Monday, March 13, 2000

Part III

Department of Agriculture Agricultural Marketing Service 7 CFR Part 205 National Organic Program; Proposed Rule

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DEPARTMENT OF AGRICULTURE faxed comments should be identified the proposed rule, including some of the with docket number TMD–00–02-PR. To issues most commonly raised in public Agricultural Marketing Service facilitate the timely scanning and comments. posting of comments to the NOP 7 CFR Part 205 Is this the final word on National homepage, multiple page comments organic standards? [Docket Number: TMD±00±02±PR2] submitted by regular mail should not be stapled or clipped. Commenters should No. This is only a proposed rule. It is RIN 0581±AA40 identify the topic and section number of important that you take the time to read this proposal to which the comment it carefully and write to USDA to give National Organic Program refers. us your recommendations, being as AGENCY: Agricultural Marketing Service, It is our intention to have all specific as you can. Your comments are USDA. comments to this proposal, whether due by June 12, 2000. Your comments do matter. On ACTION: Proposed rule. mailed, faxed, or submitted via the Internet, available for viewing on the December 16, 1997, the first proposed SUMMARY: This proposed rule would NOP homepage at http:// rule was published in the Federal establish a National Organic Program www.ams.usda.gov/nop in a timely Register, and 275,603 people wrote to (NOP or program) under the direction of manner. Comments submitted in us to explain why and how the rule the Agricultural Marketing Service response to this proposal will be should be rewritten, the largest public (AMS), an arm of the United States available for viewing at USDA–AMS, response to a proposed rule in USDA Department of Agriculture (USDA). This Transportation and Marketing, Room history. Then, in the October 24, 1998 national program is intended to 2945–South Building, 14th and Federal Register, we asked for public facilitate interstate commerce and Independence Ave., SW, Washington, comment on issues concerning livestock marketing of fresh and processed food DC, from 9:00 a.m. to 12:00 p.m. and confinement, medications, and the that is organically produced and to from 1:00 p.m. to 4:00 p.m., Monday authority of certifying agents, and 10,817 people wrote to us. As you read assure consumers that such products through Friday (except official Federal through this document, you will get a meet consistent, uniform standards. holidays). Persons wanting to visit the sense of what these comments said This program will establish national USDA South Building to view because in each section we briefly standards for the production and comments received in response to this summarize the relevant comments and handling of organically produced proposal are requested to make an products, including a National List of provide our response to them. appointment in advance by calling (202) We expect to publish a final rule later substances approved and prohibited for 720–3252. use in organic production and handling. this year, once we know what you think FOR FURTHER INFORMATION CONTACT: about this proposal. The final rule will This proposal will establish a national- Richard Mathews, Senior Agricultural level accreditation program to be have, as proposed here, an Marketing Specialist, USDA–AMS–TM– implementation phase-in period so administered by AMS for State officials NOP, Room 2510–So., PO Box 96456, and private persons who want to be farmers and processors won’t have to Washington, DC 20090–6456; change overnight. accredited as certifying agents. Under Telephone: (202) 205–7806; Fax: (202) the program, certifying agents will 205–7808. Has there been citizen input on this certify production and handling proposal beyond public comments? SUPPLEMENTARY INFORMATION: operations in compliance with the Yes. The National Organic Standards requirements of this regulation and Background of the National Organic Board (NOSB) is a 15-member citizen initiate compliance actions to enforce Program board that advises the Secretary on all program requirements. The proposal To address problems created by aspects of the National Organic Program includes requirements for labeling inconsistent organic standards, the and has special responsibility for products as organic and containing organic industry attempted to establish development of the National List. organic ingredients. The rule also a national voluntary organic Established by law in 1990, the NOSB provides for importation of organic certification program in the late 1980’s. includes 3 environmental agricultural products from foreign However, that effort failed to develop a representatives, 3 consumer programs determined to have equivalent consensus on needed organic standards. representatives, 4 organic farmers/ organic program requirements. The Congress was then petitioned by an ranchers, 2 organic processors, 1 program is proposed under the Organic organic industry trade association to retailer, 1 scientist, and 1 certifying Foods Production Act of 1990, as establish a mandatory national organic agent. Currently, the NOSB comprises amended. program, resulting in the Organic Foods 14 members. The 15th member, an DATES: Comments must be submitted on Production Act of 1990 (the Act). accredited certifying agent, would be or before June 12, 2000. Congress passed the Act to: (1) Establish appointed after certifying agents are ADDRESSES: Interested persons are national standards governing the accredited by the Secretary. Since the invited to submit written comments on marketing of certain agricultural first NOSB was appointed in 1993, the this proposal to: Keith Jones, Program products as organically produced Board has held 19 public meetings, Manager, National Organic Program, products; (2) assure consumers that including one public teleconference, USDA–AMS–TMP–NOP, Room 2945– organically produced products meet a crisscrossing the country to hear from So., Ag Stop 0275, PO Box 96456, consistent standard; and (3) facilitate the public before making Washington, DC 20090–6456. commerce in fresh and processed food recommendations to the Secretary on Comments also may be sent by fax to that is organically produced. This national standards. The vast majority of (703) 365–0760 or filed via the Internet proposal is designed to implement the commenters on the first proposed rule through the National Organic Program’s Act. urged the Secretary to rewrite the homepage at: http://www.ams.usda.gov/ To help readers better understand this proposal in line with NOSB nop. Written comments to this proposed proposal, we have provided answers to recommendations—and this is what we rule submitted by regular mail and some frequently asked questions about have done. More information on NOSB

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13513 members, meeting minutes, and a side- Consumers will have that confidence, information than they have today. by-side comparison of this proposal because this proposal requires for the [Labeling is covered in subpart D.] with NOSB recommendations can be first time that all organic operations be What is the National List? found at www.ams.nop/gov. certified by USDA-approved certifying In addition, to be consistent with agents. Up to now, certification has been The National List of Allowed and OMB Circular No, A–119, which directs optional; some farmers choose not to be Prohibited Substances (known as the agencies to use voluntary consensus certified at all, and others are certified National List) identifies specific standards, USDA considered adoption by State or private certifiers using substances that may or may not be used of the American Organic Standards, different standards. It can be hard for in organic production and handling Guidelines for the Organic Industry as a consumers to know if a product has operations. The National List is voluntary consensus standard for use in been certified, or, if it has, to what developed by the NOSB, through the National Organic Program. In standard. Under this proposal, all consultation with outside experts, and October 1999, the Organic Trade organic operations, except for the very forwarded to the Secretary for approval. Association published the American smallest, would be certified to the same The list identifies those synthetic Organic Standards (AOS). The AOS standard. And all products labeled as substances, which would otherwise be standards were developed over several ‘‘organic’’ would have to comply with prohibited, that may be used in organic months with two opportunities for the production and handling standards production based on the comment from interested parties. The in this rule. recommendations of the NOSB. Only introduction states that the standards Consumers can also look for the those synthetic substances found on the are written as an up-to-date compilation USDA organic seal, which can only be National List may be used. The National and codification of organic standards used on products that have been List also identifies those natural and certification procedures, as they are certified by USDA-approved certifying substances that may not be used in understood and applies in the United agents. This seal assures consumers that organic production, as determined by States. Organic Trade Association the maker of the product is part of a the Secretary based on the NOSB members are expected to follow the rigorous certification program and has recommendations. The first proposal included some guidelines. been thoroughly reviewed by substances on the National List that professional inspectors trained in USDA has determined that it would were not recommended by the NOSB. organic agriculture. be impractical to use the American This proposal contains no substances on Organic Standards in lieu of USDA National standards will also bring the approved list that were not found in developed standards for the following greater predictability for producers of the NOSB recommendations. reasons: (1) Not all participants in the organic foods. There will be no This proposal also includes organic industry elected to participate confusion about whether a product restrictions or other conditions on the in developing the AOS; (2) the AOS are satisfies the particular standard of any use of allowed substances, also known new to the industry so there has not State, for example, because all organic as ‘‘annotations,’’ as recommended by been sufficient time for the industry to foods will meet the same standards. the NOSB. Such annotations have been assess their effectiveness, and (3) some Finally, a national standard for used by existing State and private certifying agents disagree with portions organic food will help our farmers and certification programs to further ensure of the AOS. manufacturers sell organic products in that allowed substances are used in a Why do we need national standards for other countries. The lack of a consistent manner that is consistent with organic organic food? national organic program has limited production. (The National List is access to important markets in other covered in subpart G, §§ 205.600 National standards for organic food countries because of the confusion through 205.607.) production are designed to bring about created by multiple, independent greater uniformity in the production, standards. A strong national standard Does this proposal prohibit use of manufacture, and marketing of organic will help to ensure buyers in other genetic engineering in organic products. In the absence of a national countries that all U.S. organic products production? standard, 49 State and private meet the same standards. Yes. This proposal prohibits the use organizations have established of genetic engineering (included in the How can I tell how much organic food individual programs and standards for broad definition of ‘‘excluded methods’’ is in a product? certifying organic agricultural products. in this proposal, based on the definition The lack of consistency between these This proposal sets strict labeling recommended by the National Organic standards has created problems for standards based on the percentage of Standards Board) in the production of farmers and handlers of organic organic content. If a product is 100 all foods and ingredients that carry the products, particularly if they want to percent organic, it can, of course, be organic label. sell their products in multiple States labeled as such. A product that is at 275,603 commenters on the first with different standards. Lack of a least 95 percent organic can be proposal nearly universally opposed the nationwide standard has also created described as, for example, ‘‘organic use of this technology in organic confusion for consumers, who may be cereal.’’ If a cereal, for example, production systems. Based on this uncertain what it really means when a contains between 50 and 95 percent overwhelming public opposition, this food product is called ‘‘organic.’’ organic content, it can be described as proposal prohibits its use in the With a national standard, consumers ‘‘cereal made with organic ingredients,’’ production of all organic foods even across the country can go into any store and up to three organic ingredients can though there is no current scientific and have full confidence that any food be listed. Finally, if the food contains evidence that use of excluded methods product labeled ‘‘organic’’ meets a strict, less than 50 percent organic content, the presents unacceptable risks to the consistent standard no matter where it term, ‘‘organic,’’ may only appear on the environment or human health. While was made. Use of the word, ‘‘organic,’’ ingredient information panel. These these methods have been approved for on the label of any product that does not four new labeling categories will use in general agricultural production meet the standard is strictly prohibited. provide consumers with much greater and may offer certain benefits for the

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We believe consumers methods in the production of organic foods and ingredients that carry the have expressed a clear expectation that foods runs counter to consumer organic label. 275,603 commenters on sewage sludge should not be used in the expectations, foods produced with these the first proposal almost universally production of any ingredients contained methods will not be permitted to carry opposed the use of this technology in in mostly organic products. Because prominent use of the word, ‘‘organic,’’ the organic label. (Excluded methods organic production systems. Based on on the label of such products reinforces are defined in subpart A and discussed this overwhelming public opposition, that expectation, we have chosen to further under Production and Handling this proposal prohibits its use in the prohibit use of sewage sludge in (subpart C), Labeling (subpart D), and production of all organic foods even production of both the organic and the National List (subpart G).) though there is no current scientific nonorganic ingredients. We recognize evidence that use of irradiation presents Will genetic engineering be allowed in that this policy may place additional unacceptable risks to the environment the production of foods that contain burdens on organic food processors and or human health and may, in fact, offer both organic and nonorganic certifying agents. However, we believe certain benefits. Because this rule is a ingredients? that the need to meet strong consumer marketing standard and consumers have expectations outweighs these concerns. No. For products with mostly organic expressed a clear expectation that content—those products where more irradiation should not be used in the Does this proposal set standards for than half of the ingredients are organic production of organic foods, foods livestock production? and that have the word, ‘‘organic,’’ on produced with this technology will not the main product label— excluded Yes. The proposal sets the first be permitted to carry the organic label. comprehensive standards for production methods must not be used in the The prohibition on irradiation production of any ingredients. Only of organic animals and meat products. extends to nonorganic ingredients used Under this proposal, use of antibiotics those products, in which fewer than half in mostly organic ingredients—those of the ingredients are organic and in would be prohibited in organic livestock products where more than half of the production. The standards also prohibit which the organic ingredients are only ingredients are organic and that have identified on the ingredient panel, could the routine confinement of animals and the word, ‘‘organic,’’ on the main require that ruminant animals have contain nonorganic ingredients product label. Only those products, in produced through excluded methods. access to outdoor land and pasture, which fewer than half of the ingredients although temporary confinement would We believe consumers have expressed are organic and in which the organic be allowed under certain, limited a clear expectation that these methods ingredients are only identified on the circumstances. Animals under organic should not be used in the production of ingredient panel, could contain management must also receive 100- any ingredients contained in mostly irradiated nonorganic ingredients. We percent organically grown feed. organic products. Because prominent do not believe that this prohibition on (Organic livestock management issues use of the word, ‘‘organic,’’ on the label irradiation in nonorganic ingredients are discussed in greater detail under of such products reinforces that will place undue burden on either subpart C, 205.236 through 205.239.) expectation, we have chosen to prohibit handlers or certifiers because of current use of excluded methods in production labeling requirements for irradiated Does this proposal prohibit of both the organic and nonorganic products. ‘‘ecolabeling’’? ingredients. No. This proposal only regulates use We recognize that this policy will Does this proposal prohibit use of sewage sludge in organic production? of the term, ‘‘organic,’’ on product place additional burdens on organic labels. Other labels would be allowed as food processors and certifying agents Yes. This proposal prohibits the use long as they are truthful and not because the ability to meet these of sewage sludge in the production of all misleading and meet general food requirements will depend largely on foods and ingredients that carry the labeling requirements. The labeling practices used in conventional organic label. This prohibition extends requirements of this proposal are agricultural markets. For organic food to nonorganic ingredients used in the intended to assure that the term, processors, it may be harder to find production of mostly organic foods— ‘‘organic,’’ and other similar terms or sources of nonorganic ingredients that those products in which more than half phrases are not used in a way that are produced without use of excluded of the ingredients are organic and that misleads consumers. Should we find methods. Similarly, certifying agents have the word, ‘‘organic,’’ on the main that terms or phrases are being used to may face greater difficulty because they product label. Only those products, in represent ‘‘organic’’ when the products will be required to ensure that handlers which fewer than half of the ingredients are not produced to the requirements of have complied with this requirement. are organic and which the organic this regulation, we would proceed to However, we believe that the need to ingredients are only identified on the restrict their use. (Labeling is covered in meet strong consumer expectations ingredient panel, could contain subpart D.) outweighs these concerns. Furthermore, nonorganic ingredients produced using we anticipate that as marketplace sewage sludge. Are organic foods pesticide-free? practices or standards evolve, these 275,603 commenters on the first No. Organic farmers can use natural practices will be the basis for proposal almost universally opposed the pesticides to control weeds and insects implementing this provision, providing use of this technology in organic and maintain the high quality of organic handlers and certifying agents recognize production systems. Based on this products that consumers have come to criteria with which to evaluate sources overwhelming public opposition, this expect. Use of synthetic chemical of nonorganic ingredients in products proposal prohibits its use in the pesticides, however, is prohibited containing both organic and nonorganic production of all organic foods, even unless specifically allowed on the ingredients. though there is no current scientific National List as recommended by the

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National Organic Standards Board and How do I become an accredited How will USDA ensure that the National approved by the Secretary. (The certifying agent? standards are applied fairly and National List is covered in subpart G, All certifying agents must be consistently by all certifying agents? sections 205.600 through 205.607.) accredited by USDA. Certifying agents Because this proposal gives certifying Who needs to be certified? may apply for accreditation effective agents such an important role in As a general rule, all organic with publication of the final rule and enforcing the national standards, USDA production and handling operations are encouraged to apply as soon after oversight of those certifying agents is must be certified. The Act and this publication of the final rule as possible. particularly important. Under this proposal, however, do provide for some USDA will provide additional proposal, all certifying agents, both exceptions. For example, organic information on applying for private and in State organic programs, operations with less than $5,000 in accreditation on or about the date of would have to be accredited by USDA annual sales of organic products do not publication of the final rule. This before they could begin to certify require certification. Similarly, organic information will be available on the organic operations. It is this operations that handle only those NOP website and by mail upon request. accreditation process, in which USDA products with less than 50 percent Applications for accreditation will be reviews all certifying agents to make organic content or that restrict labeling handled on a first-come-first-served sure they understand and can accurately of organic ingredients to the ingredient basis. Those that apply within the first apply the national organic standards, information panel do not require 6 months following publication of the that is USDA’s main tool to ensure that certification. Finally, we are not final rule and are determined by the the standards are applied fairly and requiring certification of most grocery Administrator to meet the requirements consistently by all certifying agents. stores and restaurants (referred to in this for accreditation will be notified of their The accreditation process is really one proposal as ‘‘retail food status in writing on or about 12 months of ongoing oversight by USDA. establishments’’) at this time. after publication of the final rule. This Accreditation must be renewed every 5 Even where operations do not require approach is being taken because of the years so that we can be sure certifying certification, however, all organic food market advantage that could be realized agents continue to meet the program products must meet the national by accredited certifying agents if USDA standards. USDA will conduct one or standards as described in this proposal. did not announce the accreditations more site visits of certifying agents In that way, consumers can be confident simultaneously. (Accreditation is during the period of accreditation as that all products labeled as ‘‘organic’’ covered in subpart F.) another mechanism of monitoring their meet the national standards, even if they What are the roles and responsibilities compliance. Finally, certified operations did not require certification under the of certifying agents in the National may file complaints with USDA if they NOP. (Certification is covered in subpart Organic Program? believe they have been treated unfairly E; the exceptions from certification are or if a certifying agent is otherwise not found in subpart B.) Certifying agents are the ‘‘front line’’ following the program requirements. We representatives of USDA and play a will investigate these complaints for Will organic farmers have to pay fees? critical role in the oversight and possible enforcement action. Organic farmers and other organic enforcement of the national organic operations will have to pay fees for standards program. Once accredited by Can States have organic standards that organic certification but will not be USDA, certifying agents are empowered are more strict than the National charged any fees by USDA. Fees for to make key decisions regarding the standard? certification services will be set by the status of organic operations. Certifying Yes. Some States may have unique private or State certifying agents. The agents review the organic plans of environmental or other concerns that proposal also requires that certifying organic operations and are authorized to they believe require extra conditions agents make their schedule of fees grant certification to those operations above the national standard. In those publicly available so that organic that meet the strict national organic cases, States would apply to USDA to operations can plan appropriately and standards. Certifying agents are also have their special State program so that they can make informed choices responsible for the continuing oversight approved by the Secretary. where multiple certifying agents are of organic operations— reviewing However, no State would be allowed available. USDA will also review fees annual updates of organic plans, to set up a program that does not at least charged by certifying agents to ensure conducting residue analyses, and meet the national standard. And States that they are reasonable and that they conducting other monitoring activities. would not be allowed to use their are being applied fairly to all organic In cases in which a certifying agent programs to keep out or otherwise operations. Under this proposal, USDA finds that an organic operation does not discriminate against organic products would only charge fees for reviewing meet the national standards, the agent is made in another State. (State Programs (‘‘accrediting’’) certifying agents. These empowered to issue notices of are covered in subpart G, §§ 205.620 fees will primarily be based on the noncompliance and to initiate through 205.622.) actual costs of the accreditation work suspension or revocation of done by USDA staff so that certifying certification. Organic operations can What is the timeframe for agents with smaller and less complex appeal such decisions to USDA but implementation? programs will pay lower fees. The unless the organic operation appeals the The final rule in this rulemaking proposal also provides for a reduction in certifying agent’s decision or can correct process will establish a procedure and the accreditation fees during the first 18 the problems identified by the certifying a timeframe for implementing the NOP. months of the program to provide an agent, the agent’s decision will stand. We expect that the interim period incentive for certifying agents to become (Accreditation is covered in subpart F; between publication of the final rule in accredited under the new national Compliance is covered in subpart G, this rulemaking process and the program as soon as possible. (Fees are §§ 205.660 through 205.668; and effective date of the program (actual covered in subpart G, §§ 205.640 Appeals are covered in subpart G, implementation of regulations) will be through 205.642.) §§ 205.680 through 205.681.] 18 months. The following is a

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One have not addressed these comments certify production and handling request for comments on Issue Papers here because the relevant definitions operations to the requirements of these was published on October 28, 1998 (63 have been deleted. regulations. Equivalency discussions FR 57624). A notice of a program to will be held with foreign governments assess organic certifying agencies was Definitions—Changes Based On and foreign certifying agents. Guidelines published on June 9, 1999 (64 FR Comments and practice standards on production 30861). This subpart differs from our first and handling practices must be This preamble includes a discussion proposal in several respects as follows: finalized and distributed by the NOP. A of the proposed rule and supplementary (1) We have amended the term, ‘‘audit petition process for recommending information, including the Regulatory trail,’’ by replacing the category, amendments to the National List must Impact Assessment, Regulatory ‘‘organic’’ or ‘‘made with certain organic be developed and distributed. The Flexibility Act Analysis, Federalism ingredients,’’ with ‘‘100 percent NOSB will continue to review materials Impact Statement, and Paperwork organic,’’ ‘‘organic,’’ or ‘‘made with for the National List. State programs Reduction Act Analysis. The Civil organic (specified ingredients),’’ or may have to make adjustments in their Rights Impact Analysis is not included agricultural product containing less organic certification programs for as an attachment but may be obtained than 50 percent organic ingredients consistency with the standards of this by writing at the address provided identified as organic in an ingredients program. Producers should use the above or via the Internet through the statement. We have taken this action to interim period to prepare their National Organic Program’s homepage clarify the definition as requested by production operations to comply with at: http://www.ams.usda.gov/nop. several commenters. the relevant requirements of this National Organic Program Overview (2) We have amended the term, program. Handlers should use the ‘‘buffer area,’’ to ‘‘buffer zone’’ and Subpart A—Definitions interim period to prepare for necessary amended the term by replacing ‘‘a changes in the labeling of their Proposal Description certified farm or portion of a farm’’ with products. This subpart defines various terms ‘‘a certified production operation or Prior Documents in This Proceeding used in this part. These definitions are portion of a production operation.’’ A This proposed rule is issued pursuant intended to enhance conformance with few commenters suggested including a to the Organic Food Production Act of the regulatory requirements through a minimum size for the buffer zone and 1990 (Act or OFPA), as amended (7 clear understanding of the meaning of specifying that buffer zones must be U.S.C. 6501 et seq.). This proposal key terms. uncropped vegetated areas. The replaces the proposed rule published in We have amended terms and appropriate size and type of a buffer the Federal Register December 16, 1997. definitions carried over from the first zone is highly site-specific and cannot Comments to the first proposal were proposal where necessary to make their be rigidly specified for all locations considered in the preparation of this wording consistent with the language without placing unreasonable burdens proposed rule. used in this proposal. We have removed on some producers. Several commenters The following notices related to the the definition for the following terms supported determination of the NOSB and the development of this because the terms are not used in this appropriate buffer zone size and type by proposed regulation have been proposal or have been determined to be the producer in consultation with the published in the Federal Register. Five unnecessary: Active ingredient in any certifying agent. Additional information notices of nominations for membership input other than pesticide formulations, on this issue can be found at subpart C, on the NOSB were published between active ingredient in pesticide Crop Production, Changes Requested April 1991 and June 1999 (56 FR 15323, formulations, agroecosystem, botanical But Not Made, item 1. 59 FR 43807, 60 FR 40153, 61 FR 33897, pesticides, breeding, chapter, cation (3) We have amended the definition of 64 FR 33240). Two notices of extension balancing agent, certification activities, the term, ‘‘certification or certified,’’ to of time for submitting nominations were certification applicant, certified facility, make the language in the definition published on September 22, 1995, and chapter, confirmation of accreditation, consistent with the language of this September 23, 1996 (60 FR 49246, 61 FR contaminant, critical control point, proposal. We have also removed the 49725). Seventeen notices of meetings of cytotoxic mode of action, degradation, language concerning the information to the NOSB were published between detectable residue level, extract, farm, be found on a certificate. Commenters March 1992 and October 1999 (57 FR foliar nutrient, formulated product, suggested amending the definition by 7094, 57 FR 27017, 57 FR 36974, 58 FR fungicide, generic name, incidental adding the words, ‘‘annual’’ and ‘‘based 85, 58 FR 105, 58 FR 171, 59 FR 58, 59 additive, inert ingredient in any input on an on-site inspection and FR 26186, 59 FR 49385, 60 FR 51980, other than pesticide formulations, comprehensive review of the 60 FR 15532, 61 FR 43520, 63 FR 7389, intentionally applied, made with certain operation.’’ Other commenters 63 FR 64451, 64 FR 3675, 64 FR 28154, organic ingredients, mating disrupter, recommended deleting the reference to 64 FR 54858). One notice of public micronutrient, nonactive residues, products on a certificate because it is hearings on organic livestock and nonorganic agricultural ingredient or the operation, not the product, that is livestock products was published on product, petition, preliminary certified. We have not made the December 30, 1993 (58 FR 69315). One evaluation, processing methods, suggested additions because the issues notice specifying a procedure for production aid, production input, are adequately addressed in the submitting names of substances for proper manuring, putrefaction, site regulations. We have removed the inclusion on the National List was evaluation, soil amendment, split language concerning information found published on March 27, 1995 (60 FR operation, subtherapeutic, suspension of on a certificate because this information

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00006 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13517 is adequately addressed in the soil type, and type of crops or livestock provision of consulting services, within regulations. produced on a given operation. In the the prior 12-month period. Additional (4) We have amended the definition of interest of flexibility this proposal does information on conflicts of interest can ‘‘certifying agent’’ to clarify that the not specify what specific crops have to be found at subpart F, Changes Based term only applies to State-entity and be included in a crop rotation. The issue On Comments, items 4 and 5, and private-entity certifying agents. We have addressed in this suggestion is subpart F, Changes Requested But Not taken this action because there was addressed in the crop rotation practice Made, items 5, 6, 7, and 8; subpart F, some confusion among commenters standard at § 205.205. Additional Additional Provisions, item 2. over whether the original definition information on crop rotation can be (10) We have rewritten the definition included a State program’s governing found at subpart C, Production, Changes of ‘‘fertilizer’’ to provide for the State official. Based On Comments, item 5. inclusion of minor nutrients and trace (5) We have amended the definition of (8) We have amended the definition of elements with the three primary ‘‘commercially available’’ by removing ‘‘disease vectors’’ by adding that disease nutrients (nitrogen, phosphorus, the phrase, ‘‘to be feasibly and vectors include plants and animals that potassium) contained in a substance or economically used.’’ We have taken this transmit disease organisms or pathogens a blended substance utilized in a soil action because we agree with which may attack crops or livestock. A fertility program. This is a generic commenters that use of the phrase few commenters pointed out that the definition of fertilizer. Issues concerning provides an opportunity for producers definition as originally proposed was what substances may be present in a and handlers to avoid use of preferred technically inaccurate because it did not fertilizer for organic production are inputs. We have also clarified that address the transmission of disease addressed in subpart C of this proposal. ‘‘commercially available’’ applies to organisms to crops or livestock. (11) We have amended the definition processors by including the words, ‘‘or (9) We have rewritten the definition of of ‘‘handle’’ by providing that the term processing ingredient.’’ Additional ‘‘employee’’ to provide that an shall not include the sale, information on this issue can be found employee is any person providing paid transportation, or delivery of crops or at subpart C, Production and Handling or volunteer services for a certifying livestock by the producer thereof to a (General), Changes Requested But Not agent. A few States requested that the handler. This change was made because Made, item 2. definition clearly reference volunteers. we found merit in a certifying agent’s (6) We have amended the definition of A trade association recommended concern that farmers were turned into ‘‘compost’’ by referring to compost as expanding the definition to include any handlers by definition. This was not our ‘‘the product of a carefully managed person who works for a certifying agent. intent. process through which microorganisms We have included volunteers in this (12) We have amended the definition break down plant and animal materials proposal because of their substantial use of ‘‘inspector’’ to make terms used in the into more available forms suitable for by some certifying agents. Other States definition consistent with terms used in application to the soil.’’ We also state suggest changing ‘‘certification this proposal and to remove the phrase, that ‘‘composting’’ must use methods to decisions’’ to ‘‘certification activities’’ to ‘‘who is qualified.’’ A State certifying raise the temperature of raw materials to include any person who is involved in agent suggested deleting the phrase, the levels needed to stabilize nutrients the certification process. We have ‘‘who is qualified,’’ because the issue of and kill pathogens. Specific instructions addressed the commenters’ concern by inspector qualification is more on the production of compost for use in referring to services provided by the appropriately addressed in the organic production has been referenced employee for the certifying agent. A few regulations. We concur that the to the National Resources Conservation States stated that the definition needs to definition of ‘‘inspector’’ does not need Service’s (NRCS) practice standard for a clarify who is the employer of an to address the issue of qualifications, composting facility (Code 317). The independent inspector. An independent especially in light of the fact that NRCS practice Standard provides a field inspector would not be included in the certifying agents are required by these tested and verifiable procedure for definition of employee. Such persons regulations to use qualified inspectors. producing compost. We have made are considered to be contractors. Some (13) We have amended the definition these changes because commenters States expressed concern regarding the of ‘‘livestock’’ by adding reference to the suggested that we clarify the meaning of use of volunteers from certified production of fiber, feed, and other compost. Several commenters stated production and handling operations. agricultural-based consumer products that the definition should include rules Section 205.501(a)(11) requires that a and by providing that ‘‘livestock’’ shall about what kinds of materials are certifying agent prevent conflicts of not include fish or bees for the acceptable for use in compost. interest by not permitting any employee, production of food, fiber, feed, or other Additional information on this issue can inspector, contractor, or other personnel agricultural-based consumer products. be found at subpart C, Production and to accept payment, gifts, or favors of any A trade association and several States Handling (General), Changes Based On kind, other than prescribed fees, from recommended adding fibers to the Comments, item 4. any business inspected, except that a definition. We have added fiber, feed, (7) We have amended the definition of certifying agent that is a not-for-profit and other agricultural-based consumer ‘‘crop rotation’’ by adding a statement organization with an Internal Revenue products to the definition to capture all about the relationship of crop rotation to Code tax exemption may accept types of consumer products that would perennial crops as suggested by an voluntary labor from certified be produced from livestock. We have industry association. operations. Under this exception all excluded aquatic animals from the Several commenters suggested volunteers would be excluded from definition of livestock pending future inserting references to the use of work, discussions, and decisions in all development of detailed practice legumes and sod as essential to crop stages of the certification process and standards for specific aquatic animals. rotation. The benefits achieved through the monitoring of certified production We have also excluded bees from the the use of legumes and sod could be or handling operations for all entities in definition of livestock pending future fulfilled through many types of rotation which such person has or has held a National Organic Standards Board plans, which could only be developed commercial interest, including an (NOSB or Board) review and according to the site-specific climate, immediate family interest or the recommendations on apiculture.

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Additional information on this issue can Livestock Production, Changes Based ‘‘certification,’’ from the definition. We be found at subpart C, Livestock On Comments, item 9. have not made this change because the Production, Changes Based On (18) We have amended the definition term is meant to identify the person Comments, items 3 and 4. of ‘‘slaughter stock’’ by changing responsible for administering the State’s (14) We have amended the definition ‘‘human consumption’’ to organic certification program. By ‘‘State of ‘‘market information.’’ A commenter ‘‘consumption by humans and other organic certification program,’’ we mean suggested that the definitions of the animals.’’ A few commenters the law, regulations, and any policies terms, ‘‘labeling’’ and ‘‘market recommended deleting the word, and procedures established by the State information,’’ were difficult to ‘‘human,’’ to indicate that organic to govern the organic certification of distinguish from one another and livestock may also be used to produce producers or handlers by State or needed clarification. We have added pet food. We agree that slaughter stock private certifying agents. language to make a distinction between may be used in the production of (21) We have amended the definition the two terms. ‘‘Market information’’ products for consumption by humans of ‘‘unavoidable residual environmental now includes the phrase, ‘‘distributed, and other animals. contamination.’’ Commenters stated that broadcasted, or made available outside (19) We have amended the term, ‘‘soil USDA should set levels rather than of retail outlets.’’ This phrase indicates quality,’’ and its definition by make case-by-case decisions regarding that any information distributed, referencing ‘‘water’’ in the term and the residual environmental contamination. broadcasted, or made available outside definition. This change was made They suggested that background levels of retail outlets to assist in the sale or because of the reference to ‘‘soil and could be used to determine whether promotion of a product falls under the water quality’’ in § 205.200 of this land exceeds the level. Another ‘‘market information’’ category. proposal. Several State commenters commenter requested a clear statement ‘‘Labeling’’ includes any information stated that the definition of ‘‘soil of ‘‘unavoidable’’ and ‘‘contamination’’ displayed or made available in retail quality’’ was too vague and would pose to facilitate enforcement. Some States outlets on or about the product. problems in enforcing a requirement stated that there should be a level that (15) We have amended the definition that addressed the effect of various is unacceptable for organic agriculture. of ‘‘organic’’ to clarify that the term, practices on soil quality. Other A commenter suggested that the ‘‘organic,’’ is used as a labeling term. commenters requested expansion of the definition read, ‘‘The presence of a Commenters, including several States, definition to include a discussion of material prohibited in organic stated that the definition repeated the why soil quality is important and what production, processing, or handling in proposed requirements for allowing the functions healthy soil serves in an soil, crop, or food that occurs as a result use of ‘‘organic’’ on a product label. organic production system. Another of factors beyond the control of the They suggested amending the definition State suggested expanding the definition producer, processor, or handler.’’ to clarify that the term, ‘‘organic,’’ is to include water quality, since there Another commenter suggested that the used as a labeling term. We made the were several references in the definition read, ‘‘Background levels of suggested change because we agree that regulations to effects on soil or water prohibited substances at a site which are the definition unnecessarily repeated quality. The importance of soil quality clearly beyond the control of a certified regulatory information and that use of has been addressed under subpart C of organic farm operator through notices to the term, ‘‘organic,’’ is intended as a this proposal. We acknowledge that the neighbors, careful avoidance of labeling term. phrase, ‘‘soil and water quality,’’ is used abnormally precontaminated sites, and (16) We have amended the definition in subpart C and have, therefore, establishment of buffer zones.’’ In this of ‘‘producer’’ to clarify that the term expanded the term, ‘‘soil quality,’’ to proposal, we have defined ‘‘unavoidable includes the production of fiber and ‘‘soil and water quality’’ and amended residual environmental contamination’’ other agricultural-based consumer the definition accordingly. We have also as ‘‘background levels of naturally products. Several States suggested that added a new phrase to the previous occurring or synthetic chemicals that the definition of ‘‘producer’’ be definition to acknowledge that one are persistent in the soil or present in amended to clarify that a producer important criterion of soil and water organically produced agricultural could also be growing or producing a quality is the control of environmental products that are below established fiber product. We agree that this contaminants. The determination of tolerances.’’ clarification is needed and have also which observable indicators to monitor added reference to ‘‘other agricultural- and how to interpret the observations Definitions—Changes Requested But based consumer products’’ to further will be subject to documentation in the Not Made clarify that the term includes all organic system plan and consultation This subpart retains from our first agricultural-based consumer products between the producer and the certifying proposal terms and their definitions on produced by a producer. agent. Guidance will be provided to which we received comments as (17) We have changed the definition certifying agents through program follows: of ‘‘routine use of parasiticide’’ to the manuals. Additional information on this (1) A few commenters requested that definition recommended by the NOSB. issue can be found at subpart C, the definition of ‘‘Administrator’’ be Commenters suggested removing Production and Handling (General), revised to provide that authority to ‘‘without cause’’ from the definition in Changes Based On Comments, item 2. administer the National Organic the first proposal and adding such (20) We have amended the term, Program may be delegated to a State phrases as ‘‘without an indication of ‘‘governing State official,’’ to ‘‘State official. We have not made the illness from parasites,’’ ‘‘administration program’s governing State official’’ and recommended change because the with need based on the presence of a retained the definition to clarify the definition of ‘‘Administrator’’ merely diagnosed problem with parasites,’’ and difference between a State certifying addresses the top official of the ‘‘with or without cause.’’ The NOSB’s agent and a governing State official. We Agricultural Marketing Service (AMS) definition solves the problems caused have used the term, ‘‘State program’s and any AMS official to whom the by the use of the phrase, ‘‘without governing State official,’’ throughout Administrator may delegate authority. cause.’’ Additional information on this this proposal. A trade association and a The definition is not meant to address issue can be found at subpart C, State recommended removing the word, working relationships established

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00008 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13519 between AMS and a State or State operation from which the seller ‘‘nonagricultural substance’’ to be entity. acquired the products. consistent with the language used in (2) An environmental group requested (7) A commenter requested that we this proposal. The definition remains that we delete the phrase, ‘‘other than include definitions for ‘‘manure’’ and the same. during the manufacture of a ‘‘aged or rotted manure.’’ Under this (11) Commenters stated their multiingredient product containing both proposal it is not necessary to define objection to the use of the term, types of ingredients,’’ from the either term. ‘‘nonsynthetic (natural),’’ and its definition of ‘‘commingling.’’ This (8) An environmental organization definition. A commenter mistakenly proposal requires that a handler prevent requested that a phrase be added to the stated that the term, ‘‘natural,’’ was the commingling of organic and definition of ‘‘mulch’’ to indicate that defined in the Act. Other commenters nonorganic products but permits use of acceptable mulch materials leave no felt that use of any term that was not the word, ‘‘organic,’’ in labeling a chemical or toxic residues. This included in the Act was a violation of product made with organic and proposal allows the use of composted the Act. Because the term, ‘‘natural,’’ is nonorganic ingredients in accordance plant and animal wastes obtained from so ambiguous and subject to differing with these regulations. Therefore, it is nonorganic sources, such as commercial interpretations, the term, necessary to indicate that the term, compost products. Uncomposted plant ‘‘nonsynthetic,’’ as used throughout this ‘‘commingling,’’ does not apply to the or animal waste material which has regulation, represents an important manufacture of multiingredient been treated with a substance can be as clarification of the intent of the Act, and products produced in accordance with utilized as a mulch provided the we have, therefore, retained it in this these regulations. substance appears on the National List proposal. (3) A farmers’ association or complies with the OFPA. Off-farm (12) A few commenters requested that recommended that the Secretary plant and animal wastes from food the definition of ‘‘petition’’ be amended delegate authority for determining crop processing, municipal yard waste by adding the phrase, ‘‘to the National facilities, and other sources are used Organic Standards Board,’’ immediately year to certifying agents because crop extensively in existing organic following the word, ‘‘submitted.’’ We year will vary from region to region. We operations and generally permitted by have not made the requested change for have found no compelling reason to organic certification programs. Using two reasons. First, the change is make certifying agents responsible for such organic wastes is consistent with a unnecessary. Second, petitions, whether determining crop year and have not system of organic production and addressed to the NOSB or National made the recommended change. handling, which calls for recycling Organic Program (NOP) Staff, will be (4) A few commenters requested that organic wastes to return nutrients to the received by the NOP because the the definition of ‘‘handling operation’’ land. We believe that concerns about administrative functions of the NOSB be amended to exclude retailers of potential contaminants in plant and are performed at the NOP office. prepackaged agricultural products. This animal waste materials can be addressed Petitions received will be distributed by change is unnecessary because such by the requirement in this proposal that the NOP to the NOSB and appropriate retailers are excluded by the definition these materials be managed in a manner technical reviewers. of ‘‘handling operation’’ through the that prevents such contamination. (13) A producers association stated phrase, ‘‘except final retailers of Accordingly, this change has not been that the definition for ‘‘processing’’ was agricultural products that do not process made. Additional information on this confusing with regard to the difference agricultural products.’’ issue can be found at subpart C, Crop between a handler and a processor. A (5) Several commenters, including a Production, Changes Requested But Not handling operation that performs any of State department of agriculture, Made, items 2 and 3. the activities listed in the definition of recommended elimination of the (9) Several commenters suggested processing becomes a processor. We exception for weight labels in the adding information to the definition of have found no compelling reason to definition of ‘‘label.’’ We have not made ‘‘National Organic Standards Board’’ to revise this comprehensive definition for the recommended change to the address the role of the NOSB with processing, which comes directly from definition of ‘‘label’’ because, as used in regard to the National List. This change the Act. A commenter suggested that this proposal, ‘‘label’’ is intended to is unnecessary because the role of the this definition be changed to include represent the organic nature of the NOSB is adequately covered in section repackaging for weight. In addition to product. A weight label that does not 6517, National List, of the Act. the definition being stipulated by the refer to the organic nature of the product (10) Numerous comments were Act, affixing a weight label to a product would not constitute a label for the received from consumers, is a normal retail activity that does not purposes of this proposal. environmental groups, and organic warrant the expense and effort (6) A commenter requested that the producers concerning the definition of necessary to certify all retailers who definitions for ‘‘labeling’’ and ‘‘market the term, ‘‘nonagricultural ingredient.’’ routinely affix weight labels to organic information’’ be amended to refer only Commenters expressed the view that product. to products produced by the seller. We this term represented an attempt by (14) A few commenters requested that have not made this requested change USDA to circumvent the intent of the the definition of ‘‘State organic because changing the definitions to only Act that synthetic ingredients not be certification program’’ be amended by include products produced by the seller permitted in organic processed adding a statement indicating that a would severely restrict the application products. We disagree with the position State program could have additional of the terms, ‘‘labeling’’ and ‘‘market that the Act prohibits the use of requirements. This issue is addressed in information.’’ As defined, ‘‘labeling’’ synthetic ingredients in organic subpart G, State Organic Certification and ‘‘market information’’ correctly processed products. The use of Programs, Proposal Description. include any information that may be synthetic ingredients in organic (15) A technical institute presented to consumers concerning all processed products is discussed in the recommended including genetically products sold whether produced by the preamble to the National List found in engineered organisms and their seller, most likely a retail outlet, or subpart G. We have changed the term, products in the definition of produced by a production or handling ‘‘nonagricultural ingredient,’’ to ‘‘synthetic,’’ and an environmental

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We also do not consider it definition of ‘‘wild crop.’’ that the pesticide product is used in necessary to classify genetically organic crop or livestock production engineered organisms as either synthetic Definitions—Additional Provisions and handling. These changes have been or nonsynthetic for the purposes of this Upon further review of the definitions made to make the term and its regulation, since these organisms and in the first proposal, we have decided to definition consistent with the language their products are prohibited for use in propose the following additions and used in the National List. This proposal organic production or handling changes. takes a different position on inert ingredients, as explained in subpart G, regardless of whether or not they are Amended Definitions synthetic. National List, Changes Based on (16) A commenter recommended (1) We have amended the definition of Comments, item 6, than was taken in adding the word, ‘‘synthetic,’’ ‘‘accreditation’’ to include foreign the first proposal. Because of the immediately preceding the word, entities as now provided for in subpart increased importance of inert ‘‘substances,’’ in the second sentence of F, Accreditation. Additional ingredients in this proposal, we have the definition of ‘‘system of organic information on including foreign rejected the position of the few farming and handling.’’ We disagree entities in accreditation can be found at commenters who recommended with this suggestion because subpart B, Additional Provisions, item removal of this definition. ‘‘substances’’ as used in this definition 1, and subpart F, Changes Based On (8) We have amended the term, could be synthetic or nonsynthetic. A Comments, item 1. ‘‘organic plan,’’ to ‘‘organic system few commenters requested deletion of (2) We have amended the definition of plan’’ and made editorial changes to the the word, ‘‘extraneous,’’ as a modifier of ‘‘allowed synthetic’’ by replacing ‘‘for definition to make the term and ‘‘synthetic additives’’ in the definition use in organic farming’’ with ‘‘for use in language of the definition consistent of ‘‘system of organic farming and organic production, or handling.’’ This with the language in this proposal. handling.’’ The commenters stated that correction was necessary because the (9) We have amended the definition of use of the word, ‘‘extraneous,’’ implied National List includes synthetic ‘‘peer review panel’’ by removing ‘‘to that synthetic additives can be used in substances used in organic production assist in evaluating the performance of organic processed products. Synthetics and handling. a certifying agent’’ and inserting ‘‘to may be used in processed products if (3) We have amended the terms, assist in evaluating applicants for the substance is included on the ‘‘certified organic farm,’’ ‘‘certified accreditation as certifying agents.’’ This National List. Additionally, the word, organic handling operation,’’ and change clarifies that the role of the peer ‘‘extraneous,’’ modifies the word, ‘‘certified organic wild-crop harvesting review panel is to evaluate applicants ‘‘processing,’’ in the definition, and we operation,’’ with the term, ‘‘certified for accreditation. Additional consider use of extraneous processing to operation.’’ The term, ‘‘certified information on ‘‘peer review panel’’ can be inconsistent with organic handling. operation,’’ is used throughout this be found at subpart C, Proposal For these reasons, we have not removed proposal to refer to a crop or livestock Description, Production and Handling the word, ‘‘extraneous,’’ from the production, wild-crop harvesting, or (General). definition. We have, however, amended handling operation or portion of an (10) We have amended the definition the term, ‘‘system of organic farming operation that is certified by an of ‘‘person’’ by adding ‘‘contractor’’ to and handling,’’ by deleting ‘‘farming’’ accredited certifying agent as utilizing a clarify that, when the regulations use and inserting ‘‘production.’’ The system of organic production or ‘‘person,’’ the meaning includes definition for the term, ‘‘system of handling as described by the Act and ‘‘contractors.’’ organic production and handling,’’ is regulations in this part. We have taken (11) We have amended the definition unchanged. We have taken this action to this action to simplify the regulatory of ‘‘records’’ by removing the record make the term consistent with the language. examples. A trade association and language of this proposal. Additional (4) We have amended the term, several States recommend adding information on this issue can be found ‘‘cultural,’’ to ‘‘cultural methods’’ and ‘‘process flow charts’’ to the examples of at subpart C, Production and Handling amended the definition by removing all records. Another commenter, who does (General), Changes Requested But Not references to livestock. We have taken not want to give USDA unlimited access Made, item 1. this action because this proposal does to personnel files, suggested the creation (17) Several commenters, including a not refer to cultural methods with of a specific list of records to be State Department of Agriculture and a reference to livestock health care. maintained. We have rewritten the fishery association, requested that wild (5) We have amended the definition of recordkeeping provisions, removing all game and aquatic animals be included ‘‘field’’ by replacing ‘‘farm’’ with references to specific records or types of in the definition of ‘‘wild crop.’’ ‘‘production operation.’’ This action was records which must be maintained. We Regarding aquatic animals, we intend to taken because ‘‘farm’’ has been replaced have taken this action because we develop detailed practice standards for by ‘‘production operation’’ throughout believe that it is impracticable to specify specific aquatic species, which will be this proposal. in detail every class of records which published for comment and finalized (6) We have amended the definition of may be found essential in demonstrating prior to the implementation of the NOP. ‘‘handler’’ by adding the phrase, compliance with the Act and Given the virtual absence of recognized ‘‘including producers who handle crops regulations. Different types of certified certification programs for aquatic or livestock of their own production.’’ production and handling operations operations, including aquaculture, there We have made this change to clarify that will, by the very nature of their are no U.S. models on which to base producers who handle their own business, be required to maintain national standards. Additional production become handlers under the different records to establish their

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This proposal essentially adopts the issue of listing every class of records Reporting, and Exclusion from Sale, that definition. ‘‘Excluded methods’’ which may be found essential in Proposal Description. refers to a variety of methods used to demonstrating compliance with the Act (2) We have defined ‘‘action level.’’ genetically modify organisms or and regulations can be found at subpart Information concerning ‘‘action level’’ influence their growth and development B, Changes Based On Comments, item 6. can be found at subpart G, Inspection by means that are not possible under (12) We have amended the definition and Testing, Reporting, and Exclusion natural conditions or processes and are of ‘‘State.’’ Addition of the term, ‘‘State from Sale, Changes Based On not considered compatible with organic entity,’’ necessitated our amendment of Comments, item 2. production. Such methods would the definition of ‘‘State’’ to clarify that (3) We have defined ‘‘agricultural include recombinant DNA, cell fusion, State means the States of the United inputs.’’ Information concerning and micro-and macroencapsulation. States of America. ‘‘agricultural inputs’’ can be found at Such methods would not include the (13) We have amended the term, subpart G, Inspection and Testing, use of traditional breeding, conjugation, ‘‘system of organic farming and Reporting, and Exclusion from Sale, fermentation, hybridization, in vitro handling,’’ to ‘‘system of organic Changes Based On Comments, item 1. fertilization, or tissue culture. production and handling’’ and retained (4) We have defined ‘‘Agricultural We recognize that the phrases, the original definition in this proposal. Marketing Service (AMS) ‘‘ because the ‘‘natural conditions or processes’’ and The original definition was crafted to be term is used throughout this proposal. ‘‘not considered compatible with consistent with the requirements of the (5) We have defined ‘‘breeder stock.’’ organic production,’’ may be subject to Act. We have changed ‘‘farming’’ to We have added this definition because interpretation. We have proposed to use ‘‘production’’ to provide a more this proposal establishes conditions for these phrases for two reasons. First, encompassing term, which may come to the administration of an allowed ‘‘natural conditions or processes’’ is include such diverse activities as synthetic parasiticide to livestock used in the NOSB and American hydroponics, green house production, producing offspring for incorporation Organic Standards definitions, both of and harvesting of aquatic animals. The into an organic operation. We have also which were the result of consultation purpose of the original definition was to proposed conditions under which dairy with organic industry and consumer describe practices and substances stock, whose milk or milk products are stakeholders and, thus, accurately consistent with systems of organic to be sold, labeled, or represented as reflect current industry practices as well farming and organic handling as organically produced, may be treated as consumer preferences. Second, we required by the Act and to provide an with allowed synthetic parasiticides. recognize that industry and consumer explicit reference point for determining Additional information on this issue can expectations regarding the products of which practices and substances are most be found at subpart C, Livestock these techniques in organic production consistent with these systems. Several Production, Changes Based On systems may evolve. We believe that, commenters suggested that the Comments, item 9. taken together, these phrases allow for definition include the concepts, (6) We have defined ‘‘bulk.’’ a degree of flexibility to ensure that our ‘‘agroecosystem health,’’ ‘‘ecological Information concerning ‘‘bulk’’ can be regulations continue to accurately harmony,’’ and ‘‘biological diversity.’’ found at subpart D, Additional reflect industry practices and consumer Commenters also suggested including Provisions, item 7. preferences. In cases where questions definitions for ‘‘organic agriculture,’’ (7) We have defined ‘‘claims.’’ may arise regarding a specific ‘‘organic farming,’’ and ‘‘transition to Information concerning ‘‘claims’’ can be technique, we anticipate that such organic.’’ This definition is intended to found at subpart D, Changes Based On questions would be resolved by the clarify regulatory provisions in this Comments, item 1. Administrator based on proposal and is not intended as a broad (8) We have defined ‘‘detectable recommendations from the NOSB. philosophical statement. The terms, residue.’’ Information concerning (12) We have defined ‘‘feed additive.’’ ‘‘organic agriculture,’’ ‘‘organic ‘‘detectable residue’’ can be found at Information concerning ‘‘feed additive’’ farming,’’ and ‘‘transition to organic,’’ subpart G, Inspection and Testing, can be found at subpart C, Livestock are not used in this proposal and, Reporting, and Exclusion from Sale, Production, Changes Based On therefore, are not defined. Proposal Description and at Changes Comments, item 7. (14) We amended the definition of Based On Comments, item 2. (13) We have defined ‘‘feed transplant to prevent confusion with a (9) We have defined ‘‘drift.’’ supplement’’ Information concerning related term, ‘‘seedling.’’ While the Information concerning ‘‘drift’’ can be feed supplement’’ can be found at terms, ‘‘transplant’’ and ‘‘seedling’’ are found in subpart G, Residue Testing, subpart C, Livestock Production, often used interchangeably, the Act changes based on comments, item 2. Changes Based On Comments, item 7. treats them as distinct and establishes (10) We have defined ‘‘estimated (14) We have defined ‘‘forage.’’ separate regulatory requirements. We national mean.’’ Information concerning Information concerning ‘‘forage’’ can be have determined that the physical ‘‘estimated national mean’’ can be found found at subpart C, Livestock process of moving and replanting a at subpart G, Inspection and Testing, Production, Changes Based On seedling results in that seedling Reporting, and Exclusion from Sale, Comments, item 4. becoming a transplant. We have created Proposal Description and at Changes (15) We have defined ‘‘immediate this distinction to be able to enforce the Based On Comments, item 2. family.’’ Information concerning full requirements of the Act. Additional (11) We have defined ‘‘excluded ‘‘immediate family’’ can be found at information on ‘‘transplant’’ can be methods.’’ As a result of extensive subpart F, Changes Based On found at subpart C, Crop Production, public comment, we have revised the Comments, items 14 and 15; Changes Changes Based On Comments, item 4. definition of certain methods to be Requested But Not Made, item 18; and excluded from organic production Additional Provisions, item 2. New Definitions systems. Many commenters suggested (16) We have defined ‘‘ingredient’’ (1) We have defined ‘‘accredited that we use the definition for certain because the term is used throughout laboratory.’’ Information concerning methods to be excluded from organic subpart D.

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(17) We have defined ‘‘inspection’’ throughout the inspection and Testing, operation’s anniversary date of because the term is used throughout Reporting, and Exclusion from Sale certification. We are providing this subparts E and F. portion of subpart G. phase-in procedure for production and (18) We have defined ‘‘lot.’’ (25) We have defined ‘‘retail food handling operations certified by newly Information concerning ‘‘lot’’ can be establishment.’’ Information on ‘‘retail accredited certifying agents because we found at subpart D, Proposal food establishment’’ can be found in believe that such certifying agents will, Description and at Additional subpart B, Applicability, Proposal upon publication of the final rule, Provisions, item 6. Description and Additional Provisions, demonstrate their eligibility for (19) We have defined ‘‘natural item 2. accreditation by applying the national resources of the operation.’’ This (26) We have defined ‘‘sewage standards to the certification and definition has been added to provide sludge.’’ This term has been added and renewal of certification of their clients. greater context for evaluating the defined as synonymous with We are also providing this phase-in ‘‘maintain or improve’’ requirement for ‘‘biosolids’’ to incorporate the procedure to provide relief to certified a system of organic production and Environmental Protection Agency’s operations which would otherwise have handling. Information concerning regulatory language for this category of to be certified twice within a 12-month ‘‘natural resources of the operation’’ can materials. Information concerning period (prior to their certifying agent’s be found at subpart C, Production and ‘‘sewage sludge’’ can be found at accreditation and again following their Handling (General), Changes Based On subpart C, Crop Production, Changes certifying agent’s accreditation). This Comments, item 2. Based On Comments, item 1. relief will only be available to those (20) We have defined ‘‘nonretail (27) We have defined ‘‘State entity.’’ certified operations certified by a container.’’ Information concerning This proposal provides for the certifying agent that receives its ‘‘nonretail container’’ can be found at accreditation of domestic, tribal accreditation within 18 months from the subpart D, Proposal Description and at government, and foreign governmental date of publication of the final rule. We Additional Provisions, item 6. subdivisions that provide certification anticipate that certifying agents and (21) We have defined ‘‘practice services. We refer to such an entity in production and handling operations standard.’’ Practice standards have been this proposal as a ‘‘State entity.’’ will move as quickly as possible to added to this proposal in response to Additional information on ‘‘State begin operating under the national commenter requests for more specific entity’’ can be found at subpart F, organic standards. We are providing this guidelines for measuring the Changes Based On Comments, item 1. substantial phase-in period because performance of an organic system of (28) We have defined ‘‘tolerance.’’ accredited certifying agents will have to production and handling. A practice Information concerning ‘‘tolerance’’ can schedule on-site inspections around standard is a series of specific be found at subpart G, Inspection and varying growing seasons and because guidelines, requirements, and operating Testing, Reporting, and Exclusion from certifying agents and production and procedures through which a production Sale, Proposal Description and at handling operations will need time to or handling operation implements a Changes Based On Comments, item 2. adapt to the new national organic required component of its organic standards. system plan. For example, this proposal Subpart B—Applicability Exempt and Excluded Operations. contains a practice standard for soil This subpart provides an overview of This regulation establishes several fertility and crop nutrient management what has to be certified under the categories of exempt or excluded which describes the tillage practices, National Organic Program (NOP), operations. Exempt operations derive sources and handling restrictions for describes exemptions and exclusions their exemption from the Act while nutrients, and prohibited activities that from certification, addresses use of the excluded operations are excluded as a a production operation must comply term, ‘‘organic,’’ and addresses result of a Departmental policy decision. with. There are specific practice recordkeeping by certified production An exempt or excluded operation does standards applicable to crop, livestock, and handling operations. not need to be certified. However, and wild-crop production, and handling operations that qualify as exempt or Proposal Description operations. We are also proposing to excluded operations may elect to apply incorporate the terms of the NRCS Except for exempt and excluded for certification. A production or practice standard for a composting operations, each production or handling handling operation that is exempt or facility into the requirements of this operation or specified portion of a excluded from obtaining certification proposal. Additional information on production or handling operation that still must meet other regulatory ‘‘practice standards’’ can be found at produces or handles crops, livestock, requirements contained in this rule as subpart C, Production and Handling livestock products, or other agricultural explained below. (General), Changes Based On products that are intended to be sold, Exempt Operations. (1) A production Comments, item 4. labeled, or represented as ‘‘100 percent or handling operation that has $5,000 or (22) We have defined ‘‘private entity’’ organic,’’ ‘‘organic,’’ or ‘‘made with less in gross agricultural income from because the term is used throughout organic (specified ingredients)’’ must be organic sales annually is exempt from subpart F to differentiate between certified. Certified operations must meet certification and does not need to governmental (State entity) and all applicable requirements of these submit an the organic system plan to nongovernmental (private entity) regulations. anyone for acceptance or approval. organizations providing certification Certifying agents will begin the However, an exempt producer or services. process of certifying organic production handler must comply with the labeling (23) We have defined ‘‘production lot and handling operations to the national requirements of § 205.309 and the number.’’ Information concerning standards upon receipt of their organic production and handling ‘‘production lot number’’ can be found accreditation from the Administrator. requirements applicable to its type of at subpart D, Proposal Description and All production and handling operations operation. For example a producer of at Additional Provisions, item 6. certified by an accredited certifying organic vegetables, that performs no (24) We have defined ‘‘residue agent will be considered certified to the handling functions, would have to testing’’ because the term is used national standards until the certified comply with the labeling requirements

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Our exclusion of retail production and handling requirements operation or portion of a handling food establishments from this proposal protect the integrity of organically operation that sells organic agricultural does not prevent a State from produced products. products labeled as ‘‘100 percent developing an organic retail food (2) A retail food establishment or organic,’’ ‘‘organic,’’ or ‘‘made with establishment certification program or portion of a retail food establishment organic (specified ingredients)’’ that are otherwise regulating retail food that handles organically produced packaged or otherwise enclosed in a establishments that prepare, package, or agricultural products but does not container prior to being received or process organic agricultural products. process them is exempt from all of the acquired by the operation, remain in the No retailer, regardless of this requirements in these regulations. same package or container, and are not exclusion and the exceptions found in (3) A handling operation or portion of otherwise processed while in the the definitions for ‘‘handler’’ or a handling operation that handles control of the handling operation is ‘‘handling operation,’’ may sell, label, or agricultural products containing less excluded from the requirements in these provide market information on a than 50 percent organic ingredients by regulations, except for the provisions for product unless such product has been total weight of the finished product prevention of commingling and contact produced and handled in accordance (excluding water and salt) is exempt of organic products with prohibited with the Act and these regulations. Any from the requirements in these substances in § 205.272. The retailer who knowingly sells or labels a regulations, except the recordkeeping requirements for the prevention of product as organic, except in provisions of § 205.101(c); the commingling and contact with accordance with the Act and these provisions for prevention of contact of prohibited substances protect the regulations, will be subject to a civil organic products with prohibited integrity of organically produced penalty of not more than $10,000 under substances in § 205.272; and the products. this program. Such retailer may also be This exclusion will avoid creating an labeling regulations in § 205.309. The subject to enforcement actions and unnecessary barrier for handlers who recordkeeping provisions maintain an penalties under Federal statutes and distribute nonorganic products and who audit trail for organic products. The their implementing regulations want to offer a selection of organic prevention of contact with prohibited administered by other agencies of the products. Federal government. substances and the labeling (2) A retail food establishment or Recordkeeping Requirements for requirements protect the integrity of portion of a retail food establishment Certified Operations. A certified organically produced products. that processes or prepares, on the operation must maintain records (4) If a handling operation or portion premises of the retail food concerning the production and handling of a handling operation that handles establishment, raw and ready-to-eat of agricultural products that are sold, agricultural products containing at least food from certified agricultural products labeled, or represented as ‘‘100 percent 50 percent organic ingredients by labeled as ‘‘100 percent organic,’’ organic,’’ ‘‘organic,’’ or ‘‘made with weight (excluding water and salt) does ‘‘organic,’’ or ‘‘made with organic organic (specified ingredients)’’ not use the word, ‘‘organic,’’ on any (specified ingredients)’’ is excluded sufficient to demonstrate compliance package panel other than the from the requirements in these with the Act and regulations. Such information panel, it is exempt from the regulations, except for the provisions for records must be adapted to the requirements in these regulations, prevention of contact of organic particular business that the certified except the recordkeeping provisions of products with prohibited substances as operation is conducting, fully disclose § 205.101(c); the provisions for provided in § 205.272; and the labeling all activities and transactions of the prevention of contact of organic regulations in § 205.309. The prevention certified operation in sufficient detail to products with prohibited substances as of commingling and contact with be readily understood and audited, be provided in § 205.272; and the labeling prohibited substances and labeling maintained for not less than 5 years regulations in § 205.309. The requirements protect the integrity of beyond their creation, and be sufficient recordkeeping provisions maintain an organically produced products. to demonstrate compliance with the Act audit trail for organic products. The Excluded retail food establishments and regulations. Certified operations prevention of contact with prohibited include restaurants; delicatessens; must make the records required by this substances and labeling requirements bakeries; grocery stores; or any retail regulation available for inspection and protect the integrity of organically outlet with an in-store restaurant, copying by authorized representatives of produced products. delicatessen, bakery, salad bar, or other the Secretary, the applicable State As noted above, exempt handling eat-in or carry-out service of processed program’s governing State official, and operations producing multiingredient or prepared raw and ready-to-eat food. the certifying agent. Access to such products must maintain records as We have excluded such retail food records must be provided during normal required by § 205.101(c). This would establishments because comments to the business hours. include records sufficient to: (1) prove first proposal concerning the issue of Examples of Records. Each exempt, that ingredients identified as organic certification of retail food excluded, and certified operation were organically produced and handled, establishments were completely should maintain the records which and (2) verify quantities produced from divergent. Comments ranged from the demonstrate compliance with the Act such ingredients. Such records must be certification of all retail food and the regulations applicable to it and maintained for no less than 3 years and establishments to exclusion of all retail which it believes establish an audit trail the operation must allow food establishments. There is clearly a sufficient to prove to the Secretary, the representatives of the Secretary and the great deal of public concern regarding applicable State program’s governing applicable State program’s governing the handling of organic products by State official, and the certifying agent State official access to the records retail food establishments. Someday that the exempt, excluded, or certified during normal business hours for retail food establishments may be operation is and has been in compliance inspection and copying to determine subject to regulation under this NOP. with the Act and regulations.

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Examples of records include: organic must have been produced by a handlers since large-volume handling Application and supporting documents production or handling operation operations may qualify for inclusion for certification; organic system plan certified by an accredited certifying under the provision on the basis of few and supporting documents; purchased agent. We are seeking comment on the clients while small-volume handlers inputs, including seeds, transplants, following question. Should handlers be would be disqualified because they have livestock, and substances (fertilizers, allowed to identify organically three or more clients. pesticides, and veterinary biologics produced products produced by exempt More than 100 comments were consistent with the livestock provisions production operations as organic received, most from consumers, in of subpart C), cash purchase receipts, ingredients? Such identification would opposition to the provision. Many of the receiving manifests (bills of lading), be restricted to the ingredients list on commenters erroneously interpreted the receiving tickets, and purchase invoices; the information panel. This may provide provision as an exemption for handlers field records (planting, inputs, a wholesale outlet for organically of product for less than three certified cultivation, and harvest); storage records produced agricultural products operations. Most of these commenters (bin register, cooler log); livestock produced by producers exempted from expressed the belief that it is a violation records, including feed (cash purchase certification because their gross of the Act to allow handlers to operate receipts, receiving manifests (bills of agricultural income from organic sales through inclusion under another lading), receiving tickets, purchase totals $5,000 or less annually. certified operation’s certification rather invoices, copies of grower certificates), Compliance with Federal Statutes and than through separate certification breeding records (calendar, chart, Regulations. Any agricultural product under the Act and regulations. Several notebook, veterinary documents), that is sold, labeled, or represented as commenters stated that it is purchased animals documentation (cash ‘‘100 percent organic,’’ ‘‘organic,’’ or unacceptable to exempt handling purchase receipts, receiving manifests ‘‘made with organic (specified operations providing services to fewer (bills of lading), receiving tickets, ingredients)’’ must be produced and than three certified entities from purchase invoices, copies of grower handled in accordance with the separate certification. Several certificates), herd health records requirements in these regulations. commenters stated that operations that (calendar, notebook, card file, veterinary Organic agricultural products must be process products from a certified records), and input records (cash produced and handled in compliance producer should always be certified. purchase receipts, written records, with the Federal Meat Inspection Act, Several State departments of agriculture labels); producer invoice; producer the Poultry Products Inspection Act, and others stated that the exemption for contract; receiving manifests (bills of and the Egg Products Inspection Act, handlers servicing fewer than three lading); transaction certificate; producer concerning meat, poultry, and egg certified operations does not make certificate; handler certificate; weigh products; the Federal Food, Drug, and sense. They emphasized that certified tickets, receipts, and tags; receiving Cosmetic Act; the Federal Insecticide, operations could produce very large tickets; cash purchase receipts; raw Fungicide, and Rodenticide Act; and quantities of organic product and a product inventory reports and records; any other applicable Federal statute and large-scale handler may contract with finished product inventory reports and its implementing regulations. only a few certified producer Foreign Applicants. The regulations records; daily inventories by lot; records operations. Therefore, they called for in this part, as applicable, apply equally as to reconditioning, shrinkage, and elimination of the exemption. A few to domestic and foreign applicants for commenters questioned the certified dumping; production reports and accreditation, accredited certifying operation’s ability to ensure that the records; shipping reports; shipping agents, domestic and foreign applicants contracted handler maintains manifests (bills of lading); paid freight for certification as organic production or compliance with the Act and and other bills; car manifests; broker’s handling operations, and certified regulations. They expressed their belief contracts; broker’s statements; production and handling operations that the certified operation would have warehouse receipts; inspection unless otherwise specified. no authority to maintain compliance certificates; residue testing reports; soil with the Act within a facility it neither and water testing reports; cash receipt Applicability—Changes Based on owns nor manages. journals; general ledgers and supporting Comments We never intended to exempt documents; sales journals; accounts This subpart differs from our first handlers of fewer than three certified payable journals; accounts receivable proposal in several respects as follows: operations from certification. Rather, we journals; cash disbursement journals; (1) Exception for Handlers Serving proposed a means by which handlers of purchase invoices; purchase journals; Three or Fewer Certified Operations. We fewer than three certified operations receiving tickets; producer and handler have removed the provision that would could be covered under the certification contracts; cash sales receipts; cash have allowed handlers providing of a certified operation for which it purchase journals; sales invoices, services to fewer than three certified provides handling services. statements, journals, tickets, and organic producers to operate without Several of the commenters favored the receipts; account sales invoices; ledgers; separate certification under the NOP provision that any handling operation financial statements; bank statements; (§ 205.201). Such handlers will now that provides handling services to fewer records of deposit; canceled checks; have to be certified unless otherwise than three certified entities that produce check stubs; cash receipts; tax returns; exempted or excluded from certification or handle agricultural products that are accountant’s or other work papers; under § 205.101 of these regulations. We or that are intended to be sold, labeled, agreements; contracts; purchase orders; have taken this action because we or represented as organic or made with confirmations and memorandums of believe that the first proposal invites certain organic ingredients would not be sales; computer data; computer problems, such as making certain that required to be separately certified apart printouts; and compilations of data from the contracted handler maintains from the operations for which it the foregoing. compliance with the Act and provides such services. However, Request for Comment. This proposal regulations, taking enforcement actions supporters of the concept differed in provides that all ingredients in a against persons violating the Act and their position on the proposal. Most multiingredient product identified as regulations, and being equitable to all stated that the provision would work

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They further activities approved and monitored by organic sales totals $5,000 or less emphasized that all applicable the certifying agent responsible for the annually. We have taken this action standards must be met. A few product when it arrived at the handler’s because of commenter confusion over supporters recommended that there be a door. First, it is unreasonable to expect whether the $5,000 level applied to all contract between the handler and the the certifying agent to be responsible for sales of agricultural products or just certified operation and that the certified monitoring noncertified handlers even if sales of organic agricultural products. operation be responsible for any failure they are providing services to an This action is consistent with the of the handler to adhere to these operation certified by the certifying position of a State department of regulations. Another commenter stated agent. Second, we disagree with the agriculture, which stated that the $5,000 that, if handlers are to be exempt from commenter’s interpretation that ‘‘to exemption should apply to organic certification, the qualifying parameter receive or otherwise acquire’’ is sales, not sales of all agricultural for exemption should be based upon synonymous with taking legal title to products. The commenter believes that, economic value similar to that for the product. ‘‘To receive or otherwise as originally proposed, the regulation production operations. acquire’’ involves the possession, would limit opportunities for organic Two commenters supported the control, or custody of a product. Such industry development, especially for proposal but wanted the fewer-than- possession, control, or custody of a small producers and other small three-certified-operations limitation product may or may not involve the agribusinesses. removed. One of the commenters, a transfer of title to the product. In other (4) Applicability of Regulation to nonprofit agricultural organization, words, a handler may have possession, Exempt Operations. We have revised expressed the belief that the limitation control, or custody of the product under the producer and handler exemption, needlessly restricts commercial activity, a right derived from a certified provided to producers and handlers invites an excessive amount of operation but not under a claim of the with gross agricultural income from paperwork related to certification handler’s title to the product. organic sales totaling $5,000 or less applications, and provides no greater (2) Certification for a Portion of a annually, to provide that such assurances for quality control. This Production or Handling Operation. We operations are exempt from certification commenter, referring to the definition of have clarified that a portion of a and do not need to submit an organic handling operation at section 6502(10) production or handling operation can be system plan to anyone for acceptance or of the Act, interpreted ‘‘to receive or certified. We have taken this action approval but must comply with the otherwise acquire’’ as synonymous with because we agree with the association requirements for organic production and taking legal title to the product. This commenter who suggested that the handling and the labeling requirements commenter stated that this Department clarify for potential for agricultural products produced on interpretation creates a distinct, applicants for certification that a portion an exempt or excluded operation. We verifiable threshold which clearly of their production or handling have taken this action because the first identifies those operations needing to be operation can be certified. The Act at proposal too narrowly addressed the certified and those that do not need to section 6506(b) authorizes the regulatory requirements that exempt be certified. Under the commenter’s certification of specific fields of a producers must meet. Our purpose is to suggested system, handlers who take production operation or parts of a exempt such production and handling legal title to organic products assume handling operation when: (1) In the case operations from the regulatory and responsibility for their subsequent of a production operation or field, the financial burdens of certification but not handling and are required to have their area to be certified has distinct, defined to exempt them from the standards for operations certified. Any handler who boundaries and buffer zones separating organic production and handling. A works on organic products without the land being operated through the use fundamental concept of this regulation taking legal title would have his or her of organic methods from land that is not is to establish a label for organic. To the activities approved and monitored by being operated through the use of such extent that these entities will be using the certifying agent responsible for the methods; (2) the operators of such the term, ‘‘organic,’’ to describe their product when it arrived at the handler’s production or handling operation product, they must be truthful. If they door. The commenter believes that maintain records of all organic don’t comply with the other noncertified handlers who wanted to operations separate from records requirements of this part, they cannot serve organic customers would quickly relating to other operations and make truthfully describe their product as learn to provide the quality control and such records available at all times for organic. accountability requirements which inspection by the Secretary, the Several State commenters expressed certifying agents expect to see. certifying agent, and the State program’s the belief that the producer exemption We disagree with the commenters governing State official; and (3) would be too difficult to enforce. Some who recommended removal of the appropriate physical facilities, expressed the belief that exempt fewer-than-three-certified-operations machinery, and management practices production operations would still restriction on the grounds that the are established to prevent the possibility require monitoring to verify compliance proposal to limit exemptions to of a mixing of organic and nonorganic with organic standards. A State handlers contracting with fewer than products or a penetration of prohibited department of agriculture commented three certified operations needlessly chemicals or other substances on the that some monitoring of uncertified restricts commercial activity, invites an certified area. This clarification is found operations would still be needed to excessive amount of paperwork related at § 205.100 of this proposal. verify compliance with standards; to certification applications, and (3) Exemption for Operations with otherwise there would be no guarantee provides no greater assurances for $5000 or Less in Income. We have that standards would be met for

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States will be emphasized the value of such records over a multiple-year period. permitted to require certification of recordkeeping in monitoring the use of This commenter stated its intent, under federally exempted producers and substances. A marketing association and its State program, to require certification handlers under an approved State a State commented that the of organic production operations organic certification program. The recordkeeping period for a list of producing less than $5,000 in Department will consider any complaint substances applied to a certified agricultural product yearly. This same of noncompliance with these operation should be changed from 3 to commenter acknowledged the Federal regulations by an exempt production or 5 years to be consistent with the program’s obligation to provide the handling operation and take appropriate requirements of section 6511(d) of the exemption as required by section action. Act. A research foundation suggested 6505(d) of the Act. (5) Applicability of Federal Statutes. removal of the requirement for A producer raised the issue of having We have added at § 205.102(c) reference identifying the name and address of the exempt operations provide affidavits of to a production or handling operation’s person who applies and who has compliance with the Act and responsibility for complying with all applied any substance to any part of the regulations except for certification. A applicable Federal statutes and their farm and any livestock or other certifying agent made the observation implementing regulations as those agricultural product. A trade association that the rule as first proposed would not statutes may apply to the production recommended the addition of a new permit exempt producers, whether and handling of agricultural products. paragraph addressing the records operating under an affidavit or not, to We have made this addition as a means required to be maintained by crop sell any of their products to a certified of advising producers, handlers, and the production operations to establish an operation for further processing unless public that these regulations do not audit trail. Specifically, the commenter they were fully certified. This certifying supersede or alter a producer’s or recommended that the new paragraph agent stated that it did not believe handler’s responsibilities under other require that an audit trail be maintained excluding exempt producers from Federal statutes and their implementing by all organic crop production selling any of their products to a regulations. operations, which records: (1) All certified operation for further processing sources and amounts of all off-farm A processors association urged the unless they were fully certified was inputs; (2) the dates, rate, method of Department to advise the public in this consistent with the intent of the Act. application, location, reason for use, We disagree with both commenters. rule that food products produced and and name and address of applicator for First, we believe that an affidavit processed under the organic standard all off-farm inputs; (3) the dates, program for exempt producers, opting to must comply with applicable provisions projected and actual yield, and harvest exercise their right to the exemption, of the Federal Food, Drug, and Cosmetic location of all crops produced by the would impose unnecessary regulation Act; the Federal Meat Inspection Act; operation, both organic and nonorganic; upon entities that the Act clearly the Poultry Products Inspection Act; (4) the dates, quantities, and locations of intended not to impose such regulation and all other relevant statutes and their all crops stored; (5) the transport upon. Second, an affidavit program implementing regulations, in all system(s) used to distribute organic would create a regulatory burden on the respects, especially related to crops; and (6) the product name, date, Department and certifying agents that adulteration and misbranding. quantity, and buyer of all products sold, would not be justified by the size of (6) Recordkeeping Provisions. We both organic and nonorganic. A State such operations. We recognize, as have rewritten the recordkeeping commenter stated that the maintenance pointed out by commenters, that some provisions removing all references to of records on a certified operation is State programs currently require organic specific records or types of records important, but there must be restraint in production operations that would be which must be maintained. In their requiring redundant or irrelevant exempt under this national program to place, we are requiring that certified information. Approximately 50 retail register with the State and to comply operations maintain records adapted to commenters, speaking on behalf of a with requirements such as filing the particular business that the certified producer handler, stated that the financial records and maintaining operation is conducting. Such records recordkeeping requirements were records of production methods and must disclose all activities and burdensome and overly complicated. substances used. transactions of the certified operation in Comments indicated that there was While we believe that an affidavit sufficient detail as to be readily some concern regarding what records program is not appropriate at the understood and audited and must be had to be maintained by certified national level, we do believe that States sufficient to demonstrate compliance operations. Commenters were would be authorized to regulate organic with the Act and regulations. We have concerned about requiring the operations exempted under the NOP’s taken this action because we believe maintenance of the correct records for $5,000-or-less organic sales exemption that it is impracticable to specify in establishing an audit trail, avoiding the under an approved State program. detail every class of records which may retention of redundant or irrelevant Under this proposal, producers and be found essential in demonstrating records, and minimizing the burden and handlers exempted under the NOP’s compliance with the Act and complexity of the recordkeeping. $5,000-or-less organic sales exemption regulations. Different types of certified We agree with the commenters who will be exempt from the certification production and handling operations stated that the recordkeeping period for regulations and will not have to submit will, by the very nature of their a list of substances applied should be an organic system plan to anyone for business, be required to maintain consistent with the 5-year acceptance or approval but will be different records to establish their recordkeeping requirements of the Act.

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Accordingly, this proposal at the integrity of organic ingredients used Applicability—Changes Requested But § 205.103(b)(3) requires that certified in the products being handled. Not Made operations maintain all records (8) Exemption for Handlers that This subpart retains from our first applicable to their organic operations Handle Product Containing at Least 50 proposal regulations on which we for not less than 5 years beyond their Percent Organic Ingredients. We have received comments as follows: creation. We disagree with those provided at § 205.101(a)(4) that any (1) Exemptions for Handlers. commenters who called for more Commenters stated that under no specifics relative to what records need handling operation or portion of a handling operation that handles circumstances should organic handling to be maintained and agree with those operations be exempt from certification. commenters who expressed concern agricultural products that contain at least 50 percent organic ingredients by A few environmental organizations, a regarding the magnitude of records certifying agent, and an industry required to be maintained. This weight (excluding water and salt) that chooses to not use the word, ‘‘organic,’’ association commented that the first proposal provides each production and proposal exceeded statutory authority on any panel other than the information handling operation with the opportunity by broadening the producer exemption panel is exempt from the requirements to decide for itself what records are in section 6505(d) of the Act to apply to necessary to demonstrate its compliance in these regulations, except the handlers. An agriculture research and with the Act and regulations. provisions for prevention of contact of education organization stated that, (7) Exemption from Prevention of organic products with prohibited Commingling. We have removed the while the Act does not specifically substances as set forth in § 205.272, the identify handling operations under the requirement that a handling operation labeling provisions of § 205.309, and the or portion of a handling operation that producer exemption, including them is recordkeeping provisions of a reasonable and workable handles only agricultural products that § 205.101(c). contain less than 50 percent organic interpretation of the Act. The ingredients by total weight of the A commenter stated that the commenter stated that the Act provides finished product (excluding water and Department is required under the Act to an exemption to persons who sell no salt) that is exempt from the exempt any handling operation or more than $5,000 annually in value of requirements in this part comply with portion of a handling operation that agricultural products and it sees no the provision for the prevention of processes agricultural products that reason why the exemption should not commingling. As noted in item 8 below, contain at least 50 percent organically include handlers. This commenter also exempt handlers of agricultural produced ingredients by weight recommended that the NOP develop a products that contain at least 50 percent (excluding water and salt). We disagree new category of exemption of up to organic ingredients by weight will also with the commenter. Section 6505(c)(1) $10,000 for on-farm processing. The commenter’s recommended exemption be exempt from complying with the of the Act ties the exemption from would apply to value-added, made-on- provision for the prevention of certification to use of the word, site products, such as maple syrup, commingling. We have taken this action ‘‘organic,’’ on the principal display because the commingling of agricultural jams, and relishes, and would allow panel. The Secretary, in consultation individuals to combine their production products is often a part of the processing with the National Organic Standards activity. Such operations must, and handling exemptions. Board (NOSB) and the Secretary of We do not agree with those however, comply with all of the Health and Human Services, may applicable labeling provisions of commenters who stated that the first require certification of any operation subpart D including the prohibition on proposal exceeded statutory authority. the combining of organic and that chooses to use the word, ‘‘organic,’’ The title of the exemption in the Act nonorganic forms of the same on the principal display panel. This (section 6505(d)) specifically refers to agricultural product. In other words, the proposal provides that handlers, small farmers. However, the text to the handler must not, for example, combine processing agricultural products that exemption provides, in full, that organic and nonorganic corn if corn is contain at least 50 percent organically ‘‘subpart (a)(1) shall not apply to to be shown on the information panel as produced ingredients by weight persons who sell no more than $5,000 ‘‘organic corn.’’ (excluding water and salt), who choose annually in value of agricultural A commenter called for the removal to only use the word, ‘‘organic,’’ on the products.’’ ‘‘Person’’ is defined in the of the requirement that an exempt information panel are exempt from Act as ‘‘an individual, group of handler comply with the provisions for certification. Handlers processing individuals, corporation, association, the prevention of commingling and agricultural products that contain at organization, cooperative, or other contact of organic products with least 50 percent organically produced entity.’’ The Act defines ‘‘agricultural prohibited substances. The commenter ingredients by weight (excluding water product’’ as ‘‘any agricultural claimed that requiring exempt handlers and salt) who choose to use the word, commodity or product, whether raw or to prevent commingling of organic and ‘‘organic,’’ on any other panel, including processed, including any commodity or nonorganic products and contact of the principal display panel, must be product derived from livestock, that is marketed in the United States for organic products with prohibited certified. Use of the word, ‘‘organic,’’ on substances is inconsistent with the Act. human or livestock consumption. the principal display panel carries with We do not agree. As noted above, we Handlers are covered by the definition it connotations in the minds of have removed the prevention of of ‘‘person’’ and ‘‘agricultural product’’ commingling requirement because the consumers regarding the organic nature and are thereby eligible for exemption. commingling of agricultural products is of the product which necessitate The financial burden of certification often a part of the processing activity. certification of handlers of such is no less for handlers with sales of no We have not, however, removed the products. Further, requiring certification more than $5,000 annually than it is for requirement for the prevention of of handlers of such products is producers with sales of no more than contact of organic products with consistent with current industry $5,000 annually. Therefore, since the prohibited substances because the practice. cost of certification is the primary requirement is necessary to safeguard reason for exempting production

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00017 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13528 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules operations with sales of no more than certified operation. We anticipate that (5) Certification of Retail Operations. $5,000 annually, it is reasonable to also this exemption will be used primarily A commenter said the first proposal exempt handling operations with sales by small market gardeners, hobbyists, ignored retail operations which contract of no more than $5,000 annually. and other small producers who sell with an organic farm to produce organic This proposal exempts production produce and other agricultural products products with the store’s brand on the and handling operations that sell at farmers markets and roadside stands label. The commenter said the retail agricultural products as ‘‘organic’’ but to consumers within their communities. operation should be certified because it whose gross agricultural income from (2) Exceeding $5000 Limit for is responsible if violation occurs in the organic sales totals $5,000 or less Exemption. A few commenters, organic production or handling of the annually. Production and handling including a State, raised the concern branded product. The commenter is operations exempted on the basis of that an organic operation might not incorrect in suggesting that the retailer organic sales of $5,000 or less annually anticipate sales over $5,000 but could would be held responsible for a are exempt from certification under exceed its exemption due to a bumper violation if the violation occurred at the Subpart E and do not need to submit an crop or market price increases, putting production or handling facility. When a organic system plan under § 205.201 but the operation in violation. The retail operation contracts for the must comply with the applicable Department believes that once an production, packaging, or labeling of organic production and handling exempted operation reaches the $5,000 organic product, it is the certified requirements of subpart C and the maximum exemption level, it is production or handling operation that is labeling requirements of § 205.309. compelled to seek certification, which it responsible for meeting the applicable Exemptions for production operations would have to obtain and maintain if it organic production or handling and handling operations are separate is to continue to sell organic products. requirements under the Act and these exemptions. Therefore, a production A certified organic operation, including regulations. If a violation occurs in the operation that is also a handling one which previously lost its exempt organic production or handling of the operation, due to its production and sale status, could switch from certified to product, the certified production or of processed products, must qualify for exempt if its size or operations were handling operation retains each exemption separately. The balance changed such that it no longer sold responsibility for the violation even if of this paragraph lists exemption more than $5,000 annually in value of the retailer’s name is on the label. eligibility examples. A production agricultural products. (6) Exemption for Products operation with gross agricultural income Containing Less than 50 Percent (3) Certification of Exempt from organic sales totaling $5,000 or less Organic Ingredients. Several Operations. A producer interpreted annually will be exempt from commenters representing States and ‘‘exempt’’ as meaning that operations certification as an organic production organic organizations opposed the exempted from certification could not operation. A handling operation with exemption of a handling operation or be certified as an organic operation. gross agricultural income from organic portion of a handling operation that This interpretation is not correct. Any sales totaling $5,000 or less annually handles only agricultural product production or handling operation, will be exempt from certification as an containing less than 50 percent organic including an exempt operation, which organic handling operation. A ingredients. They stated that handling makes application for certification as an production and handling operation with operations creating products with gross agricultural income from organic organic operation and meets the organic ingredients should be certified production sales totaling $5,000 or less requirements for organic certification regardless of the percentage of organic annually and organic handling sales may be certified. ingredients found in the products they totaling $5,000 or less annually will be (4) Increasing the Statutory Limitation produce. These commenters stated that exempt from certification as an organic of $5000 for Exemption. In the first exemptions from certification production operation and from proposal, we asked for comments as to undermine audit trails and consumer certification as an organic handling whether the $5,000 level for exemption confidence. Each of these commenters operation. A production and handling from certification should be raised to called for removal of the proposed operation with gross agricultural income $10,000 or to another amount and why exemption. Another commenter stated from organic production sales totaling an increased amount would be that, if a product is less than 50 percent $5,000 or less annually and organic appropriate. Suggested levels ranged organic, then it is not organic and handling sales totaling more than $5,000 from $2,000 to $50,000. The suggested should not be labeled or sold as such. annually will be exempt from levels and justifications for such levels We disagree with the comments. certification as an organic production are not sufficiently consistent for us to Because such products consist of less operation only. A production and recommend that Congress change the than 50 percent organic ingredients, handling operation with gross $5,000 level. handlers may only use the word, agricultural income from organic In addition, we requested data as to ‘‘organic,’’ on the information panel of production sales totaling more than the number of operations that may be such products to truthfully represent the $5,000 annually and organic handling exempt under the current $5,000 organic nature of the ingredients. Such sales totaling $5,000 or less annually limitation for exemption and the handlers must also comply with the will be exempt from certification as an number of operations that may be recordkeeping provisions of organic handling operation only. exempt under any new monetary § 205.101(c), the prevention of contact Products marketed by exempt amount suggested. Comments from the of organic products with prohibited production operations and handling few States responding to the request for substances provisions of § 205.272, and operations cannot be represented as data as to the number of operations that the labeling provisions of § 205.309. certified organic or display the U.S. may be exempt under the current $5,000 (7) Ensuring Organic Ingredients are Department of Agriculture (USDA) limitation revealed that from one-third Not Contaminated. A commenter asked organic seal. Products from exempt to one-half of organic producers in the how the Department would ensure that operations may not be included as commenting States would be exempt organic ingredients are not organic ingredients in a multiingredient under the statutorily authorized $5,000 contaminated without certification of product produced or processed in a exemption limitation. the handling operation creating the final

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00018 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13529 product. Handling operations that An organic association requested that develop detailed practice standards for handle agricultural products containing proper notification of ‘‘good organic specific aquatic animals as discussed less than 50 percent organic ingredients handling practices’’ be made to the further under the production and and at least 50 percent organic transportation, trucking, and public handling subpart. ingredients that are exempt from warehousing sectors to inform them of Applicability—Additional Provisions certification must maintain records their responsibilities. The commenter sufficient to: (1) Prove that ingredients stated that the notification should Upon further review of the identified as organic were organically include requirements for audit trail applicability provisions in the first produced and handled, and (2) verify records, measures needed to prevent proposal, we have decided to propose quantities produced for such commingling and contamination by the following additions and changes. ingredients. Such operations are prohibited substances. This commenter (1) Foreign Applicants. We have required at § 205.101(c) of this proposal expressed the belief that excluded added a new provision at § 205.104 to allow representatives of the Secretary handlers should preregister and provide addressing applicability of these and the applicable State program’s a signed statement of acknowledgment regulations to foreign applicants. We governing State official access to these of the requirements. Regarding have made this addition to clarify our records for inspection and copying enforcement of the suggested intent that the regulations in this part during normal business hours to requirements, this commenter stated apply equally to domestic and foreign determine compliance with the that enforcement of the requirements applicants for accreditation, accredited applicable regulations. should be funded and administered by certifying agents, domestic and foreign (8) Exclusion for Handlers that existing State and Federal inspection applicants for certification as organic Receive and Distribute Prepackaged services. production or handling operations, and Product. Commenters raised several We acknowledge the need for certified organic production and issues regarding the exclusion of education regarding the requirements of handling operations unless otherwise handlers who receive and distribute this rule as well as such issues as the specified in these regulations. prepackaged organic products. At least handling of organic products. The NOP, (2) New Exclusions. We have three certifying agents commented that in cooperation with the NOSB, will excluded retail food establishments that all retailers should be certified unless provide educational material to the process or prepare raw and ready-to-eat they handle only organic product in a public regarding the requirements of food from most of the requirements in ‘‘final, sealed retail container,’’ or ‘‘final this rule. Such educational material will these regulations. An excluded retail impermeable containers.’’ The include good organic handling practices food establishments must comply with commenters are apparently seeking made available to the transportation, the requirements for the prevention of further assurance that nothing is added trucking, and public warehousing contact with prohibited substances to the organic product while under sectors. However, we disagree with the provisions of § 205.272 and the labeling control of a distributor or retail suggestions calling for preregistration of provisions of § 205.309. We have operation. Because of the wide variety exempt and excluded handlers and excluded such retail food of organic products and the special enforcement of the requirements by establishments because comments to the needs of some of those products, existing State and Federal inspection first proposal concerning the issue of establishing restrictions on the kind of services. We believe the suggestions certification of retail food containers used for transportation could create a burden, on exempt and establishments (restaurant, delicatessen, unfairly treat some products and excluded handlers, the Department, and bakery, grocery store, or other retail commodity industries. For example, certifying agents, not justified by the outlet) preparing, packaging, or some organic products may require nature of the handling performed. processing raw and ready-to-eat organic containers which ‘‘breathe’’ or allow the (9) Seafood Products. A marketing agricultural products that are previously exchange of air and outside institute recommended that the first labeled as ‘‘100 percent organic,’’ temperatures. Nonpermeable containers proposal be revised to address seafood ‘‘organic,’’ or ‘‘made with organic could hasten spoilage of some fresh and products in a separate seafood section (specified ingredients)’’ were processed organic products. and to include provisions that apply to completely divergent. The first proposal A few certifying agents proposed that seafood harvested in the wild. This also contained an inconsistency which distributors and trucking companies commenter stated that wild-caught would have required a supermarket which transport agricultural products seafood should be allowed to be labeled delicatessen to be certified but would also should be certified under this part. as organic. A processors association also have excluded from certification a However, such transportation called for the labeling of wild-caught restaurant with carry-out delicatessen operations do not carry out the seafood as organic. products. functions specified in the definitions for While the first proposal contained no As the comments discussed below handler and handling operations. standards solely for aquatic animals in show, there is clearly a great deal of Distributors and trucking companies an organic operation, it did contain public concern regarding the handling have traditionally been excluded from provisions applicable to their of organic products by retail food requirements of agricultural production production. The first proposal allowed establishments. Should we decide to regulations. The Act cannot be used to fish and crustaceans, among other regulate retail food establishments regulate activities or entities beyond its livestock types, to be sold, labeled, or under the NOP, we will proceed with regulatory authorities. In this case, it is represented as organic if such livestock rulemaking and provide an opportunity the responsibility of producers, had been brought into an organic for public comment. handlers, interim handlers, and retailers operation no later than the earliest Our exclusion of retail food to meet the requirements of this commercially available stage of life. establishments from this proposal does regulation by ensuring that their Several commenters suggested that the not prevent a State from developing an contracted shippers and distributors management of aquatic animals differs organic retail food establishment understand, respect, and protect the sufficiently from mammals and poultry certification program or otherwise integrity of the organic products they to require separate regulatory regulating retail food establishments are transporting. provisions. We concur and intend to that prepare, package, or process organic

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The commenter said confidence suggested that restaurants certification programs. many small, natural food retail food serving organic foods be required to No retailer, regardless of this establishments would likely stop maintain records showing the origin and exclusion and the exceptions found in carrying organic items. certification status of raw agricultural the definitions for ‘‘handler’’ or A few commenters stated there is a ingredients used in the restaurant’s food ‘‘handling operation,’’ may sell or label high potential for fraud among retailers products. a product as organically produced and who have the opportunity to repackage, The Department routinely monitors handled or fix a label to or provide other mislabel, and sell nonorganic product as compliance of various food producers, market information concerning an organic. Therefore, they believe that all handlers, distributors, and retailers agricultural product if such label or retailers must be subject to certification which are regulated under a variety of information implies that such product is or some form of oversight to assure that Departmental programs. The produced and handled using organic they are not mislabeling product. Department responds to consumer methods unless such product has been A commenter representing a large complaints and often conducts produced and handled in accordance retail grocery store operation said that unannounced compliance investigations with the Act and these regulations. Any good identification procedures enable and audits of agricultural industry retailer who knowingly sells or labels a retail stores to keep organic product businesses. The Department product as organic, except in separated from nonorganic product understands the need for and commits accordance with the Act and these during transportation, storage, and in- Departmental resources to this organic regulations, will be subject to a civil store displays. The commenter program. In addition, oversight of these penalty of not more than $10,000 under continued that unduly rigid operations can be conducted by State this program. Such retailer may also be requirements would be burdensome on agencies. subject to enforcement actions and retailers. The commenter indicated that penalties under Federal statutes and the costs of certification and compliance Subpart C—Organic Crop, Wild Crop, their implementing regulations may outweigh the benefits of carrying Livestock, and Handling Requirements administered by other agencies of the organic product. Proposal Description Federal Government. Another commenter from a major More than 90 commenters, including retail food establishment suggested that This subpart sets forth the an organic association, stated that the retailers that wash and sort fresh organic requirements with which production retailer exclusion in the first proposal produce for display should be required and handling operations must comply violates the requirement to certify all to follow ‘‘good organic handling in order to sell, label, or represent handling operations. The organic practices’’ that would establish agricultural products as ‘‘100 percent association believes that processing, as recordkeeping responsibilities and organic,’’ ‘‘organic,’’ or ‘‘made with defined in the Act, includes all the prevent commingling with nonorganic organic (specified ingredients).’’ The normal culinary arts, food products and contamination by producer or handler of an organic manufacturing, and packaging. All of prohibited materials. The commenter production or handling operation must these commenters, including some suggested that conformance could be comply with all applicable provisions of States, recommended removal of the maintained by existing State or local subpart C. Any practice implemented in exclusion. Several commenters, health inspectors or Federal inspectors accordance with this subpart must including a few States, expressed with special training in organic maintain or improve the natural concern that exclusions from handling systems. However, there is no resources, including soil and water certification eliminate effective audit authority in the Act to require the quality, of the operation. Production trails and undermine consumer services of State or local inspectors. and handling operations which sell, confidence in organic products. One Another retailer stated that retailers label, or represent agricultural products State commented that it believed retail will comply with regulations because as organic in any manner and which are food establishments should be certified consumers will hold retailers exempt or excluded from certification because they are the last handler link responsible for deficiencies or illegal must comply with the requirements of from producer to consumer. actions through the entire production this subpart, except for the development Several commenters stated that and processing chain for agricultural of an organic system plan. retailers who receive organic product products. Production and Handling (General). have a high potential for loss of integrity A commenter stated that, if a The Organic Food Production Act of of the organic product due to accidental restaurant serves organic foods, it 1990 (OFPA or Act) requires that all misuse of pesticides and sanitizers should be allowed to so state. The crop, wild crop, livestock, and handling during shipping or storage and to commenter went on to say that operations requiring certification submit inadvertent commingling with restaurants and grocery stores have a an organic system plan to their nonorganic product. The commenters right to state that they used organic certifying agent and, where applicable, believe that, even though a retailer may ingredients in preparing a given dish. the State organic program. The organic only display and sell organic product, This commenter believes that system plan is a detailed description of such retailer should be certified and restaurants and grocery stores selling how an operation will achieve, monitored for compliance to ensure organic products, even if they prepare document, and sustain compliance with proper treatment of the product in them, should not have to be certified. A all applicable provisions in the OFPA shipment and storage. A State agency, few commenters claimed that and these regulations. The certifying however, cautioned against establishing processing, as defined in the Act, agent must concur that the proposed another burden on the organic industry. includes all culinary arts and food organic system plan fulfills the The commenter said that if sorting from manufacturing. They stated that requirements of Subpart C, and any bulk and repackaging into smaller restaurants must be certified or, at the subsequent modification of the organic packages requires certification, then very least, be required to keep records plan by the producer or handler must many small ‘‘natural food’’ retail outlets of organic foods prepared. A State receive the approval of the certifying would find certification more costly commenter who stated that exemptions agent.

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The organic system plan is the forum ingredients and package finished evaluate a given organic system plan through which the producer or handler products, and the measures taken to will be determined by the producer or and certifying agent collaborate to exclude pests from a facility. Procedures handler in consultation with the define, on a site-specific basis, how to are the protocols established for certifying agent. Thus, if the organic achieve and document compliance with selecting appropriate practices and system plan calls for improvements in the requirements of certification. The materials for use in the organic system soil organic matter content in a organic system plan commits the plan, such as a procedure for locating particular field, it would include producer or handler to a sequence of commercially available organically provisions for analyzing soil organic practices and procedures resulting in an produced seed. Procedures reflect the matter levels at periodic intervals. If operation that complies with every decision-making process used to herd health improvement is an applicable provision in the regulations. implement the organic system plan. objective, factors such as somatic cell Accreditation qualifies the certifying By requiring information on the count or observations about changes in agent to attest to whether an organic frequency with which production and reproductive patterns might be used as system plan comports with the organic handling practices and procedures will indicators. standard. The organic system plan must be performed, this proposal calls for the The fourth element of the organic be negotiated, enacted, and amended organic system plan to include an system plan is a description of the through an informed dialogue between implementation schedule, including recordkeeping system used to verify and certifying agent and producer or information on the timing and sequence document an audit trail, as appropriate handler, and it must be responsive to of all relevant production and handling to the operation. For each crop or wild- the unique characteristics of each activities. The plan will include, for crop harvested, the audit trail must trace operation. example, information about planned the product from the field, farm parcel, An organic system plan contains six crop rotation sequences, the timing of or area where it is harvested through the components. First, the organic system any applications of organic materials, transfer of legal title. A livestock plan must describe the practices and and the timing and location of soil tests. operation must trace each animal from procedures used, including the Livestock management practices might its entrance into through removal from frequency with which they will be used, describe development of a rotational the organic operation. A handling in the certified operation. Second, it grazing plan or addition of mineral operation must trace each product that must list and characterize each supplements to the feed supply. A is handled and sold, labeled, or substance used as a production or handling operation might identify steps represented as organic from the receipt handling input. Third, it must identify involved in locating and contracting of its constituent ingredients to the sale the monitoring techniques which will with farmers who could produce of the processed product. In response to be used to verify that the organic plan organic ingredients that were in short several comments received, this is being implemented in a manner supply. proposal provides information, found in which complies with all applicable The second element that must be subpart B, § 205.103, on the records requirements. Fourth, it must explain included in an organic system plan is needed to establish a verifiable audit the recordkeeping system used to information on the application of trail. preserve the identity of organic products substances to land, facilities, or The fifth element which must be from the point of certification through agricultural products. This requirement included in an organic system plan delivery to the customer who assumes encompasses both natural and synthetic pertains to split production or handling legal title to the goods. Fifth, the organic materials allowed for use in production operations. This provision requires an system plan must describe the measures and handling operations. For natural operation that produces both organic to be taken to avoid contact between materials which may be used in organic and nonorganic products to describe the certified production and handling operations under specific restrictions, measures used to prevent commingling operations and prohibited substances the organic plan must detail how the of organic and nonorganic products. and document how the operation will application of the materials will comply This requirement addresses contact of prevent commingling of organic and with those restrictions. For example, organic products, including livestock, nonorganic products. Finally, the farmers who apply manure to their organic field units, storage areas, and organic system plan must contain the fields must document in their organic packaging to be used for organic additional information deemed system plans how they will prevent that products, with prohibited substances. necessary by the certifying agent to application from contributing to water Requirements in the first proposal for evaluate site-specific conditions contamination. information about the nonorganic relevant to compliance with these or The third element of the organic portion of the operation have been applicable State program regulations. system plan is a description of the removed. Producers or handlers may submit a methods used to evaluate its We do not propose to list the specific plan developed to comply with other effectiveness. Producers and handlers requirements to be included in an Federal, State, or local regulatory are responsible for identifying organic system plan. We expect to programs if it fulfills the requirements measurable indicators that can be used publish a program manual to provide of an organic system plan. to evaluate how well they are achieving guidance on appropriate documentation The first element of the organic the objectives of the operation. For for the certification process. In the system plan requires a narrative or other example, production objectives could be meantime, the accreditation process descriptive format that identifies the measured through regular tallies of provides an assurance that certifying practices and procedures to be bushels or pounds of product sold from agents are competent to determine the performed and maintained, including the farm or in numbers of cases sold specific documentation they require to the frequency with which they will be from a handling operation. Indicators review and evaluate an operation’s performed. Practices are tangible that can identify changes in quality or organic system plan. Section production and handling techniques effectiveness of management practices 205.200(a)(6) allows a certifying agent to such as the method for applying could be relatively simple, such as the request additional information needed manure, the mechanical and biological information contained in a standard soil to determine that an organic system methods used to prepare and combine test. The specific indicators used to plan meets the requirements of this

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00021 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13532 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules subpart. The site-specific nature of on the National List of nonsynthetic varieties with regard to suitability to organic production and handling substances prohibited for use in organic site-specific conditions and resistance to necessitates that certifying agents have crop production may be used to produce prevalent pests, weeds, and diseases. the authority to determine whether an organic crop. Synthetic crop nutrient Mechanical and biological methods that specific information is needed to carry supplements that appear on the do not entail application of synthetic out their function. National List of allowed synthetic substances may be used as needed to Crop Production. Any field or farm substances may be used as a source of control pest, weed, and disease parcel used to produce an organic crop crop nutrients when justified by soil or problems that may occur. Pest control must have been managed in accordance crop tissue analysis. The producer may practices include augmentation or with the requirements in §§ 205.203 not use any fertilizer that contains a introduction of pest predators or through 205.206 and have had no synthetic substance not allowed for crop parasites; development of habitat for prohibited substances applied to it for at production on the National List or use natural enemies; and nonsynthetic, least 3 years prior to harvest of the crop. sewage sludge. Burning crop residues as nontoxic controls such as lures, traps, Such fields and farm parcels must also a means of disposal, except for and repellents. Weed management have distinct, defined boundaries and trimmings of perennial crops burned to practices include mulching with fully buffer zones to prevent contact with the suppress the spread of disease, is biodegradable materials; mowing; land or crop by prohibited substances prohibited. livestock grazing; hand weeding and applied to adjoining land. The producer must use organically mechanical cultivation; flame, heat, or A producer of an organic crop must grown seeds, annual seedlings, and electrical techniques; and plastic or manage soil fertility, including tillage planting stock, except that untreated other synthetic mulches, provided that and cultivation practices, in a manner nonorganic seeds and planting stock they are removed from the field at the that maintains or improves the physical, may be used when equivalent organic end of the growing or harvest season. chemical, and biological condition of varieties are not commercially available. Disease problems may be controlled the soil and minimizes soil erosion. Seed and planting stock treated with through management practices which Crop nutrients must be budgeted and substances that appear on the National suppress the spread of disease supplied through proper use of manure List of synthetic substances allowed for organisms and the application of or other animal and plant materials, use in organic production may be used nonsynthetic biological, botanical, or mined mineral substances, and other when an organically produced or mineral inputs. When these practices substances approved for use under these untreated variety is not commercially are insufficient to prevent or control regulations. The producer must manage available. Nonorganically produced crop pests, weeds, and diseases, a animal and plant waste materials to annual seedlings may be used when a biological or botanical substance, or a maintain or improve soil organic matter temporary variance has been established synthetic substance that is allowed on content in a manner that does not due to damage caused by unavoidable the National List may be used provided contribute to contamination of crops, business interruption, such as fire, that the producer evaluates and soil, or water by plant nutrients, flood, or frost. Planting stock used to mitigates the effects of repetitive use of pathogenic organisms, heavy metals, or produce a perennial crop may be sold as the same or similar materials on residues of prohibited substances. Raw organically produced planting stock resistance and shifts in pest, weed, or animal manure must either be after it has been maintained under a disease types. The producer must use a composted, applied to land used for a system of organic management for at pest, weed, or disease control substance crop not intended for human least 1 year. Seeds, annual seedlings, in compliance with the Federal consumption, or incorporated into the and planting stock treated with Insecticide, Fungicide, and Rodenticide soil at least 90 days before harvesting an prohibited substances may be used to Act. Pest control substances produced edible product that does not come into produce an organic crop when the through excluded methods are contact with the soil or soil particles application of the substance is a prohibited. and at least 120 days before harvesting requirement of Federal or State Any wild crop that is to be sold, an edible product that does come into phytosanitary regulations. Seeds, annual labeled, or represented as ‘‘100 percent contact with the soil or soil particles. seedlings, or planting stock produced organic,’’ ‘‘organic,’’ or ‘‘made with Composted plant or animal waste through an excluded method may not be organic (specified ingredients)’’ must be materials used for soil fertility must be used for organic production. harvested from land to which no produced in compliance with the The producer is required to prohibited substances have been Natural Resources Conservation implement a crop rotation, including applied for at least 3 years prior to Service’s (NRCS) Conservation Practice but not limited to sod, cover crops, harvest. The wild crop must also be Standard for a Composting Facility green manure crops, and catch crops. harvested in a manner that ensures such (Code 317). Uncomposted plant and The crop rotation must maintain or harvesting or gathering will not be animal waste materials may be used to improve soil organic matter content, destructive to the environment and will amend soil fertility. A plant or animal provide for effective pest management sustain the growth and production of waste material that has been chemically in perennial crops, manage deficient or the wild crop. altered by a manufacturing process may excess plant nutrients, and control Livestock Production. We propose be used only if it is included on the erosion to the extent that these that any livestock or edible livestock National List of synthetic substances functions are applicable to the product to be sold, labeled, or allowed for use in organic production. operation. represented as organic must be Mined substances of low solubility may The producer must use preventive maintained under continuous organic be used as sources of crop nutrients, as practices to manage crop pests, weeds, management from birth or hatching, may mined substances of high and diseases, including but not limited with four exceptions. Poultry or edible solubility, when justified by soil or crop to crop rotation, soil and crop nutrient poultry products must be from animals tissue analysis. Ashes of untreated plant management, sanitation measures, and that have been under continuous or animal materials which have not cultural practices that enhance crop organic management beginning no later been combined with a prohibited health. Such cultural practices include than the second day of life. Milk or milk substance and which are not included the selection of plant species and products must be from animals that

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The producer must not management beginning no later than 1 and resistance to prevalent diseases and withhold medical treatment from a sick year prior to the harvest of the parasites. The producer must provide animal to maintain its organic status. nonedible product. Livestock used as organic feedstuffs, as well as vitamins, All appropriate medications and breeder stock may be brought from a minerals, and other supplements, treatments must be used to restore an nonorganic operation into an organic sufficient to meet the animals’ animal to health when methods operation at any time, provided that, if nutritional requirements. The producer acceptable to organic production such livestock are gestating and the must establish appropriate housing, standards fail. Livestock that are treated offspring are to be organically raised pasture conditions, and sanitation with prohibited materials must be from birth, the breeder stock must be practices to minimize the occurrence clearly identified and shall not be sold, brought into the organic operation prior and spread of diseases and parasites. labeled, or represented as organic. to the last third of pregnancy. Animals in an organic livestock Under this proposal, a livestock We also propose that, should an operation must be maintained under producer must document in his or her animal be brought into an organic conditions which provide for exercise, organic system plan the preventative operation pursuant to this section and freedom of movement, and reduction of measures he or she has in place to deter subsequently moved to a nonorganic stress appropriate to the species. illness, the allowed practices he or she operation, neither the animal nor any Additionally, all physical alterations will employ if illness occurs, and his or products derived from it may be sold, performed on animals in an organic her protocol for determining when a labeled, or represented as organic. livestock operation must be conducted sick animal must receive a prohibited Breeder or dairy stock that has not been to promote the animals’ welfare and in animal drug. The standards we are under continuous organic management a manner that minimizes stress and proposing will not allow an organic from birth may not be sold, labeled, or pain. system plan that envisions an represented as organic slaughter stock. The producer of an organic livestock acceptable level of chronic illness or No organism produced with excluded operation must administer vaccines and proposes to deal with disease by methods may be used for breeding other veterinary biologics as needed to sending infected animals to slaughter. purposes or for the production of protect the well-being of animals in his Neither situation can be considered livestock products intended to be sold, or her care. When preventive practices consistent with the principles of organic labeled, or represented as organic. The and veterinary biologics are inadequate management. The organic system plan producer of an organic livestock to prevent sickness, the producer may must reflect a proactive approach to operation must maintain records administer medications included on the health management, drawing upon sufficient to preserve the identity of all National List of synthetic substances allowable practices and materials. organically managed livestock and all allowed for use in livestock operations. Animals with conditions that do not edible and nonedible organic livestock The producer may not administer respond to this approach must be products produced on his or her synthetic parasiticides to breeder stock treated appropriately and diverted to operation. during the last third of gestation if the nonorganic markets. We are proposing that, except for feed progeny is to be sold, labeled, or The producer of an organic livestock additives and supplements included on represented as organically produced. operation must establish and maintain the National List of synthetic substances After administering synthetic livestock living conditions for the allowed for use in organic livestock parasiticides to dairy stock, the animals under his or her care which production, the total feed ration for producer must observe a 90-day accommodate the health and natural livestock managed in an organic withdrawal period before selling the behavior of the livestock. The producer operation must be composed of milk or milk products produced from must provide access to shade, shelter, agricultural products, including pasture the treated animal as organically exercise areas, fresh air, and direct and forage, that are organically produced. Every use of a synthetic sunlight suitable to the species, its stage produced. Any portion of the feed ration medication or parasiticide must be of production, the climate, and the that is handled must comply with incorporated into the livestock environment. This requirement includes organic handling requirements. The operation’s organic system plan subject access to pasture for ruminant animals. producer must not use animal drugs, to approval by the certifying agent. The producer must also provide including hormones, to promote growth We propose that the producer of an appropriate clean, dry bedding, and, if in an animal or provide feed organic livestock operation must not the bedding is typically consumed by supplements or additives in amounts treat an animal in that operation with the species, it must comply with above those needed for adequate growth antibiotics, any synthetic substance not applicable organic feed requirements. and health maintenance for the species included on the National List of The producer must provide shelter at its specific stage of life. The producer synthetic substances allowed for use in designed to allow for the natural must not feed animals under organic livestock production, or any substance maintenance, comfort level, and management plastic pellets for roughage that contains a nonsynthetic substance opportunity to exercise appropriate to or formulas containing urea or manure. included on the National List of the species. The shelter must also The feeding of mammalian and poultry nonsynthetic substances prohibited for provide the temperature level, slaughter by-products to mammals or use in organic livestock production. The ventilation, and air circulation suitable poultry is prohibited. The producer producer must not administer any to the species and reduce the potential must not supply animal feed, feed animal drug, other than vaccinations, in for livestock injury. The producer may additives, or feed supplements in the absence of illness. The use of provide temporary confinement of an violation of the Federal Food, Drug, and hormones is prohibited in organic animal because of inclement weather; Cosmetic Act. livestock production, as is the use of the animal’s stage of production;

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00023 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13534 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules conditions under which the health, specify in the organic system plan all A request for issuance of a temporary safety, or well-being of the animal could measures taken or intended to be taken variance, the justification for it, and be jeopardized; or risk to soil or water to prevent contact between the measures to evaluate the impact of the quality. The producer of an organic substance and any ingredient or practice on the operation’s natural livestock operation is required to finished product intended to be sold, resources must be documented in the manage manure in a manner that does labeled, or represented as organic or organic plan and approved by the not contribute to contamination of made with organic ingredients. In certifying agent. For example, if a crops, soil, or water by plant nutrients, addition to these restrictions, the drought resulted in a severe shortage of heavy metals, or pathogenic organisms handler must include in the organic organically produced hay, a dairy and optimizes nutrient recycling. handling plan an evaluation of the operation might be permitted to Handling. This proposal permits effects of repetitive use of the same or substitute some nonorganic hay for a mechanical or biological methods to be similar materials on pest resistance and portion of the herd’s diet to prevent used to process an agricultural product shifts in pest types. liquidation of the herd. The producer intended to be sold, labeled, or This proposal delineates practice must keep records showing the source represented as ‘‘100 percent organic,’’ standards that must be followed by an and amount of the hay and update the ‘‘organic,’’ or ‘‘made with organic organic handling operation to prevent organic plan to describe the justification (specified ingredients)’’ for the purpose the commingling of organic and for the practice and a timeframe for of retarding spoilage or otherwise nonorganic products and protect organic restoring the total feed ration to organic preparing the agricultural product for products from contact with prohibited sources. The certifying agent might also market. It permits the use of substances. An organic handling request that the plan include nonagricultural substances and operation must not use packaging contingency measures to avoid the need nonorganically produced agricultural materials and storage containers or bins to resort to nonorganic feed in case of products that are included on the that contain a synthetic fungicide, a future shortage. A variance for National List in or on a processed preservative, or fumigant in handling an experimental purposes might be issued agricultural product intended to be sold, organic product. The operation also to permit a crop producer to undertake labeled, or represented as ‘‘organic’’ or must not use or reuse any storage bin or on-farm trials of small quantities of a ‘‘made with organic (specified container that was previously in contact new (but not produced with excluded ingredients).’’ This proposal prohibits a with any prohibited substance unless methods) crop variety that was not handler from using ionizing radiation the reusable bin or container has been available as organic seed. for any purpose, an ingredient produced thoroughly cleaned and poses no risk of with excluded methods, or a volatile Production and Handling (General)— prohibited materials contacting the synthetic solvent in or on a processed Changes Based on Comments organic product. agricultural product intended to be sold, The subpart differs from our first labeled, or represented as ‘‘100 percent Temporary Variances. This subpart proposal in several respects as follows: organic,’’ ‘‘organic,’’ or ‘‘made with establishes conditions under which (1) Genetically Engineered Organisms. organic (specified ingredients).’’ operations may receive temporary In the first proposal, we invited public The practice standard for facility pest variances from the provisions contained comment on the use of genetically management requires the producer or in §§ 205.203 through 205.207, 205.336 engineered organisms (GEO’s) or their handler operating a facility to use through 205.239, and 205.270 through products in a system of organic management practices to prevent pests, 205.272. The Administrator may production and handling. Specifically, including removing pest habitat, food establish temporary variances due to we asked whether the use of GEO’s or sources, and breeding areas; preventing natural disasters declared by the their products should be permitted, access to handling facilities; and Secretary; unavoidable business prohibited, or allowed on a case-by-case controlling environmental factors, such interruption caused by catastrophe such basis in organic production or handling as temperature, light, humidity, as wind, fire, hail, flooding, excessive operations. Hundreds of thousands of atmosphere, and air circulation to moisture, earthquake, or drought; or to public comments opposed the use of prevent pest reproduction. Permitted conduct research on organic production GEO’s or their products in organic pest control methods include and handling techniques or inputs. A production or processing. In response to augmentation or introduction of certifying agent may recommend that these comments, this proposal prohibits predators or parasites for the pest the Administrator establish a temporary use of genetic engineering (included in species; mechanical or physical variance for unavoidable business the broad definition of ‘‘excluded controls, including traps, light, or interruption. The Administrator will methods’’ in this proposal, based on the sound; and nontoxic, nonsynthetic determine how long a temporary definition recommended by the controls, such as lures and repellents. variance will be in effect at the time it National Organic Standards Board This proposal permits the use of a is established, subject to extension as (NOSB)) in all stages of organic nonsynthetic biological or botanical the Administrator deems necessary. production and handling. This proposal substance or any synthetic substance to Upon notification by the Administrator contains a specific prohibition on the control facility pests if the permitted that a temporary variance has been use of seeds, annual seedlings and prevention and control practices are not established due to a natural disaster, a planting stock (§ 205.204(b)), pest effective. Any substance applied must certifying agent must inform each control substances (§ 205.206(f)), be used in accordance with the label production and handling operation it organisms (§ 205.236 (b)(3)), and provisions as approved by the certifies within the affected ingredients (§ 205.270(c)(2)) produced appropriate authority, such as the geographical region or each individual with excluded methods. Environmental Protection Agency (EPA) production and handling operation Products created with modern or the Food and Drug Administration affected by the temporary variance. biotechnology techniques have been (FDA). We propose that the handler of Temporary variances may not be issued tested, approved by the appropriate an organic handling operation who uses for any practice, material, or procedure regulatory agencies, and can be used any biological, botanical, or synthetic which is otherwise prohibited by these safely in general agricultural substance to control facility pests must regulations. production. At the same time,

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00024 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13535 consumers have made clear their acquisition of materials and products. would constitute a violation of the opposition to use of these techniques in Certifying agents should be aware of standards. organic food production. This rule is a agricultural products produced through We anticipate that these issues will be marketing standard, not a safety excluded methods and must carefully of particular interest to commenters on standard. Since use of genetic review material and product origin the proposal, and that comments may engineering in the production of organic documentation. It will be the help to shed light on industry foods runs counter to consumer responsibility of certifying agents to capabilities and expectations. We expectations, foods produced through review the sourcing specifications and recognize that this policy will place excluded methods will not be permitted other provisions of producer and additional burdens on certified to carry the organic label. handler organic plans to ensure the operations and certifying agents, but we We acknowledge that the broad integrity of organic and multiingredient believe that the necessity to meet strong prohibition on use of excluded methods products. We anticipate that this system consumer expectations outweighs these in organic production and handling of carefully reviewed and documented concerns. systems may create compliance organic plans, which establishes (2) Measurable Degradation Standard. obstacles for organic operations and documented procedures demonstrating We are proposing that any practice certifying agents. For example, many good faith efforts to diligently pursue implemented in accordance with the current certification programs allow and maintain the integrity of ingredients requirements for organic production and vaccination of animals with synthetic produced without use of excluded handling must maintain or improve the compounds when such treatment is methods, could satisfy the requirements soil and water quality of the operation. mandatory. However, while many FDA- in this regulation. This provision is a modification of the approved vaccines are now produced With respect to the prohibition on the requirement in the first proposal that the use or application of a practice not using excluded methods, we are use of excluded methods in production result in measurable degradation of soil unaware of any certification program of the nonorganic ingredients in or water quality. Some commenters which has an enforcement mechanism multiingredient products, we recognize stated that the concept of measurable to ensure that such substances are not that the ability to meet these degradation was too limiting and used in organic production. We do not requirements depends primarily on reduced the holistic principles behind know to what extent, if any, organic practices used in conventional organic production to an exercise in risk livestock producers are currently using agricultural markets. We also recognize assessment. In introducing the concept vaccines produced with excluded that practices for preserving product methods or how a prohibition on the of measurable degradation, we stated identity, including segregating use of such substances would affect that its purpose was to ‘‘clarify that all genetically engineered and development of the industry. methods and substances used in an Similarly, the prohibition on the use nongenetically engineered products, are organic operation shall be consistent of excluded methods in the production evolving in some conventional markets. with a system of organic farming and of organic foods may also present Currently there are no consensus handling and the purposes of the challenges to organic handlers and industry standards for product OFPA.’’ As such, measurable certifying agents. This may pose a segregation, rather contractual degradation and the specific indicators particular problem with respect to the agreements are used to the extent of soil and water quality used to nonorganic ingredients of possible. As the marketplace evolves monitor it were designed as tools to multiingredient products with 50-95 toward recognized best practices or evaluate compliance with the OFPA and percent organic content, to which the standards for product testing and not as ends in themselves. prohibition on use of excluded methods segregation, we anticipate that these The new provision requiring that an also applies. For example, it may be methods and systems will become the organic operation maintain or improve harder for organic food processors, who standards for implementing the its soil and water quality retains the may struggle to find sources of prohibition on use of excluded methods linkage between production and nonorganic ingredients that are in production of nonorganic ingredients handling practices and the natural produced without use of excluded in multiingredient products. Linking the resources of the operation, which is a methods and for certifying agents, who requirements pertaining to nonorganic fundamental tenet of both organic must ensure that handlers have ingredients in this proposal to the production and the OFPA. We have complied with this requirement. evolving practices within the introduced the ‘‘maintain or improve’’ As with most elements of this marketplace will provide certifying provision to allow for consideration of program, compliance monitoring and agents with a verifiable criterion against a variety of environmental indicators enforcement will rely on the ongoing which to evaluate production and that contribute to the overall oversight of organic operations by handling processes, as well as providing performance of the operation. Both the USDA-accredited certifying agents, greater certainty to handlers and objective of certification—establishing rather than on product testing. processors as they seek to identify an organic system of production and Certifying agents must approve organic acceptable sources of nonorganic handling—and the standard by which it plans that detail procedures and ingredients. is achieved—the requirements in this practices to be followed by organic As with other prohibited substances, proposal—remain constant for all operations and will review extensive a positive detection of a product of operations. The environmental records maintained by organic excluded methods would trigger an indicators used to establish and monitor operations to ensure that they are investigation by the certifying agent to compliance with an approved organic complying with the approved organic determine if a violation of organic system plan will depend upon the site- plans and the regulations. production or handling standards specific conditions of the individual This system of compliance assurance occurred and would not necessarily operation. For example, a producer and will be particularly important with represent a violation on its own. The certifying agent would consider the soil respect to the prohibition on use of presence of a detectable residue alone types, hydrology, other environmental excluded methods. Producers and does not necessarily indicate use of a conditions and the specific nature of the handlers must be vigilant in the product of excluded methods that crops and livestock being produced to

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Combined erosion—combined with the operation’s ‘‘rotation,’’ or ‘‘manure.’’ Some with the production and handling production practices—the use of commenters characterized the organic standards in §§ 205.201 through persistent inputs such as copper or system plan in the first proposal as a 205.207, 205.236 through 205.239, and sulfur compounds, the type of tillage simple list of materials to be used and 205.270 through 205.272, these practices used—will dictate the practices to be followed and thought requirements provide the criteria selection of environmental indicators. that it would not adequately address necessary for certifying agents to While individual indicators, especially why the producer or handler made determine whether to grant certification. when signaling that significant change specific production choices. Echoing the For similar reasons, we propose not to has occurred, remain important, the recommendation adopted by the NOSB include in this proposal a list of the ‘‘maintain or improve’’ provision allows at its June 1994 meeting in Santa Fe, specific requirements to be included in a producer or handler and his or her NM, other commenters suggested that a particular type of organic system plan. certifying agent to assume a broader each organic system plan should be For example, while the first proposal perspective in monitoring compliance required to include key elements of required that a farm operation submit with the OFPA. organic production, such as soil and the total acreage under organic Many commenters objected to the crop management, resource management as part of its organic requirement in the first proposal that conservation, crop protection, and system plan, there is no similar certain production practices ‘‘not result maintenance of organic integrity requirement in this proposal. We in a measurable degradation of the soil.’’ through growing, harvesting, and believe that accredited certifying agents The purpose of the ‘‘measurable postharvest operations. We fully agree are capable of determining the specific degradation’’ requirement was solely to with the principle that a comprehensive documentation they require to review provide producers and their certifying organic system plan is an integral an application for certification. agents with quantifiable, verifiable tools component of a certified operation and Certifying agents are granted authority with which to evaluate compliance with that it provides the foundation for the to request the information they deem the applicable regulations. While the working relationship between the essential to the performance of their current proposal does not refer to certifying agent and the producer or duties. Many resources are available to ‘‘measurable degradation’’ in the handler. This proposal contains a certifying agents for determining the practice standards, producers and standard that defines and characterizes information needed to make handlers must identify and incorporate an organic system of production and certification decisions. The Federal- into their organic system plans specific handling and establishes the organic State Marketing Improvement Program testing and evaluation techniques to system plan as the centerpiece of the of the Agricultural Marketing Service measure the environmental impact of relationship between producer or (AMS) helped fund a project (#12–25– their production practices. In many handler and certifying agent. G–0202) which created an organic cases, this requirement could be filled Some commenters expressed concern inspection manual and developed a with a standard soil analysis, which that the first proposal did not link the whole set of organic certification form would indicate trends in soil organic organic system plan to specific templates. Among these templates are content, nutrient composition, and regulatory requirements such as proper detailed forms for organic farm, physical properties. In other cases, tillage, crop rotation, and manuring. The livestock, and handling system plans. chemical or biological analysis of stream first proposal did, however, require AMS worked with the Independent water entering and leaving a crop or operations to document compliance Organic Inspectors Association and the livestock operation could suffice to with all applicable standards. The Organic Certifiers Council on this monitor compliance with the practice obligation to document compliance with project and supports continued standards. There is no way to all applicable standards was implicit in movement toward standardized substantiate the effectiveness of the the requirement that an organic system certification documentation. The NOSB practices and materials used in an plan contain a description of the provided recommendations, including organic production system without practices to be performed and sample questionnaires, for the some form of measurable verification. maintained to establish a system of information it deems necessary for Analytical procedures to monitor the organic farming and handling. A inclusion in an organic system plan. condition, over time, of an operation’s producer or handler intending to engage Additionally, the Organic Trade resource base are a standard feature of in a practice must comply with the Association recently released the efficient resource management, whether corresponding standards and include American Organic Standards that drew or not the operation is organically his or her intentions for doing so in the upon broad industry involvement to managed. organic system plan. This proposal create a detailed description of organic (3) Function and Content contains a similar provision, found in system plan requirements. Requirements of the Organic System § 205.200(a)(1), which requires a The organic system plan in the first Plan. We propose significant changes in description of the practices and proposal included requirements for split the function and content requirements procedures used in the certified farming operations—meaning farms that of the organic system plan to solidify its operation, again, without stating the engage in both organic and nonorganic role in the relationship between specific standards with which the production—that some commenters producer or handler and certifying operation must comply. stated were excessive. These agent. Public comment on the first We acknowledge that, by providing commenters pointed out that the OFPA proposal identified numerous perceived the regulatory guidance necessary to does not provide for the organic system deficiencies in the provisions for an implement the OFPA, the Secretary is plan to include any production or organic system plan. Some commenters, further empowering accredited handling practice not consistent with including organic certifying agents and certifying agents to determine whether the OFPA, and that the practices on the industry associations, stated that the an operation’s organic system plan nonorganic portion of the split-farm

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Several whether a production or a handling selection of handling ingredients; and provisions in this proposal, including operation, describe the measures it is prevention and facility pest the seeds and planting stock practice taking or will take to prevent management. There was also a general standard (§ 205.204) and the crop pest, commingling of organic and nonorganic order of preference requirement that weed, and disease management practice product and to prevent contact of mandated the use of nonsynthetic standard (§ 205.206) will allow less organic products, fields, or facilities substances in preference to synthetic desirable practices or substances to be with prohibited substances. substances. used only if the preferred alternative is (4) Regulatory Enforcement. The Comments from at least one industry either ineffective or not commercially National Organic Program (NOP) will association supported using orders of available. As was true of the first require consistent and effective preference to assure that choices made proposal, justification for choosing a enforcement of the regulations across by producers and handlers will be as less desirable alternative, such as diverse crop, wild crop, livestock, and consistent as possible with organic nonorganic seeds or planting stock, handling operations which are farming and handling principles. must be documented in the relevant differentiated by site-specific conditions Others, including several organic organic system plan and approved by within dissimilar geographic regions. certifying agents, felt that the conditions the certifying agent. The resources and objectives of each for choosing a lower order of preference Several commenters, including certified operation are unique, and the were not specified clearly enough and industry and environmental OFPA, accordingly, provides certifying could result in inconsistent enforcement associations, also took issue with the agents with criteria, not formulas, to of the standards. Some commenters use in the first proposal of performance determine whether the practices, thought that certifying agents would be standards, which specify the required procedures, and inputs described in an overly burdened by having to review outcome but not the practices that must organic system plan constitute and approve the justification in the be used to achieve it. The general compliance with the OFPA. The organic plan for choosing less preferable provision that any practice or substance flexibility implicit in this approach practices, although some stated that if used in an organic operation not allows producers and handlers to the criteria for choosing a lower order of contribute to measurable degradation of choose from a variety of production and preference were clarified and soil or water quality is an example of handling options. In addition to being documentation of the reasoning behind such a performance standard. flexible, a regulatory mechanism must the choice was explicitly required, then Objections to the use of performance be clear, consistent, and enforceable. this scheme would be workable. Some standards referred to the nature of For this reason, producers and handlers noted that ranking practices and inputs organic production standards, which must document the choices they make according to their suitability is focus on the production process and not in an organic system plan and analogous to the ‘‘approved, restricted, quantifiable outcomes such as pesticide demonstrate a good-faith effort to prohibited’’ scheme which many State implement the plan. For example, the and private certification programs residue levels. Some of these decision to use an allowed synthetic employ. A few commenters expressed commenters asserted that such a pest control substance must be based on the belief that establishing provisions to mechanism would relegate organic evidence that prevention and issue variances would address their standards to a risk assessment model, nonsynthetic pest control measures are concerns and provide for adequate which is not appropriate for evaluating not adequate. oversight and enforcement concerning a system of organic management. Public comment indicated that the practices, procedures, and inputs that We agree that standards for an organic regulatory mechanisms that were are considered to be acceptable but less management system cannot be reduced introduced in the first proposal, desirable for organic production and to measurable outcomes, and this was including orders of preference, handling. not the intent of the proposed performance standards, and provision However, several commenters, performance standards in the first for allowance of certain practices ‘‘if including consumers and organic proposal. The evaluation of measurable necessary,’’ provided producers and certifying agents, asserted that indicators as benchmarks of the proper handlers too much discretion in ‘‘preference’’ could be interpreted as functioning of a management system is selecting materials and practices. These purely based on the personal choice or compatible with the overall requirement comments indicated that insufficient convenience of the producer or handler. that practices be implemented that are oversight by certifying agents could Some certifying agents indicated that consistent with a system of organic dilute the meaning of organic the soil fertility order of preference was farming and handling. Such indicators certification. Therefore, we are too complex and difficult to enforce. A help to determine whether a given proposing significant changes in the number of consumers disliked this operation is in compliance with the regulatory mechanisms which govern concept because it permitted some regulations. For example, the crop producers, handlers, and their certifying deviation from the most desirable rotation provisions in this proposal list agents in determining the materials, standards, such as use of organically a series of functions, including weed practices, and procedures used in an produced seeds. Another commenter management, that should be provided organic operation. speculated that this scheme could be by an appropriate rotation. While the One regulatory mechanism used in interpreted as establishing different possible types of rotation that could the first proposal was an ‘‘order of levels of ‘‘organicness.’’ Although these achieve this objective are virtually preference’’ scheme for selecting organic interpretations do not reflect the intent limitless and could not be specifically practices or materials employed in of the first proposal, in the interest of prescribed, recording changes in weed production and handling. This scheme clarity, we have removed references to populations could document the

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00027 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13538 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules effectiveness of the rotation being standard for a Composting Facility how such practice standards may implemented. (Code 317). This document establishes generally be used to establish organic Another type of regulatory provision minimum acceptable requirements for standards. employed in the first proposal permitted the design, construction, and operation (5) Temporary Variances. Section the use of certain practices or of a composting facility. A copy of this 205.201(b) of this proposal provides substances only ‘‘if necessary.’’ This practice standard may be obtained from procedures for establishing a temporary was proposed for the introduction of any NRCS field office. A copy of this variance from certain requirements of nonorganic animals into an organic practice standard may be viewed at subpart C. The temporary variance is a operation, for using up to 20 percent USDA–AMS–TMD–NOP, Room 2510— mechanism for providing regulatory nonorganic livestock feed, for South Building; 1400 Independence flexibility that did not appear in the first permitting restrictions on access by Ave., SW, Washington, DC 20250–0248. proposal. This mechanism is proposed livestock to space for movement and The NOP intends to publish additional in response to comments from an access to outdoors, and for use of practice standards for public comment industry association and several synthetic processing aids in producing in the Federal Register. We are also certifying agents who expressed the an organic processed product. A holding discussions with NRCS to need, in certain circumstances, to use producer or handler was required to determine whether farming operations practices that would otherwise not establish his or her need to use a which comply with the certification comply with the applicable practice particular practice or substance based requirements of the NOP will have the standard. Similar mechanisms are used on site-specific circumstances. The basis added benefit of being able to by most existing certifying agents to for each such decision was to be stated participate simultaneously with NRCS make exceptions in cases of compelling in the organic system plan and cost-share programs. need, when there is minimal concern for evaluated by the certifying agent. Many compromising the integrity of an Incorporating NRCS practice commenters indicated that this organic system. Temporary variances standards into the requirements for provision was not appropriate because, are established from specific organic certification introduces a for example, the allowance for the use requirements and not, unless specified, significantly greater degree of specificity of 20 percent nonorganic livestock feed, from all production standards. They are than most organic standards have ‘‘if necessary,’’ left a loophole that could established for a determined period of previously contained. For example, the permit an unscrupulous producer to use time, subject to extension as deemed Composting Facility practice standard nonorganic feed without a valid reason necessary by the Administrator. For that was consistent with the regulations. includes specifications for facility size, example, the Administrator could, We concur that this allowance for moisture content of the compost pile, under appropriate circumstances, waive practices ‘‘if necessary’’ is overly vague carbon-nitrogen ratio, and the interval the requirement that a producer must and have removed the provision from which certain temperatures must be provide livestock with a ration this proposal. It has been replaced by sustained to achieve a finished product. composed of 100 percent organically more specific regulatory restrictions, The practice standard also contains produced feed. referred to as practice standards, which restrictions on source materials which Temporary variances are created better reflect the recommendations of may make it difficult to utilize certain under very specific circumstances and the NOSB. categories of materials which have are subject to strong oversight by the We have addressed comments that traditionally been allowed in organic Department to prevent potential abuse. requested more specific guidelines for compost production. Enforcing these This proposal contains three situations acceptable organic practices by additional requirements will require far in which the Administrator could introducing the concept of practice greater oversight from the certifying establish a temporary variance. These standards. Practice standards are a agent, and expertise in this area will situations are: natural disasters as series of specific guidelines, become another factor in accreditation. declared by the Secretary in a specific requirements, and operating procedures NRCS uses its practice standards for geographical area; business interruption for common agricultural practices such voluntary cost-share programs, and caused by wind, flood, fire, or other as crop rotation, pest management, and organic producers may find the catastrophic event; or for the purpose of crop nutrient management. The NOSB requirements burdensome as an added, conducting research or trials of reviewed portions of the current NRCS mandatory expense. Despite the many techniques, varieties, or ingredients practice standards for crop rotation, comments we received criticizing the used in organic production or handling. nutrient management, pest management, provisions for performance standards in In the case of natural disaster declared composting facilities, and cover or green the first proposal, organic certification by the Secretary, the Administrator will manure crops at its Washington, DC, schemes have traditionally prescribed establish a temporary variance available meeting in June 1999. NRCS practice outcomes and allowed producers and to all organic operations within the area standards, while not public health handlers flexibility in selecting designated as affected. For local standards, contain rigorous, field-tested practices used to achieve them. catastrophic events in which the provisions which provide specific However, we received many other Secretary does not declare a disaster, the benchmarks for monitoring the comments stating that more rigorous, certifying agent is responsible for performance of many required organic clearly defined regulatory mechanisms making recommendations to the production techniques. A practice were needed to protect the integrity of Administrator for establishing standard can also serve as the organic certification. We have temporary variances. Catastrophic foundation for an even more detailed considered the use of NRCS practice events must be of a sufficient magnitude program manual. standards to provide clear, consistent, and have a direct, immediate impact For example, we are proposing that and verifiable guidelines for conducting such that the operation could not composted animal and plant waste essential organic production practices. continue to function without the materials which are used for soil We are particularly interested in temporary variance. Certifying agents fertility and crop nutrient management receiving specific comment on the are responsible for making a must be produced at a facility in feasibility of using NRCS practice recommendation for a temporary compliance with the NRCS practice standards for compost production and variance in situations prompted by

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We but must make such a request through the OFPA requires only that individual do not provide a formula for their certifying agent. components of the system—soil, water, determining when price difference Temporary variances, as proposed wild crop environment—be protected. alone is enough to justify purchase of here, will not extend to any practice or Adherence to the conservation practices the less desirable input because of the substance that is expressly prohibited found in the individual practice multiple factors which could affect such by any provision of the OFPA, the standards will result in cumulative a decision. applicable standards, these regulations, benefits to the agroecosystem, but By limiting the application of the or any other Federal, State, or local laws producers and handlers would have commercial availability standard to the or regulations. For example, a variance difficulty measuring compliance at this selection of organic or untreated seeds cannot be granted for use of an organism scale. Establishing standards that produced through excluded methods, address individual components of an and planting stock, we are limiting its for use of sewage sludge as a fertilizer, organic farming system, such as tillage use to relatively narrow and well or for use of irradiation to process an practices and manure management, will defined markets. A producer must organic product or ingredient. We directly and beneficially impact the justify a choice based on commercial expect to provide additional guidelines entire ecosystem. For the purpose of availability when submitting an organic in a program manual to assist certifying enforcement, however, we propose plan to the certifying agent, and it must agents in evaluating how much of an retaining the component-based criteria be supported by evidence of a good-faith allowance is appropriate, such as how for evaluating a system of organic effort to obtain the preferred input. The much of the ration for which animals farming and handling. attempt to source an input from known could come from nonorganic sources (2) Commercial Availability Standard. suppliers and an investigation to under a variance. The first proposal allowed certain discover potential new suppliers materials and practices, such as constitute the producer’s good-faith Production and Handling (General)— nonorganic seeds and nonorganic minor effort. Certifying agent approval of the Changes Requested But Not Made ingredients in a product labeled organic, organic plan provides sufficient This subpart retains from our first to be chosen if preferable alternatives protection against abuse of this proposal regulations on which we were not ‘‘commercially available.’’ We provision. Although comments reflected received comments as follows: have retained the commercial concern that too many allowances for (1) Definition of ‘‘System of Organic availability principle in this proposal nonorganic inputs could dilute the Farming and Handling’’. The first but have limited its use to the integrity of certification, the organic proposal contained a definition of a provisions addressing the selection of industry has built its reputation while ‘‘system of organic farming and organic or untreated seeds and planting using the commercial availability handling’’ to provide an explicit stock. A number of producers, exemption for sourcing certain reference point for determining which consumers, and certifying agents materials. Certifying agent oversight can practices and substances were expressed concern that producers or ensure that it works in the NOP as well. consistent with such a system. Several handlers not be permitted to base claims industry associations and certifying of commercial unavailability on any Production and Handling (General)— agents commented that the definition price difference between organic and Additional Provisions was helpful but lacking in key concepts, nonorganic inputs. They argued that the such as ‘‘ecological balance,’’ Upon further review of the provisions term, ‘‘feasibly and economically,’’ in in the first proposal, we have decided to ‘‘agroecosystem health,’’ and ‘‘biological the proposed definition of diversity.’’ Several thought the propose the following additions and ‘‘commercially available’’ were too changes. definition should receive greater vague to be enforceable. Comments from emphasis in the regulations as a an industry association supported the (1) Dual Use of an Organic System reference point for the underlying use of this concept but requested a more Plan. Section 205.201(b) allows a principles of organic production and specific definition that could be used to producer or handler to submit an handling and that the NOSB’s definition assess the economic dimension of organic production system plan should be used. Although we commercial availability. The NOSB has developed to meet the requirements of considered many of the concepts also cited commercial availability as a another Federal, State, or local discussed by commenters, only the valid criterion for allowing some regulatory program if the plan fulfills scope and not the meaning of the flexibility in the choice of inputs and the applicable requirements of this original definition has been changed. stated that the term is applicable to the section. Government agencies may have The definition in this proposal is based quantity and quality of available programs in place that require on the one we developed in product as well as its cost. participating agricultural producers or consultation with the NOSB but is Although commercial availability is handlers to develop and follow a limited to concepts that are not defined in the OFPA, the concept is management plan. For example, the incorporated into the OFPA. Measuring well established within current NRCS Environmental Quality Incentives compliance with the component-based certification programs and the Program (EQIP) requires a conservation mandates of the OFPA, such as fostering commercial world in general. To be plan. An organic production system soil fertility and preventing water considered commercially available, a plan could be incorporated into such a contamination by manure, does not preferred input must be known and conservation plan and fully comply require criteria as far-reaching as readily available in the sense that a with the requirements proposed in ‘‘agroecosystem health’’ or ‘‘biological producer or handler can locate and § 205.201 of this proposal. This new diversity.’’ We also took into acquire the quantity and quality of provision could reduce the paperwork consideration the costs to comply with product needed to sustain his or her burden for an operation that participates such open-ended requirements and operation. The producer or handler in more than one program requiring a determined that this could be must make a good faith effort to procure farm conservation plan.

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Crop Production—Changes Based on prohibits the use of sewage sludge in agent, but in no event may it be less Comments organic production. than 60 days. The OFPA stipulates that (2) Tillage and Conservation the certifying agent determine the This subpart differs from our first Practices. While no comments objected interval between the last application of proposal in several respects as follows: to the inclusion of tillage and raw manure and harvest of the crop to (1) Biosolids. The first proposal cultivation practices in the first ensure the safety of the crop. requested public comment on the proposal, a few took issue with the Furthermore, the OFPA prohibits raw possible use of biosolids as a means of requirement that these practices result manure from being applied to any crop enhancing soil fertility on an organic in ‘‘no measurable degradation’’ of soil in a way that significantly contributes to agricultural operation. Our quality. In this proposal, the concept of water contamination by nitrates or interpretation of the term, ‘‘biosolids,’’ ‘‘ no measurable degradation’’ has been bacteria. The first proposal contained an is synonymous with the definition of replaced with the requirement to order of preference which favored the sewage sludge contained in 40 CFR part ‘‘maintain or improve’’ soil quality. We use of composted materials, including 503. In response to the comments we agree with commenters who suggest that manure, as inputs for soil fertility but received, this proposal adds biosolids to prevention of soil erosion is an allowed raw manure applications the list in § 205.203(e)(2) of substances important consideration for the subject to the 60-day minimum that are specifically prohibited for use selection of tillage and cultivation preharvest interval contained in the in organic production. methods and have included a OFPA. The first proposal reviewed some requirement that tillage and cultivation Many public comments addressed the historical information about the Federal practices maintain or improve the issue of raw manure use, and some enforcement of biosolids use and the physical, chemical, and biological industry, producer, consumer, and steps taken by EPA, FDA, and the U.S. condition of soil and minimize soil environmental groups submitted Department of Agriculture (USDA) to erosion. We have removed other substantial technical information. Many ensure that biosolids are safe to use on references to preventing measurable of these commenters addressed the crops for human consumption. degradation when using plant or animal human health risk associated with the Comments were solicited as to whether wastes in the first proposal and replaced use of manure in organic crop biosolids should be permitted or them with a requirement, in production. Most of these comments prohibited in organic production. The § 205.203(c), that the producer manage suggested that a determination of first proposal noted that the NOSB these materials to maintain or improve sufficient time to ensure the safety of a recommended that biosolids should be soil organic matter content in a manner crop depends on soil and climate classified as synthetic and were not that does not contribute to conditions, but that the 60-day period appropriate for use in organic crop contamination of crops, soil, or water by specified in the OFPA was not production. The NOSB took this plant nutrients, pathogenic organisms, sufficient. Some commenters cited position at its 1996 meeting in heavy metals, or residues of prohibited various amounts of time that might be Indianapolis, IN, and reaffirmed it at its substances. In accordance with several considered safe. Other commenters 1998 meeting in Ontario, CA. comments received, this provision stated that no interval between frames the requirement in terms of application and harvest could be We received hundreds of thousands of achieving a positive outcome rather considered safe and recommended comments, virtually all of which than avoiding a negative one. This prohibiting the application of raw strongly opposed the use of biosolids in proposal specifies the types of manure to any crop. The NOSB had organic agriculture. The vast majority of measurable degradation that could extensive deliberations on the use of the commenters stated that biosolids result from improper or excessive raw manure in organic crop production can contain synthetic substances application of plant or animal waste at its June 1999 meeting in Washington, prohibited in organic agriculture, such materials, and producers, in DC. as industrial waste, street runoff consultation with the certifying agent, The OFPA’s requirement that raw containing petroleum products, and will identify potential problems and manure be applied in a manner that household waste contaminated with address them in the organic system ensures the safety of the crop presents cleaning products, polychlorinated plan. The organic system plan must also a unique regulatory challenge. We have biphenyls (PCB’s) and dioxins. identify appropriate monitoring consistently maintained that the NOP is Commenters indicated that sewage activities to ensure that the ‘‘maintain or for marketing, not food safety, purposes. sludge should not be allowable because improve’’ requirement is being met. For Organic production and handling it may contain synthetic materials example, a producer who manages an standards, which are not based on risk prohibited in organic production which on-farm composting facility might make assessment of public health are not restricted under EPA regular observations of the pile to check consequences, may differ from the regulations. Many commenters stated for leaking and periodically sample a requirements established by agencies that biosolids are not currently allowed nearby stream for nitrate content. that are responsible for food safety in organic production and that (3) Application of Raw Manure. The regulations. The OFPA’s requirement permitting their use would run contrary first proposal requested public comment that the application of raw manure to consumer expectations. Such an on appropriate guidelines to ensure that ensures the safety of the food to which allowance would place producers at a use of raw animal manure would not it has been applied requires the NOP to competitive disadvantage in domestic cause contamination of food products move toward establishing a public and international markets. While by pathogens that cause foodborne health standard. This requirement is sewage sludge may be safely used in illness. The OFPA restricts the use of especially challenging given that there conventional agriculture, allowing its raw manure by requiring that a is no Federal oversight of the use under these standards would be reasonable period of time elapse application of raw manure to any kind inconsistent with the historical between its application to a crop of crop nor any public health standards understanding of organic fertility intended for human consumption and to establish what constitutes safe use of management shared by producers and the harvest of that crop. This period of raw manure. Applications of raw consumers. Therefore, this proposal time must be approved by the certifying manure are a hazardous, threatening

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We propose that raw bacteria, including human pathogens. treatments. animal manure must be composted, The use of the word, ‘‘significantly,’’ in The requirement from the first unless it is applied to land used for a this provision is a direct reference to the proposal that all seeds, annual crop not intended for human authorizing language in the OFPA seedlings, and planting stock be consumption, incorporated into the soil (Section 2114(b)(2) (C)). However, organically produced is retained in this not less than 120 days prior to the commenters suggested that this proposal. Similarly, this proposal harvest of a product in direct contact language implies that ‘‘insignificant’’ contains a comparable exception to the with the soil surface or particles, or contamination would be acceptable. requirement so that nonorganically incorporated into the soil not less than This proposal requires that soil produced seeds and planting stock 90 days prior to the harvest of a product management practices aim at could be used to produce an organic the edible portion of which does not preventing, to the extent possible, any crop when an equivalent organically have contact with the soil surface or contamination of water by nitrates and produced variety is not commercially particles. However, many site-specific pathogenic bacteria. available. A producer’s decision to use variables affect the viability of (4) Use of Treated Seed. The first nonorganically produced seeds and pathogens in raw manure, and we proposal permitted the use of treated planting stock for reasons of commercial cannot determine whether this standard seeds if the same variety was not nonavailability of equivalent organic will be sufficient under all conditions to commercially available in untreated varieties must be included in his or her fulfill the safe food requirement form or if unanticipated or emergency organic plan and agreed to by the contained in the OFPA. We are circumstances made it infeasible to certifying agent. We decided to retain requesting comment on the obtain untreated seeds. In this context, these provisions from the first proposal development of more comprehensive ‘‘treated seed’’ refers to the application after receiving comments from producer standards that certifying agents are of a pesticide to a seed prior to planting and industry groups that acknowledged capable of enforcing. We are also and does not include the use of a that the supplies of organic farm inputs requesting comment on how to regulate disinfection treatment for a seed that is will not be sufficient to provide for the the authority to determine the intended for sprouting and food use. A seed and planting stock needs of all ‘‘reasonable period of time’’ between the number of comments from producer and organic operations in the near future. last application of raw manure and industry groups suggested that this was We have added the requirement that harvest of a crop which the OFPA appropriate but that a producer should producers select equivalent untreated delegates to the certifying agent. Given have to choose an ‘‘equivalent’’ seed over treated seed when commercial the need for far greater scientific untreated seed variety that was availability allows them to use a understanding of the spread of commercially available. The term, nonorganically produced variety. We pathogens in raw manure, we do not ‘‘equivalent,’’ indicates that two seed recognize that these provisions could consider that certifying agents should be varieties have similar performance lead to certifying agents facing expected to make the determination of attributes, such as resistance to drought numerous decisions regarding safety. and insects, and production traits, commercial availability and equivalency Several comments were received including yield, size, and shape of the in the organic system plans they review. which suggest that any use of raw commodity. We agree with this This degree of oversight is warranted, animal manure could jeopardize human provision because it favors a however, to ensure that the use of health and that the use of raw animal nonsynthetic input over a synthetic one synthetic materials in organic manure by organic farmers thereby and have, therefore, included it in this production is kept to a minimum. We increases the risk that organic foods may proposal. We are also requiring that, are not extending the commercial not be as safe as conventionally when selecting a nonorganically availability exception to the produced foods. We recognize that our produced seed, a producer select an requirement for organically produced knowledge of the risks from foodborne untreated equivalent variety in annual seedlings because the comments pathogens has advanced since the OFPA preference to one which has been indicated that the organic input was passed a decade ago, and that safety treated with an allowed synthetic suppliers are effectively meeting this precautions have been strengthened treatment. demand. accordingly. Therefore, we are seeking Some comments objected to any In contrast to the first proposal, we further guidance for developing allowance for the use of treated seeds or propose that any synthetic seed regulations that minimize the potential planting stock, citing the prohibition in treatment used in organic production for contamination of crops grown for 2109(c)(3) of the OFPA (7 U.S.C. must be included on the National List human consumption by pathogens from 6508(c)(3)) on the use of transplants that of synthetic substances allowed for use raw animal manure. This approach is are treated with any synthetic or in organic production. We base this consistent with the traditional organic prohibited material. We recognize that requirement on the OFPA, which certification procedures which have the use of synthetic seed treatments, identifies ‘‘treated seed’’ as a category of restricted the use of raw manure for some of which are acutely toxic, may synthetic substances eligible for environmental as well as health seem inconsistent with a system of inclusion on the National List. We concerns. Other Federal and State organic production and handling, but it believe that including specific seed regulatory programs may impose is an established practice in State and treatments on the National List will additional requirements on the use of private certification programs and is satisfy the requirement in the OFPA that raw manure in crop production which supported by provisions of the OFPA. a farmer shall not apply a material to or

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Producers and producer current practice in the organic industry. treatment included on the National List, groups sent many comments stressing The NOSB endorsed this approach at its which may have been applied to the the importance of a proper crop rotation 1994 meeting in Santa Fe, NM, by seed that produced the seedling. for successful organic crop production recommending that seed treated with The application of disinfectants to and objecting to the vague allowance for synthetic fungicides appearing on the seeds used for sprouting represents a other methods to be used in its place. National List be allowed when unique dimension of the seed treatment Although we have not changed the nontreated varieties are commercially issue. Raw sprouts pose a potential food definition of crop rotation from the first unavailable. safety risk because the conditions under proposal, the new practice standard We propose that producers or which they are produced—growing eliminates the possibility that an handlers may request a temporary time, temperature, water activity, pH organic producer will substitute some variance due to unavoidable natural and nutrient content—can foster the other practice for a crop rotation. This disaster in order to use nonorganically rapid growth of bacteria. In 1999, FDA proposal does, however, allow for produced annual seedlings. The issued guidance advising sprout variances from an approved crop temporary variance will be appropriate producers and seed suppliers of rotation plan due to natural disasters, in instances in which an unexpected measures to reduce microbial hazards including weather. event such as a frost, flooding, fire, or common to sprout production. These A few commenters made the point other catastrophic event destroyed the measures include treating seeds with that, although the OFPA includes a producer’s nontreated planting one or more approved methods such as provision for a crop rotation as a means materials and no organically produced presprout soaking with 20,000 ppm of improving soil fertility, a crop replacements are commercially calcium hypochlorite. Based on the rotation serves other critical functions available. This provision cannot be used recommendation of the NOSB, the as well. We reviewed the NRCS practice to compensate for mismanagement by Secretary has included on the National standard for crop rotation (Code 328) the producer. For example, a producer List in this proposal three chlorine which addresses many of the concerns who planted seedlings prior to the materials to disinfect and sanitize food raised in public comment. Accordingly, recognized frost date and lost his or her contact surfaces. However, these § 205.205 of this proposal requires the crop to a freeze could not claim that this materials carry the annotation that producer to implement a crop rotation, disaster was unavoidable. This residual chlorine levels in water shall including, but not limited to, cover provision requires that the producer not exceed the maximum residual crops, sod, green manure crops, alley make all reasonable efforts to protect his disinfectant limit under the Safe crops, and catch crops. These or her seeds, annual seedlings, and Drinking Water Act, which is well techniques serve the following functions planting stock before being allowed to below the 20,000 ppm level that FDA as applicable to the operation: maintain substitute with treated replacements. currently advises sprout producers to or improve soil organic matter content; Some commenters cited the follow. provide for effective pest management prohibition in section 2109(c)(3) of the Existing State and private certification in annual and perennial crops; manage OFPA against using transplants that are programs have diverged in their deficient or excess plant nutrients; treated with any synthetic or prohibited response to the FDA guidance on provide erosion control to minimize soil material as justification for prohibiting chlorine treatments. While treating food loss; and manage subsurface water to the use of synthetic seed treatments. products with high concentrations of prevent transport of dissolved materials. However, the statute permits the use of chlorine has traditionally been A few comments suggested requiring seeds and seedlings treated with prohibited, some certifying agents that rotation plans include sod or substances included on the National currently allow sprout treatment at the legumes, which serve to improve soil List of allowed synthetic substances. 20,000 ppm level. Producers of organic organic matter content and increase soil The seemingly inconsistent sprouts are finding it increasingly nitrogen supplies to meet the demands requirements for seedlings and difficult to balance the FDA guidance, of a following crop. However, all of transplants, functionally equivalent the expectations of consumers, and the these functions could be fulfilled terms, have made this a difficult issue requirements of their certifying agents. through many different types of rotation to resolve. The first proposal attempted This proposal contains no specific plans, which could only be developed to reconcile these differences by guidance on the use of chlorine according to the site-specific climate, defining transplant as an annual treatments on seeds used in sprout soil type, and type of crops or livestock seedling produced on an organic farm production. As synthetic compounds, produced on a given operation. In the and transplanted to a field on the same chlorine materials would have to be interest of flexibility, therefore, this farm operation to raise an organically added to the National List at specified proposal does not specify what crops produced crop. Many commenters felt concentrations to be used for have to be included in a crop rotation. that distinguishing between annual disinfecting sprouts. Without a specific An organic plan that meets the criteria seedlings which originated on and off National List exemption, operations that specified in this proposal must be the operation was not a valid approach. treat sprouts at the level established in developed by a producer and approved We concur, and have removed this the FDA guidance could not be by the certifying agent. definition, and interpret the term,’’ organically managed. Proposed § 205.205(b) specifically transplant,’’ as applying to any seedling (5) Crop Rotation. The OFPA requires applies to perennial crops. Under this which is transported and replanted, an organic crop production plan to provision, an orchard plan might regardless of whether it originated on foster soil fertility through practices that include establishment of hedgerow the operation or not. We interpret the include a crop rotation. The first areas that provide habitat for beneficial prohibition on using a transplant treated proposal required the establishment of a insects to assist in effective pest with any synthetic or prohibited crop rotation or other ‘‘means’’ of management. This provision was added

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For this reason, the use of develop program manuals containing proposal leaves the determination of an any composted or uncomposted plant or more detailed information on different adequate buffer zone to the organic animal wastes to supply soil or crop types of rotations, including methods to producer and the certifying agent on a nutrient is permitted without further fulfill the prescribed functions for case-by-case basis. Buffer zone limitation other than preventing perennial crops, that are suitable to a provisions are an important part of each contamination of soil or water by wide range of types of operations and organic production system plan, and we pathogenic organisms, heavy metals, or geographic conditions. will provide guidelines for buffer zones residues of prohibited substances. The (6) Prohibition on Cytotoxic Pest in program manuals. certifying agent will be expected to have Control Substances. In response to (2) Nonorganic Plant and Animal the expertise to recognize materials that several comments, we have deleted the Waste Materials. The first proposal might be of concern and ensure that provision in the first proposal to permitted the use of any uncomposted they are properly addressed in the prohibit use of a synthetic carbon-based plant or animal wastes. It also allowed organic system plan. We expect to substance having a cytotoxic mode of use of composted plant or animal wastes provide additional guidelines in action for any use as a pest control obtained from nonorganic sources, such program manuals to help evaluate substance. Some commenters as commercial compost products. whether animal manure is fully interpreted this provision to mean that Several consumer and environmental decomposed, as well as guidelines for this single criterion would substitute for groups objected to permitting the use of other types of materials to address those specified in the OFPA for plant or animal wastes from nonorganic potential soil or water quality concerns. evaluating substances proposed for sources. Such materials, they argued, We acknowledge the need to examine inclusion on the National List. Other could potentially contain residues of carefully commercial blended fertilizers commenters, including industry groups, prohibited substances that could and soil amendments to ensure that objected to this provision because it has compromise the integrity of the organic such products do not contain prohibited not previously been part of certification farm system. However, off-farm plant substances. standards and its meaning was too and animal wastes from food (3) Chemically Altered Plant or ambiguous. Some substances that have processing, municipal yard waste Animal Waste Materials. The first historically been accepted for organic facilities, and other sources are used proposal allowed the use of a production could have cytotoxic effects extensively in existing organic composted or uncomposted plant or when used in inappropriate operations and are generally permitted animal waste material that had been concentrations. Although this provision by organic certification programs. Bone chemically altered by a manufacturing added to and did not replace the meal, fish meal, and seaweed meal are process—such as leather meal, evaluation criteria contained in the also commonly used as organic farm newspaper, and biosolids—if the OFPA and eliminated the need for the inputs. Commercial fertilizer products material was included on the National NOSB to review clearly inappropriate that contain mixtures of such plant and List of allowed synthetics. Only substances, it has been removed from animal by-products are commonly newspaper was proposed for inclusion this proposal in the interest of clarity. permitted for use in existing organic on the National List. A few commenters certification programs, subject to objected to this allowance, although Crop Production—Changes Requested certifying agent review. Using such newspaper is commonly permitted as a But Not Made organic wastes is consistent with a mulch material or as an ingredient in This subpart retains from our first system of organic production and compost in existing organic certification proposal regulations on which we handling, which calls for recycling programs and was recommended for received comments as follows: organic wastes to return nutrients to the this use by the NOSB. The National List (1) Buffer Zones. Section 205.202(a)(3) land. We believe that concerns about review process offers an adequate of this proposal requires that any land potential contaminants in plant and safeguard to ensure that other waste on which organic crops are produced animal waste materials can be addressed materials that may be permitted in the have distinct, defined boundaries and by the requirement in this proposal that future will be consistent with a system buffer zones, such as runoff diversions, these materials be managed in a manner of organic production and handling, and to prevent the unintended exposure of that prevents such contamination. For we propose to retain this provision in the crop to prohibited substances from example, cotton gin trash that had been § 205.203(c)(5) of this proposal. adjoining land. Several commenters treated with a prohibited substance (4) Soil and Crop Mineral Nutrients. suggested that the regulations should could only be used if the organic system This proposal includes provisions for specify a minimum size for buffer zones, plan specified composting the material supplying soil and crop mineral as is currently required by some organic before adding it to the soil. Composting nutrients that are similar to those in the certifying agents. Although specifying a has been shown to effectively first proposal. While use of a proper size for these zones would establish a biodegrade synthetic organic crop rotation and recycled plant and more definable requirement, it could compounds, and the organic system animal wastes can often provide all the also impose unnecessary burdens on plan could also call for the compost or mineral nutrients required by crops, some organic producers without offering soil to be monitored regularly for supplemental sources of these nutrients greater protection of organic fields and specific residues. are sometimes needed. Section crops from unintended contact with Finally, the first proposal and this 205.203(d) of this proposal permits a prohibited substances. Another proposal prohibit the use of any producer to supply soil and crop commenter argued that buffer zones commercially blended fertilizer product nutrients through use of mined minerals should not be required for unmanaged that contains a prohibited substance, as and other nonsynthetic sources. lands such as wilderness areas or required by the OFPA. Although a Synthetic micronutrients are also abandoned farms. There might be no number of commenters worried that a allowed if they are included on the

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National List. Ash from plant or animal More detailed guidance will be horticultural oils; fish emulsions; materials can be used, as long as the provided in program manuals on the treated seed; vitamins and minerals; burned material was not treated or appropriate justifications for the use of livestock parasiticides and medications, combined with a prohibited substance highly soluble nutrient sources, and production aids, including netting, and was not included on the National including plans for discontinuing their tree wraps and seals, insect traps, sticky List of prohibited nonsynthetic use. Soil or tissue testing will be an barriers, row covers, and equipment substances. For example, ashes from important aspect of justifying the need cleansers. Section 205.206 of this treated wood or incinerator ash are not for any such supplementation. proposal contains the practice standard permitted, nor is ash from manure, Producers concerned about to implement the provisions of the which is on the National List of requirements for export markets can OFPA for synthetic pest control prohibited nonsynthetics. The request certification to the standards substances. prohibition of burning crop residues on required by individual contracts. We have made a minor modification the farm in the first proposal has been (5) Nonorganically Produced Planting by eliminating one element of the order retained, but an exception for burning Stock. The first proposal allowed of preference which commenters trimmings of perennial crops to control nonorganically produced planting stock considered too difficult to enforce. diseases has been added in response to used to produce a perennial crop to be There is no distinction made in this an NOSB recommendation. sold, labeled, or represented as proposal between pest prevention and Commenters raised no objection to the organically produced after the planting control practices in terms of stock had been managed on an organic preferability. However, a provision in proposed allowance for mineral operation for a period of no less than 1 the first proposal that permitted substances of low solubility, including crop year. This provision is authorized application of a botanical or allowed lime, greensand (glauconite), and rock by section 2107(a)(11) of the OFPA (7 synthetic pest control substance only if phosphate, which have traditionally U.S.C. 6506(a)(11)). Some commenters previously delineated methods were been permitted in organic certification thought this provision provided a ineffective has been retained. This programs. However, numerous loophole for indiscriminate use of provision is supported by public producers and certifying agents treated planting stock on an organic comments from producers, certifying expressed concern about the allowance operation. They argued that a producer agents, and many consumers who for use of mined mineral substances of could purchase treated nursery stock emphasized that such substances, while high solubility or salinity. These and list it as organic planting stock in sometimes necessary, should only be include substances such as sodium the organic plan after only 1 year. permitted as a last resort. This provision (Chilean) nitrate or potassium nitrate However, producer and industry groups requires a producer to document the (niter), potassium chloride (muriate of supported this provision as an need for copper and sulfur fungicides, potash), langbeinite (sulfate of potash important stimulus to the organic input dormant oils, or similar materials in magnesia), and potassium sulfate. suppliers, since it allows a nursery their organic system plan. Because of their potential to degrade operation to purchase planting stock (7) Wild-crop Harvesting. We received soil quality by contributing to soil from a nonorganic operation and later few comments on the provision in the salinization, these substances, along resell this stock as organically first proposal concerning wild-crop with the synthetic micronutrients that produced. The first proposal described harvesting, and, therefore, this proposal are on the National List of allowed an organic nursery operation which retains similar requirements. Changing synthetics, were allowed only when could purchase nonorganic dwarf apple the term for the location from which used in cases of known nutrient rootstock and graft it with locally wild crops may be harvested from deficiency. Many commenters objected adapted varieties and then sell the ‘‘land’’ to ‘‘area’’ is the only substantive to the use of sodium nitrate and resulting planting stock as organically difference between the first proposal potassium nitrate in organic production, produced after raising it organically for and this one. We made this change to and some contested the determination at least 1 year. We agree that the be consistent with the language in the that nonsynthetic, mined sources of potential benefits of this provision OFPA. One commenter stated that maps potassium nitrate are available. Some outweigh its possible abuses, and should be required as part of the also objected to allowing potassium § 205.204(d) of this proposal permits certification process. A certifying agent chloride, which has traditionally been nonorganically produced planting stock could reasonably require such maps to prohibited in most organic certification to be used as planting stock to produce assist in evaluating the organic system programs. Several commenters argued a perennial crop to be sold, labeled, or plan, but we have not made their that no highly soluble source of represented as organically produced inclusion a requirement. nitrogen, synthetic or not, should be after the planting stock has been under The provisions of this section apply permitted for application to soil in an a system of organic management for no only to the management of wild crops. organic management system. They less than 1 crop year. The OFPA includes ‘‘fish used for food, indicated that these materials are not (6) Pest, Weed, and Disease Control wild or domesticated game, or other permitted in international organic Practice Standard. The OFPA sets forth nonplant life’’ in the definition of standards, and approval could practices such as the use of natural livestock, and we are considering potentially harm exports of organic poisons that persist in the environment additional standards for animals and products. The NOSB reviewed Chilean or plastic mulches that are prohibited or animal products harvested from the nitrate in 1995 and recommended restricted in the control of pests, weeds, wild. We received substantial public certain restrictions on the use of this and diseases in organic crops. It also comment on the opportunities for material, which is allowed with lists the following categories of active developing standards for marine and restrictions in some existing organic synthetic pest, weed, and disease freshwater aquatic animals certification programs and prohibited in control substances that may be (encompassing finfish and shellfish) and others. In accordance with the NOSB’s considered for exemption if they are apiculture operations. Additional recommendation, this proposal permits included on the National List: Copper comments addressed the feasibility of these materials to be used according to and sulfur compounds; toxins derived developing production standards for justifications in the organic system plan. from bacteria; pheromones; soaps; harvesting wild terrestrial animals.

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The certification of aquatic animals of the condition of the natural resource minimum period of organic has very limited precedent among base can be qualitatively assessed using management for animals from which existing certifying agents and will simple field observations so that the nonedible products, such as wool, were require additional dialogue before impact of site-specific practices on soil to be harvested. Many consumers and credible standards can be developed. and water quality can be documented in producers said that a 90-day period was The FY 2000 Agriculture, Rural the organic plan. too short and that an animal should be Development, Food and Drug under organic management for at least 1 Crop Production—Additional Administration, and Related Agencies year before a nonedible organic product Provisions Appropriations Act provides funds for could be obtained from it. This the NOP to convene national meetings Upon further review of the provisions requirement is consistent with the to consider the development of organic in the first proposal, we have decided to provision that dairy animals receive a standards for aquatic animals. Meetings propose the following additions and minimum of 1 year of continuous will be held in Alaska, Alabama, and changes. organic management prior to the Rhode Island. Simultaneously, the NOP (1) Mandatory Phytosanitary production of the milk or milk products will be working with stakeholders from Treatment of Seeds, Seedlings, and to be sold, labeled, or represented as the aquaculture community to consider Planting Stock. Section 205.204(e) of organic. Therefore, this proposal has standards for the production of farm- this proposal contains a new provision been revised to state that an animal raised aquatic animals. that permits the use of treated seeds, brought into an organic operation must The certification of apiculture seedlings, or planting stock in cases in be under continuous organic operations has some precedent among which Federal or State phytosanitary management for 1 year prior to the certifying agents. However, due to many regulations require treatment. For harvest of nonedible products that are unique production considerations, example, some States require seed sold, labeled, or represented as organic. organic certification for apiculture potatoes or strawberry crowns to be (2) Origin of Mammalian Slaughter operations has been very limited. Public treated to prevent the spread of plant Stock. The first proposal allowed comment on the first proposal indicated diseases. The OFPA authorizes mammalian livestock from a nonorganic that consensus on critical apiculture reasonable exemptions from specific source for the production of organic issues including forage area and pest requirements for compliance with meat if the livestock was brought into an management will require considerable Federal or State emergency pest or organic operation no later than the 15th additional dialogue. The NOSB has disease treatment programs. This day of life, if necessary. Public comment expressed interest in leading the provision is also consistent with the was sought as to the specific conditions, discussion of the key issues pertinent to NOSB’s recommendation on the use of such as commercial unavailability of certification of apiculture operations. treated planting stock. organic livestock or an emergency We will incorporate public participation (2) Restriction on the Use of a situation, that should be a prerequisite and the NOSB’s recommendations into Synthetic Pest Control Substance. The for allowing mammalian livestock of future production standards for first proposal included a provision that nonorganic origin to be designated as apiculture as well as for other wild any use of biological or botanical pest organic slaughter stock. Thousands of harvested livestock operations as control substances or synthetic pest commenters, along with the NOSB, needed. control substances approved for use on strongly opposed allowing the use of (8) Practice Standards for Specialty the National List had to be used in a cows, sheep, or other mammals as Crop Operations. Several organic manner that did not result in organic slaughter stock if they were not certifying agents and producer measurable degradation of soil or water organic from birth. Most of them also associations commented that the quality. This provision has been rejected allowing such practices on an proposed rule did not sufficiently detail removed, and § 205.207(e) of this ‘‘if necessary’’ basis. Accordingly, prescribed practices for many proposal includes a new provision that § 205.236 requires that mammalian specialized aspects of organic further restricts use of these substances slaughter stock be organically raised production and handling, such as by requiring the producer to implement from birth. mushrooms, greenhouses, and measures to evaluate and mitigate the (3) Standard for Aquatic Animal aquaculture. We concur that such effects of repetitive use of the same or Production. While the first proposal details are lacking, and to a certain similar materials on pest resistance and contained no standards solely for extent, this proposal addresses that gap shifts in pest types. This requirement aquatic animals in an organic operation, through the introduction of more can be met by reviewing available it did contain provisions applicable to detailed practice standards. In some research on pest resistance to the their production. The first proposal cases, more specific regulations substance being used and observing allowed fish and crustaceans, among appropriate for such specialized changes in pest populations following other livestock types, to be sold, labeled, operations, including aquaculture, repeated application of the substance. or represented as organic if such mushroom production, and greenhouse Public comments pointed out evidence livestock had been brought into an operations, will be filled in as that nonsynthetic biological and organic operation no later than the recommendations are developed by the botanical pest control substances, if earliest commercially available stage of NOSB. Beyond this, the Department overused, pose concerns for inducing life. Several commenters suggested that expects to address the need for greater accelerated resistance in pest the management of aquatic species specificity through program manuals, populations. differs significantly from mammals and which will provide more detailed poultry and would require separate guidance about site-specific decisions. Livestock Production—Changes Based regulatory provisions. We concur and For example, program manuals could on Comments intend to develop detailed practice include examples of crop rotation plans This subpart differs from our first standards for specific aquatic species suited to different geographic regions, proposal in several respects as follows: that will be published for comment and soil conditions, and types of enterprises. (1) Minimum Period of Organic finalized prior to the implementation of Program manuals could also be used to Management—Nonedible Products. The the NOP. Given the virtual absence of provide guidance about how indicators first proposal established a 90-day recognized certification programs for

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We will hold public nonorganic feed in emergency allowed, the OFPA does not contain meetings in Alaska, Alabama, and situations, with strict requirements for affirmative conditions for their use. In Rhode Island to receive comment and documentation in the organic system developing provisions in the first anticipate that the NOSB will also plan. proposal for treating livestock with provide recommendations. Based on the public comment antibiotics, we reviewed the NOSB (4) Apiculture Standard. The first received and the recommendations of recommendations, public input received proposal allowed bees to be brought into the NOSB, we agree that allowances for at NOSB meetings, testimony presented an organic operation at any stage of life providing nonorganic feed to at livestock hearings, and existing State and required that the predominant organically managed livestock should be and private standards. We found that portion of their forage be organically limited to emergencies, such as fire, innovative production practices and produced. Several commenters, drought, flood, and other natural consumer expectations had increasingly including producer and industry disasters. Accordingly, we have diminished the use of antibiotics in groups, pointed out that bees differ removed the provision from the first organic livestock since passage of the significantly from other livestock types proposal that a producer may provide OFPA. At its 1994 meeting in Santa Fe, and that the first proposal lacked up to 20 percent nonorganically raised NM, the NOSB recommended sufficient details to guide honey feed ‘‘as necessary.’’ Exemptions for prohibiting the use of antibiotics in the producers. Many consumers stated that emergency use of nonorganic feed must production of organic slaughter stock the provisions proposed for bee forage, be authorized by the Administrator but allowing their use with extended which required only that a predominant through the procedures for establishing withdrawal intervals for dairy and portion of the bees’ forage be organic, a temporary variance. Producers will breeder stock. By its Ontario, CA, were too vague and lenient. Recognizing work with their certifying agents to meeting in 1998, the NOSB that the provisions in the first proposal determine the minimum percentage of recommended prohibiting all antibiotic for certifying beekeeping operations nonorganic feed needed to supply the use after animals were brought into an were inadequate, we removed them nutritional requirements of the livestock organic operation. Other comments we entirely from this proposal. We will until the 100 percent organic ration can reviewed favored allowing the use of review the detailed production and be restored. antibiotics because organic livestock handling standards for beekeeping (6) New Dairy Herd exemption. The might benefit from receiving such operations that several certifying agents first proposal included an exemption to treatments. Other commenters requested have developed and assess the allow an entire, distinct dairy herd— that organic producers be prohibited feasibility of developing a practice converted to organic management for from withholding treatment from sick standard. The NOSB has agreed to the first time—to be fed nonorganic feed animals for economic reasons. review and recommend an apiculture up to 90 days prior to the production of The first proposal permitted mammals practice standard for organic honey milk or milk products labeled as raised as organic slaughter stock to production and hive care, including the organic. A few producer groups receive antibiotics in the first 21 days of origin of organic bees. supported this allowance for a one-time, life and other species to be given (5) Organic Feed Requirement. The whole-herd exemption to make it antibiotics in the first 7 days of life. The first proposal allowed a producer to feed feasible for existing conventional dairy rationale for allowing antibiotic use was livestock up to 20 percent of the total farmers to convert to organic based on concerns about the feed ration in a given year that was not management without incurring the costs vulnerability of newly born or hatched organically produced. Furthermore, in of 100 percent organic feed for 12 livestock brought into an organic an emergency situation, the first months prior to certification. However, operation from a nonorganic source. The proposal allowed the Administrator to in light of the strong opposition to any first proposal permitted organic increase the amount of nonorganic feed nonorganic feed allowance by slaughter stock to originate from that could be provided. Thousands of consumers and its inconsistency with nonorganic sources if it was brought comments were received opposing any NOSB recommendations, we have under organic management at an early allowance for nonorganic livestock feed, eliminated this provision. stage of life. Allowing the use of animal and many thought that no conditions (7) Synthetic Feed Additives. The first drugs could be an appropriate safety net justified providing any nonorganic feed proposal prohibited the feeding of for young organic livestock during their to organic animals. Most producer substances containing synthetic amino first week of organic management. We groups, organic certifying agents, and acid additives and synthetic trace requested public comment on the use of industry groups, however, recognized elements to stimulate the growth or animal drugs in the production of that eliminating all flexibility in this production of livestock. In organic livestock, including organic regard could seriously inhibit growth of § 205.237(c)(2), the term, ‘‘synthetic slaughter stock. We also published an the organic livestock industry and amino acids,’’ is replaced with the term, issue paper in October 1998 entitled reduce the availability organic livestock ‘‘additives,’’ which includes nutritional ‘‘The Use of Antibiotics and products. Several existing certification substances other than amino acids. Parasiticides in Organic Livestock programs allow some use of nonorganic Some commenters stated that the term, Production,’’ requesting additional feed in emergencies, in one case ‘‘additives,’’ more precisely reflects the public comment on this subject. specifying that up to 10 percent of the intent of the OFPA, which prohibits the We received thousands of comments livestock ration may be nonorganic. use of growth stimulants. The provision from consumers, producers, and Commenters made it clear that the in the first proposal to permit use of industry groups objecting to any commercial availability of certified synthetic amino acid additives to fulfill allowance for antibiotic use in

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Based on these public positions taken by consumers and of necessity was to be based on site- comments and the availability of producers in response to the first specific conditions described by the alternative production practices, this proposal and the subsequent issue paper producer in an organic system plan or proposal prohibits selling, labeling, or on livestock medications. We recognize updates to an organic plan, which representing as organic any animal that that the goal of organic production is to required approval from the certifying has been treated with an antibiotic at use management practices and natural agent. We requested public comment as any dosage. substances to eliminate, when possible, to the conditions under which animals (9) Parasiticide Use. The first proposal reliance on synthetic materials. may be maintained to restrict the permitted livestock in an organic However, we do not believe that a available space for movement or access operation to receive parasiticides comprehensive prohibition on synthetic to the outdoors. We also released an topically at any time of life, provided parasiticides is feasible for all species issue paper in October 1998 entitled that the producer complied with the and for all regions of the country at this ‘‘Livestock Confinement in Organic prohibition against routine use of a time. Additionally, the new Production Systems’’ to solicit further synthetic internal parasiticide. We requirements for access to the outdoors public participation in preparing this concluded that, while some earlier for organically managed livestock proposal. public comment favored prohibiting the contained in this proposal may Many commenters stated that, while use of internal parasiticides and the exacerbate exposure to parasites for confinement is appropriate under NOSB recommended restricting their animals in systems which previously certain conditions, access to the use, many producers had indicated that used greater degrees of confinement. outdoors is a fundamental tenet of parasiticides were essential to their These provisions are also consistent organic livestock production. operations. These producers stated that with the position of the NOSB, which Commenters cited the widespread parasites can threaten animal health at recommended at its October 1999 prohibition on confinement systems, any stage of life and that the use of meeting to allow a synthetic parasiticide such as raising poultry in battery cages, parasiticides is unavoidable in certain for use on organically raised breeder contained in domestic and international regions of the country. Even under and dairy stock with the same standards. Producers of organic highly controlled situations, some restrictions incorporated in this livestock have incorporated access to parasites endemic to certain regions can proposal. the outdoors into viable production be carried by wild birds, water, or feed. The OFPA prohibits the use of systems for all major commercial Concerns for the overall health of an synthetic internal parasiticides on a species, and consumers clearly identify animal warranted that parasiticides be routine basis. In the first proposal, the these practices as a distinguishing used as soon as possible after word, ‘‘routine,’’ was defined as characteristic of organic products. Some determining the presence of parasites at administering an animal drug ‘‘without commenters stated that production a level affecting the health of the cause.’’ Many commenters objected to standards containing broad allowances infected livestock. that definition, pointing out that for confinement would weaken their In responding to the first proposal, a producers would not administer a incentive for purchasing organic large number of commenters stated that parasiticide unless they perceived a products. Some producers pointed out synthetic parasiticides should be justifiable cause. Commenters fear that that providing animals access to the prohibited in organic production, this might lead to dependence on outdoors can reduce stress and diminish especially for slaughter stock. The parasiticides rather than a management the risk of transmitting disease. The vast NOSB also recommended prohibiting system to reduce the number of majority of commenters strongly the use of parasiticides in slaughter parasites. Therefore, this proposal indicated that protection of an animal’s animals. For other livestock, the Board adopts the NOSB-recommended welfare or the soil and water resources recommended that, in certain climates, definition for ‘‘routine’’ as use of a of the operation were the only in certain stages of production, and for synthetic parasiticide on a regular, appropriate conditions for restricting certain animals, the use of synthetic planned, or periodic basis. The access to the outdoors. Furthermore, parasiticides might be necessary. The prohibition on using synthetic many commenters stated that the Board stated that breeding stock, for treatments on a routine basis is retained condition and properties of the outdoor example, could receive parasiticides up in § 205.238(c)(4). area to which an animal receives access, to certain stages of gestation specific to (10) Temporary Confinement. The such as the nutritional content of the type of livestock. Such use of first proposal provided that, if pasture, must be important synthetic parasiticides would be highly necessary, animals could be maintained considerations in developing livestock restricted and include a lengthy period under conditions that restrict the production standards. of elapsed time before the animal’s available space for movement or access Section 205.239(b) of this proposal offspring would be eligible for use in a to outdoors if other living conditions specifies the circumstances under certified operation. The Board proposed were adequate to maintain the animals’ which animals may be temporarily developing practice standards to health without the use of permitted confined. This new requirement address specific instances in which animal drugs. This provision considered proposes temporary confinement during parasiticides could be allowed. the effects of climate, geographical periods of inclement weather; certain This proposal allows the use of location, and physical surroundings on stages of production such as when dairy synthetic parasiticides included on the the ability of animals to have access to animals are very young; when the National List for use in organic the outdoors. We explained that a animal’s health, safety, or well-being are production on breeder and dairy stock system of organic production is soil jeopardized; or when there is risk to soil provided that preventative practices and based and that animals should be and water quality. The NOSB specified veterinary biologics are inadequate to allowed, as appropriate, access to the that the stage of an animal’s production

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Practice standards addressing In order to use an animal’s welfare intended to prohibit such practices but when and how individual species may and comfort as a condition for were, rather, motivated by concerns for be temporarily confined will be establishing standards, we are food safety and the humane treatment of developed and published in program requesting comment on techniques to animals. This proposal prohibits the manuals. We are also incorporating the measure animal stress. Certifying agents feeding of poultry and mammalian NOSB recommendation that ruminants will need objective, verifiable methods slaughter by-products to organically receive access to pasture during the to determine whether a producer is raised poultry or mammals. This change periods they are not temporarily fulfilling the livestock management is based on the thousands of comments confined. conditions established in the organic that expressed strong consumer (11) Physical Alterations. This system plan. Such methods may include preference against adding animal by- proposal contains a requirement in physiological or behavioral approaches products into feed for the same species. § 205.238(a)(5) that the producer of an to measuring stress and may be directed There was concern that this practice organic livestock operation must at individual animals or larger groups could expose ruminant animals to perform, as needed, physical alterations such as herds or flocks. The many Bovine Spongiform Encephalopathy on livestock to promote the animal’s comments addressing the well-being of (BSE). FDA regulates animal feed welfare and in a manner that minimizes animals under organic management additives and uses its authority to pain and stress. Physical alterations indicate that this issue is central to the address the human health include castration and other practices, differentiation of organic production considerations of animal refeeding. FDA such as wing clipping, intended to standards from nonorganic practices. continually revises its regulations to modify or affect the animal’s behavior in We need consistent, verifiable ensure the highest level of protection confinement. We received comments on enforcement techniques to ensure that against known and emerging human the first proposal which stated that the organic producers are capable of health risks. The prohibition on feeding performance of physical alterations is attaining and documenting such poultry and mammalian slaughter by- integral to a system of organic livestock standards. products to organically raised poultry or production which must be addressed in (12) Treatment of Sick or Injured mammals contained in this proposal is the standards. Subsequently, some Animals. In this proposal, any animal based solely on the consumer preference commenters on the confinement issue that is to be sold, labeled, or represented expressed in public comment and is not paper drew a connection between as organic may not be treated with a a food safety standard. Future changes certain physical alterations, such as prohibited animal drug, including that are made to FDA regulations will be debeaking in poultry, and the antibiotics, synthetic substances that are reflected in NOP standards. conditions for space and mobility under not allowed, or nonsynthetic substances (14) Withdrawal Intervals. The first which livestock are raised We anticipate that are prohibited. Any substance used proposal required that a producer that this subject will be a significant as an animal drug in organic livestock determine that an animal was fully consideration when the NOP engages in production must be approved by FDA or recovered from the condition for which equivalency discussions under the registered by EPA and must be an animal drug was administered before Codex Alimentarius guidelines. administered in compliance with the a product obtained from that animal While many certification programs Federal Food, Drug, and Cosmetic Act. could be sold, labeled, or represented as have production standards for This proposal simultaneously requires organic. In compliance with FDA conducting physical alterations on that sick or injured animals must be regulations, this could not have been animals, we cannot identify general treated with the appropriate animal less than the withdrawal time specified consensus on which practices should be medicine regardless of whether organic on the label of the animal drug approved or prohibited. Many status is lost as a result of doing so. This administered. We received comments production variables, including breed, requirement has been added in response from producer groups that favored the number and concentration of to an NOSB recommendation. extending the withdrawal times animals raised, and the available natural Thousands of comments expressed specified on animal drug labels. Many resource base, influence the selection of concern that organic livestock would private certification programs applied production practices. Operations which suffer unduly if producers were not the principle of extended withdrawal raise the same species of livestock required to provide treatment, periods to the use of antibiotics in dairy could, due to differences in production especially to save the life of a critically and breeder stock before innovations in practices, require different approaches ill animal, rather than risk the suffering production led to such substances being to whether and how to conduct physical or death of the animal simply to prohibited. The NOSB has continued to alterations. We do not have sufficient maintain its organic status. If the include extended withdrawal period information at this time to propose treatment required under this proposal annotations with its recommendations species-specific guidelines but includes the use of a prohibited for the use of parasiticides. anticipate working with producers, substance, the animal and any product Based on consumer preference and consumers, and certifying agents to derived from it must be diverted to the the recommendations of the NOSB, we develop a better understanding on nonorganic market. are proposing an extended withdrawal which to act. By including the (13) Feeding of Animal By-Products. interval for three animal drugs requirement for conducting physical Although we received thousands of (Ivermectin, Lidocaine, and Procaine) alterations in a manner which promotes comments supporting a ban on the included on the National List in this an animal’s welfare and minimizes pain feeding of any animal by-products to proposal. FDA exercises full and stress in this proposal, we are livestock under organic management, a responsibility for determining and

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In requirements for livestock. Producers proposal included a provision that emergency situations where the need for and certifying agents will use these permitted the use of incidental additives a synthetic parasiticide or medicine is publications to ensure that animal in processing, except those extracted unavoidable, an extended withdrawal nutrient requirements are met. with a volatile synthetic solvent, if it period would indicate that such use was was necessary for the production of the Handling—Changes Based on neither routine nor normal. This product. As with previous provisions Comments approach is consistent with the manner for practices that could be used only ‘‘if in which organic certification agencies This subpart differs from our first necessary,’’ the preamble to the first addressed antibiotic use in livestock proposal in several respects as follows: proposal explained that a determination production. Before the current (1) Irradiation. In the first proposal, of necessity was based on site-specific prohibition on antibiotics became the we requested public comment on the conditions that were described by a industry norm, certifying agents allowed compatibility of ionizing radiation producer or handler in an organic their use under restricted conditions, (irradiation) with a system of organic system plan or updates to an organic including extended withdrawal production and handling. We also asked system plan and reviewed by the intervals, to demonstrate to consumers if there are effective alternatives to certifying agent. We requested that such use was genuinely essential. ionizing radiation, such as sanitary comments as to the conditions under practices, heat pasteurization, and which an incidental additive might be Livestock Production—Changes incidental additives, that are compatible considered necessary and requested Requested But Not Made with a system of organic production and comment as to whether handlers who This subpart retains from our first handling, and, if so, how they are handle only products sold, labeled, or proposal regulations on which we compatible. We further asked whether represented as ‘‘made with certain received comments as follows: the use of ionizing radiation was organic ingredients’’ should be (1) Feed Requirements. The first considered an essential standard exempted from the restriction of using proposal required the use of preventive industry practice or good manufacturing incidental additives only if necessary. health care practices, including diverse practice. Although the NOSB An incidental additive was defined as feedstuffs, appropriate housing, well recommended prohibiting the use of an additive that is present in an maintained pasture, and good sanitation ionizing radiation for organic products, agricultural product at an insignificant practices, and this proposal contains we requested this information because level, does not have any technical or similar provisions. It also included of increasing concern about foodborne functional effect in the product, and is provisions for administering appropriate illness and growing interest in FDA- not considered an active ingredient. veterinary biologics, vitamins, and approved ionizing radiation as a This definition is consistent with 21 minerals, and on selecting species and sanitation or preservation treatment for CFR 101.100(a)(3)(ii) and is the basis for types of livestock with regard to a wide range of agricultural products. the definition of an incidental additive suitability for site-specific conditions We received hundreds of thousands of in this proposal. and resistance to prevalent diseases and comments from every segment of the Although thousands of consumers parasites. Preventive health care organic community—producers, objected to the use of synthetic practices were generally supported by processors, certifying agents, substances in processed organic comments as being consistent with a consumers, environmental groups, and products, many others specified that an system of organic livestock production. retailers—opposing the use of ionizing incidental additive that had been Many commenters requested an radiation. These comments indicated reviewed and approved by the NOSB explanation of the term, ‘‘diverse that ionizing radiation has been would be acceptable. Few respondents feedstuffs,’’ and some expressed expressly prohibited in all existing supported exempting products labeled concern that this provision could permit organic certification standards, as ‘‘made with organic ingredients’’ use of feed supplements which might be international as well as domestic. from restrictions on the use of prohibited by other Federal, State, or Allowing this practice could put incidental additives. The NOSB local laws. All provisions proposed in domestic producers and handlers at a recommended that documentation be this subpart must be in compliance with trade disadvantage, disrupt required for use of synthetic incidental applicable laws and regulations, international markets, and undermine additives and that handlers demonstrate including the Federal Food, Drug, and consumer faith in the integrity of the progress over time in finding Cosmetic Act; the OFPA; and our domestic organic label. replacements. Organic industry groups definition of a system of organic Comments suggested alternatives to also commented that hundreds of production and handling. Vitamins, ionizing radiation for preventing incidental additives are currently being minerals, and other synthetic or contamination by human pathogens. used to process organic products and nonagricultural supplements, which Alternatives include heat disinfection, that prohibiting the use of such appear on the National List of allowed refrigeration, moisture and oxygen substances would severely restrict the synthetic livestock products in the first reduction, packaging, hygienic choices available to consumers and proposal are similarly permitted here, handling, and appropriate use of limit the growth of the organic sector. and provide a means to diversify an disinfectant substances. Although no The NOSB recommended several animal’s diet. Soybean meal and other one suggested that any products might synthetic incidental additives for the organically produced feed concentrates be unavailable if irradiation were National List, recognizing that a wide also serve this purpose. We encourage prohibited, many commenters expressed range of organic products could not be the NOSB to develop and recommend the willingness to do without any feasiblely manufactured without the use

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00039 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13550 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules of incidental additives such as products. Producers and handlers § 205.271(c). The handler must fully defoaming agents, adjuvants, clarifiers, commented that it is possible and document in his or her organic plan the filtering agents, and equipment desirable to reuse some kinds of evidence that such a measure was cleansers. Therefore, this proposal containers if precautions are taken. This necessary and the measures taken to requires that any incidental additive modification is consistent with the protect organic products or ingredients used to process agricultural products OFPA, which requires that the organic from coming into contact with any pest that are intended to be sold, labeled, or quality of a product not be control substance. represented as ‘‘organic’’ or ‘‘made with compromised. (2) Waxes. We propose to retain the organic (specified ingredients)’’ must be (5) Agricultural Fibers. Some definition of packaging included in the included on the National List of allowed commenters stated that the labeling first proposal, which encompasses nonagricultural (nonorganic) substances provisions in the first proposal for waxes used in contact with an edible in § 205.605. A product labeled as ‘‘100 processed commodities containing surface of an agricultural product. A percent organic’’ could not be produced organically produced cotton fibers were number of commenters disagreed with through the use of any synthetic excessively restrictive. The OFPA the inclusion of waxes in the definition processing aid. provides the Secretary with the of packaging, arguing that waxes should (3) Prevention and Control of Facility authority to implement standards for be considered nonagricultural Pests. The first proposal addressed the organically produced agricultural fibers, ingredients and, therefore, should be prevention and control of facility pests including cotton, used for nonfood required to appear on the National List and authorized the NOP to require such purposes. This authority includes of nonagricultural (nonorganic) terms and conditions as are determined standards for the production of the substances allowed as ingredients in or necessary. These provisions were based agricultural fiber as well as handling on processed products labeled as on existing organic certification standards to regulate the practices and ‘‘organic’’ or ‘‘made with organic programs and NOSB recommendations. materials that are used in the (specified ingredients).’’ However, the The first proposal included a three-step manufacture of the nonfood commodity. first proposal did require carnauba and order of preference, which commenters State and private certification agents other waxes to be on the National List found to be overly complex and difficult have made substantial progress in of nonagricultural ingredients allowed to enforce. This proposal retains similar developing and implementing handling for use in organic processed products, provisions but simplifies the scheme so standards for organically produced and this proposal contains a similar that there are only two levels of agricultural fibers that are gaining provision. These provisions adequately distinction between preferable and less acceptance in the marketplace. We are address the concerns expressed by the preferable practices. In this proposal, reviewing the existing certification commenters that only waxes meeting pest prevention and control methods guidelines and industry practices and the criteria for ingredients in organic that do not entail use of biological, anticipate developing standards for processed products be permitted. It is botanical, or synthetic substances are processing organically produced appropriate to include waxes in the equally acceptable, and the producer or agricultural fibers. definition of packaging to ensure that handler may only use biological, prohibited substances are not added to Handling—Changes Requested But Not botanical, or synthetic substances if approved waxes that may be applied to Made other approved methods are not the edible surface of organic products, effective. Paragraph (c) of § 205.271 This subpart retains from our first in accordance with the OFPA, which parallels the provision proposed in proposal regulations on which we prohibits use of any packaging materials § 205.206(d) addressing crop pest, weed, received comments as follows: that contain synthetic fungicides, and disease management. Accordingly, (1) Facility Pest Control Substances. preservatives, or fumigants. it requires an operator of an organic The first proposal permitted the use of Subpart D—Labels, Labeling, and handling operation who applies any any substance to control facility pests, Market Information biological, botanical, or synthetic as long as the intended use was substance for the prevention or control approved by the appropriate regulatory The Act provides that a person may of pests to implement measures to authority and the substance was applied sell or label an agricultural product as evaluate the effects of repetitive use of in a manner that prevents it from organically produced only if the product the same or similar materials on pest coming into contact with any organic has been produced and handled in resistance and shifts in pest types. product. Many consumers objected to accordance with provisions of the Act (4) Storage Containers. Sections this provision and suggested that and these regulations. This subpart sets 205.272 (b)(1) and (b)(2) of this proposal prohibited substances should never be forth labeling requirements for organic contain provisions similar to the first allowed to be used in any organic agricultural products and products with proposal which prohibit the use of operation. However, comments from a organic ingredients based on their storage containers or bins, including number of organic handlers and one percentage of organic composition. For packages and packaging materials, that industry association stated that, because each labeling category, this subpart contain synthetic fungicides, handling operations must comply with establishes what ‘‘organic’’ terms and preservatives, or fumigants. These health regulations that require references can and cannot be displayed requirements also prohibit the use or elimination of any pests that may on a product package’s principal display reuse of any bag or container that was invade food handling facilities, panel, information panel, ingredient previously in contact with any prohibited substances must sometimes statement, and on other package panels. substance that could compromise the be used. The NOSB also acknowledged Labeling is proposed for containers used organic integrity of its contents. This this possibility in its recommendations, in shipping and storing organic product proposal adds a provision to permit the and most organic certification programs and for denoting organic bulk products reuse of a bag or container originally similarly allow for such an occurrence, in market information which is used for conventional products if the with strict provisions for safeguarding displayed or disseminated at the point reusable bin or container has been the integrity of organic products. In of retail sale. Restrictions on labeling thoroughly cleaned and poses no risk of agreement with these comments, we organic product produced by exempt prohibited materials contacting organic have proposed a similar allowance in operations are described. Finally, this

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00040 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13551 subpart proposes a new USDA organic operations is covered in subpart C of that is organically produced and seal or shield (hereafter referred to as this regulation. No claims, statements, handled. Products not organically the USDA Seal) and regulations for or marks using the term, ‘‘organic,’’ or produced and handled will not be able display of the USDA seal and display of display of certification seals, other than to use the term, ‘‘organic,’’ on any the seals, logos, or other identifying as provided in this regulation, may be package panel or in market information marks of certifying agents. used. A handler which chooses not to in any way that implies the product is The intent of these sections is to use these required and prohibited organically produced. ensure that organically produced labeling provisions may not otherwise Categories of Organic Content. The agricultural products are consistently label or represent a product as organic. type of labeling and market information labeled to aid consumers in selection of Once a handler makes a decision to that can be used and its placement on organic products and to prevent labeling market a product as organic or different panels of consumer packages abuses. These provisions cover the containing organic ingredients, the will be based on the percentage of labeling of a product as ‘‘organic’’ and handler is required to follow the organic ingredients in the product. The are not intended to supersede other provisions in this subpart regarding use, percentage will reflect the actual weight labeling requirements specified in display, and location of organic claims or fluid volume (excluding water and various Federal labeling regulations. For and certification seals. Handlers who salt) of the organic ingredients in the instance, we propose that the percent of may produce organic ingredients and/or product. Four categories of organic organic ingredients and the name of the assemble multiingredient products content are proposed: 100 percent certifying agent be displayed on the composed of more than 50 percent organic; 95 percent or more organic information panel of packaged products organic ingredients must be certified as content; 50 to 95 percent organic and that the organic ingredients be an organic handling operation. Handlers content; and less than 50 percent identified as ‘‘organic’’ in the ingredient of products of less-than-50-percent organic content. statement. The Food and Drug organic ingredients do not have to be Administration (FDA) has authority to certified unless the handler actually 100 Percent Organic regulate the placement of information produces one or more of the ingredients For labeling and market information on package information panels and, used in the less-than-50-percent purposes, this proposal allows a ‘‘100 thus, FDA labeling requirements in 21 product. Repackers who purchase percent organic’’ label for an CFR parts 100 through 169 must be certified organic product from other agricultural product that is composed of complied with by handler when affixing entities for repackaging and labeling a single ingredient such as raw, organic labels to product packages. must be certified as an organic organically produced fruits and Display of the USDA Seal and certifying operation. Entities which simply relabel vegetables. The product also may be agent seals, logos, or other identifying a product package would be subject to composed of two or more organically marks also must be in accordance with recordkeeping requirements to show produced ingredients, provided that the those regulations. The requirements of proof that the product purchased prior individual ingredients are organically FDA’s Fair Packaging and Labeling Act to relabeling was, indeed, organically produced and handled consistent with (FLPA) and the Federal Food, Drug, and produced. Distributors which receive provisions in subpart C of this Cosmetic Act (FFDCA) must be and transport labeled product to market regulation. No processing aids may be followed. Likewise, the Federal Trade are not subject to certification or any used in the production of 100 percent Commission has authority over product handling requirements of this organic products. This proposal advertising and the extent to which a regulation. provides that labeling provisions for handler or retail food establishment Proposal Description ‘‘100 percent organic’’ products be the engages in advertising as part of its same as provisions for the 95 percent market information activities. The The general labeling principle ‘‘organic’’ products specified below. Federal Trade Commission (FTC) employed in this proposal, and to which regulations in 16 CFR must be followed. we think most commenters would Organic USDA’s Food Safety and Inspection subscribe, is that labeling or Products labeled or represented as Service’s (FSIS) Federal Meat Inspection identification of the organic nature of a ‘‘organic’’ will contain, by weight Act, Poultry Products Inspection Act, product should increase as the organic (excluding water and salt), at least 95 and Egg Products Inspection Act also content of the product increases. In percent organically produced raw or have implementing regulations in 9 CFR other words, the higher the organic processed agricultural product. The which must be followed. The labeling content of a product, the more organic ingredients must be produced requirements specified in this subpart prominently its organic nature can be using production and handling practices must not be applied in a manner so that displayed. This is consistent with pursuant to subpart C of this regulation. they would conflict with the labeling provisions of the Act which establishes The nonorganic (5 percent or less) requirements of these and other Federal the three percentage categories for ingredients may be composed of and State programs. organic content and basic labeling nonorganic or nonagricultural While this regulation does not require requirements in two of those categories. substances. The difference between 100 labeling of an organic product as Section 205.300 specifies the general percent organic products and 95 organic, we assume that producers and use of the term, ‘‘organic,’’ on product percent-plus products is that the latter handlers will choose to label their labels. Paragraph (a) establishes that the may contain up to 5 percent nonorganic organic products and display the USDA term, ‘‘organic,’’ may be used only on or nonagricultural products. Seal to the extent allowed in these labels and in market information of regulations. They will do this to agricultural products and ingredients Multiingredient Product: 50–95 Percent improve the marketability of their that have been certified as produced and Organic Ingredients organic product. handled in accordance with these For labeling and market information In this proposal, assembly, packaging, regulations. The term, ‘‘organic,’’ cannot purposes, the third category of and labeling of a multiingredient be used on a product label for any agricultural products are organic product are considered handling purpose other than to modify or identify multiingredient products containing by activities. The certification of handling the product or ingredient in the product weight or fluid volume (excluding water

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TABLE 1.ÐPROHIBITED PRODUCTION AND HANDLING PRACTICES FOR LABELING CATEGORIES

Use both Use proc- Contain Use or- organic & Use Use sew- Use essing aids added sul- ganic in- nonorganic Labeling category excluded age sludge irradiation not on na- fites, ni- gredients forms of methods tional list trates, when avail- same in- nitrites able gredient

``100 percent Organic'' Single/multiingredients completely organic NO ...... NO ...... NO ...... Use NO NO ...... NO ...... NO. Proc- essing Aids. ``Organic'' Organic Ingredients (95% or more) ...... NO ...... NO ...... NO ...... NO ...... NO ...... NO ...... NO. Nonorganic Ingredients (5% or less) ...... NO ...... NO ...... NO ...... NO ...... NO ...... NO ...... NO. ``Made with Organic (specified ingredients)'' Organic Ingredients (50±95%) ...... NO ...... NO ...... NO ...... NO ...... NO ...... NO ...... NO. Nonorganic Ingredients (49% or less) ...... NO ...... NO ...... NO ...... OK ...... OK ...... NA* ...... NA*. Less-than 50% Organic Ingredients Organic Ingredients (49% or less) ...... NO ...... NO ...... NO ...... NO ...... NO ...... NO ...... NO. Nonorganic Ingredients (50% or more) ..... OK ...... OK ...... OK ...... OK ...... OK ...... NA* ...... NA* * Not applicable.

Calculating the Percentage of Organic The organic percentage of liquid a concentrate, the organic content will Ingredients. This proposal specifies products and liquid ingredients will be be calculated on the basis of a single- procedures for calculating the determined based on the fluid volume strength concentration. percentage, by weight or fluid volume, of the product and ingredients Some products may contain both dry of organically produced ingredients in (excluding water and salt). When a and liquid ingredients that are produced an agricultural product labeled or product is identified on the principal organically. In such cases, this proposal represented as ‘‘organic.’’ display panel or the information panel provides that the percentage of total as being reconstituted with water from organic ingredients will be based on the

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For example, a product ingredients are identified on the organic (specified ingredients),’’ when it may be made using organically ingredient statement, the handler of the appears on the principal display panel: produced vegetable oils or grain oils or finished product that combined the (1) The statement cannot list more than contain organic liquid flavoring extracts various organic ingredients must three organic ingredients in the product; in addition to other organic and maintain documentation, pursuant to (2) the statement cannot appear in print nonorganic ingredients. In these cases, subpart B of this regulation, certifying that is larger than one half (50 percent) the weight of the liquid organic oils or the organic content of the added of the size of the largest print or type flavoring extracts, less any added water ingredients. appearing on the principal display and salt, would be added to other solid While certifying agent identifications panel; and (3) the statement must organic ingredients in the product, and can appear on the package with the appear in its entirety in the same type their combined weight would be the USDA Seal, they may not appear larger size, style, and color without basis for calculating the percentage of than the USDA Seal on the package. highlighting. Display of the statement, organic ingredients. We believe this There is no restriction on the size of the ‘‘made with organic (specified process provides the most appropriate USDA Seal as it may appear on any ingredients),’’ on other panels must be and least burdensome method for panel of a packaged product, provided similarly consistent with the size of calculating the organic percentage of that display of the Seal conforms with print used on those panels. These such multiingredient products. the labeling requirements of FDA and restrictions are consistent with FDA Only one figure providing the total FSIS. regulations and similar to the percentage of all organic ingredients This proposal specifies three labeling recommendations of the National will be shown on the information panel. practices that will be required if a Organic Standards Board (NOSB). This The total percentage will be displayed handler labels a product ‘‘100 percent provision will help assure that the on the information panel of the organic’’ or ‘‘organic’’ on the principal statement, ‘‘made with organic consumer package above or below the display panel. If a product is labeled as (specified ingredients),’’ is not ingredient statement with the words, ‘‘100 percent organic’’ the ingredients displayed in such a manner as to ‘‘contains X percent organic may also be modified with the term, misrepresent the actual organic ingredients,’’ or a similar phrase. If the ‘‘organic,’’ but would not have to be so composition of the product. total percentage is a fraction, it will be labeled because it is assumed from the We also propose that, at the handler’s rounded down to the nearest whole 100 percent label that all ingredients are option, the certifying agent’s seal or logo number. The percentage of each organic organic. For 95 percent-plus products may be displayed on the principal ingredient will not be required to be that contain more than one ingredient, display panel or other package panel. displayed. each organic ingredient listed in the Packages of products labeled as Labeling ‘‘100 Percent Organic’’ and ingredient statement must be modified ‘‘made with organic (specified ‘‘Organic’’ Products. This proposal with the term, ‘‘organic.’’ Water and salt ingredients)’’ will be required to display includes optional, required, and in the ingredient will not be identified on the information panel the total prohibited practices for labeling as ‘‘organic.’’ Secondly, the total percentage of organic ingredients in the packages of agricultural products that percentage of organic ingredients in the product and modify each organic are ‘‘100 percent organic’’ or ‘‘organic’’ product must be shown on the ingredient listed in the ingredient (at least 95 percent organic). Only information panel. The percentage statement with the term, ‘‘organic.’’ The products that are composed of a wholly statement should be placed in a manner percentage of organic ingredients must organic single ingredient or entirely of that it can be viewed in relation to the be displayed so that it can be viewed in certified organic ingredients may be ingredient statement. relation to the ingredient statement. identified with a percentage number The handler also must display on the The name of the certifying agent (100 percent) on the principal display information panel the name of the which certified the handler of the panel. Products between 95 and 100 certifying agent which certified the finished product must be displayed percent organic composition, when handler producing the finished product. below or otherwise near the identified as ‘‘organic’’ on the principal The handler has the option to include manufacturer or distributor’s name. The display panel, will be required to state the business address or telephone statement may include the phrase, on the information panel the percentage number of the certifying agent. This ‘‘Certified organic by * * *’’ or of organic ingredients in the finished information must be placed below or ‘‘Ingredients certified as organically product and identify each organic otherwise near the manufacturer or produced by * * *’’ to help distinguish ingredient in the ingredient statement. distributor’s name. the certifying agent from the The handler may display the Labeling Products ‘‘Made with manufacturer or distributor. At the following information on the principal Organic (Specified Ingredients)’’. With handler’s option, this label may include display panel, the information panel, regard to agricultural products ‘‘made the business address or telephone and any other part of the package and with organic (specified ingredients)’’— number of the certifying agent which in market information representing the those products containing between 50 certified the handler of the finished product: (1) The term, ‘‘100 percent and 95 percent organic ingredients—this product. organic’’ or ‘‘organic,’’ as applicable, to proposal establishes the following Labeling Products with Less Than 50 the content of the product; (2) the USDA optional, required, and prohibited Percent Organic Ingredients. The final Seal; and (3) the seal, logo, or other labeling practices. labeling category covers packaged identifying mark of the certifying agent Under optional practices, the multiingredient agricultural product (hereafter referred to as ‘‘seal or logo’’) statement, ‘‘made with organic containing less than 50 percent organic which certified the handler of the (specified ingredients),’’ may be placed ingredients. finished product. The seals or logos of on the principal display panel and other Handlers of ‘‘less than 50 percent’’ other certifying agents which certified panels of the package. The same multiingredient products, who choose organic raw materials or organic statement can also be used in market to declare the organic nature of the

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TABLE 2.ÐLABELING CONSUMER PRODUCT PACKAGES

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

``100 percent Organic'' (Entirely or- ``100 percent organic'' .... ``100% Organic'' ...... If multiingredient prod- ``100 percent Organic''. ganic; whole, raw or processed uct, identify each in- product). gredient as ``organic''. USDA Seal and Certi- Certifying agent name ...... USDA Seal and Certi- fying agent sets(s). (required); business fying agent seal(s). address, tele. # (op- tional). ``Organic`` (95% or more organic ``Organic'' ...... ``X% Organic Ingredi- Identify organic ingredi- ``Organic''. ingredients). ents''. ents as ``organic''. USDA Seal and Certi- Certifying agent name ...... USDA Seal and Certi- fying agent seals(s). (required); business fying agent seal(s). address, tele. # (op- tional). ``Made with Organic (specified in- ``Made with organic ``X% Organic Ingredi- Identify organic ingredi- ``Made with organic gredients)'' (50 to 95% organic (specified ingredients)''. ents''. ents as ``organic''. (specified ingredi- ingredients). ents)''. Certifying agent seal of Certifying agent name Identify organic ingredi- ``Made with organic final product handler. (required; business ents as ``organic''. (specified ingredi- address, tele. # (op- ents)''. tional). Prohibited: USDA Seal .. Prohibited: USDA Seal ...... Prohibited: USDA Seal. Less-than 50% Organic Ingredi- Prohibited: Any ref- ``X% Organic Ingredi- Identify organic ingredi- Prohibited: Any ref- ents (49% or less organic ingre- erence to organic con- ents''. ents as ``organic''. erence to organic con- dients). tent of product. tent of product. Prohibited: USDA Seal & Prohibited: USDA Seal & ...... Prohibited: USDA Seal & Certifying agent seal. Certifying agent seal. Certifying agent seal.

Misrepresentation in Labeling of ‘‘organic,’’ we have determined that different from other ‘‘organic’’ products Organic Products. The labeling handlers may not qualify or modify the that are not so requirements of this proposal are term, ‘‘organic,’’ using adjectives such Moreover, ‘‘pure,’’ ‘‘healthy,’’ and intended to assure that the term, as, ‘‘pure’’ or ‘‘healthy,’’ e.g., ‘‘pure other similar terms are regulated by ‘‘organic,’’ and other similar terms or organic beef’’ or ‘‘healthy organic FSIS and FDA. These terms may be used phrases are not used on a product celery.’’ The term, ‘‘organic,’’ is used in only in accordance with the labeling package or in marketing information in labeling to indicate a certified system of requirements of FDA and FSIS. For a way that misleads consumers as to the agricultural production and handling. example, the regulations implemented contents of the package. Thus, we Terms such as ‘‘pure,’’ ‘‘healthy,’’ and by FSIS, 9 CFR 317.363, define the intend to monitor the use of the term, other similar adjectives attribute terms, ‘‘healthy,’’ ‘‘health,’’ and similar ‘‘organic,’’ and other similar terms and hygienic, compositional, or nutritional derivations and the conditions of use as a nutritional claim. Also, according to phrases. Should we find that terms or characteristics to products. Use of such phrases are being used on product FSIS regulations, 9 CFR 317.8(b)(34), the adjectives misrepresents products packages to represent ‘‘organic’’ when term, ‘‘pure,’’ as well as the terms, ‘‘all,’’ produced under the organic system of the products are not produced to the ‘‘100 percent,’’ and similar terms, may requirements of this regulation, we will agriculture as having special qualities as only be used to indicate that a single proceed to restrict their use. a result of being produced under the ingredient product is composed of 100 After consideration of alternative organic system. Furthermore, use of percent of the product ingredient and labeling terms that handlers might wish such adjectives would incorrectly imply contains no other ingredients. The term, to use to qualify or modify the term, that products labeled in this manner are ‘‘healthy,’’ is regulated by FDA (21 CFR

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101.14) and can be used, with association’s organic standards deemed handler also must maintain records documentation, only to indicate or equivalent to these standards and showing export of the product to a characterize a relationship of the certified by a certifying agent accredited foreign country. product to a disease or health-related by the Secretary may be imported into Much of the required information may condition. The prohibition on use of the United States provided that the overlap information that the handler these terms to modify ‘‘organic’’ does product labels are consistent with the normally affixes to shipping and storage not otherwise preclude their use in requirements of this subpart. Any containers or information that is other labeling claims. labeling on the product package or in required under other Federal labeling We also intend to monitor the use of market representation cannot imply that regulations. Provisions in this proposal the term, ‘‘organic,’’ in corporate or the product is also certified to other do not take precedence over food safety company names and seek additional organic standards or requirements that or quality control provisions which may guidance from the FTC. We do not are more restrictive than this national be required for specified products or believe that the term, ‘‘organic,’’ in a program. These provisions are types of products covered by such brand name context inherently implies consistent with international standards Federal regulations. There are no an organic production or handling claim and will facilitate international trade of restrictions on size or display of the or inherently constitutes a false or organically produced products and, term, ‘‘organic product,’’ or the misleading statement. thus, benefit the global organic industry. certifying agent seal unless otherwise The determination as to whether the Labeling Nonretail Containers. required by other Federal or State use of the term, ‘‘organic,’’ in a brand Section 205.306 provides for labeling statutes. name conveys a message about the nonretail containers used to ship or Labeling Products at the Point of product’s attributes must be made by store raw or processed organic Retail Sale Section 205.101(b)(2) of the Secretary. We will monitor use of agricultural products that are labeled subpart B on Applicability provides the term, ‘‘organic,’’ in product and ‘‘100 percent organic,’’ ‘‘organic,’’ and regulations regarding the certification of company names at this time. However, ‘‘made with organic (specified retail food establishments under this if we find that the term is being used in ingredients).’’ These labeling provisions program. Those operations are subject to a false or misleading way to are not intended for shipping or storage labeling and market information misrepresent the organic nature of the containers that also will be used in requirements concerning products product, we have the authority under displays at the point of retail sale. They offered to consumers at the point of section 6519(b) of the Act to take action would be used for easy identification of retail sale. Such labeling and market against such use. Such determinations the product to help prevent information must truthfully represent and actions will be taken on a case-by- commingling with nonorganic product the organic nature and handling of the case basis. or handling of the product which would product. Labeling of Products Shipped in destroy the organic nature of the Section 205.307 applies to organically International Markets. Domestically product (fumigation, etc.). Retail produced products that are not produced organic products intended for containers will have to meet labeling prepackaged prior to sale and are export may be labeled to meet the provisions specified in § 205.307. presented in a manner which allows the requirements of the country of Containers used only for shipping and consumer to select the quantity of the destination or any labeling requirements storage of any product labeled as product purchased. specified by a particular foreign buyer. containing 50 percent or more organic To be labeled as ‘‘100 percent For instance, a product label may content may, at the handler’s discretion, organic’’ or ‘‘organic’’ at the point of require a statement that the product has display the following information: (1) retail sale, the processing and assembly been certified to, or meets, certain The name and contact information of of such products must be carried out by European Union organic standards. the certifying agent which certified the a certified manufacturing facility for Such factual statements regarding the handler of the finished product; (2) the distribution to a retail food organic nature of the product will be term, ‘‘organic,’’ modifying the product establishment. For instance, a tossed permitted. However, those packages name; (3) any special handling salad may be labeled as ‘‘100 percent must be exported and cannot be sold in instructions that must be followed to organic tossed salad’’ or ‘‘organic tossed the United States with such a statement maintain the organic integrity of the salad’’ (consistent with the percentage on the label because the statement product; and (4) the USDA Seal and the of organic ingredients in the salad) indicates certification to standards other appropriate certifying agent seal. This provided the salad and ingredients have than are required under this program. information is optional if handlers been produced and assembled under As a safeguard for this requirement, we believe display of the information helps organic certification. If the require that shipping containers and ensure special handling or storage multiingredient product is identified as bills of lading for such exported practices which are consistent with ‘‘organic’’ at the point of retail sale, any products display the statement, ‘‘for organic practices. ingredient statement displayed at retail export only,’’ in bold letters. Handlers Containers used for shipping and sale must identify the organic also will be expected to maintain storage of organic product must display ingredients as ‘‘organic.’’ The retail records, such as bills of lading and U.S. a production lot number if such a materials may also display the USDA Customs Service documentation, number is used in the processing and Seal and the seal or logo of the showing export of the products. Only handling of the organic product being certifying agent. If shown, the certifying products which have been certified and shipped or stored. The lot number must agent seal must not be larger than the labeled consistent with the be included for inventory control and USDA Seal. requirements of the National Organic quality assurance purposes. To help Using the same example, a product Program (NOP) may be shipped to assure export of organic product made with 95 percent or more certified international markets without marking produced and labeled to foreign organic salad components but which is the shipping containers ‘‘for export specifications, the shipping containers assembled at an uncertified operation only.’’ and shipping documents (bills of lading) may be labeled ‘‘tossed salad made with Organic product produced under a must be marked with the phrase, ‘‘for organic (specified ingredients).’’ The foreign country’s or international export only,’’ in bold letters. The retail food establishment may not

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This proposal introduces seals of cerftifying agents involved in Applicability. a new, redesigned, USDA Seal, that can ingredient certifications because the Under this proposal, any such be placed on consumer packages, final assembly of the product was not operation that is exempt or excluded displayed at retail food establishments, certified pursuant to the handling from certification, or which chooses not and used in market information to show requirements of this regulation. to be certified, may not label its that products have been produced and Our position on the applicability of products in a way which indicates that handled in accordance with these these regulations to different business the operation has been certified as regulations. The Seal can only be used entities is more completely explained in organic. Primarily, this means that the to identify raw and processed products subpart B, Applicability, of this exempt or excluded operation may not that are labeled as ‘‘100 percent regulation. display the USDA Seal or any seal or organic’’ or ‘‘organic.’’ It cannot be used ‘‘Section 205.308 addresses processed logo of a certifying agent. Any packaged for products labeled as ‘‘made with products ‘‘made with organic (specified organic product from an exempt or organic (specified ingredients)’’ (50 to ingredients)’’ that are not prepackaged excluded operation may not use the 95 percent organic ingredients) or on prior to sale and are presented in a labeling terms ‘‘100 percent organic,’’ or multiingredient products with less than manner which allows the consumer to ‘‘organic,’’ or ‘‘made with organic 50 percent organic ingredients. select the quantity of the product (specified ingredients),’’ on the The USDA Seal presented in this purchased. These products will include, principal display panel. Those labeling proposal will consist of the phrase, but will not be limited to, terms are reserved for products ‘‘USDA Certified Organic,’’ on a shield multiingredient products containing produced by certified operations. The or badge design. When used, the seal between 50 and 95 percent organic organic representation of exempt or must be the same form and design as ingredients. Retail displays, display excluded operation products may only shown in figure 1 of § 205.310 of this containers, and market information for be made on the information panel where proposal. The seal must be printed such products may display the phrase, the organic percentage can be displayed legibly and conspicuously. On ‘‘made with organic (specified and the organic ingredients identified as consumer packages, retail displays, and ingredients)’’ provided that the product ‘‘organic.’’ labeling and market information, the has been assembled by a manufacturing Retail displays and market Seal may be printed on a white, light facility certified pursuant to this representation of such products may not colored, or transparent background with contrasting dark colored words and regulation. Up to three organic indicate that the product has been shield outline or on a dark colored ingredients may be identified in the certified as organic. For instance, a background with contrasting words and statement. If such statement is declared whole, raw, organic product marketed shield outline in one or two light colors. in market information at the point of directly to consumers at a farmers The Seal also may be printed in the retail sale, the ingredient statement market or roadside stand as ‘‘organic colors red, white, and blue as follows: must identify the organic ingredients as apples’’ or ‘‘organic tomatoes.’’ a white background, with dark blue ‘‘organic.’’ Retail display and market However, no terms may be used which shield outline, and red words. The information of such bulk products indicate ‘‘certified’’ organic apples, etc. choice of color scheme is left to the cannot use the USDA Seal but may No organic seal or logo may be discretion of the producer, handler, or display the seal or logo of the certifying displayed with the product at the point retail food establishment based on other agent which certified the finished of retail sale. colors on the product package and other product, provided that assembly of the We propose these restrictions simply considerations. product was carried out at a certified as truth in labeling provisions because manufacturing facility. The certifying use of terms or phrases reserved for Labeling—Changes Based On Comments agent’s seal or logo may be displayed at certified operations and products and This subpart differs from our first the option of the retail food display a certification seal will indicate proposal in several respects as follows: establishment. If such a product has not that the product has been certified. We (1) Use of terms other than ‘‘organic.’’ been assembled at a certified believe this requirement will help The first proposal stated that manufacturing facility, the retail display differentiate between certified and not informational statements which imply and market information may not certified products and help maintain the ‘‘organic’’ production and handling identify the product as ‘‘made with integrity of certified products while should be used only on products that organic (specified ingredients).’’ providing limited organic labeling are produced and handled in Prepared food products containing opportunities for exempt and excluded accordance with these regulations. The less than 50 percent organic ingredients operations. proposal identified several at retail sale may not be identified as Finally, this rule proposes that informational statements commonly organic or containing organic exempt organic producers cannot sell referred to as ‘‘eco-label’’ or ‘‘green’’ ingredients. The USDA Seal and any their product to a handler for use as an terms and phrases such as: ‘‘produced certifying agent seal or logo may not be ingredient or for processing into an without synthetic fertilizers,’’ ‘‘pesticide displayed. ingredient that will be labeled as free farm,’’ ‘‘no drugs or growth Labeling Products Produced on ‘‘organic’’ on the information panel. hormones used,’’ ‘‘raised without Exempt or Excluded Operations. This However, this restriction is raised for antibiotics,’’ ‘‘ecologically produced,’’ proposal provides limited organic public comment in subpart B, ‘‘sustainably harvested,’’ etc. We asked labeling provisions for organic product Applicability, of this part. for comments on these and other terms produced or handled on exempt and Small producers or handlers who or phrases which directly or indirectly excluded operations. Such operations qualify for exemption but who choose to imply that a product was organically would include retail food be certified pursuant to these produced and handled. establishments, certain manufacturing regulations can label their product as Commenters favored use of ‘‘eco- facilities, and production and handling certified organic and can sell that label’’ and ‘‘green’’ terms and phrases operations with annual organic sales of product to certified handlers for further on any product labels. The general less the $5,000. They are discussed processing as an organic ingredient. consensus expressed in the comments is

VerDate 072000 21:33 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00046 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm02 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13557 that producers and handlers should be to be labeled and represented in market finished product. Commenters also able to make claims about their product information as 100 percent. stated that labels should not be used to provided the claims are truthful. We agree that a ‘‘100 percent organic’’ misrepresent one product as being more While commenters did not oppose the labeling category may increase the organic than another product, which use of eco-label terms or phrases on effectiveness of marketing efforts and might happen if multiple seals are nonorganic products, they made it clear may provide incentives for handlers to displayed on one product package and that the term, ‘‘organic,’’ should only be use more certified organic ingredients in only two are displayed on a competing used on products produced and handled their multiingredient products. product package. While we understand in accordance with these regulations. Therefore, this proposal will allow the the commenters’ points, we believe that Several commented that consumers term, ‘‘100 percent organic,’’ to be used display of certifying agent seals on respond favorably to the term, on labels affixed to or market products labeled ‘‘100 percent organic,’’ ‘‘organic,’’ when used on a product information representing raw or ‘‘organic,’’ and ‘‘made with organic label, and, therefore, proper use of the processed organic products that are (specified ingredients)’’ should remain term must be closely protected. composed entirely of organically optional for handlers. If two or more We also received several comments produced agricultural product. certifying agents are involved in regarding use of the terms, ‘‘biological’’ (3) Identification of private certifying certifying raw organic agricultural and ‘‘ecological,’’ on product labels. A agents. Under the first proposal, product and organic ingredients used in few comments indicated that the terms identification of private certifying a finished product, the seals or marks of should be allowed on nonorganic agents was not permitted on the those certifying agents may be products to truthfully describe an principal display panel with the USDA displayed, at the discretion of the alternative agricultural system under Seal and the State organic seal. While a handler. There should be only two few commenters suggested that only the which the product was produced or restrictions to using multiple certifying USDA Seal should be displayed on the processed. However, most commenters agent seals: (1) The seal of the certifier principal display panel, the majority of opposed use of the terms as substitutes of the handling operation producing the those commenting on this topic for the term ‘‘organic’’ on product finished product should be displayed; requested that private certifying agent labels. and (2) only the seals of those certifying seals be displayed on an equal basis agents actually involved with We agree with the majority of with a seal of the appropriate State’s comments received on this subject, and certification of the product or organic program. Although the number ingredients may be displayed. For we, therefore, propose to regulate the of State certifying agents is relatively term, ‘‘organic,’’ and no other terms. We instance, a private certifying agent may small, private certifying agents believe certify a product assembled using propose that the term, ‘‘organic,’’ may that State organic programs and State organic ingredients produced in Texas only be used on labeling and market certifying agents may implement and certified by the Texas State information of products that are measures in States that work against the certifying agent. The product package produced and handled in accordance interests of private certifying agents. may, at the handler’s option, display the with these regulations. We understand The Department believes those concerns Texas State agent’s seal in addition to that the terms, ‘‘ecological’’ and to be unfounded. Under the NOP, the the seal of the private certifying agent ‘‘biological,’’ are a special case in that Secretary will approve all State organic which certified the operation creating they are used synonymously with the programs and accredit all State other organic ingredients and creating term, ‘‘organic,’’ in other countries. certifying agents. However, any of those the finished product. Likewise, display However, they cannot be used programs or agents that might of a seal of a foreign country’s organic interchangeably with the term, discriminate or work against the program or foreign certifying agent will ‘‘organic,’’ in this country. These terms interests of private certifying agents in be permitted only if the foreign agent may be used as eco-labels at this time. the State would not be approved by the certified the finished product or a However, we will proceed to restrict use Secretary. product ingredient. of these or any other terms if we find Some commenters suggested that Some commenters say that display of that they are used on product packages many private certifying agent seals are two State agent seals may confuse in the United States to represent widely recognized and respected and consumers. However, we do not believe ‘‘organic’’ when the products are not their seals influence consumer choices it is likely that handlers will choose to produced to the requirements of this in product purchases. It is appropriate display multiple certifying agent seals to regulation. that private certifying agents be afforded misrepresent a product. We also do not (2) 100 percent organic category. Our the same treatment with regard to believe that possible consumer first proposal did not provide for a ‘‘100 labeling as the State certifying agent. We confusion from display of multiple seals percent organic’’ category because that agree with commenters’ requests for should take precedence over the level of organic composition is not equal treatment of certifying agents and handler’s right to provide product specifically provided for in the Act. that certifier seals may have marketing information. If multiple certifying agent While the Act and the first proposal potential in some areas. Therefore, we seals or marks are displayed on a provide for a labeling category of 95 specify in this proposal that a private product package or in market percent or higher organic content, certifying agent’s seal or logo can be information, the handler or retail food commenters appealed for a labeling displayed to the same extent as the seal establishment must maintain category for product that is 100 percent of a State certifying agent. This change appropriate records showing proof of all organic. Many suggested that being able is reflected throughout this subpart. organic certifications. to use the term, ‘‘100 percent,’’ will give (4) Use of a certifying agent’s seal or (5) Display of certifying agent name handlers added incentive to use only logo. Many commenters believe that the and business address. Commenters also certified ingredients in multiingredient certifying agent’s seal, logo, or suggested that the certifying agent’s products. Some commenters suggested identifying mark shown on ‘‘100 percent name and business address be displayed that if a product is composed only of organic’’ and ‘‘organic’’ products should adjacent to identification of the handler organic ingredients, with no additives or be the seal or mark of the certifying or distributor of products labeled other substances, it should be allowed agent that certifies the handler of ‘‘organic’’ and ‘‘made with organic

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(specified ingredients).’’ The less than 50 percent organic ingredients. commenters and assist consumers in commenters stated that such Some commenters also suggested that making more informed choices. Under information should be available for including the total percentage of organic this proposal, the statement, ‘‘made consumers who may have questions content adjacent to the ingredient with organic (specified ingredients),’’ about the organic nature of a product or statement (in which the organic must be used on the principal display product ingredients. We agree that the ingredients are identified) would give panel and on other package panels of a name of the certifying agent should be relevance to the ingredient statement. product containing between 50 and 95 included on a product package but We concur with commenters’ percent organic ingredients. believe that display of the business recommendations about the display of Several commenters suggested that address or telephone number should be the total percentage of organic content the size of the letters in the phrase be optional to the handler who assembles and propose that the percentage of limited to a fraction of the size of the the finished product and affixes the organic ingredients be placed on the product name as it appears on the label on the package. If a consumer information panel. The percentage principal display panel. They stated that wants to inquire about the organic statement and the ingredient statement limiting the size of the letters will keep nature of a purchased product, the should be shown in a way that indicates the statement from making the product consumer can obtain contact the relationship of the information. If a appear more organic than products with information through the certifying agent product is labeled ‘‘100 percent 95 percent organic ingredients. For database listed on the NOP homepage. organic,’’ all ingredients (except water instance, if a product contains 55 Finally, to clearly identify the and salt), by definition, would have to percent organic ingredients and the information provided, the statement, be certified organic ingredients, and statement, ‘‘made with organic ‘‘Certified organic by * * *’’ or each ingredient may be but would not (specified ingredients),’’ is displayed on ‘‘Ingredients certified as organically have to be identified as ‘‘organic.’’ the principal display panel in large, produced by * * *,’’ may be used to Identification of organic ingredients bold letters, the product may appear distinguish the certifying agent from the would be required for products labeled more organic than a 97-percent product manufacturer or distributor of the ‘‘organic’’ and ‘‘made with organic simply labeled ‘‘organic.’’ Commenters product. (specified ingredients),’’ and for recommended letter sizes from one-half The statement and agent products containing less than 50 percent to three-fourths the size of the product identification is intended for organic ingredients. We did not change name as it appears on the principal information purposes only and is not to the identification of organic ingredients display panel. promote the organic nature of the for products containing less than 50 We also believe that the labeling for product. The certifying agent percent organic ingredients because we these products should not use typeface identification may be placed below the believe the uses of the term on the or letter sizes which would mislead manufacturer or distributor information information panel and ingredient consumers. FDA labeling requirements and must not interfere with display of statement of such product packages do in 21 CFR 101.3(d) specify that required that information. not imply that the product is organic. statement of identity of the product (6) Size of certifying agent seal. There (8) Labeling of products containing shall be in a size most reasonably was a general consensus among 50–95 percent organic ingredients. The related to the largest printed matter on commenters that the seals of State and first proposal specified that products a panel. FDA enforces ‘‘reasonably private certification agents should not with 50–95 percent organic content related’’ as being one half the size of the be larger than the USDA Seal. To could use ‘‘made with certain organic largest printed matter, which is usually emphasize the market value of such a ingredients’’ on the label. Many the product name. Therefore, to be national organic seal and maintain some commenters suggested that the word, consistent with FDA labeling consistency of treatment with regard to ‘‘certain,’’ may appear confusing to requirements, we have established the the different organic content categories, consumers and that a stronger statement print size of the statement, ‘‘made with we propose that State and private is needed to identify the organic nature organic (specified ingredients),’’ to be certifying agent seals can be the same of the product. One commenter sought not more than 50 percent, or one half, size as but must not exceed the size of clarification of whether the term, of the largest print size appearing on the the USDA Seal on any package label or ‘‘certain,’’ is a substitute for the name of principal display panel. This print size in market information. The size of the the ingredient in a single-ingredient is consistent with the recommendation USDA Seal on a package is left to the product. Many requested that the of many commenters but is smaller than discretion of the handler. statement be changed to allow specific the 75 percent recommended by the (7) Displaying the percentage of identification of the organic ingredients NOSB. We propose that the statement, organic ingredients. The first proposal on the principal display panel. Because ‘‘made with organic (specified permitted use of the word, ‘‘organic,’’ in that is the panel first and most often ingredients),’’ appear in only one print the ingredient statements to modify observed by consumers, the commenters style and color, without highlighting. those ingredients that were produced indicated that the information presented We believe that these additional and handled pursuant to these on the principal display panel should be restrictions on display of the statement regulations, but did not require the clear and accurate to assist consumers will enable the message to be delivered percentage of organic ingredients to be in making their purchasing decisions. and yet provide some structure and displayed on the label. Most all After review of the comments, we consistency to display of the statement. commenters responding to this labeling believe that, if the statement is going to It is our intention that the statement not issue stated that identification of be displayed on the principal display be used to disproportionately dominate organic ingredients as ‘‘organic’’ will panel, it should state the specified the principal display panel or other encourage handlers to increase the organic ingredient in the product; e.g., panels and not be used to misrepresent organic composition of multiingredient ‘‘made with organic (specified the organic nature of the product. products. However, some commenters ingredients).’’ Replacing the word, (9) Limiting the number of organic did not favor any use of the word, ‘‘certain,’’ with the actual organic ingredients listed. Some commenters ‘‘organic,’’ on packages of commodity name or organic ingredient suggested limiting the number of multiingredient products containing will add the specificity sought by organic ingredients that could be

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00048 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13559 included in the statement ‘‘made with be certified under this program, it is design is consistent with comments organic ingredients.’’ This topic was the appropriate that they should be allowed requesting simplicity and use of the subject of much NOSB deliberation and to display some evidence of that words, ‘‘certified organic.’’ At the public discussion. Commenters certification. We propose, therefore, that request of commenters, this proposal reasoned that if the list of organic handlers of 50–95 percent organic provides for labeling on transparent ingredients became too long, the product may display the seal or logo of material. We believe the proposed basic product could appear to be more organic the certifying agent which certified the dark on light or light on dark than ‘‘95 percent’’ products. For finished product. Display of the USDA requirement is broad enough to allow instance, a product could have 10 Seal will still be restricted to only 100 handlers the flexibility needed to match organic ingredients, but those 10 percent organic products and to 95 color schemes compatible with their ingredients may comprise only 51 percent-plus products. We believe this product packages. The alternative red, percent of the product. The consensus provision will provide more equitable white, and blue color scheme offers of comments suggested that the treatment for handlers of 50–95 percent handlers what consumers may identify statement should be limited to three products who are required under this as a more official or patriotic display of organic ingredients, which is the regulation to obtain and maintain the Seal. We believe it is important that industry standard. We believe their organic certification in order to label the Seal be displayed in a consistent recommendation has merit and, their organic product. It will also manner, within general light/dark therefore, propose that up to three maintain a distinction between the two guidelines so that the Seal becomes organic ingredients can be shown in the product levels by continuing the easily recognizable to consumers. statement. We encourage additional restriction on display of the USDA Seal. Labeling—Changes Requested But Not comments on the maximum number of We believe that, while display of the Made ingredients that should be allowed to USDA Seal is less likely to be an appear in the statement on the principal incentive for handlers of products at the Comments reflecting different display panel. Commenters should lower end of the 50 to 95 percent range opinions on the same topic are covered provide reasons for the number they of organic content, handlers of products above (e.g., the number of organic recommend. at the higher end of the 50 to 95 percent ingredients listed on the principal (10) Qualifications for display of the organic content range may be display panel, the size of ‘‘organic’’ USDA Seal. In the first proposal, we encouraged to increase the organic letters on the principal display panel, a permitted the display of the USDA seal content in order to display the USDA recommended redesign of the USDA on products with 50 percent or more Seal. Seal, etc.). Obviously, not all such organic ingredients. Commenters An organic product produced or conflicting recommendations can be objected. They overwhelmingly handled by an exempt or excluded accepted. Two comments were received endorsed a high organic content operation, including those with less which are not accepted but which we standard for a product to be labeled as than $5,000 annual organic sales, may believe warrant further consideration by ‘‘organic.’’ They believe products not display the USDA Seal or the seal the public and the organic community. containing less than 95 percent organic of a certified agent because the We request additional comments ingredients do not have sufficient operation has not been certified. Even if regarding the following two organic content to justify an ‘‘organic’’ the organic content of the product is 95 recommendations. Commenters should label on the principal display panel, and percent or higher, the product still specify their recommendation regarding should not be so labeled under the NOP cannot be labeled as ‘‘certified’’ organic each topic and provide reasons for their regulations. Commenters also stated that or marketed using an organic seal or recommendation. display of the USDA Seal will be very logo. (1) Changing the ‘‘organic’’ threshold desirable. Many stated that a prohibition (11) Design of the USDA Seal. The for multiingredient products. At least on display of the USDA Seal on 50-to- final change prompted by comments is one commenter suggested that the 50–95 95-percent products would encourage redesign of the USDA Seal. The Seal in percent labeling category sets too low a handlers who assemble multiingredient the first proposal was a triangular shape threshold for organic labeling of products to use more organically behind a circle of recycling arrows multiingredient products. The produced ingredients and fewer around a globe figure with the word, commenter suggested that, for increased nonorganic ingredients. They suggested ‘‘organic,’’ printed diagonally across the international acceptance of USDA that the USDA Seal and the certifying globe. That proposed seal was opposed standards, the lowest acceptable agent’s seal or logo not be displayed on by hundreds of commenters. Comments percentage for receiving an organic label any package panel of products ‘‘made included: The triangle resembles a should be 70 percent organic with organic (specified ingredients)’’ or radioactive warning symbol or fallout ingredients, based on the European on products with less than 50 percent shelter sign; the diagonal line across the Union (EU) standard which now organic ingredients. circle appears to be the universal ‘‘no’’ requires a minimum of 70 percent We agree that some distinction should sign (such as ‘‘no walking,’’ ‘‘no organic ingredients for the product to be be made between 95 percent-plus smoking’’); the globe design doesn’t labeled as ‘‘organic’’ (or, ‘‘biological’’ or organic products and the 50–95 percent show up; the globe design implies an ‘‘ecological’’). organic products. Handlers of 95 international program; the design is too The EU standard allows products percent-plus organic products may busy; simplify the design; use the with a 70 percent organic content to be display both the USDA Seal and the words, ‘‘certified organic’’; use a text labeled as ‘‘organic,’’ where our certifying agent seal or logo on the logo; the seal will be too costly to proposal will require at least 95 percent principal display panel of the product. produce; and the triangle points will organic content before a product could The commenters propose that handlers puncture or tear plastic when printed. be labled as ‘‘organic.’’ This 95 percent of 50–95 percent organic products not Given the overwhelming negative standard is in the Act. Where the two be allowed to display either seal on the response to the first seal, we propose a standards differ is that the EU standard principal display panel. However, we simplified design composed of the doe not have a ‘‘made with organic believe that, because handlers of 50–95 words, ‘‘USDA CERTIFIED ORGANIC,’’ (specified ingredients)’’ category percent organic product are required to inside a shield or badge design. This proposed in this rule.

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While the Act establishes a 50-percent should there be a minimum percentage This determination is based on a minimum ingredient content, that for any individual organic ingredient proposed change in State programs. A percentage can be adjusted upward if that could be listed on the principal State organic program will be approved doing so would further the purposes of display panel as one of three organic by the Secretary for specific, need-based the Act. To do so, however, the ingredients in the product? Would such reasons particular to that State (see State Secretary must have good cause and a labeling restriction prevent Programs under subpart G). To establish justification for establishing a higher identification of an important organic and maintain uniform national minimum organic ingredient content. In ingredient from being displayed on the standards, States will not be authorized other words, we could raise the principal display panel? to implement more restrictive organic minimum organic ingredient content Commenters on questions (1) and (2) standards simply to promote State threshold to 70 percent, redefining two should state whether they think the products that are ‘‘more organic’’ than of our four categories. The four recommendations would further the products produced and handled in other categories would be: less than 70 marketing of organic products and, if so, States or under NOP requirements. percent, 70–95 percent, greater than 95 clearly state the recommended Rather, the Secretary will approve only percent, and 100 percent. Under this percentage for each question and the those State programs that need more scenario, the prohibitions on excluded reasons for their opinions regarding restrictive requirements to protect or methods, irradiation, and sewage sludge each issue. preserve unique environmental would not apply to the nonorganic (3) Labeling requirements for small conditions or to accommodate product ingredients of products with less than operations. A majority of those who and handling practices unique to a State 70 percent organic content. At the same commented on the exemption for small or portion of a State. In the absence of time, these products would only be able operations (less than $5,000 organic such environmental conditions or to list the organic ingredients on the sales) in the first proposal stated that production practice needs, a State’s information panel. The ‘‘made with such operations are not exempt from organic program must have the same organic ingredients’’ category, to which labeling requirements under the Act. In requirements as this NOP. If this is the the prohibition would apply, would be this proposal, we provide limited case and if a relatively few State 70–95 percent organic content. The only labeling provisions which prohibit programs are approved to have more products that would get the ‘‘organic’’ exempt and excluded operations, restrictive requirements, then no real designation would still be those with at including those with less than $5,000 in purpose is served by permitting State least 95 percent organic content. annual organic sales, from labeling their organic programs to display a separate Because we find no compelling reason products in a way that indicates the and distinct seal on a product label. to raise the 50-percent minimum operations or the products have been Such a seal would not represent a ‘‘more ingredient content threshold established certified as organic. These provisions organic’’ product. in the Act, we have not accepted the will not allow such operations to use In the place of a State organic program commentor’s recommendation in this labeling terms and organic seals and seal, this proposal provides for the seal proposal. However, if comments on this logos specified for certified operations. or logo of a State certifying agent to be proposal suggest an appropriate We believe those terms, logos and seals displayed on packages, if that certifying justification, the minimum ingredient should be reserved for operations and agent certifies the organic operation content threshold could be raised in the products that are certified under these producing the product. Selection of a final rule. regulations. (2) Minimum content requirements for State or private certifying agent is the organic ingredients. One commenter Labeling—Additional Provisions choice of the organic producer or suggested that a minimum percentage of Upon further review of the label and handler being certified. A State’s the entire product weight be established market information provisions in the department of agriculture (or other to qualify for a single ingredient to be first proposal, we propose the following equivalent State agency) may establish included in the statement, ‘‘made with additions and changes. one or more State certifying agent organic (specified ingredients).’’ The (1) Display of a State organic seal. offices as part of its governmental commenter suggested that this would Under the first proposal, each State operations, or the State may license a help prevent misrepresentation of the organic certification program would private certifying agent to certify organic organic nature of a product. The have been allowed to display a seal or operations on behalf of the State. In commenter suggested that the minimum logo of its State organic program. The either case, the certifying agent would content for any ingredient should be 15 first preamble stated that it was certify these national requirements and percent. The commenter did not justify appropriate for a State to have a seal not the particular requirements of a the 15-percent minimum (as opposed to representing its organic program, thus State organic program unless those another minimum percentage). Because allowing product produced under that requirements were approved by the such a recommendation could prevent program to bear the State’s seal. Secretary. Therefore, the only organic important ingredients from being Currently, 13 State departments of seal or mark representing a State will be specified on a product label, we have agriculture (or other State agency) and the seal or mark of a State’s certifying not incorporated the comment in this approximately 40 private agents certify agent or licensed certifying agent. Any proposal. However, we believe the to a variety of private and State organic certifying agent licensed by the State comment may have merit. One factor in requirements. After establishing a policy must be accredited by the Secretary establishing a minimum percentage for which more clearly defines the criteria pursuant to subpart F of this proposal. any individual ingredient listed on the for approval of a State organic program, (2) Labeling for international markets. principal display panel would be the we believe that, in the interest of We have added two paragraphs under established minimum percentage for all consistent and uniform national section 205.300 to provide for labeling organic ingredients in a product, the standards, product packages should not of products intended for international question raised in the paragraph above. display the seal of a State organic markets. Domestically produced organic For instance, if the minimum percentage program if the seal is different from the products intended for export may be of all ingredients is established at 70 seal or mark used by the State’s organic labeled to meet the requirements of the percent to conform to EU standards, certifying agent. country of destination or any labeling

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00050 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13561 requirements specified by a particular produced using water that does not Only one percentage figure for total foreign buyer. meet requirements of the Safe Drinking organic ingredients will be shown on a If labeled to meet foreign labeling Water Act (42 U.S.C. 300(f) et seq.). We package. The percentage of individual requirements, such packaged products have not included that provision in this organic ingredients will not be cannot be sold in the United States. proposal because potable water is displayed. Pursuant to § 205.306, shipping required in other FDA and FSIS An organic product may be containers and bills of lading for these processing regulations and does not constituted completely of organic liquid products would have to be marked ‘‘for need to be repeated as a requirement in products. Therefore, this proposal adds export only’’ to assure that the product this regulation. the phrase, ‘‘or fluid volume,’’ in several was not distributed domestically. We The first three practices (use of places in the proposal when referring to are providing this exception to labeling excluded methods, sewage sludge, and liquid products and ingredients. For requirements for the convenience of irradiation) are discussed elsewhere in ingredients in liquid form that are exporters only. If the foreign country or this proposal and are added as reconstituted with water from a buyer does not require different product prohibited practices in this labeling concentrate, the calculation would be labeling, domestic product which has section for consistency purposes. based on a single-strength solution of been produced, certified, and labeled Only processing aids and substances the liquid concentrate. For products that pursuant to these regulations may be on the National List in subpart G of this may contain both dry and liquid organic shipped without the statement, ‘‘for regulation may be used in the ingredients, the percentage calculation export only,’’ on the containers and bills production and handling of 95 percent- would be based on the combined weight of lading. plus organic products and 50–95 of the organic ingredients, including the Organic product produced in another percent organic products and in any weight of the liquid ingredients, minus country for export to the United States ingredient labeled as organic on a water and salt. may be certified to the requirements of product package. (6) Labeling of nonretail containers. this regulation or to an approved foreign The first proposal prohibited use of We have added new § 205.306, covering organic certification program that has sulfites, nitrates, and nitrites in labeling of nonretail containers—those been recognized as equivalent to the production or processing of organic used only for shipping and storage of requirements of the NOP. Such products products or ingredients. We have agricultural products labeled as organic must be labeled pursuant to the amended the wording of this provision or containing organic ingredients. While requirements of this subpart. to clarify that a handler cannot add any the same containers are commonly used (3) Product composition. Under new sulfites, nitrates, and nitrites to a for both shipping and storage, the first § 205.301, Product Composition, we product and still label the finished proposal did not reference storage have clarified the composition of product or ingredient as ‘‘organic.’’ We containers or specify labeling organic and nonorganic ingredients in make this clarification because these requirements for those containers. These products covered in the four labeling substances are found naturally in many provisions are proposed only for categories. All ingredients labeled as substances and may appear naturally in products labeled as ‘‘100 percent ‘‘organic’’ in the ingredient statement of potable water used in processing. organic,’’ ‘‘organic,’’ and ‘‘made with the product package must be produced The last two processing practices that organic (specified ingredients).’’ Some and handled pursuant to these would prohibit an ‘‘organic’’ label may believe that use of the USDA Seal requirements. No substances prohibited appeared in separate sections of the first on a shipping container of products on the National List in subpart G and no proposal and are included in this ‘‘made with organic (specified production or handling practices proposal in § 205.301(e)(6) and (e)(7). ingredients)’’ may be inconsistent with prohibited in § 205.301(e) may be used The first is that products and organic other labeling provisions prohibiting in the production or handling of any ingredients assembled using organic or display of the Seal on consumer ingredient labeled as ‘‘organic.’’ nonorganic forms of the same ingredient packages of those products. However, in Regulations covering the production or component ingredients—depending the case of shipping and storage and handling of nonorganic ingredients on availability of the organic containers, the display of seals is not varies with the labeling category. The ingredients—cannot be labeled as intended for marketing purposes but higher the percentage of a product’s ‘‘organic when available’’ or a similar would be used for easy identification of organic composition, the more phrase. Similarly, products and organic the product to help prevent restrictive the production and handling ingredients assembled using both commingling with nonorganic product requirements of the nonorganic organic and nonorganic forms of the or handling of the product which would ingredients in the product. These same ingredient or component destroy the organic nature of the requirements are found under § 205.301 ingredients cannot be labeled as organic product (fumigation, etc.). These and explained above under Proposal if that ingredient is identified as organic provisions will not apply to shipping Description. on the ingredient statement and and storage containers of products (4) Prohibited practices. Section included in the percentage of organic containing less than 50 percent organic 205.301(e) lists seven production and content on the information panel. ingredients. handling practices that are prohibited (5) Calculating organic content. (7) Retail Food Establishments. The from being used to produce whole Because labeling requirements are based extent of the regulatory authority of this products or product ingredients that on the amount of organic ingredients in regulation has been the subject of would be labeled as ‘‘organic’’ under the a product, we have added new section intense discussions in comments NOP. Some of these prohibited practices 205.302, which addresses the received, NOSB deliberations, and AMS appear for the first time in this proposal, calculation of organic percentages. discussions. Commenters claimed that it and others were specified in the first Provisions in this new section were not makes no sense to regulate and certify proposal and were supported by all included in the first proposal. While the production and handling of organic those who addressed them in their this should be a simple mathematical product but not require certification and comments. procedure, the section proposes certain regulate retail food establishments The first proposal prohibited organic guidelines for calculating and labeling where some fresh foods containing labeling of a product or ingredient organic percentages. organic ingredients are processed and

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00051 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13562 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules assembled and where they can become any way as ‘‘organic’’ or containing applicable to the organic operation must adulterated or misrepresented to the organic ingredients. In addition, the be maintained for not less than 5 years consuming public. USDA Seal and seal, logo, or other beyond their creation. Authorized Retail food establishments that market identifying mark of the certifying agent representatives of the Secretary, the organic product, whether produced in- is prohibited from being used in retail applicable State program’s governing store, in a corporate commissary, or by displays and market information. State official, and the certifying agent others, will be subject to the labeling (8) Change in calculating the $5,000 must be allowed access to the provisions of this subpart as that exemption. We are proposing a change operation’s records during normal labeling applies to: (1) Point-of- in calculating the $5,000 exemption for business hours. Access to the purchase, in-store displays describing producers and handlers. The $5,000 operation’s records will be for the the organic nature of the product; and annual exemption will be calculated on purpose of reviewing and copying the (2) other market information and media sales of organically produced product records to determine compliance with advertising regarding the product being and not on all agricultural products the Act and regulations. marketed at the retail food marketed by the exempt producer or Certified operations are required to establishment. Food retail handler, as provided in the first immediately notify the certifying agent establishments must describe the proposal. This exemption means that concerning any application, including product in in-store retail displays, qualifying exempt organic producers drift, of a prohibited substance to any market information, and media and handlers may annually sell up to field, production unit, site, facility, advertising that is consistent with the $5,000 of organically produced products livestock, or product that is part of the organic content of the finished product. and not be certified as an organic organic operation. They must also Any labeling of a product that is operation under this regulation. The immediately notify the certifying agent inconsistent with the percentage of exemption could apply to a large, concerning any change in a certified organic content of the product will be conventional agricultural operation that operation or any portion of a certified considered a violation of truth in also has a small amount of acreage operation that may affect its compliance labeling and/or truth in advertising designated for organic production—the with the Act and regulations. regulations of FDA and the FTC. products of which, for example, is sold Certification Process. To obtain Multiingredient products which are at a roadside stand. Any sale of other, certification, a producer or handler must described as organic product in retail nonorganic products will not count submit a request for certification to an displays and market information must against the $5,000 sales total. The accredited certifying agent. The request be assembled by a certified labeling and market information must contain descriptive information manufacturing facility, pursuant to the requirements for organic products about the applicant’s business, an Applicability subpart of this regulation. produced by such exempt operations are organic production and handling system Packaged organic products, organic specified in § 205.309 of this regulation. plan, information concerning any fresh produce, and organic bulk bin previous business applications for food items must be described in point- Subpart E—Certification certification, and any other information of-purchase displays, pricing This subpart sets forth the necessary to determine compliance with information, and consumer information requirements for a national program to the Act. in terms consistent with the organic certify production and handling Applicants for certification and content of the product. For instance, an operations as certified organic certified operations must submit the in-store retail display would describe an production or handling operations. The applicable fees charged by the certifying 87 percent organic product by certification process proposed in this agent. An applicant may withdraw its specifying the percentage of organic subpart will be carried out by accredited application at anytime. An applicant content of the product and identifying certifying agents. who withdraws its application will be the organic ingredients in the ingredient liable for the costs of services provided Proposal Description statement, as may be required by FDA. up to the time of withdrawal of the The market information for such a General Requirements. Production application. product must not, for instance, label the and handling operations seeking to The certifying agent will decide product as ‘‘organic’’ or ‘‘100 percent receive or maintain organic certification whether to accept the applicant’s organic.’’ This would be a violation of must comply with the Act and application for certification. Certifying truth in labeling and advertising applicable organic production and agents may decline to accept an regulations of FDA and FTC. The USDA handling regulations. Such operations application for certification but may not Seal and the seal of the certifying agent must establish, implement, and decline to accept an application on the may be displayed at retail sales and in annually update an organic production basis of race, color, national origin, market information on products or handling system plan that is gender, religion, age, disability, political certified as containing 95 percent or submitted to an accredited certifying beliefs, sexual orientation, or marital or more organic content. Multiingredient agent. They must permit on-site family status. products containing 50–95 percent inspections by the certifying agent with Upon acceptance of an application for organic ingredients may display the seal complete access to the production or certification, a certifying agent will or logo of the certifying agent of the handling operation, including review the application to ensure organic handling operation. noncertified areas and structures. completeness and to determine whether We believe these labeling practices As discussed in Subpart B, certified the applicant appears to comply or may will help assure appropriate operations must maintain records be able to comply with the applicable representation of bulk organic products concerning the production and handling production or handling regulations. As at retail sale and will encourage of agricultural products that are sold, part of its review, the certifying agent handlers to use more organic labeled, or represented as ‘‘100 percent will verify that an applicant has ingredients. organic,’’ ‘‘organic,’’ or ‘‘made with submitted documentation to support the Products containing less than 50 organic (specified ingredients)’’ correction of any deficiencies identified percent organic ingredients at the point sufficient to demonstrate compliance in a previously received notification of of retail sale may not be identified in with the Act and regulations. Records noncompliance. The certifying agent

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00052 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13563 will also review any available U.S. Certifying agents will conduct on-site agent will approve certification and Department of Agriculture (USDA) data inspections when the applicant or an issue a ‘‘certificate of organic on production and handling operations authorized representative of the operation.’’ The approval may include for information concerning the applicant who is knowledgeable about restrictions regarding minor deficiencies applicant. the operation is present. An on-site that would not prevent certification as We anticipate using data collected inspection must also be conducted a condition of continued certification. A from certifying agents to establish and when land, facilities, and activities that certificate of organic operation will maintain a password-protected Internet demonstrate the operation’s compliance specify the name and address of the database only available to accredited with or capability to comply with the certified operation; the effective date of certifying agents and USDA. This applicable production or handling certification; the categories of organic database would include data on regulations can be observed. operation, including crops, wild crops, production and handling operations The on-site inspection must verify livestock, or processed products issued a notification of noncompliance, that the information provided to the produced by the certified operation; and noncompliance correction, denial of certifying agent accurately reflects the the name, address, and telephone certification, certification, proposed practices used or to be used by the number of the certifying agent. Once suspension or revocation of applicant or certified operation and that certified, a production or handling certification, and suspension or prohibited substances have not been operation’s organic certification revocation of certification. Certifying and are not being applied to the continues in effect until surrendered by agents would use this Internet database operation. Certifying agents may use the the organic operation or suspended or during their review of an application for collection and testing of soil; water; revoked by the certifying agent, the certification. This data will not be waste; plant tissue; and plant, animal, State program’s governing State official, available to the general public because and processed products samples as tools or the Administrator. much of the data would involve ongoing in accomplishing this verification. Denial of Certification. Should the compliance issues inappropriate for The inspector will conduct an exit certifying agent determine that the release prior to a final determination. interview with an authorized applicant is not able to comply or is not After a complete review of the representative of the inspected in compliance with the act, the application, the certifying agent will operation to confirm the accuracy and certifying agent will issue a written communicate its findings to the completeness of inspection observations notification of noncompliance to the applicant. If the review of the and information gathered during the on- applicant. Applicants who receive a application reveals that the applicant site inspection. The main purpose of notification of noncompliance may may be in compliance with the this exit interview is to present the correct the deficiencies and submit, by applicable production or handling inspection observations to those in the date specified, a description of regulations, the certifying agent will charge of the firm in such a manner so correction and supporting schedule an on-site inspection of the as to ensure they clearly understand the documentation to the certifying agent. applicant’s operation to determine results of the inspection. The firm is not As an alternative, the applicant may whether the applicant qualifies for required to volunteer any information submit a new application to another certification. The initial on-site during the exit interview but would be certifying agent, along with the inspection must be conducted within a required to respond to questions or notification of noncompliance and a reasonable time following a requests for additional information. The description of correction of the determination that the applicant inspector will raise and discuss during deficiencies and supporting appears to comply or may be able to the exit interview any known issues of documentation. Applicants may also comply with the requirements for concern, taking into account their submit, by the date specified, written certification. perceived significance. As a general information to the certifying agent to The certifying agent will conduct an rule, the inspector will not make rebut the noncompliance described in initial on-site inspection of each recommendations for improvements to the notification of noncompliance. production unit, facility, and site the operation during the exit interview. When a noncompliance cannot be included in the applicant’s operation. However, the certifying agent will have corrected, a notification of As a benchmark, certifying agents the discretion to decide the extent to noncompliance and a ‘‘notification of should follow auditing guidelines which an inspector may discuss any denial of certification’’ may be prescribed by the International compliance issue. combined in one notification. Organization for Standardization Guide Notification of Approval. A certifying The certifying agent will evaluate the 10011–1, ‘‘Guidelines for auditing agent will review the on-site inspection applicant’s corrective actions taken and quality systems—Part 1: Auditing’’ (ISO report, the results of any analyses for supporting documentation submitted or Guide 10011–1).1 The certifying agent substances, and any additional the written rebuttal. If necessary, the will use the on-site inspection in information provided by the applicant certifying agent will conduct a followup determining whether to approve the within a reasonable time after on-site inspection of the applicant’s request for certification and to verify the completion of the initial on-site operation. When the corrective action or operation’s compliance or capability to inspection. The certifying agent will rebuttal is sufficient for the applicant to comply with the Act and regulations. approve certification upon making two qualify for certification, the certifying determinations: (1) That the applicant’s agent will approve certification. When 1 ISO Guide 10011–1 is available for viewing at operation, including its organic system the corrective action or rebuttal is not USDA–AMS, Transportation and Marketing plan and all procedures and activities, sufficient for the applicant to qualify for Programs, Room 2945—South Building, 14th and Independence Ave., SW, Washington, DC, from 9:00 is in compliance with the Act and certification, the certifying agent will a.m. to 4:00 p.m., Monday through Friday (except regulations; and (2) that the applicant is issue the applicant a written notice of official Federal holidays). A copy may be obtained able to conduct operations in denial of certification. The certifying from the American National Standards Institute, 11 accordance with its organic systems agent will also issue a written notice of West 42nd Street, New York, NY 10036; Website: www.ansi.org; E-mail: [email protected]; plan. denial of certification when an Telephone: 212–642–4900; Facsimile: 212–398– Upon determining the applicant’s applicant fails to respond to the 0023. compliance and ability to comply, the notification of noncompliance. The

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00053 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13564 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules notice of denial of certification will state continues to comply with the Act and agent’s file on the certified operation to the reasons for denial and the regulations. If the certifying agent the operation’s new certifying agent. applicant’s right to reapply for determines that the operation is in Upon initiation of suspension or certification, request mediation, or file compliance, certification will continue. revocation of a certifying agent’s an appeal. If any of the information specified on accreditation, or upon suspension or An applicant who has received a the certificate of organic operation has revocation of a certifying agent’s notification of noncompliance or notice changed, the certifying agent will issue accreditation, the Administrator may of denial of certification may apply for an updated certificate of organic initiate proceedings to suspend or certification again at any time with any operation. If the certifying agent finds revoke the certification of operations certifying agent. When the applicant that the operation is not complying with certified by the certifying agent. The submits a new application to a different the Act and regulations, a written Administrator’s decision to suspend or certifying agent, the application must notification of noncompliance will be revoke a producer’s or handler’s include a copy of the notification of issued as described in § 205.662. certification in light of the loss of its noncompliance or notice of denial of In addition to annual inspections, a certifying agent’s accreditation would be certification. The application must also certifying agent may conduct additional made on a case-by-case basis. Actions include a description of the actions on-site inspections of certified such as fraud, bribery, or collusion by taken, with supporting documentation, operations to determine compliance the certifying agent, which cause the to correct the deficiencies noted in the with the Act and regulations. The Administrator to believe that the notification of noncompliance. When a Administrator or State program’s certifying agent’s clients do not meet the certifying agent receives such an governing State official may also require standards of the Act or these application, the certifying agent will that additional inspections be regulations, might require the treat the application as a new performed by the certifying agent to immediate initiation of procedures to application and begin a new application determine compliance with the Act and suspend or revoke certification from process. regulations. Additional inspections may some or all of its client base. Removal A certifying agent has limited be announced or unannounced and of accreditation, regardless of the authority to deny certification without would be conducted, as necessary, to reason, in no way affects the appeals first issuing a notification of obtain information needed to determine rights of the certifying agent’s clients. noncompliance. This authority may be compliance with identified Further, a certified operation’s exercised when the certifying agent has requirements. certification will remain in effect reason to believe that an applicant for pending the final resolution of any Such on-site inspections would likely certification has willfully made a false proceeding to suspend or revoke its be precipitated by reasons to believe statement or otherwise purposefully certification. misrepresented its operation or its that the certified operation was A private-entity certifying agent must compliance with the requirements for operating in violation of one or more furnish reasonable security for the certification. requirements of the Act or these purpose of protecting the rights of Continuation of Certification. Each regulations. The policies and operations certified by such certifying year, the certified operation must procedures regarding additional agent. This security is to ensure the update its organic production or inspections, including how the costs of performance of the certifying agent’s handling system plan and submit the such inspections are handled, would be contractual obligations. As noted updated information to the certifying the responsibility of each certifying elsewhere in this proposed rule, the agent to continue certification. The agent. Misuse of such authority would specific amount and type of security updated organic system plan must be subject to review by the Department that must be furnished by a private include a summary statement, during its evaluation of a certifying certifying agent will be the subject of supported by documentation, detailing agent for reaccreditation and at other future rulemaking by the Department. deviations from, changes to, times in response to complaints. We anticipate that the amount of the modifications to, or other amendments Certified production and handling security will be tied to the number of to the previous year’s organic system operations could file complaints with clients served by the certifying agent plan. The updated organic system plan the Department at any time should they and the anticipated costs of certification must also include additions to or believe a certifying agent abuses its that may be incurred by its clients in the deletions from the previous year’s authority to perform additional event that the certifying agent’s organic system plan, intended to be inspections. accreditation is suspended or revoked. undertaken in the coming year. The Certification After Suspension or We anticipate that the security may be certified operation must update the Revocation of Certifying Agent’s in the form of cash, surety bonds, or descriptive information about its Accreditation. When the Administrator other financial instrument (such as a business and other information as revokes or suspends a certifying agent’s letter of credit) administered in a deemed necessary by the certifying accreditation, affected certified manner comparable to cash or surety agent to determine compliance with the operations will need to make bonds held under the Perishable Act and regulations. application for certification with Agricultural Commodities Act. Following receipt of the certified another accredited certifying agent. The operation’s updated information, the certification of the production or Certification—Changes Based on certifying agent will arrange and handling operation remains in effect Comments conduct an on-site inspection of the during this transfer of the certification. This subpart differs from our first certified operation. As a benchmark, The certified production or handling proposal in several respects as follows: certifying agents should follow auditing operation may seek certification by any (1) On-site Inspection Requirements. guidelines prescribed by ISO Guide qualified certifying agent accredited by We have amended the general 10011–1. Upon completion of the the Administrator. To minimize the requirements provision concerning on- inspection and a review of updated burden of obtaining the new site inspections. The first proposal information, the certifying agent will certification, the Administrator will required production and handling determine whether the operation oversee transfer of the original certifying operations to permit an annual on-site

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00054 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13565 inspection by the certifying agent. A few requirements. Most of these comments certifying agents to request other commenters suggested that the term, were received from organic producer information they deem necessary must ‘‘inspection,’’ be made plural and that organizations and certifying agents. A be qualified by the requirement that the the section citations be amended to few commenters questioned the information be necessary to determine include the section on additional necessity of maintaining records for 5 compliance with the Act and inspections. The section on additional years, requested a different period for regulations. Accordingly, we have inspections addressed the certifying different records, and requested provided certifying agents with the agent’s authority to perform on-site clarification on the meaning of authority to request other information inspections in addition to the annual providing access. Section 6511(d) of the necessary to determine compliance with on-site inspection. Act requires organic production or the Act and regulations. This addition is The commenters believe that handling operations to maintain records found at § 205.401(d). ‘‘inspection’’ should apply to all for 5 years. Accordingly, we have made (5) Requirement for Notification of situations when on-site inspections no change to the retention period in this Noncompliance. We have replaced the must be or could be performed, proposal. The clarification on the first proposal’s section on ‘‘preliminary including the initial site inspection for meaning of providing access to records evaluation of an applicant for a new certification as well as, for is found at § 205.400(d). certification’’ with a new section on instance, compliance inspections. (3) Notification of Drift. We have ‘‘review of application.’’ We have Commenters believe that these changes amended the requirement that revised the section to clarify that are needed to assure access to the production and handling operations certifying agents will issue notices of certified operation and that an immediately notify the certifying agent noncompliance only after the initial on- applicant’s agreement to permit any and concerning any application of a site inspection of an applicant’s all necessary on-site inspections should prohibited substance by adding the operations. We also allow applicants to be clearly stated as a general phrase, ‘‘including drift.’’ A few voluntarily withdraw their application requirement for certification. commenters suggested adding a for certification at any time. We had intended for the general requirement that the certified operation This change was in response to requirements provision concerning on- notify the certifying agent when an comments on the first proposal’s site inspections to include all instances organically certified field is requirement that applicants for in which an on-site inspection might be contaminated by drift. They stated that certification report, to the certifying appropriate. Accordingly, we have drift is the most common reason for agent with whom they have applied, the amended the requirement by replacing prohibiting the organic label on receipt of a notice of noncompliance the phrase, ‘‘an annual on-site otherwise organically produced received from another certifying agent. inspection,’’ with the phrase, ‘‘on-site product. A State organic growers association inspections.’’ This terminology would We agree that the certified operation stated that this requirement places a cover initial, annual, and additional should immediately report any drift of stigma on applicants who, for example, inspections needed for certification, a prohibited substance onto an organic applied for certification before the continuation of certification, and to field to its certifying agent. Accordingly, operation was ready to meet all determine whether the operation is in § 205.400(f)(1) provides that an requirements for certification. This compliance with program requirements. applicant seeking to receive or maintain commenter suggested that notification To ensure complete access to the organic certification must immediately of previous denial only be required after production or handling operation for the notify the certifying agent concerning an applicant has been denied purpose of conducting on-site any application, including drift, of a certification. The commenter went on to inspections and determining prohibited substance. This provision say that, if the language in the original compliance with the requirements of the applies to new applicants as well as to proposal is maintained, there should be National Organic Program (NOP), we ongoing certified operations. a time limit of within the past 3 or 5 have added a requirement that the Contamination by drift could occur years of denial. Another commenter operation permit complete access to the during the time period between suggested that certifying agents have the production or handling operation, application for and approval of option of recommending that including noncertified areas and certification. Accordingly, an applicant noncompliant applicants withdraw their structures. The general requirements for certification would be required to applications rather than be denied provision on on-site inspections is notify the certifying agent of any contact certification. As an alternative, one of found at § 205.400(c). with a prohibited substance. the commenters suggested that denial of (2) Providing Access to Records. We (4) Applicant Requirements. We have certification to an unprepared applicant have clarified the meaning of providing added the requirement that applicants should not have to be reported on a access to the records that the certified for certification include other subsequent application to another operation must maintain by adding information necessary to determine certifying agent unless the first ‘‘during normal business hours for compliance with the Act and noncompliance notice led to a denial of review and copying’’ to the regulation. regulations. Commenters suggested that certification. The first proposal required that certified the we add a provision to the We continue to believe that it is in the organic operations maintain records for application regulations requiring best interest of the program and not less than 5 years from the date of applicants for certification to submit consumers to require applicants to their creation. It also required the other information deemed necessary by report the receipt of notices of certified operation to allow authorized the certifying agent. They stated that noncompliance and denial of representatives of the Secretary, the this authority is needed to assure that certification to any certifying agent to applicable governing State official, and applicants are fully cooperative and whom they make application. However, the certifying agent access to such responsive throughout the certification we also believe that operations should records to determine compliance with process. not be unnecessarily stigmatized the Act and regulations. We believe the requested authority because they applied for certification Several comments were received would be helpful to certifying agents. before the operation was ready to meet regarding these recordkeeping However, we believe the authority for all requirements for certification.

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Accordingly, this proposal requires that confirm the accuracy and completeness days of completing an inspection, a an applicant report the receipt of a of inspection observations and written report that describes the notice of noncompliance or denial of information gathered during the on-site inspector’s observations and certification to any certifying agent to inspection. The inspector can use the assessments of the inspected operation’s whom application is made but allows exit interview to request any additional compliance or ability to comply with applicants to voluntarily withdraw their information necessary to establish the Act and regulations. A variety of application at any time. eligibility for certification. Finally, this comments, pro and con, were received An applicant that voluntarily amendment requires the inspector to on this requirement. Certifying agents withdrew its application prior to the raise and discuss during the exit questioned whether the 30-day issuance of a notice of noncompliance interview any known issues of concern. timeframe was reasonable. Other would not be issued a notice of Certifying agents commented that it commenters suggested that, rather than noncompliance. Similarly, an applicant would be inappropriate for an inspector specifying a time period, the section that voluntarily withdrew its to discuss observations and possible should stress the need for timely application prior to the issuance of a violations of compliance at an exit reporting. A commenter suggested that notice of certification denial would not interview. They stated that requiring an inspector’s observations and be issued a notice of certification denial. exit interviews places the inspector in assessments on the inspected operation (6) Residue Testing. We have revised the position of providing observations include the inspector’s the verification of information and feedback to the applicant before the recommendations on approval of provisions to provide that the on-site inspector is able to confer with the certification. Other commenters stated inspection of an operation must verify certifying agent. Some certifying agents that the requirement amounted to micro that prohibited substances have not expressed concern that exit interviews management of a certifying agent’s been and are not being applied to the could result in inspectors providing business. This latter group of operation. Verification would be false or misleading information to the commenters believe that the setting of a through means which, at the discretion applicant. Some commenters requested time period for inspector reporting of the certifying agent, may include the that exit interviews be held only for the involves a policy matter that should be collection and testing of soil; water; purpose of checking the accuracy and determined by the certifying agent. We waste; seeds; plant tissue; and plant, completeness of inspector observations agree with the commenters who stated animal, and processed products made and the information obtained that setting deadlines for the filing of samples. during the inspection. Other inspection reports is an internal policy Comments from certifying agents commenters requested that the exit matter better left to certifying agents. suggested adding a provision that would interviews requirement be removed We believe that policies and allow a certifying agent to collect from these regulations. procedures regarding inspector samples of substances from the We believe that qualified inspectors reporting are the purview of the operation for residue testing. They should be capable of competently certifying agent. Certifying agents would stated that such testing is necessary to discussing an applicant’s compliance or be expected to develop and implement detect unreported use or accumulation ability to comply with these regulations. inspector reporting requirements for on- of prohibited substances. Section However, we also believe that a site inspections internal to their own 6506(a)(6) of the Act requires periodic certifying agent should have the operations. Such policies and residue testing by certifying agents of opportunity to decide whether to allow procedures and a certifying agent’s products produced by certified organic its inspectors to discuss issues of performance in making timely operations. It is our intent that compliance at an exit interview. certification decisions would be subject collection of samples for residue testing Accordingly, we have amended the exit to review during accreditation and may be conducted as part of initial on- interview requirements as noted above. reaccreditation of the certifying agent. site inspections, as well as during on- These amended requirements are found Accordingly, we have removed the site inspections of certified organic at § 205.403(d). provision. operations. The inspector could collect (8) Additional Inspections. We have Removal of this requirement does not samples of soil; water; waste; seeds; added a new provision that additional eliminate the need for a written on-site plant tissues; and plant, animal, and inspections may be announced or inspection report or the importance of processed products. Collection of such unannounced at the discretion of the timely inspection reporting by an samples would be at the discretion of certifying agent or as required by the inspector to the certifying agent. the certifying agent. To maintain the Administrator or State program’s Certifying agents are expected to make integrity of the inspection process, it is governing State official. This change timely decisions regarding whether to necessary that the certifying agent or was made in response to commenters certify an applicant and whether a inspector collect such samples first who requested the addition of a certified operation is in compliance hand, rather than receive the samples requirement that certifying agents with the Act and regulations. from the applicant. We have made the conduct unannounced site visits in Applicants with complaints regarding requested addition at § 205.403(c)(3). addition to the initial and annual timeliness of service could forward their (7) Postinspection Conference inspections. We believe that complaints to the Administrator. Requirements. We have amended the unannounced on-site inspections are (10) Responsibilities of Certifier in the postinspection conference requirements. appropriate and valuable in both Application Process. We have replaced We have changed all references to monitoring and investigating the list of requirements to be reviewed ‘‘postinspection conference’’ to ‘‘exit compliance with the Act and by a certifying agent in determining an interview.’’ We have removed the regulations. The requested addition is applicant’s eligibility for certification requirement that the inspector discuss found at § 205.403(a)(2)(iii). with a general statement on his or her observations regarding the (9) Requirements for Written determination of eligibility. operation’s compliance or ability to Inspection Reports. We have removed Commenters requested the addition of a comply with the Act and regulations. the requirement that the certifying agent provision requiring certifying agents to This requirement has been replaced require an inspector to prepare and verify implementation of the organic with the requirement that the inspector submit to the certifying agent, within 30 system plan. We agree that an on-site

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By requiring the the operation must be able to show that address, and telephone number of the name, address, and telephone number of it is satisfactorily carrying out its certifying agent. Further, because the the certifying agent, as noted above, the organic system plan. certificate of organic operation would be certificate would provide interested It was our intent that certifying agents an official document of the certifying persons with a contact for obtaining would verify implementation of the agent, it would be appropriate for this releasable information concerning the applicant’s organic system plan during information to appear on every certified operation. Further, the the certifying agent’s review of the on- certificate. Accordingly, we have added certifying agent is the first line of site inspection report and application. the name, address, and telephone compliance under this program and, as However, our list of requirements to be number of the certifying agent to the such, is the person to whom all reviewed by a certifying agent in information which must be included on questions and concerns should be determining an applicant’s eligibility for every certificate. This addition is found addressed about certified operations. certification did not specifically at § 205.404(b)(4). We agree with the commenters who reference verification of implementation We disagree with the commenters requested that certificates display the of the organic system plan. We have who requested that certificates of name and address of the certified decided to replace the list of organic operation display an expiration operation because such information is requirements to be reviewed with a date. We believe annual expiration of a potentially beneficial to consumers. general statement on determination of certificate would place an unnecessary Accordingly, we have added the name eligibility. This statement provides: ‘‘If burden on certifying agents and certified and address of the certified operation to the certifying agent determines that the operations. Annual expiration of the information which must be included organic system plan and all procedures certificates is also inconsistent with the on every certificate. This addition is and activities of the applicant’s fact that an operation’s certification found at § 205.404(b)(1). operation are in compliance with the does not expire. In fact, once an The first proposal required that the requirements of this part and that the operation is certified as an organic certificate list the category(ies) and applicant is able to conduct operations operation, its certification remains in type(s) of products produced by the in accordance with the plan, the agent effect until surrendered by the certified certified operation. Commenters were shall approve certification.’’ We believe operation or suspended or revoked by apparently confused about the meaning this general statement, in combination the certifying agent, the State program’s of category(ies) and type(s) of products. with the requirement that the certifying governing State official, or the We have, therefore, revised the agent review the application, the on-site Administrator. All certified operations requirement to provide that a certificate inspection report, the results of any are required to annually update their of organic operation would specify the analyses for substances conducted, and organic system plan. If the updated plan categories of organic operation, any additional information requested causes information on the certificate to including, crops, wild crops, livestock, from or supplied by the applicant, be incorrect, the certifying agent will or processed products produced by the adequately addresses the commenters’ issue a new certificate with the correct certified operation. This revision is concerns. This revision to the approval information. This provides a mechanism found at § 205.404(b)(3). of certification requirements is found at for ensuring that certificates are updated (12) Certifiers Authority to Deny § 205.404(a). as necessary on an annual bases. We Certification. We have added authority (11) Information Included on the have not included the recommended for certifying agents to deny certification Certificate of Organic Operation. We addition in this proposal. to applicants who do not meet the have amended the regulations For clarification, we have added requirements for certification. The first specifying what information must be § 205.404(c). This section provides that proposal required certifying agents to included on a certificate of organic once certified a production or handling forward their recommendations for operation. Comments received from operation’s organic certification denial of certification to the organic operations, certifying agents, continues in effect until surrendered by Administrator. Commenters stated that and consumers recommended that the organic operation or suspended or authority for denial of certification certifying agents provide additional revoked by the certifying agent, the should rest with the certifying agents. information on certificates of organic State program’s governing State official, They also contended that referral to the operation. Specifically, they or the Administrator. Administrator for denial of certification recommended that all certificates We disagree with the commenters establishes a bureaucratic process, include: (1) The certifying agent’s name who requested that certificates display which would create unnecessary delays and address; (2) an expiration date; (3) the physical location of certified to the denial process and increased cost the physical location of certified operations, including separate fields to applicants. Many commenters operations, including separate fields and facilities, and the name of the suggested the appeals process is and facilities; (4) the name of the certified operation’s contact person sufficient to protect the interests of the certified operation’s contact person responsible for compliance with Secretary. responsible for compliance with program requirements. We believe that We have determined that it is program requirements; (5) the name and the location of a certified operation’s reasonable to authorize certifying agents address of the certified operation; and fields and facilities has no relationship to deny certification. Denial by the (6) the crops and products certified. The to the operation’s status as a certified certifying agent would provide the commenters believe such information, organic operation. Therefore, such applicant with a more timely decision especially a date on which the information should only be made on its eligibility for certification. A more certificate expires, to be vital to assuring available with the written consent of the timely decision would provide an

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An applicant who is found at section 205.405. agent has reason to believe that the has independently had such tests This proposal requires certifying applicant has willfully made a false conducted may, but is not required to, agents to evaluate the applicant’s statement or otherwise purposefully include them with the application. corrective actions taken and supporting misrepresented its operation or While the Act requires that handlers documentation or written rebuttal compliance with the certification only use in their products water that submitted in response to a notification requirements. meets all Safe Drinking Water Act of noncompliance. Certifying agents are requirements, no similar requirements Certification—Changes Requested But authorized to perform on-site are placed on producers and the water Not Made inspections to verify corrections to they use to irrigate their crops. For these deficiencies or statements contained in This subpart retains from our first reasons, we are not requiring applicants a rebuttal, if necessary, to assure full proposal regulations on which we for certification to submit soil fertility or compliance with the certification received comments as follows: irrigation water quality test results. requirements. The certifying agent will (1) Timeliness of Applicant’s (4) Timeliness of On-site Inspection. issue the applicant a written notice of Notification to Certifiers. A commenter The first proposal required a certifying denial of certification if the corrective suggested that ‘‘immediately’’ in the agent to conduct an initial on-site action or rebuttal is not sufficient for the requirement that production and inspection within a reasonable time applicant to qualify for certification. handling operations immediately notify following a favorable preliminary We believe the denial of certification the certifying agent concerning any evaluation of an application for provisions should clearly state an application of a prohibited substance be certification. Several commenters asked applicant’s options and rights upon replaced with ‘‘within 2 days.’’ No what constitutes reasonable time receiving a notice of denial of justification was given for the between submission of an application certification. Accordingly, recommended change, and the change and an on-site inspection. Others stated § 205.405(c)(1)(ii) provides that a notice has not been made. ‘‘Immediately that, when determining what constitutes of denial of certification must state the notify’’ means that the applicant or reasonable time, consideration should reasons for denial and the applicant’s certified operation must at once notify be given to factors such as when the right to reapply for certification, request its certifying agent upon learning that a application was submitted relative to mediation, or file an appeal. An prohibited substance has come in when activities demonstrating applicant who has received a written contact with any portion of its operation compliance can be observed and when notice of denial of certification may or production. The certifying agent will the inspection can be scheduled to apply for certification again at any time evaluate the circumstances surrounding assure the presence of the applicant. with any certifying agent, may request the event and decide whether the We stated in the first proposal that we mediation to resolve a dispute with the certified operation acted within the did not specify a time within which an certifying agent, or may file an appeal intent of this requirement. This inspection must be conducted because with the Administrator as outlined in requirement is found at § 205.400(f)(1). the time would vary according to when § 205.663 for mediation and § 205.681 (2) Notification of Changes to the application was submitted and the for appeals. Applicants subject to an Certifying Agent. Commenters type of operation to be inspected. approved State program would seek questioned how the certified operation Timely service will be in the best mediation or appeal in accordance with would know what changes in its interest of certifying agents since the rules of the approved State program. certified operation or any portion of its applicants may forward complaints (13) Willful Misrepresentations or operation would require reporting to its regarding service to the Administrator. False Statements by Applicants. We certifier. Certified operations are Such complaints could have an impact have included authority for certifying responsible for being familiar with the on a certifying agent’s reaccreditation or agents to deny certification if the agent requirements of the Act and these continued accreditation. Further, our has reason to believe that the applicant regulations. Further, they have an original position is consistent with has willfully made a false statement or obligation to contact their certifying those commenters requesting flexibility otherwise purposefully misrepresented agent when they have questions in determining what constitutes its operation or compliance with the regarding compliance with this reasonable time. Accordingly, we have certification requirements. Such false program. As a rule, certified operations made no changes in this proposal statements would, in most cases, be should contact their certifying agent regarding what constitutes reasonable verified during an on-site inspection. whenever the change is not covered time. This requirement is found at This authority was provided to under their approved organic system § 205.403(b). certifying agents in the first proposal plan. The requirement that a certified (5) Additional On-site Inspections. relative to certified operations. The first operation notify its certifying agent Some organic associations asked what proposal, however, did not reference an concerning any change in its certified would trigger a decision to conduct an applicant’s willful making of a false operation that may affect its compliance additional on-site inspection. statement or otherwise purposefully with the Act and regulations is found at Commenters expressed the concern that misrepresenting its operation or § 205.400(f)(2). certifying agents could conduct compliance with the certification (3) Tests for Soil Fertility and additional, unneeded inspections at the requirements. Certifying agents Irrigation Water. Certifying agents expense of operators who would have to commented that applicants for suggested that applicants for pay the costs of the inspections. Other certification also may make false certification be required to submit test commenters asked who would pay for statements or misrepresent facts. They results for soil fertility and irrigation the additional on-site inspections. Some suggested that the regulations reflect a water quality to prove compliance with certifying agents suggested that certifying agent’s authority in such the NOP. We recognize that increasing guidelines need to be established under

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The The authority for on-site inspections This commenter recommended certified operation, therefore, should be is necessary for monitoring and requiring a yearly application and other fulfilling its annual continuation of compliance purposes at the discretion of documentation deemed necessary by the certification obligations at a time when the certifying agent, the Administrator, certifying agent. it can demonstrate its compliance with or a State program’s governing State We disagree with the commenters. We the Act and regulations. The official. Such on-site inspections would prefer continuous certification due to commenters’ recommendations are not likely be precipitated by reasons to the very real possibility that the renewal accepted. believe that the certified operation was process might not always be completed operating in violation of one or more before expiration of the certification Certification—Additional Provisions requirements of the Act or these period. Expiration of the certification Upon further review of the regulations. The on-site inspection period would result in termination of certification provisions in the first would be conducted, as necessary, to the operation’s certification. Even a proposal, we have decided to propose obtain information needed to determine short period of interruption in an the following additions and changes. compliance with identified operation’s organic status could have (1) Requirements for Business requirements. severe economic ramifications. Further, Information. We have revised the We believe policies and procedures we believe that a regular schedule of business information required of all regarding additional inspections, expiration of certification is applicants for certification as an organic including how the costs of such unnecessary inasmuch as all certified operation. First, the application must inspections are handled, are the operations are required to annually include the name of the person who responsibility of each certifying agent. update their organic system plan and completed the application. Certifying Misuse of such authority would be submit any changes to their certifying agents will use this information when subject to review by the Department agent. Accordingly, this proposal retains following up on information within the during its evaluation of a certifying the provision for continuous application. Second, we have removed agent for reaccreditation and at other certification. the requirement that the application times in response to complaints. (7) Timing of On-site Inspections. A include the names of personnel Certified production and handling State certifying agent and an industry responsible for maintaining compliance operations could file complaints with organization stated that requiring an on- with the Act and regulations. We the Department at any time should they site inspection after receipt of the believe this information is unnecessary believe a certifying agent abuses its renewal application is not consistent since the person responsible for authority to perform additional with current practice. The State overseeing compliance is the certifying inspections. Accordingly, we have made certifying agent stated that it moved the agent. Third, we have added the no changes in this proposal based on renewal date to January 1 of each year requirement that when the applicant is these comments. to make the renewal process less a corporation, the application must (6) Annual Renewal of Certification. burdensome to its certified producers. include the name, address, and Commenters requested annual renewal This commenter went on to say that the telephone number of the person of certification rather than updates to a annual inspection conducted during the authorized to act on the applicant’s continuing certification program. Other appropriate growing or processing behalf. Fourth, we have removed the commenters requested that the notice of season is used to evaluate the organic requirement that the applicant for certification have an ending date or be operation in the renewal process. The certification submit a statement of issued for an established period of time. State certifying agent further stated that compliance. We have also removed the An industry association commented that an additional inspection at renewal time ‘‘Statement of Compliance’’ section the proposed continuation of would not be useful if it was not an which required the submission of a certification regulations requires a appropriate time to observe production statement of compliance with the certified operation to annually certify practices at the organic operation. Both application for certification. We have that it is complying with the Act and commenters requested elimination of removed this requirement because we these regulations. This commenter the requirement that the certifying agent have determined that it creates an stated that the proposed continuation of arrange and conduct an on-site unnecessary burden upon applicants for certification procedures changes the inspection following receipt of the certification. Section 205.400(a) requires process of recertification to one more operation’s annual submission of that a person seeking to receive or closely resembling self-certification. information. These commenters also maintain organic certification must Another industry association stated that requested that a determination of comply with the Act and applicable certification until surrendered by the noncompliance be based on on-site production and handling regulations. certified operation or suspended or inspections conducted during the Accordingly, it is unnecessary to require revoked would make the assurance of previous certification year and a review a separate document through which the compliance extremely difficult, if not of the information annually submitted applicant for certification agrees to impossible. This commenter further by the certified operation. comply with the Act and regulations. stated that certifying agents will be We disagree with the commenters. The requirements for the submission of unable to effectively monitor applicants Certifying agents are required to business information with the request or gain needed information. This schedule on-site inspections for a time for certification are found at commenter recommended that renewal when land, facilities, and activities that § 205.401(b). paperwork include the items specified demonstrate the operation’s compliance (2) Disclosure of Previous in the continuation of certification or capability to comply with the Applications. The first proposal

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We have application may contain the same agents in the absence of a U.S. national amended this requirement by adding organic system plan and other organic program to comply with ‘‘including a copy of any notification of information provided in the European Union (EU) requirements noncompliance or denial of certification unsuccessful application for beginning on June 30, 1999. That issued to the applicant for certification certification, it must also provide any assessment program verifies that State and a description of the actions taken by new information or changes in and private organic certifying agents are the applicant to correct the deficiencies operations which may have occurred operating third-party certification noted in the notification of since the filing of the unsuccessful systems in a consistent and reliable noncompliance, including evidence of application. The updated information manner, thereby facilitating such correction.’’ We have added this concerning the applicant’s operation uninterrupted exports of U.S. organic provision to clarify what we mean by must include a description of actions agricultural commodities to the EU. ISO ‘‘the outcome of the application(s) taken, with supporting documentation, Guide 65 is used as a benchmark in submitted.’’ This provision is found at to correct the deficiencies identified in developing the accreditation program § 205.401(c). the notification of noncompliance. This described in this proposed rule. (3) On-site Inspections. We have new provision is found at § 205.405(e). Certifying agents accredited under the combined the arranging for inspection, NOP that maintain compliance with the verification of information, Subpart F—Accreditation of Certifying Act and these regulations will meet or postinspection conference, and Agents exceed the requirements of ISO Guide additional inspection regulations of the This subpart sets forth the 65; therefore, the organic assessment first proposal into a new on-site requirements for a national program to program is no longer needed. inspections section, § 205.403. We made accredit State and private entities as Participation in the NOP does not this change for the purposes of certifying agents to certify domestic or preclude the accredited certifying agent clarification and the removal of foreign organic production or handling from conducting other business redundancies. operations. This subpart also provides operations, including the certification of (4) Additional Inspections. We have that USDA will accept a foreign agricultural products, practices, and revised the on-site inspections certifying agent’s accreditation to certify procedures. An accredited certifying requirements to provide that a State organic production or handling agent may not, however, engage in any program’s governing State official may operations if: (1) USDA determines, business operations or activities which require a certifying agent to conduct an upon the request of a foreign would involve the agent in a violation additional inspection of a production or government, that the standards under of or a conflict of interest under the handling operation to determine the which the foreign government authority NOP. operation’s compliance with the Act accredited the foreign certifying agent Proposal Description and these regulations. We have meet the requirements of this part; or (2) provided State program governing State the foreign governmental authority that The Administrator will accredit officials with authority to require accredited the certifying agent acted qualified domestic and foreign additional inspections because such under an equivalency agreement applicants in the areas of crops, officials will have compliance negotiated between the United States livestock, wild crops, or handling or any responsibilities under their State Government and the foreign combination thereof to certify domestic programs and will need such authority government. or foreign production or handling to carry out their responsibilities. These This National Organic Program (NOP) operations as certified organic requirements are found at § 205.403(a). operations. Qualified applicants will be (5) Notifications of Noncompliance. accreditation process will facilitate national and international acceptance of accredited for 5 years. We have added at § 205.405(b) a Application Process. Certifying agents provision which identifies for United States organically produced agricultural commodities. The will apply to the Administrator for applicants for certification what their accreditation to certify production or options are when they receive a accreditation requirements in these regulations will replace the organic handling operations operating under the notification of noncompliance. Such NOP. The certifying agent’s application applicants may correct the deficiencies assessment voluntary, fee-for-service program, established by AMS under the must include basic business and submit a description and information, must identify each area of supporting documentation of correction Agricultural Marketing Act of 1946. That assessment program verifies that operation for which accreditation is to the certifying agent, correct the requested and the estimated number of deficiencies and submit a new State and private organic certifying agents comply with the requirements each type of operation to be certified application to another certifying agent annually, and must include a list of along with the notification of prescribed under the International Organization for Standardization/ each State or foreign country where it noncompliance and a description and currently certifies production or supporting documentation of correction, International Electrotechnical Commission Guide 65, ‘‘General handling operations and where it or submit written information to the intends to certify such operations. certifying agent to rebut the Requirements for Bodies Operating noncompliance described in the Product Certification Systems’’ (ISO 2 a.m. to 4:00 p.m., Monday through Friday (except notification of noncompliance. Guide 65). ISO Guide 65 provides the official Federal holidays). A copy may be obtained (6) Reapplying After a Notice of from the American National Standards Institute, 11 2 ISO/IEC Guide 65 is available for viewing at West 42nd Street, New York, NY 10036; Website: Noncompliance or Denial of USDA–AMS, Transportation and Marketing www.ansi.org; E-mail: [email protected]; Certification. We have added a new Programs, Room 2945-South Building, 14th and Telephone: 212–642–4900; Facsimile: 212–398– provision which requires a certifying Independence Ave., SW, Washington, DC, from 9:00 0023.

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Certifying agents must also submit operation for a fee, other than as part of A private entity certifying agent must personnel, administrative, conflict of the fees under the certification program. additionally agree to hold the Secretary interest, current certification, and other The Administrator will provide harmless for any failure on the agent’s documents and information to oversight of the fees to ensure that the part to carry out the provisions of the demonstrate their expertise in organic schedule of fees filed with the Act and regulations. A private entity production or handling techniques, Administrator is applied uniformly and certifying agent’s statement will also their ability to comply with and in a nondiscriminatory manner. The include an agreement to furnish implement the organic certification Administrator may inform a certifying reasonable security for the purpose of program, and their ability to comply agent that its fees appear to be protecting the rights of operations with the requirements for accreditation. unreasonable and require that the certified by such certifying agent. Such The administrative information certifying agent justify the fees. The security will be in an amount and submitted by the applicant should Administrator will investigate the level according to such terms as the include copies of their procedures for of fees charged by an accredited Administrator may by regulation certifying operations, for ensuring certifying agent upon receipt of a valid prescribe. A private entity certifying compliance of their certified operations complaint or under compelling agent must agree to transfer all records with the Act and regulation, for circumstances warranting such an or copies of records concerning its complying with recordkeeping investigation. Certifying agents are certification activities to the requirements, and for making prohibited from providing advice Administrator if it dissolves or loses its information available to the public concerning organic practices or accreditation. A private entity certifying about certified operations. The techniques to any certification applicant agent must also agree to make such procedures for certifying operations or certified operation for a fee, other records available to any applicable State encompass the processes used by the than as part of the fees under the program’s governing State official. certifying agent to evaluate applicants, certification program. Approval of Accreditation. Upon make certification decisions, issue Statement of Agreement. Upon receipt receiving all the required information, certification certificates, and maintain of the certifying agent’s application for including the statement of agreement, the confidentiality of any business accreditation, the Administrator will and the required fee, the Administrator information submitted by the certified send a statement of agreement to the will determine if the applicant meets operation. The procedures for ensuring person responsible for the certifying the requirements for accreditation. The compliance of the certified operations agent’s day-to-day operations for Administrator’s determination will be would include the methods used to signature. The statement of agreement based on a review of the information review and investigate certified affirms that, if granted accreditation as submitted and, if necessary, a review of operations, for sampling and residue a certifying agent under this subpart, the the information obtained from a site testing, and to report violations. applicant will carry out the provisions evaluation. The Administrator will The personnel information submitted of the Act and the regulations in this notify the applicant of approval of with the application should part. Accreditation will not be approved accreditation in writing. The notice of demonstrate that the applicant uses a until this statement is signed and accreditation will state the area(s) for sufficient number of adequately trained returned to the Administrator. which accreditation is given, the personnel to comply with and The statement of agreement will effective date of the accreditation, and, implement the organic certification include the applicant’s agreement to for a private-entity certifying agent, the program. The certifying agent will also accept the certification decisions made amount and type of security that must have to provide evidence that its by another U.S. Department of be established. responsibly connected persons, Agriculture (USDA)-accredited Certifying agents who apply for employees, and contractors with certifying agent as equivalent to its own accreditation and do not meet the inspection, analysis, and decision- and the applicant’s agreement to refrain requirements for accreditation will be making responsibilities have sufficient from making false or misleading claims provided, in accordance with § 205.665, expertise in organic production or about its accreditation status, the USDA with a notification of noncompliance handling techniques to successfully accreditation program, or the nature or and given an opportunity to come into perform the duties assigned. They must qualities of products labeled as compliance. After receipt of a also show that these employees have organically produced. Further, the notification of noncompliance, the revealed existing or potential conflicts statement will include the applicant’s applicant may submit a description of of interest. agreement to pay and submit the fees the actions taken to correct the noted Applicants who currently certify charged by AMS and to comply with, deficiencies and evidence production or handling operations must implement, and carry out any other demonstrating such corrections or file also submit a list of the production and terms and conditions determined by the an appeal with the Administrator. If the handling operations currently certified Administrator to be necessary. applicant is successful in its appeal or by them. For each area in which the Applicants are also required to affirm provides acceptable evidence applicant requests accreditation, the through this statement of agreement that demonstrating correction of the applicant should furnish copies of they will: (1) Conduct an annual deficiencies, the Administrator will inspection reports and certification performance appraisal for each notify the applicant of accreditation. If evaluation documents for at least three inspector used; (2) have an annual the applicant fails to correct the operations. If the applicant underwent program evaluation conducted of their deficiencies, fails to report the any other accrediting process in the year certification activities by their staff, an corrections by the date specified in the previous to the application, the outside auditor, or a consultant who has notification of noncompliance, fails to applicant should also submit the results expertise to conduct such evaluations; file an appeal by the date specified in of the process. and (3) implement measures to correct the notification of noncompliance, or is Certifying agents are prohibited from any deficiencies in compliance with the unsuccessful in its appeal, the providing advice concerning organic Act and regulations identified in an Administrator will issue a written practices or techniques to any inspector performance appraisal or notification of accreditation denial to certification applicant or certified program evaluation. the applicant. An applicant who has

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00061 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13572 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules received written notification of private-entity certifying agent whose Administrator relevant to continuing or accreditation denial may apply for accreditation is revoked will be renewing the accreditation status of a accreditation again at any time. ineligible for accreditation for a period certifying agent. Information about the Once accredited, a certifying agent of not less than 3 years following the certifying agent received as part of the may establish a seal, logo, or other date of such determination. review process is confidential identifying mark to be used by certified Peer Review Panels. The information, and peer reviewers must production and handling operations. Administrator may establish a peer not release, copy, quote, or otherwise However, the certifying agent may not review panel to assist in evaluating use material from the information require use of its seal, logo, or other applicants for accreditation. Peer review received other than in the report identifying mark on any product sold, panels will be used at the discretion of required to be submitted. Each peer labeled, or represented as organically the Administrator following the site reviewer must agree to treat the produced as a condition of certification. evaluation of a certifying agent, but information received for review as The certifying agent also may not under no circumstances will the confidential. require compliance with any production Administrator convene a peer review A peer review panel meeting will be or handling practices other than those panel when the peer review pool does held solely for the purposes of provided for in the Act and regulations not contain sufficient persons qualified exchanging information. Any meeting or as a condition for use of its identifying to peer review the certifying agent. conference call will be conducted in a mark. This provision does not apply to To be eligible to serve on a peer manner that will ensure the actions of States with more restrictive review panel, the applicant for panel members are carried out on an requirements approved by the membership in the peer review pool individual basis with any opinions and Administrator or private-entity must provide the Administrator with a recommendations by a member being certifying agents certifying operations written description and, upon request, made individually. We do not believe within such States. supporting documentation of its that it is usual to have consensus in peer Site Evaluations. One or more qualifications to conduct peer reviews. review or that it is the best use of USDA representatives of the Administrator The applicant for membership in the resources or the time of peer reviewers will perform site evaluations for each peer review pool must address possible to seek consensus under a single report. certifying agent in order to examine the limitations on availability to serve and Further, requiring a consensus report certifying agent’s operations and to include information concerning may make peer review panels subject to evaluate compliance with the Act and commercial interests with any person the Federal Advisory Committee Act, regulations. Site evaluations will who may seek to become or who is an which might stifle meaningful dialog include an on-site review of the accredited certifying agent. No person between reviewers, increase the cost certifying agent’s certification who has or has had a commercial and time required of peer reviewers for procedures, decisions, facilities, interest, including an immediate family peer review service, and result in administrative and management interest or the provision of consulting problems obtaining volunteers for systems, and production or handling services, in an applicant for service on peer review panels. operations certified by the certifying accreditation or renewal of accreditation Peer review panel members will agent. A site evaluation of an will be appointed to a panel evaluating prepare and submit individual reports, accreditation applicant will be such applicant for accreditation or including recommendations, to the conducted before or within a reasonable renewal of accreditation. Persons Administrator regarding a certifying time after issuance of the applicant’s accepted to the pool may serve until agent’s ability to conduct and perform notification of accreditation. Certifying notified that their appointment has been certification activities. The agents will be billed for each site rescinded by the Administrator or until Administrator will consider the reports evaluation conducted in association they are no longer qualified, whichever when determining whether to continue with an initial accreditation, occurs first. Peer reviewers will serve or renew the certifying agent’s amendments to an accreditation, and without compensation. accreditation. Copies of the peer review renewals of accreditation. Certifying Peer review panels will consist of at panel reports will be provided, upon agents will not be billed by USDA for least three but no more than five request, to the certifying agent, and USDA-initiated site evaluations members. A Department representative written responses from the certifying conducted to determine compliance will preside over the panel. A peer agent may be submitted for with the Act and regulations. review panel will include no fewer than consideration by the Administrator. As noted above, a certifying agent two members who possess sufficient Copies of peer review panel reports may may be accredited prior to a site expertise in the certifying agent’s areas be provided to any person requesting evaluation. If the Administrator finds, of accreditation. Peer review panels may such reports under the Freedom of following the site evaluation, that an include up to two members with Information Act. accredited certifying agent is not in expertise in other disciplines, including Continuing Accreditation. An compliance with the Act or regulations, organizational management and finance; accredited certifying agent must submit the Administrator will issue the member(s) from the approved State annually to the Administrator, on or certifying agent a written notification of organic certification program when the before the anniversary date of the noncompliance. If the certifying agent applicant is a private entity that will issuance of the notification of fails to correct the deficiencies, report operate within the State; and member(s) accreditation, the following reports and the corrections by the date specified in from a foreign government’s organic fees: (1) A complete and accurate update the notification of noncompliance, or program when the applicant is a private of its business information, including its file an appeal by the date specified in entity that will operate within the fees, and information evidencing its the notification of noncompliance, the country. expertise in organic production or Administrator will begin proceedings to Each person on a peer review panel handling and its ability to comply with suspend or revoke the accreditation. A must individually review the site these regulations; (2) information certifying agent that has had its evaluation report prepared by the supporting any changes requested in the accreditation suspended may apply for Department’s evaluator(s) and any other areas of accreditation; (3) a description accreditation again at any time. A information that may be provided by the of measures implemented in the

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The certifying agent must memoranda concerning applicants and appraisals and evaluation; and (5) the maintain strict confidentiality with certified operations. Examples of required AMS fees. respect to its clients and not disclose to records created or received by the Certifying agents will keep the third parties (with the exception of the certifying agent pursuant to the Administrator informed of their Secretary or the applicable State accreditation requirements include certification activities by: (1) Providing program’s governing State official or operations manuals; policies and the Administrator with a copy of any their authorized representatives) any procedures documents (personnel, notice of denial of certification, business-related information concerning administrative); training records; annual notification of noncompliance, any client obtained while implementing performance appraisals and supporting notification of noncompliance these regulations except as authorized documents; conflict of interest correction, notification of proposed by regulation. A certifying agent must disclosure reports and supporting suspension or revocation, and make the following information documents; annual program evaluation notification of suspension or revocation available to the public: (1) Certification working papers, memoranda, letters, issued simultaneously with its issuance; certificates issued during the current and reports; fee schedules; quarterly and (2) on a quarterly calendar basis, the and 3 preceding calender years; (2) a list reports of operations granted name, address, and telephone number of of producers and handlers whose certification; application materials each operation granted certification. operations it has certified, including for submitted to the NOP; correspondence One or more site evaluations will each the name of the operation, type(s) received from and sent to USDA; and occur during the 5-year period of of operation, and the effective date of annual reports to the Administrator. accreditation to determine whether an the certification, during the current and The certifying agent must make all accredited certifying agent is complying 3 preceding calender years; and (3) the records available for inspection and with the Act and regulations. USDA will results of laboratory analyses for copying during normal business hours establish an accredited certifying agent residues of pesticides and other by authorized representatives of the compliance monitoring program, which prohibited substances conducted during Secretary and the applicable State will involve no less than one randomly the current and 3 preceding calender program’s governing State official. In the selected site evaluation of each years. A certifying agent may make event that the certifying agent dissolves certifying agent during its 5-year period other business information available to or loses its accreditation, it must of accreditation. Larger and more the public if permitted in writing by the transfer to the Administrator and make diverse operations, operations with producer or handler. This information available to any applicable State clients marketing their products will be made available to the public at program’s governing State official all internationally, and operations with a the public’s expense. records or copies of records concerning history of problems should expect more An accredited certifying agent must its certification activities. frequent site evaluations by USDA. maintain records according to the Certifying agents are also required to Operations with clients marketing their following schedule: (1) Records prevent conflicts of interest and to products internationally will be obtained from applicants for require the completion of an annual annually site evaluated to meet the ISO- certification and certified operations conflict of interest disclosure report by Guide 61 3 requirement for periodic must be maintained for not less than 5 all personnel designated to be used in surveillance of accredited certifying years beyond their receipt; (2) records the certification operation. Coverage of agents. USDA may also conduct site created by the certifying agent regarding the conflict of interest provisions evaluations during investigations of applicants for certification and certified extends to immediate family members alleged or suspected violations of the operations must be maintained for not of the certifying agent; responsibly Act or regulations and in followup to less than 10 years beyond their creation; connected persons of the certifying such investigations. Such investigations and (3) records created or received by agent; and any employee, inspector, will generally be the result of the certifying agent pursuant to the contractor, or other personnel of the complaints filed with the Administrator accreditation requirements, excluding certifying agent. A certifying agent may alleging violations by the certifying any records covered by the 10-year not certify a production or handling agent. Compliance site evaluations may requirement must be maintained for not operation if the certifying agent or a be announced or unannounced at the less than 5 years beyond their creation responsibly connected party of such or receipt. Examples of records obtained certifying agent has or has held a 3 ISO/IEC Guide 61 is available for viewing at from applicants for certification and commercial interest in the production or USDA–AMS, Transportation and Marketing certified operations include organic handling operation, including an Programs, Room 2945—South Building, 14th and Independence Ave., SW, Washington, DC, from 9:00 production system plans, organic immediate family interest or the a.m. to 4:00 p.m., Monday through Friday (except handling system plans, application provision of consulting services, within official Federal holidays). A copy may be obtained documents, and any documents the 12-month period prior to the from the American National Standards Institute, 11 submitted to the certifying agent by the application for certification. A certifying West 42nd Street, New York, NY 10036; Website: www.ansi.org; E-mail: [email protected]; applicant/certified operation. Examples agent may certify a production or Telephone: 212–642–4900; Facsimile: 212–398– of records created by the certifying agent handling operation if any employee, 0023. regarding applicants for certification inspector, contractor, or other personnel

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00063 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13574 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules of the certifying agent has or has held by the certifying agent and the time private and state certifying agents, will a commercial interest, including an within which those terms and be required to meet the same immediate family interest or the conditions must be satisfied. Renewal of requirements to be recognized as provision of consulting services, within accreditation will be for 5 years. Upon qualified to certify organic production the 12-month period prior to the a determination that the certifying agent or handling operations. This change application for certification. However, is not in compliance with the Act and provides foreign private and state any such person must be excluded from regulations, the Administrator will certifying agents with transparent work, discussions, and decisions in all initiate proceedings to suspend or standards for accreditation. stages of the certification process and revoke the certifying agent’s A commenter raised concerns that we the monitoring of the entity in which accreditation. Any certifying agent acted in violation of international they have or have held a commercial subject to a proceeding to suspend or agreements and domestic policy by interest. The acceptance of payment, revoke its accreditation may continue to proposing rules that were contrary to gifts, or favors of any kind, other than perform certification activities pending internationally accepted organic prescribed fees, from any business resolution of the proceedings to suspend standards and, thus, created an inspected is prohibited. However, a or revoke the accreditation. unacceptable barrier to trade. The Act certifying agent that is a not-for-profit directs the Secretary to establish Accreditation—Changes Based on organization with an Internal Revenue national standards governing the Comments Code tax exemption or, in the case of a marketing of certain agricultural foreign certifying agent, a comparable This subpart differs from our first products as organically produced recognition of not-for-profit status from proposal in several respects as follows: products. In accordance with our its government, may accept voluntary (1) Equivalency of Imported Organic international agreements, this proposal labor from certified operations. Products. We have removed the ensures that, with respect to Certifying agents are also prohibited regulations on equivalency of imported accreditation under this subpart, from providing advice concerning organic products included in the first products imported from the territory of organic practices or techniques to any proposal. In this proposal, we have any country are being accorded certification applicant or certified added foreign certifying agents as treatment no less favorable than that operation for a fee, other than as part of entities eligible for accreditation as accorded to products of U.S. origin. the fees under the certification program. certifying agents qualified to certify However, in accordance with our No accredited certifying agent may domestic and foreign organic international trade agreements and upon exclude from participation in or deny production and handling operations. We implementation of this program, the the benefits of the NOP to any person have also added to subpart A definitions Administrator will give positive due to discrimination because of race, for private entity and State entity. We consideration to accepting as equivalent color, national origin, gender, religion, have defined ‘‘private entity’’ as any technical regulations of other countries, age, disability, political beliefs, sexual domestic or foreign nongovernmental even if these regulations differ from our orientation, or marital or family status. for-profit or not-for-profit organization own, provided such regulations fulfil Renewal of Accreditation. To avoid a providing certification services. We the objectives of this proposed program. lapse in accreditation, certifying agents have defined ‘‘State entity’’ as any Any such equivalency agreements will must apply for renewal of accreditation domestic or foreign governmental be negotiated on a case-by-case basis, 6 months prior to the fifth anniversary subdivision providing certification and ample opportunity for public of issuance of the notification of services. comment will be provided before and accreditation and each subsequent In commenting on the first proposal, during the negotiation process. renewal of accreditation. The several commenters expressed Two commenters requested that the accreditation of certifying agents who confusion as to how the Secretary Secretary recognize international make timely application for renewal of would determine equivalency of accreditation systems for foreign organic accreditation will not expire during the imported organic products. They also certification programs and establish the renewal process. The accreditation of expressed confusion as to how the requirements for approval of such certifying agents who fail to make Secretary would ensure that imported systems in this proposal. We have timely application for renewal of products met the same requirements as instead proposed for the purposes of accreditation will expire as scheduled those produced domestically. We have this rule that all certifying agents, unless renewed prior to the scheduled addressed these concerns by adding regardless of their country of origin, expiration date. Certifying agents with foreign certifying agents as private or meet the same requirements for an expired accreditation must not state entities that may be accredited accreditation through the provisions of perform certification activities under the under the NOP. We have also provided this subpart. Act and these regulations. that USDA will accept a foreign One commenter requested that all Following receipt of the certifying certifying agent’s accreditation to certify imported organic products be labeled by agent’s annual report and fees, the organic production or handling their respective country of origin. The results of a site evaluation, and, when operations if: (1) USDA determines, purpose of this proposal is to provide applicable, the reports submitted by a upon the request of a foreign the requirements for the marketing of peer review panel, the Administrator government, that the standards under agricultural products in the United will determine whether the certifying which the foreign government authority States that are labeled or sold as organic. agent remains in compliance with the accredited the foreign certifying agent The issue of country-of-origin labeling Act and regulations and should have its meet the requirements of this part; or (2) of imported products is not related to accreditation renewed. Upon a the foreign governmental authority that this proposal or the Act. Further, determination that the certifying agent accredited the certifying agent acted regulations pertaining to the labeling of is in compliance with the Act and under an equivalency agreement organic agricultural products should not regulations, the Administrator will issue negotiated between the United States be used to enforce country-of-origin a notice of renewal of accreditation. The Government and the foreign labeling requirements. notice of renewal will specify any terms government. These changes ensure that Several commenters stated that the and conditions that must be addressed all certifying agents, including foreign first proposal did not take into account

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00064 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13575 the use of equivalency to ensure the we are proposing three retention gifts, or favors of any kind, other than marketing of U.S. organic products in periods. First, records created by the regular fees from any business inspected foreign markets. The Department will certifying agent regarding applicants for by the certifying agent. This addition, work to oppose other countries’ organic certification and certified operations which is found at § 205.501(a)(11), was regulations that would prohibit entry of would have to be maintained for not made to clarify that contractors, U.S. organic product produced under less than 10 years beyond their creation. including contract inspectors, are the Act or these regulations. As We believe this retention period to be prohibited from accepting payment, appropriate, the U.S. Government may consistent with the Act’s requirement gifts, or favors of any kind, other than represent U.S. organic interests in that the certifying agent maintain all regular fees. international government-to-government records concerning its activities for a (5) Use of Voluntary Labor. We have bodies. However, neither of these period of not less than 10 years. Second, added an exception to the prohibition of objectives is intended to be achieved by records obtained from applicants for the acceptance of payment, gifts, or this rule. certification and certified operations favors of any kind. The exception (2) Accreditation Requirements would have to be maintained for not provides that any certifying agent that is Regarding Expertise of Employees. We less than 5 years beyond their receipt. a not-for-profit organization with an have added a new regulation to the This retention period is the same as that Internal Revenue Code tax exemption general requirements for accreditation. required by the Act for the retention of or, in the case of a foreign certifying This regulation requires that the records by the certified operation. Since agent, a comparable recognition of not- certifying agent ensure that its the certified operation can dispose of its for-profit status from its government responsibly connected persons, records 5 years after their creation, the may accept voluntary labor from employees, and contractors with certifying agent should also be able to certified operations. Internal Revenue inspection, analysis, and decision- dispose of those records it receives from Code tax exemption or, in the case of a making responsibilities have sufficient the certified operation 5 years after their foreign certifying agent, a comparable expertise in organic production or receipt. Third, records created or recognition from its government is handling techniques to sufficiently received by the certifying agent for required as verification of the certifying perform the duties assigned. Certifying USDA accreditation would have to be agent’s status as a not-for-profit agents were required under the first maintained for not less than 5 years organization. This change was made to proposal to use a sufficient number of beyond their creation or receipt. clarify our original intent that not-for- adequately trained personnel, including profit certifying agents would be inspectors. They were also required to (4) Conflict of Interest Provisions. We allowed to accept volunteer labor from conduct an annual performance have made three changes which we persons certified by the certifying agent. appraisal of each inspector. believe will strengthen the conflict of Commenters felt that the proposed interest provisions. We have made these In the preamble to the first proposal, rule did not sufficiently ensure that changes because we concur with the we stated that we would not consider a certifying agents would employ comment from a research foundation volunteer who performs services for a qualified individuals. One of these stating that the provisions for not-for-profit certifying agent as commenters requested that we require preventing conflicts of interest needed providing favors to any particular organic certification inspectors to to be significantly strengthened. First, individual in that agency and, therefore, participate in an inspector accreditation we have added a new would not consider the certifying agent program, such as that offered by the § 205.501(a)(11)(v), which requires the as being in a conflict of interest Independent Organic Inspectors completion of an annual conflict of situation by accepting such services Association. We believe that inspector interest disclosure report by all from volunteers. We have made this participation in an inspector personnel designated to be used in the clarification because a commenter accreditation program should be left to certification of an operation, including expressed the belief that the certifying the discretion of the inspector and administrative staff, certification agent should be allowed to receive certifying agent. However, we believe inspectors, members of any certification donations of time, food, and money that the new requirement combined review and program evaluation beyond any mandatory fees from with the requirements from the first committees, contractors, and all parties persons they certify. The Act prohibits proposal should ensure that responsibly responsibly connected to the certifying certifying agents from accepting connected persons, employees, and agent. Second, coverage of the conflict payments, gifts, or favors of any kind contractors of an accredited certifying of interest provisions has been extended from a business inspected, other than agent are qualified to perform their to immediate family members of the prescribed fees. Accordingly, this inspection, analysis, and decision- certifying agent; responsibly connected exception is limited to acceptance of making duties. This new regulation is persons of the certifying agent; and any voluntary labor by not-for-profit found at § 205.501(a)(5) of this proposal. employee, inspector, contractor (to be certifying agents. While (3) Recordkeeping Requirements. We used in the certification of an § 205.501(a)(11)(iii) prohibits the have proposed a new § 205.510(b), operation), or other personnel of the acceptance of payments, gifts, or favors which identifies three categories of certifying agent. Immediate family of any kind, other than prescribed fees, records and their retention periods. This members would include the spouse; from any business inspected for new paragraph was added to address minor children, including legally certification as a producer or handler of commenter concern that the adopted children; or blood relatives organic agricultural products, the requirement that an accredited who reside in the immediate household paragraph does not prohibit the certifying agent maintain records about of a certifying agent; responsibly accredited certifying agent from all of its activities for 10 years was connected person of the certifying agent; accepting payments, gifts, or favors of excessive and unnecessary. Commenters or any employee, inspector, contractor, any kind, including time, food, or suggested a 5- to-7-year retention or other personnel of the certifying money, from persons for whom they do period. We agree that for some records, agent. Third, this proposal lists not provide inspections for certification a retention period of 10 years may be contractors among those persons who as a producer or handler of organic excessive. Accordingly, in this proposal, are prohibited from accepting payment, agricultural products.

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(6) Certification Fees. We have that their more restrictive standards, reasonable public access to such removed the requirement that a approved by the USDA, be met as a records. certifying agent charge only such fees to requirement for use of the State’s logo (9) Scope of Information for Public applicants for certification and on organically produced products. We Release. We have expanded the scope of operations it certifies that the Secretary did not intend to prohibit States from information for public release which determines are reasonable. We have requiring that their more restrictive must be included in the list of made this change because we concur standards be met as a requirement for producers and handlers whose with those commenters who expressed use of the State’s logo on organically operations the certifying agent has the belief that certifying agents should produced products. Including this certified. Specifically, certifying agents be permitted to set their own fees exception in § 205.501(b)(2) will permit will have to include the name of the without the approval of the Secretary. States with more restrictive operation and type(s) of operation in its However, we continue to believe that requirements approved by the Secretary list of producers and handlers it has the Administrator should retain and private entity certifying agents certified. This change is included in oversight of the fees, not for the purpose certifying production or handling section § 205.504(b)(5)(ii). Commenters of setting the fees or of dictating the operations within the borders of such requested that the list be expanded to level of the fees, but for the purpose of States to require that the State’s more include the name of the operation, its determining if any certifying agent’s fees restrictive standards be met as a physical location(s), certification are so high as to be unreasonable and to requirement for use of their logo or history, type(s) of operation, acreage ensure that the schedule of fees filed other identifying mark on organically (when applicable), and person with the Administrator are applied produced products. responsible for organic regulation uniformly and in a nondiscriminatory Certifying agents may not require a compliance. While we agree that the manner. The Administrator should also certified operation to meet production name of the operation and type(s) of retain the ability to inform a certifying or handling standards greater than those operation should be available to the agent that its fees appear to be established by the Department or, when public, we believe that the certified unreasonable and to require a applicable, an approved State organic operation’s physical location(s), justification for the level of fees set by certification program as a condition for certification history, and acreage are the certifying agent. We further believe using its logo or other identifying mark. confidential information which has no that the Administrator should retain the However, a certifying agent may verify, relationship to the operation’s status as a certified organic operation. Therefore, ability to investigate the level of fees upon the request of a producer or such information should only be made charged by an accredited certifying handler certified by the certifying agent, available with the written consent of the agent if a complaint is made or if that the producer or handler is meeting certified operation. We also believe that compelling circumstances warrant such contractual specifications which it is unnecessary to list a person an investigation. Accordingly, we have include requirements in addition to responsible for organic regulation proposed at § 205.501(a)(15) that a those of the Act and regulations. compliance since the applicant certifying agent must charge applicants (8) Time Period for Public Access to for certification and certified production ultimately has that responsibility. Information. For the requirement that Therefore, these requested additions and handling operations only those fees certifying agents describe the and charges that it has filed with the have not been made. We have also procedures they will use for making removed the separate requirement that Administrator. We have also included at information available to the public, we certifying agents identify for the public § 205.642 regulations with respect to have changed the time period from the organic agricultural products fees charged by certifying agents to ‘‘during the 10-year period preceding produced by each certified operation. producers and handlers. Section the receipt of the request from the We have taken this action because the 205.642 is discussed under fees in public’’ to ‘‘during the current and 3 information is available on the subpart G of this preamble. preceding calendar years.’’ Commenters certificates and the list of producers and (7) State Standards That Vary From stated that the required 10-year period handlers required to be released by the the National Organic Program. We have was excessive and unnecessary. The Act certifying agent to the public. These added an exception to the regulation requires public access to certification requirements are found at which prohibited certifying agents from documents and laboratory analyses that § 205.504(b)(5)(i) and (ii). requiring, as a condition for use of the pertain to certification. However, the (10) Release of Nonconfidential certifying agent’s identifying mark, Act does not specify that a certifying Business Information. We have removed compliance with any farming or agent must provide access to its records the requirement that certifying agents handling requirements other than those throughout their 10-year retention provide a description of the procedures provided for in the Act and regulations. period. We agree with the commenters to be used to make nonconfidential The exception provides that the that public access to the records the business information, as permitted by requirement does not apply to States certifying agent is required to keep the producer or handler and approved with more restrictive requirements should be limited to a reasonable period by the Secretary, available to the public. approved by the Secretary or private short of the full retention period. Such This requirement has been replaced entity certifying agents certifying a reasonable period, we believe, would with the requirement that the certifying production or handling operations be the current calendar year and the 3 agent provide a description of the within States with more restrictive calendar years preceding the calendar procedures to be used to make other requirements approved by the Secretary. year of the request. Accordingly, business information, as permitted in This change was made because we agree § 205.504(b)(5) requires certifying agents writing by the producer or handler, with the State commenters who stated to describe the procedures they will use available to the public. Commenters that the prohibition on requiring for making information available to the objected to the requirement that the compliance with any farming or public during the current and 3 Secretary approve the release of handling requirements other than those preceding calendar years. This time nonconfidential business information provided for in the Act and regulations period will lessen the burden on that the producer or handler had would prohibit States from requiring certifying agents while assuring authorized the certifying agent to

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We concur certifying agents currently certifying Section 205.508 also provides that one that this requirement is unnecessary. production or handling operations. or more site evaluations will be However, we believe that the producer’s This change has been made because of conducted during the period of or handler’s approval must be obtained the value such information and accreditation to determine whether an in writing, which is reflected in this documents would have in assisting the accredited certifying agent is complying proposal at § 205.504(b)(5)(v). Department in evaluating an applicant with the general requirements for (11) Submission of Applicant’s for accreditation. However, we have accreditation. Financial Policies and Procedures. We limited the submission of inspection (14) Eligibility for Peer Review Panels. have removed the requirement that a reports and certification evaluation We have added a new regulation certifying agent include with its documents for production and handling addressing eligibility for peer review application for accreditation a operations certified by the applicant. panels. Commenters expressed concern description of its policies and The applicant is required to submit that peer review pool applicants be free procedures for collection and copies of at least 3 different inspection of conflicts of interest and possess the disbursement of funds and documents reports and certification evaluation necessary expertise in organic that identify anticipated sources of documents for production or handling production or handling. The first income, including all fees to be operations certified by the applicant proposal provided that candidates for collected from producers and handlers. during the previous year for each area membership in the peer review panel Commenters stated that they did not of operation for which accreditation is pool would be required to submit a believe the submission of applicant requested. We have limited the letter to the Program Manager of the financial policies and procedures was submission to reduce the reporting NOP requesting appointment, necessary. We have decided that the burden on certifying agents. The describing their qualifications, and information requested probably would Administrator may, however, require identifying conflicts of interest. We not fully meet our needs in determining that the certifying agent submit believe that there is value to the that certification decisions were not additional inspection reports and applicants for membership in the peer influenced by the certifying agent’s certification evaluation documents. review panel pool and the general concern for the certification decision’s We recognize that a newly organized public in addressing eligibility for peer financial impact on the certifying agent certifying agent with no experience or in determining compliance with the would be unable to supply the review panels in the regulatory text. conflict of interest provisions of the Act information. An applicant’s inability to Accordingly, we have added a new and these regulations. Accordingly, this provide the information and regulation at § 205.509(b) which requirement is not included in this documentation required by the revised provides that applicants for membership proposal. paragraph due to lack of experience in the peer review panel pool must (12) Submission of Information would not be prejudicial to the provide the Administrator with a Concerning Current Certification Department’s evaluation of the written description and, upon request, Activities. We have changed the application. supporting documentation of their voluntary submission of information (13) Site Evaluations. We have revised qualifications to conduct peer reviews. and documents concerning current the site evaluation provisions to clarify Such description must include certification activities to a required the scope of an evaluation, to specify information concerning the applicant’s submission. Commenters stated that the that the evaluation will be arranged and training and expertise in organic submission of a list of all farms, wild- conducted by a representative of the production or handling methods and in crop harvesting operations, and Administrator, and to specify when evaluating whether production or handling operations currently certified evaluations shall or may be conducted. handling operations are using a system by the applicant should be required. These changes are made in response to of organic production or handling. They went on to say that the submission commenters who suggested adding Applicants must also address their of copies of the inspection reports and details to the regulatory text regarding possible limitations on availability to certification evaluation documents for the nature of site evaluations. The serve. Further, applicants would be production or handling operations revised section provides that site required to include information certified by the applicant during the evaluations of accredited certifying concerning their commercial interests previous year should remain optional. agents shall: (1) Be conducted for the and those of their immediate family They also said the submission of results purpose of examining the certifying members, within the 12-month period from any accreditation process of the agent’s operations and evaluating its prior to application, with any person applicant’s operation by an accrediting compliance with the Act and who may seek to become or who is an body during the previous year for the regulations; (2) include an on-site accredited certifying agent. No person purpose of evaluating its certification review of the certifying agent’s who has or has had a commercial activities should remain optional. certification procedures, decisions, interest, including an immediate family We agree with the commenters that a facilities, administrative and interest or the provision of consulting list of all operations currently certified management systems, and production or services, in an applicant for by the applicant should be a required handling operations certified by the accreditation or renewal of accreditation submission. We also believe that copies certifying agent; (3) be conducted by a will be appointed to or accept of inspection reports, certification representative(s) of the Administrator; appointment to a panel evaluating the evaluation documents, and and (4) be conducted after application applicant. This provision was added for accreditation results should be a for renewal of accreditation but prior to the purpose of avoiding conflicts of required submission from all applicants the issuance of a notice of renewal of interest by peer reviewers. This new currently certifying production or accreditation. This revised section regulation also provides that persons handling operations. Accordingly, at provides that an initial site evaluation of accepted to the pool may serve until § 205.504(d) we have made the an accreditation applicant would be notified that their appointment has been submission of information and conducted before or within a reasonable rescinded by the Administrator or until

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Commenters requested of issuance of the notice of a notification of noncompliance, the that the peer review panel consist of at confirmation. applicant may submit a description of least two members who are not USDA We believe that clarification regarding the actions taken to correct the noted employees, rather than not AMS the status of the certifying agent’s deficiencies and evidence employees. We agree with this accreditation during the renewal demonstrating such corrections, rather suggested change, which clarifies what process is appropriate. We also concur than submitting a new application. We had been our intent. This change is with the commenters’ suggestion that have taken this action because included in § 205.509(c). Section certifying agents should submit their commenters were confused by our 205.509(c) provides that peer review applications for renewal of accreditation reference to a new application in the panels shall consist of at least three but 6 months prior to the fifth anniversary denial of accreditation regulations. The no more than five members. This of issuance of the notice of denial of accreditation regulations are section provides that peer review panels confirmation. We have replaced ‘‘notice found at § 205.507 in this proposal. must include a Department of confirmation of accreditation,’’ Accreditation—Changes Requested But representative who will preside over the however, with ‘‘notification of Not Made panel and no fewer than two members accreditation’’ because this proposal from the peer review pool who possess eliminates the section on confirmation This subpart retains from our first sufficient expertise in the relevant areas of accreditation. Accordingly, we have proposal regulations on which we of accreditation. Additionally, section provided in this proposal at § 205.510(c) received comments as follows: 205.509(c) provides that peer review that: (1) An accredited certifying agent’s (1) Durations of Accreditation and panels may include up to two members application for accreditation renewal Reporting Requirements. Commenters with expertise in other disciplines, must be received 6 months prior to the expressed concern regarding the including organizational management fifth anniversary of issuance of the duration of accreditation and whether and finance; member(s) from the notification of accreditation and each the interval of required reporting is approved State organic certification subsequent renewal of accreditation; (2) adequate. An association expressed program when the applicant is a private the accreditation of certifying agents concern regarding the economic impact entity seeking accreditation within the who make timely application for of accreditation on small certifying State; and member(s) from a foreign renewal of accreditation will not expire agents. This commenter stated that government’s organic program when the during the renewal process; (3) the small certifying agents should not be applicant is a private entity that will accreditation of certifying agents who accredited more often than every 5 operate within the country. We have fail to make timely application for years. An international organic added authorization for these additional renewal of accreditation will expire as federation expressed the belief that members to broaden the scope and scheduled unless renewed prior to the accreditation for 5 years is too long. The depth of expertise available to peer scheduled expiration date; (4) certifying commenter went on to say that review panels. agents with an expired accreditation certification bodies are expanding Commenters also expressed concern must not perform certification activities rapidly and that annual reports cannot that the peer review panels consist of at under the Act and regulations; and (5) be relied upon to fully convey the least one member from a State organic following receipt of the information consequent changes. This commenter certification program. We do not believe submitted by the certifying agent, the believes that many of the conditions of that the composition of peer review results of any site evaluation, and, when accreditation may relate to operational panels regulations needs to be amended applicable, the reports submitted by a aspects that cannot be addressed in an to accommodate this concern. To the peer review panel, the Administrator annual report. extent possible, accredited private will determine whether the certifying Annual reporting by the certifying certifying agents will peer review agent remains in compliance with the agent, under this proposal, would private certifying agents, and accredited Act and regulations and should have its provide: (1) A complete and accurate State certifying agents will peer review accreditation renewed. update of applicant information and State certifying agents. These changes would provide the expertise and ability information (16) Renewal of Accreditation. We Department with sufficient time to fully previously submitted; (2) information have revised the renewal of process the certifying agent’s supporting any changes being requested accreditation provisions to, among other application for accreditation renewal in the areas of accreditation; (3) the things, require that an accredited prior to the accreditation’s scheduled measures that were implemented in the certifying agent’s application for date of expiration. This revised previous year and any measures to be accreditation renewal be received 6 regulation also clarifies that a certifying implemented in the coming year to months prior to the fifth anniversary of agent’s accreditation will not expire satisfy any terms and conditions issuance of the notification of during the accreditation renewal determined by the Administrator to be accreditation and each subsequent process if the certifying agent has made necessary as specified in the most recent renewal of accreditation. The first timely application for renewal. It also notification of accreditation; and (4) the proposal provided that an accredited makes clear that the accreditation of results of the most recent inspector certifying agent would request renewal certifying agents who fail to make performance appraisal and program of accreditation on or before the fifth timely application for renewal of evaluation and adjustments to the anniversary of issuance of the notice of accreditation will expire as scheduled certifying agent’s operation and confirmation of accreditation and each unless renewed prior to the scheduled procedures implemented and intended subsequent renewal of accreditation. expiration date. This regulation also to be implemented in response to the Commenters expressed concern about provides that certifying agents with an appraisals and evaluations. This whether the accredited certifying agent’s expired accreditation must not perform proposal includes a requirement at

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§ 205.501(a)(14) that the certifying agent changed the questioned provisions, during the 12 months prior to submit to the Administrator a copy of which appear at § §205.501(a)(6) and certification. Several States and industry each notification of: (1) Denial of (7). We have, however, revised associations stated that the prohibition certification; (2) noncompliance; (3) § 205.501(a)(7) to clarify that the annual of commercial interest should apply to noncompliance correction; (4) proposed program evaluation can be conducted by the 12 months after as well as the 12 suspension or revocation; and (5) the certifying agency staff, an auditing months prior to certification. These suspension or revocation, entity, or a consultant who has expertise commenters offered no reasoning for simultaneously with its issuance. to conduct program evaluations. their position. A research foundation We believe that these reporting (3) ‘‘Open Records’’ Requirements. recommended that the prohibition of requirements, coupled with feedback Commenters expressed the belief that commercial interest should be for 3 from applicants for certification, confidentiality requirements for years before and after the application for certified operations, and other certifying agents might conflict with certification. This commenter stated that interested parties, will provide the State requirements for ‘‘open records.’’ the conflict of interest provisions Department with sufficient information We recognize this potential for needed significant strengthening. A regarding the certifying agent and its conflicting requirements. Records producer commenter stated that the operation to determine whether a site collected and maintained under the prohibition of commercial interest visit is necessary to evaluate the NOP are subject to the confidentiality should be for an indefinite period, not certifying agent’s suitability to remain provisions of the Act and these for 12 months. Some commenters accredited. Under this proposal, the regulations. However, a State-entity recommended that certifying agents and Department will conduct one or more certifying agent will be subject to its responsible parties and employees of site evaluations during the period of State ‘‘open records’’ laws when such certifying agents be barred from accreditation to determine whether the laws conflict with the confidentiality accepting employment for 1 to 3 years accredited certifying agent is complying provisions of the Act and these from any certified production or with the requirements for accreditation. regulations. Records collected and handling operation in which they Accordingly, we believe the duration of maintained under the NOP by a private participated in any manner in the accreditation period first proposed was entity certifying agent will always be operation’s certification. An correct, and we are, therefore, subject to the confidentiality accreditation service stated it believed reproposing this time period at requirements of the Act and these there would be a conflict of interest § 205.500(b). regulations. Accordingly, pursuant to should a consulting or business (2) Performance Appraisals and the Act, we are reproposing the connection arise between an inspector Program Evaluation. Comments from confidentiality provisions at and a production or handling operation State departments of agriculture and § 205.501(a)(10). following the site evaluation. This some certifiers indicated that the annual To clarify that authorized commenter presented the example of an inspector performance appraisal and representatives of the Secretary or the inspector being offered employment annual program evaluation applicable State program’s governing during the site evaluation but not taking requirements duplicated State State official may act on behalf of the the position until 6 months after the site requirements. The commenters asked Secretary or the State program’s evaluation. Many commenters, however, what the required scope and depth of governing State official and must be supported our proposed prohibition of evaluations was expected to be, whether given access to the records, we have commercial interest in an organic third party evaluators would be required added the phrase, ‘‘or their authorized operation during the 12 months prior to to be used to assess the performance of representatives,’’ to § 205.501(a)(10). certification. the operation, and whether existing Such representative could be a member performance appraisal and program of the NOP staff, a Department We disagree with the evaluation practices of a certifying agent compliance officer, or other official. recommendations calling for a longer would be used to meet the annual This provision is standard practice and precertification conflict of interest inspector performance appraisal and is necessary for Government oversight of prohibition period and with the program evaluation requirements. a regulatory program. recommendations for a postcertification We do not intend for States to develop (4) List of Confidential Records. One prohibition period for those persons no dual performance appraisal and commenter requested a definitive list of longer associated with the certifying program evaluation programs. We the records that had to be kept agent. Regarding the recommendations believe that performance appraisals and confidential. We cannot create such a for a longer precertification prohibition program evaluations conducted to meet list because it is not possible to describe period, we continue to believe that 12 State requirements will also meet the every record that would be months is a sufficient period to ensure requirements of this proposal. State and characterized as a business-related that any previous commercial interest private agency personnel performance record. Such records would include, would not create a conflict of interest appraisals and program evaluations however, organic production and situation for two reasons. First, this time would be expected to be consistent with handling plans, records that are related period is consistent with similar good management practices and to trade secrets and commercial or provisions governing conflicts of appropriate to the organization’s size financial information obtained from interest for government employees. and structure. This could be different applicants for certification, and records Second, we have added a new section, for different organizations. Therefore, or information compiled for an 205.501(a)(11)(v), which requires the we are not prescribing the specific investigation into alleged completion of an annual conflict of performance appraisal system or noncompliance with the Act and interest disclosure report by all instrument to be used to assess regulations. personnel designated to be used in the inspector performance, the specific (5) Time Period for Prohibition of certification operation, including program evaluation methods that must Commercial Interest. We received many administrative staff, certification be used, or that third parties must comments regarding the prohibition of inspectors, members of any certification conduct the required program commercial interest in an organic review and program evaluation evaluation. Accordingly, we have not production or handling operation committees, contractors, and all parties

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Accordingly, we have prohibition period would have the effect from certifying any organic operation reproposed the requirement that a of severely curtailing most certifying owned or operated by a member of the certifying agent prevent conflicts of agents’ ability to comply with the Act’s certifying agent’s board of directors or interest by: (1) Not certifying a requirement that they employ persons from certifying any organic operation production or handling operation if the with sufficient expertise to implement owned or operated by an employee of certifying agent or a responsibly the applicable certification program. the certifying agent. One commenter connected party of such certifying agent Accordingly, we have decided to stated that because certification arose has or has held a commercial interest repropose the prohibition on from the ranks of organic farmers, there within the 12-month period prior to the commercial interest in an applicant for are many certification personnel, application for certification and (2) certification for a 12-month period prior including inspectors, who also farm or excluding any person with a conflict of to the application for certification at have family who farm. This commenter interest from work, discussions, and section § 205.501(a)(11). stated that it should be permissible for decisions in all stages of the a certifying agent to review and certify Regarding the recommendations for a certification process and the monitoring an organic operation owned or operated postcertification prohibition period for of certified production or handling by a responsibly connected person or those persons no longer associated with operations for all entities in which the employee, provided that the responsibly the certifying agent, we believe such a person has or has held a commercial connected person or employee is period is unnecessary. We take this interest within the 12-month period excluded from the decision-making position because certifying agents and prior to the application for certification. process with respect to the organic their responsibly connected parties, Both of these provisions are found in operation to be certified. § 205.501(a)(11). employees, inspectors, contractors, and The commenters are correct in their (7) Defining Commercial Interest. A other personnel are prohibited from interpretation that the first proposal research foundation recommended that engaging in activities or associations at prohibited certifying agents from the provisions for preventing conflicts, any time during their affiliation with the certifying an operation when the found in this proposal at certifying agent which would result in certifying agent or a responsibly § 205.501(a)(11), be strengthened by a conflict of interest. While associated connected party of such certifying agent changing ‘‘a commercial interest in the with the certifying agent, all employees, has or has held a commercial interest in operation’’ to ‘‘a commercial interest in inspectors, contractors, and other the operation. This prohibition is the operation or the marketing or personnel are expected to disclose to the limited, however, to the 12-month distribution of its products.’’ We believe certifying agent any offer of employment period prior to the application for that the recommended addition is they have received and not immediately certification. The first proposal did not unnecessary because ‘‘commercial refused. They are also expected to prohibit certifying agents from certifying interest’’ covers all business disclose any employment they are an operation when an employee of the transactions between the certifying seeking and any arrangement they have certifying agent has or has held a agent or responsibly connected parties, concerning future employment with an commercial interest in the operation. employees, inspectors, contractors, or applicant for certification or a certified The first proposal prohibited a other personnel of the certifying agent operation. The certifying agent would certifying agent from using an employee and the applicant for certification or then have to exclude that person from in any phase of the certification process certified operation. This interpretation work, discussions, and decisions in all when such employee has or has held a would not apply to voluntary labor stages of the certification or monitoring commercial interest in an operation provided, in accordance with of the operation making the making application for certification § 205.501(a)(11)(iii), by a certified employment offer. If a certifying agent within the 12-month period prior to the operation to a certifying agent that is a or a responsibly connected party of the application for certification. A not-for-profit organization with an certifying agent has received and not responsibly connected party is any Internal Revenue Code tax exemption. immediately refused an offer of person who is a partner, officer, Further, this interpretation would not employment, is seeking employment, or director, holder, manager, or owner of apply to the providing of advice, in has an arrangement concerning future 10 percent or more of the voting stock accordance with § 205.501(a)(11)(iv), employment with an applicant for of an applicant for or a recipient of concerning organic practices or certification, the certifying agent may certification or accreditation. techniques to any certification applicant not accept or process the application. We believe that a certifying agent and or certified operation when such advice Further, certifying agents and a responsibly connected party of such is covered by fees under the applicable responsibly connected parties may not certifying agent hold positions of power certification program established under seek employment or have an and authority which preclude the the Act. arrangement concerning future certification of an operation in which (8) Provision of Information to employment with an operation certified they have or have held a commercial Producers and Conflicts of Interest. by the certifying agent while associated interest during the 12-month period Commenters were concerned about the with that certifying agent. Certifying prior to an application for certification. effect that some of the conflict of agents and responsibly connected The certifying agent’s control over the interest provisions would have on parties must sever their association with employment of an agent’s employee certifying agents that provide producers the certifying agent when such person makes it unreasonable to expect an with information on organic practices does not immediately refuse an offer of employee of a certifying agent to through forums such as in-house employment from a certified operation. impartially carry out the employee’s publications, conferences, workshops, Accordingly, we have decided not to duties when the certifying agent or a informational meetings, and field days

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00070 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13581 for a fee. Specifically, they were representing State programs stated that capabilities and qualifications and will concerned about the impact of the States should be able to maintain allow all eligible certifying agents to conflict of interest provision requiring control over which certifying agents receive timely accreditation. We will that certifying agents prevent conflicts operate within their State. Other only accredit certifying agents that we of interest by not providing advice commenters suggested that the believe possess the expertise and ability concerning organic practices or requirement be amended to: (1) Require to implement the proposed certification techniques to any certification applicant that a certifying agent accept the program. This includes newly or certified organic production or certification decisions made by another established certifying agents who might handling operation for a fee, other than USDA-accredited certifying agent as require a longer period of time between as part of the fees established under the equivalent to its own only after the accreditation and a site evaluation to applicable certification program certifying agent’s accreditation has been allow the certifying agent to perform established under the Act. These confirmed by the Department; (2) sufficient certification activities for the commenters requested that the provide that if a certifying agent doubts Department to perform a meaningful site paragraph be rewritten to clarify that the accuracy of another certifying evaluation. such activities would not be prohibited. agent’s determination, the certifying Should questions arise regarding a We also received a comment stating that agent questioning the accuracy can file certifying agent’s certification activities, advice relating to improving production a complaint with the Secretary; and (3) a certified production or handling yields, market access, etc., is not the authorize an accredited certifying agent operation’s activities, or the organic function of an inspector and can lead to to request additional documentation status of a certified production or a nonmonetary conflict of interest. This from another certifying agent if handling operation’s product, the commenter stated that advice, where questions arise regarding the other questioning certifying agent could given, should be restricted to issues certifying agent’s certification activities report a complaint or allegation of related to the understanding and or the activities or product of a noncompliance, with the certification implementation of the standards. production or handling operation provisions of this part, to the State Certifying agents have historically certified by the other certifying agent. program’s governing State official or the provided advice concerning organic No organic product may be produced Administrator. As appropriate, the State practices or techniques to any or handled to organic standards lower program’s governing State official or the certification applicant or certified than the standards of the NOP. To Administrator will investigate such organic production or handling certify organic production or handling complaints or allegations. Certifying operation for a fee through forums such operations to the national standards or agents are not authorized to investigate as in-house publications, conferences, to more restrictive State standards allegations or suspicions of workshops, informational meetings, and approved by the Secretary, the certifying noncompliance by other certifying field days. Such activities and their fees agent must be accredited by the agents, nor are certifying agents allowed would not be prohibited under the Act Administrator. While States may set to take unilateral action against an or these regulations, provided that such more restrictive standards than the accredited certifying agent, such as activities were not required as a national organic standards for product refusal to recognize the certification condition for production or handling produced or handled within their State, decisions made by another certifying certification. Section 205.503(c) would those requirements do not apply to agent. require that the applicant for organic product produced or handled For the above reasons, we have not accreditation provide a copy of the outside of such State. Further, a State changed the requirement that a applicant’s schedule of fees for all government may not prevent the certifying agent accept the certification services to be provided under these marketing or sale in the State of organic decisions made by another USDA- regulations by the applicant. We would product produced in another State to accredited certifying agent as equivalent consider such activities to be voluntary this program’s national organic to its own. This requirement is located participation activities provided by the standards. State organic certification at § 205.501(a)(12). certifying agent to producers, handlers, programs approved by the Secretary (10) False or Misleading Claims. and other interested persons under the would be required to treat all accredited Commenters objected to the NOP. We also believe that it is certifying agents equally. Likewise requirements that an accredited appropriate, as well as industry under this program, accredited certifying agent must refrain from practice, during an on-site inspection certifying agents in one State cannot making false or misleading claims about for inspectors to provide advice on a refuse to recognize another State’s its accreditation status, the USDA wide range of issues related to an on-site product which is certified to these accreditation program for certifying inspection of a production or handling national organic standards. agents, or the nature or qualities of operation. Accordingly, the conflict of We disagree with the suggestion to products labeled as organically interest provisions found at allow certifying agents to challenge the produced. A few of these commenters § 205.501(a)(11) have not been rewritten decisions of certifying agents that have stated that the requirements exceed the as requested by the commenters. not yet had their accreditation authority given by the Act by (9) Equivalency of Certification confirmed by the Department. We introducing claims other than those Decisions. We received a variety of believe that allowing a certifying agent concerning representations of comments suggesting changes to the to challenge the certification decisions nonorganic product as organic. requirement that accredited certifying made by a certifying agent that has not Additionally, a few commenters agents accept the certification decisions had its site evaluation would create an believed that the term, ‘‘misleading,’’ is made by another USDA-accredited insurmountable barrier for persons too broad and could be interpreted to certifying agent as equivalent to its own. wanting to become accredited under the mean that the certifying agent could Several of these commenters asked NOP, especially persons establishing make no negative claims about the whether States with more restrictive new operations. The proposed USDA accreditation program. They standards could challenge certification accreditation procedures are sufficiently suggested that the requirements be decisions made by any accredited rigorous to permit a well-founded amended by removing the reference to certifying agents. A few commenters assessment of the applicant’s misleading claims. Another commenter

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00071 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13582 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules believed that the phrase, ‘‘or the nature ensure that we have relatively current reproposed provision is found at or qualities of products labeled as data for responding to inquiries § 205.501(b). organically produced,’’ should be involving the granting of certifications (14) Additional Requirements for deleted because it is vague and would by certifying agents. It was not our Private Certifying Agents. Commenters unduly limit the freedom of certifying intent to have certifying agents update expressed concern regarding the three agents to share information with their list of certified entities quarterly. additional requirements for a certifying consumers, farmers, processors, and Our intent was to receive on a quarterly agent who is a private person. First, other interested parties regarding the basis a listing of all certifications private certifying agents expressed attributes of organic food and organic granted by the certifying agent during concern regarding the requirement that production systems, including the quarter being reported. Accordingly, private certifying agents hold the nutritional properties, freshness, taste, no changes have been made on the basis Secretary harmless for any failure on and less reliance on synthetic of these comments to the requirements their part to carry out the provisions of substances. found in this proposal at the Act and regulations. Their concern We disagree with the commenters § 205.501(a)(14). focused on the fact that applicants for who stated that the requirements exceed (12) Certifier Compliance With Terms certification can appeal a certifying the authority given by the Act by and Conditions Deemed Necessary. agent’s refusal to certify to the Secretary introducing claims other than those Commenters objected to the requirement and that a certifying agent’s concerning representations of that certifying agents must comply with recommendation to suspend or revoke a nonorganic product as organic. Claims and implement other terms and certification can be appealed to the regarding accreditation status, the conditions deemed necessary by the Secretary. They believe that, without the USDA accreditation program for Secretary. This requirement is authority to independently deny, certifying agents, and the nature and consistent with § 6515(d)(2) of the Act, suspend, or revoke certification, the quality of products labeled as which requires a certifying agent to certifying agent becomes liable for the organically produced all fall under the enter into an agreement with the actions of the Secretary. authority of the Act. We believe that the Secretary under which such agent shall We disagree with the assertion that requirements are needed to prevent the agree to such other terms and conditions the certifying agent becomes liable for dissemination of inaccurate or as the Secretary determines appropriate. the actions of the Secretary. The misleading information to consumers Accordingly, this requirement, found at provision clearly states that private about organically produced products. § 205.501(a)(17), is unchanged in this certifying agents hold the Secretary We further believe that the changes proposal except to change ‘‘Secretary’’ harmless for any failure on their part. suggested by the commenters would to ‘‘Administrator’’ since the This in no way would make the undermine the goal of a uniform NOP Administrator will be responsible for certifying agent responsible for any by allowing certifying agents to make administration of the NOP. failure on the part of the Department. claims that would state or imply that (13) Limitations on the Use of Further, the wording of this provision is organic products produced by Certifying Agent’s Marks. Private consistent with § 6515(e)(1) of the Act, operations that they certify are superior certifying agents disagreed with the which provides that private certifying to those of operations certified by other provision that prohibited certifying agents shall agree to hold the Secretary certifying agents. These requirements agents from requiring, as a condition of harmless for any failure on the part of would not prohibit certifying agents use of the certifying agent’s identifying the certifying agent to carry out the from sharing factual information with mark, compliance with any production provisions of the Act. Accordingly, we consumers, farmers, processors, and or handling requirements other than are reproposing this regulation at other interested parties regarding those provided for in the Act and § 205.501(c)(1). verifiable attributes of organic food and regulations. Private certifying agents Second, commenters expressed organic production systems. commented that they should be allowed concern regarding the requirement that Accordingly, the requirements are to use their identifying mark to certifying agents furnish reasonable reproposed in this proposal without recognize additional achievements by security, in an amount and according to change at § 205.501(a)(13). producers and handlers that exceed the terms as the Secretary may by regulation (11) Notification of Status of Certified requirements proposed in the national prescribe, for the purpose of protecting Operations. Comments received on the organic standards. The commenters’ the rights of production and handling requirements addressing documentation position is the same as that suggested by operations certified by such certifying to be submitted by certifying agents to public input prior to publication of the agent. The commenters expressed the Department regarding the status of first proposal. concern regarding what would be the certified operations suggested that: (1) We believe that the private certifying dollar amount of the security, how the The public should have access to the agents’ position advocating the use of dollar amount of the security would be notification of certification status their identifying mark to recognize determined, and in what form the documentation; (2) annual reporting by additional achievements is inconsistent security might be furnished. Several certifying agents of the name of each with § 6501(2) of the Act, which commenters expressed concern over the operation whose application for provides that a stated purpose of the Act availability of errors and omissions certification has been approved is is to assure consumers that organically insurance. The commenters also sufficient; and (3) the required reporting produced products meet a consistent expressed a belief that guidance on what should only include the name of those national standard. Accordingly, we are reasonable security might entail will be operations certified during the quarter reproposing the provision prohibiting needed by accreditation applicants to being reported rather than a listing of all certifying agents from requiring, as a evaluate their costs for accreditation. operations certified by the certifying condition of use of the certifying agent’s A private-entity certifying agent must agent. First, we believe that the Freedom identifying mark, compliance with any furnish reasonable security for the of Information Act adequately provides production or handling requirements purpose of protecting the rights of for public access to information. other than those provided for in the Act operations certified by such certifying Second, we need the required and regulations or under an approved agent. This security is to ensure the information to facilitate oversight and to State organic certification program. This performance of the certifying agent’s

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00072 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13583 contractual obligations. As noted proposal. This proposal requires the These requirements are found at elsewhere in this proposed rule, the applicant to provide the name of the § 205.504. specific amount and type of security person responsible for the certifying (17) Public Access to Information on that must be furnished by a private agency’s day-to-day operations and to Certified Operations. Commenters certifying agent will be the subject of submit a copy of its schedule of fees for requested that the public be provided future rulemaking by the Department. all services to be provided under these information about a certified operation’s Such rulemaking will provide for public regulations. farming practices, use of pesticides, and input and will occur prior to the call for (16) Application Requirements for livestock production practices. All applications for accreditation. We States. Commenters stated that State production and handling operations anticipate that the amount of the certifying agents should not be required must meet the requirements of the security will be tied to the number of to submit documents and information national organic certification program to clients served by the certifying agent regarding personnel, administrative be certified. An accredited certifying and the anticipated costs of certification policies and procedures, and financial agent will determine whether an that may be incurred by its clients in the policies and procedures to demonstrate operation meets those requirements. event that the certifying agent’s evidence of expertise and ability. They Certified operations can be held to no accreditation is suspended or revoked. believe that the requirements should not other standards except, if applicable, the We anticipate that the security may be apply to States that have established requirements of an approved State in the form of cash, surety bonds, or hiring procedures, standard organic certification program. other financial instrument (such as a qualifications for job descriptions, and Accordingly, we believe access to the letter of credit) administered in a statewide policies for training, requested information is unnecessary. manner comparable to cash or surety evaluating, and supervising personnel. We also believe the information to be bonds held under the Perishable They also stated that administrative confidential business information that Agricultural Commodities Act. policy and procedure review should be should not be released to the public. Accordingly, we are reproposing this limited to organic program Therefore, we have made no changes to regulation at § 205.501(c)(2). administration, not to agencywide the proposed rule to accommodate the Third, commenters expressed concern policies or procedures such as financial commenters’ request. regarding the requirement that a private policies. (18) Conflicts of Interest. The first person accredited as a certifying agent We acknowledge that States have proposal required a description of must transfer to the Secretary and make established hiring procedures, standard procedures intended to be implemented available to any applicable State qualifications for job descriptions, to prevent the occurrence of conflicts of program’s governing State official all administrative procedures, and interest. It also required the records or copies of records concerning statewide policies for training, identification of any food or agriculture- the private certifying agent’s evaluating, and supervising personnel related business interests of all certification activities in the event that and that such policies and procedures personnel intended to be used in the the certifying agent dissolves or loses its would be applicable to State certifying certification operation, including accreditation. This requirement is agents. This fact, however, does not administrative staff, certification consistent with § 6515(c)(3) of the Act, make States uniquely different from inspectors, members of any certification which provides that if any private private accreditation applicants who review and evaluation committees, all person that was certified under the Act would have similar policies and parties responsibly connected to the is dissolved or loses its accreditation, all procedures in exercising good business certification operation, and immediate records or copies of records concerning practices. State certifying agents cannot family members, that may result in a such person’s activities under the Act be exempt from these requirements conflict of interest. Commenters stated shall be transferred to the Secretary and simply because they are a government that existing State policies should be made available to the applicable State agency. sufficient to prevent conflicts of interest. program’s governing State official. In We anticipate that a State will submit They also stated that lists of the addition to being consistent with the its established policies and procedures business interests of all inspectors, Act, we believe that this regulation is to meet the requirements for program staff, and their families are necessary to ensure the continuity and demonstrating its expertise in organic unnecessary. integrity of the NOP. Accordingly, we production and handling techniques We agree with the commenters that are reproposing this regulation at and its ability to fully comply with and existing State policies should be § 205.501(c)(3). implement the national organic sufficient to prevent conflicts of interest. (15) Public Access to Applicant certification program. A stated purpose However, we disagree with the Information. The first proposal included of the Act is the establishment of commenters’ assertion that lists of the provisions regarding what information national standards. We believe such business interests of all inspectors, had to be submitted by an accreditation national standards extend to uniform program staff, and their families are applicant. Commenters requested the requirements for State and private unnecessary. At § 6515(h), the Act addition of a paragraph addressing certifying agents unless otherwise places responsibility for the prevention public access to this information about provided by the Act. We further believe of conflicts of interest with the the applicant’s organization and the required information is essential to certifying agent. We, however, have intended certification activities. We enable the Administrator to make a responsibility for ensuring that the have not made this requested change determination concerning approval of certifying agent complies with that because the proposed recordkeeping an application for accreditation. responsibility. We believe these and availability requirements under this Accordingly, the requirements for requirements will provide the program, coupled with the Freedom of demonstrating expertise in organic Administrator with information Information Act, adequately provide for production and handling techniques essential to the identification of public access to information. The and an ability to fully comply with and conflicts of interest. A stated purpose of regulations on applicant information are implement the national organic the Act is the establishment of national found at § 205.503 and include two certification program remain the same standards. We believe such national additions to the provisions of the first for private and State certifying agents. standards extend to uniform conflict of

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00073 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13584 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules interest requirements for State and deems it necessary, a preapproval site accreditation, and (3) site evaluation to private certifying agents. Further, for evaluation would be conducted. determine compliance with the Act and conflict of interest standards to achieve As noted above, a site evaluation to regulations. their intended effectiveness, they must verify compliance with the Act and (21) Application Fees Incurred From be uniformly applied to both State and regulations would be conducted within Notifications of Noncompliance. private certifying agents. The required a reasonable time period after the date Commenters questioned whether a new information is also essential to the on which the agent’s notice of approval application for accreditation, following Administrator’s determination of the of accreditation was issued. Following the correction of deficiencies identified applicant’s suitability for accreditation. the site evaluation, the certifying agent’s in the notification of noncompliance, As the commenters point out, States accreditation would be continued would require a second application fee. have established conflict of interest provided the certifying agent is in The commenters stated that fees paid for policies and procedures. Thus, the compliance with the Act and the initial application should cover required information should be readily regulations. Should it be found that the timely resubmission of the application available for submission to the accredited certifying agent is not in after correction of deficiencies. In this Administrator with minimal compliance with the Act and proposal, we have replaced the flat fee inconvenience to the certifying agent. regulations, the Administrator will issue for accreditation with an hourly user fee Accordingly, we have made no changes the certifying agent a notification of system, which will involve billing for in this proposal based on these noncompliance and afford the certifying actual time used in the accreditation comments. Regulations concerning agent an opportunity to correct the process. Accordingly, there will be conflicts of interest are found at deficiencies. If the deficiencies are not additional costs to applicants who §§ 205.501(a)(11) and 205.504(c) in this corrected, the Administrator will begin submit a description of the actions taken proposal. proceedings to suspend or revoke the to correct the deficiencies noted in the (19) Accreditation Prior to Site certifying agent’s accreditation. notification of noncompliance. Evaluation. Commenters expressed We also believe that: (1) Conducting (22) Peer Review Panels. Comments concern that applicants could be a site evaluation of a newly established were received expressing various accredited prior to a site evaluation of certifying agent before it had begun any opinions regarding the peer review the applicant’s facilities and operations. certification activities might not panel provisions of the first proposal. Most, however, recognized the need for contribute information that would be First, commenters stated that peer accreditation decisions on written useful for the Department’s evaluation; review panels should participate in site materials as opposed to further delay to (2) previously existing certifying agents evaluations. Prior to publishing the first program implementation. A few of the also would need time to make proposal, the Department received some commenters urged USDA to complete adjustments in their operations to public input which also suggested the the site evaluations during the comply with the NOP regulations; and use of peer reviewers in the site implementation phase. The first (3) requiring full site evaluations and evaluation process. As noted in the first proposal provided that an initial site peer reviews to be conducted prior to proposal, we did not provide for such evaluation of the operation of each granting accreditation would further participation because we believed that certifying agent must be performed for delay implementation of the Act. the use of peer reviewers could pose an the purpose of verifying its compliance Accordingly, we have made no changes excessive burden on the certifying with the Act and regulations. Two to the application requirements found at agents, would increase the costs of restrictions concerning timing were § 205.502 or the site evaluation conducting site evaluations, and could placed on the performance of an initial requirements found at § 205.508 on the delay site evaluations and because AMS site evaluation. First, the site evaluation basis of these comments. staff are well qualified to perform the had to be performed within a reasonable (20) Conditional Accreditation. site evaluations. We have made no period of time after the date on which Commenters suggested that the rule change to our proposal as a result of this the agent’s notice of approval of provide for conditional accreditation of comment. accreditation was issued. Second, the certifying agents. We disagree with the Second, commenters stated that peer site evaluation had to be performed after concept of conditional accreditation. We review panels should participate in the the agent had conducted sufficient believe accreditation before a site initial review of an application for certification activities for the evaluation to be the most effective accreditation. We believe this would not Administrator to examine its operations means of providing new certifying be an effective use of panel members’ and evaluate its compliance with the agents with the opportunity to talents and expertise and would not be general requirements for accreditation. participate in the NOP. New certifying cost effective. We have made no change We never intended that a site agents need to be unconditionally to our proposal as a result of this evaluation be required prior to accredited to sell their services to comment. accreditation. While site evaluations potential organic clients. Such certifying Third, an industry association stated could be conducted before approval, we agents need organic clients to that section 6516(a) of the Act clearly believe accreditation approval without a demonstrate to the Administrator their states that the Secretary shall consider site evaluation is appropriate. We compliance with the Act and a report, not three to five individual believe that the commenters’ concerns regulations relative to the certification reports, in determining whether to are adequately addressed by the first of organic producers or handlers. approve an applicant for accreditation. proposal, which provided for a well- Furthermore, the Act does not provide We do not agree that the Act requires a founded assessment of the applicant’s for conditional accreditation. single report, nor do we believe that it qualifications and capabilities through a Accordingly, the proposed accreditation is usual to have consensus in peer sufficiently rigorous review of the program for initial accreditation review. We also believe that it is application and supporting provides for: (1) Review and analysis of impractical to bring peer reviewers documentation. In cases where the the applicant’s application and evidence together for the purpose of reviewing document review raises concerns of expertise and ability, (2) approval of the information provided and drafting a regarding the applicant’s qualifications accreditation upon determination that single report. The Administrator could and capabilities and the Administrator the applicant meets the requirements for convene a peer review panel meeting or

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00074 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13585 conference call if necessary. Such Administrator to be necessary, as new regulation provides for excluding meeting or conference call would be specified in the most recent notification any person, including contractors, with conducted in a manner that would of accreditation or notice of renewal of conflicts of interest from work, ensure the actions of panel members are accreditation; and describe the results of discussions, and decisions in all stages carried out on an individual basis with the most recent inspector performance of the certification process and the any opinions and recommendations by appraisals and program evaluation and monitoring of certified production and a member being made individually. A adjustments to the certifying agent’s handling operations for all entities in peer review panel meeting or conference operation and procedures implemented which such person has or has held a call will be held solely to give and and intended to be implemented in commercial interest, including an receive information. Such meeting or response to the appraisals and program immediate family interest or the conference call will not be held for the evaluation. The first proposal stated that provision of consulting services, within purpose of achieving consensus by the this information would be reviewed by the 12-month period prior to the peer review panel. The written report of the Administrator to determine whether application for certification. This each panel member would reflect the the certifying agent was maintaining its regulation would permit a certifying particular knowledge, expertise, and accreditation by satisfying the agent to certify the operation of an opinion that its author-member brings to requirements of the Act and regulations employee or contractor or an employee’s the panel. The Administrator will and to assess the need for a site or contractor’s immediate family consider all points in the individual evaluation. We believe that an annual member provided the employee or reports in making a determination as to process of reviewing information contractor was not used in certifying the the continued operation of the submitted by certifying agents is production or handling operation. accredited certifying agent. We have necessary so that the Administrator can (3) Reporting Requirements for made no change to our proposal as a be informed of any changes in the Certifying Agents. The first proposal result of this comment. procedures and personnel used by the required a certifying agent to submit to Fourth, commenters stated that the certifying agents. We have made no the Administrator a copy of each peer review panel regulations should be change to our proposal as a result of this notification of noncompliance issued revised to specify what situations, other comment. simultaneously with its issuance to the than continuation or renewal of certification applicant or the certified accreditation, would trigger a peer Accreditation—Additional Provisions operation. It also required a certifying review; that a peer review panel should Upon further review of the agent to submit to the Administrator on be used in determining noncompliance accreditation provisions in the first a quarterly calendar basis the name of with accreditation requirements; and proposal, we have decided to propose each operation certified. In this that a peer review panel should be the following additions and changes. proposal, we have expanded the convened to review any decision of (1) Access to Records. We have added provision to provide that certifying noncompliance prior to initiation of the requirement that the records agents must submit to the proceedings to suspend or revoke a maintained by the certifying agent Administrator: (1) A copy of any notice certifying agent’s accreditation. The first under the Act and regulations be made of denial of certification, notification of proposal provided that the available for copying by authorized noncompliance, notification of Administrator may convene a peer representatives of the Secretary and the noncompliance correction, notification review panel at any time for the purpose applicable State program’s governing of proposed suspension or revocation, of evaluating a certifying agent’s State official. This addition is necessary and notification of suspension or activities under the Act and regulations. to ensure that authorized revocation issued simultaneously with This provision would provide flexibility representatives are able to obtain copies its issuance; and (2) on a quarterly for the Administrator to seek of records applicable to a review or an calendar basis, the name, address, and recommendations from peer reviewers investigation regarding compliance with telephone number of each operation at other times when it may be necessary the Act and regulations. This addition, granted certification. This information is to evaluate a certifying agent’s found at § 205.501(a)(9), is authorized needed to facilitate oversight and to compliance with the Act and under section 6506 of the Act. ensure that we have relatively current regulations. We do not believe that it is (2) Conflicts of Interest. A conflict of data for responding to inquiries practical or necessary to require the use interest regulation in the first proposal involving the granting of certifications of peer review panels in determining required that certifying agents prevent by certifying agents. These changes are noncompliance and decisions to conflicts of interest by not certifying an included in § 205.501(a)(14). suspend or revoke an accreditation. We operation through the use of any We anticipate using the data collected have made no change to our proposal as employee that has or has held a under § 205.501(a)(14) to establish and a result of these comments. commercial interest in the operation, maintain 2 Internet databases. The first (23) Purpose of Annual Reporting including the provision of consulting Internet database would be accessible to Requirements. At least one commenter services, within the 12-month period the general public and would include was confused regarding the purpose for prior to the application for certification. the names and other appropriate data on having certifying agents submit annual This regulation was closely related to a certified organic production and reports to the Administrator. The second regulation which required handling operations. The second reports would update information and certifying agents to prevent conflicts of Internet database would be password evidence of expertise and ability interest by not assigning an inspector to protected and only available to previously submitted by the certifying perform an inspection of an operation if accredited certifying agents and USDA. agent; support any changes being the inspector has or has held a This second database would include requested in the areas of accreditation; commercial interest in the operation, data on production and handling describe the measures that were including the provision of consulting operations issued a notification of implemented in the previous year and services, within the 12 months prior to noncompliance, noncompliance any measures to be implemented in the conducting the inspection. For correction, denial of certification, coming year to satisfy any terms and clarification, this proposal combines the certification, proposed suspension or conditions determined by the regulations at § 205.501(a)(11)(ii). This revocation of certification, and

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00075 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13586 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules suspension or revocation of (7) Submission of Residue Testing be ineligible for accreditation for a certification. Certifying agents would Procedures. We believe that applicants period of not less than 3 years following use the second Internet database during for accreditation should provide the date of such determination. This their review of an application for evidence of expertise and ability in period of ineligibility is consistent with certification. meeting the sampling and residue section 6519(e) of the Act. These (4) Requirements for testing requirements of these changes are included in § 205.507. Nondiscrimination. We have included regulations. Therefore, we have added A certifying agent accredited prior to at § 205.501(d) the provision that no the requirement that applicants for an initial site evaluation whose site private or State entity accredited as a accreditation submit a copy of the evaluation reveals that the certifying certifying agent under subpart F shall procedures to be used for residue agent is not properly adhering to the exclude from participation in or deny testing. This requirement is found at provisions of the Act or these the benefits of the NOP to any person § 205.504(b)(6). Residue testing regulations will be subject to suspension due to discrimination because of race, requirements are found at § 205.670. of its accreditation. A private certifying color, national origin, gender, religion, (8) Elimination of Section on agent accredited prior to an initial site age, disability, political beliefs, sexual Confirmation of Accreditation. We have evaluation who’s site evaluation reveals orientation, or marital or family status. amended the section on approval of that the certifying agent has violated the This regulation is consistent with USDA accreditation by adding the duration of provisions of the Act and these regulations which prohibit accreditation provision formerly regulations or that falsely or negligently discrimination in its programs and included in the first proposal’s section certifies any production or handling activities. on confirmation of accreditation. We operation that does not meet the terms (5) Submission of Policies and have also eliminated the section on and conditions of this national organic Procedures. The first proposal required confirmation of accreditation. We have certification program as an organic an applicant for accreditation as a taken this action to eliminate the operation will be subject to revocation certifying agent to submit documents confusion created by having a section of its accreditation. Section 205.660(b) on approval of accreditation and a of subpart G provides that the Secretary and information to demonstrate the section on confirmation of accreditation. may initiate suspension or revocation applicant’s expertise in organic farming (9) Denial of Accreditation. We have proceedings against a certified operation or handling techniques, its ability to amended the denial of accreditation upon initiation of suspension or fully comply with and implement the regulations and eliminated the section revocation proceedings against or upon organic certification program, and its on denial of confirmation of suspension or revocation of the certified ability to comply with the requirements accreditation. We have taken this action operation’s certifying agent’s for accreditation. Much of the to eliminate the confusion created by accreditation. documentation and information having a section on denial of (10) Peer Review Panels. We have required involved submission of a accreditation and a section on denial of removed the provision which provided description of a policy or procedure to confirmation of accreditation. We have that the Administrator may convene a be used by the certifying agent. In this added to the denial of accreditation peer review panel at any time for the proposal we have changed the regulations that a notification of purpose of evaluating an applicant for requirement from submission of a noncompliance can be issued based on accreditation or a certifying agent’s description of the policy or procedure to the findings of a site evaluation. activities under the Act and regulations. submission of a copy of the actual Under the first proposal’s denial of This change has been made because policy or procedure. This will facilitate accreditation regulations, the peer review panels will only be used to the Department’s determination of an Administrator could institute assist in the evaluation of applicants for applicant’s eligibility for accreditation proceedings to deny accreditation to an accreditation, amendment to an by providing more complete applicant who did not correct the accreditation, and renewal of information. By requiring a copy of each deficiencies noted in a notification of accreditation. policy and procedure, which should noncompliance within the time already be in the possession of the specified. In this proposal, we have Subpart G—Administrative applicant, rather than a description of amended these regulations to provide The National List of Allowed and each, we have lessened the burden on that the Administrator will provide the Prohibited Substances applicants for accreditation. This applicant with a written notification of change is found in § 205.504 of this accreditation denial or begin Proposal Description proposal. proceedings to suspend or revoke the This subpart contains criteria for (6) Public Access to Certification certifying agent’s accreditation if determining which substances and Certificates. In this proposal, we have accredited prior to a site evaluation. ingredients are allowed or prohibited in added the requirement that certifying Such action will be taken when the products to be sold, labeled, or agents make copies of certification applicant fails to correct the represented as ‘‘organic’’ or ‘‘made with certificates issued during the current deficiencies, report the corrections by organic (specified ingredients).’’ It and 3 preceding calendar years available the date specified, or file an appeal by establishes the National List of Allowed to the public. Such documents may be the date specified in the notification of and Prohibited Substances (National useful to consumers wishing to verify noncompliance. List) and identifies specific substances that an operation is certified to produce We have also clarified that an which may or may not be used in and label agricultural products as applicant who has received written organic production and handling organic. Copies of certification notification of accreditation denial or operations. Sections 6504, 6510, 6517, certificates will be especially valuable had its accreditation suspended may and 6518 of the Organic Foods in assisting handlers in assuring that the apply for accreditation again at any Production Act (OFPA) of 1990 provide products they receive labeled as organic time. Additionally, we have provided the Secretary with the authority to were produced and handled by certified that a private certifying agent whose develop the National List. The contents organic operations. This requirement is initial accreditation is revoked of the National List are based upon a found at § 205.504(b)(5)(i). following an initial site evaluation will Proposed National List, with

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00076 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13587 annotations, as recommended to the recommendations and minor formatting Official Publication, which is updated Secretary by the National Organic changes, the National List in this annually. Standards Board (NOSB). The NOSB is proposal corresponds to the National List—Changes Based On established by the OFPA to advise the recommendations on allowed and Comments Secretary on all aspects of the National prohibited substances made by the Organic Program (NOP). The OFPA NOSB. The National List in this This subpart differs from our first prohibits synthetic substances in the proposal has also been developed in proposal in several respects as follows: (1) Genetically Engineered Organisms production and handling of organically consultation with the Food and Drug (GEO’s). To solicit public comment on produced agricultural products unless Administration (FDA), the the use of genetically engineered such synthetic substances are placed on Environmental Protection Agency organisms in organic production and the National List. (EPA), and the Food Safety Inspection The first category of the National List handling, we included two such Service (FSIS) of USDA. Additionally, materials on the National List in the first includes synthetic substances allowed we have made changes in response to for use in organic crop production. The proposal. As discussed in Production public comment received on the first second category includes nonsynthetic and Handling—Subpart C, we received proposal. substances prohibited for use in organic many thousands of comments opposing crop production. The third category of Nothing in this subpart alters the the use of substances or organisms the National List includes synthetic authority of other Federal agencies to produced through genetic engineering substances allowed for use in organic regulate substances appearing on the in organic production and handling. livestock production. The fourth National List. FDA establishes safety Many commenters expressed strong category includes nonsynthetic regulations on approved and prohibited concerns that GEO’s do not meet current substances prohibited for use in organic uses of substances in food production consumer expectations of organic livestock production. The fifth category and processing. FSIS has the authority agriculture or an organically produced of the National List includes to determine efficacy and suitability product. They stated that existing nonagricultural (nonorganic) substances regarding the production and processing national and international organic allowed as ingredients in or on of meat, poultry, and egg products. FDA certification standards clearly and processed products labeled as ‘‘organic’’ and FSIS restrictions on use or consistently prohibit GEO’s. or ‘‘made with organic (specified combinations of food additives or Accordingly, this proposal prohibits ingredients).’’ The final category of the ingredients take precedence over the GEO’s and their derivatives and the National List includes nonorganically approved and prohibited uses specified products of GEO’s and their derivatives produced agricultural products allowed in this proposal. Any combinations of in any product or ingredient that is sold, as ingredients in or on processed substances in food processing not labeled, or represented as organic. As a products labeled as ‘‘organic’’ or ‘‘made already addressed in FDA and FSIS result of the prohibition, the National with organic (specified ingredients).’’ regulations must be approved by FDA List does not contain any materials derived from GEO’s. This subpart also outlines procedures and FSIS prior to use. Use-of-substance through which an individual may (2) Inclusion of Substances not requirements are proposed by FDA and Recommended by the NOSB. The first petition the Secretary to evaluate FSIS in rulemaking actions and are substances for developing proposed proposal allowed some synthetic frequently updated with revised use substances in organic crop production National List amendments and requirements. It is important that deletions. and handling that the NOSB had not certified organic producers and handlers included on the proposed National List. National List (General) of both crop and livestock products Citing the statutory requirements of the The NOSB is responsible for making consult with FDA regulations in 21 CFR OFPA, commenters were the recommendation of whether a parts 170 through 199 and FSIS overwhelmingly opposed to adding substance is suitable for use in organic regulations in this regard. All feeds, feed substances to the National List that had production and handling. The OFPA ingredients, and additives for feeds used not been recommended by the NOSB. authorizes the NOSB to develop and in the production of livestock in an Every substance on the National List in forward to the Secretary a Proposed organic operation must comply with the this proposal was favorably National List and any subsequent Federal Food, Drug, and Cosmetic Act recommended by the NOSB. proposed amendments. In March 1995, (FFD&CA). Animal feed labeling With four exceptions, the National the NOSB initiated a petition process to requirements are published in 21 CFR List included in this proposal contains solicit public participation in part 501, and new animal drug every substance that the NOSB identifying specific materials to be requirements and a listing of approved recommended to allow in organic added to the National List. The NOSB animal drugs are published in 21 CFR production and handling. The Secretary convened a Technical Advisory Panel parts 510–558. Food (feed) additive has not accepted the NOSB (TAP) to review substances identified in requirements, a list of approved food recommendations to allow sulfur the petition process and made extensive (feed) additives generally recognized as dioxide in the production of wine recommendations on a Proposed safe substances (GRAS), substances labeled as ‘‘made with organic grapes.’’ National List during its meetings in affirmed as GRAS, and substances Additionally, the Secretary has not 1995 and 1996. In 1999, the NOSB prohibited from use in animal food or concurred with the NOSB selected materials left from the original feed are published in 21 CFR parts 570– recommendation to allow the petition process to authorize a second 571, 21 CFR part 573, 21 CFR part 582, antibiotics, Streptomycin and round of TAP reviews. The NOSB used 21 CFR part 584, and 21 CFR part 589, Terramycin, in organic crop production these updated TAP reviews to make respectively. Furthermore, the Food and or to allow livestock producers to additional recommendations on the Drug Administration has worked closely administer synthetic Oxytocin for Proposed National List at its October with the Association of American Feed approved organic veterinary practices. 1999 meeting. With the exception of Control Officials (AAFCO) and The Secretary decided not to add sulfur four substances on which the Secretary recognizes the list of additives and dioxide to the National List because its did not concur with the NOSB feedstuffs published in the AAFCO use produces sulfites, which are

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00077 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13588 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules prohibited in the OFPA. Streptomycin which it may be applied, establish use products used as ingredients, processing and Terramycin were not added to the restrictions based on environmental aids, or incidental food additives should National List for use in crop production monitoring, or create other conditions to be categorically allowed in organically in order to be consistent with this govern the use of a substance. processed products unless specifically proposal’s prohibition on the use of all Many commenters stated that prohibited and that synthetic, antibiotics in animal production. The removing annotations diminished the nonagricultural products should not be Secretary’s decision not to allow NOSB’s role in advising the Secretary used as ingredients, processing aids, or livestock producers to administer on the content of the National List. incidental food additives unless synthetic Oxytocin is based on Commenters also stated that annotations specifically included on the National extensive public comment that opposed are essential for ensuring that List. The NOSB applied these the use of animal drugs including substances are used in a manner which recommendations to processed foods hormones in organic livestock is consistent and compatible with a labeled ‘‘organic’’ and ‘‘made with operations. Many certifying agencies system of organic production and organic (specified ingredients).’’ have allowed producers to administer handling. Considering how annotations However, the OFPA does not allow the Oxytocin to animals that experience have been applied in regulating the use categorical allowance for nonsynthetic, severe complications resulting from of allowed substances by State and nonagricultural products. Section labor. While most of the public private certifying agents, we have 6510(a)(4) of the OFPA requires that any comment strongly opposed the use of incorporated every feasible NOSB- nonorganically produced ingredient synthetic hormones in organic dairy proposed annotation in this proposal. added to an organic product must be production, Oxytocin has some uses (5) Incidental Additives. The first included on the National List. that do not involve lactation but are proposal stated that a nonagricultural The NOSB revisited this issue at its instead related to an animal’s synthetic substance occurring as an February 1999 meeting when it adopted postpartum survival. Not allowing incidental additive, including a criteria for accepting (adding to the Oxytocin in organic operations is processing aid, could be used in organic National List) a synthetic processing aid responsive to the public comment production and handling without or adjuvant. These criteria are an opposing the use of synthetic hormones having to be added to the National List. interpretation and application of the but does preclude the use of an animal This position was based on FDA and general evaluation criteria for synthetic medication that some producers have FSIS regulations which require that substances contained in the OFPA that previously been able to use in active ingredients, but not incidental the NOSB will apply to processing aids emergency situations. additives, appear on a product label. and adjuvants. To review the adopted (3) Prohibited Nonsynthetic Because incidental additives were not criteria, the public can visit the USDA Substances. The National List in the active ingredients in organically NOP website: www.ams.usda.gov/nop/ first proposal contained no prohibited processed food under these regulations, nosbfeb99.html or write Program nonsynthetic (natural) substances. Many the first proposal maintained that they Manager, Room 2945 South Building, commenters requested that the four were not prohibited by the OFPA and U.S. Department of Agriculture, AMS, nonsynthetic substances which the would not need to be added to the Transportation and Marketing Programs, NOSB proposed to prohibit be added to National List. NOP, PO Box 96456, Washington, DC the National List. We agree with this Thousands of commenters responded 20090–6456. The NOSB adopted these position, and this proposal lists ash with varying opinions on this subject. criteria as internal guidelines for from manure burning, mined sodium Many commenters approved of the evaluating processing aids and fluoaluminate, strychnine, and tobacco proposed approach, generally stating adjuvants. The adopted criteria do not dust as natural substances that are that processing aids are essential and supercede the criteria contained in the prohibited in organic crop production needed for most agricultural products. OFPA, or replace FDA’s authority to and handling. In addition, we have These commenters felt that eliminating regulate food additives. included arsenic and lead salts on the their use entirely would greatly limit We are proposing that to be used in National List of prohibited natural handlers’ ability to produce a wide or on a processed product labeled as substances in accordance with variety of organic products. However, ‘‘organic’’ or ‘‘made with organic provisions of the OFPA. other commenters strongly opposed (specified ingredients),’’ a (4) Annotations on National List allowing the use of any nonagricultural nonagricultural substance, whether Substances. The National List in the synthetic substance that had not been synthetic or nonsynthetic, must be first proposal did not include all of the petitioned, reviewed, and recommended included on the National List. This annotations originally developed by the by the NOSB; published for comment in position supports the NOSB NOSB for the materials it recommended the Federal Register; and then added by recommendation that synthetic to include on the National List. The the Secretary to the National List. Some substances be allowed in organic OFPA stipulates that when basing the commenters protested the use of any processed foods but incorporates the National List upon the NOSB’s synthetic incidental additives in organic National List requirement reflected in recommendations, the Secretary shall handling operations. They stated that public comment. We have divided the include ‘‘an itemization, by specific use their use is not consistent with the materials on this list (§ 205.605) in the or application,’’ of each synthetic principles of organic agriculture and current proposal to reflect the substance permitted or natural that consumers currently do not believe recommended distinction made by the substance prohibited. This itemization, that such aids and additives are used in NOSB between synthetic and commonly known within the organic organically processed products. nonsynthetic substances. This industry as an annotation, has been Prior to the first proposal, the NOSB distinction does not affect how the used by existing State and private reviewed this issue and recommended substances may be used. We recognize certification agents to regulate the use of allowing both synthetic and that many commenters, basing their allowed materials. Annotations can nonsynthetic incidental additives in argument on the OFPA, objected to establish allowable sources or processed organic products. The allowing any synthetic substances in procedures for obtaining a substance, NOSB’s 1995 recommendation stated processed organic products. However, specify the crops or conditions for that nonsynthetic, nonagricultural we believe that the OFPA does allow

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We have retained the National List, to be used in this manner. associated with EPA List 2 (potentially provision from the first proposal The criteria utilized by the NOSB for toxic) and EPA List 3 (unknown prohibiting the use of any formulated evaluating processing aids and toxicity) inert ingredients, they product containing a EPA List 1 Inert. adjuvants are very restrictive and, if questioned how such substances could Using the criteria established in the applied to all incidental additives, satisfy the criteria in OFPA for adding OFPA for evaluating synthetic should minimize the number of synthetic substances to the National substances, the NOSB may review inert substances added to the National List. List. Commenters also opposed ingredients on EPA List 2 or 3 as well (6) Inert Ingredients in Formulated expanding the definition of inert to as other synthetic, nonactive substances Products. The first proposal addressed include nonactive ingredients in all used in formulated products for the presence of synthetic inert formulated products. They stated that inclusion on the Proposed National List ingredients in formulated products used the EPA classifies only those inerts used it forwards to the Secretary. as production inputs in organic crop or in pesticides, and that many of the We recognize that inert ingredients in livestock operations. Formulated substances routinely used in other types pesticides and similar substances in products are multiingredient of formulated products were not subject other formulated products pose one of compounds including pesticides, to review. Therefore, substances not the most problematic examples of the fertilizers, and animal drugs and feeds. used in pesticides would not appear on use of synthetic materials in organic In accordance with the OFPA, we any EPA list and would be allowed. production. For example, verifying the proposed that a formulated product Finally, commenters cited the disparity use of inerts and similar substances containing an inert ingredient could be between the allowance for synthetic such as fillers, carriers, additives, and used, provided that the substance did inert ingredients in the first proposal excipients has been difficult because not appear on EPA’s List 1 as an Inert and the more restrictive substance they are not required to appear on of Toxicological Concern. We also review procedures used by existing ingredient labels, and formulators prohibited the use of synthetic inerts organic certifying agents. typically treat product formulas as not on EPA List 1 if the substance was The NOSB responded to the confidential information. At times, also used as an active ingredient that provisions for inert ingredients certifying agents have been unable to had not been added to the National List. contained in the first proposal. At its determine the exact composition of To review or to receive the most current meeting in March 1998, the NOSB formulated products proposed for use in listing of the EPA Inerts, the public can stated that synthetic compounds should organic production. In other instances, visit EPA’s Internet home page at http:/ not be allowed in production inputs organic producers have applied /www.epa.gov/opprd001/inerts/ unless they appear on the National List. formulated products containing inert lists.html, or write to Registration In February 1999, the NOSB voted to ingredients and similar substances that Support Branch (Inerts), Registration prohibit EPA List 1 and 2 inerts, are not specifically allowed. We are Division (Mail Code 7505C), Office of prohibit EPA List 3 inerts unless challenged with balancing standard Pesticide Programs, Environmental specifically allowed by the NOSB, and practice with the strict statutory Protection Agency, 401 M St., SW., allow EPA List 4 inerts unless requirement that producers and Washington, DC 20460. specifically prohibited. The NOSB also handlers apply only those synthetic The first proposal interpreted the recommended full disclosure of all substances added to the National List. statutory prohibition on EPA List 1 ingredients in formulated products, As sanctioned by OFPA, synthetic inerts as allowing the use of synthetic called for an expedited review of EPA substances can be used in organic inert ingredients that were not List 3 inerts currently in common use in production as long as they appear on the specifically prohibited. This allowed the organic production, and endorsed an 18- National List. The development and use of products containing synthetic month phase-out period for EPA List 3 maintenance of the National List has inert substances (provided that they inerts not ultimately allowed. been and will be designed to allow the were not also used as active substances) In this proposal, only EPA List 4 use of a minimal number of synthetic included on the other EPA inert lists: inerts are allowed as ingredients in substances that are acceptable to the List 2, Potentially Toxic Inerts; List 3, formulated products used in organic organic industry and meet the OFPA Inerts of Unknown Toxicity; and List 4, production. This would not include criteria. Inerts of Minimal Concern. We also varieties of EPA List 4 substances such Two principles will be essential for applied the term, ‘‘inert,’’ to all as corn starch, lecithin, or citric acid responding to this challenge: greater nonactive ingredients contained in any that are the product of excluded disclosure of the contents of formulated formulated product used in organic methods. Additionally, the term inert is products and an expedited review of production. This meant that the restricted to nonactive ingredients in inert ingredients and other nonactive nonactive ingredients in animal feeds pesticides. Synthetic nonactive substances. The OFPA recognized the (fillers or additives), animal drugs ingredients in formulated products used need for disclosure by requiring the (excipients), and fertilizers (carriers or as production inputs, including NOSB to work with formulators to adjuvants) would only be prohibited if fertilizers, animal drugs, and feeds, obtain a complete list of ingredients in they were classified by the EPA as List must be included the National List. their products. The NOSB has initiated 1 inerts. While the OFPA prohibits using a this work, and its effort is ongoing as of We received many comments stating fertilizer containing synthetic the date of this publication. It is our that our restrictions on inert ingredients ingredients or a commercially blended understanding from the comments, were too permissive and would result in fertilizer containing prohibited hearings, and information considered by many traditionally prohibited materials materials, the requirement does not the NOSB that the organic industry has being used in organic production. apply to synthetic substances included made considerable progress on Commenters stated that the statutory on the National List. The NOSB disclosure of inert ingredients since the prohibition on EPA List 1 inerts did not recommended and the Secretary passage of OFPA. Formulators have imply that all other inerts should be concurs that certain synthetic responded to the incentive to provide allowed and argued that the NOSB had substances used in fertilizer-formulated products using EPA List 4 inert the authority to prohibit additional products should be included on the ingredients, and certifying agents have

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00079 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13590 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules gained greater access to information on the National List and included an substances are: Potassium Bicarbonate product composition. EPA has extensive list of information to be (205.601(d)), Glycerin (2005.603(a)), expressed its willingness to expedite the provided for reviewing a substance. Phosphoric Acid (205.603(a) and review of its List 2 and 3 inerts, which Some commenters recommended that 205.605(b)), Ivermectin (205.603(a)), the NOSB identifies as particularly this section be amended to include Chlorhexidine (205.603(a)), and important in formulated products procedures for deleting substances from Ethylene (205.605(b)). This proposal widely used in organic operations. The the National List. The OFPA and the establishes conditions that allow organic industry should clearly first proposal indicated that the NOSB producers to administer the parasiticide understand that NOSB evaluation of the would review substances added to the Ivermectin to breeder stock and dairy wide variety of inert ingredients and National List at least on a 5-year basis stock in organic livestock operations. other nonactive substances will require and recommend to the Secretary any Treating organically managed slaughter considerable coordination between the substances that should be removed. We stock with Ivermectin is prohibited. NOP, the NOSB, and industry. Materials concur with commenters that removal of These provisions are based on the review can be anticipated as the NOSB’s a substance should not have to wait for recommendations developed by the primary activity during NOP such a review cycle. Thus, a petition to NOSB at its October 1999 meeting. The implementation. Considering the critical remove a substance from the National NOSB’s recommendations from that nature of this task, the organic industry List may be filed at any time. The meeting were derivative of many years should make a collaborative effort to information contained in the petition for of work addressing how to establish and prioritize for NOSB review those removal of a substance will be provided enforce the conditions allowing use of substances which are essential to by AMS upon request. The NOSB will synthetic parasiticides. The OFPA organic production and handling. evaluate substance removal petitions identifies livestock parasiticides as a We recognize that more work is and forward a recommendation to the category of substances which may be needed for this policy to satisfy the Secretary. Commenters suggested that included on the National List and also needs of organic producers and any changes to the National List be prohibits the use of synthetic internal handlers, product formulators, and published in the Federal Register for parasiticides on a routine basis. The consumers. We are requesting comment public comment. All proposed changes determination of what constitutes a on the proposed requirements for inert to the National List will be published in routine basis for parasiticide use has ingredients in formulated products. We the Federal Register. been challenging given the diversity of are sensitive that an abrupt prohibition (9) Use of Sulfur Dioxide. The first animals, production systems, and on synthetic substances which may proposal allowed the use of sulfur environmental factors which are have knowingly or unknowingly been dioxide in crop production and as an covered by a national organic standard. used in the past but which are not ingredient in or on organic processed In this proposal, the conditions under added to the National List may disrupt products. The NOSB had recommended which Ivermectin may be used apply to many well-established and accepted that sulfur dioxide be permitted in the the health care history of the animal production systems. However, our processing of organic wine and for prior to treatment and the certification assessment is that the benefits of a clear smoke bombs used underground to of products derived from the animal policy consistent with the OFPA, NOSB control rodents. Numerous commenters after treatment. The pretreatment recommendations, and public comment opposed the use of sulfur dioxide in conditions are designed to ensure that outweigh the costs. The net effect will organic wine because its use produces the producer is using a comprehensive be greater consumer confidence in sulfites, which are prohibited in the management system to prevent the USDA’s organic label and more OFPA, as a by-product. We concur with introduction and transmission of products that are tailored to the needs the commenters and further believe that parasites among the animals in his or of organic producers. the trend in the organic industry, as her care. Producers must document in (7) Use of Veterinary Medicines. The evidenced by the California Department their organic system plan preventative OFPA prohibits certain routine uses of of Food and Agriculture’s Preliminary practices such as quarantine and fecal veterinary medications (specifically Organic Materials List of September exams for all incoming stock, subtherapeutic doses of antibiotics) but 1998, is to prohibit all uses of sulfur appropriate pasture rotation and allows their administration in the dioxide except in underground rodent management, culling of infested presence of illness. The first proposal control. Therefore, we are proposing to livestock, and vector and intermediate added antibiotics to the National List allow sulfur dioxide for underground host control. A producer may because their use had been evaluated control of rodents and to prohibit its use administer an allowed synthetic and approved by applicable regulatory as an ingredient in or processed food parasiticide only after all applicable agencies, pursuant to FDA including the production of organic management practices and nonsynthetic requirements, and because they had to wine. treatments have been employed. A be included on the National List to be producer must receive the approval of used in organic livestock production. National List—Additional Provisions their certifying agent before using a We received many comments Upon further review of the provisions synthetic parasiticide. In collaboration opposing the use of antibiotics in in the first proposal, we have decided to with the NOSB, we will be developing organic livestock production. propose the following additions and program manuals detailing preventive Commenters expressed general concern changes. management practices for specific over microbial resistance to antibiotics (1) New Additions to the National livestock species to assist producers and and expressed a desire to source food List. During the October 1999 meeting, certifying agents in determining when products without antibiotics. This the NOSB reviewed substances and the use of synthetic parasiticides is proposal removes antibiotics from the made new recommendations to the allowable. National List of approved synthetic Proposed National List. The Secretary This proposal also contains substances for livestock use. concurs with the recommendations from provisions addressing the posttreatment (8) Removal of Substances from the that meeting and this proposal adds condition of livestock which are National List. The first proposal those substances with the applicable administered Ivermectin. These outlined a petition process for amending annotations to the National List. These conditions are included as an

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00080 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13591 annotation to Ivermectin on the requirements of the petition process and Requirements of a State Organic National List and are consistent with the publish the changes in the Federal Certification Program. Under the Act requirements contained in Register. This revised process will help and the NOP, a State, through the State § 205.238(b)(1)(2) of the regulatory text to expedite amending the National List program’s governing State official, must for administering any allowed synthetic and keep the National List more current. submit to the Secretary a copy of the parasiticide. In compliance with the We anticipate that amendments to the proposed State organic certification recommendations of the NOSB, we are National List will be made on an annual program. The governing State official proposing that a producer may not basis, depending upon the number of must submit an affidavit or administer Ivermectin to breeder stock substance petitions filed. Substances memorandum of understanding agreeing during the last third of gestation if the petitioned for inclusion onto the to meet the 11 general requirements of progeny is to be sold, labeled, or National List will be reviewed by the an organic program, as specified in represented as organically produced. NOSB, which will forward a section 6506(a) of the Act. Specifically, Additionally, a producer must observe a recommendation to the Secretary. All the governing State official must agree 90-day withdrawal period before selling amendments to the National List will be to: (1) Require that product sold or milk or milk products produced from an published for comment in the Federal represented as organic must be animal treated with Ivermectin as Register. produced and handled only by certified organically produced. The Food and organic operations; (2) require that Drug Administration exercises State Organic Certification Programs participating organic producers and responsibility for determining and The Act provides that each State may handlers establish organic plans for enforcing the withdrawal intervals for implement a certification program for their operations; (3) allow certified animal drugs. No food safety arguments producers and handlers of agricultural producers and handlers to appeal are used or implied to support the use products that have been produced and adverse decisions under appeal of extended withdrawal periods. Rather, handled within the State, using organic provisions of these regulations; (4) we determined that extended methods that meet the requirements of require that certified operations certify withdrawal periods are more compatible this regulation. Each State organic annually that they have complied with with consumer expectations of certification program must be approved the NOP; (5) provide for annual on-site organically raised animals. by the Secretary. A State organic inspections of certified operations by Ivermectin is the first synthetic certification program’s organic certifying agents; (6) require periodic parasiticide that the Secretary has standards and requirements cannot residue testing by certifying agents; (7) proposed adding to the National List, exceed these National Organic Program provide for appropriate and adequate and allowing its use could significantly (NOP) regulations unless the State enforcement procedures which are affect organic management practices. petitions for, and the Secretary consistent with the NOP; (8) protect The FDA has approved 18 animal drugs approves, more restrictive requirements. against conflict of interests as specified containing Ivermectin that are labeled The sections covering State programs, in these regulations; (9) provide for for use on one or more animals beginning with § 205.620, establish: (1) public access to certification including beef and dairy cattle, sheep, documents; (10) provide for collection The requirements for a State organic swine, and several minor species. A of reasonable fees; and (11) require other certification program and amending total of 11 of these drugs are not covered terms and conditions as may be such a program; and (2) the process for by this proposed rule: three have established by the Secretary. The NOP initial approvals of programs and additional synthetic active ingredients will assume these responsibilities in program amendments. A process for not on the National List and eight others States that do not have an approved review and approval of a State’s organic are labeled for nonfood uses. (They are State organic certification program. used on horses not for food use, dogs, certification program every 5 years will Supporting materials must be and cats.) While there are no approved be addressed in subsequent rulemaking. submitted addressing these general uses of Ivermectin on lactating dairy Proposal Description requirements, including such animals, the remaining seven food-use documentation as: authorizing State products could be administered to There are a wide variety of organic statutes, program goals and objectives, a breeder stock and dairy stock either certification programs now operating in description of the State’s organic prior to lactation or during a dry period. different States. Approximately 31 program office, codified compliance and Future NOSB meetings will consider States currently have, or are developing, appeals processes, and other new proposals of substances to be added their own State organic certification information as may be requested by the to the National List. programs. At least 13 of those use State Secretary. Written material must assess (2) Petition Process to Amend the government agencies or contracted the State organic certification program’s National List. We are modifying the private certifying agents to certify ability and willingness to administer the contents of the petition for amending organic operations in the State. Thus, at 11 general requirements for organic the National List that was contained in least 19 States do not have State organic programs. Administration of these the first proposal. We are proposing that programs and approximately 37 States general requirements may require any person requesting a change in the do not have State Government or State- development of a unique working National List should request a copy of designated private certifying agents. relationship between the State organic the petition procedures from the NOP Under this proposal, States may utilize program and the NOP. Program Manager. The procedures will these NOP standards and requirements With the approval of its State organic include a list of information that has to and not have State oversight or certification program, the State must be provided for consideration of a responsibility for administration of the assume responsibility for administration change in the National List. Under the NOP in the State. On the other hand, a of these 11 general requirements and provisions in the first proposal, the NOP State may petition the Secretary for any approved, more restrictive would be required to go through approval to add its unique State requirements in the State. For instance, rulemaking every time it sought to requirements to the NOP and agree to a State’s responsibilities will include update contents of the petition. Under administer the national program in the oversight of certified organic production this proposal, the NOP will amend the State. and handling operations to ensure that

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00081 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13592 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules products sold or represented as organic organic production and handling The submitted copy of the State are produced and handled pursuant to standards. Rather, the increased organic certification program must be in these regulations. A State’s organic requirements are likely to be limited to its final form and ready for certification program must include a specific production or handling implementation. It cannot be altered by noncompliance and appeals procedures practice or a more restricted use of the State during the review process similar in force and effect to those approved National List substances to unless the change is cleared with the outlined in the Compliance and Appeals address needs or critical conditions in a Secretary. provisions of this subpart. We expect specified geographic area(s). For Amendments to State Programs. For that every State has in place official instance, to protect an endangered lake amendment of a State organic program, compliance procedures and formal or estuary, a State may have more the State program’s governing State appeal procedures which are used to restrictive buffer zone requirements official must submit a copy of the enforce the State’s regulatory programs. than are provided in this regulation. proposed amendments and justification Those procedures should provide Such a State may request that its more for them. The supporting material must opportunity, as do the procedures in restrictive buffer zone requirements be document the unique environmental or this subpart, for entities that may not be established as the minimum buffer zone ecological conditions or production in compliance with State regulations, to requirements of this regulation. practices in the State that necessitate come into compliance with those A State’s more restrictive standards use of more restrictive organic regulations. Such procedures should be will not be applied to production and requirements. The supporting material clearly addressed in the State’s organic handling activities outside the State or must also explain how the more certification application. a specified geographic area in the State. restrictive requirements will address the A proposed State organic certification Further, the more restrictive standards environmental condition. Likewise, the program and any proposed amendment do not apply to marketing of organic supporting material must explain how to such a program must be approved by product and, thus, will not be used to the increased requirements are better the Secretary prior to being restrict access of organic product suited to agricultural conditions in the implemented by the State. A State may produced in other States. State. have other organic State sponsored Because State organic certification Section 205.621 provides that a State projects, such as research and program requirements cannot be less program’s governing State official will promotion programs, tax incentives, or restrictive than NOP requirements, any submit to the Secretary a copy of a transition assistance for organic amendment to lower such requirements proposed State organic program or producers within the State. Such could only entail a relaxation of a more request for approval of any substantive programs would not be subject to the restrictive requirement previously amendment to a State’s approved Secretary’s approval, provided they do approved by the Secretary. Thus, an program. not conflict with the purposes of the amendment to relax a State program’s Act. State Program Approval Process. We requirement also must be reviewed by Under certain circumstances, a State envision the request and approval the Secretary. A decrease in a State organic program may have more process will occur during the period organic certification program’s more restrictive requirements in the State between publication of the final rule restrictive requirements must be than corresponding NOP requirements and the projected effective date of the justified, based on documented changes for production and handling of organic this national program (which will be in the unique conditions or practices product and certification of organic announced in the final rule). Because which warranted the increase in production and handling operations. requirements of a State organic program requirements. These more restrictive requirements cannot exceed the requirements of this Written materials supporting an must be based on unique environmental program unless warranted by unique amendment must assess how the more conditions or specific production or conditions in the State, some State restrictive requirements further the handling practices particular to the organic programs currently in effect may purposes of and are consistent with the State or portion of the State. Any elect to discontinue their programs Act and these regulations. The written environmental condition cited in the when the NOP becomes effective. Those material should acknowledge that the proposed amendment must be of a programs simply will not request more restrictive State requirements will nature that implementation of these approval of their programs and their not be used to limit or restrict access of NOP regulations will be insufficient to State organic requirements, in effect organic products produced in other correct the condition. The under the State program, will be States or foreign countries to markets in environmental condition must superseded on the effective date of the the State. Also, supporting materials necessitate use of more restrictive NOP. State organic certification must explain how the amended practices or requirements rather than programs which seek approval of their requirements would affect the State the corresponding practices and programs will submit the required program’s governing State official’s requirements provided in these material and continue operations until ability to administer the 11 general regulations. Any such condition that is the effective date of the NOP. We requirements. A request to relax a limited to a specific geographic area of envision that all approved State organic requirement also must address these the State will be required of organic certification programs will become issues. production and handling operations effective under the NOP on the day the The Secretary will review each State’s active only in that geographic area. If program becomes effective. A State application based on how closely it approved by the Secretary, the more wishing to establish a new State organic complies with the purposes and intent restrictive requirements will become the certification program under the NOP of the Act and the provisions of the NOP NOP regulations for appropriate organic may submit the State program request and how well its administrative producers and handlers in the State or and supporting material at any time. capabilities and processes match up area of the State. New programs submitted after this with the needs of the State’s program. We do not expect that a State’s program becomes effective will be The Act provides that the Secretary’s request for more restrictive subject to the same review and approval review and determination of a new State requirements will cover a wide range of process. organic certification program or a

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AMS will identify, among approving States requests for more similar authority to private certifying other things, any more restrictive restrictive State organic programs. The agents. Private certifying agents are not certification requirements that are criteria for establishing such government entities and have no official included in the approved State program. requirements must be consistent with regulatory or administrative authorities A denial of a new program or program the purposes of the Act. We believe the over agricultural activities in the State. amendment will include a written need to preserve, protect, and enhance State certifying agents as well as private explanation of why the proposal is unique environmental or farming certifying agents will act as service denied and what changes will be conditions is a common criterion for all providers, certifying to national and, needed for the program to be approved. States. We believe such criteria are where applicable, to particular State The State may implement needed consistent with the stated goals of most, organic requirements. changes and submit a new program or if not all, State organic programs and Again, commenters appear to miss an program amendment. organic trade and farming organizations. essential point of this national program. Section 205.622 establishes that State The more restrictive standards will The only mandatory organic standards organic certification programs will be not be applied to production and and requirements are those of the NOP reviewed at least once every 5 years by handling activities outside the and the unique requirements approved the Secretary and that a determination geographic area of the State. Further, the for a State organic certification program more restrictive standards do not apply will be made within 6 months of the by the Secretary. A private certifying to marketing of organic product and, anniversary date as to continuation of agent may believe its more restrictive thus, will not be used to restrict access the State organic certification program. requirements result in a more organic or of organic product produced in other We will issue appropriate procedures purer product and may want to certify States. Clearly, prohibiting the sale of regarding this requirement at a later producers and handlers only to those other States’ products is prohibited by date, after AMS and the States have had requirements. However, neither State the Act as well as other national laws an opportunity to administer the NOP certifying agents nor private certifying covering interstate commerce in the and State programs. agents will be able to require that client United States. If some States were to operations or organic product be State Programs—Changes Based On restrict access to State markets, the Comments purposes and the benefits of the certified to more restrictive standards There are no changes based on national program would be lost. than the standards of this program or comments. Discriminatory marketing practices approved State standards. The only are prohibited under section other more restrictive requirements that State Programs—Changes Requested But 6507(b)(2)(c) of the Act. Thus, the may be certified to may be requirements Not Made purpose of more restrictive State organic made at the request of handlers or (1) Allowing more restrictive State requirements cannot be, as the manufacturers who are purchasing the standards. About a third of those commenters suggest, to allow claims of organic product or ingredient. For commenting on State organic more organic or purer product. States example, a producer could request a certification program provisions will not be able to promote their certifying agent to certify certain complained that the first proposal gave products as being more organic because production practices required for export USDA complete control over State their products were produced under to a foreign manufacturer. Such organic standards. A few suggested that more restrictive State requirements. certification can be made only at the a State with higher organic requirements More restrictive State organic request of the producer or handler being should be able to prohibit the in-State requirements will be authorized only as certified. Both State and private sale of products certified only to the needed to respond to special certifying agents may certify to the NOP or other State organic program environmental or production conditions requested more restrictive contract requirements. Another commented that in the State which necessitate more requirements, provided those more the NOP should ‘‘defer’’ to other State restrictive requirements. Any State’s restrictive requirements are consistent organic certification programs with request for less restrictive or lower with these regulations and provided the higher standards. organic standards than are required certifying agents have the necessary While paragraph (b)(1) of section 6507 under this program will not be approved technical qualifications to carry out the of the Act provides that States may by the Secretary. certification. establish more restrictive organic (2) Treatment of private and State Similarly, one commenter stated that certification requirements, paragraph certifying agents. Some private the NOP should not prevent a private (b)(2) establishes parameters for those certifying agents commented that the certifying agent from having and requirements. More restrictive State first proposal would permit accredited advertising its own higher organic organic program requirements must: State certifying agents to establish more standards. While a private certifying Further the purposes of the Act; be restrictive standards than these agent may have the capability to certify consistent with the Act; not regulations but prohibit private to certain higher organic requirements, discriminate against other States’ certifying agents from establishing their a handler certified by the certifying agricultural commodities; and be own more restrictive requirements. agent may not claim on product labels approved by the Secretary before Under this program, State certifying or in market information that its becoming effective. As noted above, we agents will not unilaterally establish products are more organic, purer, or expect that a State’s more restrictive organic standards or requirements in a better than product certified by other requirements are likely to cover specific State. A State program’s governing State certifying agents or State organic production or handling practices such official may, upon approval of the programs.

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In this regard, certifying agents, authority is the sole responsibility of the restrictive organic production or whether they are State or private Secretary. handling requirements. We also will certifying agents, may not use different If more restrictive State requirements include a summary of the new program seals, logos, or other identifying marks are approved by the Secretary, we will on the NOP homepage. to distinguish between organic review certifying agent qualifications in (5) State program consistencies. operations certified to NOP the State and determine whether they Several commenters asked for requirements and a State’s approved are able to certify to the approved, more clarification of the first proposal’s terms, more restrictive requirements, the restrictive requirements. Our ‘‘consistent’’ and ‘‘substantive certifying agent’s preferred accreditation responsibilities must amendments,’’ used in regard to State requirements, or the client’s requested include oversight of both State and programs operating under the NOP. higher requirements. We believe that if private certifying agents, including any Being ‘‘consistent’’ with the NOP means certifying agents were allowed to use foreign certifying agents that may that a State program’s written standards more than one seal or identifying mark, operate in a State, and to monitoring or requirements must be at least equal based on various standards certified to, their compliance with accreditation to the standards and requirements of the the marketplace would be inundated requirements. NOP. This is provided for in the Act. with a variety of different certifying (4) Public comment on State Further, in allowing State organic agent seals, logos, and identifying applications. One commenter suggested programs to have more restrictive or marks. This would add to consumer that USDA publish for comment in the higher standards, the Act requires that confusion, complicate the marketplace, Federal Register, a summary of each those more restrictive standards and and jeopardize benefits of this program. State’s proposed organic program and requirements be consistent with the (3) Private certifying agent concerns. any requested program amendments. purposes of the Act. To be ‘‘consistent’’ Several commenters expressed concern The commenter claimed that an with the purposes of the Act means that that private certifying agents are at a approved State organic certification the requested, more restrictive standards disadvantage vis-a-vis State certifying program will effectively substitute the or requirements are of such a nature that State’s program for the NOP in the State. agents. They stated that a State organic they do not undermine the application Thus, the commenter contends, those program or a State certifying agent could of uniform national organic standards. proposed State programs and program initiate policies that would limit the Thus, if a request for more restrictive amendments should be made available activities or effectiveness of private State organic standards is determined to for public comment. After consideration certifying agents. However, this not be consistent with uniform national of the implications of the comment, we proposed program does not alter the organic standards, the State program do not believe that the Federal Register current situation in that State and will not be approved by the Secretary. notification process is the proper venue The administrative procedures used by private certifying agents operate in the for receiving comments on a proposed the State in administering the 11 general same States. If a requested State organic State program which is applicable only requirements of the State’s organic certification program proposes a to residents and business entities in the program should have the same force and requirement or procedure that will have State. We assume that the governing effect of the procedures use by AMS in a negative affect or discriminate against State official is submitting the request administering this program. private certifying agents operating in the on behalf of the organic producers and The same commenters asked for State, the Secretary will not approve the handlers in the State. Further, the clarification of the term, ‘‘substantive requirement or procedure. appropriateness of the State’s requested amendments,’’ in obtaining USDA Some commenters asked whether more restrictive requirements should approval of more strict amendments for these national regulations will affect a stand on the merits of each proposal and one State’s organic certification State’s accreditation of private certifying not on whether commenters in other program. ‘‘Substantive amendments’’ agents operating in the State. A few States believe the proposed means changes that would increase the believe that States should be allowed to requirements are warranted. Certified quantitative or qualitative standards or continue or establish separate organic producers and handlers outside specific requirements for an operation’s accreditation programs for private the State will not be subject to the more or a product’s certification under the certifying agents. restrictive standards or requirements of State organic program. Once this We believe accreditation of certifying the State program. The more restrictive national program is operating, if a agents is a core responsibility for USDA. standards will not be used to restrict question arises as to whether a desired Establishment of a single national market access of organic product change in a State organic certification accreditation program is an essential produced in other States or countries. program is considered substantive or part of the NOP. States will not accredit Thus, there is no reason to receive not, the State program’s governing State private certifying agents. As stated public comment on requested State official should raise the issue with the elsewhere in this proposal, any requirements from individuals not Secretary. accreditation responsibilities of a State’s directly affected by the proposed current organic certification program requirements. State Programs—Additional Provisions will cease with implementation of this The commenter suggested that AMS (1) State program responsibilities. program. Pursuant to the Compliance also publish a summary of each This subpart establishes that a State provisions of this subpart, the governing proposed program and any amendments organic certification program which State official or designee charged with to a program in a newspaper of general petitions for approval by the Secretary compliance oversight under the State circulation in the State. AMS will issue will have increased responsibilities program may investigate and notify the a public information notices which will under the NOP. Our first proposal did NOP of possible compliance violations announce each approved State organic not suggest qualifying factors or other on the part of certifying agents operating certification program and any approved information that had to be submitted by in the State. However, the State may not amendments of a State program. The the State program’s governing State pursue compliance actions or remove notices will identify the unique official. This proposal specifies the 11 accreditation of any certifying agent characteristics of the approved State general requirements, addressed above, accredited by the Secretary. That program that warranted the more and the needs-based environmental

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These regulations also all applicable travel charges. Travel program under the NOP. For instance, address general requirements to be met charges may include a mileage charge as discussed above, a State with an by certifying agents in assessing fees administratively determined by the approved organic certification program and other charges for the certification of Department, travel tolls, or, where the will oversee compliance and appeals producers and handlers as certified travel is made by public transportation procedures for certified organic organic operations. Finally, these (including hired vehicles), a fee equal to operations in the State. Those regulations address the Secretary’s the actual cost thereof. If the service is procedures must provide due process oversight of a certifying agent’s fees and provided on a circuitous routing the opportunities such as rebuttal, charges for certification services. travel charges will be prorated among mediation, and correction procedures in all the applicants and certifying agents Proposal Description this proposal. Once approved by the furnished the service involved on an Secretary, the State governing official or Fees and Other Charges for equitable basis. Travel charges will designee must effectively administer the Accreditation. Fees and other charges become effective for all applicants for State’s organic certification program in will be assessed and collected from initial accreditation and accredited a manner that is consistent and applicants for initial accreditation and certifying agents on the effective date of equitable for the certified parties accredited certifying agents submitting subpart F. The applicant or certifying involved in compliance actions. annual reports or seeking renewal of agent will not be charged a new mileage A State’s organic certification program accreditation. Such fees will be equal as rate without notification before the may include other programs and nearly as may be to the cost of the service is rendered. projects which the State government accreditation services rendered under When service is requested at a place may conduct to promote or increase these regulations. Fees-for-service will away from the evaluator’s headquarters, organic production and handling in the be based on the time required to render the fee for such service shall include a State. Such programs may include the service provided calculated to the per diem charge if the employee(s) organic promotion and research nearest 15-minute period. Activities to performing the service is paid per diem projects, transition assistance, a be billed on the basis of time used in accordance with existing travel directory of organic production and include the review of applications and regulations. Per diem charges to handling operations in the State, a accompanying documents and applicants and certifying agents will consumer referral program, or information, evaluator travel, the cover the same period of time for which certifications given to retail operations conduct of on-site evaluations, review of the evaluator(s) receives per diem which market organic foods. This annual reports and updated documents reimbursement. The per diem rate will proposal will not prohibit such State and information, and the preparation of be administratively determined by the activities, provided those activities do reports and any other documents in Department. Per diem charges shall not establish production or handling connection with the performance of become effective for all applicants for standards that work against the service. The hourly rate will be the same initial accreditation and accredited purposes of the NOP. Such programs as that charged by the Agricultural certifying agents on the effective date of may not advertise, promote, or Marketing Service (AMS), through its subpart F. The applicant or certifying otherwise infer that the State’s organic Quality System Certification Program, to agent will not be charged a new per products are more organic or better than certification bodies requesting diem rate without notification before the organic product produced in other conformity assessment to the service is rendered. States. Such programs and projects International Organization for When costs, other than fees-for- should be beyond the scope of this Standardization ‘‘General Requirements service, travel charges, and per diem national program and, if so, will not be for Bodies Operating Product charges are associated with providing subject to the Secretary’s review. Certification Systems’’ (ISO Guide 65). the services, the applicant or certifying (2) Renewal of State program. The Applicants for initial accreditation agent will be charged for these costs. final section provides that reviews of and accredited certifying agents Such costs include, but are not limited State organic certification programs will submitting annual reports or seeking to, equipment rental, photocopying, be conducted at least once every 5 years, renewal of accreditation during the first delivery, facsimile, telephone, or as required in paragraph (c) of section 18 months following the effective date translation charges incurred in 6507. The intent of the provision is not of subpart F will receive service without association with accreditation services. changed in this proposal. We will incurring an hourly charge for such The amount of the costs charged will be provide further information regarding service. determined administratively by the reviews of State programs before the Applicants for initial accreditation Department. Such costs will become first 5-year period is completed. We and renewal of accreditation must pay effective for all applicants for initial expect that, with experiences gained at the time of application, effective 18 accreditation and accredited certifying from a few years of program operation, months following the effective date of agents on the effective date of subpart F. we will be able to propose more Subpart F, a nonrefundable fee of Payment of Fees and Other Charges. appropriate procedures, guidelines, and $500.00. This fee will be applied to the Applicants for initial accreditation and requirements to assure proper reviews applicant’s fees-for-service account. renewal of accreditation must remit the of operating State organic programs. When service is requested at a place nonrefundable fee along with their Fees. This portion of subpart G sets so distant from the evaluator’s application. Remittance must be made forth the regulations on fees and other headquarters that a total of one-half payable to the Agricultural Marketing charges to be assessed for accreditation hour or more is required for the Service, USDA, and mailed to: Program and certification services under the evaluator(s) to travel to such place and Manager, USDA–AMS–TMP–NOP,

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Room 2945-South Building, PO Box time and travel expenses necessary for subsidization of the hourly costs for 96456, Washington, DC 20090–6456 or the NOP to perform accreditation accreditation by the Department during such other address as required by the services. the first 18 months of operation. This Program Manager. All other payments This proposed program is similar to 18-month subsidization of the hourly for fees and other charges must be the Quality Systems Certification costs will prove especially beneficial to received by the due date shown on the Program (QSCP) established pursuant to any applicant for accreditation that bill for collection, made payable to the 7 CFR part 54. The QSCP is an audit- submits a substandard application or Agricultural Marketing Service, USDA, based program administered by AMS has difficulty establishing eligibility for and mailed to the address provided on through its Livestock and Seed Program, accreditation. Certifying agents will be the bill for collection. The which provides meatpackers, charged for accreditation service at the Administrator will assess interest, processors, producers, and other published hourly rate on the first day of penalties, and administrative costs on businesses in the livestock and meat the nineteenth month following the debts not paid by the due date shown trade with the opportunity to have effective date of subpart F. on a bill for collection and collect special processes or documented quality Over 15,000 comments were received delinquent debts or refer such debts to management systems verified. Since the on fees, with all opposing the first the Department of Justice for litigation. procedures used for accrediting State proposal’s fee provisions. In addition to Fees and Other Charges for and private entities as accredited comments from consumers, comments Certification. Fees charged by a organic certifying agents are similar to were received from State agencies, certifying agent must be reasonable, and those used to certify other types of organic growers, grower associations, a certifying agent may charge applicants product or system certification programs and certifying agents. Most of these for certification and certified production under the QSCP, we have decided to use commenters expressed the belief that and handling operations only those fees this existing program and its staff in the proposed fees would price small and charges that it has filed with the examining certifying agents’ operations certifying agents out of the organic Administrator. The certifying agent and evaluating their compliance with industry. Almost half of the over 15,000 must provide each applicant with an the Act and these regulations. Using the comments suggested a sliding-scale fee estimate of the total cost of certification QSCP and its staff will enable the NOP system, rather than the flat fee system in and an estimate of the annual cost of to provide the necessary services the first proposal, to accommodate the updating the certification. The certifying without creating a separate bureaucracy. economic needs of small certifying agent may require applicants for Hourly fees to be charged for services agents. We have not accepted the certification to pay at the time of under this program will be the same as concept of a sliding-scale fee system. application a nonrefundable fee of no those under the QSCP, currently Rather, as noted above, we are more than $250.00 which must be estimated at $95.00 per hour. proposing that certifying agents be applied to the applicant’s fees-for- This fee of approximately $95.00 is charged for the actual time and travel service account. The certifying agent greater than the $42.20 base rate charged expenses necessary for the NOP to must provide all persons inquiring under the voluntary user-fee-funded perform accreditation services. Under about the application process with a program established by AMS to verify this fee system, smaller certifying agents copy of its fee schedule. that State and private organic certifying should pay less in hourly charges to Fees—Changes Based on Comments. agents in the United States comply with obtain and maintain certification than This portion of subpart G differs from the requirements prescribed under ISO larger certifying agents. This our first proposal in several respects as Guide 65. This program, administered assumption, however, is contingent on follows: by the AMS Livestock and Seed the quality of all documentation (1) Application and Administrative Program, applied the aggregate meat submitted to the Department, certifying Fees. We have removed the provisions grading rate for services to this ISO agent recordkeeping, and the efficiency which required certifying agents to pay Guide 65 verification program for State of the certifying agent in meeting the application and administrative fees. and private organic certificating agents. requirements of this part. The fees and These fee provisions have been replaced The grading rate of $42.20 was the only other charges for accreditation with provisions for the assessment of rate for which AMS was authorized to regulations are found in § 205.640. fees for service equal as nearly as may charge at the time that the program to (2) Payment by Certified Check. We be to the cost of the accreditation assess ISO Guide 65 conformity by have removed the requirement that the services rendered under these organic certifying agents was payment of fees and charges to the regulations. In other words, we will be implemented. This was not the actual Department be by certified check or assessing fees and charges only for audit rate of approximately $95.00 for money order. We have made this change activities related to accreditation. These such services. The AMS Livestock and because we agree with commenters that fees and charges will be assessed and Seed Program will engage in rulemaking this requirement is unnecessary and collected from applicants for initial to establish audit fees for its QSCP. As potentially burdensome. accreditation and accredited certifying noted above, those fees are expected to Nearly all industry commenters agents submitting annual reports or be approximately $95.00 per hour. The opposed the form and method of seeking renewal of accreditation. The NOP will notify accredited certifying payments stated throughout the original balance of costs incurred by the NOP agents of proposed rate changes and fee sections. Commenters stated that will be funded through appropriations. final actions on such rates by AMS. payment by certified check or money We have retained the requirement, with To minimize the economic impact of order was unnecessary and would create modification, that certifying agents implementing the NOP on certifying an additional burden on individual reimburse the Department for travel, per agents, we have decided to provide producers, handlers, and private diem, and related other costs associated services for accreditation during the first certifiers. A few State commenters with providing accreditation services. 18 months following the effective date stated that it was insulting for the U.S. We have taken these actions in an of new subpart F without an hourly Department of Agriculture (USDA) to attempt to minimize the cost of this charge for all applicants for initial require a State government agency to program on certifying agents. Certifying accreditation and accredited certifying pay for its accreditation with a certified agents will be charged for the actual agents. This represents full check.

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(3) Producer and Handler Fees to the operations marginal. A few State certified production and handling Department. We have removed the agencies commented that many small operations. provisions which required the payment organic producers also conduct their (4) Estimated Cost of Certification. We of certification fees by producers and own on-farm handling and that these have added, at § 205.642, the handlers to the Department. We have operations would be forced out of the requirement that the certifying agent taken this action because we believe organic industry by the excessive must provide each applicant with an that the goal of recovering program costs handler fee and reporting burdens. estimate of the total cost of certification through fees and other costs charged to The comment, that exempt producers and an estimate of the annual cost of producers and handlers for certification who might want to be certified so they updating the certification. Additionally, as certified organic operations should be could market their product as organic the certifying agent must provide all balanced against the Act’s purpose to would be dissuaded from doing so persons inquiring about the application facilitate interstate commerce in fresh because of the cost of certification, process with a copy of its fee schedule. and processed food. requires clarification. It may be true that We have added these provisions to We received over 15,000 comments such producers would be dissuaded ensure that producers and handlers all opposing the first proposal’s fee from seeking certification because of the have early and ready access to the provisions for producers and handlers. cost of certification. It is not true, information they need to consider cost Comments were received from however, that exempt producers must in selecting an agent to certify their consumers, State agencies, organic be certified to sell or label their production or handling operation. We growers, grower associations, and production as organic. The Act exempts consider this to be especially important certifying agents. Most of these small producers, those who produce no because, as noted in the preamble to commenters stated that the proposed more than $5,000 in agricultural subpart F, we have removed the fees would price small producers and products, from the requirement that a requirement that the certifying agent handlers out of the organic industry. person may sell or label an agricultural charge only such fees to applicants for Hundreds of these commenters stated product as organically produced only if certification and operations it certifies that the proposed fees favor large such product is produced and handled that the Secretary determines are production operations. Almost half of in accordance with the Act. reasonable. We have removed this the over 15,000 comments suggested a requirement because we concur with Industry commenters recommended sliding-scale fee system, rather than the those commenters who expressed the complete changes to the proposed fee flat fee system proposed in the first belief that certifying agents should be structure. Most, like the consumer proposal, to accommodate the economic permitted to set their own fees without commenters, suggested a sliding scale needs of small producers and handlers. the approval of the Secretary. We have for fees based on either size or sales Hundreds more suggested that small also removed this requirement because volume. Several industry commenters producers and processors be exempt we concur with the commenters’ belief stated that the Act does not require that from the payment of fees. that production and handling operations Most of the State agency, organic USDA recover all program costs from are free to consider cost in selecting an grower, grower association, and assessments on producers, handlers, agent to certify their production or certifying agent (industry) commenters and certifying agents. They cited section handling operation. spoke to the very small size and family- 6522 of the Act as authorizing the use Fees—Changes Requested But Not farm nature of the average organic of appropriated funds to carry out the Made. This subpart retains from our first production operation and how those program. Some industry commenters proposal regulations on which we operations would be affected by the suggested that appropriated funds received comments as follows: proposed fees. Commenters from this should be used to cover all (1) Accreditation Charges Billed to group who offered estimates suggested administrative and overhead costs and State Certifying Agents. Several State that one-third to over one-half of organic that fees collected from the industry certifying agents stated that State producers in their area or State are very should only be used for specific certifying agents should not be assessed small organic producers operating at or program activities such as accreditation. accreditation charges. Commenters near the exemption level of $5,000 in A few industry commenters suggested stated that most State certifying agents annual sales. They said those operating that organic farmers not be charged an could face large accreditation costs just above the exemption level could be AMS fee but that each be required to because they have many county or forced out of organic production by the sign an affidavit of compliance with regional offices which would be extra fee and the increased certification program requirements. considered subsidiaries of the charges passed down by certifying After further discussions within the headquarters office. They stated that agents who would have to pay the Department and review of the these charges would have to be passed proposed accreditation charges. comments, we have determined that the on to producers and handlers or paid Commenters, industry and consumer, fee structure for the NOP should be with supplemental State funds. A few stated that, rather than encouraging modified to reduce costs to all organic State certifying agents stated that USDA growth and new participation in organic sectors. We acknowledge that the fees should pay the States, rather than vice agriculture, the costs of certification proposed in the first proposal might versa, because of the State organic would stifle growth and discourage have discouraged industry growth and programs’ contributions to the national small producer participation in organic might not have facilitated interstate program. At least one State agriculture. An industry commenter commerce of organic products. Because representative commented that stated that exempt producers who might we believe that fees and other costs accreditation fees for State certifying want to be certified so they could charged to producers and handlers for agents should be less than for private market their product as organic would certification as certified organic certifying agents because State certifying be dissuaded from doing so because of operations should be kept to a minimum agents should require less review and the cost of certification. Industry to encourage industry participation and oversight by AMS. commenters also stated that the growth, we have removed the We disagree with those commenters additional USDA fee on small handlers regulations which provided for the who recommended that State certifying would make small organic handling payment of fees to the Department by agents not be assessed accreditation

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This Act to review the operations of State of private-entity certifying agents. regulation does not prohibit certifying organic certification programs, Accordingly, under this proposal, State- agents from providing and charging for accredited certifying agents, and entity certifying agents will be assessed services outside the NOP. Services that certified production or handling fees for accreditation under the same fee certifying agents might provide outside operations for compliance with the Act structure as private-entity certifying the NOP include in-house publications, and these regulations. The Program agents. conferences, workshops, informational Manager of the NOP may carry out (2) Subsidization. Some industry meetings, and field days. Certifying oversight of compliance proceedings on commenters stated that national agents cannot require participation in behalf of the Secretary and the governments in Europe provide direct such activities by certified operations or Administrator. However, most reviews subsidies and other economic incentives applicants for certification as a and analyses of certification for their farmers to grow organic. A few condition of certification. noncompliance will be conducted by questioned why the organic industry Second, the certifying agent may the certifying agent which certified the would be charged for services while require applicants for certification to operation. With regard to certifying some USDA programs are provided pay at the time of application a agents, the Program Manager may without cost to other agricultural nonrefundable fee of no more than initiate proceedings to suspend or sectors, and USDA actually pays some $250.00 which must be applied to the revoke the accreditation of a certifying farmers not to grow some commodities. applicant’s fees-for-service account. We agent for failure to conduct Industry commenters and many believe that this fee will help ensure accreditation activities or maintain consumer commenters stated that it was that certifying agents are compensated accreditation requirements pursuant to unfair for this proposed program to for certification services provided to an subpart F of this regulation. charge all costs to a fledgling applicant that is found to be not In States with an approved State agricultural industry composed mostly qualified to receive certification as an organic certification program, the State of small, family farmers and marginal organic production or handling program’s governing State official is operations. Finally, a few industry operation. responsible for administration of the commenters proposed the philosophical (2) Fees Charged to Foreign Certifying State’s compliance program for certified argument that program fees penalize Agents. We have removed the operations. Governing State officials those who protect the earth and that provisions which required the payment also may review and investigate USDA should charge traditional of fees for import programs. We have complaints of certifying agents producers who damage the earth with taken this action because this proposal operating in the State who may not be chemical applications and includes foreign State entities and in compliance with the accreditation nonsustainable cultural practices. foreign private entities which provide requirements of the Act and these AMS is primarily a user-fee-based certification services under the regulations. They must notify the Federal agency. The Act at section accreditation requirements of this part. Program Manager of such 6506(a)(10) requires the collection of Accordingly, such entities are covered noncompliance activities and make fees from producers, handlers, and under the fees for accreditation information regarding the violation certifying agents. We are, therefore, provisions of § 205.640. available to the NOP for appropriate unable to provide for the full action. Compliance subsidization of producers, handlers, The Program Manager may initiate and certifying agents as espoused by This portion of subpart G sets forth proceedings to suspend or revoke a some commenters. Accordingly, this the enforcement procedures for the certified operation’s certification if a proposal provides for the payment of National Organic Program (NOP). These certifying agent or State program’s fees by producers, handlers, and procedures describe the compliance governing State official fails to take certifying agents. We have, however, responsibilities of the Secretary, USDA, appropriate enforcement action or if an proposed regulations in this proposal and Agricultural Marketing Service operation is found to be erroneously which we believe will minimize the (AMS) officials acting on behalf of the certified by a certifying agent whose economic impact of the NOP on Secretary. These procedures also accreditation has been suspended or producers, handlers, and certifying describe responsibilities of State revoked. agents. programs’ governing State officials The compliance provisions of the Fees—Additional Provisions. Upon (governing State officials) and State and NOP are consistent with the further review of the fee provisions in private certifying agents for compliance requirements of the Administrative the first proposal, we have decided to under the NOP. The NOP is the AMS Procedure Act (APA) (5 U.S.C. 553–559) propose the following additions. office that reviews applications and in that this program provides for due (1) Certification Fees Charged by initiates approvals of accreditation of process including an opportunity for Certifying Agents. We have added, at new certifying agents, conducts hearing, appeal procedures, written § 205.642, regulations addressing oversight of accredited certifying agents, notifications of noncompliance, and general requirements to be met by and reviews and recommends opportunities to demonstrate or achieve certifying agents in assessing fees and continuation of accreditation of compliance before any suspension or other charges for the certification of certifying agents. These provisions also revocation of organic certification or producers and handlers as certified address the rights of certified accreditation is invoked. An exception organic operations. First, fees charged production and handling operations and to the initial due process steps under by a certifying agent must be reasonable, accredited certifying agents operating the APA is provided in instances of and a certifying agent may charge under the NOP. Approval or denial of willful violations. However, willful applicants for certification and certified applications for certification and violations may be appealed pursuant to

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The notification for mediation, and notices of correction may be combined in one notification of process for denying applications for of deficiencies sent by certified proposed suspension or revocation. The certification and applications for operations will be sent to the certified operation will have an accreditation is laid out in subparts E addressee’s place of business by a opportunity to appeal that suspension and F respectively. delivery service which provides dated or revocation decision. Noncompliance Procedure for return receipts. This will help assure Mediation. A certified operation may Certified Operations. The Act provides completed communications and timely request mediation of any dispute for the enforcement of certified compliance procedures. regarding denial of certification or operations. Statutory oversight of If a certified operation believes the proposed suspension or revocation of production and handling operations by notification of noncompliance is certification. Mediation is not required prior to filing an appeal but is offered certifying agents includes review of incorrect or not well-founded, the as an option which may resolve the organic plans, residue and tissue testing, operation may submit a rebuttal to the noncompliance more quickly than the authority to conduct investigations, and certifying agent, providing supporting next step, which is filing an appeal. If responsibility to report violations. data to refute the facts stated in the a State program is in effect, the Applicants for certification must meet notification. Rebuttals are provided to mediation procedures established in the certification requirements of the NOP, allow certifying agents and certified State program, as approved by the as determined by certifying agents. operations to informally resolve Notification of Noncompliance. As Secretary, must be followed. Mediation noncompliance notices. Rebuttals noted above, the Program Manager or will be requested in writing to the should be helpful in resolving the governing State official may review applicable certifying agent. The dispute differences which may be the result of and investigate a certified operation will be mediated by a qualified mediator based on complaints and may initiate misinterpretation of requirements, mutually agreed upon by the parties to noncompliance proceedings established misunderstandings, or incomplete the mediation. The parties to the in this subpart. However, we expect that information. Alternatively, the certified mediation will have no more than 30 most compliance procedures will begin operation may correct the identified days to reach an agreement following a with a certifying agent’s inspection, deficiencies and submit proof of such mediation session. If mediation is review, or investigation of such certified corrections. When the operation unsuccessful, the certified operation operation. Thus, this noncompliance demonstrates that each noncompliance will have 30 days from termination of procedure is proposed based on that has been corrected or otherwise mediation to appeal the proposed process. resolved, the certifying agent will send suspension or revocation to the A written notification of the certified operation a written Administrator. noncompliance will be sent to the notification of noncompliance Any agreement reached during or as certified operation if a certifying agent’s resolution. a result of the mediation process must inspection, review, or investigation Proposed Suspension or Revocation of be in compliance with the Act and these reveals any noncompliance with the Act Certification. If the noncompliance is regulations. Also, the Secretary reserves or these regulations. Noncompliance not resolved and is not in the process of the right to review any mediated may include, among other things, being resolved by the date specified in settlement to assure that the terms of the production or handling practices or the notification, the certifying agent will settlement conform with the conditions, use of substances, or send the certified operation a written requirements of the Act and the NOP. labeling which are not in compliance notification of proposed suspension or Suspension or Revocation. The with subparts C, Production and revocation of certification for the entire certifying agent will suspend or revoke Handling, or E, Certification, of this operation or a portion of the operation the certified operation’s certification regulation. The results of a residue test affected by the noncompliance. The when the operation fails to resolve the may trigger a noncompliance notification will state: (1) The reasons issue through rebuttal or mediation, notification. A noncompliance for the proposed suspension or fails to complete needed corrections, or notification may encompass the entire revocation; (2) the proposed effective does not file an appeal. The operation operation or a portion of the operation. date of the suspension or revocation; (3) will be notified of the suspension or For instance, a violation at one farm the impact of the suspension or revocation by written notification. The may not warrant loss of certification at revocation on the certified operation’s certifying agent must not send a other farms of the certified operation not future eligibility for certification; and (4) notification of suspension or revocation affected by the violation. that the certified operation has a right to to a certified operation that has A notification of noncompliance will request mediation or to file an appeal. requested mediation or filed an appeal. provide: (1) A description of each The impact of a proposed suspension or The decision to suspend or revoke condition, action, or item of revocation may include the suspension certification will be based on the noncompliance; (2) the facts upon period or whether the suspension or seriousness of the noncompliance and which the notification is based; and (3) revocation applies to the entire on whether the noncompliance is a the date by which the certified operation or to a portion or portions of willful action by the certified operation. operation must rebut the notification or the operation. A governing State official Such decisions must be made on a case- correct the noncompliance. A certified may not suspend or revoke certification by-case basis. Section 6519 of the Act operation may continue to sell its of an entity’s certified operations in establishes that willful violations product as organic upon receiving a other States. Likewise, a certifying agent include making a false statement, notification of noncompliance and may not suspend or revoke certification knowingly affixing a false label, or

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Additionally, the accreditation and in each State for However, only the Program Manager or notification will provide the date by which its accreditation is suspended or governing State official may make the which the certifying agent must rebut revoked. Any certifying agent whose final determination that a violation is the noncompliance notice or correct accreditation has been suspended or willful. each noncompliance described. revoked must transfer to the Secretary If a suspected willful noncompliance When documentation received by the all records concerning its certification is not a serious violation, a proposed Program Manager demonstrates that activities that were suspended or suspension rather than revocation may each noncompliance has been resolved, revoked. The certifying agent must also be issued. Revocation is reserved for the Program Manager will send the make such records available to any serious instances of willful certifying agent a written notification of applicable governing State official. The noncompliance and other serious noncompliance resolution. records will be used to determine violations. If a noncompliance is not resolved by whether operations certified by the The certifying agent may determine rebuttal or correction of violations, the certifying agent may retain their organic that a lesser penalty of suspension is Program Manager will issue a proposed certification. warranted by the noncompliance. A suspension or revocation of A certifying agent whose accreditation proposal to suspend certification may be accreditation. The notification will state is suspended by the Secretary may at issued for violations that are inadvertent whether the certifying agent’s entire any time submit a new request for or cannot be proven to be willful. A business, field office, or offices in a accreditation. Such request must be suspension may be applicable only to geographic area or in a specified accompanied by evidence one area of operation or one field or technical field of accreditation are to be demonstrating correction of each farm unit where the noncompliance suspended or revoked. For instance, if a noncompliance and actions taken to occurred. private certifying agent with field offices comply with and remain in compliance A certified operation that has had its in different geographic areas is cited for with the Act and regulations. A certification revoked will not be eligible a compliance violation in one area, the certifying agent whose accreditation is to receive certification for an operation Program Manager could determine that revoked by the Secretary will be in which such operation or person has only the accreditation of the ineligible to be accredited as a certifying an interest for 5 years following the date noncompliant operation should be agent under the Act and regulations for of revocation. If an individual is the suspended or revoked. a period of not less than 3 years owner of a certified operation or is the If the Program Manager determines following the date of revocation. principal officer or director of that the noncompliance cannot be State Programs’ Compliance operations who is fully responsible for immediately or easily corrected, the Procedures. A State program’s governing complying with certification Program Manager may combine the State official may initiate requirements of this part, a suspension notification of noncompliance and the noncompliance proceedings of certified or revocation could be issued in the proposed suspension or revocation in organic operations operating in the individual’s name. The effect would be one notification. The notification of State. Such proceedings may be that another operation would be proposed suspension or revocation of initiated for failure of a certified ineligible for organic certification if that accreditation will state the reasons and operation to meet the production or individual is listed as a principal in the effective date for the proposed handling requirements of this part or the operation. The Secretary may waive an suspension or revocation. Such State’s more restrictive requirements, as ineligibility period when it is in the best notification will also state the impact of approved by the Secretary. The interests of the certification program. a suspension or revocation on future governing State official must attempt to Noncompliance Procedure for eligibility for accreditation and the resolve the compliance violations Certifying Agents. The Program certifying agent’s right to file an appeal. through State mediation and reviews of Manager, on behalf of the Secretary, If the Program Manager has reason to corrections to operations. may initiate a compliance action against believe that a certifying agent has The governing State official must an accredited certifying agent who fails willfully violated the Act or regulations, promptly notify the Program Manager of to carry out responsibilities entrusted to the Program Manager may issue a commencement of enforcement the certifying agent or maintain notification of proposed revocation of proceedings initiated against certified resources sufficient to meet accreditation. The proposed revocation operations. An enforcement proceeding, accreditation requirements in subpart F. may be for the certifying agent’s entire brought by a governing State official Compliance proceedings may be accreditation business, a particular field against a certified operation may be initiated as a result of annual reviews office, or a specified technical area of appealed in accordance with the appeal for continuation of accreditation, as a accreditation. This notification, because procedures of the State organic result of site visits, or as a result of it involves a willful violation, will be certification program. There will be no investigations initiated in response to sent without first issuing a notification subsequent rights of appeal to the complaints of noncompliant activities. of noncompliance. Secretary. Compliance proceedings also may be The certifying agent may file an initiated on recommendation of a appeal of the Program Manager’s Compliance—Changes Based On governing State official. determination, pursuant to § 205.681. If Comments A written notification of the certifying agent fails to file an This portion of subpart G differs from noncompliance will be sent by the appeal of the proposed suspension or our first proposal in several respects as Program Manager to an accredited revocation, the Program Manager will follows: certifying agent when an inspection, suspend or revoke the certifying agent’s (1) Authority of certifying agents. We review, or investigation of such person accreditation. The certifying agent will have provided accredited certifying

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We also agree that be in accordance with the Act, the certifying agent’s notification of providing certifying agents with a more Secretary has authority to review and proposed suspension or revocation of direct role in suspension or revocation overrule a mediated settlement if the certification provides an opportunity for proceedings will shorten the Secretary determines the settlement is the certified operation to file an appeal compliance process. not in accordance with Act and these in accordance with the appeal Accordingly, as noted above, we have regulations. provisions of § 205.681. If a provided accredited certifying agents (3) State certification program. noncompliance procedure initiated by a with increased authorities in Commenters generally requested that certifying agent is not corrected, enforcement proceedings. They will States administer and enforce their own remains unresolved, and is not make determinations to accept or reject organic certification programs. We have appealed, the certified operation’s rebuttals submitted in response to added regulations in these provisions certification will be suspended or notifications of noncompliance. They addressing States’ enforcement of their revoked. If the certified operation files will be responsible for defending their programs regarding certified producers an appeal, the action is turned over to determinations, which must be and handlers operating in the State. the Program Manager or applicable consistent with the position of the NOP, These regulations clarify a State’s governing State official for further in mediation processes. Finally, their responsibility to provide for resolution. The suspension or decisions to propose suspension or enforcement and appeal proceedings revocation will not become effective revocation of producer and handler which are consistent with these unless upheld by a ruling on the appeal. certifications will become effective regulations and for keeping the Commenters expressed opposition to unless appealed by the certified Secretary informed of such proceedings. the notification of noncompliance with operation. Authority for certifying We have added these regulations certification requirements and agents to take enforcement actions because we believe that a State must termination of certification provisions of against certified operations is found in have the authority to initiate the first proposal. Those provisions § 205.662. compliance actions to enforce its (2) Mediation. We have added a new required a certifying agent to submit to organic certification program. The section authorizing certified operations the Administrator a notice of its regulations are found at § 205.668. recommendation to terminate the to request mediation of any dispute Regarding accreditation authorities, certification of a certified operation or regarding denial of certification or commenters stated that a State any portion of a certified operation if proposed suspension or revocation of program’s governing State official the certifying agent had reason to certification. This section addresses the should have authority to suspend or believe the operation had ceased to request for mediation, selection of the revoke the accreditation of private comply with the Act and regulations. mediator, the time period for reaching The commenters were opposed to the an agreement, requirements of an certifying agents operating within the Secretary assuming authority for agreement, and appealing a State. Sections 6515(j) and 6519(e) of suspension or revocation of noncompliance decision if mediation is the Act address suspension and certification. The commenters stated unsuccessful. The parties in the revocation of accreditation by the that such decisions are the duty and procedure must make administrative Secretary or governing State official. responsibility of certifying agents, with arrangements for the mediation and While the Act may provide for the the Secretary providing for appeals. arrange for payment of any costs possibility of such authority being used Some commenters expressed the belief involved in the mediation. The by governing State officials, it also that the certifying agent’s position is Department will not finance or requires the Secretary to establish a undermined by not having authority to participate in such mediation. This workable accreditation program and it suspend or revoke a certification for additional provision is found at grants sole authority to the Secretary to cause. Many commenters stated that § 205.663. accredit certifying agents. Therefore, the certifying agents must have such Commenters requested that the Secretary must have sole authority to authority in order to: (1) Achieve Department authorize the use of suspend or revoke that accreditation. producer and handler compliance with alternative dispute resolution This does not mean that governing the regulations; and (2) expedite the procedures and mediation. We support State officials are denied a role in enforcement process. They believe that the idea of using mediation to resolve oversight of certifying agents operating providing certifying agents with the disputes with respect to denial of in their States. If a governing State authority to suspend or revoke a certification or proposed suspension or official believes a certifying agent certification will preserve the NOP’s revocation of certification. Some States operating in the State is not in integrity and increase consumer use mediation as a component of their compliance with the accreditation confidence in the quality of the organic appeal process. We believe mediation requirements of the Act or is not products they purchase. Commenters could prove effective in resolving many properly certifying producers or stressed that, in addition to providing of the possible disputes between handlers to NOP and the State’s procedures for producer and handler applicants for certification or certified approved unique organic certification appeals, the Department provides a operations and certifying agents. requirements, the governing State system of checks and balances through Without mediation, such disputes official must investigate the possible the accreditation program. would probably be referred to the noncompliance. If evidence of We agree that certifying agents should Administrator in the form of appeals. noncompliance is found, the governing have an important role to play in the Mediation in some cases, however, may State official must notify the Program suspension or revocation of the be of limited value because all Manager of such noncompliance certification of production or handling agreements reached during mediation or activities and document those activities. operation that they certify. This as a result of the mediation process The Program Manager will investigate proposal will enhance the certifying must be in compliance with the Act, such complaints of noncompliance.

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(4) Right of appeal. We have added suggestion that ineligibility waivers Second, this section provides that the the requirement that any notification of should be decided at the local level. Program Manager may initiate proposed suspension or revocation must Actions which are finalized by the proceedings to suspend or revoke a include a notice to the certified governing State official, Administrator, certified operation’s certification when a operation’s or certifying agent’s of its or Secretary cannot be subject to certifying agent or governing State right to file an appeal. Commenters reversal or waivers by certifying agents. official fails to take appropriate requested that the notification of Additionally, a national program such enforcement action against a certified proposed suspension or revocation as this must have uniformity in operation that is not in compliance with provisions for certifying agents application, which would be less likely the Act or these regulations. We have reference the appeals section. We agree if individual certifying agents were added this provision because this with the commenters’ request and add permitted to establish their own criteria proposal provides certifying agents and that all recipients of a notification of for ineligibility waivers. Accordingly, governing State officials with proposed suspension or revocation the ineligibility and waiver provisions enforcement authorities, including the should be made aware of their appeal are unchanged in this proposal. suspension and revocation of rights. Notification of appeal rights is (2) Accreditation sanctions. certifications. However, we believe the found in § 205.662 for certified Commenters stated that suspension and Secretary, through the Program operations and § 205.665 for certifying revocation of accreditation should be Manager, must have authority to take agents. applied fairly to both private and State such actions if a certifying agent or governing State official fails to carry out Compliance—Changes Requested But certifying agents. Governing State its responsibilities. Not Made officials do not have any accreditation authorities under this proposal—which Third, this section provides that the This subpart retains from our first may reduce private certifying agents’ Program Manager may initiate proposal regulations on which we concerns of unfair or unequal treatment. proceedings to suspend or revoke a received comments as follows: Accreditation compliance actions by the certified operation’s certification upon (1) Revocation period. Commenters suspension or revocation of the stated that a 5-year period of Program Manager and the Administrator will be conducted impartially and in operation’s certifying agent’s ineligibility for certification after accreditation. We have added this revocation of certification is too harsh a accordance with the Administrative Procedure Act and Department policies. provision to enable the Program punishment to apply in all cases. Some Manager to suspend or revoke Revocation would be based on a commenters suggested that ‘‘shall not be certification of any operation that a determination that a private certifying eligible’’ should be replaced with ‘‘may certifying agent certified following agent willfully violated the Act or these be deemed ineligible’’ so that the procedures or practices that are not in penalty provision would be available for regulations or falsely or negligently compliance with the Act or these flagrant violations of the Act but would certified a production or handling regulations. This addition is found at not have to be applied to all violations. operation as an organic operation. The § 205.660. A commenter suggested a maximum Act does not authorize the revocation of (2) Certifying agent investigations. We period of ineligibility of 3 years be a State certifying agent’s accreditation. have added a section to clarify that established for certified operations. The However, because suspension of such certifying agents may investigate commenter’s justification was that entity can be established for any period complaints of noncompliance with the organically produced agricultural of time, a suspension can be effectively Act or regulations concerning products must be produced on land to equivalent to a revocation of operations that they have certified. This which no prohibited substances have accreditation. Accordingly, this section does not authorize a certifying been applied for 3 years prior to harvest. proposal retains the provisions for the agent to investigate certified operations This commenter also stated that the suspension of accreditation for private that the certifying agent has not ineligibility waiver should be a local and State certifying agents and the certified. Such complaints should be decision with notice to the revocation of accreditation for private reported to the certifying agent that Administrator. certifying agents. certifies the operation in question. This Section 6519(c) of the Act requires Compliance—Additional Provisions addition is found at § 205.661. certification ineligibility for 5 years (3) Certified operation rebuttals. We unless reduced or eliminated by the Upon further review of the have added a certified operation’s right Secretary. Revocation of a certification accreditation provisions in the first to rebut any noncompliance described is a serious action subject to due process proposal, we have decided to propose in a notice of noncompliance. We for the accused certified producer or the following additions and changes. believe this provision is necessary to handler. We believe that any (1) Enforcement rights of the clarify that certified operations should noncompliance action, combination of Secretary. We have added a general be able to present facts or arguments noncompliance actions, or history of section addressing specific enforcement refuting the certifying agent’s findings. noncompliance activities deemed to rights of the Secretary. First, this section We see this as an informal process warrant the revocation of certification clarifies that the Program Manager on between the certified operation and the also warrants ineligibility from behalf of the Secretary and the certifying agent to clarify possible certification for 5 years unless reduced Administrator may inspect and review misunderstandings or misinterpretation or eliminated by the Secretary. If the State organic certification programs, of requirements, data, or information. noncompliance is not significant accredited certifying agents, and The APA requires such opportunities enough to warrant revocation of the certified production or handling prior to suspension or revocation. operation’s certification, the certifying operations for compliance with the Act Certified operations that successfully agent, State program’s governing State or regulations. The Program Manager refute a finding of noncompliance will official, or Secretary may choose to has this oversight authority in States receive a notification of noncompliance suspend the operation’s certification for with State organic certification resolution. Any certified operation a period of time less than the 5-year programs as well as in States without unable to successfully refute a finding of revocation period. We disagree with the such programs. noncompliance must correct the

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This testing premises of a certified organic rebut any accreditation noncompliance program provides State programs’ operation; (3) the proximity of a described in a notice of noncompliance governing State officials and certifying certified organic operation to a potential issued by the Program Manager. This agents with a tool for ensuring source of drift; (4) suspected soil also will be an informal process and is compliance with three areas for testing: contamination by historically persistent consistent with the intent of the APA. (1) Preharvest residue testing, (2) substances; or (5) when the product We believe this provision is necessary to postharvest residue testing, and (3) from a certified organic operation is clarify that certifying agents should be testing for unavoidable residual unaffected when neighboring fields or able to present facts or arguments environmental contamination levels. crops are infested with pests. These refuting the Program Manager’s situations do not represent all of the Proposal Description findings. Certifying agents that possible occurrences that would trigger successfully refute a finding of Under the residue testing an investigation. Preharvest or noncompliance will receive a requirements of the NOP, we propose postharvest residue testing will occur on notification of noncompliance that all agricultural products sold, a case-by-case basis. resolution. Any certifying agent unable labeled, or represented as organically In each case, an inspector to successfully refute a finding of produced be available for inspection by representing the Administrator, noncompliance must correct the the Administrator, State program’s certifying agent, or State program’s noncompliance or face possible governing State official, or certifying governing State official will conduct suspension or revocation of its agent. Organic farms and handling sampling. Testing for chemical residues accreditation. This addition is found at operations must be made available for must be performed in an accredited § 205.665(a)(3). inspection under proposed Subpart E, laboratory, defined as a laboratory that (5) Willful noncompliance. We have Certification. In addition, products from has met and continues to meet the also added authority for certifying the aforementioned organic operations requirements specified in the Food, agents and governing State officials to may be required by the State program’s Agriculture, Conservation, and Trade move directly to a notice of proposed governing State official or certifying Act of 1990 (7 U.S.C. 138) (FACT Act) revocation if a certification agent to undergo preharvest or for pesticide residue analyses of fresh noncompliance is a willful, serious postharvest testing when there is reason fruit and vegetables and/or pesticide violation of these regulations. This will to believe that agricultural products to analysis of products derived from allow expedited action in dealing with be sold or labeled as organically livestock and fowl. AMS is currently serious violations of certification. The produced have come into contact with developing a regulation for the National due process provisions of the APA prohibited substances. The cost of such Laboratory Accreditation Program provide an exception in cases of willful testing will be borne by the applicable (NLAP), which will accredit laboratories violations. Even though a certifying party and is considered a cost under the FACT Act. We expect that the noncompliance may be a willful act, the of doing business. Accordingly, NLAP will be implemented before or at certified operation maintains the right to certifying agents should make the same time as the NOP. When file an appeal of a proposed suspension provisions for the cost of preharvest or conducting chemical analyses, the or revocation of certification. postharvest residue testing when laboratory must incorporate the Revocation of certification is reserved structuring certification fees. analytical methods described in the for serious instances of willful Preharvest and Postharvest Residue 16th edition of the Official Methods of noncompliance and other serious Testing. The main objectives of the Analysis of the AOAC International or violations. If a suspected willful residue testing program are to: (1) other applicable validated methodology violation is deemed not serious, a Ensure that certified organic production for determining the presence of proposed suspension of certification and handling operations are in contaminants in agricultural products. rather than revocation may be issued. compliance with the requirements set When testing indicates that an forth in this proposal; and (2) serve as agricultural product to be sold or Inspection and Testing, Reporting, and a means for monitoring drift and labeled as organically produced Exclusion From Sale unavoidable residue contamination of contains residues of prohibited This portion of subpart G sets forth agricultural products to be sold or substances, certifying agents will the inspection and testing requirements labeled as organically produced. Any compare the level of detected residues for agricultural products that have been detectable residues of a prohibited with a national mean of detection for produced on organic production substance found in or on samples the specific commodity/pesticide operations or handled through organic during chemical analysis will serve as a combination generated by the U.S. handling operations. warning indicator to the State program’s Department of Agriculture’s (USDA) Based on comments received governing State official or certifying Pesticide Data Program (PDP). This regarding the first proposal, we have agent. national mean is defined as the mean modified and restructured our residue The request for preharvest or level of detected pesticide residues as testing requirements. Commenters were postharvest residue testing is based on described in certain pesticide/ concerned about the cost of residue the Administrator’s, State program’s commodity pairs or combinations testing to certified operations and governing State official’s, or certifying established by USDA’s Pesticide Data certifying agents, the determination of agent’s belief that an agricultural Program. The national mean for specific detectable levels of prohibited product has come into contact with one commodity/pesticide combinations will substances, and the exclusion of or more prohibited substances. The serve as a standard for the contaminated products from sale as ‘‘reason to believe’’ could be triggered Administrator, State programs’ organically produced. by various situations, for example: (1) governing State officials, and certifying

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00093 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13604 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules agents to assist in monitoring for illegal agricultural crop is in violation of these substance. Additionally, the offspring of use violations. This information will be requirements, the certification of that gestating mammalian breeder stock made available by USDA to aid State crop will be suspended for the period treated with a prohibited substance may programs’ governing State officials and that the crop is in production. Certifying be considered organic if the breeder certifying agents in making sound agents must follow the requirements stock was not in the last third of evaluations and decisions regarding specified in §§ 205.662 and 205.663 of gestation on the date that the breeder detected levels of prohibited substances. Subpart G, Compliance. In addition, stock was treated with the prohibited In addition, levels of unavoidable when a State program’s governing State substance. residual environmental contamination official or a certifying agent detects a Residue Testing—Changes Based on will be determined for crop-and site- prohibited substance in or on Comments specific agricultural commodities to be agricultural products to be sold or sold, labeled, or represented as ‘‘100 labeled as organically produced, the This portion of subpart G differs from percent organic,’’ ‘‘organic,’’ or ‘‘made State program’s governing State official our first proposal in several respects as with organic (specified ingredients).’’ or certifying agent may conduct an follows: These levels will represent limits at investigation to determine the cause of Residue Testing. (1) We have revised which the Department may take the prohibited substance. the first proposal’s section on residue compliance action to suspend the use of If the investigation into the cause of testing and repositioned it under the contaminated area for organic a detectable residue level in a product § 205.670(b). agricultural production. Initially, indicates that the residue was the result Commenters disagreed with the unavoidable residual environmental of an intentional application of a provisions in the first proposal which contamination levels will be set for prohibited substance, the Administrator required certifying agents to conduct persistent prohibited substances (aldrin, is authorized to initiate proceedings to residue testing of products produced dieldrin, chlordane, DDE, etc.) in the revoke or suspend the certification and handled on operations that they had environment. In time, they may become status of an operation or portion of that certified not less frequently than every more inclusive of prohibited residues as operation. When testing indicates that 5 years. They stated that the first additional information becomes an agricultural product contains proposal’s requirements for residue available. Unavoidable residual prohibited substances that exceed either testing: (1) Were in excess of what the environmental contamination levels the EPA tolerance level or FDA action Act actually requires; (2) were more will be based on the unavoidability of level, as applicable, for the prohibited stringent than that of the industry norm; the chemical substances and do not substance, the data revealing such (3) would create an unnecessary burden represent permissible levels of information will be promptly reported on certifying agents and organic contamination where it is avoidable. to the appropriate regulatory health production and handling operations; Historical residue data gathered from agencies. and (4) would increase costs for Federal and State monitoring and Emergency Pest Eradication or certified production and handling testing programs will be used to Disease Treatment Programs. When a operations. The commenters stated that determine these levels. They will be set prohibited substance is applied to an the NOP’s residue testing requirements by the Administrator, in consultation organic production or handling should utilize existing Federal and State with the Food and Drug Administration operation due to a Federal or State testing programs for the detection of (FDA) and Environmental Protection emergency pest eradication or disease pesticide residues. They also stated that Agency (EPA). treatment program and the organic residue testing should only be required After all tests and analyses have been handling or production operation when it is known or suspected that concluded, the results must be provided otherwise meets the requirements of this prohibited substances have been to the Administrator. The results of proposal, the certification status of the applied to organic products. analyses and tests will be available, kept operation shall not be affected as a We disagree with the commenters’ on record, and reviewed by the result of the application of the assertions regarding the first proposal’s Department to evaluate concentration prohibited substance, provided that: (1) requirements for residue testing. levels of prohibited substances for Any harvested crop or plant part to be However, in an attempt to minimize the specific regions and agricultural crops. harvested that has contact with a burdens of residue testing, we have Analyses and test results will also be prohibited substance applied as the proposed that State programs’ governing available for public access, unless the result of a Federal or State emergency State officials and certifying agents may residue testing is part of an ongoing pest eradication or disease treatment test agricultural inputs used for organic compliance investigation. Information program cannot be sold, labeled, or production and require preharvest or relative to an ongoing compliance represented as ‘‘100 percent organic,’’ postharvest testing of any agricultural investigation will be confidential and ‘‘organic,’’ or ‘‘made with organic product to be sold, labeled, or restricted to the public. (specified ingredients)’; and (2) any represented as ‘‘100 percent organic,’’ Detection of Prohibited Substances. In livestock that are treated with a ‘‘organic,’’ or ‘‘made with organic the case of residue testing and the prohibited substance applied as the (specified ingredients)’’ when there is detection of prohibited substances in or result of a Federal or State emergency reason to believe that the agricultural on agricultural products to be sold, pest or disease treatment program or product has come into contact with labeled, or represented ‘‘100 percent product derived from such treated prohibited substances. This change organic,’’ ‘‘organic,’’ or ‘‘made with livestock cannot be sold, labeled, or allows State programs’ governing State organic (specified ingredients),’’ represented as ‘‘100 percent organic,’’ officials and certifying agents to perform detectable residues of prohibited ‘‘organic,’’ or ‘‘made with organic preharvest and postharvest residue substances that exceed the national (specified ingredients).’’ testing on a case-by-case basis. mean of detection for the respective However, milk or milk products may Commenters requested that the rule commodity/pesticide combination or be labeled or sold as organically specify which laboratories are unavoidable residual contamination produced beginning 12 months authorized to perform residue testing levels cannot be sold or labeled as following the last date that the dairy and what tests each laboratory would be organically produced. When such an animal was treated with the prohibited accredited to perform. We have defined

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00094 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13605 an accredited laboratory as a laboratory removed from the market immediately, Protection Agency under the Federal that has met and continues to meet the pending determination of cause. Food Drug and Cosmetic Act, section requirements specified in the Food, Organic standards, including 408. FDA action levels represent limits, Agriculture, Conservation, and Trade provisions governing prohibited at or above which FDA will take legal Act of 1990 (7 U.S.C. 138) for pesticide substances, are based on the method of action against a food product to prevent residue analyses of fresh fruit and production, not the content. The poisonous or deleterious substances vegetables and/or pesticide residue primary purpose of the residue testing from entering the food supply. Both analysis of products derived from approaches described in this proposal, EPA tolerances and FDA action levels livestock and fowl. Any laboratory that then, is to provide an additional tool for are public health-based standards. Our meets the specified requirements State programs’ governing State officials rationale for residue testing, as a tool for therein may be used in conducting and certifying agents to use in State programs’ governing State officials residue tests. We have required that monitoring and ensuring compliance and certifying agents to monitor accredited laboratories be used to with the NOP. We acknowledge that compliance with the NOP, is different ensure consistency among data, testing consumers have a reasonable from these public health programs. methodology, reporting procedures, and expectation that organic products will Accepting a percentage of EPA other testing criteria needed to maintain contain minimal residues of prohibited tolerance or FDA action levels could analytical uniformity in the residue substances. We are not allowing the use also pose a significant problem for testing program. Validated analytical of prohibited substances. We are making analytical laboratories trying to analyze methodologies for determining the provisions for the unavoidable for prohibited substances. In some presence of contaminants in agricultural occurrences of prohibited substances cases, pesticides have tolerances that are products, such as those described in the while ensuring that residue levels are set near their analytical method’s Limit 16th edition of the Official Methods of consistent with consumer expectations. of Quantification (LOQ). The LOQ is Analysis of the AOAC International, This proposal adopts PDP’s national defined as the lowest level where may be used. means of detected residue for specific analytical measurement becomes Tolerance Levels for Pesticide commodity/pesticide combinations and quantitatively meaningful. If the EPA Residues. (2) We have prohibited the the unavoidable residual environmental tolerances are near the analytical sale and labeling of agricultural contamination levels. Both standards method LOQ’s, accurate determination products as organic when such products have been adopted for the purpose of of the levels at 5 to 10 percent of the have been tested for prohibited determining excessive prohibited tolerance may not be attainable for substances and found to contain substances on agricultural products to analytical instrumentation currently residues of prohibited substances at be sold, labeled, or represented as ‘‘100 employed. Therefore, the Department levels greater than the national mean of percent organic,’’ ‘‘organic,’’ or ‘‘made could be setting a level of concern detection for the specific commodity/ with organic (specified ingredients).’’ below the LOQ for some substances if it pesticide combination or levels greater The national mean of detected residue adopted this recommendation. As a than the unavoidable residual for a specific commodity/pesticide fundamental principle, we have chosen environmental contamination. Such combination is derived from detections not to set an enforcement level that agricultural products cannot be sold, in the PDP monitoring program. As a could be below detection limits for labeled, or represented as ‘‘100 percent result of mean values being based on some substances. As an alternative, we organic,’’ ‘‘organic,’’ or ‘‘made with conventional substances, we believe are proposing to use the PDP national organic (specified ingredients).’’ The that residue values that fall above this mean of detected residues for specific Administrator, State program’s mean, then, would be beyond commodity/pesticide combinations. governing State official, or certifying reasonable consumer expectations for Other commenters suggested that agent may conduct an investigation of minimal residues. The situation is very USDA adopt a ‘‘zero tolerance’’ for the applicable production or handling similar with respect to unavoidable residues of prohibited substances. operation to determine the cause of the residual environmental contamination Under this suggestion, products presence of any prohibited substance. If levels. Even though the presence of containing any detectable residues of a the investigation reveals that the residues of certain persistent substances prohibited substance would not be presence of a prohibited substance was may not be the result of intentional allowed to be labeled as organically the result of intentional application of application, we believe that excessive produced. This proposal does not adopt the prohibited substance, the residue levels would not be consistent this suggestion. While standards strictly Administrator may initiate proceedings with the intentions of the Act. prohibit use of any substance not found to suspend or revoke the production or Accordingly, when levels of a persistent on the approved National List, we handling operation’s certification. substance are detected above the recognize that some minimal residues (3) Commenters suggested that USDA unavoidable residual environmental may still be found in organic foods. We adopt a uniform standard for the contamination level, the product cannot believe our proposed residue testing maximum allowable residue levels. be sold or labeled as organically system and compliance provisions Some commenters expressed the belief produced. should be adequate to protect the that it is impractical or too expensive to Some commenters suggested that we integrity of agricultural products sold, establish site-specific, unavoidable use a percentage of the EPA tolerance of labeled, or represented as ‘‘100 percent residual environmental contamination FDA action level, such as 5 or 10 organic,’’ ‘‘organic,’’ or ‘‘made with levels for every commodity/pesticide percent, as a uniform standard for the organic (specified ingredients).’’ combination in every growing area. maximum allowable residue level. We Several commenters expressed Others argued that the cause of considered the comments but decided opposition to the first proposal not contamination is irrelevant and that not to adopt them for the following requiring residue testing in the event of crops that exceed the maximum residue reasons. The EPA tolerances for drift. These commenters stated that levels should not be allowed to be sold pesticides are defined as the maximum organic producers should report all as organic. Finally, others argued that a legal level of a pesticide residue in or on incidences of drift to their certifying single standard was needed because a raw or processed agricultural agent. The commenters further stated contaminated products would not be commodity, as set by the Environmental that a crop should be tested for the

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The laboratory capabilities and different percent of the EPA tolerance level, the proposal provided that crops and levels of quantification between and crop should be prohibited from being livestock that had contact or been within laboratories. sold or labeled as organically produced. treated with a prohibited substance Residue Testing—Additional Provisions In response to commenters’ concern under such an official emergency about contamination from drift, we have treatment program could not be sold or Section 205.670(a) has been added. It used some of their reasoning in the labeled as organic. This proposal retains provides that the Administrator, the development of our residue testing that prohibition. State program’s governing State official, program. Drift is defined as the physical Commenters suggested that producers and the applicable certifying agent have movement of prohibited substances work with the Federal or State agency access, for inspection purposes, to all from the intended target site onto an which requires an emergency treatment agricultural products being sold, organic production operation or any program and arrange for use of materials labeled, or represented as ‘‘100 percent portion thereof. The National Organic that are compatible with organic organic,’’ ‘‘organic,’’ or ‘‘made with Standards Board (NOSB or Board) production. While this may be possible organic (specified ingredients).’’ In recommended that agricultural products under certain emergency treatment addition, the organic products must be exposed to drift not be sold, labeled, or situations, it cannot be relied on as a made available for examination by said represented as ‘‘100 percent organic,’’ solution to every emergency treatment authorities in the manner that they ‘‘organic,’’ or ‘‘made with organic situation. Appropriate alternative prescribe. (specified ingredients)’’ or fed to treatments may not be available, or the Public comments did not suggest this livestock on organic operations. The jurisdiction requiring the emergency action. However, we believe it is NOSB also recommended that program may not grant alternative necessary to officially grant the preharvest tissue testing of crops treatments. Commenters also suggested Administrator, the State program’s suspected of receiving drift be required that producers avoid planting crops that governing State official, and the to verify the presence or absence of might be subject to pests or diseases applicable certifying agent the authority prohibited substances. This proposal targeted by emergency treatment to access all agricultural products addresses the problem of drift through programs to avoid emergency subject to inspection under this section. the use of preharvest testing of crops treatments. We do not believe that is a This authority will help resolve suspected of receiving drift of a reasonable solution for producers. conflicts that may arise regarding prohibited substance. Although drift Emergency treatment programs are used product accessibility during inspection may occur, especially in those in response to unforeseen infestations and testing. agricultural regions where pesticide use and diseases. Only hindsight would Adverse Action Appeal Process. This on nonorganic lands is routine and help organic producers determine portion of subpart G sets forth the heavy, exposure to drift does not which crops to produce. Further, the general framework for an appeal process constitute use of a prohibited substance. possibilities of damaging insect for persons subject to compliance Therefore, preharvest testing provisions infestations or plant or animal diseases determinations under the National have been established for State warranting an emergency treatment Organic Program (NOP). In this programs’ governing State officials and program are so numerous that an proposal, we are empowering certifying certifying agents to test when there is a organic producer could be left with few agents with the authority to make reason to believe that agricultural or no alternative crops or livestock to decisions concerning denial of products intended to be sold or labeled produce. Cultural conditions and certification and the suspension or as organically produced have come into market factors also would limit revocation of certified operations. This contact with prohibited substances. This selection of alternative organic empowerment of certifying agents will allow a State program’s governing production. Accordingly, the makes the appeal process very State official or certifying agent to commenters’ recommendation that loss important. determine whether the integrity of the of organic certification and an automatic We envision two kinds of appeals will product has been affected. We believe 3-year prohibition on organic be filed under these procedures: (1) our proposed residue testing program production from land or livestock Producers and handlers appealing and compliance provisions should be treated under an official emergency denial of certification and proposed adequate to protect the integrity of treatment program is not accepted. suspension and revocation of agricultural products. Residue Testing. (2) Commenters certification decisions by certifying suggested that some of the responsibility agents; and (2) certifying agents Residue Testing—Changes Requested of residue testing be removed from appealing denial of accreditation and but Not Made certifying agent responsibilities. They proposed suspension and revocation (1) The original proposal provided also suggested that residue testing decisions by the NOP Program Manager. that land subject to a Federal or State requirements take into account current The Administrative Procedure Act emergency disease or pest treatment Federal and State testing requirements (APA) (5 U.S.C. 553–559) provides that program should not lose its organic already in place for the detection of entities such as certified operations and certification and should not be required pesticide residues. accredited certifying agents have the to be withheld from organic production We have not adopted language that right to appeal any adverse actions for a period of 3 years. A few the Department would use current taken against their certification or commenters stated that a field treated Federal and State testing requirements accreditation, respectively. Applicants under such emergency situations should for the detection of pesticide residues in for certification and applicants for lose its certification and should be the residue testing program. Although accreditation who receive a denial of restricted for organic use for 3 years State and Federal testing provide good certification or accreditation may appeal following the emergency treatment. The sources of data on pesticide residues, that denial following this appeal

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00096 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13607 procedure. The appeal process is the appeal a certifying agent’s notification granted certification or continued same for applicants as for certified of proposed suspension or revocation of certification, as applicable to the operations and accredited certifying the operation’s certification. These operation’s status. The applicant or agents. appeals will be made to the certified operation will not be required The informal appeal process Administrator or to the applicable to correct the actions or conditions cited described in this section is an extension governing State official or designated in the compliance notification. If the of the noncompliance proceeding official in the approved State organic appeal is denied, a formal outlined in the Compliance section of certification program. administrative proceeding will be this subpart. Certification appeals may be filed initiated to deny, suspend, or revoke the For certification proceedings, the NOP only after an applicant or a certified accreditation. and the Administrator will oversee operation has been given opportunity to The certifying agent may continue to compliance proceedings and handle come into compliance with these operate as a certifying agent throughout certification appeals from operations in regulations or otherwise resolve the the informal appeals process and the States that do not have an approved specified noncompliance. Prior to filing formal administrative proceeding. State organic certification program. The an appeal, the applicant or certified All appeals to the Administrator must Administrator will issue decisions to operation must have failed in rebuttal, be filed in writing and sent to: sustain or deny appeals. If an appeal is refused to make specified corrections, or Administrator, USDA–AMS, Room denied, the Secretary will initiate a made corrections which the certifying 3071–S, PO Box 96456, Washington, DC formal administrative review process, agent subsequently determined to not 20090–6456. An appeal must include a which includes a hearing before an meet certification requirements of the copy of the adverse decision to be administrative law judge and review by NOP. reviewed and a statement of the the Department’s Judicial Officer. The If the Administrator or governing appellant’s reasons for believing that the formal administrative review process State official sustains an appeal, the decision was not proper and not made will be conducted pursuant to the applicant or certified operation will be in accordance with applicable program Department’s Uniform Rules of Practice, granted certification or continued regulations, policies, or procedures. A 7 CFR 1.130 through 1.151. The formal certification, as applicable to the certified operation must send a copy of administrative review will be the operation’s status. The applicant or its appeal, to its certifying agent. All Department’s final determination on the certified operation will not be required written communications between noncompliance proceeding. That to correct the actions or conditions cited parties involved in appeal proceedings decision may be appealed to the District in the noncompliance notification. The must be sent to the recipient’s place of Courts. This section addresses the act of sustaining the appeal will not be business by a delivery service which informal appeal process which is used considered an adverse action and may provides dated return receipts. Appeals to arrive at the Administrator’s decision not be appealed by the certifying agent under a State’s procedure will be filed to sustain or deny an appeal. which issued the notification. pursuant to the State’s appeal process, In States with approved State organic If the Administrator or governing which should include addresses and certification programs, the governing State official denies an appeal, a formal filing periods, etc. State official or designee will oversee administrative proceeding will be An appeal must be filed within the certification compliance proceedings initiated to deny, suspend, or revoke the time provided in the letter of and handle appeals from certified certification. Such proceeding will be notification or at least 30 days from the operations in the State. The governing conducted pursuant to the Department’s date of receipt of the notice to deny, State official or designated appeals Uniform Rules of Practice or pursuant to suspend, or revoke certification or official will rule on appeals filed under the State’s formal appeal procedures. accreditation. The appeal will be a State organic certification program. Certified operations may continue to considered ‘‘filed’’ on the date received Further appeal of that decision may be operate throughout this informal by the Administrator or, when made to the district court system. appeals process and the formal applicable, the State program’s administrative proceedings. governing State official or such official’s Proposal Description designee. The Administrator will notify Accreditation Appeals These appeal procedures provide that the appellant and the appellant’s persons subject to the Act who believe Pursuant to § 205.665 of this subpart, certifying agent that the appeal was that they are adversely affected by a all accredited certifying agents are received. Unless appealed in a timely noncompliance decision of a certifying subject to the Program Manager’s review manner, a notification to deny, suspend, agent, Program Manager, or governing of their operations and any or revoke a certification or an State official may appeal such decision noncompliance actions resulting from accreditation will become final. The to the Administrator or to the applicable such reviews. As provided in § 205.668, applicant, certified operation, or State’s appeal process. Under a State program’s governing State certifying agent that does not file an Compliance provision in this subpart, official must advise the Program appeal in the time period provided accredited certifying agents initiate Manager if an investigation of a waives the right to further appeal of the noncompliance proceedings. If an certifying agent reveals that the compliance proceeding. appeal of a certification decision is certifying agent is not in compliance filed, the process is referred to the with the Act or these regulations. The Appeals—Changes Based On Comments Administrator or governing State official appeal process for applicants is the These appeal regulations differ from or designee, as applicable, to the State same as for accredited certifying agents. our first proposal as follows: where the applicant or certified An appeal may be filed with the (1) Decision-making. We have operation resides. Administrator only after the certifying clarified who will be making decisions agent fails to rebut the noncompliance that may be appealed to the Certification Appeals notice and fails to correct the Administrator. This proposal provides Applicants for certification may noncompliance specified. If the that persons subject to the Act who, appeal a certifying agent’s denial of Administrator sustains an appeal, the during noncompliance proceedings certification. Certified operations may applicant or certified operation will be described in this subpart, believe that

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The Secretary has sole authority Commenters stated that the proposed appeals will be administered by persons for accrediting certifying agents and, appeals procedures limited appeals to not involved in the decision being therefore, must retain sole authority for decisions of the NOP staff. Commenters appealed. This appeals procedure is suspending or revoking that requested that the appeals procedures consistent with the requirements of the accreditation. A State program’s be available for decisions by the APA. governing State official must investigate Secretary, any representative of the Paragraph (a)(1) of § 205.681 provides any complaints of noncompliance on Secretary, and decisions by any that if the Administrator sustains an the part of a certifying agent operating certifying agent. What we meant in the applicant’s or certified operation’s in the State. If noncompliance activities first proposal was that appeals would be appeal of a certifying agent’s or conditions are found, the governing filed on decisions made by the Program noncompliance decision, the act of State official must notify the Program Manager and certifying agents. sustaining the appeal shall not be an Manager of those compliance violations As noted above, we are empowering adverse action subject to appeal by the or suspected compliance violations. affected certifying agent. We have certifying agents to make decisions Miscellaneous concerning denials of certification and included this provision because, as suspension or revocation of certified noted above, certifying agents are Section 205.690 provisions the Office operations’ certifications. Certifying accredited by the Secretary to provide of Management and Budget control agents accredited under this program act certification services as agents of the number assigned to the information on behalf of the Secretary and the Secretary and the Administrator. collection requirements of these Administrator to carry out certification Therefore, if the Administrator regulations. Sections 205.691 through services, including noncompliance overrules a decision of an accredited 205.699 are reserved. certifying agent, that certifying agent actions. The Administrator or List of Subjects in 7 CFR Part 205 designated governing State official will cannot request an appeal of the Administrator’s decision. Administrative practice and make decisions to either sustain or deny procedure, Agriculture, Animals, appeals by certification applicants and Appeals—Changes Requested But Not Archives and records, Foods, Imports, certified operations, as applicable to the Made Labeling, Organically produced State. None. products, Plants, Reporting and The Program Manager will make Appeals—Additional Provisions recordkeeping requirements, Seals and decisions to deny applications for insignia, Soil conservation. accreditation and to suspend or revoke (1) State appeals procedures. We are For the reasons set forth in the certifying agents’ accreditations. The proposing that appeal proceedings in preamble, it is proposed that Title 7, Administrator will make all decisions to States with organic certification Chapter I of the Code of Federal either sustain or deny appeals by programs approved by the Secretary will Regulations be amended as follows: accreditation applicants and certifying be carried out in accordance with the 1. Parts 205 through 209 which are agents. official administrative appeal currently reserved in subchapter K (2) Appeal procedures. Commenters proceedings in each State. A State’s (Federal Seed Act), are removed. requested detailed appeal procedures or appeal process will be included as part 2. A new subchapter M consisting of the use of citations to identify existing of the State’s organic certification part 205 through 209 is added to read Departmental appeal procedures which program. Because a State’s appeal as follows: would be used for appeals filed under procedure is approved by the Secretary, this program. We acknowledge that the the final determination for a SUBCHAPTER M—ORGANIC FOODS first proposal lacked detailed appeals certification appeal arrived at under that PRODUCTION ACT PROVISIONS provisions. However, we believe this procedure is considered to have the PART 205ÐNATIONAL ORGANIC explanation is more informative and effect of a decision by the Secretary. PROGRAM helpful for the commenters. The formal Approved State appeal processes are administrative procedure following the unique to each State and are not Subpart AÐDefinitions Department’s Uniform Rules of Practice included in this regulation. is required under the APA. The rules of Certification appeals are made to the Sec. practice are not included in individual State program’s governing State official 205.1 Meaning of words. rulemaking actions but may be found or such official’s designee. The 205.2 Terms defined. under 7 CFR 1.130 through 1.151. The governing State official or designee will Subpart BÐApplicability combination of this informal appeal administer the appeal pursuant to 205.100 What has to be certified. procedure followed by the formal appeal procedures which have been 205.101 Exemptions and exclusions from administrative proceeding assures approved by the Secretary. Rulings on certification. applicants, certified operations, and such appeals, as noted in § 205.668, may 205.102 Use of the term, ‘‘organic.’’ accredited certifying agents that they not be appealed to the Secretary. The 205.103 Recordkeeping by certified will be given full opportunity to certification applicant or certified operations. respond to any noncompliance operation may make subsequent appeal 205.104 Foreign applicants. 205.105–205.199 [Reserved] proceeding brought against their to the Court of Appeals of the United application or operation. Individual States for the circuit in which such Subpart CÐOrganic Crop, Wild Crop, State programs will have their own, applicant or certified operation carries Livestock, and Handling Requirements approved appeal procedures. on business or in the United States 205.200 General.

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205.201 Organic production and handling 205.503 Applicant information. 205.673—205.679 [Reserved] system plan. 205.504 Evidence of expertise and ability. Adverse Action Appeal Process 205.202 Land requirements. 205.505 Statement of agreement. 205.680 General. 205.203 Soil fertility and crop nutrient 205.506 Approval of accreditation. 205.681 Appeals. management practice standard. 205.507 Denial of accreditation. 205.682—205.689 [Reserved] 205.204 Seeds and planting stock practice 205.508 Site evaluations. Miscellaneous standard. 205.509 Peer review panel. 205.690 OMB control number. 205.205 Crop rotation practice standard. 205.510 Annual report, recordkeeping, and 205.691—205.699 [Reserved] 205.206 Crop pest, weed, and disease renewal of accredition. Authority: 7 U.S.C. 6501–6522. management practice standard. 205.511–205.599 [Reserved] 205.207 Wild-crop harvesting practice standard. Subpart GÐAdministrative Subpart AÐDefinitions 205.208–205.235 [Reserved] The National List of Allowed and Prohibited 205.1 Meaning of words. 205.236 Origin of livestock. Substances 205.237 Livestock feed. 205.600 Allowed and prohibited For the purpose of the regulations in 205.238 Livestock health care practice substances and ingredients in organic this subpart, words in the singular form standard. production and handling. shall be deemed to impart the plural 205.239 Livestock living conditions. ≤205.601 Synthetic substances allowed for and vice versa, as the case may demand. 205.240–205.269 [Reserved] use in organic crop production. 205.270 Organic handling requirements. 205.602 Nonsynthetic substances 205.2 Terms defined. 205.271 Facility pest management practice prohibited for use in organic crop Accredited laboratory. A laboratory standard. production. that has met and continues to meet the 205.272 Commingling and contact with 205.603 Synthetic substances allowed for requirements specified in the Food, prohibited substance prevention practice use in organic livestock production. standard. 205.604 Nonsynthetic substances Agriculture, Conservation, and Trade 205.290 Temporary variances. prohibited for use in organic livestock Act of 1990 (7 U.S.C. 138) for pesticide residue analyses of fresh fruit and Subpart DÐLabels, Labeling, and Market production. [Reserved] Information 205.605 Nonagricultural (nonorganic) vegetables and/or pesticide residue substances allowed as ingredients in or analysis of products derived from 205.300 Use of the term, ‘‘organic.’’ on processed products labeled as livestock and fowl. 205.301 Product composition. ‘‘organic,’’ or ‘‘made with organic 205.302 Calculating the percentage of Accreditation. A determination made (specified ingredients).’’ by the Secretary that authorizes a organically produced ingredients. 205.606 Nonorganically produced 205.303 Packaged products labeled ‘‘100 agricultural products allowed as private, foreign, or State entity to percent organic’’ or ‘‘organic.’’ ingredients in or on processed products conduct certification activities as a 205.304 Packaged products labeled ‘‘made labeled as ‘‘organic’’ or ‘‘made with certifying agent under this part. with organic (specified ingredients).’’ organic ingredients.’’ Act. The Organic Foods Production 205.305 Multiingredient packaged products 205.607 Amending the National List. Act of 1990, as amended (7 U.S.C. 6501 with less that 50 percent organic State Programs ingredients. et seq.). 205.620 Requirements of State organic Action level. The limit at or above 205.306 Labeling of nonretail containers certification programs. used for only shipping or storage of raw which the Food and Drug 205.621 Submission and determination of Administration will take legal action or processed agricultural products proposed State organic certification labeled as ‘‘100 percent organic,’’ programs and amendments to approved against a product to remove it from the ‘‘organic,’’ or ‘‘made with organic State organic certification programs. market. Action levels are based on (specified ingredients).’’ 205.622 Review of approved State organic unavoidability of the poisonous or 205.307 Agricultural products in a form certification programs. deleterious substances and do not other than packages at the time of retail Fees sale that are labeled or represented as represent permissible levels of 205.640 Fees and other charges for ‘‘100 percent organic’’ or ‘‘organic.’’ contamination where it is avoidable. accreditation. 205.308 Agricultural products in a form Administrator. The Administrator for 205.641 Payment of fees and other charges. other than packages at the time of retail the Agricultural Marketing Service 205.642 Fees and other charges for sale that are sold, labeled, or represented certification. (AMS), United States Departure of as ‘‘made with organic (specified Agriculture, or the representative to ingredients).’’ 205.643–205.649 [Reserved] Compliance whom authority has been delegated to 205.309 Agricultural products produced on act in the stead of the Administrator. an exempt production operation. 205.660 General. 205.310 USDA Seal. 205.661 Investigations of certified Agricultural inputs. All substances or operations. materials used in the production or Subpart EÐCertification 205.662 Noncompliance procedure for handling of organic agricultural 205.400 General requirements for certified operations. products. certification. 205.663 Mediation. Agricultural product. Any agricultural 205.401 Application for certification. 205.664 [Reserved] 205.665 Noncompliance prodcedures for commodity or product, whether raw or 205.402 Review of application. processed, including any commodity or 205.403 On-site inspections. certifying agents. 205.404 Approval of certification. 205.666–205.667 [Reserved] product derived from livestock that is 205.405 Denial of certification. 205.668 Noncompliance procudures under marketed in the United States for 205.406 Continuation of certification. State organic certification programs. human or livestock consumption. 205.407–205.499 [Reserved] 205.699 [Reserved] Allowed synthetic. A substance that is Inspection and Testing, Reporting, and included on the National List of Subpart FÐAccreditation of Certifying Exclusion from Sale Agents synthetic substances allowed for use in 205.670 Inspection and testing of organic production, or handling. 205.500 Areas and duration of agricultural product to be sold or labeled accreditation. ‘‘organic’’. Agricultural Marketing Service (AMS). 205.501 General requirements for 205.671 Exclusion from organic sale. The Agricultural Marketing Service of accreditation. 205.672 Emergency pest or disease the United States Department of 205.502 Applying for accreditation. treatment. Agriculture.

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Animal drug. Any drug as defined in operation is in compliance with the Act weeds, or diseases to levels that do not section 201 of the Federal Food, Drug, and the regulations in this part, which significantly reduce productivity. and Cosmetic Act, as amended (21 is documented by a certificate of organic Crop. A plant or part of a plant U.S.C. 321), that is intended for use in operation. intended to be marketed as an livestock, including any drug intended Certified operation. A crop or agricultural product or fed to livestock. for use in livestock feed but not livestock production, wild-crop Crop residues. The plant parts including such livestock feed. harvesting, or handling operation or remaining in a field after the harvest of Annual seedling. A plant grown from portion of such operation that is a crop, which include stalks, stems, seed that will complete its life cycle or certified by an accredited certifying leaves, roots, and weeds. produce a harvestable yield within the agent as utilizing a system of organic Crop rotation. The practice of same crop year or season in which it production or handling as described by alternating the annual crops grown on a was planted. the Act and the regulations in this part. specific field in a planned pattern or Area of operation. The types of Certifying agent. Any entity sequence in successive crop years, so operations: Crops, livestock, wild-crop accredited by the Secretary as a that crops of the same species or family harvesting, handling, or any certifying agent for the purpose of are not grown repeatedly without combination thereof that a certifying certifying a production or handling interruption on the same field. agent may be accredited to certify under operation as a certified production or Perennial cropping systems employ this part. handling operation. means such as alley cropping, Audit trail. Documentation that is Certifying agent’s operation. All sites, intercropping, and hedgerows to sufficient to determine the source, facilities, personnel, and records used introduce biological diversity in lieu of transfer of ownership, and by a certifying agent to conduct crop sequencing. transportation of any agricultural certification activities under the Act and Crop year. That normal growing product labeled as ‘‘100 percent the regulations in this part. season for a crop as determined by the organic,’’ the organic ingredients of any Claims. Oral, written, implied, or Secretary. agricultural product labeled as symbolic representations, statements, or Cultivation. Digging up or cutting the ‘‘organic’’ or ‘‘made with organic advertising or other forms of soil to prepare a seed bed; control (specified ingredients)’’ or the organic communication presented to the public weeds; aerate the soil; or work organic ingredients of any agricultural product or buyers of agricultural products that matter, crop residues, or fertilizers into containing less than 50 percent organic relate to the organic certification process the soil. ingredients identified as organic in an or the term, ‘‘100 percent organic,’’ Cultural methods. Methods used to ingredients statement. ‘‘organic,’’ or ‘‘made with organic enhance crop health and prevent weed, Biodegradable. Subject to biological (specified ingredients),’’ or, in the case pest, or disease problems without the decomposition into simpler biochemical of agricultural products containing less use of substances; examples include the or chemical components. Biologics. All viruses, serums, toxins, than 50 percent organic ingredients, the selection of appropriate varieties and and analogous products of natural or term, ‘‘organic,’’ on the ingredients planting sites; proper timing and synthetic origin, such as diagnostics, panel. density of plantings; irrigation; and antitoxins, vaccines, live Commercially available. The ability to extending a growing season by microorganisms, killed microorganisms, obtain a production input in an manipulating the microclimate with and the antigenic or immunizing appropriate form, quality, or quantity to green houses, cold frames, or wind components of microorganisms fulfill an essential function in a system breaks. intended for use in the diagnosis, of organic production or handling, as Detectable residue. The amount or treatment, or prevention of diseases of determined by the certifying agent in presence of chemical residue or sample animals. the course of reviewing the organic component that can be reliably observed Breeder stock. Female livestock plan. or found in the sample matrix by the whose offspring may be incorporated Commingling. Physical contact current approved analytical into an organic operation at the time of between unpackaged organically methodology. their birth. produced and nonorganically produced Disease vectors. Plants or animals that Buffer zone. An area located between agricultural products during production, harbor or transmit disease organisms or a certified production operation or transportation, storage or handling, pathogens which may attack crops or portion of a production operation and other than during the manufacture of a livestock. an adjacent land area that is not multiingredient product containing both Drift. The physical movement of maintained under organic management. types of ingredients. prohibited substances from the intended A buffer zone must be sufficient in size Compost. The product of a carefully target site onto an organic operation or or other features (e.g., windbreaks or a managed process through which portion thereof. diversion ditch) to prevent the microorganisms break down plant and Emergency pest or disease treatment possibility of unintended contact by animal materials into more available program. A mandatory program prohibited substances applied to forms suitable for application to the soil. authorized by a Federal, State, or local adjacent land areas with an area that is Compost used in an organic operation agency for the purpose of controlling or part of a certified operation. must be produced in a facility in eradicating a pest or disease. Bulk. The presentation to consumers compliance with the Natural Resource Employee. Any person providing paid at retail sale of an agricultural product Conservation Service’s practice standard or volunteer services for a certifying in unpackaged, loose form, enabling the for a composting facility (Code 317) and agent. consumer to determine the individual must use methods to raise the Estimated National Mean. The mean pieces, amount, or volume of the temperature of the raw materials to the level of detected pesticide residues as product purchased. levels needed to stabilize nutrients and described in certain pesticide/ Certification or certified. A kill pathogens. commodity pairs or combinations determination made by a certifying Control. Any method that reduces or established by USDA’s Pesticide Data agent that a production or handling limits damage by populations of pests, Program.

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Excluded methods. Refers to a variety retailers of agricultural products that do information about the weight of the of methods used to genetically modify not process agricultural products) that product. organisms or influence their growth and receives or otherwise acquires Labeling. All written, printed, or development by means that are not agricultural products and processes, graphic material accompanying an possible under natural conditions or packages, or stores such products. agricultural product at any time or processes and are not considered Immediate family. The spouse, minor written, printed, or graphic material compatible with organic production. children, or blood relatives who reside about the agricultural product displayed Such methods would include in the immediate household of a at retail stores about the product. recombinant DNA, cell fusion, and certifying agent or an employee, Livestock. Any cattle, sheep, goat, micro- and macroencapsulation. Such inspector, contractor, or other personnel swine, poultry, or equine animals used methods would not include the use of of the certifying agent. For the purpose for food or in the production of food, traditional breeding, conjugation, of this part, the interest of a spouse, fiber, feed, or other agricultural-based fermentation, hybridization, in vitro minor child, or blood relative who is a consumer products; wild or fertilization, or tissue culture. resident of the immediate household of domesticated game; or other nonplant Feed. Edible materials which are a certifying agent or an employee, life, except such term shall not include consumed by livestock for their inspector, contractor, or other personnel aquatic animals or bees for the nutritional value. Feed may be of the certifying agent shall be production of food, fiber, feed, or other concentrates (grains) or roughages (hay, considered to be an interest of the agricultural-based consumer products. silage, fodder). The term, ‘‘feed,’’ certifying agent or an employee, Lot. Any number of containers which encompasses all agricultural inspector, contractor, or other personnel contain an agricultural product of the commodities, including pasture of the certifying agent. same kind located in the same ingested by livestock for nutritional Inert ingredient. Any substance (or conveyance, warehouse, or packing purposes. group of substances with similar house and which are available for Feed Additive. A substance or chemical structures if designated by the inspection at the same time. combination of substances added to feed Environmental Protection Agency) other Market information. Any written, in micro quantities to fulfill a specific than an active ingredient which is printed, audiovisual, or graphic nutritional need, i.e., nutrients in the intentionally included in any pesticide information, including advertising, form of amino acids, vitamins, and product used in organic crop or pamphlets, flyers, catalogues, posters, minerals. livestock production and handling (40 and signs, distributed, broadcasted, or Feed Supplement. A feed used with CFR 152.3(m)). made available outside of retail outlets Information panel. That part of the another feed to improve the nutrient that are used to assist in the sale or label of a packaged product that is balance or performance of the total promotion of a product. immediately contiguous to and to the ration and intended to be: Mulch. Any material, such as wood right of the principal display panel as (1) Diluted with other feeds when fed chips, leaves, straw, paper, or plastic observed by an individual facing the to livestock; (on the National List), that serves to principal display panel, unless another (2) Offered free choice with other suppress weed growth, moderate soil section of the label is designated as the parts of the ration if separately temperature, or conserve soil moisture. available; or information panel because of package National List. A list of allowed and (3) Further diluted and mixed to size or other package attributes (e.g., prohibited substances as provided for in produce a complete feed. irregular shape with one usable surface). Fertilizer. A single or blended Ingredient. Any substance used in the section 6517 of the Act (7 U.S.C. 6517). substance containing one or more preparation of an agricultural product National Organic Program (NOP). The recognized plant nutrient(s) which is that is still present in the final program authorized by the Act for the used primarily for its plant nutrient commercial product as consumed. purpose of implementing its provisions. content and which is designed for use Ingredients statement. The list of National Organic Standards Board or claimed to have value in promoting ingredients contained in a product (NOSB). A Board established by the plant growth. shown in their common and usual Secretary under 7 U.S.C. 6518 to assist Field. An area of land identified as a names in the descending order of in the development of standards for discrete unit within a production predominance. substances to be used in organic operation. Inspector. Any person retained or production and to advise the Secretary Forage. Vegetable material in a fresh, used by a certifying agent to conduct on any other aspects of the dried, or ensiled state (pasture, hay, or inspections of certification applicants or implementation of the National Organic silage) which is fed to livestock. certified production or handling Program. Handle. To sell, process, or package operations. Natural resources of the operation. agricultural products, except such term Inspection. The act of examining and The physical, hydrological, and shall not include the sale, evaluating the production or handling biological features of a production transportation, or delivery of crops or operation of an applicant for operation, including soil, water, livestock by the producer thereof to a certification or certified operation to wetlands, woodlands, and wildlife. handler. determine compliance with the Act and Nonagricultural substance. A Handler. Any person engaged in the the regulations in this part. substance that is not a product of business of handling agricultural Label. A display of written, printed, agriculture, such as a mineral or a products, including producers who or graphic material on the immediate bacterial culture, that is used as an handle crops or livestock of their own container of an agricultural product or ingredient in an agricultural product. production, except such term shall not any such material affixed to any For the purposes of this part, a include final retailers of agricultural agricultural product or affixed to a bulk nonagricultural ingredient also includes products that do not process agricultural container containing an agricultural any substance, such as gums, citric acid, products. product, except for package liners or a or pectin, that is extracted from, isolated Handling operation. Any operation or display of written, printed, or graphic from, or a fraction of an agricultural portion of an operation (except final material which contains only product, so that the identity of the

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Sewage sludge animal matter and does not undergo a a label that is most likely to be includes, but is not limited to: domestic synthetic process as defined in section displayed, presented, shown, or septage; scum or solids removed in 6502(21) of the Act (7 U.S.C. 6502(21)). examined under customary conditions primary, secondary, or advanced For the purposes of this part, of display for sale. wastewater treatment processes; and a nonsynthetic is used as a synonym for Private entity. Any domestic or material derived from sewage sludge. natural as the term is used in the Act. foreign nongovernmental for-profit or Sewage sludge does not include ash Nontoxic. Not known to cause any not-for-profit organization providing generated during the firing of sewage adverse physiological effects in animals, certification services. sludge in a sewage sludge incinerator or plants, humans, or the environment. Processing. Cooking, baking, curing, grit and screenings generated during Nonretail container. Any container heating, drying, mixing, grinding, preliminary treatment of domestic used for shipping or storage of an churning, separating, extracting, cutting, sewage in a treatment works. agricultural product that is not used in fermenting, eviscerating, preserving, Slaughter stock. Any animal that is the retail display or sale of the product. dehydrating, freezing, or otherwise intended to be slaughtered for Organic. A labeling term that refers to manufacturing and includes the consumption by humans or other an agricultural product produced in packaging, canning, jarring, or otherwise animals. accordance with the Act and the enclosing food in a container. Soil and water quality. Observable regulations in this part. Producer. A person who engages in indicators of the physical, chemical, or Organic matter. The remains, the business of growing or producing biological condition of soil and water, residues, or waste products of any food, fiber, feed, and other agricultural- including the presence of environmental organism. based consumer products. contaminants. Organic system plan. A plan of Production lot number/identifier. State. Any of the several States of the management of an organic production or Identification of a product based on the United States of America, its territories, handling operation that has been agreed production sequence of the product the District of Columbia, and the to by the producer or handler and the showing the date, time, and place of Commonwealth of Puerto Rico. certifying agent and that includes State certifying agent. A certifying production used for quality control written plans concerning all aspects of agent accredited by the Secretary under purposes. agricultural production or handling the National Organic Program and Prohibited substance. A substance described in the Act and the regulations operated by the State for the purposes whose use in any aspect of organic in subpart C of this part. of certifying organic production and production or handling is prohibited or Peer review panel. A panel of handling operations in the State. individuals who have expertise in not provided for in the Act or the State entity. Any domestic, tribal organic production and handling regulations of this part. government, or foreign governmental methods and certification procedures Records. Any information in written, subdivision providing certification and who are appointed by the visual, or electronic form that services. Administrator to assist in evaluating documents the activities undertaken by State organic certification program. A applicants for accreditation as certifying a producer, handler, or certifying agent State program that meets the agents. to comply with the Act and regulations requirements of section 6506 of the Act, Person. An individual, group of in this part. is approved by the Secretary, and is individuals, contractor, corporation, Residue testing. An official or designed to ensure that a product that association, organization, cooperative, validated analytical procedure that is sold or labeled as organically or other entity. detects, identifies, and measures the produced under the Act is produced Pesticide. Any substance which alone, presence of chemical substances, their and handled using organic methods. in chemical combination, or in any metabolites, or degradations products in State program’s governing State formulation with one or more or on raw or processed agricultural official. The chief executive official of a substances is defined as a pesticide in products. State or, in the case of a State that section 2(u) of the Federal Insecticide, Responsibly connected. Any person provides for the statewide election of an Fungicide, and Rodenticide Act (7 who is a partner, officer, director, official to be responsible solely for the U.S.C. 136(u) et seq). holder, manager, or owner of 10 percent administration of the agricultural Petition. A request to amend the or more of the voting stock of an operations of the State, such official, National List that is submitted by any applicant or a recipient of certification who administers a State organic person in accordance with this part. or accreditation. certification program. Planting stock. Any plant or plant Retail food establishment. A Synthetic. A substance that is tissue, including rhizomes, shoots, leaf restaurant; delicatessen; bakery; grocery formulated or manufactured by a or stem cuttings, roots, or tubers, used store; or any retail outlet with an in- chemical process or by a process that in plant production or propagation. store restaurant, delicatessen, bakery, chemically changes a substance Practice standard. The guidelines and salad bar, or other eat-in or carry-out extracted from naturally occurring requirements through which a service of processed or prepared raw plant, animal, or mineral sources, production or handling operation and ready-to-eat-food. except that such term shall not apply to implements a required component of its Routine use of parasiticide. The substances created by naturally production or handling organic system regular, planned, or periodic use of occurring biological processes. plan. A practice standard integrates a parasiticides. System of organic production and series of allowed and prohibited actions, Secretary. The Secretary of handling. A system that is designed to materials, and conditions to establish a Agriculture or a representative to whom produce agricultural products by the use minimum level performance for authority has been delegated to act in of methods and substances that planning, conducting, and maintaining the Secretary’s stead. maintain the integrity of organic

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This is accomplished by certification. operation or portion of the operation using, where possible, cultural, (a) Exemptions. only sells organic agricultural products biological, and mechanical methods, as (1) A production or handling labeled as ‘‘100 percent organic,’’ opposed to using substances, to fulfill operation that sells agricultural ‘‘organic,’’ or ‘‘made with organic any specific function within the system products as ‘‘organic’’ but whose gross (specified ingredients)’’ that: so as to: Maintain long-term soil agricultural income from organic sales (i) Are packaged or otherwise fertility; increase soil biological activity; totals $5,000 or less annually is exempt enclosed in a container prior to being ensure effective pest management; from certification under subpart E of received or acquired by the operation; recycle wastes to return nutrients to the this part and from submitting an organic and land; provide attentive care for farm system plan for acceptance or approval (ii) Remain in the same package or animals; and handle the agricultural under § 205.201 but must comply with container and are not otherwise products without the use of extraneous the applicable organic production and processed while in the control of the synthetic additives or processing in handling requirements of subpart C of handling operation. accordance with the Act and regulations this part and the labeling requirements (2) A handling operation that is a in this part. of § 205.309. retail food establishment or portion of a Transplant. A seedling which has (2) A handling operation that is a retail food establishment that processes been removed from its original place of retail food establishment or portion of a or prepares, on the premises of the retail production, transported, and replanted. retail food establishment that handles food establishment, raw and ready-to- Tolerance. The maximum legal level organically produced agricultural eat food from agricultural products that of a pesticide residue in or on a raw or products but does not process them is are previously labeled as ‘‘100 percent processed agricultural commodity as set exempt from the requirements in this organic,’’ ‘‘organic,’’ or ‘‘made with by the Environmental Protection Agency part. organic (specified ingredients)’’ is under FFDCA, Section 408. (3) A handling operation or portion of excluded from the requirements in this Unavoidable residual environmental a handling operation that handles part, except: contamination (UREC). Background agricultural products that contain less (i) The requirements for the levels of naturally occurring or synthetic than 50 percent organic ingredients by prevention of contact with prohibited chemicals that are present in the soil or total weight of the finished product substances as set forth in § 205.272; and present in organically produced (excluding water and salt) is exempt (ii) The labeling provisions of agricultural products that are below from the requirements in this part, § 205.309. (c) Records to be maintained by established tolerances. except: exempt operations. Wild crop. Any plant or portion of a (i) The provisions for prevention of (1) Any handling operation exempt plant that is collected or harvested from contact of organic products with from certification pursuant to paragraph prohibited substances set forth in an area of land that is not maintained (a)(3) or (a)(4) of this section must § 205.272 with respect to any under cultivation or other agricultural maintain records sufficient to: management. organically produced ingredients used (i) Prove that ingredients identified as in an agricultural product; Subpart BÐApplicability organic were organically produced and (ii) The labeling provisions of handled; and § 205.309; and § 205.100 What has to be certified. (ii) Verify quanities produced from (iii) The recordkeeping provisions in (a) Except for operations exempt or such ingredients. paragraph (c) of this section. (2) Records must be maintained for no excluded in § 205.101, each production (4) A handling operation or portion of or handling operation or specified less than 3 years beyond their creation a handling operation that handles and the operations must allow portion of a production or handling agricultural products that contain at operation that produces or handles representatives of the Secretary and the least 50 percent organic ingredients by applicable State program’s governing crops, livestock, livestock products, or total weight of the finished product other agricultural products that are State official access to these records for (excluding water and salt) that chooses inspection and copying during normal intended to be sold, labeled, or to not use the word, ‘‘organic,’’ on any represented as ‘‘100 percent organic,’’ business hours to determine compliance panel other than the information panel with the applicable regulations set forth ‘‘organic,’’ or ‘‘made with organic is exempt from the requirements in this in this part. (specified ingredients)’’ must be part, except: certified according to the provisions of (i) The provisions for prevention of § 205.102 Use of the term, ``organic.'' subpart E of this part and must meet all contact of organic products with Any agricultural product that is sold, other applicable requirements of this prohibited substances set forth in labeled, or represented as ‘‘100 percent part. § 205.272 with respect to any organic,’’ ‘‘organic,’’ or ‘‘made with (b) Any production or handling organically produced ingredients used organic (specified ingredients)’’ must be: operation that has been certified by a in an agricultural product; (a) Produced in accordance with the certifying agent on the date that the (ii) The labeling provisions of requirements specified in § 205.101 or certifying agent first receives its § 205.309; and §§ 205.202 through 205.207 or accreditation under this part shall be (iii) The recordkeeping provisions in §§ 205.236 through 205.239 and all considered certified to the national paragraph (c) of this section. other applicable requirements of part standards until the operation’s (b) Exclusions. 205; anniversary date of certification. Such (1) A handling operation or portion of (b) Handled in accordance with the recognition shall only be available to a handling operation is excluded from requirements specified in § 205.101 or those operations certified by a certifying the requirements of this part, except for §§ 205.270 through 205.272 and all agent that receives its accreditation the requirements for the prevention of other applicable requirements of this within 18 months from the date of commingling and contact with part 205; and publication of the final rule prohibited substances as set forth in (c) Produced and handled in implementing this part. § 205.272 with respect to any compliance with the Federal Meat

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Inspection Act (21 U.S.C. 601 et seq.), resources of the operation, including (c) Have distinct, defined boundaries the Poultry Products Inspection Act (21) soil and water quality. and buffer zones such as runoff U.S.C. 451 et seq.), and the Egg Products diversions to prevent the unintended § 205.201 Organic production and application of a prohibited substance to Inspection Act (21 U.S.C. 1031 et seq.), handling system plan. concerning meat, poultry, and egg the crop or contact with a prohibited products; the Federal Food, Drug, and (a) The producer or handler of a substance applied to adjoining land that Cosmetic Act (21 U.S.C. 301 et seq.); the production or handling operation, is not under organic management. Federal Insecticide, Fungicide, and except as exempt or excluded under § 205.203 Soil fertility and crop nutrient Rodenticide Act (7 U.S.C. 136 et seq.); § 205.101, wishing to sell, label, or represent agricultural products as ‘‘100 management practice standard. and any other applicable Federal statute percent organic,’’ ‘‘organic,’’ or ‘‘made (a) The producer must select and and its implementing regulations. with organic (specified ingredients)’’ implement tillage and cultivation § 205.103 Recordkeeping by certified must develop an organic production or practices that maintain or improve the operations. handling system plan that is agreed to physical, chemical, and biological (a) A certified operation must by the producer or handler and an condition of soil and minimize soil maintain records concerning the accredited certifying agent. An organic erosion. production, harvesting, and handling of system plan must meet the requirements (b) The producer must budget and agricultural products that are or that are set forth in this section to establish a supply crop nutrients by properly intended to be sold, labeled, or system of organic production or utilizing manure or other animal and represented as ‘‘100 percent organic,’’ handling. An organic production or plant materials, mined mineral ‘‘organic,’’ or ‘‘made with organic handling system plan must include: substances, and substances approved in (specified ingredients).’’ (1) A description of practices and § 205.601. (b) Such records must: procedures to be performed and (c) The producer must manage animal (1) Be adapted to the particular maintained, including the frequency and plant waste materials to maintain or business that the certified operation is with which they will be performed; improve soil organic matter content in conducting; (2) A list of each substance to be used a manner that does not contribute to (2) Fully disclose all activities and as a production or handling input, contamination of crops, soil, or water by transactions of the certified operation in indicating its composition, source, and plant nutrients, pathogenic organisms, sufficient detail as to be readily location(s) where it will be used; heavy metals, or residues of prohibited understood and audited; (3) A description of the monitoring substances. Animal and plant waste (3) Be maintained for not less than 5 practices and procedures to be materials include: years beyond their creation; and performed and maintained, including (1) Raw animal manure, which must (4) Be sufficient to demonstrate the frequency with which they will be be composted unless it is: compliance with the Act and the performed, to verify that the plan is (i) Applied to land used for a crop not regulations in this part. effectively implemented; intended for human consumption; (c) The certified operation must make (4) A description of the recordkeeping (ii) Incorporated into the soil not less such records available for inspection system implemented to comply with the than 120 days prior to the harvest of a and copying during normal business requirements established in § 205.103; product whose edible portion has direct hours by authorized representatives of (5) A description of practices and contact with the soil surface or soil the Secretary, the applicable State procedures to prevent commingling of particles; or (iii) Incorporated into the soil not less program’s governing State official, and organic and nonorganic products and to than 90 days prior to the harvest of a the certifying agent. prevent contact of organic production and handling operations and products product whose edible portion does not § 205.104 Foreign applicants. with prohibited substances; and have direct contact with the soil surface The regulations in this part, as (6) Additional information deemed or soil particles; applicable, apply equally to domestic necessary by the certifying agent to (2) Other uncomposted plant or and foreign applicants for accreditation, evaluate compliance with the animal wastes, such as aged, fully accredited certifying agents, domestic regulations. decomposed animal manure; (3) A composted product produced in and foreign applicants for certification (b) A producer may substitute a plan a facility in compliance with the Natural as organic production or handling prepared to meet the requirements of Resources Conservation Service’s operations, and certified organic another Federal, State, or local practice standard for a composting production and handling operations government regulatory program for the facility (Code 317); and unless otherwise specified. organic system plan: Provided, That, the submitted plan meets all the (4) A composted or uncomposted §§ 205.105Ð205.199 [Reserved] requirements of this subpart. plant or animal waste material that has been chemically altered by a Subpart CÐOrganic Production and § 205.202 Land requirements. manufacturing process: Provided, That, Handling Requirements Any field or farm parcel from which the material is included on the National harvested crops are intended to be sold, List of synthetic substances allowed for § 205.200 General. labeled, or represented as ‘‘100 percent use in organic crop production The producer or handler of a organic,’’ ‘‘organic,’’ or ‘‘made with established in § 205.601. production or handling operation organic (specified ingredients)’’ must: (d) In addition to crop rotations and wishing to sell, label, or represent (a) Have been managed in accordance plant and animal waste materials, a agricultural products as ‘‘100 percent with the provisions of §§ 205.203 producer may supply soil and crop organic,’’ ‘‘organic,’’ or ‘‘made with through 205.206; nutrients by applying: organic (specified ingredients)’’ must (b) Have had no prohibited (1) A mined substance of low comply with the applicable provisions substances, as listed in § 205.600, solubility; of this subpart. Practices implemented applied to it for a period of 3 years (2) A mined substance of high in accordance with this subpart must immediately preceding harvest of the solubility, when justified by soil or crop maintain or improve the natural crop; and tissue analysis;

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(3) Ash obtained from the burning of (b) The producer of an organic are insufficient to prevent or control a plant or animal material, except as operation must not use seeds or planting crop pests, weeds, and diseases, a prohibited in paragraph (e) of this stock produced with excluded methods. biological or botanical substance or a section: Provided, That, the material substance included on the National List burned has not been treated or § 205.205 Crop rotation practice standard. of synthetic substances allowed for use combined with a prohibited substance The producer must implement a crop in organic production may be applied to or the ash is not included on the rotation including, but not limited to, prevent, suppress, or control pests, National List of nonsynthetic substances sod, cover crops, green manure crops, weeds, or diseases: Provided, That, the prohibited for use in organic crop and catch crops that provide the producer implements measures to production; and following functions that are applicable evaluate and mitigate the effects of (4) A crop nutrient supplement to the operation: repetitive use of the same or similar included on the National List of (a) Maintain or improve soil organic materials on pest resistance and shifts in synthetic substances allowed for use in matter content; pest, weed, or disease types, and the organic production, when justified by (b) Provide for pest management in substance is used in compliance with soil or crop tissue analysis. annual and perennial crops; the Federal Insecticide, Fungicide, and (e) The producer must not use: (c) Manage deficient or excess plant Rodenticide Act. (1) Any fertilizer or commercially nutrients; and (f) The producer or handler of an blended fertilizer or composted product (d) Provide erosion control. organic operation must not use a pest, weed, or disease control substance that contains a synthetic substance not § 205.206 Crop pest, weed, and disease included on the National List of management practice standard. produced through excluded methods. synthetic substances allowed for use in (a) The producer must use § 205.207 Wild-crop harvesting practice organic production; standard. (2) Sewage sludge (biosolids) as management practices to prevent crop (a) Any area from which a wild crop defined in 40 CFR part 503; and pests, weeds, and diseases including, (3) Burning as a means of disposal for but not limited to: that is intended to be sold, labeled, or crop residues produced on the (1) Crop rotation and soil and crop represented as organic is harvested must operation: Except, That, prunings from nutrient management practices, as have had no prohibited substance, as set perennial crops may be burned to provided for in §§ 205.203 and 205.205; forth in § 205.600, applied to it for a suppress the spread of disease. (2) Sanitation measures to remove period of 3 years immediately preceding disease vectors, weed seeds, and habitat the harvest of the wild crop. § 205.204 Seeds and planting stock for pest organisms; and (b) A wild-crop must be harvested in practice standard. (3) Cultural practices that enhance a manner that ensures that such (a) The producer must use organically crop health, including selection of plant harvesting or gathering will not be grown seeds, annual seedlings, and species and varieties with regard to destructive to the environment and will planting stock: Except, That, suitability to site-specific conditions sustain the growth and production of (1) Nonorganically produced and resistance to prevalent pests, weeds, the wild crop. and diseases. untreated seeds and planting stock may §§ 205.208Ð205.235 [Reserved] be used to produce an organic crop (b) Pest problems may be controlled when an equivalent organically through mechanical or physical § 205.236 Origin of livestock. produced variety is not commercially methods including, but not limited to: (a) Livestock or edible livestock available; (1) Augmentation or introduction of products that are to be sold, labeled, or (2) Nonorganically produced seeds predators or parasites of the pest represented as organic must be from and planting stock that have been species; livestock under continuous organic treated with a substance included on the (2) Development of habitat for natural management from birth or hatching: National List of synthetic substances enemies of pests; Except, That, allowed for use in organic crop (3) Nonsynthetic, nontoxic controls (1) Poultry. Poultry or edible poultry production may be used to produce an such as lures, traps, and repellents. products must be from poultry that has organic crop when an equivalent (c) Weed problems may be controlled been under continuous organic organically produced or untreated through: management beginning no later than the variety is not commercially available; (1) Mulching with fully biodegradable second day of life; (3) Nonorganically produced annual materials; (2) Dairy Animals. Milk or milk seedlings may be used to produce an (2) Mowing; products must be from animals that organic crop when a temporary variance (3) Livestock grazing; have been under continuous organic has been granted in accordance with (4) Hand weeding and mechanical management beginning no later than 1 § 205.290(a)(2); cultivation; year prior to the production of the milk (4) Nonorganically produced planting (5) Flame, heat, or electrical means; or or milk products that are to be sold, stock to be used to produce a perennial (6) Plastic or other synthetic mulches: labeled, or represented as organic. crop may be sold, labeled, or Provided, That, they are removed from (3) Nonedible products. Nonedible represented as organically produced the field at the end of the growing or livestock products must be from animals only after the planting stock has been harvest season. that have been under continuous maintained under a system of organic (d) Disease problems may be organic management not less than 1 year management for a period of no less than controlled through: prior to harvest of the nonedible 1 year; and (1) Management practices which product. (5) Seeds, annual seedlings, and suppress the spread of disease (4) Breeder stock. Livestock used as planting stock treated with prohibited organisms; or breeder stock may be brought from a substances may be used to produce an (2) Application of nonsynthetic nonorganic operation onto an organic organic crop when the application of the biological, botanical, or mineral inputs. operation at any time: Provided, That, if materials is a requirement of Federal or (e) When the practices provided for in such livestock are gestating and the State phytosanitary regulations. paragraphs (a) through (d) of this section offspring are to be raised as organic

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(3) Establishment of appropriate natural behavior of animals, including: (b) The following are prohibited: housing, pasture conditions, and (1) Access to shade, shelter, exercise (1) Livestock or edible livestock sanitation practices to minimize the areas, fresh air, and direct sunlight products that are removed from an occurrence and spread of diseases and suitable to the species, its stage of organic operation and subsequently parasites; production, the climate, and the managed on a nonorganic operation may (4) Provision of conditions which environment; be not sold, labeled, or represented as allow for exercise, freedom of (2) Access to pasture for ruminants; organically produced. movement, and reduction of stress (3) Appropriate clean, dry bedding. If (2) Breeder or dairy stock that has not appropriate to the species; the bedding is typically consumed by been under continuous organic (5) Performance of physical the animal species, it must comply with management since birth may not be alterations as needed to promote the the feed requirements of § 205.237; sold, labeled, or represented as organic animal’s welfare and in a manner that (4) Shelter designed to allow for: slaughter stock; and minimizes pain and stress; and (i) Natural maintenance, comfort (3) No organism produced by (6) Administration of vaccines and behaviors, and opportunity to exercise; excluded methods may be used for other veterinary biologics. (ii) Temperature level, ventilation, breeding purposes or for the production (b) When preventive practices and and air circulation suitable to the of livestock products intended to be veterinary biologics are inadequate to species; and sold, labeled, or represented as organic. prevent sickness, a producer may (iii) Reduction of potential for (c) The producer of an organic administer synthetic medications: livestock injury; livestock operation must maintain Provided, That, such medications are (b) The producer of an organic records sufficient to preserve the allowed under § 205.603. Parasiticides livestock operation may provide identity of all organically managed allowed under § 205.603 may be used temporary confinement for an animal animals and edible and nonedible on because of: animal products produced on the (1) Breeder stock, when used prior to (1) Inclement weather; operation. the last third of gestation for progeny (2) The animal’s stage of production; that are to be sold, labeled, or (3) Conditions under which the § 205.237 Livestock feed. represented as organically produced; health, safety, or well being of the (a) The producer of an organic and animal could be jeopardized; or livestock operation must provide (2) Dairy stock, when used a (4) Risk to soil or water quality. livestock with a total feed ration minimum of 90 days prior to the (c) The producer of an organic composed of agricultural products, production of milk or milk products that livestock operation must manage including pasture and forage, that is are to be sold, labeled, or represented as manure in a manner that does not organically produced and, if applicable, organic. contribute to contamination of crops, organically handled: Except, That, (c) The producer of an organic soil, or water by plant nutrients, heavy nonagricultural products and synthetic livestock operation must not: metals, or pathogenic organisms and substances allowed under § 205.603 (1) Sell, label, or represent as organic optimizes recycling of nutrients. any animal or edible product derived may be used as feed additives and §§ 205.240Ð205.269 [Reserved] supplements. from any animal treated with (b) The producer of an organic antibiotics, any substance that contains § 205.270 Organic handling requirements. operation must not: a synthetic substance not allowed under (a) Mechanical or biological methods, (1) Use animal drugs, including § 205.603, or any substance that including, but not limited to, cooking, hormones, to promote growth; contains a nonsynthetic substance baking, heating, drying, mixing, (2) Provide feed supplements or prohibited in § 205.604. grinding, churning, separating, additives in amounts above those (2) Administer any animal drug, other extracting, slaughtering, cutting, needed for adequate nutrition and than vaccinations, in the absence of fermenting, eviscerating, preserving, health maintenance for the species at its illness; dehydrating, freezing, chilling, or specific stage of life; (3) Administer hormones; (4) Administer synthetic parasiticides otherwise manufacturing, and the (3) Feed plastic pellets for roughage; packaging, canning, jarring, or otherwise (4) Feed formulas containing urea or on a routine basis; (5) Administer synthetic parasiticides enclosing food in a container may be manure; used to process an agricultural product (5) Feed mammalian or poultry to slaughter stock; intended to be sold, labeled, or slaughter by-products to mammals or (6) Administer animal drugs in represented as ‘‘100 percent organic,’’ poultry; or violation of the Federal Food, Drug, and (6) Use feed, feed additives, and feed Cosmetic Act; or ‘‘organic,’’ or ‘‘made with organic supplements in violation of the Federal (7) Withhold medical treatment from (specified ingredients)’’ for the purpose Food, Drug, and Cosmetic Act. a sick animal in an effort to preserve its of retarding spoilage or otherwise organic status. All appropriate preparing the agricultural product for § 205.238 Livestock health care practice medications must be used to restore an market. standard. animal to health when methods (b) Nonagricultural substances (a) The producer must establish and acceptable to organic production fail. allowed under § 205.605 and maintain preventive livestock health Livestock treated with a prohibited nonorganically produced agricultural care practices, including: substance must be clearly identified and products allowed under § 205.606 may (1) Selection of species and types of shall not be sold, labeled, or represented be used in or on a processed agricultural livestock with regard to suitability for as organically produced. product intended to be sold, labeled, or site-specific conditions and resistance to represented as ‘‘organic’’ or ‘‘made with prevalent diseases and parasites; § 205.239 Livestock living conditions. organic (specified ingredients).’’ (2) Provision of feedstuffs sufficient to (a) The producer of an organic (c) The handler of an organic handling meet nutritional requirements, livestock operation must establish and operation must not use in or on an

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(3) A volatile synthetic solvent or any protect organic products from contact (e) Temporary variances may not be other synthetic processing aid not with prohibited substances. requested for any practice, material, or allowed under § 205.605 as ingredients (b) The following methods and procedure otherwise prohibited in these in or on processed products labeled as substances are prohibited for use in the regulations. organic or made with organic handling of any agricultural product ingredients. intended to be sold, labeled, or Subpart DÐLabels, Labeling, and Market Information § 205.271 Facility pest management represented as ‘‘100 per cent organic,’’ ‘‘organic,’’ or ‘‘made with organic practice standard. § 205.300 Use of the term, ``organic.'' (a) The producer or handler of an (specified ingredients)’’: (1) Packaging materials and storage (a) The term, ‘‘organic,’’ may only be organic facility must use management used on labels and in labeling of raw or practices to prevent pests, including, containers or bins that contain a synthetic fungicide, preservative, or processed agricultural products, but not limited to: including ingredients, that have been (1) Removal of pest habitat, food fumigant; (2) The use or reuse of any bag or produced and handled in accordance sources, and breeding areas; with the regulations in this part. (2) Prevention of access to handling container that had previously been in contact with any substance in such a (b) Products for export, produced and facilities; or certified to foreign national organic (3) Management of environmental manner as to compromise the organic standards or foreign contract buyer factors, such as temperature, light, integrity of any products unless, after requirements, may be labeled in humidity, atmosphere, and air use for conventional products, the accordance with the organic labeling circulation to prevent pest reproduction. reusable bin or container has been (b) Pests may be controlled through: thoroughly cleaned and poses no risk of requirements of the receiving country or (1) Augmentation or introduction of prohibited materials contacting the contract buyer: Provided, That, the predators or parasites for the pest organic product. shipping containers and shipping species; documents meet the labeling (2) Mechanical or physical controls §§ 205.273Ð205.289 [Reserved] requirements specified in § 205.306(c). (c) Products produced in a foreign including, but not limited to, traps, § 205.290 Temporary variances. light, or sound; or country and exported for sale in the (3) Nontoxic, nonsynthetic controls, (a) Temporary variances from the United States must be certified pursuant such as lures and repellents. requirements in §§ 205.203 through to subpart E of this part and labeled (c) If the practices provided for in 205.207, 205.236 through 205.239, and pursuant to this subpart D. paragraphs (a) and (b) of this section are 205.270 through 205.272 may be not effective to prevent or control established by the Administrator for the § 205.301 Product composition. facility pests, a nonsynthetic biological following reasons: (a) Products sold, labeled, or or botanical substance or a synthetic (1) Natural disasters declared by the represented as ‘‘100 percent organic.’’ A substance may be applied to prevent, Secretary; raw or processed agricultural product suppress, or control pests: Provided, (2) Damage caused by wind, flood, sold, labeled, or represented as ‘‘100 That, the substance is applied in the excessive moisture, tornado, earthquake, percent organic’’ must contain (by manner consistent with its label as fire, or other business interruption; and weight or fluid volume, excluding water approved by the Federal, State, and (3) Practices used for the purpose of and salt) not less than 100 percent local regulatory authorities. conducting research or trials of organically produced raw or processed (d) The handler of an organic techniques, varieties, or ingredients agricultural product. No such product or handling operation who applies a used in organic production or handling. product ingredient may contain or be nonsynthetic biological or botanical (b) A certifying agent may recommend created using excluded methods or be substance or a synthetic substance for in writing to the Administrator a produced using sewage sludge or the prevention or control of a pest must temporary variance from a standard set ionizing radiation. If labeled as an include in the organic handling plan a forth in subpart C of this part for organic organic food product, such product list of all measures taken or intended to production or handling operations: must be labeled pursuant to § 205.303. be taken to prevent contact between the Provided, That, such variance may only (b) Products sold, labeled, or substance and any ingredient or be recommended for the reasons listed represented as ‘‘organic.’’ A raw or finished product intended to be sold, in paragraph (a) of this section. processed agricultural product sold, labeled, or represented as ‘‘organic’’ or (c) The Administrator will provide labeled, or represented as ‘‘organic’’ ‘‘made with organic (specified written notification to certifying agents must contain (by weight or fluid ingredients).’’ upon establishment of a temporary volume, excluding water and salt) not (e) The handler of an organic handling variance applicable to the certifying less than 95 percent organically operation who applies a nonsynthetic agent’s certified production or handling produced raw or processed agricultural biological or botanical substance or a operations. When establishing a product. Any remaining product synthetic substance for the prevention temporary variance, the Administrator ingredients must consist of or control of a pest must include in the shall specify the period of time it shall nonagricultural substances or organic handling plan an evaluation of remain in effect, subject to extension as nonorganically produced agricultural the effects of repetitive use of the same the Administrator deems necessary. products approved in the National List or similar materials on pest resistance (d) A certifying agent, upon of Allowed and Prohibited Substances and shifts in pest types. notification from the Administrator of in subpart G of this part and must not

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If labeled (a) The percentage of all organically of the operations producing such as an organic food product, such produced ingredients in an agricultural ingredients, and: Provided further, That, products must be labeled pursuant to product sold, labeled, or represented as such seals or marks are not, § 205.303. ‘‘100 percent organic,’’ ‘‘organic,’’ or individually, displayed more (c) Products sold, labeled, or ‘‘made with organic (specified prominently than the USDA Seal. represented as ‘‘made with organic ingredients),’’ or that include organic (b) Agricultural products in packages (specified ingredients).’’ Multiingredient ingredients must be calculated by: described in § 205.301(a) and (b) must: agricultural product sold, labeled, or (1) Dividing the total net weight (1) On the information panel of represented as ‘‘made with organic (excluding water and salt) of combined multiingredient products and consistent (specified ingredients)’’ must contain organic ingredients by the total weight with the labeling requirements of the (by weight or fluid volume, excluding (excluding water and salt) of the Food and Drug Administration, declare water and salt) at least 50 percent finished product. the total percentage of organic (2) Dividing the fluid volume of all organically produced agricultural ingredients in the product. organic ingredients (excluding water products which are produced and (2) In the ingredient statement, and salt) by the fluid volume of the handled pursuant to requirements in modify each organic ingredient of finished product (excluding water and subpart C of this part. The nonorganic multiingredient products with the word, salt) if the product and ingredients are ingredients must not contain or be ‘‘organic’’: Except, That, ingredients in liquid. If the liquid product is identified created using excluded methods or be multiingredient products labeled ‘‘100 on the principal display panel or produced using sewage sludge or percent organic’’ are not required to information panel as being reconstituted ionizing radiation. If labeled as an modified with the term ‘‘organic.’’ Any from concentrates, the calculation organic food product, such products water or salt included as an ingredient should be made on the basis of single- must be labeled pursuant to § 205.304. will not be identified as organic. strength concentrations of the (3) On the information panel, below (d) Products with less than 50 percent ingredients and finished product. the information identifying the handler organic ingredients. The organic (3) For products containing organic or distributor of the product and ingredients in multiingredient ingredients in both solid and liquid preceded by the statement, ‘‘Certified agricultural product containing less form, dividing the combined weight of organic by * * *,’’ or similar phrase, than 50 percent organic ingredients (by the solid ingredients and the weight of identify the name of the certifying agent weight or fluid volume, excluding water the liquid ingredients (excluding water that certified the handler of the finished and salt) must be produced and handled and salt) by the total weight (excluding product: Except, That, the business pursuant to requirements in subpart C of water and salt) of the finished product. address or telephone number of the this part. The nonorganic ingredients (b) The percentage of all organically certifying agent may be included in may be produced and handled without produced ingredients in an agricultural such label. regard to the requirements of this part. product must be rounded down to the Multiingredient agricultural product nearest whole number and indicated on § 205.304 Packaged products labeled containing less than 50 percent the information panel above the ``made with organic (specified ingredients).'' organically produced ingredients may ingredient statement with the words, represent the organic nature of the ‘‘contains X percent organic (a) Agricultural products in packages product only as provided in § 205.305. ingredients.’’ described in § 205.301(c) may display on the principal display panel, (e) All ingredients identified as (c) The percentage must be calculated information panel, and any other panel ‘‘organic’’ in the ingredient statement of by the handler who affixes the label on and on any labeling or market any product must not: the consumer package and verified by the certifying agent of the handler. information concerning the product: (1) Be produced using excluded (1) The statement, ‘‘made with organic methods or products of excluded § 205.303 Packaged products labeled ``100 (specified ingredients)’’: Provided, That, methods as ingredients or processing percent organic'' or ``organic.'' display of the statement is consistent aids; (a) Agricultural products in packages with labeling requirements of the Food (2) Be produced using sewage sludge; described in § 205.301(a) and (b) may and Drug Administration and: display, on the principal display panel, (i) Does not list more than three (3) Be processed using ionizing information panel, and any other panel organic ingredients; radiation; of the package and on any labeling or (ii) Does not exceed one-half the size (4) Be processed using processing aids market information concerning the of the largest type size on the panel; and not approved on the National List of product, the following terms: (iii) Appears in its entirety in the Allowed and Prohibited Substances in (1) The term, ‘‘100 percent organic’’ or same type size, style, and color without subpart G of this part: Except, That, ‘‘organic,’’ as applicable, to modify the highlighting; and products labeled as ‘‘100 percent name of the product; (2) The seal, logo, or other identifying organic,’’ if processed, must be (2) The USDA Seal; mark of the certifying agent that processed using no processing aids; (3) The seal, logo, or other identifying certified the handler of the finished (5) Contain sulfites, nitrates, or mark of the certifying agent which product. nitrites added during the production or certified the production or handling (b) Agricultural products in packages handling process; operation producing the finished described in § 205.301(c) must: product and any other certifying agent (1) On the information panel and (6) Be produced using nonorganic which certified production or handling consistent with the labeling ingredients when organic ingredients operations producing raw organic requirements of the Food and Drug are not available; or product or organic ingredients used in Administration, declare the total (7) Include organic and nonorganic the finished product: Provided, That, percentage of organic ingredients in the forms of the same ingredient. the handler producing the finished product.

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(2) In the ingredient statement, processed agricultural product labeled accordance with the requirements of modify each organic ingredient with the as containing organic ingredients must this part, and: word, ‘‘organic.’’ Any water or salt display the production lot number of (1) Such statement does not list more included as an ingredient will not be the product, if applicable. than three organic ingredients, and identified as organic. (c) Shipping containers of (3) On the information panel, below domestically produced product labeled (2) In any such display of the the information identifying the handler as organic intended for export to product’s ingredient statement, the or distributor of the product and international markets may be labeled organic ingredients must be modified as preceded by the statement, ‘‘Certified consistent with any shipping container ‘‘organic.’’ organic by * * *,’’ or similar phrase, labeling requirements of the foreign (b) Such agricultural products labeled identify the name of the certifying agent country of destination or the container as ‘‘made with organic (specified that certified the handler of the finished labeling specifications of a foreign ingredients)’’ in retail displays, display product: Except, That, the business contract buyer: Provided, That, the containers, and market information may address or telephone number of the shipping containers and shipping display the certifying agent’s seal, logo, certifying agent may be included in documents accompanying such organic or other identifying mark. such label. product be clearly marked ‘‘For export (c) Agricultural products in packages only’’ and: Provided further, That, proof § 205.309 Agricultural products produced described in § 205.301(c) must not of such container marking and export on an exempt or excluded operation. display the USDA Seal. must be maintained by the handler, (a) An agricultural product consistent with recordkeeping § 205.305 Multiingredient packaged organically produced or handled on an requirements for exempt and excluded products with less than 50 percent organic exempt or excluded operation must not: ingredients. operations under § 205.101. (1) Display the USDA Seal or any (a) Agricultural products with less § 205.307 Agricultural products in other certifying agent’s seal or other than 50 percent organic ingredients than packaged form at the point of retail identifying mark which represents that must: sale that are sold, labeled, or represented (1) On the information panel and as ``100 percent organic'' or ``organic.'' the production or handling operation as a certified organic operation, or consistent with the labeling (a) Agricultural products labeled or requirements of the Food and Drug represented as ‘‘100 percent organic’’ or (2) Be represented as a certified Administration, declare the total ‘‘organic’’ in retail display, labeling, and organic product to any buyer. percentage of organic ingredients in the display containers may use the term, (b) An agricultural product product. ‘‘100 percent organic’’ or ‘‘organic,’’ as organically produced or handled on an (2) In the ingredient statement, applicable, to modify the name of the exempt or excluded operation may be modify each organic ingredient with the product: Provided, That, such products identified as an organic product or word, ‘‘organic.’’ are assembled in a manufacturing (b) Agricultural products with less organic ingredient in a multiingredient facility certified in accordance with the product produced by the exempt or than 50 percent organic ingredients requirements of this part; and, Provided must not display: excluded operation. Such product or further, Than, the word, ‘‘organic,’’ is ingredient must not be identified as (1) The USDA Seal and used to modify the organic ingredients ‘‘organic’’ in a product processed by (2) Any certifying agent’s seal, logo, or listed in the ingredient statement of the others. other identifying mark. products. § 205.306 Labeling of nonretail containers (b) The retail display, labeling, and (c) Such product is subject to labeling used for only shipping or storage of raw or display containers may use: requirements specified in paragraph (a) processed agricultural products labeled as (1) The USDA Seal; of § 205.300, and paragraphs (e)(1) ``100 percent organic,'' ``organic,'' or ``made (2) The seal, logo, or other identifying through (e)(7) of § 205.301. with organic (specified ingredients).'' mark of the certifying agent that § 205.310 USDA Seal. (a) Nonretail containers used only to certified the production or handling ship or store raw or processed operation producing the finished (a) The USDA Seal described in agricultural product labeled as product and any other certifying agent paragraphs (b) and (c) of this section containing organic ingredients may which certified operations producing may be used only for agricultural display the following terms or marks: raw organic product or organic products (raw or processed) described (1) The name and contact information ingredients used in the finished in § 205.301(a) and (b). of the certifying agent which certified product: Provided, That, such seals or (b) The USDA Seal must replicate the the handler which assembled the final marks are not, individually, displayed form and design of the example in figure product; more prominently than the USDA Seal. (2) Identification of the product as 1 and must be printed legibly and ‘‘organic product’’; § 205.308 Agricultural products in other conspicuously: (3) Special handling instructions than packaged form at the point of retail (1) On a white, light colored, or needed to maintain the organic integrity sale that are sold, labeled, or represented as ``made with organic (specified transparent background with contrasting of the product; dark color words and shield outline or (4) The USDA Seal; ingredients).'' on a dark colored background with (5) The seal, logo, or other identifying (a) Retail displays, display containers, mark of the certifying agent that and market information of agricultural contrasting white or light colored words certified the organic production or products containing between 50 and 95 and shield outline; or handling operation that produced or percent organic ingredients may use the (2) On a white background with dark handled the finished product. phrase, ‘‘made with organic (specified blue colored words and red shield (b) If not required under other Federal ingredients)’’ Provided, That, such outline. labeling regulations, nonretail products have been assembled at a BILLING CODE 3410±02±P containers used to ship or store raw or manufacturing facility certified in

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request must include the following notice of noncompliance. Similarly, an information: applicant that voluntarily withdrew its (a) An organic production or handling application prior to the issuance of a system plan, as required in § 205.200; notice of certification denial will not be (b) The name of the person issued a notice of certification denial. completing the application; the applicant’s business name, address, and § 205.403 On-site inspections. telephone number; and, when the (a) On-site inspections. applicant is a corporation, the name, (1) A certifying agent must conduct an address, and telephone number of the initial on-site inspection of each person authorized to act on the production unit, facility, and site that is applicant’s behalf. included in an operation for which (c) The name(s) of any organic certification is requested and an on-site certifying agent(s) to which application inspection of each certified operation has previously been made, the year(s) of annually thereafter, for the purpose of application, and the outcome of the determining whether to approve the BILLING CODE 3410±02±C application(s) submission, including a request for certification or whether the copy of any notification of certification of the operation should Subpart EÐCertification noncompliance or denial of certification continue. § 205.400 General requirements for issued to the applicant for certification (2)(i) A certifying agent may conduct certification. and a description of the actions taken by additional on-site inspections of A person seeking to receive or the applicant to correct the deficiencies applicants for certification and certified maintain organic certification under the noted in the notification of operations to determine compliance regulations in this part must: noncompliance, including evidence of with the Act and the regulations in this (a) Comply with the Act and such correction and; part. applicable organic production and (d) Other information necessary to (ii) The Administrator or State handling regulations of this part; determine compliance with the Act and program’s governing State official may (b) Establish, implement, and update the regulations in this part. require that additional inspections be annually an organic production or § 205.402 Review of application. performed by the certifying agent for the handling system plan that is submitted purpose of determining compliance (a) Upon acceptance of an application to an accredited certifying agent as with the Act and the regulations in this for certification a certifying agent must: provided for in § 205.200; part. (1) Review the application to ensure (c) Permit on-site inspections with (iii) Additional inspections may be complete access to the production or completeness pursuant to § 205.401; (2) Determine by a review of the announced or unannounced at the handling operation, including application materials whether the discretion of the certifying agent or as noncertified areas and structures, by the applicant appears to comply or may be required by the Administrator or State certifying agent as provided for in able to comply with the applicable program’s governing State official. § 205.403; requirements of subpart C of this part; (b) Scheduling. The initial on-site (d) Maintain all records applicable to inspection must be conducted within a the organic operation for not less than (3) Verify that an applicant who previously applied to another certifying reasonable time following a 5 years beyond their creation and allow determination that the applicant authorized representatives of the agent and received a notification of noncompliance, pursuant to appears to comply or may be able to Secretary, the applicable State comply with the requirements of program’s governing State official, and § 205.405(a), has submitted documentation to support the correction subpart C of this part. On-site the certifying agent access to such inspections must be conducted when records during normal business hours of any deficiencies identified in such notification, as required in § 205.405(b); the applicant or an authorized for review and copying to determine representative of the applicant who is compliance with the Act and the and (4) Schedule an on-site inspection of knowledgeable about the operation is regulations in this part, as provided for the operation to determine whether the present and at a time when land, in § 205.104; facilities, and activities that demonstrate (e) Submit the applicable fees charged applicant qualifies for certification if the review of application materials reveals the operation’s compliance with or by the certifying agent; and capability to comply with the applicable (f) Immediately notify the certifying that the production or handling operation may be in compliance with provisions of subpart C of this part can agent concerning any: be observed, except that this (1) Application, including drift, of a the applicable requirements of subpart C requirement does not apply to prohibited substance to any field, of this part. unannounced on-site inspections. production unit, site, facility, livestock, (b) The certifying agent shall or product that is part of an operation; communicate to the applicant its (c) Verification of information. The and findings on the review of application on-site inspection of an operation must (2) Change in a certified operation or materials specified in § 205.402(a). verify: any portion of a certified operation that (c) The applicant may withdraw its (1) The operation’s compliance or may affect its compliance with the Act application at any time. An applicant capability to comply with the Act and and the regulations in this part. who withdraws its application shall be the regulations in this part; liable for the costs of services provided (2) That the information, including § 205.401 Application for Certification. up to the time of withdrawal of its the organic production or handling A person seeking certification of a application. An applicant that system plan, provided in accordance production or handling operation under voluntarily withdrew its application with §§ 205.401, 205.406, and 205.200, this subpart must submit a request for prior to the issuance of a notice of accurately reflects the practices used or certification to a certifying agent. The noncompliance will not be issued a to be used by the applicant for

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The inspector must taken with supporting documentation to of noncompliance. conduct an exit interview with an the certifying agent; (f) A certifying agent who receives a authorized representative of the (2) Correct deficiencies and submit a new application for certification, which inspected operation to confirm the new application to another certifying includes a notification of accuracy and completeness of agent: Provided, That, the applicant noncompliance or a notice of denial of inspection observations and information must include a complete application, certification, must treat the application gathered during the on-site inspection. the notification of noncompliance as a new application and begin a new The inspector must also address the received from the first certifying agent, application process pursuant to need for any additional information as and a description of the corrective § 205.402. well as any issues of concern. actions taken with supporting (g) Notwithstanding paragraph (a) of documentation; or this section, if a certifying agent has § 205.404 Approval of certification. (3) Submit written information to reason to believe that an applicant for (a) Within a reasonable time after rebut the noncompliance described in certification has willfully made a false completion of the initial on-site the notification of noncompliance. statement or otherwise purposefully inspection, a certifying agent must (c) After issuance of a notification of misrepresented the applicant’s review the on-site inspection report, the noncompliance, the certifying agent operation or its compliance with the results of any analyses for substances must: certification requirements pursuant to conducted, and any additional (1) Evaluate the applicant’s corrective this part, the certifying agent may deny information requested from or supplied actions taken and supporting certification pursuant to paragraph by the applicant. If the certifying agent documentation submitted or the written (c)(1)(ii) of this section without first determines that the organic system plan rebuttal, conduct an on-site inspection if issuing a notification of noncompliance. and all procedures and activities of the necessary, and; applicant’s operation are in compliance (i) When the corrective action or § 205.406 Continuation of certification. with the requirements of this part and rebuttal is sufficient for the applicant to (a) To continue certification, a that the applicant is able to conduct qualify for certification, issue the certified operation must annually operations in accordance with the plan, applicant an approval of certification submit the following information, as the agent shall approve certification. pursuant to § 205.404; or applicable, to the certifying agent: The approval may include restrictions (ii) When the corrective action or (1) An updated organic production or as a condition of continued certification. rebuttal is not sufficient for the handling system plan which includes: (b) The certifying agent must issue a applicant to qualify for certification, (i) A summary statement, supported certificate of organic operation which issue the applicant a written notice of by documentation, detailing any specifies the: denial of certification. deviations from, changes to, (1) Name and address of the certified (2) Issue a written notice of denial of modifications to, or other amendments operation; certification to an applicant who fails to made to the previous year’s organic (2) Effective date of certification; respond to the notification of system plan during the previous year; (3) Categories of organic operation, noncompliance. and including crops, wild crops, livestock, (3) Provide notice of approval or (ii) Any additions or deletions to the or processed products produced by the denial to the Administrator, pursuant to previous year’s organic system plan, certified operation; and § 205.501(a)(14). intended to be undertaken in the (4) Name, address, and telephone (d) A notice of denial of certification coming year, detailed pursuant to number of the certifying agent. must state the reason(s) for denial and § 205.200; (c) Once certified, a production or the applicant’s right to: (2) Any additions to or deletions from handling operation’s organic (1) Reapply for certification pursuant the information required pursuant to certification continues in effect until to §§ 205.401 and 205.405(e); § 205.401(b); and (3) Other information surrendered by the organic operation or (2) Request mediation pursuant to as deemed necessary by the certifying suspended or revoked by the certifying § 205.663 or, if applicable, pursuant to agent to determine compliance with the agent, the State program’s governing a State program; or Act and the regulations in this part. State official, or the Administrator. (3) File an appeal pursuant to (b) Following the receipt of the § 205.681 or, if applicable, pursuant to information specified in paragraph (a) of § 205.405 Denial of certification. a State program of the denial of this section, the certifying agent shall (a) When the certifying agent has certification. arrange and conduct an on-site reason to believe, based on a review of (e) An applicant for certification who inspection of the certified operation, the information specified in § 205.402 or has received a written notification of pursuant to § 205.403. § 205.404, that an applicant for noncompliance or a written notice of (c) If the certifying agent has reason to certification is not able to comply or is denial of certification may apply for believe, based on the on-site inspection not in compliance with the certification again at any time with any and a review of the information requirements of this part, the certifying certifying agent, in accordance with specified in § 205.404, that a certified agent must provide a written §§ 205.401 and 205.405(e). When such operation is not complying with the notification of noncompliance to the applicant submits a new application to requirements of the Act and the

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(8) Provide sufficient information to (12) Accept the certification decisions (c) In lieu of accreditation under persons seeking certification to enable made by another USDA-accredited paragraph (a) of this section, USDA will them to comply with the applicable certifying agent as equivalent to its own; accept a foreign certifying agent’s requirements of the Act and the (13) Refrain from making false or accreditation to certify organic regulations in this part; misleading claims about its production or handling operations if: (9) Maintain all records pursuant to accreditation status, the USDA (1) USDA determines, upon the § 205.510(b) and make all such records accreditation program for certifying request of a foreign government, that the available for inspection and copying agents, or the nature or qualities of standards under which the foreign during normal business hours by products labeled as organically government authority accredited the authorized representatives of the produced; foreign certifying agent meet the Secretary and the applicable State (14) Submit to the Administrator: requirements of this part; or program’s governing State official; (i) A copy of any notice of denial of (2) The foreign government authority (10) Maintain strict confidentiality certification issued pursuant to that accredited the foreign certifying with respect to its clients under the § 205.405, notification of agent acted under an equivalency applicable organic certification program noncompliance, notification of agreement negotiated between the and not disclose to third parties (with noncompliance correction, notification United States and the foreign the exception of the Secretary or the of proposed suspension or revocation, government. applicable State program’s governing and notification of suspension or State official or their authorized revocation sent pursuant to § 205.662, § 205.501 General requirements for representatives) any business-related simultaneously with its issuance and accreditation. information concerning any client (ii) On a quarterly calender basis, the (a) A private or State entity accredited obtained while implementing the name, address, and telephone number of as a certifying agent under this subpart regulations in this part, except as each operation granted certification; must: provided for in § 205.504(b)(5); (15) Charge applicants for certification (1) Have sufficient expertise in (11) Prevent conflicts of interest by: and certified production and handling organic production or handling (i) Not certifying a production or operations only those fees and charges techniques to fully comply with and handling operation if the certifying that it has filed with the Administrator; implement the terms and conditions of agent or a responsibly connected party (16) Pay and submit fees to AMS in the organic certification program of such certifying agent has or has held accordance with § 205.640; and established under the Act and the a commercial interest in the production (17) Comply with, implement, and regulations in this part; or handling operation, including an carry out any other terms and (2) Demonstrate the ability to fully immediate family interest or the conditions determined by the comply with the requirements for provision of consulting services, within Administrator to be necessary. accreditation set forth in this subpart; the 12-month period prior to the (b) A private or State entity accredited (3) Carry out the provisions of the Act application for certification; as a certifying agent under this subpart and the regulations in this part, (ii) Excluding any person, including may establish a seal, logo, or other including the provisions of §§ 205.402 contractors, with conflicts of interest identifying mark to be used by through 205.406 and § 205.670; from work, discussions, and decisions production and handling operations (4) Use a sufficient number of in all stages of the certification process certified by the certifying agent to adequately trained personnel, including and the monitoring of certified indicate affiliation with the certifying

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(1) A copy of the applicant’s policies (1) Does not require use of its seal, and procedures for training, evaluating, § 205.503 Applicant information. logo, or other identifying mark on any and supervising personnel; product sold, labeled, or represented as A private or State entity seeking (2) The name and position description organically produced as a condition of accreditation as a certifying agent must of all personnel to be used in the certification and submit the following information: certification operation, including (a) The business name, primary office (2) Does not require compliance with administrative staff, certification location, mailing address, name of the any production or handling practices inspectors, members of any certification person(s) responsible for the certifying other than those provided for in the Act review and evaluation committees, agent’s day-to-day operations, contact and the regulations in this part as a contractors, and all parties responsibly numbers (telephone, facsimile, and condition of use of its identifying mark: connected to the certifying agent; Internet address) of the applicant, and, (3) A description of the qualifications, Provided, That, this provision does not for an applicant who is a private person, apply to States with more restrictive including experience, training, and the entity’s taxpayer identification education in agriculture, organic requirements approved by the Secretary number; production, and organic handling, for: or private entity certifying agents (b) The name, office location, mailing (i) Each inspector to be used by the certifying production and handling address, and contact numbers applicant and operations within States with more (telephone, facsimile, and Internet (ii) Each person to be designated by restrictive requirements approved by the address) for each of its organizational the applicant to review or evaluate Secretary. units, such as chapters or subsidiary applications for certification; and (c) A private entity accredited as a offices, and the name of a contact (4) A description of any training that certifying agent must: person for each unit; the applicant has provided or intends to (1) Hold the Secretary harmless for (c) Each area of operation (crops, wild provide to personnel to ensure that they any failure on the part of the certifying crops, livestock, or handling) for which comply with and implement the agent to carry out the provisions of the accreditation is requested and the requirements of the Act and the Act and the regulations in this part; estimated number of each type of regulations in this part. (2) Furnish reasonable security, in an operation anticipated to be certified (b) Administrative policies and amount and according to such terms as annually by the applicant along with a procedures. the Administrator may by regulation copy of the applicant’s schedule of fees (1) A copy of the procedures to be prescribe, for the purpose of protecting for all services to be provided under used to evaluate certification applicants, the rights of production and handling these regulations by the applicant; make certification decisions, and issue operations certified by such certifying (d) The type of entity the applicant is certification certificates; agent under the Act and the regulations (e.g., government agricultural office, for- (2) A copy of the procedures to be in this part; and profit business, not-for-profit used for reviewing and investigating (3) Transfer to the Administrator and membership association) and for: certified operation compliance with the make available to any applicable State (1) A State entity, a copy of the Act and the regulations in this part and program’s governing State official all official’s authority to conduct the reporting of violations of the Act records or copies of records concerning certification activities under the Act and and the regulations in this part to the the person’s certification activities in the regulations in this part, Administrator; the event that the certifying agent (2) A private entity, documentation (3) A copy of the procedures to be dissolves or loses its accreditation. showing the entity’s status and used for complying with the (d) No private or State entity organizational purpose, such as articles recordkeeping requirements set forth in § 205.501(a)(9); accredited as a certifying agent under of incorporation and by-laws or (4) A copy of the procedures to be this subpart shall exclude from ownership or membership provisions, and its date of establishment; and used for maintaining the confidentiality participation in or deny the benefits of (e) A list of each State or foreign of any business-related information as the National Organic Program to any country in which the applicant set forth in § 205.501(a)(10); person due to discrimination because of currently certifies production and (5) A copy of the procedures to be race, color, national origin, gender, handling operations and a list of each used for making the following religion, age, disability, political beliefs, State or foreign country in which the information available to any member of sexual orientation, or marital or family applicant intends to certify production the public upon request: status. or handling operations. (i) Certification certificates issued § 205.502 Applying for accreditation. during the current and 3 preceding § 205.504 Evidence of expertise and calender years; (a) A private or State entity seeking ability. (ii) A list of producers and handlers accreditation as a certifying agent under A private or State entity seeking whose operations it has certified, this subpart must submit an application accreditation as a certifying agent must including for each the name of the for accreditation which contains the submit the following documents and operation, type(s) of operation, and the applicable information and documents information to demonstrate its expertise effective date of the certification, during set forth in §§ 205.503 through 205.505 in organic production or handling the current and 3 preceding calender and the fees required in § 205.640 to: techniques; its ability to fully comply years; Program Manager, USDA–AMS–TMP– with and implement the organic (iii) The results of laboratory analyses NOP, Room 2945–South Building, PO certification program established in for residues of pesticides and other Box 96456, Washington, DC 20090– §§ 205.100 and 205.101, §§ 205.201 prohibited substances conducted during 6456. through 205.203, §§ 205.300 through the current and 3 preceding calender (b) Following the receipt of the 205.303, §§ 205.400 through 205.406, years; and information and documents, the and §§ 205.661 and 205.662; and its (iv) Other business information as Administrator will determine, pursuant ability to comply with the requirements permitted in writing by the producer or to § 205.506, whether the applicant for for accreditation set forth in § 205.501: handler; and

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(6) A copy of the procedures to be activities by certifying agent staff, an (c) The accreditation of a certifying used for sampling and residue testing outside auditor, or a consultant who has agent shall continue in effect until such pursuant to § 205.670. the expertise to conduct such time as the certifying agent fails to (c) Conflicts of interest. evaluations and implement measures to renew accreditation as provided in (1) A copy of procedures intended to correct any deficiencies identified in § 205.510(b), the certifying agent be implemented to prevent the compliance with the Act and the voluntarily ceases its certification occurrence of conflicts of interest, as regulations in this part; activities, or accreditation is suspended described in § 205.501(a)(11). (5) Pay and submit fees to AMS in or revoked pursuant to § 205.665. (2) For each person identified in accordance with § 205.640; and § 205.504(a)(2), a conflict of interest (6) Comply with, implement, and § 205.507 Denial of accreditation. disclosure report, identifying any food- carry out any other terms and (a) If the Administrator has reason to or agriculture-related business interests, conditions determined by the including business interests of believe, based on a review of the Administrator to be necessary. information specified in §§ 205.503 immediate family members, that cause a (b) A private entity seeking through 205.505 or after a site conflict of interest. accreditation as a certifying agent under evaluation as specified in § 205.508, that (d) Current certification activities. An this subpart must additionally agree to: an applicant for accreditation is not able applicant who currently certifies (1) Hold the Secretary harmless for to comply or is not in compliance with production or handling operations must any failure on the part of the certifying the requirements of the Act and the submit: agent to carry out the provisions of the (1) A list of all production and Act and the regulations in this part; regulations in this part, the handling operations currently certified (2) Furnish reasonable security, in an Administrator shall provide a written by the applicant; amount and according to such terms as notification of noncompliance to the (2) Copies of at least 3, the the Administrator may by regulation applicant in accordance with Administrator may require additional, prescribe, for the purpose of protecting § 205.665(a). different inspection reports and the rights of production and handling (b) The applicant may: certification evaluation documents for operations certified by such certifying (1) File, with the Administrator, an production or handling operations agent under the Act and the regulations certified by the applicant during the appeal of the deficiencies identified in in this part; and the notification of noncompliance; or previous year for each area of operation (3) Transfer to the Administrator and for which accreditation is requested; make available to the applicable State (2) Submit to the Administrator a and program’s governing State official all description of the actions taken to (3) The results of any accreditation records or copies of records concerning correct the deficiencies identified in the process of the applicant’s operation by the certifying agent’s certification notification of noncompliance and an accrediting body during the previous activities in the event that the certifying evidence demonstrating such year for the purpose of evaluating its corrections. certification activities. agent dissolves or loses its accreditation. (c) If an applicant fails to correct the (e) Other information. Any other § 205.506 Approval of accreditation. information the applicant believes may deficiencies, fails to report the (a) Accreditation will be approved corrections by the date specified in the assist in the Administrator’s evaluation when: of the applicant’s expertise and ability. notification of noncompliance, fails to (1) The accreditation applicant has file an appeal of the notification of § 205.505 Statement of agreement. submitted the information required by noncompliance by the date specified, or (a) A private or State entity seeking §§ 205.503 through 205.505; is unsuccessful in its appeal, the accreditation under this subpart must (2) The accreditation applicant pays Administrator will provide the sign and return a statement of agreement the required fee in accordance with applicant with written notification of prepared by the Administrator which § 205.640(c); and accreditation denial. An applicant who (3) The Administrator determines that affirms that, if granted accreditation as has received written notification of the applicant for accreditation meets the a certifying agent under this subpart, the accreditation denial may apply for requirements for accreditation as stated applicant will carry out the provisions accreditation again at any time in in § 205.501, as determined by a review of the Act and the regulations in this accordance with § 205.502. part, including: of the information submitted in (1) Accept the certification decisions accordance with §§ 205.503 through (d) If the certifying agent was made by another USDA accredited 205.505 and, if necessary, a review of accredited prior to the site evaluation certifying agent as equivalent to its own; the information obtained from a site and the certifying agent fails to correct (2) Refrain from making false or evaluation as provided for in § 205.508. the deficiencies, fails to report the misleading claims about its (b) On making a determination to corrections by the date specified in the accreditation status, the USDA approve an application for notification of noncompliance, or fails accreditation program for certifying accreditation, the Administrator will to file an appeal of the notification of agents, or the nature or qualities of notify the applicant of approval of noncompliance by the date specified, products labeled as organically accreditation in writing, stating: the Administrator will begin produced; (1) The area(s) for which accreditation proceedings to suspend or revoke the (3) Conduct an annual performance is given; certifying agent’s accreditation. An appraisal for each inspector to be used (2) The effective date of the applicant who has had its accreditation by the certifying agent and implement accreditation; and suspended may apply for accreditation measures to correct any possible (3) For a certifying agent who is a again at any time in accordance with deficiencies identified in compliance private entity, the amount and type of § 205.502. A private entity certifying with the Act and the regulations in this security that must be established to agent whose accreditation is revoked part; protect the rights of production and will be ineligible for accreditation for a (4) Have an annual internal program handling operations certified by such period of not less than 3 years following evaluation conducted of its certification certifying agent. the date of such determination.

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§ 205.508 Site evaluations. information concerning the applicant’s (2) Information about the certifying (a) Site evaluations of accredited training and expertise in organic agent received as part of the review certifying agents shall be conducted for production or handling methods and in process is confidential information, and the purpose of examining the certifying evaluating whether production or peer reviewers must not release, copy, agent’s operations and evaluating its handling operations are using a system quote, or otherwise use material from compliance with the Act and the of organic production or handling. the information received, other than in regulations of this part. Site evaluations (ii) Address possible limitations on the report required to be submitted; shall include an on-site review of the availability to serve. (3) Each peer reviewer must agree to certifying agent’s certification (iii) Include information concerning treat the information received for review procedures, decisions, facilities, their commercial interests and those of as confidential; and administrative and management their immediate family members, within (4) Each person on a peer review systems, and production or handling the 12-month period prior to panel must provide an individual operations certified by the certifying application, with any person who may written report, including agent. Site evaluations shall be seek to become or who is an accredited recommendations, to the Administrator conducted by a representative(s) of the certifying agent. No person who has or regarding a certifying agent’s ability to Administrator. has had a commercial interest, conduct and perform certification (b) An initial site evaluation of an including an immediate family interest activities. accreditation applicant shall be or the provision of consulting services, (e) Peer review panel reports. Copies conducted before or within a reasonable in an applicant for accreditation or of the peer review panel reports will be period of time after issuance of the renewal of accreditation within the provided upon request to the certifying applicant’s ‘‘notification of preceding 12-month period shall be agent, and written responses from the accreditation.’’ A site evaluation shall appointed to or accept appointment to certifying agent may be submitted for be conducted after application for a panel evaluating such applicant for consideration by the Administrator. renewal of accreditation but prior to the accreditation or renewal of accreditation. § 205.510 Annual report, recordkeeping, issuance of a notice of renewal of and renewal of accreditation. accreditation. One or more site (2) Persons accepted to the pool may evaluations will be conducted during serve until notified that their (a) Annual report and fees. An the period of accreditation to determine appointment has been rescinded by the accredited certifying agent must submit whether an accredited certifying agent is Administrator or until they are no annually to the Administrator, on or complying with the general longer qualified, whichever occurs first. before the anniversary date of the requirements set forth in § 205.501. (c) Composition of peer review panels. issuance of the notification of (1) Peer review panels convened by accreditation, the following reports and § 205.509 Peer review panel. the Administrator shall consist of at fees: The Administrator may establish a least three but no more than five (1) A complete and accurate update of peer review panel to assist in evaluating members. information submitted pursuant to applicants for accreditation, amendment (2) Peer review panels must include: §§ 205.503 and 205.504; to an accreditation, and renewal of (i) A Department representative who (2) Information supporting any accreditation as certifying agents. Peer shall preside over the panel and changes being requested in the areas of reviewers will serve without (ii) No fewer than two members, accreditation described in § 205.500; compensation. drawn from the peer review pool, who (3) A description of the measures (a) Peer review panel(s). possess sufficient expertise, as implemented in the previous year and (1) A peer review panel shall review determined by the Administrator, in the any measures to be implemented in the the documentation provided by the areas of accreditation described in the coming year to satisfy any terms and Administrator after any site evaluation application for accreditation or the conditions determined by the performed pursuant to §§ 205.508 and notice of approval of accreditation for Administrator to be necessary, as 205.510. each certifying agent whose operations specified in the most recent notification (2) The Administrator shall consider and performance are to be reviewed. of accreditation or notice of renewal of the reports received from each (3) Peer review panels may include: accreditation; individual member of a peer review (i) Up to two members with expertise (4) The results of the most recent panel when determining whether to in other disciplines, including inspector performance appraisals and continue or renew the accreditation of a organizational management and finance; annual program evaluation and a certifying agent. (ii) Member(s) from the approved description of adjustments to the (3) A peer review panel meeting shall State organic certification program certifying agent’s operation and be held solely for the purposes of giving when the applicant is a private entity procedures implemented or to be and receiving information. Any meeting that will operate within the State; and implemented in response to the or conference call shall be conducted in (iii) Member(s) from a foreign appraisals and evaluation; and a manner that will ensure the actions of government’s organic program when the (5) The fees required in § 205.640(a). panel members are carried out on an applicant is a private entity that will (b) Recordkeeping. Certifying agents individual basis with any opinions and operate within the country. must maintain records according to the recommendations by a member being (d) Duties and responsibilities of following schedule: made individually. panel members. (1) Records obtained from applicants (b) Eligibility for peer review panels. (1) Each person on a peer review for certification and certified operations (1) Applicants for membership in the panel must individually review the site must be maintained for not less than 5 peer review panel pool must: evaluation report prepared by the years beyond their receipt; (i) Provide the Administrator with a Department’s evaluator(s) and any other (2) Records created by the certifying written description and, upon request, information that may be provided by the agent regarding applicants for supporting documentation of their Administrator relevant to continuing or certification and certified operations qualifications to conduct peer reviews. renewing the accreditation status of a must be maintained for not less than 10 Such description must include certifying agent; years beyond their creation; and

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(3) Records created or received by the produced and handled without the use (6) Petroleum-Based Oils—on woody certifying agent pursuant to the of: plants for dormant and summer pest accreditation requirements of this (a) Synthetic substances and control, Except, That, a petroleum-based subpart F, excluding any records ingredients, except as provided in material allowed as a pesticide is covered by §§ 205.510(b)(2), must be § 205.601 and § 205.603. prohibited for use as a herbicide. maintained for not less than 5 years (b) Nonagricultural substances used in Aromatic petroleum solvents as a beyond their creation or receipt. or on processed products, except as subclass of petroleum-based oils are (c) Renewal of accreditation. otherwise provided in § 205.605; prohibited. (1) An accredited certifying agent’s (c) Nonsynthetic substances (7) Soaps, Insecticidal application for accreditation renewal prohibited in § 205.602 or § 205.604; (8) Sticky Traps/Barriers must be received 6 months prior to the and (f) As insect attractants—Pheromones (g) As rodenticides fifth anniversary of issuance of the (d) Materials, processes, or techniques (1) Sulfur Dioxide—underground notification of accreditation and each prohibited in § 205.301. rodent control only (smoke bombs) subsequent renewal of accreditation. § 205.601 Synthetic substances allowed (2) Vitamin D3 The accreditation of certifying agents for use in organic crop production. (h) As slug or snail bait—[Reserved] who make timely application for In accordance with restrictions (i) As plant disease control renewal of accreditation will not expire specified in this section and § 205.102 (1) Coppers, Fixed—Copper during the renewal process. The and § 205.200 through § 205.207, the Hydroxide, Copper Oxide, Copper accreditation of certifying agents who following synthetic substances may be Oxychloride, Includes products fail to make timely application for used: exempted from EPA tolerance, Except, renewal of accreditation will expire as (a) As algicides, disinfectants and That, copper-based materials shall be scheduled unless renewed prior to the sanitizers, including irrigation system managed in a way that prevents scheduled expiration date. Certifying cleaning systems excessive accumulation in the soil and agents with an expired accreditation (1) Alcohols shall not be used as herbicides. must not perform certification activities (i) Ethanol (2) Copper Sulfate—Substance must under the Act and these regulations. (ii) Isopropanol be used in a manner that minimizes (2) Following receipt of the (2) Chlorine Materials—Except, That, accumulation of copper in the soil. information submitted by the certifying residual chlorine levels in the water (3) Hydrated Lime—not permitted for agent in accordance with paragraph (a) shall not exceed the maximum residual soil application or to cauterize of this section, the results of a site disinfectant limit under the Safe mutilations or deodorize animal wastes evaluation, and, if applicable, the Drinking Water Act. (4) Hydrogen Peroxide reports submitted by a peer review (i) Calcium Hypochlorite (5) Oils, Horticultural, as dormant, panel, the Administrator will determine (ii) Chlorine Dioxide suffocating, and summer oils, whether the certifying agent remains in (iii) Sodium Hypochlorite insecticides only compliance with the Act and the (3) Hydrogen Peroxide (6) Petroleum-Based Oils—Except, regulations of this part and should have (4) Soap-Based Algicides/Demossers That, aromatic petroleum solvents as a (b) As herbicides, weed barriers, as its accreditation renewed. subclass of petroleum-based oils are applicable. prohibited. (d) Notice of renewal of accreditation. (1) Herbicides, Soap-Based—for use in Upon a determination that the certifying (7) Potassium Bicarbonate farmstead maintenance (roadways, (8) Elemental Sulfur agent is in compliance with the Act and ditches, right of ways, building (j) As plant or soil amendments. the regulations of this part, the perimeters) and ornamental crops (1) Aquatic Plant Extracts (other than Administrator will issue a notice of (2) Mulches hydrolyzed)—Extraction process is renewal of accreditation. The notice of (i) Newspaper or other recycled paper, limited to the use of Potassium renewal will specify any terms and without glossy or colored inks. Hydroxide or Sodium Hydroxide; conditions that must be addressed by (ii) Plastic mulch and covers solvent amount used is limited to that the certifying agent and the time within (petroleum-based other than polyvinyl amount necessary for extraction. which those terms and conditions must chloride (PVC)) (2) Humic Acids—naturally occurring be satisfied. (c) As compost feedstocks— deposits, water and alkali extracts only (e) Noncompliance. Upon a Newspapers or other recycled paper, (3) Lignin Sulfonate—chelating agent, determination that the certifying agent without glossy or colored inks dust suppressant, floatation agent is not in compliance with the Act and (d) As animal repellents—Soaps, (4) Micronutrients—not to be used as the regulations of this part, the Ammonium—for use as a large animal a defoliant, herbicide, or desiccant. Administrator will initiate proceedings repellant only, no contact with soil or Those made from nitrates or chlorides to suspend or revoke the certifying edible portion of crop are not allowed. Soil deficiency must be agent’s accreditation. (e) As insecticides (including documented by soil or tissue test. acracides or mite control) (i) Soluble Boron Products §§ 205.511Ð205.599 [Reserved] (1) Ammonium Carbonate—for use as (ii) Sulfates, carbonates, oxides, or bait in insect traps only, no direct silicates of zinc, iron, magnesium, Subpart GÐAdministrative contact with crop or soil manganese, molybdenum, selenium, The National List of Allowed and (2) Boric Acid—structural pest and cobalt Prohibited Substances control, no direct contact with organic (5) Liquid Fish Products—can be pH food or crops adjusted with sulfuric, citric or § 205.600 Allowed and prohibited (3) Elemental Sulfur phosphoric acid. The amount of acid substances and ingredients in organic (4) Lime Sulfur—including calcium used shall not exceed the minimum production and handling. polysulfide, fungicides, or insecticides needed to lower the pH to 3.5 To be sold or labeled as ‘‘organic,’’ or if no alternatives (6) Vitamins, B1, C, and E ‘‘made with organic (specified (5) Oils, Horticultural—as dormant, (k) As plant growth regulators— ingredients),’’ the product must be suffocating, and summer oils [Reserved]

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(l) As floating agents in postharvest plan-approved preventive management (4) Bentonite handling does not prevent infestation. Milk or (5) Calcium Carbonate (1) Lignin Sulfonate milk products from a treated animal (6) Calcium Chloride (2) Sodium Silicate—for tree fruit and cannot be labeled as provided for in (7) Carrageenan fiber processing subpart D of this part for 90 days (8) Cornstarch (Native) (m) As synthetic inert ingredients as following treatment. In breeder stock, (9) Dairy Cultures—non-EM classified by the Environmental treatment cannot occur during the last (10) Diatomaceous Earth—food Protection Agency (EPA), for use with a third of gestation if the progeny will be filtering aid only synthetic substance listed in this section sold as organic (11) Enzymes—must be derived from and used as an active ingredient in (12) Phosphoric Acid—allowed as an edible, nontoxic plants, nonpathogenic accordance with any limitations on the equipment cleaner fungi, or nonpathogenic bacteria use of such synthetic substances—EPA (13) Vaccines and Biologics (12) Gums—Water extracted only List 4—Inerts of Minimal Concern (b) As topical treatment, external (arabic, guar, locust bean, carob bean) (n)–(z) [Reserved] parasiticide or local anesthetic as (13) Kaolin applicable. (14) Kelp—for use only as a thickener § 205.602 Nonsynthetic substances (1) Iodine and dietary supplement prohibited for use in organic crop (2) Lidocaine—as a local anesthetic. (15) Lecithin—unbleached production. Use requires a withdrawal period of 90 (16) Nitrogen—Oil-free grades (a) Ash from manure burning days after administering to livestock (17) Oxygen—Oil-free grades (b) Arsenic intended for slaughter and 7 days after (18) Pectin (high-methoxy) (c) Lead salts administering to dairy animals (19) Perlite—for use only as a filter (d) Sodium Fluoaluminate (Mined) (3) Lime, Hydrated—(Bordeaux aid in food processing (e) Strychnine mixes) (20) Potassium Chloride (f) Tobacco Dust (4) Mineral Oil—for topical use and as (21) Potassium Iodide (g)-(z) [Reserved] a lubricant (22) Sodium Bicarbonate (23) Sodium Carbonate § 205.603 Synthetic substances allowed (5) Procaine—as a local anesthetic, for use in organic livestock production. use requires a withdrawal period of 90 (24) Yeast—Nonsynthetic, non-EM (i) Autolysate Any substance in the following days after administering to livestock intended for slaughter and 7 days after (ii) Bakers categories may be used in organic (iii) Brewers livestock production in accordance with administering to dairy animals (6) Copper Sulfate (iv) Nutritional any restrictions specified in this section (c) As feed supplements—Milk (v) Smoked—growth on and § 205.102 and § 205.236 through Replacers—without antibiotics, as petrochemical substrate and sulfite § 205.239. emergency use only, no nonmilk waste liquor prohibited. Nonsynthetic (a) As disinfectants, sanitizers, and products or products from BST treated smoke flavoring process must be medical treatments as applicable animals documented (1) Alcohols (d) As feed additives (b) Synthetics allowed: (i) Ethanol—disinfectant and sanitizer (1) Trace Minerals, including: (1) Alginates only, prohibited as a feed additive (i) Copper Sulfate (2) Ammonium Bicarbonate—for use (ii) Isopropanol—disinfectant only (ii) Magnesium Sulfate only as a leavening agent (2) Aspirin—approved for health care (2) Vitamins—accepted for (3) Ammonium Carbonate—for use use to reduce inflammation enrichment or fortification, limited to only as a leavening agent (3) Chlorine Materials—disinfecting those approved by the FDA for livestock (4) Ascorbic Acid and sanitizing facilities and equipment. use (5) Calcium Citrate Residual chlorine levels in the water (e) As fillers and excipients (6) Calcium Hydroxide shall not exceed the maximum residual (f)–(z) [Reserved] (7) Calcium Phosphates (monobasic disinfectant limit under the Safe and dibasic) Drinking Water Act § 205.604 Nonsynthetic substances (8) Carbon Dioxide (i) Calcium Hypochlorite prohibited for use in organic livestock (9) Chlorine Materials—disinfecting (ii) Chlorine Dioxide production. [Reserved] and sanitizing food contact surfaces, (iii) Sodium Hypochlorite § 205.605 Nonagricultural (nonorganic) Except, That, residual chlorine levels in (4) Chlorohexidine—Allowed for substances allowed as ingredients in or on the water shall not exceed the maximum surgical procedures conducted by a processed products labeled as ``organic'' or residual disinfectant limit under the veterinarian. Allowed for use as a teat ``made with organic (specified Safe Drinking Water Act. dip when alternative germicidal agents ingredients).'' (i) Calcium Hypochlorite and/or physical barriers have lost their The following nonagricultural (ii) Chlorine Dioxide effectiveness substances may be used only in (iii) Sodium Hypochlorite (5) Electrolytes—without antibiotics accordance with any restrictions (10) Ethylene—allowed for post (6) Glucose specified in this section and § 205.102, harvest ripening of tropical fruit (7) Glycerin—Allowed as a livestock § 205.270, and § 205.300 through (11) Ferrous Sulfate—for iron teat dip, must be produced through the § 205.310. enrichment or fortification of foods hydrolysis of fats or oils (a) Nonsynthetics allowed: when required by regulation or (8) Iodine (1) Agar-agar recommended (independent (9) Hydrogen Peroxide (2) Acids organization) (10) Magnesium Sulfate (i) Alginic (12) Glycerides (mono and di)—for (11) Parasiticides—Ivermectin— (ii) Citric—produced by microbial use only in drum drying of food Prohibited in slaughter stock, allowed in fermentation of carbohydrate substances (13) Glycerin—produced by emergency treatment for dairy and (iii) Lactic hydrolysis of fats and oils breeder stock when organic system (3) Baking Powder—aluminum-free (14) Hydrogen peroxide

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(15) Lecithin—bleached for recommendation to the Secretary for § 205.621 Submission and determination (16) Magnesium Carbonate—for use inclusion on or deletion from the of proposed State organic certification only in agricultural products labeled National List in accordance with section programs and amendments to approved ‘‘made with organic (specified 6517 of the Act. State organic certification programs. ingredients),’’ prohibited in agricultural (b) A person petitioning for (a) A State program’s governing State products labeled ‘‘organic’’ amendment of the National List should official must submit to the Secretary a (17) Magnesium Chloride—derived request a copy of the petition proposed State organic certification from sea water procedures from the USDA at the program and any proposed amendments (18) Magnesium Stearate—for use address in § 205.607(c). to such approved program. only in agricultural products labeled (1) Such submission must contain ‘‘made with organic (specified (c) A petition to amend the National supporting materials that include ingredients),’’ prohibited in agricultural List must be submitted to: Program statutory authorities, program products labeled ‘‘organic’’ Manager, USDA/AMS/TM/NOP, Room description, a statement of acceptance of (19) Magnesium Sulfate 2945 South Building, PO Box 96456, the general requirements for organic (20) Nutrient vitamins and minerals, Washington, DC 20090–6456. programs specified in the Act, in accordance with 21 CFR 104.20, (d) A substance may be added to the documentation of unique environmental Nutritional Quality Guidelines For National List only in the following or ecological conditions or specific Foods categories: production practices particular to the (21) Ozone (1) Synthetic substances allowed for State which necessitate more restrictive (22) Pectin (low-methoxy) use in organic crop or livestock requirements than the requirements of (23) Phosphoric Acid—cleaning of production; this part, and other information as may food-contact surfaces and equipment (2) Nonsynthetic substances be required by the Secretary. only prohibited for use in organic crop or (2) Submission of a request for (24) Potassium Acid Tartrate livestock production; or amendment of an approved State (25) Potassium Tartrate made from organic certification program must Tartaric acid (3) Nonagricultural substances contain supporting material that (26) Potassium Carbonate allowed for use as ingredients in or on includes an explanation and (27) Potassium Citrate processed products labeled as ‘‘organic’’ documentation of the unique (28) Potassium Hydroxide— or ‘‘made with organic (specified environmental or ecological conditions prohibited for use in lye peeling of fruits ingredients).’’ or specific production practices and vegetables State Programs particular to the State or region, which (29) Potassium Iodide—for use only in necessitates the proposed amendment. agricultural products labeled ‘‘made § 205.620 Requirements of State organic Supporting material also must explain with organic (specified ingredients),’’ certification programs. how the proposed amendment furthers prohibited in agricultural products (a) A State may establish a State and is consistent with the purposes of labeled ‘‘organic’’ organic certification program for the Act and the regulations of this part. (30) Potassium Phosphate—for use production and handling operations (b) Within 6 months of receipt of only in agricultural products labeled within the State which produces and submission, the Secretary will: ‘‘made with organic (specific handles organic agricultural products. (1) Publish in the Federal Register for ingredients),’’ prohibited in agricultural (b) A State organic certification public comment, a summary of a products labeled ‘‘organic’’ program must meet the general proposed State organic certification (31) Silicon Dioxide requirements for organic programs program, and a summary of any (32) Sodium Citrate specified in the Act and be at least proposed amendment to such program. (33) Sodium Hydroxide—prohibited equivalent to the regulations in this (2) After review of materials and for use in lye peeling of fruits and part. documentation accompanying the vegetables proposal and consideration of (34) Sodium Phosphates—for use only (c) A State organic certification program may contain more restrictive comments received, notify the State in dairy foods program’s governing State official of (35) Tocopherols—derived from requirements based on unique environmental conditions or specific approval or disapproval of the proposed vegetable oil when rosemary extracts are program or amendment of an approved not a suitable alternative production or handling practices particular to the State or region of the program and, if disapproved, the (36) Xanthan gum reasons for the disapproval. (c)–(z) [Reserved] United States, which necessitates the more restrictive requirement. Such (c) After receipt of a notice of § 205.606 Nonorganically produced additional requirements must further disapproval, the State program’s agricultural products allowed as ingredients the purposes and be consistent with the governing State official may resubmitt a in or on processed products labeled as Act and regulations in this part. revised State organic certification organic or made with organic ingredients. program or amendment of such a (d) A State organic certification Any nonorganically produced program at any time. program must assume enforcement agricultural product may be used in obligations in the State for the accordance with any restrictions § 205.622 Review of approved State requirements of this part and any more organic certification programs. specified in this section and § 205.102, restrictive requirements approved by the § 205.270, and § 205.300 through The Secretary will review a State Secretary. § 205.310. organic certification program not less (e) A State organic certification than once during each 5-year period § 205.607 Amending the National List. program and any amendments to such following the date of the initial program (a) Any person may petition the program must be approved by the approval. The Secretary will notify the National Organic Standard Board for the Secretary prior to being implemented by State program’s governing State official purpose of having a substance evaluated the State. of approval or disapproval of the

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Fees travel tolls, if applicable, or such travel (b) Payments for fees and other § 205.640 Fees and other charges for prorated among all the applicants and charges not covered under paragraph (a) accreditation. certifying agents furnished the service of this section must be: Fees and other charges equal as nearly involved on an equitable basis or, where (1) Received by the due date shown as may be to the cost of the accreditation the travel is made by public on the bill for collection; services rendered under the regulations, transportation (including hired (2) Made payable to the Agricultural including initial accreditation, review of vehicles), a fee equal to the actual cost Marketing Service, USDA; and annual reports, and renewal of thereof. Travel charges shall become (3) Mailed to the address provided on accreditation, shall be assessed and effective for all applicants for initial the bill for collection. collected from applicants for initial accreditation and accredited certifying (c) The Administrator shall assess accreditation and accredited certifying agents on the effective date of subpart F interest, penalties, and administrative agents submitting annual reports or of this part. The applicant or certifying costs on debts not paid by the due date seeking renewal of accreditation in agent will not be charged a new mileage shown on a bill for collection and accordance with the following rate without notification before the collect delinquent debts or refer such provisions. service is rendered. debts to the Department of Justice for (c) Per diem charges. When service is (a) Fees-for-Service. litigation. requested at a place away from the (1) Except as otherwise provided in evaluator’s headquarters, the fee for § 205.642 Fees and other charges for this section, fees-for-service shall be such service shall include a per diem certification. based on the time required to render the charge if the employee(s) performing the Fees charged by a certifying agent service provided calculated to the service is paid per diem in accordance must be reasonable, and a certifying nearest 15-minute period, including the with existing travel regulations. Per agent shall charge applicants for review of applications and diem charges to applicants and certification and certified production accompanying documents and certifying agents will cover the same and handling operations only those fees information, evaluator travel, the period of time for which the evaluator(s) and charges that it has filed with the conduct of on-site evaluations, review of receives per diem reimbursement. The Administrator. The certifying agent annual reports and updated documents per diem rate will be administratively shall provide each applicant with an and information, and the time required determined by the Department. Per estimate of the total cost of certification to prepare reports and any other diem charges shall become effective, for and an estimate of the annual cost of documents in connection with the all applicants for initial accreditation updating the certification. The certifying performance of service. The hourly rate and accredited certifying agents on the agent may require applicants for shall be the same as that charged by the effective date of subpart F of this part. certification to pay at the time of Agricultural Marketing Service (AMS), The applicant or certifying agent will application a nonrefundable fee of no through its Quality Systems not be charged a new per diem rate more than $250.00, which shall be Certification Program, to certification without notification before the service is applied to the applicant’s fees-for- bodies requesting conformity rendered. service account. The certifying agent assessment to the International (d) Other costs. When costs, other shall provide all persons inquiring Organization for Standardization than costs specified in paragraphs (a), about the application process with a ‘‘General Requirements for Bodies (b), and (c) of this section are associated copy of its fee schedule. Operating Product Certification with providing the services, the §§ 205.643Ð205.649 [Reserved] Systems’’ (ISO Guide 65). applicant or certifying agent will be (2) Applicants for initial accreditation charged for these costs. Such costs Compliance and accredited certifying agents include, but are not limited to, § 205.660 General. submitting annual reports or seeking equipment rental, photocopying, renewal of accreditation during the first delivery, facsimile, telephone, or (a) The National Organic Program’s 18 months following the effective date translation charges incurred in Program Manager, on behalf of the of subpart F of this part shall receive association with accreditation services. Secretary, may inspect and review service without incurring an hourly The amount of the costs charged will be certified production and handling charge for service. determined administratively by the operations and accredited certifying (3) Applicants for initial accreditation Department. Such costs shall become agents for compliance with the Act or and renewal of accreditation must pay effective for all applicants for initial regulations in this part. at the time of application, effective 18 accreditation and accredited certifying (b) The Program Manager may initiate months following the effective date of agents on the effective date of subpart F suspension or revocation proceedings subpart F of this part, a nonrefundable of this part. against a certified operation: fee of $500.00 which shall be applied to (1) When the Secretary has reason to the applicant’s fees-for-service account. § 205.641 Payment of fees and other believe that a certified operation has (b) Travel charges. When service is charges. violated or is not in compliance with requested at a place so distant from the (a) Applicants for initial accreditation the Act or regulations in this part. evaluator’s headquarters that a total of and renewal of accreditation must remit (2) When a certifying agent or a State one-half hour or more is required for the the nonrefundable fee, pursuant to program’s governing State official fails evaluator(s) to travel to such place and § 205.640(a)(3), along with their to take appropriate action to enforce the back to the headquarters or at a place of application. Remittance must be made Act or regulations in this part; or prior assignment on circuitous routing payable to the Agricultural Marketing (c) The Program Manager may initiate requiring a total of one-half hour or Service, USDA, and mailed to: Program suspension or revocation of a certifying more to travel to the next place of Manager, USDA–AMS–TMP–NOP, agent’s accreditation if the certifying assignment on the circuitous routing, Room 2945–South Building, PO Box agent fails to meet, conduct, or maintain

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Any agreement complaints of noncompliance with the (3) The impact of a suspension or reached during or as a result of the Act or regulations of this part revocation on future eligibility for mediation process shall be in concerning production and handling certification; and compliance with the Act and these operations certified as organic by the (4) The right to request mediation regulations. The Secretary may review certifying agent. A certifying agent must pursuant to § 205.663 or to file an any mediated agreement for conformity notify the Program Manager of all appeal pursuant to § 205.681. to the Act and these regulations. compliance proceedings and actions (d) Willfull violations. taken pursuant to this part. Notwithstanding paragraph (a) of this § 205.664 [Reserved] (b) A State program’s governing State section, if a certifying agent or State § 205.665 Noncompliance procedure for official may investigate complaints of program’s governing State official has certifying agents. noncompliance with the Act or reason to believe that a certified regulations in this part concerning operation has willfully violated the Act (a) Noncompliance. When an organic production or handling or regulations in this part, the certifying inspection, review, or investigation of operations operating in the State. agent or State program’s governing State an accredited certifying agent by the official shall send the certified operation Program Manager reveals any § 205.662 Noncompliance procedure for noncompliance with the Act or certified operations. a notification of proposed suspension or revocation of certification of the entire regulations in this part, a written (a) Notification. When an inspection, operation, or a portion of the operation, notification of noncompliance shall be review, or investigation of a certified as applicable to the noncompliance. sent to the certifying agent, as operation by a certifying agent or a State (e) Suspension or revocation. applicable. Such notification shall program’s governing State official (1) If the certified operation fails to provide: reveals any noncompliance with the Act correct the noncompliance, to resolve (1) A description of each or regulations in this part, a written the issue through rebuttal or mediation, noncompliance found; notification of noncompliance shall be or to file an appeal of the proposed (2) The facts upon which the sent to the certified operation. Such suspension or revocation of notification of noncompliance is based; notification shall provide: certification, the certifying agent or and (1) A description of each State program’s governing State official (3) The date by which the certifying noncompliance; shall send the certified operation a agent must rebut or correct each (2) The facts upon which the written notification of suspension or noncompliance when correction is notification of noncompliance is based; revocation. possible. and (2) A certifying agent or State (b) Resolution. When each (3) The date by which the certified program’s governing State official must noncompliance has been resolved, the operation must rebut or correct each not send a notification of suspension or Program Manager shall send the noncompliance and submit supporting revocation to a certified operation that certifying agent a written notification of documentation of each such correction has requested mediation pursuant to noncompliance resolution. when correction is possible. § 205.663 or filed an appeal pursuant to (c) Proposed suspension or (b) Resolution. When a certified § 205.681. revocation. If rebuttal is unsuccessful or operation demonstrates that each (f) Ineligibility. A certified operation if correction of the noncompliance is noncompliance has been resolved, the or a person responsibly connected with not made within the prescribed time certifying agent or the State program’s an operation whose certification has period or is not adequate to demonstrate governing State official, as applicable, been revoked will not be eligible to that each noncompliance has been will send the certified operation a receive certification for a period of not corrected, the Program Manager shall written notification of noncompliance more than 5 years following the date of send a written notification of proposed resolution. such revocation, as determined by the suspension or revocation of (c) Proposed suspension or Secretary. accreditation to the certifying agent. The revocation. When rebuttal is notification of proposed suspension or unsuccessful or correction of the § 205.663 Mediation. revocation shall state whether the noncompliance is not completed within Any dispute with respect to proposed certifying agent’s accreditation or the prescribed time period or is not suspension or revocation of certification specified areas of accreditation are to be adequate to demonstrate that each under this part shall, at the request of suspended or revoked. When correction noncompliance has been corrected, the the applicant for certification or of a noncompliance is not possible, the certifying agent or State program’s certified operation, be mediated by a notification of noncompliance and the governing State official shall send the qualified mediator mutually agreed proposed suspension or revocation may certified operation a written notification upon by the parties to the mediation. If be combined in one notification. The of proposed suspension or revocation of a State Program is in effect, the notification of proposed suspension or certification of the entire operation or a mediation procedures established in the revocation of accreditation shall state: portion of the operation, as applicable to State Program, as approved by the (1) The reasons for the proposed the noncompliance. When correction of Secretary, will be followed. Mediation suspension or revocation; a noncompliance is not possible, the shall be requested in writing to the (2) The proposed effective date of the notification of noncompliance and the applicable certifying agent. The parties suspension or revocation; proposed suspension or revocation of to the mediation shall have no more (3) The impact of a suspension or certification may be combined in one than 30 days to reach an agreement revocation on future eligibility for notification. The notification of following a mediation session. If accreditation; and

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(4) The right to file an appeal State may be appealed to the United presence of contaminants in agricultural pursuant to § 205.681. States District Court for the district in products. (d) Willfull violations. which such certified operation is (d) Results of all analyses and tests Notwithstanding paragraph (a) of this located. performed under this section: section, if the Program Manager has (c) A State program’s governing State (1) Must be provided to the reason to believe that a certifying agent official may review and investigate Administrator promptly upon receipt; has willfully violated the Act or complaints of noncompliance with the and regulations in this part, the Program Act or regulations concerning (2) Will be available for public access, Manager shall send a written accreditation of certifying agents unless the testing is part of an ongoing notification of proposed suspension or operating in the State. When such compliance investigation. revocation of accreditation to the review or investigation reveals any § 205.671 Exclusion from organic sale. noncompliance, the State program’s certifying agent. (a) When residue testing detects (e) Suspension or revocation. When governing State official shall send a written report of noncompliance to the prohibited substances at levels that are the accredited certifying agent fails to greater than the estimated national file an appeal of the proposed Program Manager. The report shall provide a description of each mean of detected residues for specific suspension or revocation of commodity/pesticide pairs, as accreditation, the Program Manager noncompliance and the facts upon which the notification of demonstrated by USDA’s Pesticide Data shall send a written notice of Program, or unavoidable residual noncompliance is based. suspension or revocation of environmental contamination, as accreditation to the certifying agent. § 205.669 [Reserved] determined by the Administrator, the (f) Cessation of certification activities. agricultural product must not be sold, A certifying agent whose accreditation Inspection and Testing, Reporting, and labeled, or represented as organically is suspended or revoked must: Exclusion from Sale produced. The Administrator, the (1) Cease all certification activities in § 205.670 Inspection and testing of applicable State program’s governing each area of accreditation which its agricultural product to be sold or labeled State official, or the certifying agent may accreditation is suspended or revoked. organic. conduct an investigation of the certified (2) Transfer to the Secretary and make (a) All agricultural products that are operation to determine the cause of the available to any applicable governing to be sold, labeled, or represented as prohibited substance residue. State official all records concerning its ‘‘100 percent organic,’’ ‘‘organic,’’ or (b) If test results indicate a specific certification activities that were ‘‘made with organic (specified agricultural product contains pesticide suspended or revoked. ingredients)’’ must be made accessible residues or environmental contaminants (g) Eligibility. by certified organic production or that exceed the Food and Drug (1) A certifying agent whose handling operations for examination by Administration’s or the Environmental accreditation is suspended by the the Administrator, the applicable State Protection Agency’s regulatory Secretary under this section may at any program’s governing State official, or the tolerances, the data must be reported time submit a new request for certifying agent. promptly to the appropriate public accreditation, pursuant to § 205.502. (b) The Administrator, applicable health agencies. The request must be accompanied by State program’s governing State official, § 205.672 Emergency pest or disease evidence demonstrating correction of or the certifying agent may require each noncompliance and corrective treatment. preharvest or postharvest testing of any When a prohibited substance is actions taken to comply with and agricultural input used or agricultural remain in compliance with the Act and applied to a certified operation due to product to be sold, labeled, or Federal or State emergency pest the regulations in this part. represented as ‘‘100 percent organic,’’ (2) A certifying agent whose eradication or disease treatment ‘‘organic,’’ or ‘‘made with organic program and the certified operation accreditation is revoked by the Secretary (specified ingredients)’’ when there is shall be ineligible to be accredited as a otherwise meets the requirements of this reasonable cause to believe that the part, the certification status of the certifying agent under the Act and the agricultural input or product has come regulations in this part for a period of operation shall not be affected as a into contact with a prohibited result of the application of the not less than 3 years following the date substance. Such tests must be of such revocation. prohibited synthetic substance: conducted by the applicable State Provided, That: §§ 205.666 and 205.667 [Reserved] program’s governing State official or the (a) Any harvested crop or plant part certifying agent at the official’s or to be harvested that has contact with a § 205.668 Noncompliance procedures certifying agent’s own expense. prohibited substance applied as the under State organic certification programs. (c) The preharvest or postharvest result of a Federal or State emergency (a) A State program’s governing State tissue test sample collection pursuant to pest eradication or disease treatment official must promptly notify the paragraph (b) of this section must be program cannot not be sold, labeled, or Secretary of commencement of any performed by an inspector representing represented as organically produced; enforcement proceeding against a the Administrator, certifying agent, or and certified operation and forward to the applicable State program’s governing (b) Any livestock that are treated with Secretary a copy of each notice issued. State official. Sample integrity must be a prohibited substance applied as the (b) A noncompliance proceeding, maintained in transit, and residue result of a Federal or State emergency brought by a State program’s governing testing must be performed in an pest or disease treatment program or State official against a certified accredited laboratory. Chemical analysis product derived from such treated operation, shall be appealable pursuant must be made in accordance with the livestock cannot be sold, labeled, or to the appeal procedures of the State methods described in the 16th edition of represented as organically produced: organic certification program. There the Official Methods of Analysis of the Except, That: shall be no subsequent rights of appeal AOAC International or other applicable (1) Milk or milk products may be sold, to the Secretary. Final decisions of a validated methodology determining the labeled, or represented as organically

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Merrigan, continue its accreditation, as applicable Administrator, Agricultural Marketing prohibited substance may be considered to the operation. organic: Provided, That, the breeder Service. stock was not in the last third of (2) If the Administrator denies an gestation on the date that the breeder appeal, a formal administrative Appendices to the Preamble stock was treated with the prohibited proceeding to deny, suspend, or revoke substance. the accreditation will be initiated. Such Appendix A.—Regulatory Impact proceeding shall be conducted pursuant Assessment for Proposed Rules §§ 205.673Ð205.679 [Reserved] to the Department’s Uniform Rules of Implementing the Organic Foods Production Act of 1990 (Executive Order 12866) Adverse Action Appeal Process Practice. The following regulatory assessment is § 205.680 General. (c) An appeal of a noncompliance provided to fulfill the requirements of decision must be filed within the time Executive Order 12866. This assessment Persons subject to the Act who believe period provided in the letter of consists of a statement of the need for the they are adversely affected by a notification or at least 30 days from the proposed action, a description of the baseline noncompliance proceeding decision of receipt of the notification. The appeal for the analysis, an examination of alternative the National Organic Program’s Program approaches, and an analysis of the benefits will be considered ‘‘filed’’ on the date Manager or a certifying agent may and costs. Much of the analysis is necessarily appeal such decision to the received by the Administrator or by the descriptive of the anticipated effects of the Administrator. State program’s governing State official proposed rule. Because basic market data on or such official’s designee as provided the prices and quantities of organic goods § 205.681 Appeals. in the State’s approved appeal and services and the costs of organic procedures. A decision to deny, production are limited, it is not possible to (a) Certification appeals. An applicant provide quantitative estimates of all benefits for certification may appeal a certifying suspend, or revoke certification or and costs of the proposed rule. The cost of agent’s notice of denial of certification, accreditation will become final and fees and recordkeeping proposed by U.S. and a certified operation may appeal a nonappealable unless the decision is Department of Agriculture (USDA) are certifying agent’s notification of appealed in a timely manner. quantified, but the anticipated benefits are not. Consequently, the analysis does not proposed suspension or revocation of (d) All appeals to the Administrator certification to the Administrator: estimate the magnitude or the direction must be filed in writing and addressed (positive or negative) of net benefits. Except, That, when the applicant or to Administrator, USDA–AMS, Room certified operation is subject to an 3071–S, PO Box 96456, Washington, DC The Need for the Proposed Action approved State organic certification 20090–6456, and be copied to the The Organic Foods Production Act of 1990, program and the decision to deny, certifying agent completely and Title XXI of the Food, Agriculture, suspend, or revoke a certification is Conservation and Trade Act of 1990, U.S.C. made by a certifying agent or a State simultaneously with submission to the Title 7, mandates that the Secretary of program’s governing State official, the Administrator. Appeals must include a Agriculture develop a national organic appeal must be made to the State copy of the adverse decision and a program. The OFPA states that the Secretary program’s governing State official or statement of the appellant’s position shall establish an organic certification program for farmers, wild-crop harvesters, such official’s designee who will carry that the decision was not made in accordance with applicable program and handlers of agricultural products that out the appeal pursuant to the State have been produced using organic methods program’s appeal procedures approved regulations, policies, or procedures. as provided for in the OFPA. In addition, by the Secretary. section 6514 of the OFPA requires the §§ 205.682Ð205.689 [Reserved]. (1) If the Administrator sustains a Secretary to establish and implement a certification applicant’s or certified Miscellaneous program to accredit a State program’s operation’s appeal of a certifying agent’s governing State official or any private person, § 205.690 OMB control number. who meets the requirements of the Act, as a decision, the applicant will be issued certifying agent to certify that farm, wild-crop organic certification, or a certified The control number assigned to the harvesting, or handling operations are in operation will continue its certification, information collection requirements by compliance with the standards set out in the as applicable to the operation. The act the Office of Management and Budget regulation. As stated by the OFPA in section of sustaining the appeal shall not be an pursuant to the Paperwork Reduction 6501, the regulations are proposed for the following purposes: (1) to establish national adverse action subject to appeal by the Act of 1980, Public Law 96–511, is OMB affected certifying agent. standards governing the marketing of certain number 0581–0181. agricultural products as organically produced (2) If the Administrator denies an products; (2) to assure consumers that appeal, a formal administrative organically produced products meet a proceeding will be initiated to deny, consistent standard; and (3) to facilitate suspend, or revoke the certification. interstate commerce in fresh and processed Such proceeding shall be conducted food that is organically produced. pursuant to the Department’s Uniform The OFPA was introduced at the request of Rules of Practice. the organic community after it experienced a (b) Accreditation appeals. An number of problems in the marketing of organic products. Many consumers are applicant for accreditation and an willing to pay price premiums for organic accredited certifying agent may appeal a food; hence, producers (farmers, ranchers, Program Manager’s denial of and wild-crop harvesters) and handlers have accreditation or proposed suspension or an economic incentive to label their products

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Where producers operate in States with no program developed standards for livestock there has been no mandatory certification, and voluntarily secure third party production. consumers have been unable to verify organic certification to well-defined standards. The provisions of the New Hampshire product claims on their own, and may have Certification costs vary with farm size and organic program are summarized below to been vulnerable to fraud from the mislabeling across certifying agents. Illustrative illustrate key elements of current organic of organic products. certification costs are presented in Tables 2A standards. The New Hampshire program As organic production became better and 2B. provisions are not substantially different established in the 1980’s, new certifying Very few certifying agents operate with an from provisions in some State programs, agencies were formed, and some States external accreditation. There is no law which private programs, and mirror provisions of passed laws establishing standards for requires them to be accredited: The price USDA’s proposed national program. Soil organic production. However, the standards may be unacceptably high in relation to tests are required for initial certification and for organic production, processing, handling, expected benefits; the certifying agent may be every three years afterward. Soil testing and labeling were different to some degree, unable to find an accrediting party willing to measures the quality of the soil for causing disagreements between certifying accredit the particular organic program the agricultural production and is different from agents over whose standards would apply to certifying agent is marketing; and State residue testing. New Hampshire requires ingredients used in multi-ingredient organic programs may believe that their status as a residue testing ‘‘if the department believes processed products. Disagreements about government entity obviates the need for that the produce or soil which certified standards also created sourcing problems for external accreditation. produce was grown may have become handlers of these multiingredient products. In 1999 USDA began verifying certifying contaminated with prohibited substances.’’ Certifying agents are able to negotiate and agents to International Organization for (New Hampshire Rule AGR 906 Certification maintain reciprocity agreements at some cost. Standardization (ISO) Guide 65. It is a of Organically Grown Food, Agr 906.05 These reciprocity agreements specify the valuable recognition that the certifying entity Laboratory Analysis) Other production conditions under which certifying agents satisfies the business capacity standards of standards include a written rotation plan, recognize each others’ standards. The current ISO Guide 65. European Union authorities tillage systems that incorporate organic system of variable standards has led the have accepted verification of certifying matter wastes into the topsoil, compliance organic industry to take on costs of private agents to ISO Guide 65 as an interim measure with limits on the sources of manure and the accreditation or shipment-by-shipment to facilitate exports pending the timing of its application, prohibitions on the certification, required to gain access to some establishment of a national organic program. use of certain substances (e.g., sewage sludge, synthetic sources of nitrates, synthetic foreign markets such as the European Union Organic Food Production (EU). These costs would be avoided if a growth regulators, and anhydrous ammonia), national program were in place. Organic production occurs in all States. An a list of accepted and prohibited weed and estimated 12,000 organic producers are pest control practices, segregation of organic Baseline operating in the United States. Most organic and nonorganic production, record keeping The organic industry is characterized by an producers are small both in terms of value of regarding fertilization, cropping, and pest array of production and handling practices, sales and acreage. Small producers do not management histories, separate sales records self regulation and state regulation, and necessarily farm full-time, and may not for organic and nonorganic production, and consumer perceptions. However, there are depend solely on farm income for a records of all laboratory analyses. commonalities throughout the industry. livelihood. Some organic production occurs The New Hampshire program requires as a distinct part of a larger operation that growers to pay a $100 annual inspection fee, Certification includes conventional production practices. and to provide a written description of their The United States currently has 49 Key production practices followed by farm operation including the size of the farm, certifying agents. There are 36 private certified organic producers include: a field map, a three-year history of crop certifying agencies and 13 States which have abstaining from use of certain crop chemicals production, pest control, and fertilizer use, a certification programs. Private certifying and animal drugs; ecologically based pest crop rotation and a soil management plan, agents range from small nonprofit and nutrient management; segregation of and a description of post-harvest storage and associations that certify only a few growers organic fields and animals from nonorganic handling methods. Applicants for to large for-profit businesses operating in fields and animals; following an organic certification must also agree to comply with numerous States and certifying hundreds of production plan with multiple goals, regulations controlling the use of the New producers. Typically, certifying agents including sustainability; and record keeping Hampshire certified organic logo. review producers’ organic production plans, to document practices and progress toward inspect the farm fields and facilities to be the plan’s goals. Specific elements of organic Organic Food Handling certified, periodically reinspect, and may production will vary, but organic systems In addition to growers, who actually conduct soil tests and tests for residues of generally share a core set of practices. For produce and harvest products to be marketed prohibited substances. In some cases, example, the certification standards of as organic, there are handlers who transform certifying agents negotiate reciprocity virtually all State and private U.S. certifying and resell the organic products. Not all agreements with other agents. agents prohibit the use synthetic chemical certifying agents have standards for handling State laws vary widely on organic herbicides and insecticides or animal growth organic products. Some have standards for certification and registration. Some States hormones. And most certification standards parts of the food marketing system, such as require only that an organic producer register include a three year ban on the use of retail food establishments, that are not and make certification voluntary. California prohibited substances on cropland before explicitly covered by the OFPA or by the is an example. Other States require production can be certified as organic. proposed regulation. certification by the State’s own agents, while On the other hand, certification standards Definitions of processing and handling others accept certification by a private for organic livestock production have been differ across certifying agents and State laws. certifying agent. The least stringent more variable, for pasture, feed, and other Some States, such as Washington, distinguish requirement among States with organic practices. Until 1999, the USDA Food Safety between a processor and a handler, legislation is that products marketed as and Inspection Service (FSIS) withheld specifying 21 actions which constitute organic comply with their definition of approval for the use of organic labels on meat processing and defining a handler as anyone organic but both registration and certification and poultry products pending the outcome of who sells, distributes, or packs organic are voluntary. Approximately half of the this rulemaking. However, the Secretary products. Washington does not consider States have laws which regulate organic announced a change in policy in January retail grocery stores and restaurants to be production and processing. Thirteen States 1999. Meat and poultry products may be organic handlers or processors.

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Marketing of Organic Food—Domestic and announced proposed standards and third- will be established by the accredited International party certification requirements. Under certifying agents. USDA will not set fees. The The marketing practices of organic Japan’s proposed standards, certifying agents rule requires certifying agents to submit a producers range from roadside stands from countries without national organic copy of their fee schedules to USDA, post marketing directly to consumers, to standards administered by a federal their fees, and provide applicants estimates marketing through wholesale markets, to government will have to be accredited of the costs for initial certification and for direct marketing to restaurants and (registered) with MAFF to obtain approval to renewal of certification. certify products destined for the Japanese supermarkets. USDA does not have official Production and Handling national level statistics on organic retail market. The Japanese proposal includes sales. An industry trade publication reported provisions for country-to-country The rule establishes standards for organic equivalency recognition of other national estimates of retail sales of organic foods for production of crops and livestock and programs. a number of years in the 1990’s (Table 1). The handling of organic products. These standards were developed from specific last published estimate was $3.5 billion in The Proposed Rule requirements in the OFPA, recommendations 1996 ($3.6 billion in 1998 dollars). To put The proposed rule follows the structure this figure in context, total food expenditures from the National Organic Standards Board established in the OFPA. By adopting this (NOSB), review of existing organic industry by families and individuals were $606 billion alternative, the Department would follow in 1996 ($629 billion in 1998 dollars). practices and standards, public comments legislative direction in the OFPA. All received on the 1997 proposal and The United States is both an importer and products marketed as organic will have to be an exporter of organic foods. The United subsequent issue papers, and public produced and handled as provided in the meetings. States does not restrict imports of organic OFPA and the regulations. Compared to foods. In fact, U.S. Customs accounts do not The proposed rule establishes a number of current organic practices, the proposed rule requirements for producers and handlers of distinguish between organic and sets a more stringent system of requirements. conventional products. The largest markets organic food. These requirements will affect for organic foods outside the United States Accreditation and Certification farming operations, packaging operations, are in Europe, Japan, and Canada. There is processing operations and retailers. Some of The rule specifies the accreditation and the major provisions are: (1) Land increasing pressure, particularly in Europe certification process. Persons providing and Japan, for U.S. exports to demonstrate requirements; (2) crop nutrient requirements; certification of organic production and (3) crop rotation requirements; (4) pest that they meet a national standard rather than handling must be accredited by USDA a variety of private and State standards. management requirements; (5) livestock through the NOP. Applicants for management requirements; (6) processing The EU is the largest market for organic accreditation must document their abilities to food outside the United States. The organic and handling requirements; and (7) certify according to the national standards commingling requirements. food market in the EU was estimated to be and to oversee their clients’ compliance with worth $5.2 billion in 1997 (International the requirements of the OFPA and NOP National List Trade Centre UNCTAD/WTO 1999). The regulations. Producers and handlers of The National List lists allowed synthetic largest organic retail sales markets in the EU organic products must be certified by an substances and prohibited non-synthetic in 1997 were Germany ($1.8 billion), France accredited certifying agent. Producers and substances that may or may not be used in ($720 million), and Italy ($750 million). handlers are required to document their organic production and handling operations. Large organic markets outside the EU include organic plans and procedures to ensure The list identifies those synthetic substances, Canada and Australia, with approximately compliance with the OFPA. which would otherwise be prohibited, that $60 million and $68 million, respectively, in All certifying agents would have to be may be used in organic production based on organic retail sales in 1997 (Lohr 1998). accredited, and certification by producers the recommendations of the NOSB. Only Import share of the organic food market in and handlers would not be voluntary. The those substances on the National List may be Europe ranged from 10 percent in France to exceptions are: (1) Growers and handlers used. The National List also identifies those 70 percent in the United Kingdom, was 80 with gross organic sales of $5,000 or less natural substances that may not be used in percent in Canada, and varied from 0 to 13 would be exempt from certification; and (2) organic production, as determined by the percent in various Australian states. a handling operation may be exempt or Secretary based on the NOSB Japan is another important market for U.S. excluded from certification according to recommendations. organic products. Currently, Japan has provisions described in the rule’s subpart B, voluntary labeling guidelines for 6 categories Applicability. For example, a handling Testing of non-conventional agricultural products: operation that is a retail food establishment When certifying agents have reason to organic, transitional organic, no pesticide, or portion of a retail food establishment believe organic products contain a prohibited reduced pesticide, no chemical fertilizer, and would be exempt if it handles organically substance, they may conduct residue tests. reduced chemical fertilizer. Total sales, produced agricultural products but does not The rule incorporates the national mean of including foods marketed as ‘‘no chemical,’’ process them, and would be excluded from detected residues for specific commodity/ and ‘‘reduced chemical’’ are forecast to jump the requirement to be certified if it processes pesticide pairs and clarifies how unavoidable 15 percent in 1999 to almost $3 billion. or prepares, on the premises of the retail food residual environmental contamination would Imports of organic agricultural products were establishment, raw and ready-to-eat-food be used in residue testing. valued at $90 million in 1998. Given Japan’s from agricultural products that are previously limited agricultural acreage, imports will labeled as ‘‘100 percent organic,’’ ‘‘organic,’’ Labeling likely provide an increasingly significant or ‘‘made with organic (specified The rule also states how organic products share of Japan’s organic food supply (USDA ingredients).’’ However, this exemption does may be labeled and permitted uses of the FAS 1999a). not extend to other provisions of the USDA organic seal. In addition to the USDA Recently, these markets have adopted or proposed rule such as prevention of contact seal and the certifying agent’s seal, are considering to adopt procedures that may with prohibited substances. information on organic food content may be impede the importing of organic food. The USDA will charge applicants for displayed. It is important to note that small EU regulations establishing the basis for accreditation a $500 fee at the time of businesses who are certified may use the equivalency in organic production among EU application. USDA will also charge USDA seal. members and for imports from outside the applicants for costs over $500 for site EU were adopted in 1991 (Council evaluation of the applicant’s business. The Recordkeeping Regulation 2092/91). The EU regulations only applicant would be charged for travel costs, The rule will require certifying agents, allow imports from non-EU countries whose per diem expenses, and any miscellaneous producers, and handlers to keep certain national standards have been recognized as costs incurred with a site evaluation. Review records. Certifying agents will be required to equivalent to the EU standards (Commission of documents for renewal of accreditation file periodic reports with USDA. Producers Regulation 94/92). will be charged at an hourly rate. and handlers will be required to notify and The Ministry of Agriculture, Forestry, and Producers and handlers will not pay submit reports to their certifying agent. While Fisheries (MAFF) in Japan recently certification fees to USDA. Certification fees recordkeeping is a standard practice in

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The list of growth in trade of organic products, although requirements, particularly those certifying allowed and prohibited substances mirrors the magnitude of these costs and their effects agents operating without external the list developed by the NOSB. Production on growth is unknown. accreditation. State and private certifying practices for crops and livestock include the Under the proposed national program, all agents regulate the use of organic seals and common features in most State and private applicants for accreditation will be assessed logos. The proposed rule permits certifying programs—a 3 year transition, no against ISO Guide 65, eliminating the need agent logos and requires the name of the commingling, use of organic feed, limits on for a separate ISO Guide 65 assessment that certifying agent on processed organic foods. the use of antibiotics, requirements for an exists for those exporting to the EU in the organic plan and recordkeeping. Hence, even absence of a national program. Growth in the Alternatives to the Proposed Rule in the absence of a national program, the trade of organic products, particularly As required by E.O. 12866, alternatives to organic industry may be moving toward a exports, may be jeopardized by a status quo- the proposed rule were considered. The common standard. no program alternative because there would identified alternatives were the Status Quo Under the status quo-no national program be no national program upon which to and Industry-Developed Standards. The costs alternative, producers and handlers who establish equivalency. and benefits of each alternative were assessed chose to be certified, or who are required by Industry-Developed Standards to the extent possible. State laws to be certified, would pay fees that would vary depending on the market for the As an alternative to the proposed national Status Quo: The Organic Market in the particular private certifying agent’s service program, another national program could Absence of Federal Regulation and whether a State certification program adopt industry-developed standards. For This is the no program alternative. There was operating with subsidized fees. example, USDA could adopt the standards would be no national standard or national No federal funds would be used, there recently developed by the Organic Trade program of accreditation and certification. would be no transfer from federal taxpayers Association or other consensus standards and Certification would be voluntary and at large to organic market participants, and enforce those standards. Certification to these certifying agents would not have third party there would be no federal regulatory barriers standards could be performed as it is accreditation. Some producers and handlers to entry into organic production and currently, by private certifiers or by state would operate with certification provided by handling. programs. There could be variation among private organizations or State programs. International access for domestic organic certifiers’ standards, but producers and Other producers and handlers would products may be very influential on certifiers would not be able to prohibit use characterize their foods as organic but would development of the organic industry in the of a product meeting the national standard not be certified. United States. A food trade publication (The from the production of other ‘‘organic’’ products. A mix of State and private programs may Natural Foods Merchandiser) tracked organic There are various enforcement mechanisms continue to operate according to varying sales for a while in the 1990s showing annual that are available under this alternative. The standards. In States without organic laws or growth in retail sales of 20–25 percent USDA could choose to enforce the adopted States where certification is voluntary, goods between 1990 and 1996 (Table 1). This standards. Enforcement could be left to other would be marketed as organic without third growth took place in the absence of a federal agencies or State governments. For party certification. Even under this scenario, national program. example, the Federal Trade Commission organic food produced in States with In the absence of national standards, U.S. could regulate truth in advertising with production standards and certification may organic producers have been able to access respect to organic food; the USDA Food be produced using similar practices because European markets only by obtaining specific Safety Inspection Service could regulate most State standards follow similar product permissions granted to individual labeling of organic meat and poultry requirements: A 3 year transition, prohibited importers by organic regulatory authorities in products. use of certain substances (lists of substances an EU member state (Byng, p. 27–28 1994). Adopting the industry standard as the tend to overlap), practices which prevent This process has required the importer to USDA standard, the USDA could provide an commingling with conventional products, satisfy the authorities, through acceptable national standard that would be and where livestock standards exist, organic documentation and possible site inspection, necessary in establishing equivalency to feed. that the product in question has been access international organic markets, and In addition, at the time the OFPA was certified to and produced under equivalent eliminate the problems associated with enacted, the industry had been unable to standards of production and inspection. This establishing reciprocity in the domestic agree on organic standards. Recently, there case-by-case process of approving imports organic market. has been movement toward shared standards was intended as a temporary arrangement to It is important to note that it may be partly in response to efforts to develop accommodate non-EU countries that had not difficult to develop consensus industry national organic standards including the yet established government systems standards. For example, while standards 1997 proposal and the public NOSB process. regulating organic production and recently proposed by OTA were developed The Organic Trade Association (OTA) has certification. Another step State and private with significant industry input they may not developed ‘‘American Organic Standards’’ organic certifying agencies have taken to represent the kind of consensus that is the which the OTA Board recently ratified. The access international markets in the absence of result of this proposed rule. OTA describes itself as ‘‘ * * * a national a national program has been a voluntary, fee- association representing the organic industry for-service program to verify that they Number of Affected Parties and Projections in Canada, the United States and Mexico. comply with the requirements prescribed In assessing the impacts of the rule, we Members include growers, shippers, under ISO Guide 65. have attempted to determine the number of processors, certifying agents, farmer Governments in foreign markets and certifying agents, private and State, that are associations, brokers, consultants, foreign private processors and retailers are currently operating, and considered the distributors and retailers. Established in 1985 expected to insist on additional verification factors likely to affect the number of as the Organic Foods Production Association that goods have been produced to acceptable certifying agents after the rule is of North America, the Organic Trade organic standards. This would likely lead to implemented. We have attempted to Association works to promote organic an increased use of private accreditation determine the number of currently operating products in the marketplace and to protect services and of USDA’s ISO Guide 65 producers and handlers that would be the integrity of organic standards.’’ (OTA verification service. USDA’s ISO Guide 65 affected. And, we have considered the factors website). Although there is substantial verification services are provided on a user which might affect the number of producers consensus on the draft standards, acceptance fee basis with full cost recovery. These and handlers after the program has been is not unanimous. private accreditations and USDA’s implemented.

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For the analysis, the USDA assumes the producers registered and certified in certification has value and organic producers following: California to the OFRF 1997 list count. This would be expected to take advantage of the 1. Forty-nine domestic certifying agents would suggest the number of non-certified marketing advantages of certification. and ten foreign certifying agents will be producers to be 8,918, resulting in the total Furthermore, the emergence of State affected by the proposed regulation. number of organic producers to be 14,315. certification programs that appear to have 2. Approximately 12,200 certified and non- However, it is important to note that lower certification fees than private certified organic producers will be affected California’s structure of organic production certification entities may have encouraged by the proposed regulation. With the may not be representative of the national more organic producers to be certified. assumed growth rate of 14% for certified profile. The number of non-certified Therefore, for purposes of analyzing the organic producers and approximately 8% for producers may be higher or lower. impacts of the rule for the Paperwork non-certified organic producers, the number CDFA also reports the number of registered Reduction Act, we assume growth of non- of organic producers will grow to 17,150 in and certified producers by sales class. Many certified organic producers from 4,000 in 2002. producers would likely be eligible for the 1999 to 5,000 non-certified farms by 2002, 3. Approximately 1,250 processors and small farm (sales less than $5,000) exemption making the total number of farms potentially provided for in the OFPA. Of 1,372 registered handlers of organic food will be affected by affected by the rule, 17,150 farms. However, organic farms in California, 907 had sales of the proposed action. This number will grow we request comment and/or data on the less than $10,000. Of the 517 certified farms, to 2,150 by 2002. number and the growth of certified and non- 188 had sales of under $10,000. If these ratios 4. The number of retailers affected by the certified organic farms. proposed action is not quantified. are applied to the number of producers calculated, then the number of certified Organic Handlers Certifying Entities producers with sales under $10,000 would be Little information exists on the number of 1,962, and the number of organic producers We place the number of certifying agents handlers. They include processors such as in general with sales under $10,000 would be currently operating at 49, including 13 State organic soup manufacturers, organic food 9,463. Thus, there are potentially a large programs. The number of certifying agents packaging operations, and organic food has remained fairly stable, between 40 and number of farms which could be exempt wholesalers. USDA has estimated that there 50, for some years, with entries and exits from certification requirements. were 600 entities in this category in 1994 tending to offset each other. For purposes of Dunn (1995a, 1995b, and 1997) has (Dunn 1995b). AMS estimated that the estimating the paperwork burden described estimated the number of certified organic growth rate was 11 percent from 1990 elsewhere, we assume no growth in the producers in the United States. Dunn (1995a, through 1994 (Dunn 1995b). More recent data number of domestic certifying agents but 1995b) estimated the number of certified from CDFA registration records suggest a project 10 foreign certifying agents in the first producers at 4,060 in 1994. Dunn (1997) growth rate of about 28 percent (California 3 years of the program. reported 4,856 certified organic farms in 1995. USDA’s 1997 proposal relied on Department of Health Services 1999). For Organic Producers Dunn’s 1995 estimate of 4,060 total certified projection purposes, we use a growth rate of It is more difficult to establish the number producers. Dunn’s numbers have been used 20 percent, which makes the number of of organic producers. Organic farming was because Dunn’s 1995 work was an official handlers for 1999 1,250 and for 2002 2,150. not distinguished from conventional USDA study. The methods used were Reasons for growth include the general agriculture in the 1997 Census of Agriculture. reviewed by USDA and the resulting increase in organic production and growth in Among the sources which give insight into estimates are official USDA statistics. the market for processed organic foods, the number of producers, the Organic Although Dunn’s 1997 estimates were not a including multiingredient products. Again, Farming Research Foundation (OFRF) has USDA study, the 1997 study used the same these projections are based on limited data conducted nationwide surveys of certified approach as the 1995 study. from the early 1990’s, and growth may have organic producers from lists provided by An adjustment is needed to account for the slowed or increased. We request comment cooperating certifying agents (OFRF 1999). number of producers who are practicing and/or data on the number and the growth OFRF sent its 1997 survey to 4,638 organic organic agriculture but who are uncertified rate of processors and handlers in the organic producers. and would be affected by this proposed rule. industry. Because OFRF did not obtain lists from all We reject the idea of expanding by the Retail Food Establishments certifying organizations or their chapters (55 certified-to-registered ratio reported in out of a total of 64 identified entities California for reasons previously stated. We Retailers of organic food are grocery stores, provided lists), its list count of 4,638 assume that the number of organic-but-not- bakeries, restaurants and other producers is likely an underestimate of the certified producers in 1999 is about 4,000. establishments that process or prepare raw number of certified organic farms. If the We adopt this figure recognizing that there and ready-to-eat food. Most are not currently average producer-to-certifying agent ratio (55 may be 1,000 such farms in California, given subject to either voluntary practices or certifying agents to 4,638 producers) holds that there were 855 in CDFA’s report on 1995 mandatory standards of the organic industry. for the 9 certifying organizations that did not registrations. The total number of organic Although they are excluded from the provide the list (9 certifying agents out of a farms for assessing the impact of the rule is certification requirements, they are subject to 64 certifying agents), then the number of 12,200 in 1999. other processing, handling, and other producer grows to 5,397 producers. Data collected by AMS indicate that the production related requirements of the The different estimates of the number of number of certified organic farmers increased proposed rule. Hence, a new stratum of the certifying agents should be noted. The USDA about 12 percent per year during the period organic industry will be regulated by the estimates 49 certifying agents; the OFRF 1990 to 1994. OFRF survey efforts indicate proposed rule. estimates 64 certifying agents. The difference that growth has continued, though it is not Dunn’s (1995a) estimates the number of stems from the USDA’s not counting different clear whether the growth rate has changed. certified retailers to be 31 in 1995. It is not chapters of certifying organizations We use the average growth rate from Dunn’s clear whether Dunn’s (1995a) definition of separately. time series from 1991–1994, which was about retailers and the proposed definition stated The California Department of Food and 14 percent. The true rate of growth could be above are consistent. Hence, the total number Agriculture’s organic registration program higher or lower. By applying the 14-percent of retailers that may be regulated remains suggests that, at least for California, most growth rate to Dunn’s (1995) estimate, the unknown. USDA’s Economic Research organic producers are not certified. For the number of certified organic producer Service (ERS) reports there were 161,707 1994–95 reporting period, CDFA reported potentially affected in 1999 is 8,200 and grocery stores in 1997 (ERS website). Many that 1,372 farms registered as organic 12,150 in 2002. of these stores sell organic products and may producers but only 517 of these farms were We have no national-level growth rates for be affected by the proposed rule. The effect certified (Klonsky and Tourte, 1998a). Thus, not-certified organic farms. The limited times of the proposed regulation on the growth of one approach to projecting national totals series from CDFA is of limited value in retailers remains unknown. We request from OFRF survey lists of certified producers estimating a growth rate. We suspect it is less comment and/or data on the number and the would be to apply the 1994–95 ratio between than the rate for certified farms because growth rate on the retailers of organic food.

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Foreign Entities However, we have no evidence to suggest International Markets The discussion of the number of affected that this problem is wide-spread (Mergentime The final national program rule is expected parties has focused on domestic certifying 1995). Also, it is important to recognize that to lead to EU acceptance of NOP certified agents, producers, and handlers. We the organic industry’s effort to police itself organic products. That is, it is anticipated recognize that foreign entities may apply for and the remedies provided by the judicial that the EU would determine that the NOP accreditation and foreign producers and system may be adequate to address consumer is acceptable vis-a-vis EU regulation 2092/91. handlers may be certified under the NOP. fraud. Mergentime (1997) documents the Article 11 of EU Reg. 2092/91 establishes the Furthermore, upon request of a foreign effect of litigating fraud cases on the conditions under which organic products government, a foreign certifying agent may industry. However, we request comment and/ may be imported from third countries and meet the requirements for accreditation when or data on the extent and the severity of addresses the framework for equivalency. the Administrator determines that the consumer fraud that may exist. The NOP is a national program that should certifying agent meets the requirements of the Some producers may have limited their be acceptable to the EU and other NOP. organic livestock production because of governments. The result would be the At this time, we have no information uncertainty regarding the standards that removal of trade restrictions, thereby regarding the number of foreign entities would be used in the NOP. By removing the possibly increasing the growth in exports of which may enter the NOP. We do not know uncertainty, producers may increase organic food products. how many foreign producers and handlers production, thereby increasing the quantity Currently, despite restricted access to the are marketing goods as organic, nor do we of livestock products. European market, the United States is the know how many will seek to be certified Reduced Administrative Costs most important non-EU supplier of organic under the NOP. Accredited certifying agents products to EU countries (Foreign will be able to certify operations outside the The proposed rule addresses the problem Agriculture Service (FAS), 1995). Import United States and foreign certifying agents of existing certifying agents using different authorizations have been granted for a may become accredited by USDA. It is likely standards and not granting reciprocity to number of raw and processed commodities, that the costs for accreditation will be higher other certifying agents. By accrediting including sunflowers, buckwheat, beans, for foreign applicants for accreditation. certifying agents, the rule would establish the sugar, and apples. Demand is strong Foreign applicants will face the same costs as requirements and enforcement mechanisms throughout the European market, and the domestic applicants but the levels of cost that would reduce inconsistent certification organic market share was 1–2 percent of total would reflect generally higher costs of services and lack of reciprocity between food sales in 1997 (Collins). foreign travel and per diem expenses for site certifying agents. In the current system, the Lohr (1998) cites several growth evaluation and miscellaneous costs such as certifying agent of a final product is not projections: for translation of documents. For purposes of required to recognize the certification of an Annual growth rates of 25% to 30% have estimating the paperwork burden described intermediate product. Both primary farmers been experienced in the EU, the United elsewhere, we assume 10 foreign certifying and food handlers may face a risk of being States, and Japan for over five years, but agents in the first 3 years of the program. We unable to sell a certified organic product growth is already slowing in some product request comment and/or data on the number when more than one certifying agent is categories (PSC, Scott) * * * Segger projects and the growth rate of foreign entities that involved. By imposing a uniform standard of that the EU market will reach $58 billion and may export to the U.S. organic market. certification and production, costs associated the U.S. market $47 billion by 2006. Ahmed with establishing reciprocity between suggests that the Australian market could Benefits of the Proposed Rule certifying agents will be eliminated. grow to $571 million by 2000, whereas The benefits from implementation of the However, the magnitude of this benefit LaFond projects that the value of Canadian proposed rule are: (1) Improved protection of cannot be gauged without quantification. In organics will reach $145 million by 2006. buyers from misleading claims and more particular, with the increasing consensus Mergentime forecasts the Japanese market information on organic food; (2) reduced within the organic industry, the benefit may will reach $2.6 billion by 2000 (Lohr, 1126). administrative costs; and (3) improved access not be large. Lohr further states that these projected to international organic markets. Not all It is important to distinguish between future growth rates are based on straight-line benefits that may arise from the rule are consensus with respect to standards of extrapolations of current sales and growth quantifiable. Where economic data are production and consensus with respect to rates without understanding the underlying available, they may relate to costs and are certifying agents practices. There is growing market mechanisms and price elasticities generally not adequate to quantify economic consensus regarding crop standards, (Lohr 1998). benefits. livestock standards are more problematic. Foreign acceptance of the U.S. national And, consensus is least evolved regarding standard can be expected to expand the Information standards of conduct and practice for universe of consumers for U.S. producers and Potential benefits to consumers as a result certifying agents. There is no consensus reduce costs of negotiating and documenting of the proposed rule include more regarding whether certifying agents should be shipment by shipment. information on organic food, and protection accredited or who the accrediting body from false and misleading organic food should be. Costs of the Proposed Rule claims. Consumers may be misled by labels Industry-wide training costs may decrease. The costs of the proposed regulation are on processed and raw products claiming to The proposed uniform standards of the direct costs of complying with the be organic. In particular, with processed production, certification should enable specific standards. It is important to note that food, some of the ingredients may not be organic inspectors to move more easily from while some costs associated with organically produced, or the product may one certifying agent to another than the accreditation and certification are quantified, contain less organic content than the current system. costs stemming from other provisions of the consumer assumes. The USDA organic seal In addition, USDA accreditation of proposed regulations are not. In addition, will provide consumers a quick tool to verify certifying agents would present opportunities this is a short-run analysis. The analysis that goods offered for sale as organic are in for sharing information about standards, examines the costs that may be incurred from fact organic. To the extent that consumers practices, and the general requirements of the 1999 to 2002. It is not possible at this time view the seal as an important information program through the NOP staff. USDA will to conduct a longer-run analysis because we too, that is, product with the seal is perceived undertake a number of outreach and do not know enough about the fundamental as more desirable, they may enhance the education efforts in connection with the supply and demand relationships to make ability of producers to realize the price launch of the NOP. Compliance guides and economically sound long run projections. premiums associated with certified products. other printed material will be prepared There is anecdotal evidence to suggest that which will be more readily understood than Accreditation Costs consumer fraud involving organic food does the Federal Register document. NOP staff USDA has identified 36 private certifying occur (Mergentime 1997). Criminal will participate at industry meetings and will agents and 13 State programs providing prosecutions involving felony pleas and fines likely host public information exchange certification. These 49 entities are considered have taken place (Mergentime 1997). meetings. likely applicants during the first 18 months

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Recent currently operating certifying agents become number of certifying agents does not appear experience with USDA’s program to verify accredited during the first 18 months to have grown significantly, with the net organic certifying agents to ISO Guide 65 following the final rule, is approximately effect of entries and exits maintaining a indicates that roughly 32 staff hours are $75,000 to $100,000. This figure is derived population of certifying agents at about 40– required. Although much of the accreditation from the per firm costs in Table 3. After the 50. site evaluation will involve comparisons first 18 months, the direct cost for accrediting The proposed rule would allow USDA to against ISO Guide 65, additional hours will 49 certifying agents would be approximately collect fees from certifying agents for USDA be required because USDA will be evaluating $150,000 to $238,000. accreditation. Collecting fees from certifying additional aspects of the applicant’s The 18 month period affects the agents only is administratively simpler and operation to determine if the applicant is distribution of program costs between the will enable State programs that want to keep qualified to perform as an accredited agent organic industry and the taxpayer. Some of client costs low to do so. for the NOP. Based on experience with ISO the costs of accreditation would be absorbed Applicants for accreditation will be Guide 65 verifications, we project that small by the NOP operation budget appropriated by required to submit a nonrefundable fee of applicants with a simple business structure Congress. In effect, the taxpayers are $500 at the time of application, which is will require 3 days and large applicants with subsidizing the organic industry. Without applied to the applicant’s fees for service more complex business structure will require this subsidy, the total cost of accreditation account. This means that the $500 fee paid 5 days. Thus, the total number of hours to be may approach $1 million. at the time of application is credited against charged would range from 24 to 40 hours. At Private certifying agents and state programs any subsequent costs of accreditation arising the base rate of $95.00, the charge for hours that do not mirror the proposed regulation from the site evaluation. The $500 fee is the of service would be $2,280–$3,800. may incur additional costs to change their direct cost to applicants who are denied Per diem costs would cover 3 to 5 days, programs to adopt the proposed national accreditation based on the initial review of totaling $240–$400. A review of domestic standards. The discussion on the effect of the the information submitted with their travel by USDA staff during fiscal year 1999, proposed regulation on existing state application. Charges for the site evaluation indicates that transportation costs ranging programs is in ‘‘State Program Costs.’’ The visit will cover travel costs from the USDA from $500–$600. Miscellaneous costs are cost associated with changing existing employees’ duty station, per diem expenses estimated to add another $50 to each site private certifying programs is not quantified. for USDA employees performing the site visit. Thus, the total site visit cost would Also, certifying agents who have been evaluation, an hourly charge that we range from $3,070 to $4,850. operating without third party accreditation anticipate will not exceed $95 per hour (per During the 18-month transition period, will face new costs. Compared to the direct each employee) for services during normal USDA intends to use 2 reviewers for site costs of $3,000–$5,000 per year indicated by working hours (higher hourly rates will be evaluation visits. One reviewer will come the commenters, the direct costs of USDA charged for overtime and for work on from the QSCP audit staff and will be accreditation will be smaller. The direct costs holidays), and other costs associated with familiar with the ISO Guide 65 verification; for certifying agents obtaining accreditation providing service to the applicant or the other reviewer will come from the NOP during the first 18 months, when USDA will certifying agent. staff and will be familiar with requirements not impose an application fee or hourly The anticipated hourly rate is the rate that of the organic program. The two will conduct charges, will be limited to travel and per USDA will charge for services under the the site evaluation jointly. We anticipate only diem costs. Furthermore, USDA’s charges are Quality Systems Certification Program one reviewer will be required after the imposed every 5 years, not annually. (QSCP). A separate rulemaking will establish transition period. During the 18 month A national accreditation program may the precise hourly rate that will be charged. transition period, applicants will be charged shrink the market for a third-party Our preliminary estimate that the fee will be for travel and per diem costs for two persons, accreditation. Certifying agents will have no more than $95 per hour is presented to but not application fees or hourly fees. Thus, little incentive to maintain or seek a second give the public some indication of the rate the estimated expenditures (travel and per accreditation by a private organization unless that will be charged following the 18-month diem) for these initial accreditations will be that accreditation sufficiently enhances the transition period. QSCP is an audit-based $1,530–$2,050. Table 3 estimates the total market value of the certifying agent’s program administered by AMS, which initial costs for an applicant to become services. Thus, the market will determine provides meat packers, processors, accredited. whether other accrediting entities continue to producers, and other businesses in the Currently few private certifying agents are have a U.S. market for their services. livestock and meat trade with the operating with third party accreditation. Training programs are currently offered by opportunity to have special processes or Fetter (1999) reports that in a sample of 18 the Independent Organic Inspectors documented quality management systems certification programs four programs were Association (IOIA), an organization of verified. The procedures for accreditation accredited and one had accreditation approximately 165 organic certification evaluation are similar to those used to certify pending. All of these were large, private inspectors, and by some of the larger other types of product or system certification certifying agents. Those certifying agents certifying agents (IOIA, p. 1). Costs to programs under QSCP. currently accredited by third parties will existing certifying agents to provide At present, the base per diem for places in likely pay less for USDA accreditation. In its additional training to other staff are difficult the United States is $80 ($50 for lodging and first proposal, USDA stated at FR 62:65860, to measure in the absence of information on $30 for meals and incidental expenses). Per ‘‘We are aware that certifiers currently may current staff skill levels or the existence of diem rates are higher than $80 in most large pay in excess of $15,000 for accreditation by formal training other than inspector training. cities and urbanized places. Travel costs will a private organization.’’ Commenters thought Some agencies rely on volunteer staff who depend on where the certifying agent is this figure was too high. One commenter, may have had no formal training, but the located. which operates the International Federation extent of this practice is unknown. AMS USDA estimates the costs of a site of Organic Agriculture Movements (IFOAM) intends to offer assistance to certifying evaluation visit after the transition period Accreditation Programme under license to agents, producers, and handlers by providing will average $3,070–$4,850 depending on the IFOAM, stated ‘‘It is possible that the largest guide books and other printed material that characteristics of the applicant. This estimate programme operating a chapter system with would enable participants to better is based on experience with the QSCP and activities in many countries (which is understand the regulations. In addition, AMS more limited experience performing audits included in their IFOAM evaluation) paid intends to continue open and frequent verifying that certifying agents meet ISO this amount in their first year. On the other communication with certifying agents and Guide 65. The cost of a site evaluation visit hand the average cost to a medium sized inspectors to provide as much information as will vary with the cost of travel from the certifier works out at around $3000 to $4000 possible to aid them in fulfilling the USDA reviewer’s duty station to the per year.’’ Another commenter stated ‘‘At the requirements of the regulations.

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The OFPA requires that private certifying usually represented by the client’s gross sales government such as California, receive copies agents furnish reasonable security, such as a of organic products but sometimes based on of the State laws to which they must comply. bond, for the purpose of protecting the rights the acres operated (Fetter 1999 and Graf and Some organic producers are neither certified of participants in the organic certification Lohr 1999). Some certifying agents charge an nor registered and therefore may not practice program. Specifics requirements regarding hourly rate for inspection and audit services. the requirements proposed. Major provisions reasonable security have not yet been Graf and Lohr have applied fee schedules are discussed to illustrate costs; other established. It is expected that there will be provided by nine certifying agents to four provisions may also impose additional costs. costs to certifying agents from these hypothetical farms—small, medium, large, We request comment and/or data on the costs requirements. and a super farm. Tables 2A and 2B that may be imposed on the producers of summarizes the fees that Graf and Lohr found organic products. In addition, we request Certification Costs by applying schedules of each certifying comment and/or data on the similarities and State laws vary widely on organic agent to hypothetical farms. Total first-year differences between the current practices of certification and registration. Some States costs and subsequent (renewal) year costs for private and State programs and the proposed require only that an organic producer register certification are shown. The average cost for requirements. and make certification voluntary. Other each size class should be interpreted with Land Requirement. The transition period, States require certification by the State’s own care because the reported average is not which would specify the time during which agents, while others accept certification by a weighted by the number of clients certified. prohibited materials cannot be applied before private certifying agent. The least stringent In their study, the Texas Department of a field can be certified as organic, is included requirement among States with organic Agriculture program is the low-cost certifying in many private and State organic standards. legislation is that products marketed as agent for all-size operations. The high-cost The OFPA specifies a required transition organic comply with their definition of certifying agent differs across farm sizes. period of 3 years before certifying a field. The organic but both registration and certification None of these certification programs effect of this provision on the currently are voluntary. Thirteen States operate mentions costs for residue testing, which the certified organic farming operations may be programs to certify organic production. In NOP will require in the form of preharvest minimal. Certifying agents currently enforce many States producers may claim their testing when there is reason to believe that the 3 year transition period required by the product is organic but operate without agricultural products have come in contact OFPA. Producers who are registered in States certification or well-defined standards. On with prohibited substances. Preharvest requiring registration, receive copies of the the other hand, many organic producers testing is expected to be infrequent. Some State laws governing organic production operate in States with no program and certifying agents currently require soil which generally require a 3 year transition voluntarily secure third party certification to nutrient testing and water quality testing. period. well-defined standards. The estimated total initial costs for a The effect on small farming operations that Under the proposed rule, USDA will not producer or handler to become certified are are neither certified or registered may be impose any direct fees on producers and presented in Table 3. significant. Small farming operations that handlers. Certifying agents will establish a We have not extended the average costs have completed a 3 year transition period fee schedule for their certification services reported in Tables 2A and 2B to aggregate and can document the transition will not be that will be filed with the Secretary. certification costs for all organic farms affected by this requirement. To stay in the Certifying agents will provide all persons because the number of organic farms is not organic industry, those who have not inquiring about the application process with known with precision, nor is their geographic completed the 3 year transition period must a copy of their fees. The certifying agent will location and there are no data to distribute comply with the transition period provide each applicant with an estimate of the population of organic farms across size requirement. They may incur the cost of the total cost of certification and an estimate classes. Like conventional agriculture, the organic production for a significant length of of the annual costs of updating the largest percentage of farms would be time, yet not be allowed to sell their products certification. However, the certifying agent expected to fall in the smallest sales class. as organic. Hence, some small organic may require applicants to pay at the time of Many of the smallest farms would qualify for operations may exit the industry. We request application a nonrefundable fee of no more the small farm exemption from certification. comment and/or data on the magnitude of than $250 which must be applied to the In addition, organic producers and the cost associated with the provision. In applicants’ fee-for-services account. The $250 handlers would incur the costs associated addition, we request comment and/or data on limit is proposed as a reasonable figure with becoming familiar with the national the similarities and differences between the considering the interests of certifying agents program. We request comment and/or data current practices of private and state and applicants. on the certification costs that may be programs and the proposed requirements. The proposed maximum nonrefundable fee imposed on the organic producers, handlers, Soil fertility and crop nutrients. Lacking protects certifying agents by ensuring that processors, and retailers. information, we have not quantified the cost they receive some payment for their work for associated with this provision, but we applicants should the applicant lose interest Production and Handling Costs assume that it may have costs Organic or be found unqualified for certification. For Producers and handlers currently active in production historically rests on soil fertility the purposes of estimating the cost of the the organic industry may bear costs under the management. Private and State certifying paperwork burden on certifying agents, proposed national standards. We believe that agents have well developed standards USDA has valued their time at $27 per hour. while some provisions of the proposed addressing care and treatment of the soil. The Thus, the $250 limit, if the certifying agent program mirror current industry practices, proposed rule includes requirements for the chooses to require it, would cover others differ. In addition to the cost use of manure and a practice standard for approximately 9 hours of work. The $250 associated with becoming familiar with the composting which may impose additional limit protects applicants from paying large national program, any adjustments stemming costs to producers. However, not all organic fees up front when their ultimate eligibility from these differences will result in costs. farmers use manure for soil fertility and for certification is unknown. The $250 limit These costs are only qualitatively discussed. many farmers use composting practices that is believed to be low enough to ensure This assessment does not include a are consistent with the proposed rule. We producers and handlers can afford to take the provision-by-provision analysis of possible believe that this requirement will have first steps for certification but high enough to alternatives. minimal impact on certified or registered ensure certifying agents will have an organic producers. We request comment and/ incentive to initiate certification when the Producers or data on the magnitude of the cost prospects that the applicant will qualify are Producers of organic food will face associated with the provision. In addition, unknown. numerous provisions that will regulate their we request comment and/or data on the Some States charge minimal fees for production methods. As indicated in the similarities and differences between the certification by subsidizing operating costs Baseline section, many of the requirements current practices of private and State from general revenues. The majority of are currently practiced by certified organic programs and the proposed requirements. certifying agents structure their fee schedules farmers. Farming operations that are not Materials list. Lists of approved synthetic on a sliding scale based on a measure of size, certified, but are registered with a State materials, including soil amendments and

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00129 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13640 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules pesticides, vary from one State program to provision may have costs. We request Any producers, processors, and retailers another. A detailed analysis of specific comment and/or data on the magnitude of who are not currently certified but who differences in the various existing materials the costs associated with the provision. In package organic products are also subject to lists shows them to be overlapping in most addition, we request comment and/or data on the labeling requirements. Any changes to cases. The impact of the national program the similarities and differences between the existing labels and new labels that need to will be determined by how the national current practices of private and state conform to the proposed regulation will standards differ from current certification programs and the proposed requirements. incur a cost. The costs associated with these standards and from actual practice. Handling requirements. These activities are not quantified. Hence, the lower Farming operations, both certified and requirements prohibit a handler from using bound on the labeling cost is approximately registered, may need to adjust their ionizing radiation for any purpose, an $2 million. We request comment and/or data production methods to comply with the list. ingredient produced with excluded methods, on the extent the current labels will need to These adjustments will impose costs on these or a volatile synthetic solvent in or on a change to conform to the proposed operations. However, most currently certified processed agricultural product intended to be regulation. In addition, we request comment operations and those operating under a State sold, labeled, or represented as ‘‘100 percent and/or data on the similarities and program already adhere to a materials list. organic’’, ‘‘organic’’ or ‘‘made with organic differences between the current practices of These lists overlap in most cases with each (specified ingredients).’’ We believe, private and state programs and the proposed other and the National List in this proposal however, that the additional costs associated requirements. which should mitigate the costs for these with compliance may be small. We base this State Program Costs operations. The magnitude of the costs assumption on the thousands of comments resulting from these adjustments is not on the first proposal, including comments A national program may impose additional quantified. We request comment and/or data from the organic industry, indicating that costs on States by requiring changes in their on the magnitude of the costs associated with these practices are widely considered to be existing programs. The proposed rule the provision. In addition, we request inconsistent with organic production and encompasses most of the principles of comment and/or data on the similarities and handling. Lacking information, we have not existing State programs. However, there are differences between the current practices of quantified the cost associated with this also departures. private and state programs and the proposed provision. We request comment and/or data Where State standards are below Federal requirements. on the magnitude of the costs associated with standards or where elements of the Federal Animal drug use. Another common feature the provision In addition, we request standards are missing from a State program, of organic standards is the restricted use of comment and/or data on the similarities and these States would be required to make animal drugs for livestock. Where livestock differences between the current practices of changes in their programs that they might standards have been adopted by existing private and state programs and the proposed otherwise not make. Where State programs State programs and by private certifying requirements. have standards in addition to the Federal agents, most prohibit the use of animal drugs standards and they are not approved by the except for the treatment of a specific disease Handlers Secretary, States also would be required to condition, and use of animal drugs is Handlers of organic food may be defined make changes in their programs. States generally prohibited within 90 days prior to and regulated differently across different without organic standards or whose current the sale of milk or eggs as organic. Some certifying agents and States. Handlers may standards either would conform to those of State and private certifiers allow the use of incur some cost associated with complying the national program or would be approved animal drugs in animals for slaughter if the with the requirements of the proposed by the Secretary would not incur additional producer extends the withholding period. regulation. We request comment and/or data costs resulting from required changes. Others prohibit the use of animal drugs. The on the costs that may be imposed on the Currently, USDA cannot predict which States standards in the proposed rule would retailers of organic products. In particular, may be required to adjust their existing prohibit the sale as organic of an edible we request comment and/or data on costs programs. products derived from an animal treated with associated with excluded methods, residue States will be charged for accreditation, antibiotics or other unapproved substances. testing, and labeling. In addition, we request something none of them pay for now. The The proposed standards may not differ comment and/or data on the similarities and cost associated with this provision is from existing State or private standards in differences between the current practices of discussed in the Accreditation Section. prohibiting the use of drugs on healthy private and state programs and the proposed Enforcement Costs animals. However, the effect of this provision requirements. may differ among certified and registered Enforcement costs will fall upon USDA’s organic farms. The effect on the certified Retail Food Establishments NOP, States operating State programs, and on farming operations is unknown. We assume Largely, retailers of organic food are not certifying agents. Certifying agents will that this provision may have costs, but the regulated. However, they are still subject to review clients’ operations and will notify magnitude of these costs is not quantified. other requirements such as prevention of clients of deficiencies. Certifying agents can We request comment and/or data on the contamination of organic products with initiate suspension or revocation of magnitude of the costs associated with the prohibited substances, and commingling certification. Certifying agents will be aware provision. In addition, we request comment organic with non organic products. of these overhead costs and we assume that and/or data on the similarities and Complying with these provisions may incur they will establish fee schedules that will differences between the current practices of some cost. We request comment and/or data cover these costs. Actual costs to certifying private and state programs and the proposed on the costs that may be imposed on the agents for enforcement activities will depend requirements. retailers of organic products. on the number of clients, how well informed Other livestock requirements. Lacking clients are of their obligations, and client information, we have not quantified the cost Labeling Costs conduct. State programs will face the same associated with this provision, but we Certified handlers will have to comply obligations and types of costs as private assume that this provision may have costs with requirements regarding the approved certifying agents. due to the variability in current housing, feed use of labels. The estimated annual cost for USDA’s enforcement costs are costs and health care practices. We request 1,977 certified handlers to determine the associated with ensuring private certifying comment and/or data on the magnitude of composition of 20 products to be reported on agents and State programs fulfill their the costs associated with the provision. In labels is $948,960. This figure is based on an obligations. USDA will bear costs of addition, we request comment and/or data on average of 1 hour per product and an hourly investigating complaints, monitoring use of the similarities and differences between the cost of $27. Similarly, certified handlers will the USDA organic seal and organic labeling, current practices of private and state have to design their labels to comply with the and taking corrective action when needed. programs and the proposed requirements. regulation. This is expected to take 1 hour USDA will bear costs related to reviewing an Residue Testing. Lacking information, we per label at $27 per hour for a compliance applicant’s or certified operation’s appeal have not quantified the cost associated with cost of $948,960. Total label costs for and for administrative proceedings. We this provision, but we assume that this certified handlers are $1.9 million. request comment on the costs of the

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00130 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13641 enforcement provisions of the proposed operations they have certified and laboratory certifying agents currently rely on volunteers, regulation. analyses. These policies may have to be and the current costs of training certification created or modified to conform to the staff. Reporting and Recordkeeping Costs regulation. Producers and Handlers. The regulation The Paperwork Reduction Act of 1995 3. Documentation on the qualifications of will impose administrative costs on requires an estimate of the annual reporting all personnel used in the certification producers and handlers for reporting and and recordkeeping burden of the proposed operation, annual performance appraisals for recordkeeping. The actual amount of the NOP. Detailed descriptions of individual each inspector and personnel involved in the additional administrative costs that would be elements of that burden are presented in the certification, and an annual internal program imposed by the final rule is expected to be proposal under the heading Paperwork evaluation. Existing certifying agents may different for those entities that would begin Reduction Act of 1995. The estimated annual already perform these operations. New their activities only after the national reporting and recordkeeping burden reported certifying agents will have to establish program is implemented. Producers and is approximately $6.8 million. This figure procedures to achieve these things. handlers who currently are active in the should be understood within the context of 4. Documentation on the financial capacity organic industry already perform most of the requirements of the Paperwork Reduction and compliance with other administrative these administrative functions; therefore, the Act. The Paperwork Reduction Act requires requirements (e.g., fee structure, reasonable additional costs to them would depend upon the estimation of the amount of time security to protect the rights of the certifying the extent to which their current practices are necessary for participants to comply with the agents’ clients as provided in the NOP, and different from the requirements of the final proposed regulation in addition to the business relationships showing absence of regulation. An estimate of the cost of burden they currently have. Information conflicts of interest). Some of this compliance is the annual reporting and gathered by AMS in auditing activities in information can be compiled from existing recordkeeping burden documented in the conjunction with ISO Guide 65 verifications, records, e.g., fee schedules, and some may be Paperwork Reduction Act of 1995 analysis. leads us to believe that the paperwork burden generated from other sources. The following list describes several on current certifying agents and certified 5. Copies, submitted to USDA, of notices proposed administrative requirements or operators will be 10 to 15 percent greater issued involving denials of certification, optional submissions and the probable than their current business practices as a noncompliance, and suspension or resources required for compliance. result of this proposal. revocation of certification. This requirement 1. Establish, implement, and update Certifying Agents. The regulation will will be fulfilled simultaneously with sending annually an organic production or handling impose administrative costs on certifying notices to applicants or clients. plan. Organic plans are a standard feature in agents for reporting and recordkeeping. The 6. An annual report to the Administrator the organic industry and are required by actual amount of the additional including an update of previously submitted certifying agents. Thus, producers and administrative costs that would be imposed business information, information supporting handlers who are already involved in by the proposed rule is expected to be any requested changes in the areas of organics, can rely on their current plan with different for those entities which would accreditation, and steps taken to respond to revisions as needed to meet elements of the begin their activities only after the national previously identified concerns of the national program which are new to them or program is implemented. Certifying agents Administrator regarding the certifying agent’s differ from their current practice. Although that currently are active in the organic suitability for continued accreditation. The producers and handlers are generally aware industry already perform most of these annual report requirement will draw on of the goals of organic plans, current practice administrative functions; therefore, the records created in the normal course of may fall short of the rigor that will be additional costs to them would depend upon business. required by the national program. New the extent to which their current practices are 7. Retention of records created by the producers and handlers will have higher different from the requirements of the certifying agent regarding applicants and costs because they will have to prepare a proposed regulation. An estimate of the cost certified operations for not less than 10 years, plan from scratch. of compliance is the annual reporting and retention of records obtained from applicants 2. Maintain records pertaining to their recordkeeping burden documented in the and certified operations for not less than 5 organic operation for at least 5 years and Paperwork Reduction Act of 1995 analysis. years, and retention of other records created allow authorized representatives of the Table 4 shows the estimated annual costs for or received for USDA accreditation for not Secretary, the applicable State program’s State certifying agents and for private or less than 5 years. This activity requires governing State official, and the certifying foreign certifying agents. Based on the records and database management agent access to records. Existing organic projected number of States agents (13) and capabilities and resources (storage space, file producers and handlers maintain records. private or foreign agents (46) the total cabinets, electronic storage, etc.). In an New producers and handlers will have to reporting and recordkeeping cost, which informal inquiry, AMS found that most develop records systems. Access is expected captures much of the compliance costs of the existing certifying agents currently retain to be infrequent, will require little time of the rule, is $1,113,192. records for at least 10 years and use both certified entity, and will not require The following list describes several of the electronic and paper storage. We believe that buildings or equipment other than what is most significant proposed administrative this requirement will not pose an additional required for storing records. requirements or optional submissions and burden on existing certifying agents. 3. Notify the certifying agent as required, the probable resources required for 8. Public access to certification records, e.g., when drift of a prohibited substance may compliance. Details on the reporting and such as a list of certified farmers and have occurred, and complete a statement of recordkeeping burdens estimated for each handlers, their dates of certification, products compliance with the provisions of the NOP. item are in the paperwork analysis. produced, and the results of pesticide residue Notifications are expected to be infrequent. 1. A list of farmers, wild crop harvesters tests. This requirement will have minimal The total reporting burden includes and handlers currently certified. This impact given the requirements for retaining creation and submission of documents. It information can be compiled from existing records. covers the greatest amount of reporting records. After implementation, certifying 9. Providing program information to burden that might occur for any single agents will be required to submit on a certification applicants. To comply with this creation or submission of a document during quarterly basis a list of operations certified requirement, certifying agents may need to any one of the first 3 years following program during that quarter. modify existing standards and practices. The implementation, i.e., 2000, 2001, and 2002. 2. A copy of procedures used for criteria for qualified personnel in the The total estimated reporting burden reflects certification decisions, complying with proposed rule may likely result in an the average burden for each reporting activity recordkeeping requirements, maintaining increase in labor costs for some existing that might occur in 1 year of this 3-year confidentiality of clients’ business-related certifying agents and, initially, an increase in period. information, preventing conflicts of interest, training costs. The amount of additional costs The total recordkeeping burden is the sampling and residue testing, training and to these certifying agents would depend on amount of time needed to store and maintain supervising personnel, and public disclosure the level of expertise among current records. For the purpose of measuring the of prescribed information concerning certification agency staff, the extent to which recordkeeping burden, the year 2002 is used

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00131 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13642 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules as the reporting year for which the largest sharing the cost of the program between In addition, the certification exemption number of records might be stored and taxpayers and the organic industry, to allowed under the proposed regulation maintained. The annual reporting and respond to public concerns regarding the includes limits on what an exempt operation recordkeeping burdens on producers, effects of the proposed regulation on small may do. Without the certification, small handlers, and certifying agents is businesses. Thousands of comments were organic operations may not display the summarized in Table 4. received opposing the first proposal’s fee USDA seal and may not use a certifying Certified operations. The annual burden on provisions with most focusing on the agent’s seal. However, we are asking for certified producers is estimated at 10 hours substantial impact on small certifying agents. public comment on whether exempt and $229. Certified handlers have an Congress has expressed public policy operations should have the marketing option estimated burden of 50 hours valued at concern with the impacts of regulations on of selling their products to handlers who can $1,189. Certifying agencies have an estimated small entities generally and with the impacts claim the products as organic in multi- burden of 700 hours valued at roughly on the NOP regulations on small entities ingredient products. If the consumers of $18,900. particularly. The Small Business Regulatory organic food view the seals as important Exempt operations. The burden on small Enforcement Fairness Act of 1996 and the information tools on organic food, that is, if producers and handlers, who choose to Regulatory Flexibility Act express consumers of organic products insist on only operate as exempt entities, is minimal, 0.5 Congressional concern regarding regulatory certified organic products, the inability of hour of recordkeeping valued at $12. Exempt burden on small businesses. The Report from small operations to display these seals may operations are exempt from reporting and the Committee on Appropriations regarding prevent them from realizing the price recordkeeping burdens. However, small the Agriculture, Rural Development, Food premiums associated with certified organic producers and handlers will have to invest and Drug Administration, and Related products. some time and review documents to Agencies Appropriations Bill, 2000, includes Industry Composition determine whether they qualify for the following language (U.S. Senate 1999): exemption or exclusion. Exempt operations ‘‘The Committee continues to recognize the The imposition of the national standards that produce multiingredient products importance of organic markets for small may change the composition of the organic containing less than 50 percent organic farmers and fishermen. The Committee industry. Even with the small business ingredient will be required to maintain expects the Secretary to construct a national exemptions, some small organic operations records documenting the organic ingredients organic program that takes into consideration may choose to exit the industry and small purchased. Since records of purchases would the needs of small farmers and fishermen. organic operations may also be discouraged be part of the normal recordkeeping for * * * Furthermore, the Committee expects from entering the industry, resulting in a handlers, we do not consider this a that of the funding available for the National higher concentration of larger firms. On the recordkeeping burden. Organic Program, necessary funds should be other hand, it may be easier for small Based on the projected number of used to offset the initial costs of accreditation operations to comply with certain NOP producers (17,150) and handlers (2,150), the services, a subsidy necessary due to the lack standards, such as the livestock standards total reporting and recordkeeping cost, which of expertise in the Department of Agriculture which prohibit confinement production captures much of the compliance costs of the in the areas of organic accreditation and systems and require 100 percent organic feed. insufficient data on the industry.’’ rule for this group, is $5,200,721. We request Conclusion comment and/or data on the costs that may Certifying agents applying for accreditation be imposed by the recordkeeping during the first 18 months following the final Ideally, the net benefits of the proposed requirements of the proposed regulation. In regulation will face lower direct costs than rule would be estimated by employing a addition, we request comment and/or data on subsequent applicants. The cost for later welfare analysis. In a welfare model, the the similarities and differences between the applicants for accreditation will be higher quantitative assessment of benefits would be current practices of private and state because they will have to pay a $500 represented by net changes in consumer and programs and the proposed requirements. application fee and hourly charges for producer surplus, i.e., the difference between completing their site evaluation. The the willingness to pay (or firm cost structure Barriers to Entry—Importers of Organic requirement for accreditation was established in the case of producers) and the market Products in the OFPA in 1990 and the proposed price of organic food. These net changes Currently, there are no federal restrictions accreditation program was part of the 1997 would be estimated using information about on importing organic products to the United proposal. Because in this proposal USDA is the cost structure of the industry, the demand States in addition to those regulations using appropriated funds to cover some of for organic food, and projected shifts in applying to conventional products. However, the costs of initial accreditation during the supply and demand resulting from the some States require organic products sold first 18 months of the program, certifying various factors discussed in the assessment. within the State to be produced according the agents may set lower fees initially benefitting Although researchers have conducted State’s standards. Thus, some State programs the producers and handlers who are certified numerous small-scale studies to determine are barriers to importers. The proposed during this period. consumers’ willingness to pay for certain regulation imposes a national standard that It is important to note that many small organic products (primarily fresh produce) these importers must meet, and may incur organic operations may not be certified and to identify reasons why conventional some cost. We request comment and/or data currently. In California, for example, many food buyers do not choose organic food on the extent of the organic food imports and small farms are registered, but not certified. products (Hammitt, 1990 and 1993; Jolly; the costs that may be imposed on these Even if certifying agents pass on the cost Misra et al.; Park and Lohr; Weaver et al.), importers to meet the proposed standards. savings of the 18 month period provision to the available data are insufficient to support applicants for certification, the cost of a quantitative assessment of this type. A 1998 Small Business Ramifications certification may be higher than the cost of review of studies of consumer demand for USDA has proposed an 18-month period registration. Hence, becoming a certified organic foods concluded, ‘‘Attitudes, during which applicants for accreditation operation for small organic producers and motives, and willingness to pay for organic would not be billed for hourly services. The handlers may be more costly than the current products have been measured, but apparently rationale for this transition period is to practices. no retail data have been available to estimate reduce the costs to certifying agents and, The costs imposed on small operations own-price, cross-price, and income thus, increase the prospect that certifying may be mitigated by a $5000 certification elasticities.’’ (Thompson 1998). agents, producers, and handlers will be able exemption to aid the smallest organic USDA has identified the entities that may to afford to participate in the national operations. However, these operations are be affected by the proposed rule and has program. The choice of 18 months is still subject to other requirements of the analyzed the anticipated business-associated intended to provide sufficient time for parties proposed regulation. To the extent that these impacts on them of the rule based on our desiring accreditation to submit their requirements differ from their current knowledge of the industry and limited data. application and prepare for a site evaluation. practices, complying with the national We have drawn on industry studies, USDA has proposed to operate the program standards may be costly for exempt including studies completed since the 1997 partially with appropriated funds, in effect operations. proposed rule was published, and

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00132 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13643 information provided in comments on the production in the United States: Half a Misra, Sukant, Chung L. Huang, and Stephen 1997 proposed rule. Decade of Growth. AgriSystems L. Ott. 1991. Georgia Consumers’ The primary benefits from implementation International: Wind Gap, PA. Preference for Organically Grown Fresh of the proposed rule are improved protection Emerich, Monica. 1996. Industry Growth: Produce. Journal of Agribusiness (Fall): 53– of buyers from a reduction in market 22.6%. Natural Foods Merchandiser 65. confusion including protection from false (June):1–39. Natural Foods Merchandiser. 1995. Organic and misleading claims, and improved access Fetter, Robert T. 1999. Economic Impacts of Update: Reciprocity Controversies to markets from the reciprocity inherent in Alternative Scenarios of Organic Products Intensify, Exacerbating Certifier/ national standards. These benefits have not Regulation. Senior Honors Thesis. Manufacturer Tensions. April. been quantified. University of Massachusetts, Amherst, MA. Organic Farming Research Foundation. 1999. The costs of the proposed regulation are Graf, Anita and Luanne Lohr. 1999. Final Results of the Third Biennial the direct costs for accreditation and the ‘‘Analysis of certification program costs,’’ National Organic Farmers’ Survey. E. Walz, Working Paper, Fund for Rural America costs of complying with the specific Program Coordinator. Santa Cruz, CA. project, Market Development for Organic standards in the proposal including the Park, Timothy A. and Luanne Lohr. 1996. reporting and recordkeeping requirements. Agriculture Products, Grant No. 97–36200– Supply and Demand Factors for Organic Other than accreditation fees, recordkeeping 5. Produce. American Journal of Agricultural and reporting costs, we did not quantify the Hammitt, James K. 1990. Risk Perceptions Economics, Vol. 78 (August): 647–655. magnitude of the compliance costs or the and Food Choice: An Exploratory Analysis costs of adhering to other provisions of this of Organic—Versus Conventional-Produce Thompson, Gary D. 1998. Consumer Demand regulation. We have also not quantified the Buyers. Risk Analysis, Vol. 10, No. 3: 367– for Organic Foods: What We Know and impact of all these provisions on small 374. What We Need to Know. Amer. J. Agr. business but we believe there impact to be Hammitt, James K. 1993. Consumer Econ. Vol. 80, No. 5: 1113–1118. significant. Willingness to Pay to Avoid Pesticide Underhill, S. E. and E. E. Figueroa. 1993. The direct costs of accreditation if all Residues. Statistica Sinica, 3. Consumer Preferences for Non- currently operating certifying agents become Independent Organic Inspectors Association. Conventionally Grown Produce. Paper certified during the first 18 months following 1996. IOIA 1996 Membership Directory. presented at the Valuing Food Safety and the final rule is approximately $75,000 to Winona, MN. Nutrition Conference, organized by the $100,000. After the first 18 months, the direct International Trade Centre UNCTAD/WTO. NE–165 Regional Research Project. cost for accrediting would be approximately 1999. Organic Food and beverages: World Alexandria, VA, June 2–4. $150,000 to $238,000. During the 18-month Supply and major European Markets. USDA Foreign Agricultural Service. 1995. period during which the NOP is not Geneva: ITC, xiv, 271 p. Agricultural Situation: Agricultural recovering the full costs of accreditation Jolly, Desmond A., Howard G. Schutz, Highlights, Winter 1995. Report from services, the organic industry is being Katherine V. Diaz-Knauf, and Jagjeet Johal. Austria. Code 24, Sequence No. 007. subsidized with appropriated funded derived 1989. Organic Foods: Consumer Attitudes USDA Foreign Agricultural Service. 1995. from the taxpayers. For existing certifying and Use. Food Technology (November): Agricultural Situation: Organic Food. agents compliance costs include costs to 60–66. Report from Germany. Code 24, Sequence become familiar with and adopt NOP Jolly, Desmond A. 1991. Differences Between No. 011. standards. The aggregate cost of complying Buyers and Nonbuyers of Organic Produce USDA Foreign Agricultural Service. 1996. with reporting and recordkeeping and Willingness to Pay Organic Price Agricultural Situation: Organic Food requirements of the rule are approximately Premiums. Journal of Agribusiness Market Potential and Regulations. Report $6.8 million. Appropriated NOP funds used (Spring): 97–111. from France. Code 24, Sequence No. 002. to operate the National Organic Program are Klonsky, Karen and Laura Tourte. 1995. USDA Foreign Agricultural Service. 1999a. transfers from the taxpayers to the Statistical Review of California’s Organic Report on organic agriculture in Japan. Agriculture, 1992–93. Report prepared for participants in the organic sector. Attache report JA91234. October 5. the California Department of Food and USDA Foreign Agricultural Service. 1999b. References Agriculture Organic Program. Cooperative Report on organic agriculture in France. Byng, John. 1994. UK and European Extension, Department of Agricultural Attache report FR9070. October 18. Community (EC) Legislation. In, Handbook Economics, University of California, Davis. U.S. Senate. 1999. Report 106–80. of Organic Food Processing and Klonsky, Karen and Laura Tourte. 1998a. Production. Simon Wright (ed.). pp. 17–30. Statistical Review of California’s Organic Agriculture, Rural Development, Food and Glasgow: Blackie Academic and Agriculture, 1992–95. Report prepared for Drug Administration, and Related Agencies Professional. the California Department of Food and Appropriation Bill 2000. Committee on California Department of Health Services Agriculture Organic Program. Cooperative Appropriations. Page 56. (DHS). 1999. Report on the Registration of Extension, Department of Agricultural Weaver, Robert D., David J. Evans, and A. E. California Organic Processed Food Firms. Economics, University of California, Davis. Luloff. 1992. Pesticide Use in Tomato Sacramento: State of California. September Klonsky, Karen and Laura Tourte. 1998b. Production: Consumer Concerns and 1999. Figures obtained via personal Organic Agricultural Production in the Willingness-to-Pay. Agribusiness, Vol. 8 communication with DHS. United States: Debates and Directions. No. 2: 131–142. Table 1. California Department of Health Services. Amer. J. Agr. Econ. Vol. 80, No. 5: 1119– 1995. Report on the Registration of 1124. TABLE 1.ÐORGANIC FOOD SALES California Organic Processed Food Firms. Lohr, Luanne. 1998. Implications of Organic [$ billions] Sacramento: State of California. Certification for Market Structure and Collins, Shane. 1999. ‘‘Rosy future forecast Trade. Amer. J. Agr. Econ. Vol. 80, No. 5: Sales for Europe’s organic market,’’ Eurofruit 1125–1129. Year Sales (1998 Magazine, September. Mergentime, Ken. 1997. ‘‘Organic Fraud Case dollars) Dunn, Julie Anton. 1995a. Organic Food and Deepens; Possible Link Causes OCIA Fiber: An Analysis of 1994 Certified Turmoil’’, the Natural Foods Merchandiser, 1990 ...... 1.000 1.25 Production in the United States. U.S. March. 1991 ...... 1.250 1.50 Department of Agriculture, Agricultural Mergentime, Ken and Monica Emerich. 1995. 1992 ...... 1.540 1.79 Marketing Service. Organic Sales Jump Over $2 Billion Mark 1993 ...... 1.890 2.13 Dunn, Julie Anton. 1995b. ‘‘Organic Foods in 1994. Natural Foods Merchandiser 1994 ...... 2.310 2.54 Find Opportunity in Natural Foods (June): 74–76. 1995 ...... 2.800 2.99 Industry,’’ Food Review, Vol. 18, Issue 3, Mergentime, Ken and Monica Emerich. 1996. 1996 ...... 3.500 3.64 Sep.–Dec. Widening Market Carries Organic Sales to Dunn, Julie Anton. 1997. AgriSystems $2.8 Billion in 1995. Natural Foods Source: Mergentime and Emerich in Natural International Reports Certified Organic Merchandiser (June): 36–38. Foods Merchandiser.

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TABLE 2A.ÐFIRST YEAR CERTIFICATION COSTS, FROM GRAF AND LOHR ANALYSIS [In dollars]

Small Medium Large Super Certifying agent farm farm farm farm

CCOF ...... 750 1,650 4,750 51,150 FVO ...... 585 1,624 5,101 51,437 FOG ...... 325 845 2,525 25,525 NOFA-VT ...... 335 535 585 585 OTCO-In ...... 608 1,766 2,517 11,518 OTCO-Out ...... 568 1,498 2.352 11,353 OCIA-WI ...... 315 1,590 6,090 75,090 OCIA-VA ...... 258 320 495 1,745 TDA ...... 90 155 200 515 WSDA ...... 330 1,375 2,800 12,000 NC/SCS ...... n/a n/a n/a n/a Average cost ...... 416 1,136 2,742 24,092 Notes: CCOFÐCalifornia Certified Organic Farmers FVOÐFarm Verified Organic FOGÐFlorida Certified Organic Growers & Consumers NOFA±VTÐNortheast Organic Farming Association-Vermont OTCO±InÐOregon Tilth Certified Organic, inside Oregon OTCO±OutÐOregon Tilth Certified Organic, outside Oregon OCIA±WIÐOrganic Crop Improvement Association, Wisconsin chapter OCIA±VAÐOrganic Crop Improvement Association, Virginia chapter TDAÐTexas Department of Agriculture WSDAÐWashington State Department of Agriculture NC/SCSÐNutriClean/Scientific Certification Systems Small farmÐ25 acres with annual sales of $30,000. Medium farmÐ150 acres with annual sales of $200,000. Large farmÐ500 acres with annual sales of $800,000. Super farmÐ3,000 acres with annual sales of $10,000,000.

TABLE 2B.ÐSUBSEQUENT YEAR CERTIFICATION COSTS, FROM GRAF AND LOHR ANALYSIS [In dollars]

Small Medium Large Super Certifying agent farm farm farm 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: CCOFÐCalifornia Certified Organic Farmers FVOÐFarm Verified Organic FOGÐFlorida Certified Organic Growers & Consumers NOFA±VTÐNortheast Organic Farming AssociationÐVermont OTCO-InÐOregon Tilth Certified Organic, inside Oregon OTCO-OutÐOregon Tilth Certified Organic, outside Oregon OCIA±WIÐOrganic Crop Improvement Association, Wisconsin chapter OCIA±VAÐOrganic Crop Improvement Association, Virginia chapter TDAÐTexas Department of Agriculture WSDAÐWashington State Department of Agriculture NC/SCSÐNutriClean/Scientific Certification Systems Small farmÐ25 acres with annual sales of $30,000. Medium farmÐ150 acres with annual sales of $200,000. Large farmÐ500 acres with annual sales of $800,000. Super farmÐ3,000 acres with annual sales of $10,000,000.

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TABLE 3.ÐCOSTS OF ACCREDITATION TABLE 3.ÐCOSTS OF ACCREDITATION 3 Estimated certification fees are calculated from Graf and Lohr 1999 which, for a selection AND CERTIFICATION AND CERTIFICATIONÐContinued of certification agents, provides certification costs for four hypothetical farm sizes: (1) Miscellaneous $50 Estimated costs to certifying agents during Small Farm (``Family Farm''): 25 acres, charges (copying, first 18 months $30,000 annual sales, 5 hours to certify; (2) phone, and similar Medium Farm (``Cottage Industry''): 150 acres,

1 costs). $200,000 annual sales, 6 hours to certify; (3) Application fee $0 Large Farm (``Commercial Farm''): 500 acres, Site evaluation costs Total ...... $3,070 to $4,850 $800,000 annual sales, 8 hours to certify; and (two person team):. (4) Super Farm: 3,000 acres, $10,000,000 an- Per diem (3 to 5 $480 to $800 Annual review fees for $190 to $760 nual sales, 16 hours to certify. Our estimated days). certifying agents (2 certification fees only include those charged for small and medium farms, because most or- Travel (domestic) .... $1,000 to $1,200 to 8 hours at $95/ ganic producers fall into these categories as Hourly charges (not $0 hour) 2. defined by Graf and Lohr. In the 1997 OFRF billed). survey, 90 percent of respondents had gross Miscellaneous $50 Estimated costs to producers for organic farming income less than $250,000, charges (copying, certification 3 with 82 percent less than $100,000. phone, and similar The average current certification cost for costs). Certification fee (ini- $800 most organic producers is about $775 for the tial certification). first year of certification ($416 for small and $1,136 for medium farms) and about $705 for Total ...... $1,530 to $2,050 Certification fee (re- $730 newals). subsequent years ($371 for small and $1,036 for medium farms). Approximately $25 is Estimated costs to certifying agents for Estimated costs to handlers for added to cover the costs associated with the initial accreditation after first 18 months 4 National Organic Program for an estimated certification first year certification fee of $800 and subse- Application fee 1 ...... $500 quent year certification fee of $730 for pro- Certification fee (initial $1,825 ducers. Larger producers could expect higher Site evaluation costs certification). fees. (one person): Certification fee (re- $1,665 4 Because Graf and Lohr do not estimate Per diem (3 to 5 $240 to $400 newals). certification fees for handlers, we estimate days). these fees by applying a ratio of handler-to- Travel (domestic) .... $500 to $600 1 Nonrefundable fee that will be applied to producer certification fees from the regulatory the applicant's fee for service account. impact assessment from 1997. The ratio is Hourly charges (24 $2,280 to $3,800 2 Certifying agents are required to submit to 40 hours at 2.28 results in estimated fees of $1,825 and annual reports to USDA. Review of these re- $1,665, respectively. $95/hour)). ports is expected to range from 2 to 8 hours at an approximate rate of $95 per hour.

TABLE 4.ÐESTIMATED ANNUAL REPORTING AND RECORDKEEPING BURDEN

Annual Type of respondent hours per Hourly rate Annual cost respondent

Certified producer ...... 10 $24 $229 Exempt producer ...... 0.5 24 12 Certified handler ...... 50 24 1,189 Exempt handler ...... 0.5 24 12 State certifying agency ...... 696 27 18,778 Private or foreign certifying agency ...... 700 27 18,893 Note: Estimates derived from Paperwork Reduction Act of 1995 analysis.

Appendix B.—Unfunded Mandates Reform State officials or private persons as certifying attached as an appendix to this proposed Act agents who would certify producers or regulation). The RIA consists of a statement This proposed rule has been reviewed handlers of agricultural products that have of the need for the proposed action, an under the Unfunded Mandates Reform Act been produced using organic methods as examination of alternative approaches, and provided for in the OFPA. The OFPA also an analysis of the benefits and costs. Much (P.L.104–4). The Act requires that agencies permits a governing State official to of the analysis is necessarily descriptive of prepare a qualitative and quantitative voluntarily establish a State organic the anticipated impacts of the proposed rule. assessment of the anticipated costs and certification program if the program is Because basic market data on the prices and benefits before proposing any rule that may approved by the Secretary and meets the quantities of organic goods and services and result in annual expenditures by State, local, requirements of the OFPA. The OFPA does the costs of organic production is limited, it and tribal governments, in the aggregate, or not require that States establish their own is not possible to provide quantitative by the private sector, of $100 million organic certification programs or that State, estimates of all benefits and costs of the (adjusted annually for inflation) in any one local or tribal governments, or the private proposed rule. The cost of fees and year. According to the Act, the term Federal sector, become accredited; therefore, the recordkeeping proposed by the USDA are mandate means any provision in legislation, OFPA is not subject to the Unfunded quantified, but the anticipated benefits are statute, or regulation that would impose an Mandates Reform Act because it is a not. Consequently, the analysis does not enforceable duty upon State, local, or tribal voluntary program. contain an estimate of net benefits. governments, or the private sector, except a Although USDA has determined that this The analysis employed in reaching a duty arising from participation in a voluntary proposed rule is not subject to the Unfunded determination that this proposed rule is the Federal program. Mandates Reform Act, USDA has sought to least costly and least burdensome to the The National Organic Foods Production consider the rule’s impact on various entities. regulated parties is discussed in the sections Act (OFPA) of 1990 mandates that the USDA prepared a Regulatory Impact titled ‘‘The Regulatory Flexibility Act and the Secretary develop a National Organic Assessment (RIA) that is discussed in the Effects on Small Businesses’’ and Program (NOP) to accredit eligible governing section titled ‘‘Executive Order 12866’’ (also ‘‘Paperwork Reduction Act of 1995.’’ The

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All three sectors are subject to communicate with various entities during the confronted manufacturers of multi ingredient indirect costs of compliance. development of the proposed rule; States, for organic food products containing ingredients The term, ‘‘certifying agent,’’ means the example. Currently there are 27 States with certified by different certifying agents chief executive officer of a State or, in the some standards governing the production or because reciprocity agreements have to be case of a State that provides for the statewide handling of organic food and 13 States with negotiated between certifying agents. election of an official to be responsible solely organic certifying programs. Representatives Consumer confusion may exist because of the of State governments have participated in variety of seals, labels, and logos used by for the administration of the agricultural public meetings with the NOSB, while the certifying agents and State programs. Also, operations of a State, such official and any NOP staff has made presentations, received there is no industry wide agreement on an person (including private entities) who is comments, and consulted with States and accepted list of substances that should be accredited by the Secretary as a certifying local and regional organic conferences, permitted or prohibited for use in organic agent for the purpose of certifying a farm or workshops, and trade shows. States have production and handling. Finally, a lack of handling operation as a certified organic farm been actively involved in training sessions national organic standards may inhibit or handling operation. The term, ‘‘producer,’’ for organic inspectors; public hearings organic producers and handlers in taking full means a person who engages in the business concerning standards for livestock products advantage of international organic markets of growing or producing food or feed. The during 1994; a national Organic Certifiers and may reduce consumer choices in the term, ‘‘handler,’’ means any person engaged meeting on July 21, 1995; a USDA-hosted variety of organic products available in the in the business of handling agricultural meeting on February 26, 1996; a State marketplace. products, excluding final retailers of certifiers meeting in February 1999; and an To address these problems in the late agricultural products that do not process ISO 65 assessment training session for 1980’s, the organic industry attempted to agricultural products. Subpart B, section certifiers in April-May 1999. It is unknown establish a national voluntary organic 205.101 in the proposed regulation provides at this time how many States, if any, might certification program. At that time, the information about exemptions and voluntarily establish their own organic industry could not develop consensus on the exclusions from certification. certification programs pursuant to the OFPA standards that should be adopted, so According to the most complete data and the regulations. Congress was petitioned by the Organic Trade Association to establish national available to USDA’s Agricultural Marketing Appendix C.—The Regulatory Flexibility Act standards for organic food and fiber products. Service (AMS), there are 49 certifying agents and the Effects on Small Businesses Recently, the Organic Trade Association (36 private and 13 State) in the U.S. Over half The Regulatory Flexibility Act (5 U.S.C. published American Organic Standards, of the private and State certifying agents 601 et seq.) (Act) requires agencies to Guidelines for the Organic Industry (AOS). certify both producers and handlers, while consider the economic impact of each However, not all participants in the organic the others certify only producers. Over three- proposed rule on small entities and evaluate industry elected to participate in developing fourths of private and State certifying agents alternatives that would accomplish the the AOS. Many certifying agents preferred to each certify fewer than 150 producers and 20 objectives of the rule without unduly wait for implementation of the National handlers. The number of certifying agents has burdening small entities or erecting barriers standards, and some certifying agents remained fairly stable between 40 and 50 for that would restrict their ability to compete in disagree with portions of the AOS. For these some years, with entries and exits tending to the market. The purpose is to fit regulatory reasons, the USDA is proposing a regulation offset each other. The National Organic actions to the scale of businesses subject to for the National Organic Program. Program staff anticipates that, in addition to the action. Legal Basis for and Objectives of Proposal the 49 domestic certifying agents, 10 foreign In the first proposal published in December certifying agents may seek accreditation 1997, the initial Regulatory Flexibility In 1990, Congress enacted the Organic during the initial phase of the program. Analysis (RFA), describing the impact of the Foods Production Act of 1990, as amended National Organic Program and evaluating the (7 U.S.C. 6501 et seq.) (OFPA). The OFPA It is more difficult to establish the number alternatives, was written with guidance from requires all agricultural products labeled as of organic producers. Organic farming was the U.S. Small Business Administration ‘‘organically produced’’ to originate from not distinguished from conventional (SBA). The RFA of this proposal was written farms or handling operations certified by a agriculture in the 1997 Census of Agriculture. following consideration of comments State or private agency that has been There are sources which give insight into the received in response to the first proposal, accredited by USDA. number of producers. The Organic Farming other information that has become available The purposes of the OFPA, set forth in Research Foundation (OFRF), a California- since the first proposal, the Regulatory section 2102 (7 U.S.C. 6501), are to: (1) based nonprofit organization, has conducted Impact Assessment (RIA) that is discussed in Establish national standards governing the three nationwide surveys of certified organic the section entitled ‘‘Executive Order 12866’’ marketing of certain agricultural products as producers from lists provided by cooperating (also attached as an appendix to this organically produced products; (2) assure certifying agents. The most recent survey proposal), and the information collection consumers that organically produced applies to the 1997 production year.1 OFRF burden discussed in the section entitled products meet a consistent standard; and (3) sent its 1997 survey to 4,638 names and ‘‘Paperwork Reduction Act of 1995’’ (PRA). facilitate commerce in fresh and processed received 1,192 responses. Because OFRF did food that is organically produced. The Reasons for Proposal not obtain lists from all certifying National Organic Program, which this rule organizations or their chapters (55 out of a Currently, organic certification is voluntary proposes, is the result of the OFPA. total of 64 identified entities provided lists), and self-imposed. Members of organic industries across the U.S. have experienced Applicability of Proposal their list count is likely an understatement of numerous problems marketing their This proposal will directly affect three the number of certified organic producers. organically produced and handled sectors of the organic industry: certifying Note that the estimated number of organic agricultural products. Inconsistent and agents, producers, and handlers. The OFPA producers includes only certified organic conflicting organic production standards may provides for the collection of reasonable fees farms. Comments filed in response to the first have been an obstacle to the effective by USDA from producers, handlers, and proposal and studies indicate that the total marketing of organic products. There are certifying agents who participate in the number of organic farms is higher. currently 36 private and 13 State organic national program. This proposal will impose certification agencies (certifying agents) in direct costs on certifying agents in the form 1 Organic Farming Research Foundation. 1999. the United States, each with its own of a fee paid to the Federal Government for Final Results of the Third Biennial National standards and identifying marks. USDA accreditation. This proposal does not Organic Farmers’ Survey. Santa Cruz, CA.

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Dunn has estimated the number of certified businesses. These standards represent the to the survey accurately represent the entire organic producers in the U.S.23 Dunn’s 1995 number of employees or annual receipts population of certified organic growers. Also, work, a USDA study, estimated the number constituting the largest size that a for-profit some producers combine organic and of certified producers at 4,060 in 1994; this enterprise (together with its affiliates) may be conventional production on the same estimate was used in the first proposal. and remain eligible as a small business for operation, some with total sales that may Dunn’s 1997 work reported 4,060 certified various SBA and other Federal Government exceed $500,000. However, it is likely that a organic farms in 1994 and 4,856 in 1995. programs. majority of organic producers would be Data collected by AMS indicate that the Small businesses in the agricultural considered small. services sector, such as certifying agents, number of organic farmers increased about 12 It is also likely that the vast majority of include firms with average annual revenues percent per year and the number of organic handlers would be considered small, based handlers increased at about 11 percent per of less than $5 million (SIC Division A Major on SBA’s small business size standards for year during the period 1990 to 1994. OFRF Group 7). Producers with crop production handlers. Based on informal conversations survey efforts indicate that growth has (SIC Division A Major Group 1) and annual continued, although it is not clear whether average revenues under $500,000 are small with organic certifying agents, about 25 the growth rate has changed. Similarly, businesses. Producers with livestock or (about 2 percent) of the estimated 1,250 growth in retail sales, the addition of meat animal specialities are also considered small organic handlers have more than 500 and poultry to organic production, and the if annual average revenues are under employees. This includes firms that handle possibility of increased exports suggest that $500,000 (SIC Division A Major Group 2), or process both organic and conventional the number of operations has continued to with the exception of custom beef cattle foods. feedlots and chicken eggs, which are increase. Lacking an alternative estimate of Costs of This Proposal the growth rate for the number of certified considered small if annual average revenues organic producers, we use the average growth are under $1,500,000. In handling operations, Several requirements to complete this RFA rate of about 14 percent from Dunn’s 1997 a small business has fewer than 500 overlap with the RIA and the PRA. In order study. The true rate of growth could be employees (SIC Division D Major Group 20). to avoid duplication, we combine some higher or lower. Applying the 14-percent Based on SBA’s small business size analyses as allowed in section 605(b) of the growth rate to Dunn’s estimate of certified standards for the agricultural services sector, Act. This RFA provides information specific producers in 1995 gives an estimate of 8,200 it is not likely that many, if any, of the 49 to small entities, while the RIA or PRA organic producers for 1999. domestic certifying agents have annual should be referred to for more detail. For An adjustment is needed to account for the revenue greater than $5 million. Based on example, the RFA requires an analysis of the number of producers who are practicing anecdotal information, only a few private, proposed rule’s costs to small entities. The organic agriculture but who are not certified for-profit, certifying agents might be RIA provides an analysis of the benefits and and who would be affected by this proposal. categorized as a large business. All private, costs of this proposal. This RFA uses the RIA We assume that the number of organic but non profit, and State certifying agents would information to estimate the impact on small not certified producers in 1999 is about be considered small by SBA’s standards. entities. Likewise, the RFA requires a 4,000. This assumption is based on very Even if State certifying agents do not exceed description of the projected reporting, limited information about the number of the revenue threshold, they would not be recordkeeping, and other compliance registered but not certified organic producers considered to be small entities under the Act requirements of the proposed rule. The PRA in California in 1995. Thus, the total number if the agents are an arm of state government. section estimates the reporting and of organic producers used in assessing the Only government jurisdictions with recordkeeping (information collection) populations under 50,000 are considered to impact of the rule is 12,176 in 1999. requirements that would be required by this be small entities under section 601(5) of the Little information exists on the numbers of proposal from individuals, businesses, other Act. handlers and processors. USDA has private institutions, and State and local estimated that there were 600 entities in this Based on SBA’s small business size governments. The burden of these category in 1994. In California, there were standards for producers, it is likely that requirements is measured in terms of the 208 registered organic processed food firms almost all organic producers would be amount of time required of program in 1995 and 376 in 1999, a growth rate of 20 considered small. The OFRF survey asked for percent.4 We assume that this growth rate is the producer’s total gross organic farming participants and its cost. This RFA uses the applicable to the U.S. and project 1,250 income during 1997. Only 35 (less than 3 PRA information to estimate the burden on handlers in 1999. Again, the rate of growth percent) of the survey respondents reported small entities. could be higher or lower. gross income greater than $500,000, the The estimated direct costs of accreditation SBA’s cutoff between small and large for certifying agents and certification for SBA Definitions of Small Entities businesses. Over 70 percent reported gross producers and handlers under the first Small business size standards, Standard income of less than $50,000. The OFRF proposal issued in December 1997 and this Industrial Code (SIC) (13 CFR part 121), are survey does caution readers about potential proposal are shown in table 1 and discussed developed by an inter-agency group, survey ‘‘errors.’’ It is particularly important in the following sections. More specific published by the Office of Management and to emphasize potential ‘‘non-response error,’’ details regarding these costs are found in the Budget, and used by SBA to identify small that is, it is unknown if those who responded RIA.

TABLE 1.ÐESTIMATED DIRECT COSTS OF ACCREDITATION AND CERTIFICATION

First proposal This proposal 1st year cost 2nd year cost 1st year cost 2nd year cost

Certifying Agents: Accreditation application fee ...... $640 $640 $0 $0 USDA administrative fee ...... 2,000 2,000 0 0 Estimated site evaluation fee ...... 3,500 1 1,530 to 1 3 2,050 Annual review fee ...... 22190 to 760

2 Dunn, Julie Anton. 1995. Organic Food and 3 Dunn, Julie Anton. 1997. AgriSystems 4 California Department of Health Services (DHS). Fiber: An Analysis of 1994 Certified Production in International Reports Certified Organic Production 1995. Report on the Registration of California the United States. U.S. Department of Agriculture, in the United States: Half a Decade of Growth. Organic Processed Food Firms. Sacramento: State of Agricultural Marketing Service. AgriSystems International: Wind Gap, PA. California. September 1999 figures obtained via personal communication with California DHS.

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TABLE 1.ÐESTIMATED DIRECT COSTS OF ACCREDITATION AND CERTIFICATIONÐContinued

First proposal This proposal 1st year cost 2nd year cost 1st year cost 2nd year cost

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

Producers: Estimated certification fee 4 ...... 413 413 800 730 USDA fee ...... 50 50 0 0

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

Handlers: Estimated certification fee 4 ...... 943 943 1,825 1,665 USDA fee ...... 500 500 0 0

Total Fees ...... 1,443 1,443 1,825 1,665 1 Should certifying agents wish to become accredited in additional areas for which they have not been accredited previously, site evaluation fees will be charged. 2 First proposal: Included in application and administrative fees. This proposal: Certifying agents are required to submit annual reports to USDA. Review of these reports is expected to range from 2 to 8 hours at an approximate rate of $95 per hour. 3 During the first 18 months, site evaluation for initial accreditation will involve two reviewers. One reviewer would come from the Quality Sys- tems Certification Program audit staff and would be familiar with ISO Guide 65 verification; the other reviewer would come from the National Or- ganic Program staff and would be familiar with requirements of the organic program. The two would conduct the site evaluation jointly. We antici- pate only one reviewer would be required after the 18-month transition period. The estimated site evaluation fee shown here includes per diem and travel costs for two reviewers plus miscellaneous charges related to accreditation. Site evaluations for smaller certifying agents are esti- mated to take 3 days, with 5 days for larger certifying agents. For the first 18 months after implementation of the NOP, hourly rates will not be charged to certifying agents for accreditation. The estimated fee shown here includes only travel and per diem expenses. At an approximate rate of $95 per hour, hourly charges would add an estimated $4,560 to $7,600 for 2 reviewers during the first 18 months, and $2,280 to $3,800 for 1 reviewer after the first 18 months or for renewal of ac- creditation. 4 First proposal: Estimated certification fees at that time were based on the average of fees charged by a representative group of certifying agents (private non-profit, private for-profit and a State agency). This proposal: Estimated certification fees are calculated from a 1999 study by Graf and Lohr 5 which, for a selection of certification agents, provides certification costs for four hypothetical farm sizes: (1) Small Farm (``Family Farm''): 25 acres, $30,000 annual sales, 5 hours to certify; (2) Medium Farm (``Cottage Industry''): 150 acres, $200,000 annual sales, 6 hours to certify; (3) Large Farm (``Commercial Farm''): 500 acres, $800,000 annual sales, 8 hours to certify; and (4) Super Farm: 3,000 acres, $10,000,000 annual sales, 16 hours to certify. Our estimated certifi- cation fees only include those charged for small and medium farms, because most organic producers fall into these categories as defined by Graf and Lohr. In the 1997 OFRF survey, 90 percent of respondents had gross organic farming income less than $250,000, with 82 percent less than $100,000. The average current certification cost for most organic producers is about $775 for the first year of certification ($416 for small and $1,136 for medium farms) and about $705 for subsequent years ($371 for small and $1,036 for medium farms). An estimated $25 is added to cover the costs associated with the National Organic Program for an estimated first year certification fee of $800 and subsequent year certification fee of $730 for producers. Larger producers could expect higher fees. Because Graf and Lohr do not estimate certification fees for handlers, we estimate these fees by applying the December 1997 ratio of handler- to-producer certification fees, 2.28, to the estimated first and subsequent year certification fees for producers, resulting in fees of $1,825 and $1,665, respectively.

Direct Costs to Certifying Agents certifying agents. Total certification fees certifying agents also earn revenue from a We have identified 36 private certifying collected by the certifying agents in 1994 number of other sources, such as sale of agents and 13 State programs providing ranged from about $2,500 to about $400,000, publications, membership dues, training certification. These 49 domestic entities are with most certifying agents clustered around workshop and conference fees, farmers considered likely applicants during the first the low or high end of this range. This markets, grants, or donations. 12 months, as are an estimated 10 foreign amount is based on information collected by Certifying agents will be assessed for the certifying agents. An unknown number of AMS from a sample of 16 private and State actual time and travel expenses necessary for new entrants to the certifying business may certifying agents for certification fees the National Organic Program to perform also apply. However, over the last 10 years, collected in 1994. To determine a cutoff accreditation services. The National Organic the number of certifying agents does not point for small certifying agents, the State Program will charge the same hourly fees as appear to have grown significantly, with the certifying agents were eliminated from the are charged for the voluntary, fee-for-service net effect of entries and exits maintaining a sample because these agents are an arm of program provided by AMS to certification population of U.S.-based certifying agents at State government and are not considered bodies requesting conformity assessment to about 40 to 50. Of the 49 domestic certifying small entities. Of the remaining 11 private the International Organization for agents, based on information discussed certifying agents, 6 (or 55 percent) collected Standardization (ISO) Guide 65, ‘‘General previously, we estimate that the 36 private less than $25,000 each in total certification Requirements for Bodies Operating Product certifying agents are small. fees, and the other 5 (45 percent) each Certification Systems.’’ We expect that at the In order to identify the certifying agents collected more than $200,000. Based on this time the National Organic Program’s final that might be expected to face more information and knowledge of the organic rule is implemented, the fees will be significant impacts as a result of this industry, for purposes of analyzing the cost approximately $95 per hour, with higher proposal, we analyzed the amount of of accreditation, we estimate that about 55 overtime and holiday rates. Certifying agents revenues from certification fees received by percent of private certifying agents are small will be charged for travel, per diem, and with total annual revenue from certification other related costs associated with 5 Graf, Anita and Luanne Lohr. 1999. Analysis of of less than $25,000. accreditation. Applicants for accreditation certification program costs. Working Paper, Fund Certification fees probably do not will be required to pay at the time of for Rural America project, Market Development for constitute total income for most private application a nonrefundable fee of $500, Organic Agriculture Projects, Grant No. 97–36200– certifying agents and, thus, are not a which is applied to the applicant’s fee for 5. complete measure of economic size. Some services account. This fee is credited against

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The direct costs their documents and that had a large number six large, private programs, six smaller for certifying agents to obtain accreditation of nonconformities during previous audits private programs, and six State programs, will be limited to per diem and will require a greater amount of time. The four programs were accredited and one had transportation costs for the site evaluation, scope of a follow up audit is to verify the accreditation pending.8 All of these were which is required every 5 years. We estimate correction of nonconformities and to evaluate large private certifying agents. Three of the these costs to be $1,530 for a small certifying the effectiveness of the corrections. Certifying certifying agents identified by Fetter as agent and $2,050 for a larger certifying agent. agents are able to control these cost factors accredited requested ISO Guide 65 These estimates are based on, for small and by making certain that documents are well assessments by USDA and have been larger certifying agents, two reviewers with 3 organized and by educating themselves about approved for selling organic products into and 5 days of per diem, $500 to $600 in quality systems. the international market. Those certifying transportation costs, and $50 in The complexity of an certification agency’s agents currently accredited by third parties miscellaneous charges related to organization also will affect the time needed will likely pay less for USDA accreditation accreditation. 6 In subsequent years, to complete an audit. An agency with a because their documents are organized and certifying agents will be required to submit central office in which all certification they have fewer nonconformities. an annual report. Review of this report is activities take place will require less time for Those certifying agents who have been anticipated to range from 2 to 8 hours at the document review and site evaluation than a operating without third party accreditation chapter organization or a business structured ISO Guide 65 hourly rate. If certifying agents will face new costs—the costs of so that responsibility for making certification wish to become accredited in additional accreditation—under this proposal. decisions is delegated outside of the central areas for which they were not accredited Compared to the direct costs of $3,000 to office. In the latter cases, the auditors’ previously, site evaluation fees will be $5,000 per year indicated by the commenters, document review would require additional charged. the direct costs of USDA accreditation will be After the first 18 months of the National time and site evaluation that would extend from the central office to one or more of the smaller, with estimated site evaluation fees Organic Program, USDA estimates that the (covering 5 years) ranging from $3,070 to costs of a site evaluation visit, required every chapters or to the site to which the certification decision making is delegated. $4,850 for the first year and an annual review 5 years, could be $3,070 for small certifying fee ranging from $190 to $760 for subsequent agents and $4,850 for larger certifying agents. Other factors determine the amount of time needed to complete an accreditation audit. years. Furthermore, the direct costs would be These estimates are based on, for small and substantially less for those certifying agents larger certifying agents, one reviewer with 3 For an agency with numerous clients, auditors may need to spend more time obtaining accreditation during the first 18 and 5 days of per diem, $500 to $600 in months while USDA does not impose an transportation costs, $50 in miscellaneous reviewing client files or examining business operations than they would have to spend for application fee or hourly charges and limits charges related to accreditation, and 24 to 40 direct costs to travel and per diem costs. hours (3 to 5 work days) at an anticipated a smaller agency. Audit of an agency with a large number of processor clients may require It is expected that all certifying agents will maximum hourly rate under ISO Guide 65 of set their fee schedule to recover costs for $95. Higher hourly rates will be charged for an extended amount of time to follow audit trails, confirm that organic ingredients their certification services, including the overtime and for work on holidays. costs of accreditation. The larger the number The cost of a site evaluation will vary with remain segregated from nonorganic ingredients, and establish that foreign- of clients per certifying agent, the more fixed the cost of travel from the auditor’s work costs can be spread out. It is possible, station to the applicant’s place of business. produced ingredients originate from approved entities. Finally, the complexity of however, that small certifying agents could Auditors live in different parts of the be significantly impacted by this proposal country, and travel costs might be reduced the agricultural practices certified could influence the amount of time necessary to and may not be able to continue in business when the distance traveled is reduced. The from a financial standpoint. lowest cost airfare would be used whenever complete an accreditation audit. An agency possible. In some cases, site evaluations whose certification covers only producers Projected Reporting, Recordkeeping, and might be grouped geographically in order to who grow and harvest one crop per field per Other Compliance Requirements of Certifying reduce travel expenses. The per diem rate year, such as wheat or sugar beets, could Agents quickly be audited. An agency whose will also vary depending on the rate set for In addition to the direct costs, the the certifying agent’s location as established producers grow several different crops per field per year or an agency that certifies regulation will impose administrative costs by the General Services Administration. producers of crops and livestock as well as on certifying agents for reporting, Several factors will influence the amount handlers would require a greater amount of recordkeeping, residue testing, and other of time needed to complete an accreditation time. compliance requirements. The actual amount audit. An operation in which documents are All of these factors will impact both small of the additional administrative costs that well organized and that has few and large certifying agents. A small certifying would be imposed by the final rule is nonconformities within the quality system agent could be assumed to have a less expected to be different for those entities that complex organization or have fewer clients, would begin their activities only after the 6 During the first 18 months, site evaluation for and, thus, potentially less time would be national program is implemented. Certifying initial accreditation will be conducted jointly by necessary for review. However, other factors, agents that currently are active in the organic two reviewers. Two reviewers offers: (1) anticipated such as the degree of paperwork organization industry already perform most of these faster turn-around; (2) different areas of expertise— administrative functions; therefore, the one reviewer would come from the Quality Systems or the complexity of the agricultural practices Certification Program audit staff and would be certified, may influence the time needed for additional costs to them would depend upon familiar with ISO Guide 65 verification, while the review for any size of business. the extent to which their current practices are other reviewer would come from the National Comments from the first proposal indicate different from the requirements of the final Organic Program staff and would be familiar with that the average accreditation cost for a regulation. Projected reporting, the requirements of the program; and (3) certifying agent may range from $3,000 to recordkeeping, and other compliance consistency with the organic industry’s desire to $5,000 per year for small to medium-size requirements of certifying agents are have reviewers from both areas of expertise during certifying agents to less than $10,000 per year discussed in greater detail in the PRA and the ISO Guide 65 assessments. AMS would consider RIA. sending one reviewer, rather than two, for the site for the largest certifying agents. evaluation of small certification agents if an individual possessing both reviewing skill and 7 Adequate advance notice will be given to 8 Fetter, Robert T. 1999. Economic Impacts of knowledged of the NOP is available. We anticipate certifying agents to allow them the opportunity to Alternative Scenarios of Organic Products only one reviewer would be required after the 18- organize their records prior to the audit and Regulation. Senior Honors Thesis. University of month transition period. minimize the costs of accreditation. Massachusetts, Amhearst, MA.

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Costs to Producers and Handlers the certification. However, the certifying of organic products but sometimes based on Under this proposal, USDA will not agent may require applicants to pay at the the acres operated. Some certifying agents impose any direct fees on producers and time of application a nonrefundable fee of no charge an hourly rate for inspection and handlers. Certifying agents will establish a more than $250 which must be applied to the audit services. fee schedule for their certification services applicant’s fee for services account. Graf and Lohr have applied fee schedules that will be filed with the Secretary and Currently, supply and demand for provided by nine certifying agents to four posted in a place accessible to the public. certification services determine the fees hypothetical farms—small, medium, large, Certifying agents will provide all persons charged in most areas. Some States charge and a super farm. They define ‘‘small’’ as a inquiring about the application process with minimal fees for certification and instead 25-acre farm with annual sales of $30,000 a copy of their fees. The certifying agent may subsidize operating costs from general that would take 5 hours to certify. Note that only charge those fees that it has filed with revenues. According to separate studies by our alternative definition of small (under the Secretary. Furthermore, the certifying Fetter, and Graf and Lohr, the majority of $5,000) is different. Table 2 shows the total agent will provide each applicant with an certifying agents structure their fee schedules first-year cost and subsequent-year cost for estimate of the total cost of certification and on a sliding scale based on a measure of size, certification for small farms; the RIA shows an estimate of the annual costs of updating usually represented by the client’s gross sales detail on other size farms.

TABLE 2.ÐCERTIFICATION COSTS AMONG A SELECTION OF CERTIFYING AGENTS [For a small farm: 25 acres, $30,000 annual sales, 5 hours to certify]

Total cost to Total cost to Certifying agent certify in first certify in sub- year sequent years

California Certified Organic Farmers ...... $750 $425 Farm Verified Organic ...... 585 510 Florida Certified Organic Growers and Consumers ...... 325 325 Northeast Organic Farming AssociationÐVermont ...... 335 300 Oregon Tilth Certified Organic: ÐInside Oregon ...... 608 454 ÐOutside Oregon ...... 568 424 Organic Crop Improvement Association: ÐWisconsin chapter ...... 315 290 ÐVirginia chapter ...... 258 233 Texas Department of Agriculture ...... 90 90 Washington State Department of Agriculture ...... 330 330 NutriClean/Scientific Certification Systems ...... n/a 700 Average cost ...... 416 371

The Texas Department of Agriculture schedule to abandon their current fee system. the OFRF survey, 27 percent of currently program is the low-cost certifying agent. The Certifying agents could recover their net certified farms that responded to the survey high-cost certifying agent differs from first- additional costs by increasing their flat fee would fall under this exemption. This year to subsequent-year certification. Graf component, their incremental charges, or percentage does not take into account those and Lohr’s study indicates that even small both. Because accreditations are renewed organic farms that are not currently certified farms require significant time for the only every 5 years, certifying agents will have by a private or State certifying agent. A study certification process and this time does not 5 years to recover their net new costs. of California organic farms found that, of all increase proportionately as farm size Certifying agents who become accredited organic farms 10 in 1994–95, about 66 percent increases. None of these certification during the first year of the program would have revenues less than $10,000.11 If programs mentions costs for residue testing have fewer direct costs to recover, because California is representative and the which the National Organic Program will they will not be charged the application fee distribution within the sub-$10,000 category require in the form of preharvest testing and hourly charges for accreditation services. is uniform, then a third of the farms would when there is reason to believe that The OFPA established a small farmer be classified as small for purposes of the agricultural products have come in contact exemption from certification and submission statutory exemption with annual sales less with prohibited substances. Preharvest of organic plans for small producers with a than $5,000. Based on the California study testing is expected to be infrequent. Certifiers maximum of $5,000 in gross sales of organic and the OFRF survey results, we estimate will recover the costs of preharvest testing products. For purposes of the exemption, the that between 25 and 33 percent of organic through explicit charges to the producer OFPA defines a ‘‘small farmer’’ as those who producers are small and would qualify for whose crop is tested, or through a generally sell no more than $5,000 annually in value exemption from the certification higher fee structure that spreads the expected of agricultural products. In this proposal, we requirements. costs of tests over all clients. have clarified that the exemption applies to We have estimated that there are between Certifying agents will continue to set their those who sell no more than $5,000 annually 3,000 and 4,000 small organic producers that own fee schedules under the organic in value of organic products.9 According to will be exempt from certification. These program. Certifying agents will have to set producers would be required to comply with fees to cover any net additional costs of doing 9 We asked for comments on the first proposal as business under the National Organic to whether the current statutory limitation of $5,000 requirement of the $5,000 maximum sales volume Program. Accreditation and administrative for exemption from certification should be raised to exemption. costs are incremental costs to existing $10,000 or to another amount and why such an 10 California State law requires organic farmers to certifying agents’ businesses. Some certifying increased monetary limitation for exemption from register with the State. Certification is voluntary at agents might drop their third party certification would be appropriate. Few the current time. 11 accreditation saving perhaps $3,000 to $5,000 commenters offered recommendations as to a Klonsky, Karen, and Laura Tourte. 1998. per year, but most certifying agents are not maximum sales volume to exempt producers. Statistical Review of California’s Organic Amounts ranged from $2,000 to $50,000, with a few Agriculture, 1992–95. Report prepared for the currently paying for accreditation. suggesting $10,000 and $20,000 exemptions. These California Department of Food and Agriculture This proposal imposes no requirements proposed exemption levels and justifications in Organic Program. Cooperative Extension, that would cause certifying agents that are comments received are not sufficiently consistent Department of Agricultural Economics, University presently using a sliding scale type fee enough for us to recommend changing the statute of California, Davis.

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00140 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules 13651 the production and handling standards and production total less than $500,000 per firm consider alternatives, beyond the previously labeling requirements set forth under the for most certified handlers. Information from discussed exemptions, that would mitigate National Organic Program. We anticipate that the California DHS, where State law requires the indirect costs of this rule on small this exemption will be used primarily by organic processors to register, gives some entities. The following options were small market gardeners and hobbyists who indication of the size distribution. Of the 208 considered by AMS prior to and during the sell produce and other agricultural products processors registered with the State in 1995, development of this proposal: at farmers markets and roadside stands to 80 firms (38 percent) reported gross sales of consumers within their communities. By $50,000 or less, and 50 firms (24 percent) had Option 1: First Proposal Issued December being exempt from certification, the current gross sales exceeding $500,000. In mid- 1997 certification costs (table 2) estimated at an September 1999, 376 processors were The first proposal suggested a fee for direct average $416 for the first year and an average registered with the State, with 107 firms (28 services model which combined a fixed fee $370 for subsequent years have been percent) reporting gross sales of $50,000 or for all farmers, handlers, and certifying eliminated. less and 112 firms (30 percent) reporting agents, with a variable fee for certain direct Exempt producers will be allowed to gross sales exceeding $500,000. We use this services provided by AMS in the market their products as organically California information to estimate that 25 to accreditation of certifying agents. produced without being certified by a 30 percent of handlers have gross sales of Table 1 includes estimated direct costs of certifying agent. Products marketed by $50,000 or less and could be significantly accreditation and certification for the first exempt producers cannot be represented as impacted by this proposal. Information proposal and this proposal; the fees in this certified organic or display the USDA organic needed to estimate the number of exempt or proposal are discussed in prior sections of seal. Products produced or handled on an excluded handlers is not available. this RFA. The fee provisions in this proposal exempt operation may be identified as Some States, such as Texas and have been changed significantly, due in large organic ingredients in a multiingredient Washington, charge producers and handlers part to comments received regarding the first product produced by the exempt operation, nominal fees for certification, and it is proposal. but they may not be identified as organic in possible that more States might provide In overall design, the first proposal is a product processed by others. These certification services as the National Organic similar to this proposal. USDA would limitations may discourage some small Program is implemented. Other States, such accredit certifying agents who would in turn producers from seeking exemption, who as Minnesota, have cost-share programs to certify producers and handlers. USDA instead may choose to become certified. In help offset costs for organic producers. proposed to charge certifying agents a $640 this case, the costs of certification would Projected Reporting, Recordkeeping, and application fee, costs for a site evaluation fee apply. The value associated with having Other Compliance Requirements for that were estimated at $3,500, and a $2,000 organic certification may outweigh the costs Producers and Handlers administrative fee. Producers would be of certification. charged a $50 USDA fee in addition to the Those currently receiving voluntary In addition to the fees for certification, the fees imposed by the certifying agent. certification will likely see a modest increase regulation will impose administrative costs Handlers would be charged a $500 USDA fee as the certifying agent passes on its cost on producers and handlers for reporting, on top of the certifying agent’s fees. The fee incurred under the National Organic recordkeeping, residue testing, and other structure was intended to recover the full Program. Those not currently receiving compliance requirements. The actual amount costs of operating the National Organic certification and producing over $5,000 of the additional administrative costs that Program, which was estimated at $1 million annually in organic products will be required would be imposed by the final rule is annually. Producers with $5,000 or less in to become certified, and they will incur the expected to be different for those entities that annual gross sales of agricultural products actual costs of certification. would begin their activities only after the and handlers with annual gross sales of less We have estimated that there about 98 national program is implemented. Producers than $5,000 were exempt from certification percent of the 1,250 organic handlers are and handlers who currently are active in the as provided for in the OFPA. small. A handling operation or a portion of organic industry already perform most of The OFPA permitted but did not obligate these administrative functions; therefore, the a handling operation is exempt from USDA to charge fees. The first proposal additional costs to them would depend upon certification requirements if it has annual sought to set fees to recover the full costs of the extent to which their current practices are gross sales of less than $5,000; is a retail food the National Organic Program. Public different from the requirements of the final establishment that handles organically comment generally stressed that the fees regulation. Projected reporting, produced agricultural products but does not were too high. Most certifying agents have recordkeeping, and other compliance process them; handles agricultural products operated without third party accreditation. requirements of certifying agents are that contain less than 50 percent organic Thus, USDA fees were a substantial increase discussed in greater detail in the PRA and the ingredients by weight of finished product; or in the costs of doing business for most RIA. does not use the word, ‘‘organic,’’ on any certifiers. For producers the direct fee of $50 package panel other than the information Federal Rules was a 12 percent increase over the estimated panel if the agricultural product contains at No other burdens are expected to fall upon average fee paid for certification. For least 50 percent organic ingredients by the organic industry as a result of certifying agents the $500 fee would have weight of finished product. A handling overlapping Federal rules. This proposed been a 53 percent increase over estimated operation or specific portion of a handling regulation would not duplicate, overlap or average certification fees. To the extent the operation is excluded from certification if it conflict with any existing Federal rules. In program raised certifying agent costs, these handles packaged certified organic products preparing this proposed regulation, AMS costs would have been passed through to that were enclosed in their packages or consulted other Federal agencies such as the producers and handlers. Commenters stated containers prior to being acquired and Food and Drug Administration (FDA), the that many certifying agents had few clients remain in the same package and are not Environmental Protection Agency (EPA), the and to pass through the estimated direct costs otherwise processed by the handler, or it is Bureau of Alcohol, Tobacco and Firearms of accreditation ($6,140) would make the a retail food establishment that processes or (ATF), and the USDA’s Food Safety and costs of certification higher than producers prepares on its own premises raw and ready- Inspection Service (FSIS) to ensure that this could afford. to-eat food from certified organic products. proposed regulation would complement Comments were received opposing fee Otherwise, to be certified organic, handlers existing regulations. provisions in the first proposal. Most of these must pay for certification fees estimated at commenters expressed the belief that the $1,800 per year and fulfill recordkeeping Alternatives to This Proposal proposed fees would price small farmers, requirements. We believe that our proposed regulation handlers, and certifying agents out of the In order to identify handlers that might be could have a significant impact on a organic industry. Many commenters stated expected to face more significant impacts as substantial number of small businesses. that the proposed fees favored large farming a result of this proposal, we attempted to However, we have considered several options operations and suggested a sliding scale fee analyze handlers’ revenue from organic sales. with the intention of mitigating negative system, rather than the flat fee system Sales data indicate that gross sales of organic economic impacts of the fees. We did not discussed in the first proposal, to

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00141 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13652 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules accommodate the economic needs of small records by certified operations; and (3) other certifying agents who are exempt, perhaps by farmers, handlers, and certifying agents. Most records created or received by certifying requiring accredited certifying agents’ clients suggested that small farmers and processors agents to be maintained for five years. to include the USDA seal on their product be exempt from the payment of fees. A more labels. comprehensive review of the comments Option 2: Fee per Certification Model One of the purposes of the OFPA described appears in subpart G entitled A fee per certification model was in the statute is to assure consumers that ‘‘Administrative’’ of this proposal. considered but not used. This model would organically produced products meet a Additional comments were received that have based accreditation fees on the numbers consistent standard. Without Federal specifically referred to the section entitled of farmers and handlers certified. oversight of certifying agents, it would be ‘‘Regulatory Flexibility Act and Effects on Specifically, certifying agents would pay a difficult to ensure that one national standard Small Businesses’’ in the first proposal. Most fee to USDA for each certification performed. of production and handling for agricultural of these commenters expressed the belief that The smallest one-half of certifying agents, products would be employed. The result costs were understated and benefits were who certify about 10 percent of organic could be the continuation of reciprocity overstated. Commenters thought the operations, would pay about 10 percent of agreements between small, exempt certifying proposed fees were excessive, unacceptable, the estimated costs associated with agents and large accredited ones. This could and burdensome and would price many accreditation. The largest 10 percent of result in a cost for small entities, while small farmers, handlers, and certifying agents certifying agents, who certify about 45 providing less benefit to certified producers out of the organic industry. Some thought percent of organic operations, would pay and handlers than would be provided them that this appeared to be the actual intent of about 45 percent of accreditation costs. The by accreditation of all certifying agents. the first proposal. They also supported a remaining 40 percent of certifying agents in We request comments from all interested sliding scale fee system, rather than the flat the middle would pay 45 percent of the costs. parties, particularly small businesses, as to fee system originally proposed. Some stated The fee per certification would be fixed, whether a small certifier exemption would be that the $5,000 exemption level was much regardless of the size of the operation being beneficial or practical given the constraints too low. Producers objected to having to pay certified. This feature has the potential to explained in this option. the certification and inspection fees prior to create a barrier to market access for the Option 4: This Proposal knowing whether they would actually set a smaller operations. Certifying agents who crop, if the crop would grow, or what charge farmers and handlers for certification The new proposal includes provisions that percentage of the crop might be harvested. based on size and scope of the operation will mitigate the impact of the National Compared to this proposal, the first would maximize their profits by certifying Organic Program, especially for small proposal would have been more costly to the only the larger farmers and handlers from businesses. Fixed administration fees for organic industry in terms of direct costs for whom they would realize a higher return. If producers, handlers and certification agents accreditation, and to producers and handlers certifying agents were to discriminate in this have been eliminated. The fixed application in terms direct fees and the costs which manner in favor of larger operations, smaller fee for accreditation also has been certifying agents would have attempted to farmers and handlers would find the eliminated. This will positively affect small pass through. However, the current proposal certification services available to them to be producers and handlers because fixed fees has not set fees at levels to recover all relatively limited and possibly more expend a larger percentage of a smaller program costs and during an 18 month expensive than under the fee for direct operation’s total revenue. transition period will not require application services model that includes a variable fee for As indicated earlier in this discussion, fees or charge for hourly services. Costs that site visits. A fixed fee per certification also certifying agent evaluation fees would reflect are not recovered through fees will be would not take into account, in the actual costs for the time and travel required covered by appropriated funds, meaning that distribution of costs, the large difference in to do the evaluation. It is anticipated that taxpayers at large will bear some of the costs size between processors and primary smaller certification agents would benefit of the proposed organic program. Thus, in producers. Processors are generally much because they are small and less complex than terms of fees and other direct costs, the first larger than primary producers in terms of larger certification agents. The proposed proposal was more burdensome on the both total output and total revenue. accreditation costs would be proportional to organic industry. the actual time required to perform the The first proposal also contained new Option 3: Exemption of Small Certifying service. Several small operations could be information collection requirements, a Agents From Accreditation grouped by area to reduce travel expenses of description of those requirements, and an Small certifying agents (those with annual the evaluators. estimate of the annual economic burden on revenues of $25,000 or less) may not have the The new labeling requirements that allow the organic industry. We received responses resources to meet all of the requirements of the use of a certification agent’s seal on the specifically referring to the information the rule, such as accreditation fees, principal display panel and on the collection requirements of the first proposal. administrative and personnel requirements, information panel of processed product Among the comments made were that the and conflict of interest restrictions, based on labels also may benefit small operations. requirements would be unaffordable by small their current structure and revenues. Certification agents that have an established businesses and that paperwork requirements Therefore, exempting the smallest certifying consumer base may benefit by displaying should be kept small, simple, and to a bare agents from the accreditation requirement, their identifying seal. Small certification minimum, especially for small producers. similar to small producers being exempt from agents, whose clients more likely produce Recordkeeping requirements for certifying certification requirements, could mitigate any ingredients for processed products, could agents in the first proposal that required potential adverse impact of the rule on this also be identified and thus share in this certifying agents to maintain all records group. This option, however, would require benefit. Certification agents also may wish to concerning their activities for 10 years have a legislative amendment to the OFPA. expand their operation by offering been changed to reduce the burden. The exemption of the smaller certifying verification of truthful labeling claims which Commenters expressed concern that this agents from accreditation would carry with it will be allowed under this proposal. requirement was excessive and unnecessary. many of the limitations resulting from the This proposal has three elements of We agree and are instead proposing that there absence of Federal oversight. International flexibility that are advantageous to small be three categories of records with retention trade would likely be limited to products entities: performance-based production and periods: (1) Records created by certifying certified by accredited certifying agents. handling standards and certifying agent agents regarding applicants for certification Protecting domestic consumers from requirements; production and handling and certified operations to be maintained 10 inappropriate organic claims on the labels of standards that contain a range of allowable years, consistent with OFPA requirement for products certified by exempt certifying practices; and temporary variances. maintaining all records concerning activities agents would likely lead to greater confusion The standards in this proposal are of certifying agents; (2) records obtained from over labels in the marketplace. Federal performance standards based on the results applicants for certification and certified enforcement agencies such as the FDA, the of a management system, rather than operations to be maintained 5 years, the same ATF, and FSIS might wish to distinguish prescriptive or design standards that as OFPA requirement for the retention of accredited certifying agents from those prescribe specific technology or a precise

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Performance standards private capacity on the date that the processed food that is organically produced. promote innovation and the development of proposed national accreditation program for The OFPA was requested by the organic new technologies which would help the organic certification is implemented will not community because of problems encountered industry as a whole be more efficient. be required to pay the administrative costs of in the marketing of organic products. First, Finally, they provide a less costly means of applying for initial national accreditation there was fraudulent use of the term, compliance than design standards. Small status; the administrative costs involved in ‘‘organic,’’ resulting in the mislabeling of entities, in particular, benefit because evaluating the accreditation status of these products, caused in part because many compliance with performance standards agents will be absorbed by a portion of the consumers are willing to pay premium prices allows for the adaptation of existing systems National Organic Program operating budget for organic foods. Second, there was a lack without costly capital investment. appropriated by Congress. They will be of uniformity in standards defining organic This proposal allows for flexibility by required to pay travel expenses for the production, causing trade disruption and providing a range of production and handling reviewers. New applicants seeking national confusion among buyers, sellers, and users of practices that can be used to maintain the accreditation for organic certification services organic products. Third, there was constraint organic integrity of the operation. The use of will be charged a fee to cover the on market growth due to the prohibition on an allowed practice or substance must be administrative costs of evaluating their labeling meat and poultry products as described in the organic plan as a record for suitability for accreditation, their application organic. After implementation of the NOP, consideration by the certifying agent during fees will be structured to reflect the actual any agricultural product labeled ‘‘organic’’ a certification review. The proposal provides hourly costs of having an AMS evaluator will have to be from a production or handling temporary variances in the case of natural conduct a site visit (including travel time to operation that is certified by a certifying disasters, damage from wind, floods and the and from the evaluator’s duty station and per agent who is accredited by the U.S. like, and for research trials. The benefit of diem travel expenses). The departures from Department of Agriculture (USDA). variances is that a producer or handler would the first proposal—which would have A proposed rule to implement the OFPA not lose its investment in an organic imposed a uniform flat fee on all applicants was published in December 1997. It operation because of certain conditions that for national accreditation—along with the contained information collection are beyond the producer or handler’s control. adoption of an application fee structure requirements, an estimate of the annual Variances also enhance performance which attempts to relate the imposition of economic burden on the organic industry, standards by allowing additional innovation fees to the actual costs involved in and a request for comments about the and experimentation. This is especially administering the national accreditation burden. A few general comments were important to producers and handlers who program, should contribute to a less received about the burden and they were depend on the organic price premium. burdensome and more equitable distribution considered when this proposal was prepared. of administrative costs across all segments of Also taken into account was other Conclusion the organic industry. information about existing industry practices USDA has identified the entities that may and documents, the Initial Regulatory be affected by this proposal and has analyzed Appendix D—Paperwork Reduction Act of Flexibility Analysis that is discussed in the the anticipated impacts of the proposal on 1995 section entitled ‘‘Regulatory Flexibility Act them based on our knowledge of the industry The Paperwork Reduction Act of 1995 and the Effects on Small Businesses,’’ and the and limited data. We have drawn on industry (PRA) (44 U.S.C. 3506 and 3507) is designed Regulatory Impact Assessment (RIA) that is studies, including studies completed since to minimize the burden of reporting and discussed in the section entitled ‘‘Executive the first proposal was published in 1997, as recordkeeping (information collection Order 12866.’’ The numbers of entities well as information provided in comments requirements) required by Federal affected by this proposal are estimated in the on the first proposal. However, we lack data regulations on individuals, businesses, other RIA. The RIA is attached as an appendix to to thoroughly and quantitatively describe the private institutions, and State and local this proposal. existing organic industry and quantitatively governments. The burden is an estimate of Reporting and recordkeeping are essential analyze the effects of this proposal. the amount of time and the cost required of to the integrity of the organic certification Whether using SBA’s small business size program participants to fulfill the system. They create a paper trail that is a standards by SIC or the alternative information collection requirements. critical element in carrying out the mandate definitions created for this analysis, we Information collection requirements must of the OFPA. They serve the Agency mission, believe that this proposal could have a have Office of Management and Budget program objectives, and management needs significant impact on a substantial number of (OMB) review and approval before they can by providing information on the efficiency small businesses. Even with the flexibility become effective. They must also be made and effectiveness of the program. The proposed in the regulation and the expanded available for public comment, and the information affects decisions because it is the market opportunities brought about by comments become part of the public record. basis for evaluating compliance with the implementation of the National Organic This notice requests comments on the OFPA and the regulations, for administering Program, some small certifying agents may proposed information collection the program, for management decisions and choose not to become accredited to provide requirements of this proposal. planning, and for establishing the cost of the certifying services, and some small producers Title: National Organic Program. program. It supports administrative and and handlers may choose not to continue OMB Number: New collection. regulatory actions in response to being certified organic because the proposed Expiration Date of Approval: Three years noncompliance with the OFPA and the fees would be passed down to them as from date of approval. regulations. certification fees. We invite comments about Type of Request: New. In general, the information collected will the expected benefits and costs to small Abstract: The Organic Foods Production be used by USDA, State program’s governing entities as presented in this analysis. Act (OFPA) of 1990 mandates that the State officials, and certifying agents. It will be Specifically, we invite comments regarding Secretary develop a National Organic created and submitted by State and foreign the impact of the proposed National Organic Program (NOP) to accredit eligible State program officials, peer review panel Program on small certifying agents, program’s governing State officials or private members, accredited certifying agents, producers, and handlers so that we might persons as certifying agents who would organic inspectors, certified organic uncover potential unintended negative certify producers or handlers of agricultural producers and handlers, those seeking impacts on small entities. products that have been produced using accreditation or certification, and parties The proposed structure of user fees organic methods as provided for in the interested in changing the National List. outlined in this proposal attempts to OFPA. This regulation is proposed: (1) To Additionally, it will necessitate that all of minimize the burden of administrative costs establish national standards governing the these entities have procedures and space for which will be assumed by small-scale marketing of certain agricultural products as recordkeeping.

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The burden on each entity is discussed practices and on-site inspection reports from residue testing every 5 years to determine if below. One major estimate made about each organic inspectors. Estimates: 59 entities are products from certified operations contained entity is the number of entities likely to expected to apply for certification (13 State a detectable residue level of a prohibited participate in the NOP. The information programs, 36 private entities, 10 foreign substance and to report such findings to collection burden attempts to incorporate the entities). The annual burden for each State appropriate authorities. Commenters burden that will be in addition to the burden program will be an average of 695.428 hours expressed concern that the requirement was that current organic marketers have with the or if calculated at $18,778. The annual too costly. We agree and are instead burden required of new entrants into the burden for each private or foreign entity will proposing that the State program’s governing field. be 699.678 hours or $27 per hour (rounded State officials or certifying agents may USDA. USDA will be the accrediting up to the next dollar) it would be $18,893. conduct testing at their own expense only if authority. USDA will accredit domestic and Administrative costs for reporting, they suspect a crop has come into contact foreign certifying agents who will certify disclosure of information, and recordkeeping with a prohibited substance. Test results domestic and foreign organic producers and are expected to vary among certifying agents. must be submitted to the Administrator handlers, using information from the agents Entities which begin their activities only after (§ 205.672(b)). documenting their business operations and the national program is implemented would Organic inspectors. Inspectors will conduct program expertise. USDA will also permit be expected to incur the greatest cost as they on-site inspections for the certifying agents of State program’s governing State officials to set up an operation that conforms to the each applicant for certification and annually establish their own organic certification OFPA and the regulations. For agents who of each certified operation. They will programs after the programs are approved by are currently active in the organic industry, determine whether or not certification should the Secretary, using information from the follow ISO guidelines, and already perform continue and will report this finding to the States documenting their ability to operate many of these administrative functions, costs certifying agent. Inspectors will be the agents such programs and showing that such will vary depending upon the extent to themselves, employees of the agents, or programs meet the requirements of the OFPA which their current practices are different individual contractors. We estimate that and the regulations. from requirements in the OFPA and the about half will be certifying agents and their States. State program’s governing State regulations. Agents will be expected to employees and half will be individual officials may operate their own organic provide the public with information contractors. Individuals who apply for certification programs. State officials will concerning their clients. Efforts were made to positions as inspectors will submit to the obtain the Secretary’s approval of their incorporate existing industry practices and agents information documenting their programs by submitting information to USDA documents into this proposal. A list of qualifications to conduct such inspections. documenting their ability to operate such several proposed administrative Estimates: 293 inspectors (147 certifying programs and showing that such programs requirements and the probable resources agents and their employees, 146 individual meet the requirements of the OFPA and the required for compliance is included in the contractors) will be used. The annual burden regulations. More than half of the States Regulatory Impact Assessment. for each inspector will be an average of currently have some standards governing the When an entity applies for accreditation as 48.304 hours or if calculated at $27 per hour production, handling, or labeling of organic a certifying agent, it must provide a copy of (rounded up to the next dollar), it would be food and 13 States have organic certifying its procedures for complying with $1,305. programs. These programs require reporting recordkeeping requirements (§ 205.504(b)(3)). Producers and handlers. Producers and and recordkeeping burdens similar to those Once certified, agents will have to make their handlers, domestic and foreign, will apply to required by the NOP. It is unknown at this records available for inspection and copying certifying agents for organic certification, to time how many States, if any, will establish by authorized representatives of the Secretary renew their certification, or to report changes their own organic certification programs (§ 205.501(a)(9)). USDA will charge certifying in their practices, submitting to the agents pursuant to the OFPA and the regulations. agents for the time required to do these detailed information documenting their Estimates: 13 States will operate their own document reviews. Audits will require less specific practices. Producers include farmers, certification programs. The annual burden for time if the documents are well organized and livestock and poultry producers, and wild each State will be an average of 52.308 hours centrally located, than if they are in disarray crop harvesters. Handlers include those who or if calculated at a rate of $27 per hour, and in several locations. Certifying agents transport or transform food and may include (rounded up to the next dollar), it would be will have control over these conditions, but millers, bulk distributors, food $1,413. making documents accessible to the public manufacturers, processors, repackagers, or Peer review panels. Panels will assist the may bring about a substantial change in the packers. Some handlers may be part of a Agricultural Marketing Service (AMS) way some agents currently operate. retail operation that processes organic Administrator in evaluating applicants for Recordkeeping requirements for certifying products in a location other than the accreditation as certifying agents. Individuals agents in the first proposal were changed to premises of the retail outlet. will apply to USDA for membership in a pool reduce the burden. They required certifying The OFPA requires certified operators to from which the panels are selected, agents to maintain all records concerning maintain their records for 5 years. Estimates: submitting to USDA information their activities for 10 years. Commenters 19,300 total operators (14,153 certified and documenting their qualifications to conduct expressed concern that this requirement was 5,147 exempt), including 17,150 producers such reviews. This will be a new burden for excessive and unnecessary. We agree and are (12,176 certified and 4,974 exempt) and those serving on the panels. Estimates: 40 instead proposing three categories of records 2,150 handlers (1,977 certified and 173 people will participate in peer review panels. with varying retention periods: (1) records exempt). We do not have an estimate of the The annual burden for each panel member created by certifying agents regarding number of foreign producers and handlers will be an average of 10 hours or if calculated applicants for certification and certified that will apply for organic certification. The at and $27 per hour, it would be $270. operations, maintain 10 years, consistent annual burden for each domestic operator Certifying agents. Certifying agents may be with OFPA’s requirement for maintaining all will be: certified producer—average of 9.521 State program’s governing State officials, records concerning activities of certifying hours or if calculated at $24 per hour, it private entities, or foreign entities who are agents; (2) records obtained from applicants would be $229; certified handler—average of accredited by USDA to certify domestic and for certification and certified operations, 49.521 hours or if calculated at $24 per hour, foreign producers and handlers as organic in maintain 5 years, the same as OFPA’s it would be $1,189; exempt/excluded accordance with the OFPA and the requirement for the retention of records by operator—average of 0.5 hour or if calculated regulations. Each entity wanting to be an certified operations; and (3) records created at $24. per hour, it would be $12. agent will seek accreditation from USDA, or received by certifying agents regarding The proposed regulation exempts certain submitting information documenting its accreditation, maintain 5 years, consistent operations from certification: (1) Producers business operations and program expertise. with OFPA’s requirement for renewal of and handlers whose gross agricultural Accredited agents will determine if a agent’s accreditation (§ 205.510(b)). income from organic sales totals $5,000 or producer or handler meets organic Residue testing requirements in the first less annually; (2) handlers selling only requirements, using detailed information proposal were changed to reduce the burden. agricultural products that contain less than from the operation documenting its specific They required certifying agents to undertake 50 percent organic ingredients by total

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First This Estimated hourly rates proposal proposal

Certified and exempt operators, interested parties ...... $10 $24 State program's governing State officials, peer review panel members, certifying agents, organic inspectors ...... 20 27

Annual Reporting and Recordkeeping Appendix E.—Executive Order 12988, Civil requirements must: (a) Further the purposes Burden: Justice Reform of the OFPA; (b) not be inconsistent with the Estimated Number of Respondents: 19,730. Executive Order 12988, Civil Justice OFPA; (c) not be discriminatory towards Total Annual Hours: 269,622. Reform, instructs each executive agency to agricultural commodities organically Total Cost: $6,780,348. adhere to certain requirements in the produced in other States; and (d) not be Comments. Comments are requested on development of new and revised regulations effective until approved by the Secretary. these proposed information collection in order to avoid unduly burdening the court Pursuant to section 2120(f) of the OFPA (7 requirements. Comments are specifically system. The first proposal was reviewed U.S.C. 6519(f)), this proposal would not alter invited on: (1) Whether the proposed under this Executive Order. No comments the authority of the Secretary under the collection of information is necessary for the were received on that review and no Federal Meat Inspection Act (21 U.S.C. 601 proper performance of the functions of additional related information has been et seq.), the Poultry Products Inspections Act USDA, including whether the information obtained since then. This rule is not intended (21 U.S.C. 451 et seq.) or the Egg Products would have practical utility; (2) the accuracy to have retroactive effect. Inspection Act (21 U.S.C. 1031 et seq.), of USDA’s estimate of the burden of the States and local jurisdictions are concerning meat, poultry, and egg products, proposed collection of information, including preempted under section 2115 of the OFPA nor any of the authorities of the Secretary of the validity of the methodology and (7 U.S.C. 6514) from creating programs of Health and Human Services under the assumptions used; (3) ways to enhance the accreditation for private persons or State Federal Food, Drug and Cosmetic Act (21 quality, utility, and clarity of the information officials who want to become certifying U.S.C. 301 et seq.), nor the authority of the to be collected; and (4) ways to minimize the agents of organic farms or handling Administrator of the Environmental burden of the collection of information on operations. A governing State official would Protection Agency (EPA) under the Federal those who are to respond, including the use have to apply to the USDA to be accredited Insecticide, Fungicide and Rodenticide Act of appropriate automated, electronic, as a certifying agent, as described in section (7 U.S.C. 136 et seq.). mechanical, or other technological collection 2115(b) of the OFPA (7 U.S.C. 6514(b)). Section 2121 of the OFPA (7 U.S.C. 6520) techniques or other forms of information States also are preempted under sections provides for the Secretary to establish an technology. 2104 through 2108 of the OFPA (7 U.S.C. expedited administrative appeals procedure Comments should be submitted by the date 6503 through 6507) from creating under which persons may appeal an action stated in the section entitled DATES at the certification programs to certify organic farms of the Secretary, the applicable governing beginning of this proposal. However, they or handling operations unless the State State official, or a certifying agent under this should be sent to (1) Office of Management programs have been submitted to, and title that adversely affects such person or is and Budget, New Executive Office Building, approved by, the Secretary as meeting the inconsistent with the organic certification 725 17th Street, NW, Room 725, Washington, requirements of the OFPA. program established under this title. The Act D. C. 20503, Attention: Desk Officer, and to Pursuant to section 2108(b)(2) of the OFPA also provides that the U.S. District Court for (2) Clearance Officer, USDA–OCIO, Room (7 U.S.C. 6507(b)(2)), a State organic the district in which a person is located has 404W, Jamie Whitten Building, STOP 7602, certification program may contain additional jurisdiction to review the Secretary’s 1400 Independence Avenue, SW, requirements for the production and decision. Washington, D.C. 20250–7602. Additionally, handling of organically produced agricultural comments may be sent by fax to (202) 690– products that are produced in the State, and Appendix—Executive Order 13132, 4632 or submitted via the Internet through for the certification of organic farm and Federalism the National Organic Program’s homepage at handling operations located within the State, This proposal has been reviewed under http://www.ams.usda.gov/nop. under certain circumstances. Such additional Executive Order 13132, Federalism. This

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Order requires that regulations that have underpin the proposed organic rule. Section affect State programs. These issues are federalism implications provide a federalism 2104(c) of the OFPA (7 CFR 6503(c)) requires described below, along with the impact statement that: (1) Demonstrates the the Secretary to consult with the National Department’s response in the reproposal. Agency consulted with the State and local Organic Standards Board in developing the (1) Under OPFA 2108 (7 CFR 6507), States officials before developing the proposed organic program and the National List set may establish additional standards, approved regulation, (2) summarizes State concerns, (3) forth in Section 2118 of the OFPA (7 CFR by the Secretary. First, State commenters provides the Agency’s position supporting 6517). objected to the provision in the first proposal the need for the regulation, and, (4) describes The Secretary has received extensive input that would have prohibited States from how the concerns of State officials have been from the Board, interested persons, and the requiring compliance with these additional met. The Order indicates that where National States regarding the establishment of the standards as a condition for use of the standards are required by Federal statutes, National Organic Program and this organically produced State logo on products Agencies shall consult with appropriate State reproposal. The Board met 12 times before within the borders of such State. We agree and local officials in developing those publication of the proposed rule on with the commenters, as we did not intend standards. Further, Agencies are required to December 16, 1997, and has met five times to prohibit States from requiring that these interpret Federal statutes to preempt State during 1998 and 1999. States were invited to more restrictive standards be met as a law only where the statute contains an attend each of these meetings, and official requirement to the State’s logo on organically express preemption provision. In such a case, State certifier representatives participated in produced products. Accordingly, this any regulatory preemption of State law shall Board deliberations in meetings held in July proposal will permit States with more be restricted to the minimum necessary to 1998 and July 1999. Public input sessions restrictive requirements approved by the meet the objectives of the statute. were held at each meeting to gather Secretary and private certifiers certifying The Organic Foods Production Act (OFPA) information from all interested persons, production and handling operations within of 1990 (7 U.S.C. 6514) establishes national including State and local jurisdictions. these States to require that the State’s more standards regarding the marketing of Section 2110(g) of the OFPA (7 U.S.C. restrictive standards be met in order to use agricultural products as organically 6509(g)) requires the Secretary to hold public the State logo. produced, assures consumers that organically hearings to gather information to guide (2) The first proposal required annual produced products meet a consistent development of standards for livestock organic inspector performance appraisal and standard, and facilitates interstate commerce products. Four hearings were held during annual program evaluations for certifying in fresh and processed food that is 1994 in Washington, D.C.; Rosemont, IL; agents. State commenters objected that these organically produced. In carrying out these Denver, CO; and, Sacramento, CA. States requirements would duplicate State purposes, the Act contemplates a significant were invited to participate in each of these requirements. We do not intend for States to role for the States and, in fact, envisions a hearings. develop dual performance appraisal and partnership between the States and the National Organic Program staff also program evaluation systems because we Federal Government in meeting the received comments and consulted with believe that programs already conducted by requirements of the Statute. The Act specifies States at public events. They made the States will meet the requirements of this the State role and gives States recognition for presentations, received comments, and proposal. These programs would be expected their activities in organic agriculture in consulted with States at local and regional to conform with good management practices several ways. First, 7 CFR 6507 provides that organic conferences and workshops and at appropriate to an organization’s size and States may establish a State organic national and international organic and structure. The questioned provisions have certification program consistent with the natural food shows. not been changed, but this proposal has been national program. Second, these programs Further, States were provided the revised to clarify that the annual program may contain more restrictive requirements opportunity to comment specifically on State evaluation can be conducted by the certifying than the National Organic Program issues at a National Organic Certifiers agency staff, an auditing entity, or a established by the Secretary of Agriculture. meeting held on July 21, 1995, to discuss consultant with appropriate expertise. To be more restrictive, State Organic accreditation issues; a meeting held on (3) The first proposal set forth programs are required to: further the February 26, 1996, to discuss the role of confidentiality requirements for certifying purposes of the Act, be consistent with the States in the National Organic Program; and agents. Commenters stated that these Act, not discriminate against organic a February 1999 State Certifiers meeting to confidentiality requirements might conflict products of another State, and be approved discuss State issues. Further, States were with State requirements for ‘‘open records.’’ by the Secretary. Third, States can choose to consulted in training sessions held for While we recognize this potential for be accredited as certifying agents under the organic inspectors, as well as numerous conflicting requirements, records collected Act and carry out a State organic program. question and answer sessions at speaking under the National Organic Program would Fourth, the Act allows the States to engagements of the Agricultural Marketing be subject to the requirements of the Act. determine the manner in which they choose Service Administrator, the National Organic Where the Act and State requirements to be involved in the organic program. States Program Program Manager, and the staff. conflict, the Act would take precedence. may choose to carry out the requirements of On publication of the first proposal on There is no change to the confidentiality the Act by establishing a State program and December 16, 1997, an announcement and provision. becoming accredited as certifying agents, information packet summarizing the first To clarify that authorized representatives they may establish a State program and proposal were sent to over 1,000 interested of the Secretary or the applicable Stae utilize private certifying agents to implement parties, including State governors and State program’s governing State official may act on the program, or they may choose to utilize department of agriculture secretaries, their behalf and must be given access to the the national organic program as implemented commissioners, or directors. Subsequent to records, this proposal adds the phrase ‘‘and by the Secretary. publication of the first proposal, State and their authorized representatives.’’ In recognition of their role in carrying out local jurisdictions had the opportunity to (4) This proposal will require that the provisions of OFPA, the Department has provide input at four listening sessions held accredited certifying agents accept reached out to States and actively sought in February–March 1998 on the first proposal certification decisions made by another their input throughout the entire process of in Austin, TX; Ames, IA; Seattle, WA; and USDA-accredited certifying agent as developing the proposed organic rule. The New Brunswick, NJ. equivalent. State commenters said that States Department drew extensively on the organic Finally, States had the opportunity to should be able to control which certifying expertise of States and the organic industry comment on the first proposal. More than agents operate within their State. by working closely with the National Organic 275,000 comments were received on the first The first proposal provided that accredited Standards Board. The National Organic proposal, including State commenters. certifying agents accept the certification Standards Board, established under Section Through this extensive outreach and decisions made by another USDA-accredited 2119 of the OFPA (7 CFR 6518), has provided consultation process, States identified a certifying agent as equivalent to their own. a broad and inclusive forum for public number of issues with the first proposal. Commenters representing State programs participation in developing the States expressed several specific concerns said that States should be able to control recommendations and concepts that regarding accreditation requirements as they which certifying agents operate within their

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State. Several commenters asked whether prevention of conflicts of interest with the (1) The Administrator had sole authority to States with more restrictive standards could certifying agent. However, the Department is suspend or revoke the accreditation of challenge certification decisions made by responsible for ensuring that the certifying certifying agents in the first proposal. other accredited certifying agents. Under the agent complies with that responsibility. The Commenters indicated that State program’s Act, no organic product may be produced or requirement to provide such a listing governing State officials should have the handled to organic standards lower than the provides the Administrator information authority to suspend or revoke the standards of the National Organic Program. A essential to identifying conflicts of interest. accreditation of private certifying agents. State Government may not prevent the In addition, a stated purpose of the Act is to We agree that in a State with a program marketing or sale within a given State of establish uniform national standards. These approved by the Secretary, the State organic product produced in another State uniform standards should extend to uniform program’s governing State official should be according to this proposal. While States may, conflict of interest requirements for State and authorized to suspend or revoke an with the approval of the Secretary, set more private certifying agents. The commenters accreditation granted by the Secretary to restrictive standards than the national have said that most States already have certifying agents operating within the State. organic standards for product produced or established conflict of interest policies and We concur because of the Department’s role handled within their State, these procedures so that the required information in providing oversight to the State program, requirements do not apply to products should be easily available for submission to including its enforcement procedures, and produced or handled in another State. the Administrator. Accordingly, no change have made that change in this proposal. State programs approved by the Secretary has been made in this proposal. (2) Many commenters stated that the first will be required to treat all accredited Certification, the process of qualifying a proposal lacked adequate enforcement certifying agents equally, and accredited producer or handler to sell agricultural provisions, including enforcement by States certifying agents in one State cannot refuse products labeled as organic, raised several with an approved State program. to recognize another State’s product certified issues for States. We agree with the commenters that to national standards. Accordingly, the (1) The first proposal required an applicant additional enforcement provisions are requirement remains unchanged that a for certification to supply required necessary for the National Organic Program. certifying agent accept certification decisions documentation to provide information The following changes have been made in by another USDA-accredited certifying agent necessary to allow a certifying agent to this proposal. as equivalent. evaluate the application. State commenters (a) As noted above, the State program’s (5) The first proposal required all certifying suggested a provision be added to allow a governing State official will now be agents to submit documents and information certifying agent to require documentation authorized to suspend or revoke on personnel, administrative, and financial from applicants in addition to that required accreditation granted by the Secretary to policies and procedures to demonstrate by the first proposal. certifying agents operating in the State. organic expertise and ability to implement A certifying agent can, if necessary, follow (b) An enforcement proceeding brought by the National Organic Program. States up on an initial application with requests for a State program’s governing State official commented that State certifying agents additional information, provided that against a certified operation or certifying should not be required to submit such information is needed to evaluate the agent shall be appealable pursuant to the information, stating that these requirements application and determine compliance with appeal procedures of the State program with should not apply to States with established the Act and regulations. We did not make the no subsequent appeal rights to the Secretary. personnel, administrative, and financial suggested change, as the existing language States commented on several fees procedures. They also indicated that the already allows the certifying agent to request provisions in the first proposal. review should be limited to organic program additional information necessary to (1) The first proposal required that administration only, not to agencywide determine compliance with the Act and payment of fees and charges to the policies and procedures. We recognize that regulations. Department be by certified check or money States have established personnel, (2) The first proposal laid out a order. State commenters objected, saying it administrative, and financial procedures and certification program that provided for was insulting for USDA to require a State that these procedures would apply to State updates to a continuous organic certification. government agency to pay for its certifying agents. However, a stated purpose To meet continuation of certification accreditation with a certified check. of the Act is establishment of national requirements, the first proposal required an Accordingly, we have removed this standards. Such standards should extend to on-site inspection after receipt of the update requirement, simply requiring that payments uniform requirements for State and private to the application. A State certifying agent for fees and other charges for accreditation certifying agents unless otherwise provided objected, saying that an on-site inspection must be made payable to the Agricultural in the Act. Further, such information is after receipt of a renewal application is not Marketing Service. necessary for the Administrator to make a consistent with current practice. Currently, (2) Several State agencies objected to the determination on approval of an application on-site inspections conducted during the fee provisions in the first proposal, for accreditation. Accordingly, the prior year are used to determine compliance expressing the belief that the proposed fees requirements for demonstrating organic with certification requirements at the time of would price small producers and handlers expertise and ability to implement the renewal, along with a review of information out of the organic industry. Some State National Organic Program remain the same submitted by the certified operation. The agencies commented that those small organic for private and State certifying agents. State certifying agent stated that an producers conducting their own on-farm (6) The first proposal required a certifying additional inspection at renewal time would handling would be forced out of the organic agents to provide a description of procedures not be useful if it was not an appropriate time industry by the excessive handler fee and to prevent conflicts of interest and the to observe the certified unit in operation. reporting burdens. identification of any food or agriculture- We disagree with the commenters, since After review of the comments, we related business interests of all personnel certifiers are required to schedule on-site acknowledge that the fees charged in the first intended to be used in the certifying inspections when the certified operation can proposal may have discouraged industry operation. Commenters stated that existing be observed for its compliance or ability to growth and may not have facilitated State policies should be sufficient to prevent comply with the provisions of the National interstate commerce of organic product. We conflicts of interest for a State certifying Organic Program. The initial certification, have thus, modified the fee structure to agent and that lists of the business interests therefore, should have been granted when the reduce costs to all organic sectors and have of all inspectors, program staff, and their on-site inspection verified compliance with removed the requirement that provided for families are not necessary. certification requirements. The certified payment of fees to the Department by We agree that existing State policies should operation should be fulfilling its annual certified production and handling operations. be sufficient to prevent conflicts of interest continuation of certification at a time when Instead, the Department will charge but disagree that lists of the business it can demonstrate its compliance with the certifying agents only for fees and charges interests of all inspectors, program staff, and Act. related to accreditation, with the balance of their families are unnecessary. The Act (CFR States commented on several compliance the costs of the program to be funded through 6515(h)) places responsibility for the issues included in the first proposal. appropriations.

VerDate 072000 20:17 Mar 10, 2000 Jkt 190000 PO 00000 Frm 00147 Fmt 4701 Sfmt 4702 E:\FR\FM\13MRP3.SGM pfrm04 PsN: 13MRP3 13658 Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / Proposed Rules

(3) Some State certifying agents State representative said that accreditation proposal will assess State certifying agents commented that State certifying agents fees for State certifying agents should be less the same fees for accreditation under the should not be assessed accreditation fees. than for private certifying agents, as State same fee structure as private certifying They stated that most State certifying agents certifying agents should involve less AMS agents. could face large accreditation costs because review and oversight. We invite States and local jurisdictions to they have many county or regional offices We disagree with those commenters who comment on the issues raised in this which would be considered subsidiaries, say that State certifying agents should not be Federalism impact statement. We also adding that these costs would be passed on assessed accreditation charges, be charged encourage States and local jurisdictions to to producers and handlers or paid with less, or be paid to certify production and review and comment on this proposal as it supplemental State funds. A few State handling operations. These actions would relates to the operation of State organic certifying agents asserted that USDA should constitute unacceptable preferential programs. pay the States because of the State’s treatment of State certifying agents to the [FR Doc. 00–5723 Filed 3–7–00; 10:42 am] contribution to the national program. One detriment of private certifying agents. This BILLING CODE 3410±02±P

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