existing State

program. Additional clarification of SOP

enforcement obligations is in the

Accreditation, Appeals, and Compliance

preamble discussions.

(3) SOP Evaluation Notification

Period. A few commenters indicated

that the SOP review and decision

notification period described in section

205.621(b) of the proposed rule could

hinder a State’s ability to develop or

implement an SOP. These commenters

cited potential cases in which particular

States have requirements for regulatory

promulgation that must occur within 6

months under a State legislative session

that is held once every 2 years. These

commenters suggested the NOP should

reduce the notification time to 1 to 3

months.

We disagree with the commenters. In

the proposed rule in section 205.621(b),

the Secretary is required to notify the

SOP’s governing State official within 6

months of receipt of submission of

documents and information regarding

the approval of the SOP. We have

retained this time period. We will

review SOP applications as quickly as

possible and will endeavor to make

decisions in less than 6 months

whenever possible. However, some

SOP’s may be very complex and require

more review time. The NOP envisions

working closely with the States and

State officials to ensure a smooth

transition to the requirements of this

final rule.

State Organic Programs—Clarifications

(1) Discrimination Against Organic

Products. Several commenters requested

the addition of a provision prohibiting

an SOP from discriminating against

agricultural commodities organically

produced in other States.

Discrimination by a State against

organically produced agricultural

products produced in another State is

prevented in two ways. First, any

organic program administered by a State

must meet the requirements for organic

programs specified in the Act and be

approved by the Secretary. Finally, a

USDA-accredited certifying agent must

accept the certification decisions made

by another USDA-accredited certifying

agent as its own.

(2) Potential Duplication Between the

Accreditation and SOP Review Process.

Some commenters asked about possible

duplication between the process for

reviewing SOP’s and the process of

accreditation review. These commenters

have asked the NOP to eliminate any

duplication that may exist between the

two review processes. The NOP will be

conducting a review process for SOP’s

and a separate review process for

accrediting State and private certifying

agents. The two reviews are different.

The SOP review is the evaluation of

SOP compliance with the Act and the

NOP regulations. If approved, the SOP

becomes the NOP standards for the

particular State with which all

certifying agents operating in that State

must comply. Approved SOP’s must be

in compliance with the Act and the

NOP regulations. They cannot have

weaker standards than the NOP. States

can have more restrictive requirements

than the NOP if approved by the

Secretary.

The accreditation review is an

evaluation of the ability of certifying

agents to carry out their responsibilities

under the NOP. This review is a

measure of the competency of certifying

agents to evaluate compliance to

national organic standards. Certifying

agents will not be unilaterally

establishing regulations or standards

related to the certification of organic

products. They will only provide an

assessment of compliance.

Thus, SOP reviews and accreditation

reviews are separate evaluations of

different procedures. We acknowledge

some of the information for the two

evaluations may be similar; e.g.,

compliance procedures. The reviews do

not duplicate the same requirements.

However, the NOP envisions working

with States to ensure documentation is

not duplicated.

(3) Scope of Enforcement by States. A

number of State commenters have

requested clarification on the proposed

rule provision specifying that approved

SOP’s must assume enforcement

obligations in their State for the

requirements of the NOP and any

additional requirements approved by

the Secretary. These commenters have

indicated that they remain uncertain as

to what is expected by the term,

‘‘enforcement obligation.’’

Approved SOP’s will have to

administer and provide enforcement of

the requirements of the Act and the

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80619

regulations of the NOP. The

administrative procedures used by the

State in administering the approved

SOP should have the same force and

effect as the procedures use by AMS in

administering this program. This final

rule specifies that the requirements for

environmental conditions or for special

production and handling practices are

necessary for establishing more

restrictive requirements. These factors

establish our position that a State must

agree to incurring increased

enforcement responsibilities and

obligations to be approved as an SOP

under the NOP. For instance, a State

with an approved organic 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.

Once approved by the Secretary, the

State governing official of the SOP must

administer the SOP in a manner that is

consistent and equitable for the certified

parties involved in compliance actions.

(4) SOP’s That Do not Certify and

NOP Oversight. A few commenters

requested that the NOP develop new

provisions to include State programs

that have organic regulations but do not

conduct certification activities. These

commenters argue that any SOP that has

a regulatory impact on organic

producers, regardless of whether or not

the program includes certification, be

approved by the Secretary.

This regulation, in section 205.620(b),

provides for NOP oversight of SOP’s

that do not conduct certification

activities.

(5) State’s Use of Private Certifying

Agents. Some commenters have

requested that the NOP provide

clarification of the proposed rule

sections 205.620 through 205.622 on

how these sections will affect States that

delegate certification activities to

private certifying agents. These

commenters asked how the NOP intends

to oversee this type of State activity.

The NOP intends to give considerable

latitude to States in choosing the most

appropriate system or procedures to

structure their programs. This may

include a State establishing its own

certifying agent or relying on private

certifying agents. However, States will

not be accrediting certifying agents

operating in their State. Accreditation of

all certifying agents operating in the

United States is the responsibility of

USDA. Establishment of a single

national accreditation program is an

essential part of the NOP. As stated

elsewhere in this final rule, any

accreditation responsibilities of a State’s

current organic program will cease with

implementation of this program.

Pursuant to the Compliance provisions

of this subpart, the governing State

official charged with compliance

oversight under the SOP 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, as

provided by section 205.501(a)(20), and

determine whether they are able to

certify to the approved, more restrictive

requirements. Our accreditation

responsibilities include oversight of

both State and private certifying agents,

including any foreign certifying agents

that may operate in a State.

Subpart G—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 U.S.

Department of Agriculture (USDA) 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.

Description of Regulation

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 a place and

back to the headquarters or from 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 USDA,

travel tolls, or, when 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. 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

80620 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

the evaluator(s) receives per diem

reimbursement. The per diem rate will

be administratively determined by

USDA. 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 USDA.

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,

Room 2945-South Building, P.O. 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 that

must be applied to the applicant’s feesfor-service account. A certifying agent

may set the nonrefundable portion of

certification fees; however, the

nonrefundable portion of certification

fees must be explained in the fee

schedule submitted to the

Administrator. The fee schedule must

explain what fee amounts are

nonrefundable and at what stage during

the certification process the respective

fees become nonrefundable. 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 subpart differs from the proposal

in the following respects:

Nonrefundable Portion of

Certification Fees. Commenters were not

satisfied with the provision in section

205.642 that stated, ‘‘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 fee for service

account.’’ Some commenters believed

we were requiring the certifying agents

to bill fees for inspection services

separately. One State agency expressed

a concern that we were placing a limit

on the initial fee the certifying agent

could collect. As a result, the State

agency commented that by not being

allowed to collect the full certification

fee at the time of application, the

certifying agent, in effect, would be

extending credit to the applicant.

Commenters reported that some State

agencies are prevented by statute from

extending credit and are required to

collect all fees at the time of application.

Several commenters stated that the

amount of $250.00 was too low and

would not cover the costs the certifying

agents could incur during the

certification process. One organization

noted that we should consider prorating

the amount of the fee to be refunded

when an applicant for certification

withdraws before the completion of the

certification process. The organization

recommended that the amount of the

prorated fee should be based on how far

along in the certification process the

applicant had progressed before

withdrawal. Another commenter

believed it was inappropriate for USDA

to set any fees for private certification

programs and that the fees should be

market driven.

It was not our intent to limit the

initial amount that certifying agents

could collect from the applicant for

certification. Our intent was to limit the

portion of the fee that would be

nonrefundable in order to reduce the

potential liability for the small

producer/handler who may need to

withdraw prematurely from the

certification process. However, we

acknowledge that this provision could

be misinterpreted. We also realize that

certifying agents may incur initial costs

during the preliminary stage of the

certification process that may be more

or less than the $250.00 application rate

proposed. As a result, we have removed

the provision that stated certifying

agents could collect a nonrefundable fee

of not more than $250.00 at the time of

application from applicants for

certification.

Certifying agents may set the

nonrefundable portion of their

certification fees. However, the

nonrefundable portion of their

certification fees must be explained in

the fee schedule submitted to the

Administrator. The fee schedule must

explain what fee amounts are

nonrefundable and at what stage during

the certification process the respective

fees become nonrefundable. Certifying

agents will also provide all persons

inquiring about the application process

with a copy of its fee schedule.

Fees—Changes Requested But Not Made

This subpart retains from the

proposed rule regulations on which we

received comments as follows:

(1) Farm Subsidy/Transition Program.

Many commenters asked that USDA

subsidize or develop a cost-share

program for small farmers/producers

who are certified or who are in

transition to organic farming. Some

commenters wanted these costs to be

fully subsidized; a few commenters

suggested that USDA pay for any extra

site visit costs; and many others wanted

USDA to pay premium prices to farmers

for their products during the period of

transition to organic production. In

addition, many commenters argued that

USDA should fully fund certification

costs. Finally, many commenters

suggested that the USDA should provide

additional financial support to the

organic industry because the industry is

relatively young and composed of a

large number of small, low-resource

businesses.

We have considered the commenters

requests but have not made the

suggested changes. The NOP under

AMS is primarily a user-fee-based

Federal program. Section 2107(a)(10) of

the Organic Food Production Act of

1990 (OFPA) requires that the NOP

provide for the collection of reasonable

fees from producers, certifying agents,

and handlers who participate in

activities to certify, produce, or handle

agricultural products as organically

produced. Therefore, under the

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80621

statutory authority of OFPA, it is

outside of the scope of the NOP to

provide for the subsidization of

producers, handlers, and certifying

agents as desired by some commenters.

We have, however, established

provisions in this part that we believe

will minimize the economic impact of

the NOP on producers, handlers, and

certifying agents.

(2) Small Farmer Exemption Versus

Lower Certification Fees. Many

commenters suggested that certification

fees be lowered or based on a sliding

scale rather than instituting an

exemption from certification for small

farmers and handlers.

We have not accepted the

commenters’ suggestion. We cannot

remove the small farmer exemption

because section 2106(d) of the Act

requires that small farmers be provided

an exemption from organic certification

if they sell no more than $5,000

annually in value of agricultural

products. Also, certification fees cannot

be lowered by USDA because NOP

under AMS is primarily a user-fee-based

Federal agency. It is not our goal or

objective to make a profit on our

accreditation activities. However, our

fees associated with the accreditation

process are targeted toward recovering

costs incurred during the accreditation

process. Commenters expressed a

concern that the accreditation fees

charged by USDA would have an impact

on the certification fees prescribed by

certifying agents to operations seeking

organic certification. We understand the

commenters’ concern that accreditation

fees charged to certifying agents will

most likely be calculated into the fees

that certifiers charge their clients.

However, we believe that our provision

to waive the hourly service charges for

accreditation during the first 18 months

of implementation of the NOP should

help reduce accreditation costs of the

certifying agent and should, therefore,

result lower certification fee charged by

certifying agents. As provided by the

Act and the regulations in this part, fees

charged by certifying agents must be

reasonable. Also, certifying agents must

submit their fee schedule to the

Administrator and may only charge

those fees and charges filed with the

Administrator. In addition, certifiers are

required to provide their approved fee

schedules to applicants for certification.

Therefore, applicants for certification

will be able to base their selection of a

certifying agent on price if they choose.

Moreover, there are no provisions in the

regulations that preclude certifying

agents from pricing their services on a

sliding scale, as long as their fees are

consistent and nondiscriminatory and

are approved during the accreditation

process.

(3) Accreditation Fees. Many industry

commenters suggested that we

reevaluate our accreditation fee

structure. They believe the hourly

accreditation rate proposed is

unacceptable. Commenters were

concerned that high accreditation costs

would lead to high certification costs,

which would have a greater impact on

small operations. Some industry

commenters also noted that we should

be required to provide a fee schedule

such as the certifiers are required to do.

They stated that unless USDA provided

a fee schedule that included travel costs,

they would not be able to accurately

budget for these costs. A few

commenters wanted USDA to forgo

charging travel costs or not charge travel

time at the full rate. Several commenters

also stated that the hourly rate stated in

the proposal is much higher than what

the people who actually perform the

accreditations will earn. However, a

large majority of the commenters

favored the 18-month period in which

AMS will not charge the hourly

accreditation rate to applicants.

As stated in the proposal, the hourly

rate will be the same as that of AMS’

Quality Systems Certification Program.

Due to the fact that AMS’ Quality

Systems Certification Program publishes

one rate that is readily available to the

public, it is our belief that it is

unnecessary for the NOP to set up a

separate fee schedule. The NOP will

notify accredited certifying agents and

applicants for accreditation of any

proposed rate changes and final actions

on such rates by AMS. We will also

periodically report the status of fees to

the National Organic Standards Board.

Those applicants and certifying agents

who need accreditation cost estimates,

including travel, for budgetary or other

reasons may notify the NOP. The NOP

staff will provide the applicant with a

cost estimate, based on information

provided by the applicant. As stated in

an earlier response ((2)—Changes

Requested But Not Made), the objective

of the fee that is charged to accredit

certifying agents is not to gain a profit

for accreditation activities but to recover

costs incurred during the accreditation

process. As such, these costs include

but are not limited to salaries, benefits,

clerical help, equipment, supplies, etc.

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 NOP Program

Manager, State organic programs’ (SOP)

governing State officials, and State and

private certifying agents. These

provisions also address the rights of

certified production and handling

operations and accredited certifying

agents operating under the NOP. The

granting and denial of certification and

accreditation are addressed under

subparts E and F.

Description of Regulations

The Secretary is required under the

Act to review the operations of SOP’s,

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

compliance proceedings and provide

oversight of compliance proceedings on

behalf of the Secretary and the

Administrator. The Program Manager

will initiate proceedings to suspend or

revoke a certified operation’s

certification if a certifying agent or

SOP’s governing State official fails to

take appropriate enforcement action.

The Program Manager may also initiate

proceedings to suspend or revoke a

certified operation’s certification if the

operation is found to have been

erroneously certified by a certifying

agent whose accreditation has been

suspended or revoked. We anticipate,

however, that most investigations,

reviews, and analyses of certification

noncompliance and initiation of

suspension or revocation will be

conducted by the certified operation’s

certifying agent. With regard to

certifying agents, the Program Manager

will, when appropriate, initiate

proceedings to suspend or revoke the

accreditation of a certifying agent for

noncompliance with the Act and these

regulations.

In States with an approved SOP, the

SOP’s governing State official is

responsible for administering a

compliance program for enforcement of

the NOP/SOP. SOP’s governing State

officials may review and investigate

complaints of noncompliance involving

organic production or handling

operations operating within their State

and, when appropriate, initiate

suspension or revocation of

certification. SOP’s governing State

officials may also review and investigate

complaints of noncompliance involving

accredited certifying agents operating

within their State. They must report the

findings of any review and investigation

of a certifying agent to the Program

Manager along with any

recommendations for appropriate

action.

The compliance provisions of the

NOP are consistent with the

80622 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

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. A compliance

action regarding certification carried out

under an approved SOP’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 certification and

accreditation is laid out in subparts E

and F, respectively.

Each notification of noncompliance,

rejection of mediation, noncompliance

resolution, proposed suspension or

revocation, and suspension or

revocation issued under these

regulations must be sent to the

recipient’s place of business via a

delivery service which provides return

receipts. Certified operations and

certifying agents must respond to all

compliance notifications via a delivery

service which provides return receipts.

Noncompliance Procedure for Certified

Operations

The Act provides for the enforcement

of certification requirements. Statutory

oversight of production and handling

operations by certifying agents includes

review of organic plans, on-site

inspections, residue and tissue testing,

authority to conduct investigations and

initiate suspension or revocation

actions, and responsibility to report

violations.

Notification of Noncompliance

A written notification of

noncompliance will be sent to the

certified operation when an inspection,

review, or investigation reveals any

noncompliance with the Act or these

regulations. 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. The

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 and submit

supporting documentation of the

correction. A certified operation may

continue to sell its product as organic

upon receiving a notification of

noncompliance and throughout the

compliance proceeding and any appeal

procedure which might follow the

compliance proceeding unless

otherwise notified by a State or Federal

government agency.

If a certified operation believes the

notification of noncompliance is

incorrect or not well-founded, the

certified operation may submit a

rebuttal to the certifying agent or SOP’s

governing State official, as applicable,

providing supporting data to refute the

facts stated in the notification. The

opportunity for rebuttal is provided to

allow certifying agents and certified

operations to informally resolve

noncompliance issues. The rebuttal

process 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

noncompliances and submit proof of

such corrections. When the certified

operation demonstrates that each

noncompliance has been corrected or

otherwise resolved, the certifying agent

or SOP’s governing State official, as

applicable, will send the certified

operation a written notification of

noncompliance resolution.

Proposed Suspension or Revocation of

Certification

If the noncompliance is not resolved

or is not in the process of being resolved

by the date specified in the notification

of noncompliance, the certifying agent

or SOP’s governing State official 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

or revocation period or whether the

suspension or revocation applies to the

entire operation or to a portion or

portions of the operation.

If a certifying agent or SOP’s

governing State official 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 the proposed

suspension or revocation.

If a certifying agent or SOP’s

governing State official has reason to

believe that a certified operation has

willfully violated the Act or regulations,

a notification of proposed suspension or

revocation will be sent to the certified

operation. The proposed suspension or

revocation will be for the entire

operation or a portion of the operation.

This notification, because it involves a

willful violation, will be sent without

first issuing a notification of

noncompliance.

Mediation

A production or handling 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

dispute more quickly than the next step,

which is filing an appeal. When

mediation is requested, it must be

requested in writing to the applicable

certifying agent. The certifying agent

will have the option of accepting or

rejecting the request for mediation. If

the certifying agent rejects the request

for mediation, the certifying agent must

provide written notification to the

applicant for certification or certified

operation. The written notification must

advise the applicant for certification or

certified operation of the right to request

an appeal in accordance with section

205.681. Any such appeal must be

requested within 30 days of the date of

the written notification of rejection of

the request for mediation. If mediation

is accepted by the certifying agent, such

mediation must be conducted by a

qualified mediator mutually agreed

upon by the parties to the mediation. If

an SOP is in effect, the mediation

procedures established in the SOP, as

approved by the Secretary, must be

followed. 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 production or handling operation

will have 30 days from termination of

mediation to appeal the denial of

certification or proposed suspension or

revocation in accordance with the

appeal procedures in section 205.681.

Any agreement reached during or as

a result of the mediation process must

be in compliance with the Act and these

regulations. The Secretary reserves the

right to review any mediated agreement

for conformity to the Act and these

regulations and to reject any agreement

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80623

or provision not in conformance with

the Act or these regulations

Suspension or Revocation

The certifying agent or SOP’s

governing State official 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 or

SOP’s governing State official must not

send a notification of suspension or

revocation to a certified operation that

has requested mediation or filed an

appeal while final resolution of either is

pending.

The decision to suspend or revoke

certification will be based on the

seriousness of the noncompliance. Such

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

establishes that willful violations

include making a false statement,

knowingly affixing a false label, or

otherwise violating the purposes of the

Act.

In addition to suspension or

revocation, a certified operation that

knowingly sells or labels a product as

organic, except in accordance with the

Act, will be subject to a civil penalty of

not more than $10,000 per violation.

Further, a certified operation that makes

a false statement under the Act to the

Secretary, an SOP’s governing State

official, or a certifying agent will be

subject to the provisions of section 1001

of title 18, United States Code.

A certified operation whose

certification has been suspended under

this section may at any time, unless

otherwise stated in the notification of

suspension, submit a request to the

Secretary for reinstatement of its

certification. 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 NOP.

A certified operation or a person

responsibly connected with an

operation that has had its certification

revoked will be ineligible to receive

certification for an operation in which

such operation or person has an interest

for 5 years following the date of

revocation. Accordingly, an operation

will be ineligible for organic

certification if one of its responsibly

connected parties, was a responsibly

connected party of an operation that had

its certification revoked. The Secretary

may, when in the best interest of the

certification program, reduce or

eliminate the period of ineligibility.

Noncompliance Procedure for Certifying

Agents

The Program Manager, on behalf of

the Secretary, may initiate a compliance

action against an accredited certifying

agent who violates the Act or these

regulations. Compliance proceedings

may be initiated as a result of annual

reviews for continuation of

accreditation, site evaluations, or

investigations initiated in response to

complaints of noncompliant activities.

Compliance proceedings also may be

initiated on recommendation of an

SOP’s 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 or

correct each noncompliance described

and submit supporting documentation

of each correction.

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, the Program

Manager will issue a notification of

proposed suspension or revocation of

accreditation. The notification will state

whether the suspension or revocation

will be for the certifying agent’s entire

accreditation, that portion of the

accreditation applicable to a particular

field office, or a specific area of

accreditation. For instance, if a

certifying agent with field offices in

different geographic areas is cited for a

compliance violation at one field office,

the Program Manager could determine

that only that portion of the

accreditation applicable to the

noncompliant field office 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 will issue a

notification of proposed suspension or

revocation of accreditation. The

proposed suspension or revocation may

be for the certifying agent’s entire

accreditation, that portion of the

accreditation applicable to a particular

field office, or a specified 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 section

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 SOP’s 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, unless otherwise stated in the

notification of suspension, submit a

request to the Secretary for

reinstatement of its 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.

80624 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

State Organic Programs’ Compliance

Procedures

An SOP’s governing State official may

initiate noncompliance proceedings

against 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 SOP’s governing State official

must promptly notify the Program

Manager of commencement of

noncompliance proceedings initiated

against certified operations and forward

to the Program Manager a copy of each

notice issued. A noncompliance

proceeding, brought by an SOP’s

governing State official against a

certified operation may be appealed in

accordance with the appeal procedures

of the SOP. There will 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.

An SOP’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 SOP’s

governing State official must send a

written report of noncompliance to the

Program Manager. The SOP’s governing

State official’s report must provide a

description of each noncompliance and

the facts upon which the

noncompliance is based.

Compliance—Changes Based On

Comments

This portion of subpart G differs from

the proposal in several respects as

follows:

(1) Written Notifications. We have

added a new paragraph (d) to section

205.660. The preamble to the proposed

rule stated that all written notifications

sent by certifying agents and SOP’s

governing State officials, as well as

rebuttals, requests for mediation, and

notices of correction of noncompliances

sent by certified operations, will be sent

to the addressee’s place of business by

a delivery service which provides dated

return receipts. The assurance of

completed communications and timely

compliance procedures was given as the

reason for delivery by a service which

provides dated return receipts. The

addition of paragraph (d) at section

205.660 is one of the actions that we

have taken in response to requests from

commenters that we further clarify the

compliance process. Paragraph (d)

requires that each notification of

noncompliance, rejection of mediation,

noncompliance resolution, proposed

suspension or revocation, and

suspension or revocation issued in

accordance with sections 205.662,

205.663, and 205.665 and each response

to such notification must be sent to the

recipient’s place of business via a

delivery service which provides return

receipts. This action will facilitate the

effective administration of the

compliance process by assuring a

verifiable time line on the issuance and

receipt of compliance documents and

the response given to each such

document.

(2) Determination of Willful. The

preamble statement that ‘‘only the

Program Manager or governing State

official may make the final

determination that a violation is

willful’’ was incorrect and inconsistent

with the regulatory language in section

205.662(d). Section 205.662(d) provides

that, ‘‘if a certifying agent or State

organic 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 organic

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.’’

Accordingly, as recommended by a

commenter, the incorrect statement has

been deleted from the preamble to this

final rule.

(3) Proposed Suspension or

Revocation. We have amended sections

205.662(c) and 205.665(c) by removing

the redundant phrase ‘‘or is not

adequate to demonstrate that each

noncompliance has been corrected’’

from the first sentence of each section.

(4) Suspension or Revocation. We

have amended section 205.662(e)(2) by

adding ‘‘while final resolution of either

is pending’’ to the end thereof. The

language of section 205.662(e)(2) now

reads: ‘‘A certifying agent or State

organic program’s governing State

official must not send a notification of

suspension or revocation to a certified

operation that has requested mediation

pursuant to section 205.663 or filed an

appeal pursuant to section 205.681

while final resolution of either is

pending.’’ We have made this change

because we agree with those

commenters who expressed the belief

that section 205.662(e)(2) needed to be

amended to clarify the duration of the

stay on the issuance of a notification of

suspension or revocation when

mediation is requested or an appeal is

filed. Several commenters stated that

section 205.662(e)(2) needed to be

amended to clarify that requesting

mediation or filing an appeal does not

indefinitely stop the suspension or

revocation process.

(5) Eligibility After Suspension or

Revocation of Certification. We have

amended section 205.662(f) such that it

now parallels section 205.665(g) which

addresses suspension and revocation of

certifying agents. We have also changed

the title of section 205.662(f) from

‘‘Ineligibility’’ to ‘‘Eligibility’’ to parallel

section 205.665(g). A few commenters

referred to the provisions in section

205.665(g), which addresses eligibility

after suspension or revocation of

accreditation, and requested

clarification of the difference between

suspension and revocation of

certification. Upon reviewing section

205.662(f), we decided that amendment

was needed to clarify the difference

between suspension and revocation of

certification relative to eligibility for

certification. Accordingly, we added a

new paragraph (1) which provides that

a certified operation whose certification

has been suspended under this section

may at any time, unless otherwise stated

in the notification of suspension, submit

a request to the Secretary for

reinstatement of its certification. The

paragraph also provides that 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. We also

amended what is now paragraph (2) of

section 205.662(f) to clarify that the

period of ineligibility following

revocation of certification is 5 years

unless reduced or eliminated by the

Secretary.

Further, we have amended section

205.665(g)(1) to clarify that a certifying

agent that has had its accreditation

suspended may request reinstatement of

its accreditation rather than submit a

new request for accreditation. The

amendment also clarifies that the

reinstatement may be requested at any

time unless otherwise stated in the

notification of suspension. This

amendment makes section 205.665(g)(1)

similar to new paragraph (1) of section

205.662(f). This amendment is also

consistent with commenter desires that

the noncompliance procedures for

certified operations and accredited

certifying agents be similar.

(6) Penalties for Violations of the Act.

We have amended section 205.662 by

adding a new paragraph (g) which

incorporates therein the provisions of

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80625

paragraphs (a) and (b) of section 2120,

7 U.S.C. 6519, Violations of Title, of the

Act. Specifically, paragraph (g) provides

that, in addition to suspension or

revocation, any certified operation that

knowingly sells or labels a product as

organic, except in accordance with the

Act, shall be subject to a civil penalty

of not more than $10,000 per violation.

This paragraph also provides that any

certified operation that makes a false

statement under the Act to the

Secretary, an SOP’s governing State

official, or a certifying agent shall be

subject to the provisions of section 1001

of title 18, United States Code.

Commenters requested regulatory

language citing section 2120, 7 USC

6519, Violations of Title, of the Act.

Commenters also requested a clearer

description of enforcement. Specifically,

they want provisions describing how

USDA will deal with operations that

make false claims or do not meet the

NOP requirements. Further, numerous

commenters expressed concern that

there are no penalties in the regulations

other than suspension and revocation.

The European Community stated that it

did not find, in the proposal,

requirements for penalties to be applied

by certifying agents when irregularities

or infringements are found. The

European Community went on to say

that the European Union requires such

penalties.

The Act provides for suspension and

revocation of certification and the civil

and criminal penalties addressed in 7

U.S.C. 6519. Certified operations are

also required through the compliance

program set forth in these regulations, to

correct all noncompliances with the Act

or regulations as a condition of retaining

their certification. Furthermore, to get a

suspended certification reinstated, an

operation must submit a request to the

Secretary. 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. An operation or

a person responsibly connected with an

operation whose certification has been

revoked will be ineligible to receive

certification for a period of not more

than 5 years.

We believe adding paragraph (g) will

help clarify that there are penalties

which may be imposed on certified

operations that violate the Act and these

regulations in addition to suspension or

revocation.

The provisions of the Act and these

regulations apply to all persons who

sell, label, or represent their agricultural

product as organic. Accordingly,

persons who falsely sell, label, or

represent their product as organic, are

subject to the provisions of paragraphs

(a) and (b) of section 2120, 7 USC 6519,

of the Act. To clarify this, we have

added a new paragraph (c) to section

205.100 of the Applicability subpart.

Certifying agents, SOP’s governing

State officials, and USDA will receive

complaints alleging violations of the Act

or these regulations. Certifying agents

will review all complaints that they

receive to determine if the complaint

involves one of their clients. If the

complaint involves a client of the

certifying agent, the agent will handle

the complaint in accordance with its

procedures for reviewing and

investigating certified operation

compliance. If the complaint involves a

person who is not a client of the

certifying agent, the certifying agent will

refer the complaint to the SOP’s

governing State official, when

applicable, or, in the absence of an

applicable SOP’s governing State

official, the Administrator. SOP’s

governing State officials will review all

complaints that they receive in

accordance with their procedures for

reviewing and investigating alleged

violations of the NOP and SOP. The

SOP’s governing State official’s review

of the complaint could result in referral

of the complaint to a certifying agent

when the complaint involves a client of

the certifying agent, dismissal, or

investigation by the SOP’s governing

State official. SOP’s governing State

officials will, as appropriate, investigate

allegations of violations of the Act by

noncertified operations operating within

their State. USDA will review all

complaints that it receives in

accordance with its procedures for

reviewing and investigating alleged

violations of the NOP. USDA will refer

complaints alleging violations of the

NOP/SOP to the applicable SOP’s

governing State official, who may, in

turn, refer the complaint to the

applicable certifying agent. In States

without an approved SOP, USDA will

refer complaints to the applicable

certifying agent. USDA will, as

appropriate, investigate allegations of

violations of the Act by noncertified

operations operating in States where

there is no approved SOP.

(7) Mediation. We have amended

section 205.663 by providing that a

dispute with respect to proposed

suspension or revocation of certification

may, rather than shall, be mediated. We

have also provided that mediation must

be requested in writing to the applicable

certifying agent. The certifying agent

will have the option of accepting or

rejecting the request for mediation. If

the certifying agent rejects the request

for mediation, the certifying agent must

provide written notification to the

applicant for certification or certified

operation. The written notification must

advise the applicant for certification or

certified operation of the right to request

an appeal within 30 days of the date of

the written notification of rejection of

the request for mediation. If mediation

is accepted by the certifying agent, such

mediation must be conducted by a

qualified mediator mutually agreed

upon by the parties to the mediation.

Several commenters wanted section

205.663 amended to provide that

disputes ‘‘may,’’ rather than ‘‘shall,’’ be

mediated. The commenters advocated

allowing the certifying agent to

determine when mediation is a

productive option. Several State

commenters wanted to amend the

second sentence to read as follows: ‘‘If

a State organic program is in effect, the

mediation procedures established in the

State organic program, as approved by

the Secretary, will be followed for cases

involving the State organic program and

its applicants or certified parties.’’

Another commenter wanted to retain

the requirement that disputes ‘‘shall’’ be

mediated but wanted disputes mediated

in accordance with 7 CFR part 11 and

section 205.681 of these regulations.

We concur that certifying agents

should be authorized to reject a request

for mediation, especially when they

believe that the noncompliance issue is

not conducive to mediation.

Accordingly, we amended section

205.663 as noted above. We disagree,

however, with the State commenters

who want to amend the second

sentence. We believe that the

recommended change would exclude

the clients of private-sector certifying

agents operating within the State. USDA

approval of an SOP will require that all

certified operations operating within the

State have the same opportunities for

mediation, regardless of whether they

are certified by a private or State

certifying agent. If an approved SOP

provides for mediation, such mediation

must be available to all certified

operations operating within the State.

We also disagree with the commenter

who requested that disputes be

mediated in accordance with 7 CFR part

11 and section 205.681 of these

regulations. First, we believe that States

with an approved SOP must be allowed

to establish their own mediation

program and procedures. Second, the

Act and its implementing regulations

are subject to the APA for adjudication.

The provisions of the APA generally

applicable to agency adjudication are

not applicable to proceedings under 7

80626 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

CFR part 11, National Appeals Division

Rules of Procedure. Even if 7 CFR part

11 were applicable, it does not address

mediation procedures. Mediation is

merely addressed in 7 CFR Part 11 as an

available dispute resolution method

along with its impact on the filing of an

appeal.

(8) Noncompliance Procedure for

Certifying Agents. We have amended

section 205.665(a)(3) to clarify that, like

certified operations, certifying agents

must submit supporting documentation

of each correction of a noncompliance

identified in a notification of

noncompliance. This amendment to

section 205.665(a)(3) was made in

response to commenter concerns that

the noncompliance procedures for

certified operations and certifying

agents be similar. It had been our intent

that certifying agents would have to

document their correction of

noncompliances and that the

noncompliance procedures for certified

operations and certifying agents would

be similar.

Compliance—Changes Requested But

Not Made

This subpart retains from the

proposed rule, regulations on which we

received comments as follows:

(1) Funding for Enforcement. Several

commenters stated that USDA should

provide funding to the States for the

cost of performing enforcement

activities. Others asked who should

fund investigations and enforcement

actions if certifying agents (State and

private) are enforcing compliance with

a Federal law. Numerous commenters

requested information on how

enforcement will be funded. The

National Organic Standards Board

(NOSB) recommended that the NOP

examine existing models for capturing

enforcement fees such as the State of

California’s registration program for all

growers, handlers, and processors who

use the word, ‘‘organic,’’ in marketing

their products.

We disagree with the commenters

who stated that USDA should fund

enforcement activities (State and

private). Costs for compliance under the

NOP will be borne by USDA, States

with approved SOP’s, and accredited

certifying agents. Each of the entities

will bear the cost of their own

enforcement activities under the NOP.

AMS anticipates that States will

consider the cost of enforcing their

SOP’s prior to seeking USDA approval

of such programs. We also anticipate

that certifying agents will factor the cost

of compliance into their certification fee

schedules.

We agree that there may be

alternatives, such as the State of

California’s registration program,

available to raise funds for enforcing the

NOP. We will help identify existing

models and potential options that may

be available in the future at the Federal,

State, or certifying agent level. In the

interim, we believe that SOP’s should

explore funding options at their level

and that certifying agents should factor

the cost of enforcement into their

certification fees structure.

(2) Stop Sale. A number of

commenters requested that the

regulations include the ability to stop

sales or recall misbranded or

fraudulently produced products. The

Act does not authorize the NOP to stop

sales or recall misbranded or

fraudulently produced product.

Accordingly, USDA cannot authorize

stop sales or the recall of product. We

also believe that the certified operation’s

right to due process precludes a stop

sale or recall prior to full adjudication

of the alleged noncompliance. However,

the Food and Drug Administration

(FDA) and the USDA’s Food Safety

Inspection Service (FSIS) have stop sale

authority that may be used in certain

organic noncompliance cases. Further,

States may, at their discretion, be able

to provide for stop sale or recall of

misbranded or fraudulently produced

products produced within their State.

While the Act does not provide for stop

sale or recall, it does provide at 7 U.S.C.

6519 that any person who: (1)

knowingly sells or labels a product as

organic, except in accordance with the

Act, shall be subject to a civil penalty

of not more than $10,000 and (2) makes

a false statement under the Act to the

Secretary, an SOP’s governing State

official, or a certifying agent shall be

subject to the provisions of section 1001

of title 18, United States Code.

(3) Notification of Proposed

Suspension or Revocation. A

commenter recommended replacing

‘‘notification of proposed suspension or

revocation’’ in section 205.662(d) with

‘‘notification of suspension or

revocation.’’ Certification cannot be

suspended or revoked without due

process. Accordingly, the issuance of a

written notification of proposed

suspension or revocation is necessary to

provide the certified operation with

information regarding the alleged

noncompliance(s) and its right to

answer the allegations. For this reason

we have not accepted the commenter’s

recommendation.

(4) Mediation for Certifying Agents.

Several commenters recommended

amending section 205.665(c)(4) to

provide for mediation between a

certifying agent and the Program

Manager when a proposed suspension

or revocation is disputed by the

certifying agent. We have not accepted

the recommendation. USDA uses 7 CFR

part 1, Rules of Practice Governing

Formal Adjudicatory Proceedings

Instituted by the Secretary Under

Various Statutes, for adjudicatory

proceedings involving the denial,

suspension, and revocation of

accreditation.

(5) Revocation of Accreditation. A

commenter stated that revocation of

accreditation for 3 years is excessive.

The commenter stated that a period of

6 to 12 months might be reasonable. We

have not amended section 205.665(g)(2)

because the Act requires that the period

of revocation for certifying agents, who

violate the Act and these regulations, be

for not less than 3 years. Suspension is

available to the Secretary to address less

egregious noncompliances. A certifying

agent whose accreditation is suspended

may at any time, unless otherwise stated

in the notification of suspension, submit

a request to the Secretary for

reinstatement of its accreditation. 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

these regulations.

(6) Appeals Under SOP’s. Several

commenters recommended amending

205.668(b) by adding at the end thereof:

‘‘unless the State program’s appeals

procedures include judicial review

through the State District Court.’’

Another commenter wanted 205.668(b)

amended by removing ‘‘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,’’ and inserting in its place ‘‘at

7 CFR part 11 and 205.681 of this

chapter.’’ We have not accepted the

recommendations because the Act at 7

U.S.C. 6520 provides that a final

decision of the Secretary may be

appealed to the United States District

Court for the district in which the

person is located. We consider an

approved SOP to be the NOP for that

State. As such, we consider the SOP’s

governing State official of such

approved SOP to be the equivalent of a

representative of the Secretary for the

purposes of the appeals procedures

under the NOP. Accordingly, the final

decision of the SOP’s governing State

official of an approved SOP is

considered the final decision of the

Secretary and, as such, is appealable to

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80627

the United States District Court for the

district in which the person is located,

not a State’s District Court.

We also disagree with the commenter

who wanted all appeals to be made to

the National Appeals Division under the

provisions at 7 CFR part 11 and section

205.681 of these regulations. First, we

believe that States with an approved

SOP must be allowed to establish their

own appeal procedures. Such

procedures would have to comply with

the Act, be equivalent to the procedures

of USDA, and be approved by the

Secretary. Second, as noted elsewhere

in this preamble, the Act and its

implementing regulations are subject to

the APA for adjudication. The

provisions of the APA generally

applicable to agency adjudication are

not applicable to proceedings under 7

CFR part 11.

Compliance—Clarifications

Clarification is given on the following

issues raised by commenters:

(1) Complaints, Investigations, Stop

Sales, and Penalties. Many commenters

wanted USDA to spell out the

responsibilities and authorities of

States, State and private certifying

agents, Federal agencies, and citizens to

make complaints, investigate violations,

halt the sale of products, and impose

penalties. Anyone may file a complaint,

with USDA, an SOP’s governing State

official, or certifying agent, alleging

violation of the Act or these regulations.

Certifying agents, SOP’s governing State

officials, and USDA will receive,

review, and investigate complaints

alleging violations of the Act or these

regulations as described in item 6 above

under Changes Based on Comments.

Citizens have no authority under the

NOP to investigate complaints alleging

violation of the Act or these regulations.

As noted elsewhere in this preamble,

the Act does not authorize USDA to stop

the sale of product. Accordingly, USDA

cannot authorize stop sales by

accredited certifying agents. We also

believe that the certified operation’s

right to due process precludes a stop

sale prior to full adjudication of the

alleged noncompliance. However, FDA

and FSIS have stop sale authority that

may be used in the event of food safety

concerns. Further, States may, at their

discretion, be able to provide for stop

sale of product produced within their

State. Citizens have no authority under

the NOP to stop the sale of a product.

The Act and these regulations provide

for suspension or revocation of

certification by certifying agents, SOP’s

governing State officials, and the

Secretary. Only USDA may suspend or

revoke a certifying agent’s accreditation.

All proposals to suspend or revoke a

certification or accreditation are subject

to appeal as provided in section

205.681. The Act provides at 7 U.S.C.

6519 that any person who: (1)

knowingly sells or labels a product as

organic, except in accordance with the

Act, shall be subject to a civil penalty

of not more than $10,000; and (2) makes

a false statement under the Act to the

Secretary, an SOP’s governing State

official, or a certifying agent shall be

subject to the provisions of section 1001

of title 18, United States Code. Only

USDA may bring an action under 7

U.S.C. 6519.

(2) Certifying Agent’s Identifying

Mark. The NOSB reaffirmed its

recommendation which would allow

private certifying agents to prevent the

use of their service mark (seal) upon

written notification that: (1) certification

by the private certifying agent has been

terminated, and (2) the certifying agent

has 30 days to appeal the certifying

agent’s decision to the Secretary of

Agriculture. We will neither prohibit

nor approve a certifying agent’s actions

to withdraw a certified operation’s

authority to use the certifying agent’s

identifying mark for alleged violations

of the Act or regulations. We stand fast

in our position that all certified

operations are to be given due process

prior to the suspension or revocation of

their certification. The reader is also

reminded that the certifying agent

cannot terminate, suspend, or revoke a

certification if the certified operation

files an appeal with an SOP’s governing

State official, when applicable, or the

Administrator as provided for in the

notification of proposed suspension or

revocation. The certifying agent accepts

full liability for any action brought as a

result of the withdrawal of a certified

operation’s authority to use the

certifying agent’s identifying mark.

(3) Loss of Certification. A commenter

posed several questions regarding the

loss of certification. The commenter’s

questions and our responses are as

follows.

How will consumers and affected

regulatory agencies know if a grower or

handler loses its certification? We will

provide public notification of

suspensions and revocations of certified

operations through means such as the

NOP website.

What will the effect of a lost

certification be? Suspension or

revocation of a producer’s or handler’s

certification will require that the

producer or handler immediately cease

its sale, labeling, and representation of

agricultural products as organically

produced or handled as provided in the

suspension or revocation order. A

production or handling operation or a

person responsibly connected with an

operation whose certification has been

suspended may at any time, unless

otherwise stated in the notification of

suspension, submit a new request for

certification in accordance with section

205.401. 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. An operation or

a person responsibly connected with an

operation whose certification has been

revoked will be ineligible to receive

certification for a period of not more

than 5 years following the date of such

revocation, as determined by the

Secretary. Any producer or handler who

sells, labels, or represents its product as

organic contrary to the provisions of the

suspension or revocation order would

be subject to prosecution under 7 U.S.C.

6519 of the Act.

Will the certifying agent give a future

effective date for loss of certification, or

could the loss of certification be

immediate or even retroactive?

Suspension or revocation will become

effective as specified in the suspension

or revocation order once it becomes

final and effective. The operation, upon

suspension or revocation, will be

prohibited from selling, labeling, and

representing its product as organic per

the provisions of the suspension or

revocation order.

If organic products already on the

market were grown or handled by

someone whose certification is revoked

or suspended, would USDA require that

the products be recalled and relabeled?

USDA will not, unless the

noncompliance involves a food safety

issue under FSIS, require the recall or

relabeling of product in the channels of

commerce prior to the issuance of a

suspension or revocation order. First, at

the time the product was produced, it

may have been produced in compliance

with the Act and these regulations.

Second, USDA does not have the

authority, under the Act, to issue a stop

sale order for product sold, labeled, or

represented as organic and placed in the

channels of commerce prior to

suspension or revocation of a certified

operation’s certification. The Act,

however, provides at 7 U.S.C. 6519(a)

for the prosecution of any person who

knowingly sells or labels a product as

organic, except in accordance with the

Act. Such persons shall be subject to a

civil penalty of not more than $10,000

per violation.

(4) Investigations. A commenter

suggested that we amend section

80628 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

205.661(a) to require that all complaints

must be investigated in accordance with

the certifying agent’s complaints policy.

The commenter also stated that the

Administrator should know which

complaints were not investigated. We

disagree that all complaints must be

investigated since, upon review of the

alleged noncompliance, some

complaints may lack grounds for

investigation. For example, a concerned

citizen could allege that an organic

producer was seen applying a pesticide

to a specific field. Upon review of the

allegation, the certifying agent could

determine that the producer in question

was a split operation and that the field

in question was part of the conventional

side of the production operation.

Accordingly, there would be no need for

an investigation. However, the certifying

agent will be expected to: (1) take each

allegation seriously, (2) review each

complaint received, (3) make a

determination as to whether there may

be a basis for conducting an

investigation, (4) investigate all

allegations when it is believed that there

may be a basis for conducting the

investigation, and (5) maintain a

detailed log of all complaints received

and their disposition. The actions taken

by the certifying agent must be in

conformance with the certifying agent’s

procedures for reviewing and

investigating certified operation

compliance.

(5) Deadline for the Correction of a

Noncompliance. Several commenters

requested that 205.662(a)(3) be amended

by adding: ‘‘The deadline for correction

of the noncompliance may be extended

at the discretion of the certifier if

substantial progress has been made to

correct the noncompliance.’’ We believe

that the requested amendment is

unnecessary. Section 205.662(a)(3)

requires that the notification of

noncompliance include a date by which

the certified operation must rebut or

correct each noncompliance and submit

supporting documentation of each

correction when correction is possible.

There is no prohibition preventing the

certifying agent from extending the

deadline specified when the certifying

agent believes that the certified

operation has made a good faith effort

at correcting each noncompliance.

(6) Compliance with SOP. Several

States requested that section 205.665 be

amended to clarify how States may

handle a private certifying agent found

to be in noncompliance with SOP’s

approved by the Secretary. A majority of

these commenters also asked if NOP

intends to suspend or revoke the

accreditation of certifying agents on a

State-by-State basis. Section 205.668(c)

authorizes an SOP’s governing State

official to 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 SOP’s governing

State official shall send a written report

of noncompliance to the NOP Program

Manager. The report shall provide a

description of each noncompliance and

the facts upon which the

noncompliance is based. The NOP

Program Manager will then employ the

noncompliance procedures for

certifying agents as found in section

205.665. This may include additional

investigative work by AMS. Only USDA

may suspend or revoke a certifying

agent’s accreditation.

SOP’s must meet the general

requirements for organic programs

specified in the Act and be at least

equivalent to these regulations.

Accordingly, noncompliances worthy of

suspension or revocation would in all

probability be worthy of national

suspension or revocation of

accreditation for one or more areas of

accreditation. Therefore, USDA does not

anticipate suspending or revoking

accreditations, or areas of accreditation,

on a State-by-State basis. It is possible,

however, that the Secretary may decide

to only suspend or revoke a certifying

agent’s accreditation or an area of

accreditation to certify producers or

handlers within a given State. Such a

decision would in all probability be tied

to a State’s more restrictive

requirements.

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.

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 organic

programs’ (SOP) 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.

Description of Regulations

General Requirements

Under the residue testing

requirements of the NOP, all

agricultural products sold, labeled, or

represented as organically produced

must be available for inspection by the

Administrator, SOP’s governing State

official, or certifying agent. Organic

farms and handling operations must be

made available for inspection under

subpart E, Certification. In addition,

products from the aforementioned

organic operations may be required by

the SOP’s governing State official or

certifying agent to undergo preharvest or

postharvest testing when there is reason

to believe that agricultural inputs used

in organic agriculture production or

agricultural products to be sold or

labeled as organically produced have

come into contact with prohibited

substances or have been produced using

excluded methods. The cost of such

testing will be borne by the applicable

certifying agent 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

final rule 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 or a

product produced using excluded

methods found in or on samples during

analysis will serve as a warning

indicator to the certifying agent.

The Administrator, SOP’s governing

State official, or certifying agent may

require preharvest or postharvest testing

of any agricultural input used in organic

agricultural production or any

agricultural product to be sold or

labeled as ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with organic

(specified ingredients or food

group(s)).’’ It is based on the

Administrator’s, SOP’s governing State

official’s, or certifying agent’s belief that

an agricultural product or agricultural

input has come into contact with one or

more prohibited substances or has been

produced using excluded methods.

Certifying agents do not have to conduct

residue tests if they do not have reason

to believe that there is a need for testing.

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80629

Certifying agents must ensure, however,

that certified organic operations are

operating in accordance with the Act

and the regulations set forth in this part.

The ‘‘reason to believe’’ could be

triggered by various situations, for

example: (1) The applicable authority

receiving a 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) the product from a

certified organic operation being

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, SOP’s

governing State official, or certifying

agent or will conduct sampling.

According to subpart F, Accreditation,

private or State entities accredited as

certifying agents under the NOP must

ensure that its responsibly connected

persons, employees, and contractors

with inspection, analysis, and decisionmaking responsibilities have sufficient

expertise to successfully perform the

duties assigned. Therefore, all

inspectors employed by certifying

agents to conduct sampling must have

sufficient expertise in methods of chainof-custody sampling. Moreover, testing

for chemical residues must be

performed in an accredited laboratory.

When conducting chemical analyses,

the laboratory must incorporate the

analytical methods described in the

most current edition of the Official

Methods of Analysis of the AOAC

International or other current applicable

validated methodology for determining

the presence of contaminants in

agricultural products. Results of all

analyses and tests performed under

section 205.670 must be promptly

provided to the Administrator, except,

that, where an SOP exists, all test results

and analyses should be provided to the

SOP’s governing State official by the

applicable certifying party that

requested testing. Residue test results

and analyses must also be, according to

section 205.403(e)(2), provided to the

owner of the certified organic operation

whose product was tested. All other

parities desiring to obtain such

information must request it from the

applicable certifying agent.

OFPA requires certifying agents, to

the extent of their awareness, to report

violations of applicable laws relating to

food safety to appropriate health

agencies such as EPA and FDA. When

residue testing indicates that an

agricultural product contains pesticide

residues or environmental contaminants

that exceed either the EPA tolerance

level or FDA action level, as applicable,

the certifying agent must promptly

report data revealing such information

to the Federal agency whose regulatory

tolerance or action level has been

exceeded.

Residue Testing and Monitoring Tools

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 5 percent of the Environmental

Protection Agency (EPA) tolerance for

the specific residue detected on the

agricultural product intended to be sold

as organically produced. This

compliance measure, 5 percent of EPA

tolerance for the detected prohibited

residue, will serve as a standard for the

Administrator, SOP’s governing State

officials, and certifying agents to assist

in monitoring for illegal use violations.

In addition, we intend to establish

levels of unavoidable residual

environmental contamination (UREC)

for crop-and site-specific agricultural

commodities to be sold, labeled, or

represented as ‘‘100 percent organic,’’

‘‘organic,’’ or ‘‘made with . . .’’ These

levels will represent limits at which

USDA may take compliance action to

suspend the use of a contaminated area

for organic agricultural production.

Currently, USDA is seeking

scientifically sound principles and

measures by which it can establish

UREC levels to most effectively address

issues of unavoidable residual

environmental contamination with

respect to this rule. However, in the

interim, UREC will be defined as the

Food and Drug Administration’s (FDA)

action levels for poisonous or

deleterious substances in human food or

animal feed. UREC levels will be

initially set for persistent prohibited

substances (aldrin, dieldrin, chlordane,

DDE, etc.) in the environment. 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.

Analyses and test results will 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 or

Products Derived from Excluded

Methods

In the case of residue testing and the

detection of prohibited substances in or

on agricultural products to be sold,

labeled, or represented as ‘‘100 percent

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

. . .’’ products with detectable residues

of prohibited substances that exceed 5

percent of the EPA tolerance for the

specific residue or UREC 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

sections 205.662 and 205.663 of subpart

G, Compliance.

The ‘‘5 percent of EPA tolerance’’

standard is considered a level above

which an agricultural product cannot be

sold as organic, regardless of how the

product may have come into contact

with a potential prohibited substance.

This standard has been established to:

(1) satisfy consumer expectations that

organic agricultural products will

contain minimal chemical residues and

(2) respond to the organic industry’s

request to implement a standard

comparable to current industry

practices. However, the ‘‘5 percent of

EPA tolerance’’ standard cannot be used

to automatically qualify agricultural

products as organically produced, even

if the level of chemical residues

detected on an agricultural product is

below 5 percent of the EPA tolerance for

the respective prohibited substance.

This final rule is a comprehensive set of

standards and regulations that

determines whether a product can or

cannot be considered to carry the

specified organic labeling terms in

subpart D, Labeling. Therefore, in

addition to this section of subpart G,

Administrative, all other requirements

of this part must be met by certified

organic operations to have an

agricultural product considered

‘‘organically produced.’’

When residue testing detects the

presence of any prohibited substance,

whether above or below 5 percent of the

EPA tolerance for the specific pesticide

or UREC, the SOP’s governing State

official or certifying agent may conduct

an investigation of the certified organic

80630 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

operation to determine the cause of the

prohibited substance or product in or on

the agricultural product to be sold or

labeled as organically produced. The

same shall occur if testing detects a

product produced using excluded

methods. If the investigation reveals that

the presence of the prohibited substance

or product produced using excluded

methods in or on an agricultural

product intended to be sold as

organically produced is the result of an

intentional application of a prohibited

substance or use of excluded methods,

the certified organic operation shall be

subject to suspension or revocation of

its organic certification. In addition, any

person who knowingly sells, labels, or

represents an agricultural product as

organically produced in violation of the

Act or these regulations shall be subject

to a civil penalty of not more than

$10,000 per violation.

Emergency Pest 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 or disease

treatment program and the organic

handling or production operation

otherwise meets the requirements of this

final rule, the certification status of the

operation shall not be affected as a

result of the application of the

prohibited substance, except 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 or disease treatment program

cannot be sold, labeled, or represented

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

‘‘made with . . .’’ 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 . . .’’

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 proposal in several respects as

follows:

(1) Reporting Requirements.

Commenters were not satisfied with the

language in section 205.670(d)(1) that

required results of all analyses and tests

performed under section 205.670 to be

provided to the Administrator promptly

upon receipt. They asked that the

paragraph be amended to include that:

(1) Results of all analyses and tests

performed under section 205.670 be

provided by the Administrator to the

appropriate SOP’s governing State

official; and (2) test results be made

immediately available to the owner of

the material sampled. They stated that

since State organic certification

programs are responsible for

enforcement within their State, results

of residue tests conducted by certifying

agents must be provided to the SOP’s

governing State official for routine

monitoring and for investigating

possible violations of the Act.

We agree with the commenters and

have responded to their concerns

accordingly. To ensure that SOP’s

receive results of all tests and analyses

conducted under the inspection and

testing requirements of subpart G,

section 205.670(d) has been amended to

include that the results of all analyses

and residue tests must be provided to

the Administrator promptly upon

receipt; Except: That where an SOP

exists, all test results and analyses

should be provided to the SOP’s

governing State official.

In regard to the commenters’ request

that certified organic operations be

provided with a copy of test results from

samples taken by an inspector, an

additional paragraph, section

205.403(e)(2), has been added to subpart

E, Certification, that assures that such

information is provided to the owners of

certified organic operations by the

certifying agents.

(2) Integrity Of Organic Samples. We

have modified language in section

205.670(c) to clarify our intent regarding

the maintenance of sample integrity.

The proposed rule stated that ‘‘sample

integrity must be maintained in transit,

and residue testing must be performed

in an accredited laboratory.’’ During the

final rulemaking process, we did not

believe that our intent was clear on this

subject. Our intent is to ensure that

sample integrity is maintained

throughout the entire chain of custody

during the residue testing process.

Proposed language only suggests that

sample integrity be maintained in

transit. Therefore, we have changed the

second sentence in section 205.670(c) to

state that ‘‘sample integrity must be

maintained throughout the chain of

custody, and residue testing must be

performed in an accredited laboratory.’’

(3) Reporting Residue and Other Food

Safety Violations to Appropriate Health

Agencies. In the proposed rule, section

205.671(b) under Exclusion from

Organic Sale states, ‘‘If test results

indicate a specific agricultural product

contains pesticide residues or

environmental contaminants that

exceed the FDA’s or the EPA’s

regulatory tolerances, the data must be

reported promptly to the appropriate

public health agencies.’’ During the final

rulemaking process, a group of

commenters suggested that we move

section 205.671(b) into section 205.670

as paragraph (e). They recommended

that we move section 205.671(b)

because it does not specifically address

the sale of organically produced

products, as indicated by the section

heading. They recommended that

section 205.671(b) be placed under

section 205.670 as paragraph (e) because

it dealt with the reporting of residues

that exceed Federal regulatory

tolerances. The commenters further

stated that, while section 205.671(b)

creates a duty to report, it is not specific

as to who must report.

We have accepted the suggestions of

the commenters and have responded

accordingly. We have removed section

205.671(b) and relocated it under

section 205.670 as paragraph (e). We

have also modified the regulatory text of

paragraph (e) to include language that

instructs certifying agents to report,

when residue testing indicates that an

agricultural product contains pesticide

residues or environmental contaminants

that exceed either the EPA tolerance

level or FDA action level, as applicable,

data reveling such information to the

Federal agency whose regulatory

tolerance or action level has been

exceeded.

(4) Exclusion from Organic Sale. We

have reviewed section 205.671(a),

removed the requirement to implement

the Pesticide Data Program (pdp)

estimated national mean as a

compliance tool in monitoring for the

presence of unacceptable levels of

prohibited substances in agricultural

products intended to be sold as organic,

and added the ‘‘5 percent of EPA

tolerance’’ standard.

Commenters voiced the opinion that

the estimated national mean would be a

difficult standard in organic agricultural

production for several reasons. Some

stated that the estimated national mean

was a new concept that would confuse

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80631

producers and handlers because they

would not know the exact definition of

‘‘estimated national mean’’ and how it

would be determined. Others stated that

the PDP was too limited in scope to

employ an estimated national mean for

all commodity/pesticide combinations.

Commenters reasoned that PDP data

were limited in terms of the agricultural

commodities that are sampled and

tested.

Another group of commenters stated

that PDP data would be unfair to use in

the NOP’s residue testing plan. They

argued PDP data should not be used to

set maximum residue levels for organic

agricultural products because PDP

samples its products as close to the

point of consumption as possible. As a

result, commenters believe that PDP

data may not be totally reflective of

residue levels of agricultural products at

the farmgate level. Since most residue

testing in organic agricultural

production takes place at the farmgate,

these commenters argued that it would

be an inappropriate standard for organic

agricultural production.

As a result, a large number of

commenters suggested that we

reconsider using the estimated national

mean as a standard for the maximum

allowable residues on organically

produced products. Instead,

commenters recommended that the NOP

incorporate the National Organic

Standards Board’s (NOSB)

recommendation and current industry

practice of using 5 percent of the EPA

tolerance as a maximum level of

pesticide residue on organic agricultural

products. Commenters argued that using

5 percent of the EPA tolerance provides

a sense of confidence to the consumers

of organic agricultural products.

In many respects, we agree with the

commenters. We have revisited using

PDP data to establish an estimated

national mean for commodity/pesticide

combinations and for setting a

maximum level of pesticide residue that

could exclude agricultural products

from being sold, labeled, or represented

as organic. As a result, we have

concluded that such an approach may

be somewhat underdeveloped to

incorporate into the NOP. We have

reached this conclusion based on many

of the same arguments presented by

commenters (i.e., limited scope of

agricultural products tested under PDP,

product sampling based upon market

availability, testing near the point of

consumption, etc.). Also, we estimated

that there would be a considerable time

lag between the implementation of the

NOP and defining a comprehensive list

of estimated national means for all

commodity/pesticide combinations.

Thus, we have decided not to use the

estimated national mean as a tool for

monitoring organic agricultural

products for the presence of prohibited

substances and as a standard to exclude

agricultural products from being sold,

labeled, or represented as organically

produced.

Instead, we have decided to follow

the recommendation of the commenters

by replacing the estimated national

mean for specific commodity/pesticide

pairs with 5 percent of the EPA

tolerance for the specific pesticide.

Therefore, when residue testing detects

prohibited substances at levels that are

greater than 5 percent of the EPA

tolerance for the specific pesticide

detected on the particular product

samples, the agricultural product must

not be sold or labeled as organically

produced.

We fully understand that the EPA

tolerance is defined as the maximum

legal level of a pesticide residue in or on

a raw or processed agricultural

commodity. We also acknowledge that

the EPA tolerance is a health-based

standard. We are not trying to employ

the 5 percent standard in a manner

similar to that of EPA. As mentioned in

our proposal, the national organic

standards, including provisions

governing prohibited substances, are

based on the method of production, not

the content of the product. The primary

purpose of the residue testing approach

described in this final rule, then, is to

provide an additional tool for SOP’s

governing State officials and certifying

agents to use in monitoring and

ensuring compliance with the NOP.

(5) Unavoidable Residual

Environmental Contamination. We have

defined, as an interim measure, UREC as

the FDA action levels for poisonous or

deleterious substances in human food or

animal feed.

Section 205.671 proposed the use of

UREC to serve as a residue testing tool

for compliance. Commenters believed

UREC levels, as prescribed in section

205.671 of the proposed rule, would be

problematic as a standard because they

were undefined. Commenters argued

that it would be impractical and very

expensive to establish UREC levels for

every organic crop and region in the

United States. They suggested that

UREC levels be managed as a practice

standard or program manual issue. They

also expressed the concern that

inconsistent application of UREC levels

could create difficulties for certifying

agents and certified operations.

We agree that UREC levels should be

defined. We are seeking scientifically

sound principles and measures by

which we can establish UREC levels to

most effectively address issues of

unavoidable residual contamination

with respect to this rule. However, in

the interim, the ability to implement an

undefined standard would be difficult

for certifying agents. Therefore, we have

included language in the preamble that

temporarily defines UREC as the FDA

action levels for poisonous or

deleterious substances in human food or

animal feed. When residue testing

detects the presence of a prohibited

substance on an agricultural product

greater than such levels mentioned, the

agricultural product cannot be sold as

organic. We have decided to use FDA

action levels for UREC because they

encompass many of the toxic, persistent

chemicals and heavy metals that are

present in the environment and may be

found on food and animal feed. As

mentioned earlier, the FDA action levels

are being employed in this part as

temporary measures for compliance. We

will continue to seek scientifically

sound principles and measures by

which to establish UREC levels that

more appropriately satisfy the purposes

of this part.

Residue Testing—Changes Requested

But Not Made

This subpart retains from the

proposed rule regulations on which we

received comments as follows:

(1) Residue Testing Responsibility.

Commenters petitioned that we remove

the requirement in section 205.670(b)

that states residue tests must be

conducted by the applicable SOP’s

governing State official or the certifying

agent at the official’s or certifying

agent’s own expense. The commenters

expressed the opinion that we were

practicing ‘‘micromanagement.’’ They

also said that there was no need for the

proposal to be so detailed with respect

to who pays for residue testing. Based

on the commenters’ responses, residue

analyses are reportedly paid by

producers, buyers, brokers, certifiers,

and government residue testing

programs.

We have not adopted the suggestion

of the commenters. In the proposal, we

stated that conducting residue tests was

considered a cost of doing business for

certifying agents. Our position has not

changed. Certifying agents can factor

residue testing costs into certification

fees. It is not our intention to

‘‘micromanage’’ the way that certifying

agents conduct business. Section

2107(a)(6) of the Act requires that

certifying agents conduct residue testing

of agricultural products that have been

produced on certified organic farms and

handled through certified organic

handling operations. OFPA also

80632 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

requires, under section 2112(a) through

(c), that certifying agents enforce its

provisions by implementing a system of

residue testing to test products sold or

labeled as organically produced. In

addition, subpart E, Certification,

authorizes certifying agents to conduct

on-site inspections, which may include

residue testing, of certified organic

operations to verify that the operation is

complying with the provisions in the

Act and the regulations in this part.

Certifying agents are responsible for

monitoring organic operations for the

presence of prohibited substances; we

view residue testing as a cost of doing

business. Therefore, we believe that

certifying agents should factor

monitoring costs associated with

implementing the provisions in the Act

and Rule into their certification fees.

(2) Reporting to Federal Regulatory

Agencies. Commenters disagree with

section 205.671(b) of the proposed rule

which states that if test results indicate

a specific agricultural product contains

pesticide residues or environmental

contaminants that exceed the FDA

action level or EPA tolerance, the data

must be reported promptly to

appropriate public health agencies.

Commenters believe that since results of

all analyses and tests must be provided

to the Administrator, USDA should be

responsible for communicating such test

results to other Federal agencies such as

FDA or EPA if regulatory tolerances or

action levels are exceeded. They also

suggested that section 205.671(b) be

removed from the national regulations.

Commenters expressed the view that

such a requirement is not related to

organic certification.

We do not agree with the commenters.

It is not our intent to create additional

responsibility for the certifying agent.

Section 205.671(b), redesignated as

section 205.670(e), is a statutory

requirement. Section 2107(a)(6) of the

Organic Food Production Act of 1990

requires certifying agents, to the extent

of their awareness, to report violations

of applicable laws relating to food safety

to appropriate health agencies such as

EPA and FDA. Therefore, due to section

2107 of the Act, section 205.670(e) has

been included in the national

regulations.

(3) ‘‘Threshold’’ for Genetic

Contamination. Many commenters

suggested that we establish a

‘‘threshold’’ for the unintended or

adventitious presence of products of

excluded methods in organic products.

Some commenters argued that a

threshold is necessary because, without

the mandatory labeling of

biotechnology-derived products, organic

operations and certifying agents could

not be assured that products of excluded

methods were not being used. Others

argued that, without an established

threshold, the regulations would

constitute a ‘‘zero tolerance’’ for

products of excluded methods, which

would be impossible to achieve.

We do not believe there is sufficient

consensus upon which to establish such

a standard at this time. Much of the

basic, baseline information about the

prevalence of genetically engineered

products in the conventional

agricultural marketplace that would be

necessary to set such a threshold—e.g.,

the effects of pollen drift where it may

be a factor, the extent of mixing at

various points throughout the marketing

chain, the adventitious presence of

genetically engineered seed in

nonengineered seed lots—is still largely

unknown. Our understanding of how

the use of biotechnology in

conventional agricultural production

might affect organic crop production is

even less well developed.

Also, as was pointed out in some

comments, the testing methodology for

the presence of products of excluded

methods has not yet been fully

validated. Testing methods for some

biotechnology traits in some

commodities are becoming

commercially available. Without

recognized methods of testing for and

quantifying of all traits in a wide range

of food products, however, it would be

very difficult to establish a reliable

numerical tolerance.

There are publicly and privately

funded research projects underway that

may provide useful baseline

information. Efforts of Federal agencies

to clarify the marketing and labeling of

biotechnology- and nonbiotechnologyderived crops may also help address

these concerns. FDA, for example, is

developing guidance for food producers

who voluntarily chose to label

biotechnology- and nonbiotechnologyderived foods. USDA is also preparing

a Federal Register Notice to seek public

comment on the appropriate role, if any,

that it can play in facilitating the

marketing of agricultural products

through the development of ‘‘quality

assurance’’ type programs that help to

preserve the identity of agricultural

commodities. USDA, in cooperation

with the technology providers, is also

working to validate testing procedures

and laboratories for some commodities.

All of these efforts may help to

provide information on this issue.

Practices for preserving product

identity, including segregating

genetically engineered and

nongenetically engineered products, are

evolving in some conventional markets.

As we discussed in the preamble to the

proposed rule, we anticipate that these

evolving industry best practices and

standards will become the standards for

implementing the provisions in this

regulation relating to the use of

excluded methods. As was also

discussed in the proposed rule, these

regulations do not establish a ‘‘zero

tolerance’’ standard. As with other

substances not approve for use in

organic production systems, 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. 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.

(4) Certification Status After

Emergency Pest or Disease Treatment.

We have not modified language in

section 205.672 that would affect the

certification status of a certified organic

operation if the operation had been

subjected to a Federal or State

emergency pest or disease treatment

program.

Section 205.672 states that when a

prohibited substance is applied to a

certified operation due to a Federal or

State emergency pest 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 substance:

Provided, That, the certified operation

adheres to certain requirements

prescribed by the NOP. One group of

commenters informed us that they did

not support maintaining the organic

status of an operation that has been

directly treated with prohibited

substances, regardless of the reason for

treatment. They believe that Federal and

State emergency pest or disease

treatment programs should provide

alternatives for organic operations

whenever feasible. If no alternative

measure is feasible, the organic

operation should choose between

voluntary surrender of their organic

status on targeted parts of the operation

or destruction of the crop to eliminate

pest habitat. The commenters also

suggested that compensation should be

provided to organic producers whose

crops must be destroyed to eliminate

habitat. They feel that allowing the

application of prohibited materials to

certified organic land without affecting

the certification status violates the trust

consumers place in organic certification.

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80633

We disagree with the position of the

commenters. Historically, residues from

emergency pest or disease treatment

programs have been treated as drift

cases by certifiers. In these cases, the

specific crop may not be sold as organic,

but the organic status of future crop

years are not affected. We intend to

handle such cases in a similar manner.

We understand that commenters would

like us to remove the certification of an

organic operation that has been treated

with a prohibited substance, but organic

certification is a production claim, not

a content claim. We, along with the

commenters, are concerned with

consumers trusting organic certification.

At the same time, we are concerned

with the welfare of certified organic

operations. We have tried to include

language in section 205.672 that would

address both issues. We believe that, if

a certified organic grower has been a

good steward of his/her land and has

managed the production of his/her

product(s) in accordance with all

regulations in the Act and other

requirements in this part, the

certification status of the operation

should not be affected. The application

of a prohibited substance as part of a

Federal or State emergency pest or

disease treatment program is outside the

control of the certified operation. We

also believe that maintaining consumer

trust is important. Thus, section 205.672

states that any harvested crop or plant

part to be harvested that has been

treated with a prohibited substance as

part of a Federal or State emergency pest

or disease treatment program cannot be

sold as organically produced. Therefore,

the certified organic operation can

retain its certification status, and the

consumer can be assured that a product

from a certified organic operation that

has been in contact with a prohibited

substance as the result of a Federal or

State pest or disease treatment program

will not enter the organic marketplace.

Accordingly, we have not made the

change to section 205.672 as proposed

by the commenters.

(5) Emergency Pest or Disease

Treatment Programs. Commenters

suggested that the Department add a

new paragraph to section 205.672 that

states ‘‘the certifying agent must

monitor production operations that have

been subjected to a Federal or State

emergency pest or disease treatment

program, and may require testing of

following crops, or an extended

transition period for affected production

sites, if residue test results indicate the

presence of a prohibited substance.’’

Commenters said the language in the

proposed rule did not clearly establish

that a transition period could be needed

after contamination of a certified

organic operation by a governmentmandated spray program. They felt that

there may be a need for a case-by-case

determination by the certifying agent as

to when it would be best for a certified

organic operation to begin selling its

products as organically produced after it

has been subject to a government

mandated spray program.

We understand that commenters

would like USDA to mandate certifying

agents to monitor operations that have

been subject to Federal or State

emergency pest or disease treatment

programs; however, we do not see a

need to prescribe such a provision.

Based on the responsibilities of being a

USDA-accredited certifier, it is our

belief that certifying agents would

monitor a certified organic operation

that has been subjected to a Federal or

State emergency pest or disease

treatment program to make sure that

product being produced for organic sale

is actually being produced in

accordance with the Act and the

regulations in this part. Certifying

agents have been granted the authority

to conduct additional on-site

inspections of certified organic

operations to determine compliance

with the Act and national standards

under subpart E, section 205.403.

Commenters requested that we include

language that would allow certifying

agents to recommend an extended

transition period for affected production

sites if residue tests indicate the

presence of a prohibited substance.

Again, we understand the commenters’

concern, but we are not aware of

comprehensive soil residue data that

could guide certifying agents in

determining appropriate withdrawal

intervals for operations that have been

subjected to emergency pest or disease

treatment programs.

Residue Testing—Clarifications

Clarification is given on the following

issues raised by commenters as follows:

(1) Sampling and Testing.

Commenters stated that the purpose of

residue testing under the Act is to

assure that organically produced

agricultural products that are sold as

organic do not contain pesticide

residues or residues of other prohibited

substances that exceed levels as

specified by the NOP. Based on

language in section 205.670(b) of the

proposed rule, commenters expressed

the opinion that the Agricultural

Marketing Service (AMS) was, not only

requiring residue testing of organic

agricultural products, but also of ‘‘any’’

agricultural input used or agricultural

product intended to be sold as ‘‘100

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

with * * *’’ when there is reason to

believe that the agricultural input or

product has come into contact with a

prohibited substance. Commenters

believe that organic certifying agents

may be required to test many

nonorganic agricultural inputs (such as

seeds, compost, straw, sawdust, and

plastic) and nonorganic agricultural

products and ingredients used in

products labeled as ‘‘made with * * *’’.

They also argued that such testing

would be unnecessary, burdensome,

and expensive because such materials

are more likely to have come into

contact with a prohibited substance.

Therefore, commenters suggested that

we amend section 205.670(b) by

deleting ‘‘agricultural inputs’’ and

replacing ‘‘agricultural product’’ with

‘‘organically produced agricultural

product.’’ They also recommended that

we replace the second occurrence of

‘‘product’’ with ‘‘organic product.’’ Thus

section 205.670(b) would suggest that

only organic agricultural products could

be required to be tested by the certifying

agent.

We understand the concerns of the

commenters but believe that the

commenters have misinterpreted the

intent of section 205.670(b). It is not our

intent to mandate residue testing of all

inputs and ingredients used in the

production of organic agricultural

products. Neither is it our intent for

certifying agents to abuse residue testing

responsibility by conducting residue

tests of certified organic operations

without reason to believe that the

agricultural input or product intended

to be sold as organic has come into

contact with prohibited substances. Our

intent is to make it clear that certifying

agents have the authority to test any

agricultural input used or agricultural

product intended to be sold as

organically produced when there is

reason to believe that the agricultural

input or product has come into contact

with a prohibited substance. Section

205.670(b) allows for testing of inputs

and agricultural products, but it does

not require that all inputs of a product

intended to be sold as organically

produced must be tested. However,

certifying agents must be able to ensure

that certified organic operations are

operating in accordance with the Act

and the regulations set forth in this part.

To assure that certifying agents have

established fair and effective procedures

for enforcing residue testing

requirements, section 205.504(b)(6)

provides that they must submit to USDA

a copy of the procedures to be used for

80634 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

sampling and residue testing pursuant

to section 205.670.

(2) Chain Of Custody Training. A

commenter suggested that section

205.670(c) address chain of custody

training for inspectors that will be

performing preharvest or postharvest

tissue test sample collection on behalf of

the Administrator, SOP’s governing

State official, or certifying agent. The

commenter proposed that all inspectors

should be trained to handle chain of

custody samples in order to maintain

the integrity of the samples.

We agree that inspectors should be

appropriately trained to handle chainof-custody samples in order to maintain

the integrity of the samples taken from

a certified organic operation. However,

we do not believe that the language in

section 205.670(c) must be modified to

address such an issue. As a USDAaccredited body, a private or State entity

operating as a certifying agent must

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 successfully

perform the duties assigned. The

certifying agent must also submit a

description of the training that has been

provided or intends to be provided to

personnel to ensure that they comply

with and implement the requirements of

the Act and the regulations in this part.

In addition, certifying agents must

submit a copy of the procedure to be

used for sampling and residue testing

for approval by the Administrator.

Through the accreditation process,

therefore, we will be able to assess the

expertise of the individuals employed

by the certifying agent and provide

guidance in areas where additional

training is needed to comply with the

requirements of the Act and the

regulations in this part.

(3) Exclusion from Organic Sale.

Commenters expressed that section

205.671(a) could be easily

misinterpreted. They said that section

205.671(a) did not make clear that

residue testing may not be used to

qualify crops to be sold as organic if a

direct application of prohibited

materials occurred. Commenters

suggested that section 205.671(a)

include: ‘‘Any crop or product to which

prohibited materials have been directly

applied shall not be sold, labeled, or

represented as organically produced.’’

We do not believe this additional

language is necessary. Residue testing

cannot be used to qualify any

agricultural crop or product to which a

prohibited material has been

purposefully/directly applied. The

presence of any prohibited substance on

an agricultural product to be sold as

organic warrants an investigation as to

why the detected prohibited substance

is present on the agricultural product. It

does not matter if the product has come

into contact with a prohibited substance

through means of drift or intentional

application. If the outcome of the

investigation reveals that the presence

of the detected prohibited substance is

the result of an intentional application,

the certified operation will be subject to

suspension or revocation of its organic

certification and/or a civil penalty of not

more than $10,000 if he/she knowingly

sells the product as organic. The use of

prohibited substances is not allowed in

the Act or this final rule. Residue testing

is not a means of qualifying a crop or

product as organic if a prohibited

substance has been intentionally/

directly applied. It is a tool for

monitoring compliance with the

regulations set forth in the Act and in

this part.

(4) Emergency Pest or Disease

Treatment Programs. Commenters

requested that we make a clear

distinction between crops or

agricultural products that have had

prohibited substances directly applied

to them and those that have come into

contact with prohibited substances

through chemical drift. They have

proposed that we amend section

205.672(a) to address this issue. Section

205.672(a) of the proposal states that

any harvested crop or plant part to be

harvested that has had contact with a

prohibited substance applied as the

result of a Federal or State emergency

pest or disease treatment program

cannot be sold as organically produced.

Commenters did not find this language

acceptable because it did not

distinguish between the two types of

ways that products can come into

contact with prohibited substances (drift

and direct/intentional application) and

how each situation would be addressed

with respect to the national organic

standards. Commenters believed that

section 205.672(a) was fairly ambiguous

and open for misinterpretation.

Commenters requested that we amend

language in section 205.672(a) to

include that ‘‘Any harvested crop or

plant part to be harvested that has

contact with a prohibited substance

directly applied to the crop as the result

of a Federal or State emergency pest or

disease treatment program cannot be

sold, labeled, or represented as

organically produced.’’

We do not accept the commenters’

request and believe that the commenters

have misinterpreted section 205.672 of

the proposed rule. Section 205.672

specifically addresses certified organic

operations that have had prohibited

substances applied to them due to a

Federal or State pest or disease

treatment program. Section 205.672

does not include those organic

operations that may have been drifted

upon by prohibited substances that have

been applied to a neighboring farm as a

result of a Federal or State emergency

pest or disease treatment program. Any

potential drift from a mandatory pest

and disease treatment program will be

treated in the same manner as drift from

any other source.

Adverse Action Appeal Process

This portion of subpart G sets forth

the procedures for appealing adverse

actions under the National Organic

Program (NOP). These procedures will

be used by: (1) Producers and handlers

appealing denial of certification and

proposed suspension or revocation of

certification decisions; and (2) certifying

agents appealing denial of accreditation

and proposed suspension or revocation

of accreditation decisions. The Act and

the Administrative Procedure Act (APA)

(5 U.S.C. 553–559) provides affected

persons with the right to appeal any

adverse actions taken against their

application for certification or

accreditation or their certification or

accreditation.

The Administrator will handle

certification appeals from operations in

States that do not have an approved

State organic program (SOP). The

Administrator will also handle appeals

of accreditation decisions of the NOP

Program Manager. The Administrator

will issue decisions to sustain or deny

appeals. If an appeal is denied, the

Administrator will initiate a formal

adjudicatory proceeding to deny,

suspend, or revoke certification or

accreditation. Such proceedings will be

conducted pursuant to USDA’s Rules of

Practice Governing Formal Adjudicatory

Proceedings Instituted by the Secretary

Under Various Statutes, 7 CFR 1.130

through 1.151. Under these rules of

practice, if the Administrative Law

Judge denies the appeal, the appellant

may appeal the Administrative Law

Judge’s decision to the Judicial Officer.

If the Judicial Officer denies the appeal,

the appellant may appeal the Judicial

Officer’s decision to the United States

District Court for the district in which

the appellant is located.

In States with approved SOP’s, the

SOP will oversee certification

compliance proceedings and handle

appeals from certified operations in the

State. An SOP’s appeal procedures and

rules of procedure must be approved by

the Secretary and must be equivalent to

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80635

those of the NOP and USDA. The final

decision on an appeal under the SOP

may be appealed by the appellant to

United States District Court for the

district in which the appellant is

located.

Description of Regulations

These appeal procedures provide that:

(1) Persons, subject to the Act, who

believe they are adversely affected by a

noncompliance decision of the NOP’s

Program Manager may appeal such

decision to the Administrator; (2)

persons, subject to the Act, who believe

they are adversely affected by a

noncompliance decision of an SOP may

appeal such decision to the SOP’s

governing State official who will initiate

handling of the appeal in accordance

with the appeal procedures approved by

the Secretary; and (3) persons, subject to

the Act, who believe they are adversely

affected by a noncompliance decision of

a certifying agent may appeal such

decision to the Administrator unless the

person is subject to an approved SOP,

in which case the appeal must be made

to the SOP.

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. All

appeals filed under these procedures

will be reviewed, heard, and decided by

persons not involved with the decision

being appealed.

Certification Appeals

Applicants for certification may

appeal a certifying agent’s notice of

denial of certification. Certified

operations may appeal a notification of

proposed suspension or revocation of

their certification issued by their

certifying agent. Such appeals will be

made to the Administrator unless the

person is subject to an approved SOP,

in which case the appeal must be made

to the SOP.

If the Administrator or SOP sustains

an appeal, the applicant or certified

operation will be granted certification or

continued certification, as applicable to

the operation’s status. 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 notice of denial of

certification or notification of proposed

suspension or revocation of

certification.

If the Administrator or SOP denies an

appeal, a formal administrative

proceeding will be initiated to deny,

suspend, or revoke the certification.

Such proceeding will be conducted in

accordance with USDA’s Uniform Rules

of Practice or the SOP’s rules of

procedure.

Accreditation Appeals

Applicants for accreditation may

appeal the Program Manager’s

notification of accreditation denial.

Accredited certifying agents may appeal

a notification of proposed suspension or

revocation of their accreditation issued

by the Program Manager. Such appeals

will be made to the Administrator. If the

Administrator sustains an appeal, the

applicant or certifying agent will be

granted accreditation or continued

accreditation, as applicable to the

operation’s status. If the Administrator

denies an appeal, a formal

administrative proceeding will be

initiated to deny, suspend, or revoke the

accreditation. Such proceeding will be

conducted in accordance with USDA’s

Uniform Rules of Practice.

Filing Period

An appeal of a noncompliance

decision must be filed within the time

period provided in the letter of

notification or within 30 days from the

date of receipt of the notification,

whichever occurs later. The appeal will

be considered ‘‘filed’’ on the date

received by the Administrator or, when

applicable, the SOP. Unless appealed in

a timely manner, a notification to deny,

suspend, or revoke a certification or

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.

Where and What to File

Appeals to the Administrator must be

filed in writing and sent to:

Administrator, USDA–AMS, Room

3071–S, P.O. Box 96456, Washington,

DC 20090–6456. Appeals to the SOP

must be filed in writing to the address

and person identified in the letter of

notification. All appeals 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 or made in

accordance with applicable program

regulations, policies, or procedures.

Appeals—Changes Based On Comments

This portion of subpart G differs from

the proposal in several respects as

follows:

(1) To Whom an Appeal Is Made. We

have amended section 205.680 to clarify

to whom an appeal is made when the

noncompliance decision is made by the

NOP’s Program Manager, an SOP, or a

certifying agent. Several commenters

requested that we amend section

205.680 to make it consistent with the

provision providing that appeals to the

Administrator are not allowed in the

case of an SOP decision, because such

appeals have to be made to the SOP’s

governing State official.

We agree that section 205.680 did not

convey sufficient explanation of to

whom an appeal is made. Accordingly,

we have amended the language in

section 205.680 to clarify through

paragraphs (a), (b), and (c) that: (1)

Persons, subject to the Act, who believe

they are adversely affected by a

noncompliance decision of the NOP’s

Program Manager may appeal such

decision to the Administrator; (2)

persons, subject to the Act, who believe

they are adversely affected by a

noncompliance decision of an SOP may

appeal such decision to the SOP’s

governing State official who will initiate

handling of the appeal pursuant to

appeal procedures approved by the

Secretary; and (3) persons, subject to the

Act, who believe they are adversely

affected by a noncompliance decision of

a certifying agent may appeal such

decision to the Administrator unless the

person is subject to an approved SOP,

in which case the appeal must be made

to the SOP.

(2) Written Communications. We have

added a new paragraph (d) to section

205.680, which provides that 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. We have taken

this action to further clarify the appeals

process. This addition to section

205.680 implements the same

requirements for appeal documents as

our addition of new paragraph (d) to

section 205.660 stipulates for

compliance documents.

(3) Who Shall Handle Appeals. We

have added a new paragraph (e) to

section 205.680, which provides that all

appeals must be reviewed, heard, and

decided by persons not involved with

the decision being appealed. This

provision was added to section 205.680

to allay the fears of commenters that the

person making the decision would be

the person deciding the appeal. A

couple of commenters recommended

that an appeal be heard by persons other

than those who made the decision being

appealed. Specifically, they want the

appeal conducted by independent

hearing officers who are not responsible

for implementation or administration of

the NOP. They also want the final

decision-making authority in the

administrative review process placed in

the hands of the Secretary.

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Under the NOP, once the compliance

procedures are completed at the

certifying agent level, the certified

operation may appeal the decision of

the certifying agent to the Administrator

or to the SOP when the certified

operation is located within a State with

an approved SOP. The Administrator or

the SOP will review the case and render

an opinion on the appeal. When the

appeal is sustained, the certified

operation and certifying agent are

notified and the case ends. However, if

the appeal is denied the certified

operation and certifying agent are

notified and the certified operation is

given an opportunity to appeal the

decision of the Administrator or SOP.

Appeals of decisions made by the

Administrator will be heard by an

Administrative Law Judge. If the

Administrative Law Judge rules against

the certified operation, the

Administrative Law Judge’s decision

may be appealed by the certified

operation to the Judicial Officer. The

Judicial Officer is the USDA official

delegated authority by the Secretary as

the final deciding officer in adjudication

proceedings. If the Judicial Officer rules

against the certified operation, the

Judicial Officer’s decision may be

appealed by the certified operation to

the United States District Court for the

district in which the certified operation

is located. For additional information

see USDA’s Uniform Rules of Practice

found at 7 CFR part 1, subpart H.

Appeals of decisions made by an SOP

will follow procedures comparable to

those just described for an appeal of a

decision made by the Administrator. As

with a final decision of USDA, a final

decision of the State that goes against

the certified operation may be appealed

to the United States District Court for

the district in which the certified

operation is located.

(4) Filing Period. We have amended

the first sentence of section 205.681(c)

by replacing ‘‘at least’’ with ‘‘within’’

and by adding the words, ‘‘whichever

occurs later,’’ to the end thereof. This

amendment has been made to clarify

our intent that persons affected by a

noncompliance proceeding decision

receive not less than 30 days in which

to file their appeal of the decision.

(5) Where To File an Appeal. We have

amended section 205.681(d) to clarify

where appeals are to be filed. First, we

have amended what is now paragraph

(1) by removing the requirement that the

appellant send a copy of the appeal to

the certifying agent. This action shifts

the responsibility of notifying the

certifying agent of the appeal from the

appellant to USDA or, when applicable,

the SOP. Second, we have added

language at paragraph (2) which clarifies

that appeals to the SOP must be filed in

writing to the address and person

identified in the letter of notification.

Finally, we have amended what is now

paragraph (3) of section 205.681 by

replacing ‘‘position’’ with ‘‘reasons for

believing’’ to clarify the intended scope

and purpose of the appellant’s appeal

statement. Clarification of section

205.681(d) was prompted by a

commenter who stated that it is

discriminatory to require clients of

private certifying agents to appeal to

USDA in Washington, when State

program clients can appeal locally.

There are various levels of appeal

within the NOP. Clients of certifying

agents (State and private) are provided

with an opportunity to rebut the

noncompliance findings of the

certifying agent. Once the certified

operation has exhausted its options at

the certifying agent level, the certified

operation may appeal the decision of

the certifying agent to the Administrator

or to the SOP when the certified

operation is located within a State with

an approved SOP.

The Administrator will review the

case and render an opinion on the

appeal. This level of appeal will not

require the certified operation’s

representative to travel to the

Administrator. An appeal of a decision

made by the Administrator will be

heard by an Administrative Law Judge

as near as possible to the certified

operation’s representative’s place of

business or residence. An appeal of a

decision made by the Administrative

Law Judge will be heard by the Judicial

Officer. Again the certified operation’s

representative will not be required to

travel outside of the representative’s

place of business or residence. If the

certified operation appeals the decision

of the Judicial Officer, the appeal would

be heard by the United States District

Court for the district in which the

certified operation is located.

Appeals of decisions made by an SOP

will follow procedures comparable to

those just described for an appeal of a

decision made by the Administrator. As

with a final decision of USDA, a final

decision of the State that goes against

the certified operation may be appealed

to the United States District Court for

the district in which the certified

operation is located.

(6) Appeal Reports. We will submit an

annual report on appeals to the National

Organic Standards Board (NOSB),

which will include nonconfidential

compliance information. A commenter

requested that we report quarterly to the

NOSB on appeals (number, outcome,

kinds, and problems). We agree that it

would be appropriate for the NOP to

submit an appeals report to the NOSB.

We will compile appeal data such as the

number, outcome, kinds, and problems

encountered. We will maintain this

information under the compliance

program to be developed within the

NOP. We do not believe that it is

necessary to put this type of detail or

activity into the regulations. Further, we

do not believe, at this time, that

reporting more frequently than annually

will be needed. The NOP, however, will

work closely with the NOSB to provide

it with the information it may need to

recommend program amendments

designed to address compliance and

appeal issues.

(7) Availability of Appeal

Information. We will develop and

distribute appeal information. A

commenter requested that section

205.680 be amended to require the

distribution of an appeal information

brochure to any applicant for

accreditation or certification. We agree

that the development and distribution of

such information is a good idea. We do

not believe, however, that it is necessary

or appropriate to put this type of detail

or activity into the regulations. We plan

to provide program information,

including appeals and related issues, on

the NOP website.

Appeals—Changes Requested But Not

Made

This portion of subpart G retains from

the proposed rule, regulations on which

we received comments as follows:

(1) National Appeals Division. Several

commenters recommend amending

sections 205.680 and 205.681 to provide

for appeals to the National Appeals

Division under the provisions at 7 CFR

part 11. We disagree with the request

that the NOP use the National Appeals

Division Rules of Procedure. The Act

and its implementing regulations are

subject to the APA for rulemaking and

adjudication. The provisions of the APA

generally applicable to agency

adjudication are not applicable to

proceedings under 7 CFR part 11,

National Appeals Division Rules of

Procedure. USDA uses 7 CFR part 1,

Rules of Practice Governing Formal

Adjudicatory Proceedings Instituted by

the Secretary Under Various Statutes,

for adjudicatory proceedings involving

the denial, suspension, and revocation

of certification and accreditation.

Appeals—Clarifications

Clarification is given on the following

issues raised by commenters:

(1) Appeals. A commenter stated that

appeals of certification decisions should

always be taken first to the certifying

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80637

agent to provide an opportunity to

rectify any possible error. Another

commenter requested an appeals

process that includes private certifying

agents.

Section 205.662(a) requires a written

notification of noncompliance with

opportunity to rebut or correct. When

the noncompliance has been resolved

due to rebuttal or correction, a written

notification of noncompliance

resolution is issued in accordance with

section 205.662(b). When rebuttal is

unsuccessful or correction of the

noncompliance is not completed within

the prescribed time period, a written

notification of proposed suspension or

revocation will be issued in accordance

with section 205.662(c). This

notification will advise the certified

operation of its right to request

mediation or file an appeal with the

Administrator or, when applicable, an

SOP. We believe this process of

providing a notification of

noncompliance with opportunity to

rebut or correct, followed by a

notification of proposed suspension or

revocation, provides ample opportunity

for the certified operation to work with

its certifying agent to resolve issues of

noncompliance.

(2) Timely Notification. A few

commenters requested that we amend

section 205.680 to include mandatory

procedures for timely written notice of

an adverse decision, the reasons for the

decision, the person’s appeal rights, and

the procedures for filing an appeal. We

recognize that all compliance activities

need to be carried out as quickly and

expeditiously as possible within the

confines of due process. We believe that

the commenters’ concerns are addressed

through various sections of these

regulations. Section 205.402(a) requires

review of an application upon

acceptance of the application. Section

205.405, on denial of certification,

requires a notification of

noncompliance, followed, as applicable,

by a notice of denial of certification. In

accordance with section 205.405(d), the

notice of denial of certification will state

the reasons for denial and the

applicant’s right to request mediation or

appeal the decision. Section 205.507 on

denial of accreditation requires a

notification of noncompliance,

followed, as applicable, by a denial of

accreditation. The notification of

accreditation denial will state the

reasons for denial and the applicant’s

right to appeal the decision. Compliance

sections 205.662 for certified operations

and 205.665 for certifying agents require

a notification of noncompliance with an

opportunity to correct or rebut the

noncompliance(s). Sections 205.662 and

205.665, when applicable, require the

issuance of a notification of proposed

suspension or revocation. Such notice

must describe the noncompliance and

the entity’s right to an appeal. Section

205.681 provides the procedures for

filling an appeal.

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, Imports, Labeling,

Organically produced products, Plants,

Reporting and recordkeeping

requirements, Seals and insignia, Soil

conservation.

For the reasons set forth in the

preamble, Title 7, Chapter I of the Code

of Federal Regulations is amended as

follows:

PARTS 205–209 [REMOVED]

1. Parts 205 through 209, which are

currently reserved in subchapter K

(Federal Seed Act), are removed.

2. A new subchapter M consisting of

parts 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 [Reserved]

205.105 Allowed and prohibited

substances, methods, and ingredients in

organic production and handling.

205.106–205.199 [Reserved]

Subpart C—Organic Production and

Handling Requirements

205.200 General.

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.

205.273–205.289 [Reserved]

205.290 Temporary variances.

205.291–205.299 [Reserved]

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 or

food group(s)).’’

205.305 Multiingredient packaged products

with less that 70 percent organically

produced ingredients.

205.306 Labeling of livestock feed.

205.307 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 or food group(s)).’’

205.308 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.’’

205.309 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 or food group(s)).’’

205.310 Agricultural products produced on

an exempt or excluded operation.

205.311 USDA Seal.

205.312–205.399 [Reserved]

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 Granting 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.

80638 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

205.506 Granting accreditation.

205.507 Denial of accreditation.

205.508 Site evaluations.

205.509 Peer review panel.

205.510 Annual report, recordkeeping, and

renewal of accreditation.

205.511–205.599 [Reserved]

Subpart G—Administrative

The National List of Allowed and Prohibited

Substances

205.600 Evaluation criteria for allowed and

prohibited substances, methods, and

ingredients.

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.

205.605 Nonagricultural (nonorganic)

substances allowed as ingredients in or

on processed products labeled as

‘‘organic,’’ or ‘‘made with organic

(specified ingredients or food group(s)).’’

205.606 Nonorganically produced

agricultural products allowed as

ingredients in or on processed products

labeled as ‘‘organic’’ or ‘‘made with

organic (specified ingredients or food

group(s)).’’

205.607 Amending the National List.

205.608–205.619 [ Reserved]

State Organic Programs

205.620 Requirements of State organic

programs.

205.621 Submission and determination of

proposed State organic programs and

amendments to approved State organic

programs.

205.622 Review of approved State organic

programs.

205.623–205.639 [Reserved]

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 Investigation of certified

operations.

205.662 Noncompliance procedure for

certified operations.

205.663 Mediation.

205.664 [Reserved]

205.665 Noncompliance procedure for

certifying agents.

205.666–205.667 [Reserved]

205.668 Noncompliance procedures under

State Organic 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.

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,

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.

Agricultural Marketing Service (AMS).

The Agricultural Marketing Service of

the United States Department of

Agriculture.

Allowed synthetic. A substance that is

included on the National List of

synthetic substances allowed for use in

organic production or handling.

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 or 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 70 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.

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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 food

group(s)),’’ or, in the case of agricultural

products containing less than 70 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,

processing, transportation, storage or

handling, other than during the

manufacture of a multiingredient

product containing both types of

ingredients.

Compost. The product of a managed

process through which microorganisms

break down plant and animal materials

into more available forms suitable for

application to the soil. Compost must be

produced through a process that

combines plant and animal materials

with an initial C:N ratio of between 25:1

and 40:1. Producers using an in-vessel

or static aerated pile system must

maintain the composting materials at a

temperature between 131° F and 170° F

for 3 days. Producers using a windrow

system must maintain the composting

materials at a temperature between 131°

F and 170° F for 15 days, during which

time, the materials must be turned a

minimum of five times.

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 rotation.

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

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.

Excluded methods. 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 include cell fusion,

microencapsulation and

macroencapsulation, and recombinant

DNA technology (including gene

deletion, gene doubling, introducing a

foreign gene, and changing the positions

of genes when achieved by recombinant

DNA technology). Such methods do 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 added to

feed in micro quantities to fulfill a

specific nutritional need; i.e., essential

nutrients in the form of amino acids,

vitamins, and minerals.

Feed supplement. A combination of

feed nutrients added to livestock 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. Vegetative material in a fresh,

dried, or ensiled state (pasture, hay, or

silage), which is fed to livestock.

Governmental entity. Any domestic

government, tribal government, or

foreign governmental subdivision

providing certification services.

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.

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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 (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.

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.

Inspector. Any person retained or

used by a certifying agent to conduct

inspections of certification applicants or

certified production or handling

operations.

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.

Manure. Feces, urine, other

excrement, and bedding produced by

livestock that has not been composted.

Market information. Any written,

printed, audiovisual, or graphic

information, including advertising,

pamphlets, flyers, catalogues, posters,

and signs, distributed, broadcast, or

made available outside of retail outlets

that are used to assist in the sale or

promotion of a product.

Mulch. Any nonsynthetic material,

such as wood chips, leaves, or straw, or

any synthetic material included on the

National List for such use, such as

newspaper or plastic that serves to

suppress weed growth, moderate soil

temperature, or conserve soil moisture.

Narrow range oils. Petroleum

derivatives, predominately of paraffinic

and napthenic fractions with 50 percent

boiling point (10 mm Hg) between 415°

F and 440° F.

National List. A list of allowed and

prohibited substances as provided for in

the Act.

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

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.

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.

Nontoxic. Not known to cause any

adverse physiological effects in animals,

plants, humans, or the environment.

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 production. A production

system that is managed in accordance

with the Act and regulations in this part

to respond to site-specific conditions by

integrating cultural, biological, and

mechanical practices that foster cycling

of resources, promote ecological

balance, and conserve biodiversity.

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.

Pasture. Land used for livestock

grazing that is managed to provide feed

value and maintain or improve soil,

water, and vegetative resources.

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, partnership,

corporation, association, 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

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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 other than annual seedlings but

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 includes 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,

slaughtering, cutting, fermenting,

distilling, eviscerating, preserving,

dehydrating, freezing, chilling, or

otherwise manufacturing and includes

the packaging, canning, jarring, or

otherwise enclosing food in a container.

Processing aid. (1) Substance that is

added to a food during the processing of

such food but is removed in some

manner from the food before it is

packaged in its finished form;

(2) a substance that is added to a food

during processing, is converted into

constituents normally present in the

food, and does not significantly increase

the amount of the constituents naturally

found in the food; and

(3) a substance that is added to a food

for its technical or functional effect in

the processing but is present in the

finished food at insignificant levels and

does not have any technical or

functional effect in that food.

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 the

use of which 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.

Split operation. An operation that

produces or handles both organic and

nonorganic agricultural products.

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 organic program (SOP). 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 organic 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.

Tolerance. The maximum legal level

of a pesticide chemical residue in or on

a raw or processed agricultural

commodity or processed food.

Transplant. A seedling which has

been removed from its original place of

production, transported, and replanted.

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

a site 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 or food group(s))’’

must be certified according to the

provisions of subpart E of this part and

80642 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

must meet all other applicable

requirements of this part.

(b) Any production or handling

operation or specified portion of a

production or handling operation that

has been already certified by a certifying

agent on the date that the certifying

agent receives its accreditation under

this part shall be deemed to be certified

under the Act until the operation’s next

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 February 20,

2001.

(c) Any operation that:

(1) Knowingly sells or labels a

product as organic, except in

accordance with the Act, shall be

subject to a civil penalty of not more

than $10,000 per violation.

(2) Makes a false statement under the

Act to the Secretary, a governing State

official, or an accredited certifying agent

shall be subject to the provisions of

section 1001 of title 18, United States

Code.

§ 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

§ 205.310. The products from such

operations shall not be used as

ingredients identified as organic in

processed products produced by

another handling operation.

(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 only handles

agricultural products that contain less

than 70 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

§§ 205.305 and 205.310; and

(iii) The recordkeeping provisions in

paragraph (c) of this section.

(4) A handling operation or portion of

a handling operation that only identifies

organic ingredients on 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

§§ 205.305 and 205.310; 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 or food group(s))’’

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,

on the premises of the retail food

establishment, raw and ready-to-eat

food from agricultural products that

were previously labeled as ‘‘100 percent

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

organic (specified ingredients or food

group(s))’’ 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

§ 205.310.

(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 quantities 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 organic programs’

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 or food

group(s))’’ 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; and

(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.

§ 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 or food

group(s)).’’

(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 [Reserved]

§ 205.105 Allowed and prohibited

substances, methods, and ingredients in

organic production and handling.

To be sold or labeled as ‘‘100 percent

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

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organic (specified ingredients or food

group(s)),’’ the product must be

produced and handled without the use

of:

(a) Synthetic substances and

ingredients, except as provided in

§ 205.601 or § 205.603;

(b) Nonsynthetic substances

prohibited in § 205.602 or § 205.604;

(c) Nonagricultural substances used in

or on processed products, except as

otherwise provided in § 205.605;

(d) Nonorganic agricultural

substances used in or on processed

products, except as otherwise provided

in § 205.606;

(e) Excluded methods, except for

vaccines: Provided, That, the vaccines

are approved in accordance with

§ 205.600(a);

(f) Ionizing radiation, as described in

Food and Drug Administration

regulation, 21 CFR 179.26; and

(g) Sewage sludge.

§§ 205.106–205.199 [Reserved]

Subpart C—Organic Production and

Handling Requirements

§ 205.200 General.

The producer or handler of a

production or handling operation

intending to sell, label, or represent

agricultural products as ‘‘100 percent

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

organic (specified ingredients or food

group(s))’’ must comply with the

applicable provisions of this subpart.

Production 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, intending to sell, label, or

represent agricultural products as ‘‘100

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

with organic (specified ingredients or

food group(s))’’ 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 for

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,

location(s) where it will be used, and

documentation of commercial

availability, as applicable;

(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 the management

practices and physical barriers

established to prevent commingling of

organic and nonorganic products on a

split operation 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 ‘‘organic,’’

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 § 205.105,

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 manage crop

nutrients and soil fertility through

rotations, cover crops, and the

application of plant and animal

materials.

(c) The producer must manage plant

and animal 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 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) Composted plant and animal

materials produced though a process

that:

(i) Established an initial C:N ratio of

between 25:1 and 40:1; and

(ii) Maintained a temperature of

between 131° F and 170° F for 3 days

using an in-vessel or static aerated pile

system; or

(iii) Maintained a temperature of

between 131° F and 170° F for 15 days

using a windrow composting system,

during which period, the materials must

be turned a minimum of five times.

(3) Uncomposted plant materials.

(d) A producer may manage crop

nutrients and soil fertility 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 by applying:

(1) A crop nutrient or soil amendment

included on the National List of

synthetic substances allowed for use in

organic crop production;

(2) A mined substance of low

solubility;

(3) A mined substance of high

solubility: Provided, That, the substance

is used in compliance with the

conditions established on the National

List of nonsynthetic materials

prohibited for crop production;

(4) 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

(5) A plant or animal material that has

been chemically altered by a

manufacturing process: Provided, That,

the material is included on the National

80644 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

List of synthetic substances allowed for

use in organic crop production

established in § 205.601.

(e) The producer must not use:

(1) Any fertilizer or composted plant

and animal material that contains a

synthetic substance not included on the

National List of synthetic substances

allowed for use in organic crop

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, burning may be used to

suppress the spread of disease or to

stimulate seed germination.

§ 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: Except, That, organically

produced seed must be used for the

production of edible sprouts;

(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) [Reserved]

§ 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 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 crop production may be

applied to prevent, suppress, or control

pests, weeds, or diseases: Provided,

That, the conditions for using the

substance are documented in the

organic system plan.

(f) The producer must not use lumber

treated with arsenate or other prohibited

materials for new installations or

replacement purposes in contact with

soil or livestock.

§ 205.207 Wild-crop harvesting practice

standard.

(a) A wild crop that is intended to be

sold, labeled, or represented as organic

must be harvested from a designated

area that has had no prohibited

substance, as set forth in § 205.105,

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 products that are to be

sold, labeled, or represented as organic

must be from livestock under

continuous organic management from

the last third of gestation 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:

Except, That, when an entire, distinct

herd is converted to organic production,

the producer may:

(i) For the first 9 months of the year,

provide a minimum of 80-percent feed

that is either organic or raised from land

included in the organic system plan and

managed in compliance with organic

crop requirements; and

(ii) Provide feed in compliance with

§ 205.237 for the final 3 months.

(iii) Once an entire, distinct herd has

been converted to organic production,

all dairy animals shall be under organic

management from the last third of

gestation.

(3) 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

livestock, the breeder stock must be

brought onto the facility no later than

the last third of gestation.

(b) The following are prohibited:

(1) Livestock or edible livestock

products that are removed from an

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80645

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 the last third of

gestation may not be sold, labeled, or

represented as organic slaughter stock.

(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 are

organically produced and, if applicable,

organically handled: Except, That,

nonsynthetic substances 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 a feed ration sufficient

to meet nutritional requirements,

including vitamins, minerals, protein

and/or amino acids, fatty acids, energy

sources, and fiber (ruminants);

(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 but not during

lactation 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 for growth

promotion;

(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 the outdoors, 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, curing, heating, drying, mixing,

grinding, churning, separating,

distilling, 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 organically

produced agricultural product 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:

(1) In or on a processed agricultural

product intended to be sold, labeled, or

represented as ‘‘organic,’’ pursuant to

§ 205.301(b), if not commercially

available in organic form.

(2) In or on a processed agricultural

product intended to be sold, labeled, or

represented as ‘‘made with organic

(specified ingredients or food

group(s)),’’ pursuant to § 205.301(c).

(c) The handler of an organic handling

operation must not use in or on

agricultural products intended to be

sold, labeled, or represented as ‘‘100

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

80646 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

with organic (specified ingredients or

food group(s)),’’ or in or on any

ingredients labeled as organic:

(1) Practices prohibited under

paragraphs (e) and (f) of § 205.105.

(2) A volatile synthetic solvent or

other synthetic processing aid not

allowed under § 205.605: Except, That,

nonorganic ingredients in products

labeled ‘‘made with organic (specified

ingredients or food group(s))’’ are not

subject to this requirement.

§ 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; and

(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) Mechanical or physical controls

including but not limited to traps, light,

or sound; or

(2) Lures and repellents using

nonsynthetic or synthetic substances

consistent with the National List.

(c) If the practices provided for in

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

not effective to prevent or control pests,

a nonsynthetic or synthetic substance

consistent with the National List may be

applied.

(d) If the practices provided for in

paragraphs (a), (b), and (c) of this

section are not effective to prevent or

control facility pests, a synthetic

substance not on the National List may

be applied: Provided, That, the handler

and certifying agent agree on the

substance, method of application, and

measures to be taken to prevent contact

of the organically produced products or

ingredients with the substance used.

(e) The handler of an organic handling

operation who applies a nonsynthetic or

synthetic substance to prevent or

control pests must update the

operation’s organic handling plan to

reflect the use of such substances and

methods of application. The updated

organic plan must include a list of all

measures taken to prevent contact of the

organically produced products or

ingredients with the substance used.

(f) Notwithstanding the practices

provided for in paragraphs (a), (b), (c),

and (d) of this section, a handler may

otherwise use substances to prevent or

control pests as required by Federal,

State, or local laws and regulations:

Provided, That, measures are taken to

prevent contact of the organically

produced products or ingredients with

the substance used.

§ 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 are prohibited for

use in the handling of any organically

produced agricultural product or

ingredient labeled in accordance with

subpart D of this part:

(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 has been in contact with

any substance in such a manner as to

compromise the organic integrity of any

organically produced product or

ingredient placed in those containers,

unless such reusable bag or container

has been thoroughly cleaned and poses

no risk of contact of the organically

produced product or ingredient with the

substance used.

§§ 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 drought, wind,

flood, excessive moisture, hail, 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 State organic program’s

governing State official or certifying

agent may recommend in writing to the

Administrator that a temporary variance

from a standard set forth in subpart C of

this part for organic production or

handling operations be established:

Provided, That, such variance is based

on one or more of 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 and 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 to

which the temporary variance applies.

(e) Temporary variances will not be

granted for any practice, material, or

procedure prohibited under § 205.105.

§§ 205.291–205.299 [Reserved]

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. The

term, ‘‘organic,’’ may not be used in a

product name to modify a nonorganic

ingredient in the product.

(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 § 205.307(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.

(d) Livestock feeds produced in

accordance with the requirements of

this part must be labeled in accordance

with the requirements of § 205.306.

§ 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) 100 percent organically

produced ingredients. If labeled as

organically produced, 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

products. Any remaining product

ingredients must be organically

produced, unless not commercially

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80647

available in organic form, or must be

nonagricultural substances or

nonorganically produced agricultural

products produced consistent with the

National List in subpart G of this part.

If labeled as organically produced, such

product must be labeled pursuant to

§ 205.303.

(c) Products sold, labeled, or

represented as ‘‘made with organic

(specified ingredients or food group(s)).’’

Multiingredient agricultural product

sold, labeled, or represented as ‘‘made

with organic (specified ingredients or

food group(s))’’ must contain (by weight

or fluid volume, excluding water and

salt) at least 70 percent organically

produced ingredients which are

produced and handled pursuant to

requirements in subpart C of this part.

No ingredients may be produced using

prohibited practices specified in

paragraphs (f)(1), (2), and (3) of

§ 205.301. Nonorganic ingredients may

be produced without regard to

paragraphs (f)(4), (5), (6), and (7) of

§ 205.301. If labeled as containing

organically produced ingredients or

food groups, such product must be

labeled pursuant to § 205.304.

(d) Products with less than 70 percent

organically produced ingredients. The

organic ingredients in multiingredient

agricultural product containing less

than 70 percent organically produced

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 70 percent

organically produced ingredients may

represent the organic nature of the

product only as provided in § 205.305.

(e) Livestock feed. (1) A raw or

processed livestock feed 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.

(2) A raw or processed livestock feed

product sold, labeled, or represented as

‘‘organic’’ must be produced in

conformance with § 205.237.

(f) All products labeled as ‘‘100

percent organic’’ or ‘‘organic’’ and all

ingredients identified as ‘‘organic’’ in

the ingredient statement of any product

must not:

(1) Be produced using excluded

methods, pursuant to § 201.105(e) of

this chapter;

(2) Be produced using sewage sludge,

pursuant to § 201.105(f) of this chapter;

(3) Be processed using ionizing

radiation, pursuant to § 201.105(g) of

this chapter;

(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 organically produced

processing aids;

(5) Contain sulfites, nitrates, or

nitrites added during the production or

handling process, Except, that, wine

containing added sulfites may be

labeled ‘‘made with organic grapes’’;

(6) Be produced using nonorganic

ingredients when organic ingredients

are 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 food group(s)),’’ or that

include organic ingredients must be

calculated by:

(1) Dividing the total net weight

(excluding water and salt) of combined

organic ingredients at formulation 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

organically produced 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.

(c) The percentage must be

determined by the handler who affixes

the label on the consumer package and

verified by the certifying agent of the

handler. The handler may use

information provided by the certified

operation in determining the

percentage.

§ 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:

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

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

name of the product;

(2) For products labeled ‘‘organic,’’

the percentage of organic ingredients in

the product; (The size of the percentage

statement must not exceed one-half the

size of the largest type size on the panel

on which the statement is displayed and

must appear in its entirety in the same

type size, style, and color without

highlighting.)

(3) The term, ‘‘organic,’’ to identify

the organic ingredients in

multiingredient products labeled ‘‘100

percent organic’’;

(4) The USDA seal; and/or

(5) 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) For products labeled ‘‘organic,’’

identify each organic ingredient in the

ingredient statement with the word,

‘‘organic,’’ or with an asterisk or other

reference mark which is defined below

the ingredient statement to indicate the

ingredient is organically produced.

Water or salt included as ingredients

cannot be identified as organic.

(2) 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 and may display the business

address, Internet address, or telephone

number of the certifying agent in such

label.

80648 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

§ 205.304 Packaged products labeled

‘‘made with organic (specified ingredients

or food group(s)).’’

(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:

(i) ‘‘Made with organic (specified

ingredients)’’: Provided, That, the

statement does not list more than three

organically produced ingredients; or

(ii) ‘‘Made with organic (specified

food groups)’’: Provided, That, the

statement does not list more than three

of the following food groups: beans,

fish, fruits, grains, herbs, meats, nuts,

oils, poultry, seeds, spices, sweeteners,

and vegetables or processed milk

products; and, Provided further, That,

all ingredients of each listed food group

in the product must be organically

produced; and

(iii) Which appears in letters that do

not exceed one-half the size of the

largest type size on the panel and which

appears in its entirety in the same type

size, style, and color without

highlighting.

(2) The percentage of organic

ingredients in the product. The size of

the percentage statement must not

exceed one-half the size of the largest

type size on the panel on which the

statement is displayed and must appear

in its entirety in the same type size,

style, and color without highlighting.

(3) 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) In the ingredient statement,

identify each organic ingredient with

the word, ‘‘organic,’’ or with an asterisk

or other reference mark which is

defined below the ingredient statement

to indicate the ingredient is organically

produced. Water or salt included as

ingredients cannot be identified as

organic.

(2) 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, Internet 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 Multi-ingredient packaged

products with less than 70 percent

organically produced ingredients.

(a) An agricultural product with less

than 70 percent organically produced

ingredients may only identify the

organic content of the product by:

(1) Identifying each organically

produced ingredient in the ingredient

statement with the word, ‘‘organic,’’ or

with an asterisk or other reference mark

which is defined below the ingredient

statement to indicate the ingredient is

organically produced, and

(2) If the organically produced

ingredients are identified in the

ingredient statement, displaying the

product’s percentage of organic contents

on the information panel.

(b) Agricultural products with less

than 70 percent organically produced

ingredients must not display:

(1) The USDA seal; and

(2) Any certifying agent seal, logo, or

other identifying mark which represents

organic certification of a product or

product ingredients.

§ 205.306 Labeling of livestock feed.

(a) Livestock feed products described

in § 205.301(e)(1) and (e)(2) may display

on any package panel the following

terms:

(1) The statement, ‘‘100 percent

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

modify the name of the feed 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 raw or

processed organic ingredients used in

the finished product, Provided, That,

such seals or marks are not displayed

more prominently than the USDA seal;

(4) The word, ‘‘organic,’’ or an asterisk

or other reference mark which is

defined on the package to identify

ingredients that are organically

produced. Water or salt included as

ingredients cannot be identified as

organic.

(b) Livestock feed products described

in § 205.301(e)(1) and (e)(2) must:

(1) 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,

display the name of the certifying agent

that certified the handler of the finished

product. The business address, Internet

address, or telephone number of the

certifying agent may be included in

such label.

(2) Comply with other Federal agency

or State feed labeling requirements as

applicable.

§ 205.307 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 or food

group(s)).’’

(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;

(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) 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 in

accordance 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

products are clearly marked ‘‘For Export

Only’’ and: Provided further, That, proof

of such container marking and export

must be maintained by the handler in

accordance with recordkeeping

requirements for exempt and excluded

operations under § 205.101.

§ 205.308 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 in other than

packaged form may use the term, ‘‘100

percent organic’’ or ‘‘organic,’’ as

applicable, to modify the name of the

product in retail display, labeling, and

display containers: Provided, That, the

term, ‘‘organic,’’ is used to identify the

organic ingredients listed in the

ingredient statement.

(b) If the product is prepared in a

certified facility, the retail display,

labeling, and display containers may

use:

(1) The USDA seal; and

(2) The seal, logo, or other identifying

mark of the certifying agent that

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80649

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.

§ 205.309 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 or food group(s)).’’

(a) Agricultural products in other than

packaged form containing between 70

and 95 percent organically produced

ingredients may use the phrase, ‘‘made

with organic (specified ingredients or

food group(s)),’’ to modify the name of

the product in retail display, labeling,

and display containers.

(1) Such statement must not list more

than three organic ingredients or food

groups, and

(2) In any such display of the

product’s ingredient statement, the

organic ingredients are identified as

‘‘organic.’’

(b) If prepared in a certified facility,

such agricultural products labeled as

‘‘made with organic (specified

ingredients or food group(s))’’ in retail

displays, display containers, and market

information may display the certifying

agent’s seal, logo, or other identifying

mark.

§ 205.310 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 the

exempt or excluded operation as a

certified organic operation, or

(2) Be represented as a certified

organic product or certified organic

ingredient 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 or

represented as ‘‘organic’’ in a product

processed by others.

(c) Such product is subject to

requirements specified in paragraph (a)

of § 205.300, and paragraphs (f)(1)

through (f)(7) of § 205.301.

§ 205.311 USDA Seal.

(a) The USDA seal described in

paragraphs (b) and (c) of this section

may be used only for raw or processed

agricultural products described in

paragraphs (a), (b), (e)(1), and (e)(2) of

§ 205.301.

(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 background with a

brown outer circle and with the term,

‘‘USDA,’’ in green overlaying a white

upper semicircle and with the term,

‘‘organic,’’ in white overlaying the green

lower half circle; or

(2) On a white or transparent

background with black outer circle and

black ‘‘USDA’’ on a white or transparent

upper half of the circle with a

contrasting white or transparent

‘‘organic’’ on the black lower half circle.

(3) The green or black lower half

circle may have four light lines running

from left to right and disappearing at the

point on the right horizon to resemble

a cultivated field.

§§ 205.312–205.399 [Reserved]

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 production and handling

areas, structures, and offices 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 organic

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 an application

for certification to a certifying agent.

The application 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; the outcome of the

application(s) submission, including,

when available, 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 noncompliances 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

80650 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

noncompliance or denial of

certification, pursuant to § 205.405, has

submitted documentation to support the

correction of any noncompliances

identified in the notification of

noncompliance or denial of

certification, as required in § 205.405(e);

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 within a

reasonable time:

(1) Review the application materials

received and communicate its findings

to the applicant;

(2) Provide the applicant with a copy

of the on-site inspection report, as

approved by the certifying agent, for any

on-site inspection performed; and

(3) Provide the applicant with a copy

of the test results for any samples taken

by an inspector.

(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 produces or

handles organic products and that is

included in an operation for which

certification is requested. An on-site

inspection shall be conducted annually

thereafter for each certified operation

that produces or handles organic

products 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 organic

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

organic program’s governing State

official.

(b) Scheduling. (1) 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: Except, That, the

initial inspection may be delayed for up

to 6 months to comply with the

requirement that the inspection be

conducted when the land, facilities, and

activities that demonstrate compliance

or capacity to comply can be observed.

(2) All on-site inspections must be

conducted when an authorized

representative of the operation 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

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

operation who is knowledgeable about

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.

(e) Documents to the inspected

operation. (1) At the time of the

inspection, the inspector shall provide

the operation’s authorized

representative with a receipt for any

samples taken by the inspector. There

shall be no charge to the inspector for

the samples taken.

(2) A copy of the on-site inspection

report and any test results will be sent

to the inspected operation by the

certifying agent.

§ 205.404 Granting 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 grant certification. The

certification may include requirements

for the correction of minor

noncompliances within a specified time

period 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 organic 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. 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.

The notification of noncompliance shall

provide:

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80651

(1) A description of each

noncompliance;

(2) The facts upon which the

notification of noncompliance is based;

and

(3) The date by which the applicant

must rebut or correct each

noncompliance and submit supporting

documentation of each such correction

when correction is possible.

(b) Upon receipt of such notification

of noncompliance, the applicant may:

(1) Correct noncompliances and

submit a description of the corrective

actions taken with supporting

documentation to the certifying agent;

(2) Correct noncompliances 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 the

issuing certifying agent 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 organic program; or

(3) File an appeal of the denial of

certification pursuant to § 205.681 or, if

applicable, pursuant to a State organic

program.

(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 noncompliances 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 pay

the certification fees and 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);

(3) An update on the correction of

minor noncompliances previously

identified by the certifying agent as

requiring correction for continued

certification; and

(4) 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

within a reasonable time arrange and

conduct an on-site inspection of the

certified operation pursuant to

§ 205.403: Except, That, when it is

impossible for the certifying agent to

conduct the annual on-site inspection

following receipt of the certified

operation’s annual update of

information, the certifying agent may

allow continuation of certification and

issue an updated certificate of organic

operation on the basis of the

information submitted and the most

recent on-site inspection conducted

during the previous 12 months:

Provided, That, the annual on-site

inspection, required pursuant to

§ 205.403, is conducted within the first

6 months following the certified

operation’s scheduled date of annual

update.

(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

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

80652 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

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 governmental 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

evaluation of all persons who review

applications for certification, perform

on-site inspections, review certification

documents, evaluate qualifications for

certification, make recommendations

concerning certification, or make

certification decisions and implement

measures to correct any deficiencies in

certification services;

(7) Have an annual program review of

its certification activities conducted by

the certifying agent’s staff, an outside

auditor, or a consultant who has

expertise to conduct such reviews and

implement measures to correct any

noncompliances 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

organic 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 organic 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 giving advice or providing

consultancy services, to certification

applicants or certified operations, for

overcoming identified barriers to

certification;

(v) Requiring all persons who review

applications for certification, perform

on-site inspections, review certification

documents, evaluate qualifications for

certification, make recommendations

concerning certification, or make

certification decisions and all parties

responsibly connected to the certifying

agent to complete an annual conflict of

interest disclosure report; and

(vi) Ensuring that the decision to

certify an operation is made by a person

different from those who conducted the

review of documents and on-site

inspection.

(12)(i) Reconsider a certified

operation’s application for certification

and, if necessary, perform a new on-site

inspection when it is determined,

within 12 months of certifying the

operation, that any person participating

in the certification process and covered

under § 205.501(a)(11)(ii) has or had a

conflict of interest involving the

applicant. All costs associated with a

reconsideration of application,

including onsite inspection costs, shall

be borne by the certifying agent.

(ii) Refer a certified operation to a

different accredited certifying agent for

recertification and reimburse the

operation for the cost of the

recertification when it is determined

that any person covered under

§ 205.501(a)(11)(i) at the time of

certification of the applicant had a

conflict of interest involving the

applicant.

(13) Accept the certification decisions

made by another certifying agent

accredited or accepted by USDA

pursuant to § 205.500;

(14) 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;

(15) Submit to the Administrator a

copy of:

(i) 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) A list, on January 2 of each year,

including the name, address, and

telephone number of each operation

granted certification during the

preceding year;

(16) Charge applicants for certification

and certified production and handling

operations only those fees and charges

for certification activities that it has

filed with the Administrator;

(17) Pay and submit fees to AMS in

accordance with § 205.640;

(18) Provide the inspector, prior to

each on-site inspection, with previous

on-site inspection reports and notify the

inspector of its decision regarding

certification of the production or

handling operation site inspected by the

inspector and of any requirements for

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80653

the correction of minor

noncompliances;

(19) Accept all production or

handling applications that fall within its

area(s) of accreditation and certify all

qualified applicants, to the extent of its

administrative capacity to do so without

regard to size or membership in any

association or group; and

(20) Demonstrate its ability to comply

with a State’s organic program to certify

organic production or handling

operations within the State.

(21) Comply with, implement, and

carry out any other terms and

conditions determined by the

Administrator to be necessary.

(b) A private or governmental 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

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, certifying agents

certifying production or handling

operations within a State with more

restrictive requirements, approved by

the Secretary, shall require compliance

with such requirements as a condition

of use of their identifying mark by such

operations.

(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

organic 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;

Provided, That, such transfer shall not

apply to a merger, sale, or other transfer

of ownership of a certifying agent.

(d) No private or governmental 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 governmental 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, P.O. 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 governmental 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 governmental 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 governmental 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

80654 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

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, including any fees to be assessed,

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, products

produced, 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

(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 all persons who review

applications for certification, perform

on-site inspections, review certification

documents, evaluate qualifications for

certification, make recommendations

concerning certification, or make

certification decisions and all parties

responsibly connected to the certifying

agent, a conflict of interest disclosure

report, identifying any food- or

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 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 governmental 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 certifying agent

accredited or accepted by USDA

pursuant to § 205.500;

(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

evaluation of all persons who review

applications for certification, perform

on-site inspections, review certification

documents, evaluate qualifications for

certification, make recommendations

concerning certification, or make

certification decisions and implement

measures to correct any deficiencies in

certification services;

(4) Have an annual internal program

review conducted of its certification

activities by certifying agent staff, an

outside auditor, or a consultant who has

the expertise to conduct such reviews

and implement measures to correct any

noncompliances 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

organic 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; Provided, That such

transfer shall not apply to a merger, sale,

or other transfer of ownership of a

certifying agent.

§ 205.506 Granting accreditation.

(a) Accreditation will be granted

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 the granting of

accreditation in writing, stating:

(1) The area(s) for which accreditation

is given;

(2) The effective date of the

accreditation;

(3) Any terms and conditions for the

correction of minor noncompliances;

and

(4) 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(c), 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 Program Manager 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 Program

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80655

Manager shall provide a written

notification of noncompliance to the

applicant. 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 applicant

must rebut or correct each

noncompliance and submit supporting

documentation of each such correction

when correction is possible.

(b) When each noncompliance has

been resolved, the Program Manager

will send the applicant a written

notification of noncompliance

resolution and proceed with further

processing of the application.

(c) If an applicant fails to correct the

noncompliances, fails to report the

corrections by the date specified in the

notification of noncompliance, fails to

file a rebuttal of the notification of

noncompliance by the date specified, or

is unsuccessful in its rebuttal, the

Program Manager 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, or appeal

the denial of accreditation in

accordance with § 205.681 by the date

specified in the notification of

accreditation denial.

(d) If the certifying agent was

accredited prior to the site evaluation

and the certifying agent fails to correct

the noncompliances, fails to report the

corrections by the date specified in the

notification of noncompliance, or fails

to file a rebuttal of the notification of

noncompliance by the date specified,

the Administrator will begin

proceedings to suspend or revoke the

certifying agent’s accreditation. A

certifying agent who has had its

accreditation suspended may at any

time, unless otherwise stated in the

notification of suspension, submit a

request to the Secretary for

reinstatement of its accreditation. 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. A 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.

§ 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 shall establish a

peer review panel pursuant to the

Federal Advisory Committee Act

(FACA) (5 U.S.C. App. 2 et seq.). The

peer review panel shall be composed of

not less than 3 members who shall

annually evaluate the National Organic

Program’s adherence to the

accreditation procedures in this subpart

F and ISO/IEC Guide 61, General

requirements for assessment and

accreditation of certification/registration

bodies, and the National Organic

Program’s accreditation decisions. This

shall be accomplished through the

review of accreditation procedures,

document review and site evaluation

reports, and accreditation decision

documents or documentation. The peer

review panel shall report its finding, in

writing, to the National Organic

Program’s Program Manager.

§ 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

performance evaluations and annual

program review and a description of

adjustments to the certifying agent’s

operation and procedures implemented

or to be implemented in response to the

performance evaluations and program

review; 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

(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) The

Administrator shall send the accredited

certifying agent a notice of pending

expiration of accreditation

approximately 1 year prior to the

scheduled date of expiration.

(2) An accredited certifying agent’s

application for accreditation renewal

must be received at least 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

the regulations of this part.

(3) Following receipt of the

information submitted by the certifying

agent in accordance with paragraph (a)

of this section and the results of a site

evaluation, the Administrator will

determine whether the certifying agent

remains in compliance with the Act and

80656 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

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.

(f) Amending accreditation.

Amendment to scope of an accreditation

may be requested at any time. The

application for amendment shall be sent

to the Administrator and shall contain

information applicable to the requested

change in accreditation, a complete and

accurate update of the information

submitted pursuant to §§ 205.503 and

205.504, and the applicable fees

required in § 205.640.

§§ 205.511–205.599 [Reserved]

Subpart G—Administrative

The National List of Allowed and

Prohibited Substances

§ 205.600 Evaluation criteria for allowed

and prohibited substances, methods, and

ingredients.

The following criteria will be utilized

in the evaluation of substances or

ingredients for the organic production

and handling sections of the National

List:

(a) Synthetic and nonsynthetic

substances considered for inclusion on

or deletion from the National List of

allowed and prohibited substances will

be evaluated using the criteria specified

in the Act (7 U.S.C. 6517 and 6518).

(b) In addition to the criteria set forth

in the Act, any synthetic substance used

as a processing aid or adjuvant will be

evaluated against the following criteria:

(1) The substance cannot be produced

from a natural source and there are no

organic substitutes;

(2) The substance’s manufacture, use,

and disposal do not have adverse effects

on the environment and are done in a

manner compatible with organic

handling;

(3) The nutritional quality of the food

is maintained when the substance is

used, and the substance, itself, or its

breakdown products do not have an

adverse effect on human health as

defined by applicable Federal

regulations;

(4) The substance’s primary use is not

as a preservative or to recreate or

improve flavors, colors, textures, or

nutritive value lost during processing,

except where the replacement of

nutrients is required by law;

(5) The substance is listed as generally

recognized as safe (GRAS) by Food and

Drug Administration (FDA) when used

in accordance with FDA’s good

manufacturing practices (GMP) and

contains no residues of heavy metals or

other contaminants in excess of

tolerances set by FDA; and

(6) The substance is essential for the

handling of organically produced

agricultural products.

(c) Nonsynthetics used in organic

processing will be evaluated using the

criteria specified in the Act (7 U.S.C.

6517 and 6518).

§ 205.601 Synthetic substances allowed

for use in organic crop production.

In accordance with restrictions

specified in this section, the following

synthetic substances may be used in

organic crop production:

(a) As algicide, disinfectants, and

sanitizer, 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 algicide/demisters.

(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

acaricides 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.

(5) Oils, horticultural—narrow range

oils as dormant, suffocating, and

summer oils.

(6) Soaps, insecticidal.

(7) 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—None.

(i) As plant disease control.

(1) Coppers, fixed—copper hydroxide,

copper oxide, copper oxychloride,

includes products exempted from EPA

tolerance, Provided, That, copper-based

materials must be used in a manner that

minimizes 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—must be used in a

manner that minimizes copper

accumulation in the soil.

(4) Hydrogen peroxide.

(5) Lime sulfur.

(6) Oils, horticultural, narrow range

oils as dormant, suffocating, and

summer oils.

(7) Potassium bicarbonate.

(8) Elemental sulfur.

(9) Streptomycin, for fire blight

control in apples and pears only.

(10) Tetracycline (oxytetracycline

calcium complex), for fire blight control

only.

(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) Elemental sulfur.

(3) Humic acids—naturally occurring

deposits, water and alkali extracts only.

(4) Lignin sulfonate—chelating agent,

dust suppressant, floatation agent.

(5) Magnesium sulfate—allowed with

a documented soil deficiency.

(6) 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 testing.

(i) Soluble boron products.

(ii) Sulfates, carbonates, oxides, or

silicates of zinc, copper, iron,

manganese, molybdenum, selenium,

and cobalt.

(7) Liquid fish products—can be pH

adjusted with sulfuric, citric or

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80657

phosphoric acid. The amount of acid

used shall not exceed the minimum

needed to lower the pH to 3.5.

(8) Vitamins, B1, C, and E.

(k) As plant growth regulators—

Ethylene—for regulation of pineapple

flowering.

(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

nonsynthetic substances or synthetic

substances listed in this section and

used as an active pesticide ingredient in

accordance with any limitations on the

use of such substances.

(1) EPA List 4—Inerts of Minimal

Concern.

(n)–(z) [Reserved]

§ 205.602 Nonsynthetic substances

prohibited for use in organic crop

production.

The following nonsynthetic

substances may not be used in organic

crop production:

(a) Ash from manure burning.

(b) Arsenic.

(c) Lead salts.

(d) Sodium fluoaluminate (mined).

(e) Strychnine.

(f) Tobacco dust (nicotine sulfate).

(g) Potassium chloride—unless

derived from a mined source and

applied in a manner that minimizes

chloride accumulation in the soil.

(h) Sodium nitrate—unless use is

restricted to no more than 20% of the

crop’s total nitrogen requirement.

(i)–(z) [Reserved]

§ 205.603 Synthetic substances allowed

for use in organic livestock production.

In accordance with restrictions

specified in this section the following

synthetic substances may be used in

organic livestock production:

(a) As disinfectants, sanitizer, 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) Oxytocin—use in postparturition

therapeutic applications.

(12) 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 and must not be used

during the lactation period of breeding

stock.

(13) Phosphoric acid—allowed as an

equipment cleaner, Provided, That, no

direct contact with organically managed

livestock or land occurs.

(14) Biologics—Vaccines.

(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), not permitted to cauterize

physical alterations or deodorize animal

wastes.

(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, used for

enrichment or fortification when FDA

approved, including:

(i) Copper sulfate.

(ii) Magnesium sulfate.

(2) Vitamins, used for enrichment or

fortification when FDA approved.

(e) As synthetic inert ingredients as

classified by the Environmental

Protection Agency (EPA), for use with

nonsynthetic substances or a synthetic

substances listed in this section and

used as an active pesticide ingredient in

accordance with any limitations on the

use of such substances.

(f) EPA List 4—Inerts of Minimal

Concern.

(g)–(z) [Reserved]

§ 205.604 Nonsynthetic substances

prohibited for use in organic livestock

production.

The following nonsynthetic

substances may not be used in organic

livestock production:

(a) Strychnine.

(b)–(z) [Reserved]

§ 205.605 Nonagricultural (nonorganic)

substances allowed as ingredients in or on

processed products labeled as ‘‘organic’’ or

‘‘made with organic (specified ingredients

or food group(s)).’’

The following nonagricultural

substances may be used as ingredients

in or on processed products labeled as

‘‘organic’’ or ‘‘made with organic

(specified ingredients or food group(s))’’

only in accordance with any restrictions

specified in this section.

(a) Nonsynthetics allowed:

(1) Acids.

(i) Alginic.

(ii) Citric—produced by microbial

fermentation of carbohydrate

substances.

(iii) Lactic.

(2) Bentonite.

(3) Calcium carbonate.

(4) Calcium chloride.

(5) Colors, nonsynthetic sources only.

(6) Dairy cultures.

(7) Diatomaceous earth—food filtering

aid only.

(8) Enzymes—must be derived from

edible, nontoxic plants, nonpathogenic

fungi, or nonpathogenic bacteria.

(9) Flavors, nonsynthetic sources only

and must not be produced using

synthetic solvents and carrier systems or

any artificial preservative.

(10) Kaolin.

(11) Magnesium sulfate, nonsynthetic

sources only.

(12) Nitrogen—oil-free grades.

(13) Oxygen—oil-free grades.

(14) Perlite—for use only as a filter

aid in food processing.

(15) Potassium chloride.

(16) Potassium iodide.

(17) Sodium bicarbonate.

(18) Sodium carbonate.

(19) Waxes—nonsynthetic.

(i) Carnauba wax.

(ii) Wood resin.

(20) Yeast—nonsynthetic, growth on

petrochemical substrate and sulfite

waste liquor is prohibited.

(i) Autolysate.

80658 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

(ii) Bakers.

(iii) Brewers.

(iv) Nutritional.

(v) Smoked—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,

dibasic, and tribasic).

(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

postharvest 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.

(15) Lecithin—bleached.

(16) Magnesium carbonate—for use

only in agricultural products labeled

‘‘made with organic (specified

ingredients or food group(s)),’’

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 or

food group(s)),’’ prohibited in

agricultural products labeled ‘‘organic’’.

(19) Nutrient vitamins and minerals,

in accordance with 21 CFR 104.20,

Nutritional Quality Guidelines For

Foods.

(20) Ozone.

(21) Pectin (low-methoxy).

(22) Phosphoric acid—cleaning of

food-contact surfaces and equipment

only.

(23) Potassium acid tartrate.

(24) Potassium tartrate made from

tartaric acid.

(25) Potassium carbonate.

(26) Potassium citrate.

(27) Potassium hydroxide—prohibited

for use in lye peeling of fruits and

vegetables.

(28) Potassium iodide—for use only in

agricultural products labeled ‘‘made

with organic (specified ingredients or

food group(s)),’’ prohibited in

agricultural products labeled ‘‘organic’’.

(29) Potassium phosphate—for use

only in agricultural products labeled

‘‘made with organic (specific

ingredients or food group(s)),’’

prohibited in agricultural products

labeled ‘‘organic’’.

(30) Silicon dioxide.

(31) Sodium citrate.

(32) Sodium hydroxide—prohibited

for use in lye peeling of fruits and

vegetables.

(33) Sodium phosphates—for use only

in dairy foods.

(34) Sulfur dioxide—for use only in

wine labeled ‘‘made with organic

grapes,’’ Provided, That, total sulfite

concentration does not exceed 100 ppm.

(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 (specified

ingredients or food group(s)).’’

The following nonorganically

produced agricultural products may be

used as ingredients in or on processed

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

with organic (specified ingredients or

food group(s))’’ only in accordance with

any restrictions specified in this section.

Any nonorganically produced

agricultural product may be used in

accordance with the restrictions

specified in this section and when the

product is not commercially available in

organic form.

(a) Cornstarch (native)

(b) Gums—water extracted only

(arabic, guar, locust bean, carob bean)

(c) Kelp—for use only as a thickener

and dietary supplement

(d) Lecithin—unbleached

(e) Pectin (high-methoxy)

§ 205.607 Amending the National List.

(a) Any person may petition the

National Organic Standard Board for the

purpose of having a substance evaluated

by the Board for recommendation to the

Secretary for inclusion on or deletion

from the National List in accordance

with 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/TMP/NOP, Room

2945, South Building, P.O. Box 96456,

Washington, DC 20090–6456.

§§ 205.608–205.619 [Reserved]

State Organic Programs

§ 205.620 Requirements of State organic

programs.

(a) A State may establish a State

organic program for production and

handling operations within the State

which produce and handle organic

agricultural products.

(b) A State organic program must meet

the requirements for organic programs

specified in the Act.

(c) A State organic program may

contain more restrictive requirements

because of environmental conditions or

the necessity of specific production or

handling practices particular to the

State or region of the United States.

(d) A State organic 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 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 programs and

amendments to approved State organic

programs.

(a) A State organic program’s

governing State official must submit to

the Secretary a proposed State organic

program and any proposed amendments

to such approved program.

(1) Such submission must contain

supporting materials that include

statutory authorities, program

description, documentation of the

environmental conditions or specific

production and handling 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 program must contain

supporting materials that include an

explanation and documentation of the

environmental conditions or specific

production and handling 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: Notify

the State organic program’s governing

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80659

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 organic program’s

governing State official may submit a

revised State organic program or

amendment of such a program at any

time.

§ 205.622 Review of approved State

organic programs.

The Secretary will review a State

organic program not less than once

during each 5-year period following the

date of the initial program approval. The

Secretary will notify the State organic

program’s governing State official of

approval or disapproval of the program

within 6 months after initiation of the

review.

§§ 205.623–205.639 [Reserved]

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, feesfor-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, 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 February 20, 2001, a

nonrefundable fee of $500.00 which

shall be applied to the applicant’s feesfor-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 U.S. Department of

Agriculture 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, when 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 February 20, 2001.

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 U.S. Department of

Agriculture. Per diem charges shall

become effective for all applicants for

initial accreditation and accredited

certifying agents on February 20, 2001.

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 U.S.

Department of Agriculture. Such costs

shall become effective for all applicants

for initial accreditation and accredited

certifying agents on February 20, 2001.

§ 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, P.O. 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 which

shall be applied to the applicant’s feesfor-service account. The certifying agent

may set the nonrefundable portion of

certification fees; however, the

nonrefundable portion of certification

fees must be explained in the fee

schedule submitted to the

Administrator. The fee schedule must

explain what fee amounts are

nonrefundable and at what stage during

the certification process fees become

nonrefundable. The certifying agent

shall provide all persons inquiring

80660 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

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 Program Manager has

reason to believe that a certified

operation has violated or is not in

compliance with the Act or regulations

in this part; or

(2) When a certifying agent or a State

organic program’s governing State

official fails to take appropriate action to

enforce the Act or regulations in this

part.

(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

accreditation requirements pursuant to

the Act or this part.

(d) Each notification of

noncompliance, rejection of mediation,

noncompliance resolution, proposed

suspension or revocation, and

suspension or revocation issued

pursuant to § 205.662, § 205.663, and

§ 205.665 and each response to such

notification must be sent to the

recipient’s place of business via a

delivery service which provides dated

return receipts.

§ 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 organic 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

organic 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 organic

program’s governing State official, as

applicable, shall 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, the

certifying agent or State organic

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) Willful violations.

Notwithstanding paragraph (a) of this

section, if a certifying agent or State

organic 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 organic

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 organic program’s

governing State official shall send the

certified operation a written notification

of suspension or revocation.

(2) A certifying agent or State organic

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, while final resolution of

either is pending.

(f) Eligibility. (1) A certified operation

whose certification has been suspended

under this section may at any time,

unless otherwise stated in the

notification of suspension, submit a

request to the Secretary for

reinstatement of its certification. 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 certified operation or a person

responsibly connected with an

operation whose certification has been

revoked will be ineligible to receive

certification for a period of 5 years

following the date of such revocation,

Except, That, the Secretary may, when

in the best interest of the certification

program, reduce or eliminate the period

of ineligibility.

(g) Violations of Act. In addition to

suspension or revocation, any certified

operation that:

(1) Knowingly sells or labels a

product as organic, except in

accordance with the Act, shall be

subject to a civil penalty of not more

than $10,000 per violation.

(2) Makes a false statement under the

Act to the Secretary, a State organic

program’s governing State official, or a

certifying agent shall be subject to the

provisions of section 1001 of title 18,

United States Code.

§ 205.663 Mediation.

Any dispute with respect to denial of

certification or proposed suspension or

revocation of certification under this

part may be mediated at the request of

the applicant for certification or

certified operation and with acceptance

by the certifying agent. Mediation shall

be requested in writing to the applicable

certifying agent. If the certifying agent

rejects the request for mediation, the

certifying agent shall provide written

notification to the applicant for

certification or certified operation. The

written notification shall advise the

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80661

applicant for certification or certified

operation of the right to request an

appeal, pursuant to § 205.681, within 30

days of the date of the written

notification of rejection of the request

for mediation. If mediation is accepted

by the certifying agent, such mediation

shall be conducted by a qualified

mediator mutually agreed upon by the

parties to the mediation. If a State

organic program is in effect, the

mediation procedures established in the

State organic program, as approved by

the Secretary, will be followed. 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 pursuant

to § 205.681. Any agreement reached

during or as a result of the mediation

process shall be in compliance with the

Act and the regulations in this part. The

Secretary may review any mediated

agreement for conformity to the Act and

the regulations in this part and may

reject any agreement or provision not in

conformance with the Act or the

regulations in this part.

§ 205.664 [Reserved]

§ 205.665 Noncompliance procedure for

certifying agents.

(a) Notification. 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. 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 certifying

agent must rebut or correct each

noncompliance and submit supporting

documentation of each correction when

correction is possible.

(b) Resolution. When the certifying

agent demonstrates that each

noncompliance has been resolved, the

Program Manager shall send the

certifying agent 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, 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

(4) The right to file an appeal

pursuant to § 205.681.

(d) Willful 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 and in each

State for which its accreditation is

suspended or revoked.

(2) Transfer to the Secretary and make

available to any applicable State organic

program’s 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, unless otherwise stated in the

notification of suspension, submit a

request to the Secretary for

reinstatement of its accreditation. 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.

§§ 205.666–205.667 [Reserved]

§ 205.668 Noncompliance procedures

under State organic programs.

(a) A State organic program’s

governing State official must promptly

notify the Secretary of commencement

of any noncompliance proceeding

against a certified operation and forward

to the Secretary a copy of each notice

issued.

(b) A noncompliance proceeding,

brought by a State organic program’s

governing State official against a

certified operation, shall be appealable

pursuant to the appeal procedures of the

State organic 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 organic 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

organic 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 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 or food group(s))’’ must be

made accessible by certified organic

production or handling operations for

examination by the Administrator, the

applicable State organic program’s

governing State official, or the certifying

agent.

(b) The Administrator, applicable

State organic 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 or food group(s))’’

when there is reason to believe that the

agricultural input or product has come

80662 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

into contact with a prohibited substance

or has been produced using excluded

methods. Such tests must be conducted

by the applicable State organic

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, applicable State

organic program’s governing State

official, or certifying agent. Sample

integrity must be maintained throughout

the chain of custody, and residue testing

must be performed in an accredited

laboratory. Chemical analysis must be

made in accordance with the methods

described in the most current edition of

the Official Methods of Analysis of the

AOAC International or other current

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 promptly provided to the

Administrator; Except, That, where a

State organic program exists, all test

results and analyses shall be provided to

the State organic program’s governing

State official by the applicable certifying

party that requested testing; and

(2) Will be available for public access,

unless the testing is part of an ongoing

compliance investigation.

(e) 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

tolerences, the certifying agent must

promptly report such data to the Federal

health agency whose regulatory

tolerance or action level has been

exceeded.

§ 205.671 Exclusion from organic sale.

When residue testing detects

prohibited substances at levels that are

greater than 5 percent of the

Environmental Protection Agency’s

tolerance for the specific residue

detected or unavoidable residual

environmental contamination, the

agricultural product must not be sold,

labeled, or represented as organically

produced. The Administrator, the

applicable State organic 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.

§ 205.672 Emergency pest or disease

treatment.

When a prohibited substance is

applied to a certified operation due to

a Federal or State emergency pest 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 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 or disease treatment program

cannot 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

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.

(a) Persons subject to the Act who

believe they are adversely affected by a

noncompliance decision of the National

Organic Program’s Program Manager

may appeal such decision to the

Administrator.

(b) Persons subject to the Act who

believe that they are adversely affected

by a noncompliance decision of a State

organic program may appeal such

decision to the State organic program’s

governing State official who will initiate

handling of the appeal pursuant to

appeal procedures approved by the

Secretary.

(c) Persons subject to the Act who

believe that they are adversely affected

by a noncompliance decision of a

certifying agent may appeal such

decision to the Administrator, Except,

That, when the person is subject to an

approved State organic program, the

appeal must be made to the State

organic program.

(d) 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.

(e) All appeals shall be reviewed,

heard, and decided by persons not

involved with the decision being

appealed.

§ 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 program the

appeal must be made to the State

organic program which will carry out

the appeal pursuant to the State organic

program’s appeal procedures approved

by the Secretary.

(1) If the Administrator or State

organic program 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 or State

organic program 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 U.S.

Department of Agriculture’s Uniform

Rules of Practice or the State organic

program’s rules of procedure.

(b) Accreditation appeals. An

applicant for accreditation and an

accredited certifying agent may appeal

the 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 U.S. Department of Agriculture’s

Uniform Rules of Practice, 7 CFR part 1,

Subpart H.

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80663

(c) Filing period. An appeal of a

noncompliance decision must be filed

within the time period provided in the

letter of notification or within 30 days

from receipt of the notification,

whichever occurs later. The appeal will

be considered ‘‘filed’’ on the date

received by the Administrator or by the

State organic program. 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) Where and what to file. (1)

Appeals to the Administrator must be

filed in writing and addressed to

Administrator, USDA–AMS, Room

3071–S, P.O. Box 96456, Washington,

DC 20090–6456.

(2) Appeals to the State organic

program must be filed in writing to the

address and person identified in the

letter of notification.

(3) All appeals must include a copy of

the adverse decision and a statement of

the appellant’s reasons for believing that

the decision was not proper or 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 in

this part by the Office of Management

and Budget pursuant to the Paperwork

Reduction Act of 1995, 44 U.S C.

Chapter 35, is OMB number 0581–0181.

§§ 205.691–205.699 [Reserved]

PARTS 206–209 [Reserved]

Dated: December 13, 2000.

Kathleen A. Merrigan,

Administrator, Agricultural Marketing

Service.

Appendixes to Preamble

Appendix A—Regulatory Impact

Assessment for Final Rule

Implementing the Organic Foods

Production Act of 1990

The following regulatory assessment is

provided to fulfill the requirements of

Executive Order 12866. This assessment

consists of a statement of the need for

national organic standards, a description of

the baseline for the analysis, a summary of

the provisions of the final U.S. Department

of Agriculture (USDA) rule and the

alternative approaches that were examined,

and an analysis of the benefits and costs.

Much of the analysis is necessarily

descriptive of the anticipated effects of the

final rule. Because basic market data on the

prices and quantities of organic goods and

the costs of organic production are limited,

it is not possible to provide quantitative

estimates of all benefits and costs of the final

rule. The cost of fees and recordkeeping in

the final USDA rule are quantified, but the

anticipated benefits and other costs are not.

Consequently, the analysis does not estimate

the magnitude or the direction (positive or

negative) of net benefits.

Under the final rule, USDA will implement

a program of uniform standards of

production and certification, as mandated by

the Organic Foods Production Act of 1990

(OFPA). The primary benefits from

implementation of USDA’s National Organic

Program (NOP) are standardizing the

definitions and the manner in which organic

product information is presented to

consumers, which may reduce the cost

associated with enforcement actions in

consumer fraud cases, and improved access

to domestic and international markets from

harmonizing the various State and private

organic standards and elevating reciprocity

negotiations to the national level.

The costs of this rule are the direct costs

for accreditation and the costs of complying

with the specific standards in the proposal,

including the reporting and recordkeeping

requirements. Certifiers will be charged fees

based on the actual costs of the accreditation

work done by USDA staff. Smaller certifiers

with less complex programs are expected to

pay somewhat lower fees. Organic farmers,

ranchers, wild-crop harvesters, and handlers

will have to pay fees for organic certification

from a State or private certifier but will not

be charged any additional fees by USDA. The

direct accreditation costs to an estimated 59

certifying agents (including all 49 current

U.S. certifiers and an estimated 10 foreign

agents) during the first 18 months following

the final rule are estimated to be

approximately $92,000 to $124,000 and are

being subsidized with appropriated funds

derived from the taxpayers. In addition,

USDA will use appropriated funds to cover

approximately $270,000–$448,000 in hourly

charges for site evaluation during this period

and for other costs associated with starting

up the NOP. The magnitude of other

compliance costs for adhering to this

regulation—including the costs of becoming

familiar with and adopting the national

standards—have not been measured. For

organic farmers who adhere to State

regulations or undergo third-party inspection

and certification, the compliance cost may

not be large. For those who don’t, the costs

may be more substantial. The impact of this

regulation on small certifying agents and

other small businesses has also not been

measured but may be significant.

To account for significant rule changes

from the proposal and to reflect more up-todate information, we revised some estimates

of benefits and costs. We have raised our

estimates of current certification fees and

USDA accreditation fees. Also, we now

project higher USDA accreditation fees after

the 18-month implementation period. We

revised our estimates of the certification fees

charged by a representative set of public and

private certifiers in the U.S. based on new

data, and our new estimates are about 25

percent higher for small and midsized

farmers. Small and midsized farmers are now

estimated to pay $579 and $1,414 for their

first-year certification, respectively.

Accreditation costs after the 18-month

implementation period are substantially

above those estimated in the proposed rule,

reflecting a slight increase in the government

per diem travel allowance since the proposed

rule was published and a change in the

projected number of reviewers needed for

site evaluations and renewals after the 18-

month implementation period. In the

proposed rule, USDA had projected that only

one reviewer would be needed for site

evaluations and renewals that took place

after the 18-month implementation period

but has changed that projection to two

reviewers based on additional experience

with the International Organization for

Standardization (ISO Guide 65) program. We

estimate that initial accreditation costs after

the 18-month implementation period will

range from $6,120 to $9,700, approximately

double our estimate in the March 2000

proposed rule.

Marginal changes have been made in the

final rule, in response to comments on the

March 2000 proposal, which generally clarify

or add flexibility to producer and handler

provisions or make them better reflect

current industry standards. One key change

was to raise the threshold for labeling

products as ‘‘made with organic ingredients’’

from 50 percent organic content to 70 percent

to be consistent with international industry

standards. Although not quantified, we

believe that this will increase the cost of the

rule. Another key change was to reduce the

transition period for a dairy operation to

make a whole-herd conversion to organic

production in order to make conversion

affordable for a wider range of dairy farms,

including smaller operations. Although not

quantified, we believe that this will decrease

the cost of the rule.

The Need for National Standards

Over the last several decades, as market

demand has grown from a handful of

consumers bargaining directly with farmers

to millions of consumers acquiring goods

from supermarket shelves as well as market

stalls, a patchwork of State and private

institutions has evolved to set standards and

verify label claims. Organically produced

food cannot be distinguished visually from

conventional food and cannot necessarily be

distinguished by taste; therefore, consumers

must rely on labels and other advertising

tools for product information. Farmers, food

handlers, and other businesses that produce

and handle organically grown food have a

financial incentive to advertise that

information because consumers have been

willing to pay a price premium for these

goods. However, consumers face difficulties

in discerning the organic attributes of a

product, and many producers and handlers

have sought third-party certification of

organic claims.

State and private initiatives have resulted

in a fairly robust system of standards and

certification, and the difficulties in consumer

verification have been partially overcome by

these initiatives. Private organizations,

mostly nonprofits, began developing

certification standards in the early 1970’s as

80664 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

a way to support organic farming, as well as

to strengthen legitimate product claims. The

first organization to offer third-party

certification, California Certified Organic

Farmers, was formed in the early 1970’s, and

the first State regulations and laws on organic

labeling were also passed in the 1970’s.

Currently, 13 State and 36 private

certification programs are operating in the

United States, and about half the States

currently have some form of regulation.

While most States still do not mandate thirdparty certification and many organic

producers still market goods without

certification, large food processors, grain

traders, and retailers are increasingly

requiring certification, and many growers

have turned to certification as a marketing

tool.

However, even with increasing pressure for

growers to use third-party certification

services and increasing availability of these

services from State and private certifiers, the

discrepancies between the certifiers on

organic standards and between the States on

certification requirements have resulted in

several impediments to market development.

The patchwork of variable standards has

made producer access to organic markets,

international and domestic, uneven. The

recent emergence of the industry-developed

standards may have mitigated some domestic

access problems, but two important

impediments remain. They are:

multiingredient certification disputes and

barriers to foreign markets.

Difficulty Certifying Multiingredient Products

Although the State and private organic

standards that have developed over the last

several decades have many areas of overlap,

particularly for crop production, the

differences have caused disagreements

among certifying agents over whose

standards apply to multiingredient organic

processed products. These disagreements

have created sourcing problems for food.

Disagreements about standards also create

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

other’s standards. Although new organic

product offerings have emerged at a fast pace

during the 1990’s, this pace could eventually

slow, assuming that the need for costly

reciprocity agreements will continue to

persist in the absence of national standards.

Barriers to Foreign Organic Markets

In the absence of a national standard, U.S.

producers have taken on costs of private

accreditation or shipment-by-shipment

certification required to gain access to some

foreign markets such as the European Union

(EU). However, even with these actions, U.S.

organic products may have had some

difficulties entering other foreign markets

due to high information and search costs on

the part of foreign buyers. Some foreign

buyers of U.S. organic products may incur

costs to determine the compatibility of

standards. Such costs may have discouraged

purchases of U.S. organic products.

Congress passed the OFPA—Title XXI of

the Food, Agriculture, Conservation and

Trade Act of 1990, U.S.C. Title 7—largely to

address these marketing problems. The OFPA

mandates that the Secretary of Agriculture

develop a national organic program, and

USDA’s statutory responsibility is the

primary reason why USDA has carried out

this rulemaking process. The OFPA requires

the Secretary to 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. This legislation requires the Secretary

to establish and implement a program to

accredit a State program 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 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.

Baseline

After struggling to build market recognition

and supply capacity for many decades, the

organic farming industry became one the

fastest growing segments of U.S. agriculture

during the last decade. Certified organic

cropland more than doubled in the United

States between 1992 and 1997, and two

organic livestock sectors-eggs and dairy-grew

even faster (Greene, 2000a). USDA’s

Economic Research Service estimates that

over 1.3 million acres of U.S. farmland were

certified in 1997, and more recent data from

some of the certifiers indicate that this

momentum is continuing (Greene, 2000b).

Although national estimates of the amount of

uncertified organic acreage are not available,

data from California, the largest U.S.

producer of organic specialty crops, indicates

that most of the State’s organic acreage and

about half of the growers were certified

during the 1997/98 crop year (Klonsky et al.,

2000).

Growth in U.S. sales of organic products

during the 1990’s mirrors the growth in

acreage devoted to producing these goods.

According to industry data, total organic

product sales more than doubled between

1992 and 1996 to $3.5 billion in sales (table

1). More recent industry data on organic sales

through natural product stores, the largest

outlet for organic products, show annual

sales growth continuing in the general range

of 20–25 percent annually.

The recent growth in organic production

and sales has taken place in the absence of

national organic standards but with industry

expectation that these standards were

forthcoming. While the U.S. organic industry

is characterized by an array of certification,

production, processing, and marketing

practices, there are commonalities

throughout the industry.

Certification

The number of U.S. certification groups

has fluctuated between 40 and 50 during the

last decade. Currently, 49 organizations—36

private and 13 State—are advertising that

they provide certification services to farmers,

handlers (a category that USDA defines to

include processors), retailers, or other

segments of the food industry. Some

certifiers provide services to multiple

segments of the food industry. 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 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,

such as California, require only that an

organic producer register and make

certification voluntary. Other States,

including Texas, require certification by the

State’s own agents, while Minnesota and

others accept certification by a private

certifying agent. Approximately half of the

States have laws that regulate organic

production and processing. In many States

producers may claim their product is organic

but operate without certification or welldefined standards. Many organic producers

in States with no State programs voluntarily

secure third-party certification to welldefined 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 for the following

reasons. 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 accrediting certifying

agents as meeting ISO Guide 65. It is a

valuable recognition that the certifying entity

satisfies the business capacity standards of

ISO Guide 65. EU 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 Crop and Livestock Production

In 1997, farmers in 49 States used organic

production systems and third-party organic

certification services on over a million acres

of farmland and were raising certified organic

livestock production in nearly half the States,

according to USDA data (Greene, 2000a).

Two-thirds of the farmland was used for

growing crops, with Idaho, California, North

Dakota, Montana, Minnesota, Wisconsin,

Iowa, and Florida as the top producers.

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80665

Colorado and Alaska had the most organic

pasture and rangeland. California

overwhelmingly had the most certified

organic fruit and vegetable acreage in 1997,

but farmers were growing small plots of

certified organic vegetables for direct

marketing to consumers in over half the

States. About 2 percent of the U.S. apple,

grape, lettuce, and carrot crops were certified

organic in 1997, while only one-tenth of 1

percent of the U.S. corn and soybean crops

were grown under certified organic farming

systems. USDA has not estimated the amount

of acreage devoted to organic production

systems that has not been certified, although

data from California suggest that a large

number of farmers, mostly those with small

operations, produce and market organic

goods without third-party certification.

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

system plan with multiple goals, including

sustainability; and recordkeeping to

document practices and progress toward the

plan’s goals. Specific elements of organic

production 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 of synthetic chemical

pesticides or animal growth hormones. And

most certification standards include a 3-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 handlers obtain prior

label approval from FSIS and the claim meets

certain basic criteria. Organic labels have

been permitted on eggs and dairy products—

which are regulated by the Food and Drug

Administration (FDA)—throughout the

1990’s, but most certifiers have not yet

offered certification services for these

products.

We provide a summary of the New

Hampshire organic program to highlight the

similarities in the core set of practices. It is

important to note that this discussion is

intended to highlight the conceptual

similarities between State and private

programs and is not intended to suggest that

these programs are identical to each other or

to the NOP. 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; recordkeeping

regarding fertilization, cropping, and pest

management histories; separate sales records

for organic and nonorganic production; and

records of all laboratory analyses. Residue

testing may be required if USDA believes that

the products or soil used for producing

certified products may have become

contaminated with prohibited substances.

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 3-year history of crop

production, pest control, and fertilizer use; a

crop rotation and a soil management plan;

and a description of postharvest 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

certifiers have standards for handling organic

products. And some certifiers have standards

for parts of the food marketing system, such

as restaurants, which are not explicitly

covered by the OFPA nor encompassed by

this final 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. Other States do not distinguish

between food processors and handlers. Under

the final rule, the term, ‘‘handler,’’ includes

processors but not final retailers of

agricultural products that do not process

agricultural products.

Organic Product Marketing

The two largest marketing outlets for

organically produced goods are natural foods

stores and direct markets—which include

farmers markets, roadside stands, and

‘community supported agriculture’

arrangements—according to industry data.

USDA does not have official national level

statistics on organic retail sales, but an

industry trade publication, the Natural Foods

Merchandiser (NFM), reported estimates of

total retail sales of organic foods for years

1990–96 and continues to report estimates of

natural product stores sales (table 1). The last

NFM estimate of total organic sales through

all marketing outlets was $3.5 billion in 1996

($3.7 billion in 1999 dollars), less than one

percent of total food expenditures by families

and individuals that year.

Natural foods stores increased in size and

presence in the United States during the

1990’s—many are now the size of

conventional supermarkets—and about twothirds of estimated total organic sales during

the 1990’s were through this outlet (table 1).

Natural foods supermarkets, which are

similar to conventional in the breadth of

supermarket offerings and amount of total

sales, accounted for close to 1 percent of total

supermarket sales by 1997 (Kaufman 1998).

Organic product sales through the natural

foods stores outlet, alone, in 1999 were

estimated at $4 billion, and sales through this

outlet increased about 20–25 percent

annually through the 1990’s.

Direct-to-consumer market sales ranged

from $270 to $390 million during the early

1990’s, accounting for between 17 and 22

percent of total organic sales during this

period, according to NFM estimates (table 1).

Conventional food stores (mass markets)

accounted for 6–7 percent of total sales

during this period, and export sales

accounted for 3–8 percent of the total. A draft

report on the U.S. organic export market,

partly funded by USDA, indicates that

current U.S. export sales are under 5 percent

of total organic product sales (Fuchshofen

and Fuchshofen 2000).

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.

France, for example, has indicated to USDA

that it prefers to negotiate with a single

national organic program, rather than the

dozens of different State and private

certifying programs currently operating in the

U.S.

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 nonconventional 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 adoption of procedures that

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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 face additional financial and

administrative costs.

Requirements of the Final Rule

The final rule follows the structure

established in the OFPA. By adopting this

alternative, the Department is following the

legislative direction in the OFPA. All

products marketed as organic will have to be

produced and handled as provided in the

OFPA and these regulations. Compared to

current organic practices, the final rule sets

a somewhat more stringent system of

requirements.

Among many alternatives, two alternatives

to the final rule are discussed in this section:

continuation of the status quo and use of

industry-developed standards. Given the

statutory responsibility, USDA is

implementing the requirements of the OFPA.

However, under the status quo alternative,

there would be no national standard or

national program of accreditation and

certification. 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. However, growers

and handlers would still not have level

access, under uniform standards, to the

domestic market, and there may be

significant enforcement gaps at the State

level. International pressure for additional

verification would continue to build and

would be likely to lead to an increased use

of public and private verification and

accreditation services, which are provided on

a user-fee basis with full cost recovery.

Establishing reciprocity between certifying

agents in the domestic organic market would

continue to be costly and may stifle growth

in trade of organic products, although the

magnitude of these costs and their effects on

growth are unknown. Without further

analysis that includes quantification and

monetization of benefits and costs, it is not

clear whether the net benefits associated with

this alternative are greater or less than those

associated with the final rule.

Under the other industry-developed

standards alternative, USDA could eliminate

the costs associated with establishing

reciprocity in the domestic market and

establish equivalency for access to

international markets, but it would be

difficult for industry to develop consensus

standards. For example, the industrydeveloped standards recently proposed by

the Organic Trade Association were

developed with significant industry input but

with little public comment. In contrast,

several hundred thousand comments have

been submitted in the course of the USDA

rulemaking process. In addition, the OFPA

mandated an advisory role for a 15-member

National Organic Standards Board (NOSB),

which has wide representation from the

organic community and includes members

who are farmers, handlers, retailers,

environmentalists, consumers, scientists, and

certifiers. The NOSB has assisted in

developing the standards promulgated in this

final rule and will play an advisory role for

the NOP even after the final rule is in place.

Without further analysis that includes

quantification and monetization of benefits

and costs, it is not clear whether the net

benefits associated with this alternative are

greater or less than those associated with the

final rule.

USDA’s final rule will be implemented by

the NOP staff in the Agricultural Marketing

Service (AMS). Major features of the NOP

include:

Accreditation and Certification

The rule specifies the accreditation and

certification process. Persons providing

certification services for 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 client’s 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 be mandatory. 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.

USDA will charge applicants for

accreditation and accreditation renewal

(required every 5 years) 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. USDA

will also charge accredited certifiers at an

hourly rate to review their annual reports.

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 NOSB, review of existing organic

industry practices and standards, public

comments received on the 1997 proposal and

subsequent issue papers, public meetings,

and comments received on the 2000

proposal.

The final 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 nonsynthetic

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 synthetic 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.

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. Small businesses that are certified

may use the USDA seal.

Recordkeeping

The rule requires certifying agents,

producers, and handlers to keep certain

records. Certifying agents are required to file

periodic reports with USDA. Producers and

handlers are required to notify and submit

reports to their certifying agent. While

recordkeeping is a standard practice in

conventional and organic farming, the final

rule adds recordkeeping and reporting

requirements that 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. The rule permits certifying

agent logos and requires the name of the

certifying agent on processed organic foods.

Enforcement

Organic operations that falsely sell or label

a product as organic will be subject to civil

penalties of up to $10,000 per violation. The

provisions of the final regulation apply to all

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80667

persons who sell, label, or represent their

agricultural product as organic, including

operations that aren’t certified, and the civil

penalties of up to $10,000 apply to these

operations as well. Certifying agents, State

organic programs’ governing State officials,

and USDA will receive complaints alleging

violations of the Act or these regulations. In

States where there is no State organic

program, USDA will investigate allegations of

violations of the Act.

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

that might affect the number of producers

and handlers after the program has been

implemented.

For the analysis, USDA assumes the

following:

1. Forty-nine domestic certifying agents

and ten foreign certifying agents will be

affected by the regulation.

2. Approximately 13,650 certified and

noncertified organic producers will be

affected by the regulation. With the assumed

growth rate of 14 percent for certified organic

producers and approximately 8 percent for

noncertified organic producers, the number

of organic producers will grow to 17,150 in

2002.

3. Approximately 1,600 handlers of organic

food will be affected by the regulation. This

number will grow to 2,250 by 2002.

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 will seek

and receive USDA accreditation in the first

3 years of the program.

Organic Producers

While some USDA data on the number of

certified organic producers in the United

States exist, no national data have been

collected on the number of producers that

produce and market organic goods without

third-party certification. Organic farming was

not distinguished from conventional

agriculture in the last Census of Agriculture

in 1997. USDA and Organic Farming

Research Foundation (OFRF) data were used

in the Regulatory Impact Analysis (RIA) of

the March 2000 proposed rule to help

estimate the number of certified U.S. growers

affected by the regulation. California

Department of Food and Agriculture (CDFA)

data were used to help estimate the number

of uncertified U.S. growers affected by the

regulation. All three of these data sources

have updated their estimates of the number

of certified and uncertified organic producers

since the RIA of the proposed rule was

published earlier this year. However, the

updated numbers do not indicate trends that

would fundamentally alter the assumptions

used in the RIA of the proposed rule to

calculate the number of affected growers, and

the estimates made for the March 2000 RIA

are retained in this assessment of the final

rule.

USDA datum indicates the average annual

growth rate in the number of U.S. certified

organic growers between 1991 and 1994 was

about 14 percent (Dunn 1995b). In April

2000, USDA’s Economic Research Service

estimated that 5,021 certified organic growers

operated 1.347 million acres of U.S. farmland

in 1997, indicating that the increase in

acreage had outpaced the increase in

growers, and showing only an 8 percent

annual growth rate in growers between 1994

and 1997 (Greene, 2000b). However, USDA’s

study indicated that the pace of growth in

certified acreage had quickened considerably

since 1997, with the amount of certified

acreage increasing 38 to 150 percent between

1997 and 1999 by several large certifying

organizations across the U.S. And a nonprofit

organic research foundation, OFRF, estimates

that the number of certified organic

producers in the certification organizations

that they track—the ones that will release

data to them—grew over 20 percent annually

between 1997 and 1999, from 4,638 to 6,600

(OFRF 2000). Also, one certifier, Washington

State, responded to our request for data on

the growth rate, indicating that the number

of certified organic producers has increased

an average of 17 percent per year between

1994 and 1999 in that State and noting that

certification became mandatory by State law

in 1993.

In the March 2000 RIA, USDA estimated

that the number of certified U.S. organic

producers potentially affected by this

legislation is approximately 9,350 in 2000

and will be approximately 12,150 in 2002,

based on a straight line projection of the 14-

percent annual growth rate trend shown by

USDA data for 1991–1994. The period, 2000–

2002, was chosen for analysis because it

encompasses both the period of final

rulemaking and the 18-month

implementation period. Congress passed the

OFPA in 1990, and the 14-percent growth

rate in certified growers during the 1991–

1994 period reflects their expectation that

national organic regulations were

forthcoming. Since the recent estimates of

industry growth during the 1990’s are uneven

and the actual growth rate in the number of

growers who will become certified after this

legislation is implemented is uncertain, the

March 2000 estimates are retained in this

assessment of the final rule.

The March 2000 RIA also estimated the

number of producers who are practicing

organic agriculture but who are currently

uncertified that would be affected by the

rule. In California, where organic growers are

required to register with the State but not to

be certified, a large proportion of growers are

uncertified. The most recent State data, for

the 1997/98 crop year, indicate that 1,526

growers registered as organic, but only 41

percent of them obtained third-party

certification (Klonsky et al., 2000). While

only a small percentage of growers in the

lowest organic sales category (0–$10,000),

where the largest number of growers were

clustered, obtained certification, threequarters or more of the growers earning at

least $50,000 obtained certification, and all of

the growers in the highest sales class were

certified. USDA did not use the California

ratios of certified to uncertified growers in

the March 2000 RIA to estimate the number

of uncertified growers because the farming

structure of California may not be

representative of the Nation. For example,

California sells at least three times more

specialty crops than any other State in the

United States and has an unusual registration

program that many growers use instead of

certification.

USDA made two assumptions about

uncertified production for the March 2000

estimate. The first assumption was that the

rate of growth in uncertified production 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. This

assumption is consistent with California data

that showed an increase in the percent of

organic farmers obtaining certification

between 1996/97 and 1997/98 in virtually

every sales class (Klonsky et al. 2000).

Second, the emergence of State certification

programs with lower certification fees than

private certification entities may have

encouraged more organic producers to be

certified. Based on these assumptions, USDA

assumed that the number of uncertified

organic producers is about 4,300 in 2000 and

will be about 5,000 in 2002, making the total

number of farms potentially affected by the

rule about 13,650 in 2000 and 17,150 in

2002.

Organic Handlers

Little information exists on the number of

organic product handlers, such as organic

soup manufacturers, organic food packaging

operations, organic food wholesalers, and

feed millers. 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 and estimate there are about 1,600

in 2000 and there will be about 2,250

handlers in 2002. 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. These

estimates of organic product handlers are

slightly higher that the estimates made in the

March 2000 RIA because they include about

100 feed millers that were not included in

the earlier calculation.

Retail Food Establishments

Retailers of organic food are grocery stores,

bakeries and other establishments that

80668 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

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

under the final rule, they are subject to other

processing, handling, and other production

related requirements of the final rule. Some

of the grocery stores in the United States,

particularly the natural foods stores, sell

processed or prepared organic foods and will

be affected by the these requirements. USDA

does not have an estimate of the number of

entities affected.

Foreign Entities

In addition to domestic certifying agents,

foreign certifying agents may also apply for

accreditation under the NOP. At this time,

we have no information regarding the

number of foreign certifying agents that may

seek USDA accreditation. Foreign applicants

will face the same base costs for accreditation

as domestic applicants but the overall levels

of cost are expected to be higher due to the

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 will seek

and obtain accreditation during the first 3

years of the program.

Benefits of the Final Rule

The benefits of implementing national

uniform standards of production and

certification include: (1) Providing a common

set of definitions on organic attributes and

standardizing the manner in which the

product information is presented, which may

reduce the cost associated with enforcement

actions in consumer fraud cases; (2) reduced

administrative costs; and (3) improved access

to 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. The regulatory

changes in the final rule are not expected to

reduce the benefits from those described

under the March 2000 proposed rule.

Information

Potential benefits to consumers as a result

of the final rule include providing a common

set of definitions on organic attributes and

standardizing the manner in which the

product information is presented. This

standardization may reduce the cost

associated with enforcement actions in

consumer fraud cases.

Organic products cannot be distinguished

from conventionally produced products by

sight inspection, and consumers rely on

verification methods such as certification to

ensure that organic claims are true. Selfpolicing by certifiers of growers and handlers

that are certified has been difficult because

some certifiers have been under pressure to

use weak standards and lax enforcement

procedures in order to keep their producer

and processor clients from taking their

business to other certifiers (Scowcroft 1998).

Anecdotal evidence suggests that consumer

fraud involving organic food does occur, and

several States successfully pursued civil and

criminal prosecution of these cases during

the 1990’s. The Attorney General of

Minnesota successfully prosecuted felony

charges in 1997 against the president of

Glacial Ridge Foods, a wholesale supplier of

beans and grains, for repackaging

conventionally produced product and selling

approximately $700,000 worth labeled as

certified organic (Mergentime 1997). The San

Diego City Attorney’s office successfully

prosecuted felony charges against Petrou

Foods, Inc., an organic oil and vinegar

distributor, for misbranding conventional

product, based on an investigation by the

California Department of Health Services

(Scott 1997). Also the California Department

of Food and Agriculture conducted spot

checks of 51 uncertified organic growers

during the mid-1990’s, based on complaints,

and found 32 violations of California’s

organic standards (Farmers Market Outlook).

However, only about half of the States have

any organic legislation, and few of those

States have laws with enough teeth to permit

prosecution of organic fraud. In States

without similar laws, the costs associated

with remedies via the tort system may be

high. The NOP established in this final rule

is expected to fill in important State and

regional gaps in enforcement in organic fraud

cases.

The USDA organic seal will also provide

consumers a quick tool to verify that goods

offered for sale as organic are in fact organic.

Reduced Administrative Costs

The 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 establishes 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, the costs associated with

establishing reciprocity between certifying

agents will be eliminated, and the market

dampening effects that these costs impose

will be eliminated. Industry-wide training

costs may also decrease. USDA’s uniform

standards of production and certification

should enable organic inspectors to move

more easily from one certifying agent to

another than under the current system.

Domestic and International Markets

The final rule is expected to improve

access to domestic and foreign markets for

organically produced goods. The current

patchwork of differing State certification

requirements and variable State and private

standards has given producers and handlers

uneven access to the domestic organic market

and to the price premiums associated with

this market. Livestock producers, in

particular, may have limited their organic

production because they lacked access to a

State or private organic livestock certification

program or were uncertain about the

standards that would be implemented under

the NOP.

The final rule could also improve access to

EU and other foreign markets for U.S. organic

products. For example, the EU may

determine that the NOP is acceptable vis-avis 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. Foreign

acceptance of the U.S. national standard

would reduce costs of negotiating and

documenting shipment by shipment.

Reducing these transaction costs may reduce

entry costs for U.S. producers to foreign

organic markets. These benefits would not

accrue until after negotiations for an

equivalency agreement have been held and

completed successfully, which could be a

lengthy process.

An estimated 5 percent of total U.S. sales

are from exports. 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 1999). Mediumterm growth rate forecasts range from 5–10

percent for Germany to 30–40 percent for

Denmark, and is 20–30 percent in most of the

EU countries, according to the International

Trade Centre UNCTAD/WTO. However, most

analysts are basing their projected future

growth rates on straight-line extrapolations of

current sales and growth rates without

understanding the underlying market

mechanisms and price elasticities (Lohr

1998).

Costs of the Final Rule

The costs of the 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 final regulations

are not. In addition, this is a short-run

analysis. The analysis examines the costs that

may be incurred through 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 in the United States. These 49

entities are considered likely applicants

during the first 18 months 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

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80669

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 final rule allows USDA to collect fees

from certifying agents for USDA

accreditation. The first proposal would have

permitted USDA to collect fees from

producers and handlers as well, but USDA

decided that it would be administratively

simpler to collect fees only from certifiers

and would enable State programs that want

to keep client costs low to be able to do so.

Applicants for accreditation will be

required to submit a nonrefundable fee of

$500 at the time of application, which will

be 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 initial review and 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 duty station of USDA

employees, per diem expenses for USDA

employees performing the site evaluation, an

hourly charge (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.

At present, the base per diem for places in

the United States is $85 ($55 for lodging and

$30 for meals and incidental expenses). Per

diem rates are higher than $85 in most large

cities and urbanized places, but over half of

the current U.S. certifiers are located in

places that have an $85 per diem rate, and

that is the rate used to calculate average

certifier expenses in table 3. A review of

domestic travel by USDA staff during fiscal

year 1999 indicates transportation costs

ranging from $500 to $600 per person.

Miscellaneous costs are estimated to add

another $50 to each site visit.

The hourly rate that USDA anticipates

charging for accreditation is the rate that

USDA currently charges for services under

the Quality Systems Certification Program

(QSCP). Our preliminary estimate that this

rate 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 producers, handlers

(packers and processors), 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.

Accreditation will include verification of

adherence to ISO Guide 65 and the

regulations. Although much of the site

evaluation for accreditation 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 the QSCP and more limited

experience performing audits verifying that

certifying agents meet ISO Guide 65, we

project that a site evaluation visit for small

applicants with a simple business structure

will require 3 days of review, and for those

large applicants with more complex business

structure will require 5 days of review.

USDA will use two reviewers for each site

evaluation visit during the 18-month

implementation period, as well as for new

applicants after that period. 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.

Two reviewers will also be needed for the

site evaluation visits for the accreditation

renewals, which will take place every 5

years. In the proposed rule, USDA had

projected that only one reviewer would be

needed for site evaluations and renewals that

took place after the 18-month

implementation period but has changed that

projection based on additional experience

with the ISO Guide 65 program.

During the 18–month implementation

period, applicants will be charged for travel

and per diem costs for two persons and for

miscellaneous expenses but will not be

charged application fees or hourly fees. The

estimated expenditures for these initial

accreditations is $1,560–$2,100, with $510–

$850 for per diem expenses, $1,000–$1,200

for travel expenses, and $50 for

miscellaneous expenses (table 3). The cost of

initial site evaluation visits 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 remote locations

will involve higher travel costs.

USDA estimates the costs of a site

evaluation visit after the transition period

may average $6,120–$9,700, depending on

the characteristics of the applicant, including

$4,500–$7,600 for the hourly site evaluation

charges that are not billed to the certifier

during the first 18 months (table 3). USDA

has received appropriated funds to pay for

the hourly site evaluation charges only

during the first 18 months of the program.

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 18-month NOP implementation 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 would approach $1 million.

The direct accreditation costs to an

estimated 59 certifying agents (including all

49 current U.S. certifiers and an estimated 10

foreign certifiers) during the first 18 months

following the final rule, are approximately

$92,000 to $124,000. This figure is derived

from the per-firm costs in table 3. In addition,

USDA will use appropriated funds to cover

approximately $270,000–$448,000 in hourly

charges for site evaluation. USDA will also

use appropriated funds to cover the costs of

producing and publishing an accreditation

handbook in several languages, translating

USDA reports to foreign clients, and

developing and funding a peer review panel

to evaluate NOP’s adherence to its

accreditation procedures. And if more than

the estimated 59 certifiers apply for

accreditation during the first 18 months of

the program, USDA will use appropriated

funds to cover additional hourly charges for

site evaluation.

Private certifying agents and State

programs that do not mirror the regulation

may incur additional costs to change their

programs to adopt the national standards.

The discussion on the effect of the 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. For certifying agents who

currently obtain third-party accreditation, the

direct costs of USDA accreditation, which are

only incurred every 5 years, may be lower on

an annual basis compared to the direct costs

for third-party certification of $3,000–$5,000

per year indicated by the commenters. 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, per diem, and miscellaneous

expenses.

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

80670 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

approximately 165 organic certification

inspectors, and by some of the larger

certifying agents (IOIA). 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 accreditation training for

certification agents 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.

The OFPA requires that private certifying

agents furnish reasonable security for the

purpose of protecting the rights of

participants in the organic certification

program. It is expected that there will be

costs to certifying agents from these

requirements.

Implementation of the final rule will also

impose a less tangible cost on some certifiers.

Some private certifiers have advertised their

program and logo as representing higher

standards than other programs. The brand

value associated with the logos of these

certifiers will be lost when uniform standards

are implemented as part of the national

program. However, certifiers will still be able

to distinguish themselves to clients based on

the quality of their services and other

characteristics.

A key change was made in the final rule,

based on comments to the March 2000

proposal, to make the standard used by

certifiers to determine maximum allowable

pesticide residues (the level above which a

product could not be called organic)

consistent with the current industry standard

and with NOSB recommendations. In the

final rule, the standard will be set at 5

percent of the pesticide residue tolerances

calculated by the Environmental Protection

Agency (EPA). This change could

conceptually reduce costs, but the magnitude

of this reduction is uncertain.

Certification Costs

Under the final 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. Under the proposed rule,

certifiers could charge a maximum of $250 at

the time of application, but under the final

rule, certifiers are not limited in the amount

of certification fees that they may charge at

the time of application.

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 ten 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-year (renewal) costs for

certification are shown. The average cost for

each size class should be interpreted with

care because it 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 into 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. The data from California suggest that

a large number of small farmers produce and

market organic goods without third-party

certification, but those data may not be

representative of the national trend.

Although many of the smallest farms would

qualify for the small farm exemption from

certification, if consumers accept the labeling

practices required by this final rule, small

farmers may obtain certification to stay in the

organic market, which may involve some

cost.

In response to comments, the March 2000

proposal was changed to provide that if a

conflict of interest is identified within 12

months of certification, the certifying agent

must reconsider the application and may

reinspect the operation if necessary.

Additionally, if a conflict of interest is

identified, the certifying agent must refer the

operation to a different accredited certifying

agent. These provisions would likely increase

costs to certifiers; however, the magnitude of

this increase is unknown.

Production and Handling Costs

Producers and handlers currently active in

the organic industry may bear costs under the

national standards. We believe that while

most provisions of the program mirror

current industry practices, there are some

differences. 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 were qualitatively discussed in the

March 2000 RIA for major provisions of the

rule and are described below. The March

2000 proposal adhered closely to

recommendations from the NOSB and largely

reflected current industry standards.

Marginal changes have been made in the

final rule in response to comments on the

March 2000 proposal. These changes have

been made in concert with NOSB

recommendations and, in general, have been

made to clarify or add flexibility to producer

and handler provisions or to make them

better reflect current industry standards.

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 followed 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. The costs associated with adjusting

to provisions in the final rule may be

minimal for certified and State-registered

growers but may be more substantial for

noncertified organic producers that do not

follow a specific set of guidelines or

regulations. Some organic producers are

neither certified nor registered and, therefore,

may not practice the requirements in the

final rule. Major provisions of the final rule—

the withdrawal period required for land to be

free of prohibited substances, National List,

animal drug use, and residue tests—are

discussed to illustrate costs; other provisions

may also impose additional costs.

A 3-year withdrawal period, during which

prohibited materials cannot be applied to a

field to be certified as organic, is currently

required by most private and State organic

standards, and the final rule also specifies a

3-year period. The effect of this provision on

the currently certified organic farming

operations may be minimal, but the effect on

farming operations that are neither certified

nor registered may be significant. Farming

operations that have completed a 3-year

withdrawal period will not be affected by

this requirement. To stay in the organic

industry, those who have not completed the

3-year period must comply with this

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.

The impact of the National List, which lists

allowed synthetic substances and prohibited

nonsynthetic substances that may or may not

be used in organic production and handling

operations, will be determined by how the

national standards differ from current

certification standards and from actual

practice. Lists of approved synthetic

materials, including soil amendments and

pesticides, vary from one certification

program to another, but a detailed analysis of

specific differences in the various existing

materials lists shows them to be overlapping

in most cases with each other and with the

National List. The degree of overlap should

mitigate the costs for certified operations, but

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80671

farming operations, particularly those that

aren’t certified, may need to make some

adjustments to comply with the list. These

adjustments will impose costs on these

operations. The magnitude of the costs

resulting from these adjustments is not

quantified.

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 under certain conditions, while

others prohibit the use of animal drugs. The

standards in the final rule would prohibit the

sale as organic of edible products derived

from an animal treated with antibiotics or

other unapproved substances. The 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.

Additional costs may be imposed by

several further changes to the March 2000

proposal. These changes involve the use of

treated lumber, confinement requirements,

and the commercial availability of

ingredients in products labeled ‘‘organic.’’

The replacement of lumber treated with

prohibited substances that comes into contact

with soil, crops, or livestock under organic

management with treated lumber is now

specifically prohibited in organic systems.

Since the use of lumber treated with

prohibited substances for the purpose of

preventing degradation is not a common

practice in livestock production, this

prohibition is not expected to increase

producer costs substantially. The exact

magnitude of any increase is uncertain and

mainly dependent upon the number of

producers seeking organic certification that

currently use treated lumber in their

operations and are planning to replace that

lumber.

The confinement provisions in the March

2000 proposal have been slightly modified.

Access to the outdoors is now an explicitly

required element for all organically raised

livestock. We expect this change to have a

minor impact on overall producer costs,

since we assume most producers raising

organic livestock already provide access to

the outdoors. Additionally, the term,

‘‘pasture,’’ has been defined to emphasize

that livestock producers must manage their

land to provide nutritional benefit to grazing

animals while maintaining or improving soil,

water, and vegetative resources of the

operation. To the extent producers desiring

to raise organic livestock do not currently

manage pasture in this manner, we expect

livestock production costs to increase.

The organic plan now requires using

organically produced minor agricultural

ingredients unless not commercially

available. This applies to the previously

allowed 5-percent nonorganic agricultural

and other ingredients in products labeled

‘‘organic.’’ Handlers of organically produced

minor ingredients, especially herbs and

spices, are likely to benefit from this market

incentive, while producers of nonorganic

minor ingredients will likely be adversely

affected. Producers will also realize a burden

associated with providing the documentation

of commercial availability for ingredients in

the 5-percent component. Since the criteria

to determine commercial availability will be

developed after additional comments and

information are considered, the magnitude of

the cost and benefit implications from this

standard are currently unquantifiable but

will likely be largely dependent upon the

stringency of the developed criteria.

Producers will also have administrative

costs for reporting and recordkeeping,

although producers who currently are active

in the organic industry already perform most

of these administrative functions, and

additional costs to them would depend upon

the extent to which their current practices are

different from the requirements of the final

rule. The annual reporting and recordkeeping

burden on producers is estimated at 24 hours

for certified producers and 1 hour of

recordkeeping for small producers who

choose to operate as exempt entities and is

valued at $23 per hour.

Other provisions of the final rule, such as

those on residue testing, livestock housing

and feed, and health care practices, may vary

enough from those followed by some growers

that they may impose costs due to the

variability in current housing, feed, and

health care practices, but lacking

information, we have not quantified these

costs.

There were also several key changes made

in the final rule, based on comments to the

March 2000 proposal, that will add flexibility

to producer standards. A specific type of

production facility was required for

composting manure in the proposal, and this

provision has been modified to ensure that

manure is adequately composted while

allowing variation in the type of facility that

is used. Also, the transition period of a dairy

operation to make a whole-herd conversion

to organic production has been reduced in

order to make conversion affordable for a

wider range of dairy farms, including smaller

operations. Finally, the requirement that

slaughter stock sold, labeled, or represented

as organic be under continuous organic

management from birth was changed to

require continuous organic management from

the last third of gestation. This change is also

expected to provide possible cost savings and

added flexibility for producers.

Handlers

Handlers of organic food are defined and

regulated differently across different

certifying agents and States. Due to this

variability, handlers may incur some cost

associated with complying with the

requirements of the regulation. Several key

changes were made in the final rule, based

on comments to the March 2000 proposal, to

make handler standards more consistent with

current industry standards. The proposal

prohibited the addition of sulfites to wine as

required by OFPA. The statute has been

changed since March, and the final rule will

permit added sulfites in wine labeled ‘‘made

with organic grapes,’’ consistent with

industry standards and NOSB

recommendations.

Also, the March proposal required

products labeled ‘‘made with organic

ingredients’’ to have ingredients that were at

least 50 percent organic, and this threshold

has been raised to 70 percent in the final

rule. Some certifiers set their thresholds at 50

percent, others at 70 percent, while others

restrict labeling to individual ingredients

only. The international industry standard

outside the United States is set at 70 percent.

The threshold is set at 70 percent in the final

rule inresponese to comments received on

the proposal and to be consistent with

international standards, which will help ease

export of U.S. organic product into those

markets. Alternatively, to the extent handlers

do not currently meet the 70-percent

threshold to label products ‘‘made with

organic ingredients,’’ handlers may incur

additional costs to reach the threshold or exit

the industry. The magnitude of those effects

is unknown.

In addition to the labeling requirement, a

handler’s current use of nonsynthetic and

synthetic substances may change in response

to the final rule. The March 2000 proposal

provided for the use of any prohibited

substance to prevent or control pests. This

provision has been changed to first limit the

use of nonsynthetic and synthetic substances

to substances which are on the National List

before allowing the use of any synthetic

substance. To the extent to which handlers

are now required to consider substances on

the National List before using a prohibited

substance and these substances on the

National List are priced differently from the

substance otherwise used, handlers may

incur a change in production costs. This

requirement may increase costs on handlers,

but the magnitude of this increase is

unknown.

In addition, the commercial availability

requirement in the final rule, described in the

producer costs section, may also create a

burden on handlers to consistently apply the

standard. To the extent to which sourcing

organically produced ingredients in excess of

95 percent of the finished product is more

expensive than sourcing nonorganically

produced ingredients, handlers seeking the

‘‘organic’’ label for their products will incur

additional costs. As previously described, the

magnitude of the cost implications from this

standard is currently unquantifiable but will

likely be largely dependent upon the

stringency of the standard that is developed.

Handlers will also have administrative

costs for reporting and recordkeeping,

although handlers who currently are active in

the organic industry already perform most of

these administrative functions, and

additional costs to them would depend upon

the extent to which their current practices are

different from the requirements of the final

rule. The annual reporting and recordkeeping

burden on handlers is estimated at 63 hours

for certified handlers and 1 hour of

recordkeeping for small handlers who choose

to operate as exempt entities and is valued

at $23 per hour.

80672 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

Retail Food Establishments

Most retailers are not currently subject to

either voluntary practices or mandatory

standards of the organic industry. Retailers

that have organic processing operations, such

as organic food delis and bakeries, are not

required to be certified in the final rule.

However, retailers will be subject to

requirements such as prevention of

contamination of organic products with

prohibited substances, and commingling

organic with nonorganic products. Obtaining

certification and complying with these

provisions will incur some cost.

Labeling Costs

Certified handlers will have to comply

with requirements regarding the approved

use of labels. In addition, any producers,

handlers, and retailers who are not currently

certified but who package organic products

are also subject to the labeling requirements.

The estimated annual cost for handlers to

determine the composition of 20 products to

be reported on labels is $1,647,000. This

figure is based on an average of 1 hour per

product per handler 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 $1,647,000. Total label costs for

handlers are $3.3 million. Any changes to

existing labels and new labels that need to

conform to the regulation will incur a cost.

The costs associated with these activities are

not quantified. Hence, the lower bound on

the labeling cost is approximately $4 million.

State Program Costs

The national program may impose

additional costs on States by requiring

changes in their existing programs. The 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 that conduct certification activities

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 organic

programs, and on State and private 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 certifying agents will face the same

obligations and types of costs as private

certifying agents.

In States operating State organic programs

(SOP), State enforcement costs are costs

associated with ensuring that certified

operations fulfill their obligations. These

States will bear the costs of investigating

complaints, monitoring use of the State

organic seal and organic labeling, and taking

corrective action when needed. These States

will bear costs related to reviewing an

applicant’s or certified operation’s appeal

and for administrative proceedings. Many of

these activities are already a routine part of

the certification program in States that have

programs, and USDA will fill in gaps in

enforcement in States that choose not to have

programs.

USDA’s enforcement costs are costs

associated with ensuring that certifying

agents fulfill their obligations. In States

without an organic program, USDA will bear

the 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 or

accredited operation’s appeal and for

administrative proceedings. USDA expects to

effectively carry out its enforcement

responsibilities using funds that are already

allocated for operating the NOP. To the

extent to which we did not estimate the

likely noncompliance rate, the cost

associated with enforcement remains

unknown.

Reporting and Recordkeeping Costs

The Paperwork Reduction Act of 1995

requires an estimate of the annual reporting

and recordkeeping burden of the NOP. The

estimated annual reporting and

recordkeeping burden reported is

approximately $13 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

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 final rule.

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 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 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 certifying agents. Certifying

agencies each have an estimated burden of

1,068 hours valued at roughly $27,729.

The following list describes several of the

most significant 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 client’s 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

agent’s 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 must be submitted to USDA of

all notices that are issued on certification

denial, 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

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80673

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, 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 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

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 organic

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

as the reporting year for which the largest

number of records might be stored and

maintained.

The annual reporting and recordkeeping

burden on producers, handlers, and

certifying agents is summarized in table 4.

The annual burden on certified producers is

estimated at 24 hours and $552. Certified

handlers have an estimated burden of 63

hours valued at $1,449. The burden on small

producers and handlers who choose to

operate as exempt entities is minimal, 1 hour

of recordkeeping valued at $23. If this cost

is applied to the total estimated number of

affected producers, the reporting and

recordkeeping cost would be $5,260,100 in

2000 and $6,835,554 in 2002. By applying

this cost figure to the estimated total number

of affected handlers, the reporting and

recordkeeping cost would be $2,143,002 in

2000 and $3,013,552 in 2002.

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. If the

imposition of the NOP decreases the

importation of organic food into the United

States, then this regulatory action may result

in some cost.

Small Business Ramifications

USDA’s final rule has 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 will 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

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 accreditation

program was part of the 1997 proposal.

Because in this final rule, 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 benefiting 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

80674 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

still subject to other requirements of the

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 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. 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

that prohibit confinement production

systems and require 100 percent organic feed.

And State and Federal certification and

conservation cost-share programs and other

government programs may help lower the

impact on small producers.

References

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Community (EC) Legislation. In

Handbook of Organic Food Processing

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17–30. Glasgow: Blackie Academic and

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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

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Fiber: An Analysis of 1994 Certified

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Department of Agriculture, Agricultural

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Dunn, Julie Anton. 1997. AgriSystems

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Decade of Growth. AgriSystems

International: Wind Gap, PA. Emerich,

Monica. 1996. Industry Growth: 22.6%.

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Amherst, MA.

Fuchshofen, Winfried and Silke Fuchshofen.

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Products into Asia and Europe,’’ Draft

Report, Organic Insights, Inc.

Graf, Anita and Luanne Lohr. 1999.

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America project, Market Development

for Organic Agriculture Products, Grant

No. 97–36200–5.

Greene, Catherine. 2000a. ‘‘U.S. Organic

Farming,’’ USDA, Economic Research

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Greene, Catherine. 2000b. ‘‘U.S. Organic

Agriculture Gaining Ground,’’ Economic

Research Service, U.S. Department of

Agriculture, Agricultural Outlook, AGO–

270, April.

Hammitt, James K. 1990. Risk Perceptions

and Food Choice: An Exploratory

Analysis of Organic—Versus

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Analysis, Vol. 10, No. 3: 367–374.

Hammitt, James K. 1993. Consumer

Willingness to Pay to Avoid Pesticide

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Independent Organic Inspectors Association.

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Winona, MN.

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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

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Jolly, Desmond A. 1991. Differences Between

Buyers and Nonbuyers of Organic

Produce and Willingness to Pay Organic

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(Spring): 97–111. Kaufman, Phil. 1998.

‘‘Natural Foods Supermarkets Gaining in

Popularity,’’ Economic Research Service,

U.S. Department of Agriculture,

FoodReview, Volume 21, Issue 3,

September-December.

Klonsky, Karen and Laura Tourte. 1995.

Statistical Review of California’s Organic

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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

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Cooperative Extension, Department of

Agricultural Economics, University of

California, Davis.

Klonsky, Karen and Laura Tourte. 1998b.

Organic Agricultural Production in the

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1124.

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Lohr, Luanne. 1998. Implications of Organic

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5: 1125–1129.

Mergentime, Ken. 1997. ‘‘Organic Fraud Case

Deepens; Possible Link Causes OCIA

Turmoil,’’ the Natural Foods

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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

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Misra, Sukant, Chung L. Huang, and Stephen

L. Ott. 1991. Georgia Consumers’

Preference for Organically Grown Fresh

Produce. Journal of Agribusiness (Fall):

53–65.

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publication, www.ofrf.org.

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Agricultural Economics, Vol. 78

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for Organic Foods: What We Know and

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Luloff. 1992. Pesticide Use in Tomato

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No. 2: 131–142. Table 1.

TABLE 1.—U.S. ORGANIC PRODUCT SALES, 1990–99

($ billions)

Year Export Direct

Export/

direct

subtotal

Mass

market

Natural

foods

stores

Natural

foods

stores

(1999 $)

Total sales Total sales

(1999 $)

1990 ............................................... .................. .................. .................. .................. .................. .................. 1 1.27

1991 ............................................... 0.04 0.27 0.31 0.09 0.85 1.04 1.25 1.53

1992 ............................................... 0.07 0.32 0.39 0.12 1.03 1.22 1.54 1.83

1993 ............................................... 0.11 0.36 0.47 0.14 1.29 1.49 1.90 2.19

1994 ............................................... 0.20 0.39 0.60 0.17 1.54 1.73 2.31 2.60

1995 ............................................... 1 1 0.71 0.21 1.87 2.04 2.79 3.05

1996 ............................................... .................. .................. 1111 3.5 3.72

1997 ............................................... .................. .................. .................. .................. 2 .................. .................... ..................

1998 ............................................... .................. .................. .................. .................. 3.28 3.35 .................... ..................

1999 ............................................... .................. .................. .................. .................. 4.00 4.00 .................... ..................

Source: Natural Foods Merchandiser, New Hope Communications.—= Not reported. 1 New Hope Communications reported a combined estimate for export and direct sales in 1995 and reported a different set of subcategories in

1996 and has reported only on sales in natural foods stores since 1996. 2 New Hope Communications did not estimate natural product store sales in 1997, but the Hartman Group estimated these sales at $4.9

billion.

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

(dollars)

Certifying agent Small farm Medium

farm Large farm Super farm

CCOF ............................................................................................................................... 850 1,750 4,850 51,250

FVO .................................................................................................................................. 698 1,737 5,214 51,550

FOG ................................................................................................................................. 810 1,860 4,860 51,210

NOFA–VT ........................................................................................................................ 335 535 585 585

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

OGBA ............................................................................................................................... 1,290 3,300 12,300 33,296

OTCO-In .......................................................................................................................... 608 1,603 2,517 150,300

OTCO-Out ........................................................................................................................ 768 1,698 2,852 12,052

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

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

TDA .................................................................................................................................. 90 155 200 575

WSDA .............................................................................................................................. 480 1,555 3,040 12,480

Average cost ............................................................................................................. 579 1,414 3,623 33,276

Notes:

CCOF—California Certified Organic Farmers

FVO—Farm Verified Organic

FOG—Florida Certified Organic Growers & Consumers

NOFA–VT—Northeast Organic Farming Association—Vermont

NC/SCS—NutriClean/Scientific Certification Systems

OBBA—Organic Growers and Buyers Association

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

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.

80676 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

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

(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

NC/SCS—NutriClean/Scientific Certification Systems

OBBA—Organic Growers and Buyers Association

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

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 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 at $85/day) ........................................................................................... $510 to $850.

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

Hourly charges (not billed during the first 18 months) ............................................................ $0.

Miscellaneous charges (copying, phone, and similar costs) ................................................... $50.

Total .................................................................................................................................. $1,560 to $2,100.

Estimated costs to certifying agents for initial accreditation after first 18 months

Site evaluation costs (two person team):

Per diem (3 to 5 days) ............................................................................................................. $510 to $850.

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

Hourly charges (24 to 40 hours at $95/hour) .......................................................................... $4,560 to $7,600.

Miscellaneous charges (copying, phone, and similar costs) ................................................... $50.

Total .................................................................................................................................. $6,120 to $9,700.

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 (renewals) .............................................................................................................. $730.

Estimated costs to handlers for certification 4

Certification fee (initial certification) ................................................................................................ $2,337.

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 of less than $250,000, with 82 percent less than $100,000.

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80677

The average current certification cost for most organic producers is about $1,025 for the first year of certification ($579 for small and $1,414 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 $1,000 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-to-producer certification fees from the regulatory impact assessment from 1997. The ratio is 2:28 and results in estimated fees of $2,337 and $2,665,

respectively.

TABLE 4.—ESTIMATED ANNUAL REPORTING AND RECORDKEEPING BURDEN

Type of respondent

Annual hourly

per

respondent

Hourly rate Annual cost

Certified producer .............................................................................................................................. 24 $23 $552

Certified handler ................................................................................................................................ 63 23 1,449

Exempt producers and handlers ....................................................................................................... 1 23 23

Certifying agency ............................................................................................................................... 1,068 27 27,729

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

Appendix B—Unfunded Mandates

Reform Act

This rule has been reviewed under the

Unfunded Mandates Reform Act (Pub. L.

104–4). The Act requires that agencies

prepare a qualitative and quantitative

assessment of the anticipated costs and

benefits before issuing 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 1

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

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 program (SOP) 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 SOP’s 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 the U.S. Department of

Agriculture has determined that this 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 entitled

‘‘Executive Order 12866’’ (also attached as an

appendix to this regulation). The RIA

consists of a statement of the need for the

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

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 rule. The cost of fees and

recordkeeping required by 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 rule is the least costly

and least burdensome to the regulated parties

is discussed in the sections entitled ‘‘The

Regulatory Flexibility Act and the Effects on

Small Businesses’’ and ‘‘Paperwork

Reduction Act of 1995.’’ The 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 during

which to communicate with various entities

during the development of the rule; States,

for example. Currently, there are 32 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

National Organic Standards Board, 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

International Organization for

Standardization (ISO) 65 assessment training

session for certifiers in April-May 1999. More

detail about contact with States regarding

this rule is in the Federalism section. It is

unknown at this time how many States, if

any, might voluntarily establish their own

SOP’s pursuant to the OFPA and the

regulations.

Appendix C—Final Regulatory

Flexibility Analysis

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

601 et seq.) requires agencies to consider the

economic impact of each 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.

1. Need for and objectives of the National

Organic Rule.

Currently, organic certification is voluntary

and self-imposed. Members of organic

industries across the United States 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 multiingredient

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 industrywide 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.

In 1990, Congress enacted the Organic

Foods Production Act of 1990, as amended

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

80678 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

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 (NOP) is the result

of the OFPA.

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, USDA will implement a regulation

for the NOP.

2. Summary of the significant issues raised

by public comments in response to the Initial

Regulatory Flexibility Analysis (IRFA), a

summary of agency assessment of such

issues, and a statement of any changes made

in the final rule as a result of such comments.

Although we received many individual

comments in reference to the proposed rule’s

IRFA, they were, for the most part, variations

of several form letters. Most of the concern

on the part of commenters regarded the fees

that small certifying agents would be subject

to under the rule.

Comments Accepted

(1) We received numerous comments to the

effect that the fees, recordkeeping, and

paperwork requirements for producer and

handler certification must be kept as low as

possible while still offering a quality

certification program. We believe that we

have made every effort in this rule to

minimize the cost and paperwork burden to

certifiers and certified operations as much as

possible. We have permitted certifiers and

certified operations to develop their own

recordkeeping and reporting systems—so

long as they conform to the needs of the

program. For the most part, the paperwork

and recordkeeping requirements for certified

operations conform to the requirements that

they presently face under existing

certification programs. In order to minimize

the cost to the industry of transitioning to a

system where certifying agents are accredited

(assuming that there will be a learning curve

as agents familiarize themselves with the

requirements of accreditation), we have

waived the per-hour cost that USDA will

charge to conduct an accreditation review for

the first 18 months of the program.

(2) In the proposed rule, we requested

comment on the benefits of an exemption for

small certifiers similar to that for small

producers. We received comments in

opposition to such an exemption because

commenters wanted to maintain documented

verification of standards that is afforded by

certification and accreditation. They felt that

exemptions weakened the organic system in

its ability to assure consumers of products

that meet a consistent standard. We

concurred with this comment and have not

developed an exemption for certifiers in the

final rule.

Comments Rejected

(3) We received comments suggesting that,

in order to lower the direct cost of

accreditation to smaller certifier applicants,

we should eliminate on-site visits during

accreditation or extend the time beyond the

initial on-site visit for a subsequent visit.

Although eliminating the on-site visits would

certainly lower the applicant’s costs, we have

not made the change to reduce or eliminate

on-site visits. We did not see how USDA

could make an informed decision about

whether or not to continue to accredit a

certifying agent without complete access to

the relevant records documenting the agent’s

business practices. This can only be

efficiently done through a site visit.

(4) We received numerous comments that

the fees proposed by USDA will result in

certification fees that are excessive for small

farming operations. The commenters

suggested that USDA impose fees on a sliding

scale based on a farmer’s income so as not

to drive these farmers out of business and

deprive consumers of the benefits of these

operations. We received a similar comment

to the Fees section of the proposed rule, and

our response is the same. Although one of

our top priorities is assisting the small

farmer, AMS is primarily a user-fee-based

Federal agency. We are aware that our

accreditation fees will figure into the fees

that certifiers charge their clients. However,

the fee we will charge to accredit an

applicant is based not on earning profits, but

on recovery of costs. In addition, our waiver

of the hourly service charges for accreditation

during the first 18 months of the program

should help to keep the cost of accreditation

to certifying agents down. We believe the

requirements that fees charged by a certifying

agent must be reasonable and that certifiers

must file a fee schedule for approval by the

Administrator will help to keep costs under

control. Since certifiers are required to

provide their approved fee schedules to

applicants for certification, the applicants

will be able to base their selection of

certifying agent on price if the applicants so

choose. In addition, nothing in the

regulations precludes certifying agents from

pricing their services on a sliding scale so

long as their fees are consistent and

nondiscriminatory and are approved during

the accreditation process.

(5) Other commenters were concerned that

in the rule USDA neglects to establish

‘‘reasonable fees’’ annually for farm/site/wild

crop production and handling operation

certification. Commenters did not believe

that a valid Regulatory Flexibility Act

analysis could be made without the annual

farm and handling operation fee projection.

We have not established guidelines for what

constitutes a ‘‘reasonable fee’’ in the final

rule. Accredited certifying agents will be

required to submit a proposed fee schedule

as a part of their application. At that time,

we will work with applicants for

accreditation to ensure that their fees are

appropriate. In addition, certifying agents

will be required to send a copy of their fee

schedule to anyone who requests one. This

will allow operations that wish to be certified

to shop around and will provide a

disincentive for accredited agents to price

themselves out of the market.

3. Description of and an estimate of the

number of small entities to which the rule

will apply.

Small business size standards, Standard

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

developed by an interagency group,

published by the Office of Management and

Budget, and used by the Small Business

Administration (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.

There are three categories of operations

that contain small business entities that

would be affected by this rule: Certifying

agents, organic producers, and/or organic

handlers. 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.

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 United States.

More than half of the private and State

certifying agents certify both producers and

handlers, while the others certify only

producers. Over three-fourths 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 NOP 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.

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). 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. All private,

nonprofit certifying agents would be

considered small by SBA’s standards. Based

on anecdotal information, only a few private,

for-profit, certifying agents might be

categorized as large businesses. In addition,

the 13 State certifying agents, although not

exceeding the revenue threshold, would not

be considered to be small entities under the

Act as only government jurisdictions with

populations under 50,000 are considered to

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80679

be small entities under section 601(5).

Therefore, at least 30 certifying agents would

qualify as a small business.

The term, ‘‘producer,’’ means a person who

engages in the business of growing or

producing food or feed. 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 California-based 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).’’

b b b 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),

its 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.

Dunn has estimated the number of certified

organic producers in the United States (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 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

regulation. 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 certified organic producers used in

assessing the impact of the rule is 12,176.

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.

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. We have estimated that

there would be 12,176 producers certified in

the first year and of those 97 percent, or

11,811, based on OFRF’s survey results,

would qualify as a small business.

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. 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 2,077

certified handlers in 2001. This figure

includes 100 livestock feed handlers who

would become certified organic. Again, the

rate of growth could be higher or lower.

In handling operations, a small business

has fewer than 500 employees (SIC Division

D Major Group 20). 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, currently, about 25 (about

2 percent) of the estimated 1,250 organic

handlers in 1999 had more than 500

employees. This includes firms that handle

or process both organic and conventional

foods. We have estimated that 2,077 handlers

would be certified organic in the first year.

Based on this information, 98 percent or

2,035 would qualify as a small business.

4. An estimate of the projected reporting,

recordkeeping, and other compliance

requirements of the rule, including an

estimate of the classes of small entities which

will be subject to the requirement and the

type of professional skills necessary for

preparation of the report or record.

The reporting, recordkeeping, and

compliance requirements of the rule will

directly affect three sectors of the organic

industry that contain small business entities:

accredited certifying agents, organic

producers, and organic handlers. We have

examined the requirements of the rule as it

pertains to each of these entities, however

several requirements to complete this

Regulatory Flexibility Analysis (RFA) overlap

with the Regulatory Impact Assessment (RIA)

and the Paperwork Reduction Act (PRA)

section. 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 rule’s costs to small

entities. The RIA provides an analysis of the

benefits and costs of this regulation. 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 final rule.

The PRA section estimates the reporting and

recordkeeping (information collection)

requirements that would be required by this

rule 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.

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 30 of the 36

private certifying agents are small businesses.

The recordkeeping and paperwork

requirements are outlined in the Paperwork

Reduction Act section. The requirements for

small and large certifying agents are

identical. The recordkeeping and paperwork

requirements for accreditation will be a new

burden to most agents as the majority of them

have not been accredited in the past.

However, 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 required

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. Because the rule does not require

any particular system or technology, it does

not discriminate against small businesses.

The ability of an agent to carry out the

paperwork and recordkeeping sections of the

rule will be more dependant on the

80680 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

administrative skill and capacity of their

particular organization than their size. We

did not receive significant comments about

the paperwork requirements of the proposed

rule that would indicate that they will be

onerous for small certifying agents.

Certifying agents will be the front line in

monitoring and ensuring that certified

operations stay in compliance with the Act

and the regulations. However, most of the

compliance requirements, with the exception

of some reporting requirements, are

consistent with what certifiers are currently

expected to do. Like the paperwork and

reporting requirements, the additional costs

to an agent will depend on how different

their current practices are from the final

regulation.

The final, and probably most significant,

area in which certifying agents are affected

by the rule is in the fees that they must pay

for accreditation. Certifying agents will be

assessed for the actual time and travel

expenses necessary for the NOP to perform

accreditation services, including initial

accreditations, 5-year renewals of

accreditation, review of annual reports, and

changes to accreditation. Although the fees

have not been set yet, we are using as a

starting point the hourly fees that are charged

for the voluntary, fee-for-service program

provided by AMS to certification bodies

requesting conformity assessment to the ISO

Guide 65, ‘‘General Requirements for Bodies

Operating Product Certification Systems.’’

We expect that at the time the NOP’s final

rule is implemented, the fees will be

approximately $95 per hour with higher

overtime and holiday rates. Certifying agents

will also be charged for travel, per diem, and

other related costs associated with

accreditation. To ease the financial burden of

accreditation during the 18 month transition

period after the NOP 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 to the site evaluation. Review of the

certifying agent’s annual report is anticipated

to range from 2 to 8 hours at the ISO Guide

65 hourly rate. Also, if certifying agents wish

to become accredited in additional areas for

which they were not accredited previously,

a site evaluation (with associated fees) will

be necessary. Detail about the expected costs

of accreditation can be found in the RIA.

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 followup

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 followup 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 a 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 affect 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.

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.

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 affected by this final rule and

may not be able to continue in business from

a financial standpoint.

Costs to Producers and Handlers

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 rule, we have

clarified that the exemption applies to

producers and handlers who sell no more

than $5,000 annually in value of organic

products (9). In addition, handling operations

are exempt if they: Are a retail food

establishment that handles organically

produced agricultural products but does not

process them; handles agricultural products

that contain less than 70 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 70 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 ready-to-eat food from certified

organic products.

According to the OFRF survey, 27 percent

of currently certified farms that responded to

the survey would fall under the producer

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 4,801

small organic producers and 173 handlers

that will be exempt from certification (this

figure does not include excluded operations).

These operations would be required to

comply with the production and handling

standards and labeling requirements set forth

under the NOP. They do not have to meet the

paperwork requirements of certification and

they must only keep records that document

compliance with the law for 3 years (rather

than 5 for certified operations. We anticipate

that this exemption will be used primarily by

small market gardeners and hobbyists who

grow and process produce and other

agricultural products for sale at farmers

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80681

markets and roadside stands to consumers

within their communities.

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.

As with accredited certifying agents, the

regulation will impose administrative costs

on certified 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

become certified 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

differ 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. The only distinction made in the final

rule between large and small entities for

reporting, recordkeeping, and compliance is

for operators who produce less than $5000

per year in organic products as stated above.

As with the certifying agents, most of the

concern this rule generated for small certified

operations revolves around fees. Under this

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 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.

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’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 the existing certification

programs mention 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

into 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.

This rule 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.

Those currently receiving voluntary

certification will likely see a modest increase

as the certifying agent passes on its cost

incurred under the NOP. 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.

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 NOP is

implemented. Other States, such as

Minnesota, have cost-share programs to help

offset costs for organic producers.

Conclusion

This rule will primarily affect small

businesses. We have, therefore, attempted to

make the paperwork, recordkeeping, and

compliance provisions as flexible as possible

without sacrificing the integrity of the

program. We are not requiring specific

technologies or practices and with the 18-

month phase-in of the program we are

attempting to give both certifying agents and

certified operators an opportunity to adapt

their current practices to conform with the

rule. Because we have attempted to make the

rule conform with existing industry

standards, including ISO guide 65 for

certification and ISO guide 61 for

accreditation, the changes for most

organizations and operations should be

relatively straightforward.

The fees required for accreditation will be

the most significant change faced by most

operations—and this was apparent in the

comments received. While we understand

the concerns of the affected organizations, in

order to administer an accreditation program,

it is necessary that we recover our costs. We

are hoping that the elimination of the hourly

charges in the first round of accreditation

will help to alleviate some of this burden.

1. Organic Farming Research Foundation.

1999. Final Results of the Third Biennial

National Organic Farmers’ Survey. Santa

Cruz, CA.

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.

4. California 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.

5. 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.

6. During the first 18 months, site

evaluation for initial accreditation will be

conducted jointly by two reviewers. Two

reviewers offers: (1) Anticipated faster turnaround; (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 NOP 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.

7. Adequate 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.

8. Fetter, Robert T. 1999. Economic

Impacts of Alternative Scenarios of Organic

Products Regulation. Senior Honors Thesis.

University of Massachusetts, Amherst, MA.

9. We 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.

80682 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

10. California 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.

Appendix D—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 revised 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 Organic

Foods Production Act (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 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 toward

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 regulation 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 E—Executive Order 13132,

Federalism

This final rule has been reviewed under

Executive Order 13132, Federalism. This

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 final rule, (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.

The Organic Foods Production Act (OFPA)

of 1990 (7 U.S.C. 6501 et seq.) 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. There has been a great

deal of support for this law and these

regulations from the organic community.

OFPA and these regulations do preempt

State statutes and regulations related to

organic agriculture. OFPA 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. Currently, 32 States

have organic statutes on their books and have

implemented them to various degrees.

However, 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 allows

the States to determine the degree to which

they are involved in the organic program.

States may choose to: (1) Carry out the

requirements of the Act by establishing a

State organic program (SOP) and becoming

accredited to certify operations, (2) establish

an SOP but utilize private accredited

certifying agents, (3) become accredited to

certify and operate under the National

Organic Program (NOP) as implemented by

the Secretary, or (4) not play an active role

in the NOP. 7 U.S.C. 6507 provides that

States may establish an SOP consistent with

the national program. SOP’s may contain

more restrictive requirements than the NOP

established by the Secretary of Agriculture.

To be more restrictive, SOP’s must: 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.

Because implementation of OFPA will

have a significant effect on many States’

existing State statutes and programs, the U.S.

Department of Agriculture (USDA) has

reached out to States and actively sought

their input throughout the entire process of

developing the organic rule. On publication

of the first proposal on December 16, 1997,

an announcement and information packet

summarizing the proposal was sent to more

than 1,000 interested parties, including State

governors and State department of

agriculture secretaries, commissioners, or

directors. Over a period of 6 years, numerous

meetings were held to provide States an

opportunity to provide information and

feedback to the rule. In 1994, States were

invited to participate in four public hearings

held in Washington, DC; Rosemont, IL;

Denver, CO; and Sacramento, CA, to gather

information to guide development of

standards for livestock products. States were

also provided the opportunity to comment

specifically on State issues at a National

Organic Certifiers meeting held on July 21,

1995. They were invited to discuss

accreditation issues at a meeting held on

February 26, 1996. Following the publication

of the first proposal, State and local

jurisdictions had the opportunity to provide

input at four listening sessions held in

February and March 1998 in Austin, TX;

Ames, IA; Seattle, WA; and New Brunswick,

NJ. A meeting to discuss the role of States in

the NOP was held in February 1999. A State

organic certifiers meeting to discuss State

issues was held at a March 2000 meeting

with the National Association of State

Organic Programs.

USDA also drew extensively on the

expertise of States and the organic industry

by working closely with the National Organic

Standards Board. The Board met 12 times

before publication of the proposed rule on

December 16, 1997, and met five times

during 1998 and 1999 and two times in 2000.

States were invited to attend each of these

meetings, and official State certifier

representatives participated in Board

deliberations in meetings held in July 1998,

July 1999, and March 2000.

Public input sessions were held at each

meeting to gather information from all

interested persons, including State and local

jurisdictions. NOP 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. 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 (AMS) Administrator, the

NOP Program Manager, and NOP staff.

In addition, during August and September

2000, the Administrator and NOP staff

engaged in extensive efforts to discuss the

proposed rule. While many organizations

declined opportunities for these briefings,

AMS staff did meet with the National

Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations 80683

Conference of State Legislatures (NCSL) and,

at their request, in lieu of a meeting,

provided information to the National

Governor’s Association (NGA). NGA and

NCSL representatives stated they were aware

of the development of the final rule but

offered no comments during these

consultations beyond those submitted by the

individual States during the proposed rule’s

comment period. In addition, between

August and October 2000, NOP staff had

telephone or e-mail contact with the State

organic program directors or other State

department of agriculture representatives in

25 States to determine the scope and status

of each State’s organic program in the context

of the issuance of the final rule. These State

representatives stated that they were eagerly

awaiting the publication of the final rule and

had already begun adjusting their programs

to conform with the March 2000 proposed

rule in anticipation of the publication of the

final rule. Finally, States have had the

opportunity to comment on two proposed

rules. More than 275,000 comments were

received on the first proposal, and 40,000 on

the second proposed rule-including extensive

comments from twelve State departments of

agriculture, one State legislator, two members

of Congress, and the National Association of

State Organic Programs.

Through this outreach and consultation

process, States have both provided general

feedback to the rule and expressed several

specific concerns about how this rule will

affect State programs. Overwhelmingly,

States were extremely supportive of the

March 2000 proposed rule. With a few

exceptions, most notably who should bear

the cost of enforcement of an SOP, States are

supportive of the Federal legislation. We did

not receive a single comment from a State

that indicated that there should not be a

national organic program.

The most prevalent issues they raised

regarding the March 2000 proposed rule as to

how this rule will affect organic programs in

their States, along with USDA’s response, are

described below. We received no direct

comments from States on the Federalism

section in the proposed rule. Many of these

concerns and others are addressed in more

detail in the relevant sections of the rule.

Applicability

Regarding section 205.100(b), five States

currently offer a ‘‘transition to organic’’ label

for producers who are in the process of

becoming certified. Many of these States

would like to continue to offer this label.

However, OFPA does not authorize a

‘‘transition to organic’’ label. Although the

States (or private certifiers) are free to come

up with a different label for these farmers,

they cannot utilize the term, organic, in any

seal or labeling associated with the

conversion period. There is no change in this

provision from the proposed rule.

Accreditation

Regarding section 205.501(a), many States

wanted the NOP to add an additional

subsection to the Accreditation section

requiring certifiers to prove that they can

carry out a State’s more restrictive standards

in order to be accredited to certify in that

State. AMS concurs with this suggestion and

has added a new paragraph 205.502(a)(20)

requiring the certifying agent to demonstrate

its ability to comply with a State’s additional

requirements.

Regarding section 205.501(b), there was

strong support by all of the States for the

provision that States with SOP’s are able to

have higher standards than the NOP for

operations within their State. However, there

was not consensus among the States on the

prohibition on private certifiers requiring

more stringent standards.

Although most supported the prohibition

on private certifiers imposing additional

requirements as a condition of certification

because they perceived that it lowered

barriers to farmers and processors in their

States, three States were strongly opposed to

this provision. Because having a consistent

national standard is one of the primary

purposes of the legislation, there is no change

in this provision from the proposed rule.

State Programs

There was general confusion about what is

the difference between a State organic

certification program and an SOP. In

addition, some States wanted the scope of the

NOP’s oversight for State organic activities to

be limited to certification. A State organic

certification program is equivalent to a

private or foreign certification program.

States wishing to certify operations in their

State must apply to the NOP for

accreditation.

An SOP, on the other hand, requires the

State to submit a plan to the NOP for

approval to, in effect, administer the NOP

within their State. Included in this is the

opportunity to include requirements that

differ from the NOP. In creating an SOP, a

State is also agreeing to take on enforcement

activities that would otherwise be the

responsibility of the NOP. One exception to

a State’s enforcement authority is that States

with SOP’s do not have jurisdiction over the

accreditation of certifying agents and cannot

revoke accreditation. They can investigate

and report accreditation violations to the

NOP. States with only an accredited

certification program are only responsible for

the level of enforcement that all accredited

certifying agents, State, private, or foreign,

are required to take on.

Regarding section 205.620(c), several States

want broader language than ‘‘unique

environmental conditions’’ to be the basis for

a State to have the right to establish more

restrictive requirements under an SOP. AMS

does not concur. There is no change to this

language in the final rule. It is the opinion

of AMS that the current language is broad

enough to cover the scope of more restrictive

requirements as authorized by OFPA.

Regarding section 205.620(d), many States

want it to be optional for States with SOP’s

to take on enforcement obligations; several

want funding from USDA for enforcement

activities. AMS does not concur with this

change. AMS does not envision that

participation under the NOP will impose

additional fiscal costs on States with existing

organic programs, other than the costs of

accreditation.

Regarding section 205.621(b), several

States commented that States with SOP’s

should not be required to publish proposed

changes to their programs in the Federal

Register for public comment. AMS concurs

with this comment. This language was an

oversight from the first proposed rule.

Fees

A few States commented that the proposed

fees for accreditation could cost more than

some States could afford to pay. They made

some suggestions for reducing accreditation

fees, ranging from no fees (a completely

federally funded program) to charging

reduced rates for travel or eliminating hourly

charges. AMS has no plans to change the fee

structure. As in the proposed rule, hourly

charges for accreditation will be waived for

all applicants in the first 18 months of the

program to facilitate the conversion to a

national accreditation system.

80684 Federal Register / Vol. 65, No. 246 / Thursday, December 21, 2000 / Rules and Regulations

Compliance

Regarding section 205.665, several States

wanted to know what their authority was to

revoke the accreditation of private certifiers

in their State who do not meet additional

State standards under an SOP. An SOP’s

governing State official is authorized to

review and investigate complaints of

noncompliance with the Act or regulations

concerning accreditation of certifying agents

operating in their State. If they discover a

noncompliance, they shall send a written

report to the NOP program manager. Because

accreditation is a Federal license, States do

not have the authority to revoke a certifying

agent’s accreditation. There is no change in

this section from the proposed rule

Appeals

Regarding section 205.668(b), several State

commenters want appeals from SOP’s to go

to State district court rather than Federal

district court. AMS disagrees. The Act

provides that a final decision of the Secretary

may be appealed to the U.S. District Court for

the district in which the person is located.

AMS considers an approved SOP to be the

NOP for that State. As such, AMS considers

the governing State official of such State

program to be the equivalent of a

representative of the Secretary for the

purpose of the appeals procedures under the

NOP. Because the final decision of the

governing State official is considered the

final decision of the Secretary, under the Act

it is then appealable to the U.S. District

Court, not the State district court.

Regarding section 205.680, State

commenters want a process by which people

who feel they were adversely affected by the

organic program in a State with an SOP may

appeal to the SOP’s governing State official,

rather than the Administrator. AMS has

amended the language in section 205.680 to

clarify to whom an appeal is made under

various situations. If persons believe that

they were adversely affected by a decision

made by the NOP Program Manager, they

appeal to the Administrator. If they were

adversely affected by a decision made by a

certifying agent (State, private, or foreign),

they appeal to the Administrator unless they

are in a State with an SOP, in which case,

they appeal to the SOP’s governing State

official. If persons believe that they were

adversely affected by a decision made by a

representative of an SOP, they appeal such

decision to the SOP’s governing State official

or such official’s designee.

[FR Doc. 00–32257 Filed 12–20–00; 8:45 am]

BILLING CODE 3410–02–P